The Market Radar

We anticipate monitor and comment on market-moving global economic and geopolitical issues.  No dark side brooding, no wanting the world to end, no political rants.  Traders, investors, policymakers, or market observers can’t afford to ignore us.  In one word, perspicacity.

An educated citizenry is a vital requisite for our survival as a free people– Thomas Jefferson

By seeking and blundering, we learn. – Johann Wolfgang von Goethe

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Masters Week: Jack and German POWs (BFTP)

BFTP: Blast From The Past Post

Who would of thunk “Infrastructure Week” at Augusta meant hiring German WWII POWs to build bridges at Golf’s Mecca.

My top three picks this week for total money won:  Jon Rahm, Jordan Speith, and Phil, with the Spaniard (Rahm) taking home the Green Jacket.

Golf’s Ultimate Shame

Awesome to see Lee Elder hit the ceremonial first tee shot.   Lee Elder was the first Black man to play in the Masters back in 1975.    Shame on Augusta National for not allowing a Black Man to play their tourney until 19-freakn’-75.   Shame on the PGA Tour’s “Caucausian only clause,”  in place from 1934-19-freakin’ 61, that prevented non-whites from competing on the PGA Tour.

Originally Posted on

Masters_ImageAnswer to yesterday’s Masters quiz question:

Anthony Kim posted 11 birdies in the second round of the 2009 Masters.

Here’s some more 19th hole fodder to impress your buddies and something I bet you didn’t know about Augusta:  German POWs from nearby Camp Gordon built the bridge over Rae’s Creek next to the 13th tee box during WWII.  They were part of Rommel’s Panzer division in North Africa responsible for building bridges to enable tanks to cross rivers.

While Augusta National is famed for its almost unnaturally beautiful flora, as it turns out some rather interesting fauna once called the course home as well: 200 heads of cattle and more than 1,400 turkeys. From 1943 until late 1944, Augusta National was closed for play and transformed into a farm of sorts to help support the war effort. Some of the turkeys were given to club members during Christmas (meat rations were in effect) while the rest were sold to local residents to help fund the club. And the cows? Well, they acted as natural lawnmowers but also inflicted quite a bit of damage to Augusta National, devouring many of the course’s famed plants and shrubs.

To help repair cattle-related damage and revive Augusta National for its reopening, 42 German prisoners of war from nearby Camp Gordon were shuttled back and forth to work on the course.

Writes John Strege in “When War Played Through: Golf During World War II:”

“The POWs had been with the engineering crew serving Rommel, the Desert Fox, in North Africa, part of the Panzer division responsible for building bridges that enabled German tanks to cross rivers. It was a useful skill for the renovation work to be done at Augusta National. The Germans were asked to erect a bridge over Rae’s Creek adjacent to the tee box at the thirteenth hole.”

The Masters resumed at Augusta National — now free of German prisoners and barnyard animals — in 1946. And interestingly enough, the Supreme Commander of the Allied Forces in Europe during World War II, Dwight D. Eisenhower, later became a member of Augusta National. Two Augusta National landmarks bearing Eisenhower’s name still stand today: the Eisenhower Tree (a loblolly pine at the 17th hole that the former president and avid golfer repeatedly struck with golf balls and requested be cut down; photo above) and the Eisenhower Cabin (built in the 1950s according to Secret Service security guidelines by the club for the former president’s visits).

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Fed Heads Talking 4 Percent Inflation

The bond market might, however, assuming Kashkari’s  quote is true.

We are reposting a piece, which we recieved tremendous pushback when it was posted.   Now the Fed Heads are climbing aboard.  NK is one of the smartest but a bit of an opportunist, in our opinion.

Wall Street’s “everything is bullish” mantra is why the U.S. stock market cap to GDP is now close 200 percent (almost 50 percent above prior bubble peaks) and why we now see no way out of this rabbit hole but to print, print, print.   And print some more.

Asset valuations are so out whack, the Fed has lost control of the markets.  Just a hint of normalizing rates — a positive real interest rate across the curve — would cause stocks to correct 50 percent, in our opinion,  and throw us back into the “ice age.”

The policymakers are “up on a tightwire, one side is ice and one is fire.”    Ice as in deflation, fire as in hyperinflation,  the ultimate corner solution.  Write it down.

Ready For 4 Percent CPI By Mid-Year?

Origninal Posted on  by macromon

Starting to hear lots of talk about inflation these days, something we have been seeing in the pipeline for the past six months.

Input price inflation accelerated to a near-decade high in January. Costs increased to the greatest extent since April 2011, reflecting stronger rises in both the manufacturing and service sectors. This was partly passed on to clients in the form of higher charges, the main factor underlying the steepest rise in output prices for 27 months. – JPMo Global PMI, January

We’ve crunched a boatload of numbers over the past few days.  Sit back and enjoy.

What Deflation?

Since 1957, 888 monthly observations of the Consumer Price Index, there have only been 106 monthly negative prints and only 12 negative monthly prints on Core CPI (excluding food and energy).    Monthly year-on-year inflation has only printed 40 times on the main CPI and Core CPI has never printed a negative year-on-year number.

You read that right, never.

Three Consecutive Negative Monthly Prints Are Rare

Three consecutive negative monthly CPI prints are rare, only 15 times for main CPI and just once for Core, which happened just recently after the COVID shock.

The Coming Base Effect

The following FRED chart of the Consumer Price Index illustrates how it bottomed last May after the COVID shock, which is going to set up for some very high year-on-year CPI inflation prints by mid-year.  In part, because of the lower base but also the surprisingly quick snapback in the price index after the government temporarily shut off the lights and the Fed turned on the printing press.

We have constructed in the following chart a couple paths for CPI inflation in 2021, one based on an average 0.3 percent monthly rate, which takes the year-on-year inflation rate to 4.1 percent by May, which is sustained and translates to a core CPI of 3.5 percent.  Given what we currently see in the PMIs, including major problems in the global supply chain, and the excess stimulus already in the system, a 0.3 percent monthly CPI may be too stingy.

A Different Kind Of Economic Shock 

We also think very few understand the current economic situation and that this crisis is unlike those in the recent past.  The labor force and employment problems are not so much the result of too little demand but a forced reduction in supply due to the COVID restrictions.  More than 70 percent of the 10 million jobs that have been lost and have not been recovered are in three sectors: 1) leisure and hospitality; 2)  education and health services, and 3) government.

Once COVID begins to fade – it has already started – and the economy opens fully, pent-up demand, especially for leisure and hospitality will be huge, and with capacity already reduced in this area, hiring will rebound sharply and so will prices.

Why Are Average Hourly Earnings (AHE) Spiking? 

While crunching the numbers, we also found an interesting anomaly with AHE, which is now running at multi-year highs.  We have warned many times on this site about going deeper with the macro data and the problems of averaging.

Though we have not engaged in much second-order thinking or analysis on this issue — you don’t pay us enough to do so — we are pretty certain the spike in earnings is the result that most of the job losses have been in the lower-paying service sector, such as leisure and hospitality.   If, for example, all the sub .250 hitters on the Yankees are given their walking papers, the team batting average naturally goes up.  The same goes for the macro.

We are also kind of amazed that those soaking up the sun at the genius bar on bubble vision are not using the “spike in AHE” as a rationale to justify the market’s irrational and outrageous valuations.  Maybe they will or already have?

Market Impact

Personally,  I have given up on the market, which has become almost farcical, well, not even almost.  One would think that if inflation is rising the Fed’s hands will be tied and there is a risk they may panic, or the bond market will panic first, which could send risk markets into a tailspin.   But that’s too rational.

We also know that we mortal humans tend to think linearly but markets, the economy, and society move forward on a nonlinear trajectory.  In other words, it impossible to predict the future, especially when it comes to timing.

Nevertheless, we still hold to the instruments and signals that have guided us in the past and continue to heed the words of one of our heroes,

In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could. – Rudiger Dornbusch

Sweet Carol K.  

Finally, I am thankful to my partner at GMM,  Carol K., who has taught me “you have got to ride the gravy train as long as it lasts.”    I guess you can tell who is making the money at the Global Macro Monitor.   Keep fighting, CK.



Carpet bombing the economy with stimulus and liquidity is a huge mistake and will end in a river of tears, in my opinion.   Surgical strikes to help the sectors most in need, please.

Inflation is always and everywhere a monetary phenomenon. – Milton Friedman 

Posted in Employment, Equities, Inflation/Deflation | Tagged , , , | 24 Comments

Getting Back Pre-COVID GDP Levels

Nice chart from Bloomberg. Chile’s almost there, baby! h/t CK

The U.S. may be.

If Q1 GDP grew at an annualized compounded rate of 10.2 percent (2.45 percent q/q), the U.S. economy will back to its pre-COVID end of quarter high of $19.254 tillion set in Q4 2019. The U.S. economy probally peaked in mid-February.

The Atlanta Fed’s GDPNow forecast has Q1 GDP growing at 6.2 percent (CAAG). Stay tuned.

Posted in Economics, Emerging Markets | 1 Comment

A Day In The Life Of Tim Cook

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You Sure, Georgia?

“Poor Mexico [Georgia Republicans.]  So far from God and so close to the United States [MAGA.]”  ― Porfirio Diaz (paraphrased)

This image has an empty alt attribute; its file name is handing-out-water-in-ga.png

The Georgia law will make it a misdemeanor crime to give food or drinks to voters waiting in long lines. – Reuters

Gonna get hot, hot, hot for y’all.   

“Then he will say to those on his left, ‘Depart from me, you who are cursed, into the eternal fire prepared for the devil and his angels.  For I was hungry and you gave me nothing to eat, I was thirsty and you gave me nothing to drink,  I was a stranger and you did not invite me in, I needed clothes and you did not clothe me, I was sick and in prison and you did not look after me.’

“They also will answer, ‘Lord, when did we see you hungry or thirsty or a stranger or needing clothes or sick or in prison, and did not help you?’

“He will reply, ‘Truly I tell you, whatever you did not do for one of the least of these, you did not do for me.’

“Then they will go away to eternal punishment, but the righteous to eternal life.” – Gospel of Matthew

No judgement, just logic.  

Good Trouble

Time for vigilance and to stir up some “Good Trouble,” not only to honor Saint Lewis but to stop a repeat of a timeline similar to the one below.  Because that, folks, is where America is slouching.    


Unjust laws exist: shall we be content to obey them, or shall we endeavor to amend them, and obey them until we have succeeded, or shall we transgress them at once? Men, generally, under such a government as this, think that they ought to wait until they have persuaded the majority to alter them. They think that, if they should resist, the remedy would be worse than the evil. But it is the fault of the government itself that the remedy is worse than the evil. It makes it worse. Why is it not more apt to anticipate and provide for reform? Why does it not cherish its wise minority? Why does it cry and resist before it is hurt? Why does it not encourage its citizens to put out its faults, and do better than it would have them? Why does it always crucify Christ and excommunicate Copernicus and Luther, and pronounce Washington and Franklin rebels?  – Henry David Thoreau, Civil Disobedience

h/t  CK

Eternal Vigilance

Mr. Jefferson, the great apostle of human rights, has told us, that ‘the price of Liberty is eternal vigilance.’  – Communicated,” Richmond Enquirer, December 30, 1834

Posted in Politics, Uncategorized | Tagged , | 1 Comment

What’s The Probability Of This Event?

Incredible video. The Big Unit snares a seagull 20 years ago today.

Take a guess on the empirical probabliity? Let’s do a calcuation based on these assumptions:

  1. Very few other occurances of a picther nailing a bird. Let’s assume three in post-War era;
  2. Average pitches per game equal 200 per team;
  3. 158 games per year for each team. MLB season expanded to 162 games from 154 games in 1962;
  4. Average number of teams equal 25. Major league baseball currently has 30 teams, compared to 16 in 1960,
  5. Seventy years of data

And the probability is…..


Passive Investment

I would invest — yes, investment given today’s market madness and new definitions as most trades are now prop bets — $2430 each year ($1 per game) to takedown the $582k payoff. Robinhooders may pay much, much more.

The trade is even tastier if it could be done with options to get the leverage.

Gotta be carefull of your counter-party has the capital to make good on the trade, however.

Get on it Vegas or Draft Kings (DKNG, up 481 percent over last year, btw). You think Steve Cohen, the new owner of the Mets, will begin making a market?

The theoretical probabilty of such an event? Call a physicist, that’s way beyond my pay grade.

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The Largest U.S. Cities by Population from 1790 to 2020

Interesting graphic.  Watch Detroit and L.A.’s sharp ascent starting in the 1920s, which illustrates the auto industry’s outsize impact on the urban demographics.   Also, San Francisco’s ascent during/after the Gold Rush in the 1850s.

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How AI Will Entertain Us

Must view videos, folks.  Stunningly entertaining.

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Happy St. Patrick’s (Maweyn Succat) Day!

Blast From The Past (BFTP).

Originally Posted On 

Happy St. Patrick’s (Maweyn Succat) Day!

St. Patrick, Ireland, St. Patrick’s Day. Simple, right? The man wasn’t even Irish! He was actually born in Britain around the turn of the 4th century. At 16 years old, Irish raiders captured him in the midst of an attack on his family’s estate. The raiders then took him to Ireland and held him captive for six years. After escaping, he went back to England for religious training and was sent back to Ireland many years later as a missionary. St. Patrick was actually born Maewyn Succat, according to legend; he changed his name to Patricius, or Patrick, which derives from the Latin term for “father figure,” when he became a priest.  – Time

The Irish Comeback

Ireland has come a long way since this post, which was just after the European debt crisis.  The government just placed €1.03 billion of 10-year bonds in mid-February at a stunning yield of 0.85 percent.  The auction had a bid-to-cover of 2.24.

Yeah, got it, distorted due to ECB asset-buying program.  But still well below the Euro periphery bond yields.


Though the Irish economy is slowing and there is much uncertainty around Brexit, still it’s been one helluva comeback,  and the Irish are a resilient bunch, now positioning themselves with U.S. and Canadian companies as the “only English-speaking common-law country in the whole of the European Union.”

Me “finks [sic]” part of the success was thumbing their nose and ignoring the advice and dictates of the Eurocrats in Brussels.

Plus, Ireland still has Bono and U2, Andrea and the rest of the Corrs, and the many, if not all the great people of Ireland, we love so much,  including my late grandmother and her side of the family.   That is the upside of being an American.  We are all mutts and can claim to be citizens of many cultures.  Don’t think POUTS has got the memo quite yet.


How great would be to see an Irishman win the PGA’s coveted Players Championship on St. Paddy’s Day?   Rory tees it up in today’s final round one back.

Getting long Rory as I write.  Pour me one in Dublin and Hollywood, CD in the wee hours tomorrow to celebrate!   You heard it here first.  Unleash the Leprechauns!


Source:  Golf Digest

Happy St. Patrick’s (Maweyn Succat) Day!

Originally Posted on 

In case you’re wondering,  Maweyn Succat was St. Patrick’s real name and he wasn’t even Irish!.   Click here for some great background and history of St. Patrick’s Day.

Go Paddy, Rory, Graeme, and Darren!

Happy St. Patrick’s Day!  Not too many green beers, folks!

By the way, there has been one huge bond rally in Ireland over the past year.

Posted in Bonds, General Interest, Picture of the Day, PIIGS | Tagged , , , , , , | 1 Comment

The Macro Factors Driving The Covid Economy In Two Charts

Here’s a couple of interesting and surprising charts, which explain what has been driving the COVID economy and why the U.S. economy is set up for monster growth over the next few quarters.

When the economy fully reopens, we suspect a consumer feeding frenzy in many of the services that have been closed or operating at a limited capacity.   We also expect these firms and businesses that have survived will have mucho pricing power given the massive stimulus that has been put into the economy and the forced savings thrust on those whose incomes have not been affected.

Moreover,  capacity in the service sector has been significantly reduced with many businesses forced to close (see chart below).

Personal Income (PI)

Personal income,  which consists mainly of wages and salaries, rental and investment income, and government transfer payments, such as the latest COVID stimulus payments, is growing at its fastest pace in nearly 40 years.   Some context, however, the 12 plus percent PI growth in the early 1980s took place with CPI inflation running at 10-15 percent year-on-year.

Wages and salaries have not been the driver of PI over the past year but the massive increase in transfer payments.  And “transfer payments” is really a misnomer as much of it has been monetized by the Fed’s digital printing press.

Clearly, this situation is not sustainable and it is uncertain what the economy will look like in the second half of 2022.

Shift In Personal Expenditures 

The following chart illustrates the unexpected shift in consumer expenditures from services, which made up around 70 percent of personal expenditures before the pandemic.  The reallocation of spending to durable goods is contributing to the supply chain difficulties and shortages in industries, such as semiconductors and global shipping.

Many firms, such as the auto industry, settled in for a typical recession after the economic lights were turned off last February, reduced inventories of materials and supplies , and were caught with their pants down when the demand came storming back a few months later.

Inflation:  Temporary or Permanent Acceleration?

Nobody really knows but if the market determines the monetization of transfer payments becomes a more permanent reality,  inflationary expectations will likely take off and the economy will experience a major regime shift from lowflation/disinflation to…..?

Posted in Disinflaton, Inflation/Deflation | Tagged , , | 18 Comments