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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President Trump grants exemptions on 400 tariffs

Probably not the roll back China was looking for?

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What’s Hot In Women’s Fashion

Capitalism at its best or worst?

We have a few questions:  1)  Does the Tariff Man get a royalty for the sale of each dress sold, and will that violate the Emoluments Clause of the U.S. Constitution, and 2) Are the dresses Made in China?

Just askin’.

Fashsion Trend

Hat Tip:  @scottlincicome

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Beware Mocking Bubbles & Bears

Once again, seeing lots of articles and talking heads mocking bubbles and the bears, which is usually a sign a big bubble is going to burst.  The last time we saw this kind of taunting of the bears was three days before the bear market, which we think is on, began in January 2018.

Here’s what we wrote,

Finally, you also see the investing public openly mocking the bears during the later stages of a bull market. We see a lot of that these days. Just check your twitter feed.  –  GMM, January 23, 2018

Stress In Money Markets

Nobody really knows for certain what is causing the stress in the money markets, but our calculated guess is it is:  1)  somehow related to the massive new issuance of Treasuries, which is sucking liquidity out of the markets, as prices are repressed and not allowed to clear –>  think,  a) rent control, where the excesses have to be cleared through quantities,  and  b) Le Chatelier’s principle, where, in a dynamic equilibrium, pressure on one variable has to be offset by movement in other variables;   2) primary dealers stuffed with Treasuries having to fund themselves, and 3) though there are still $1.4 trillion of excess reserves in the banking system, it is possible only a few banks hold the bulk and are hoarders.  In other words, another top-heavy distribution problem, along with wealth and income, where the few own the much.

Primary dealers


Whatever the case, the markets are so distorted now and becoming more so, especially by the false belief that central banks can even now fine-tune a Stradivarius violin.  Haha!

We believe quantitative easing and the massive expansion of central bank balance sheets are the financial equivalent to excessive carbon emissions resulting in kind of a of global warming in the markets. Thus, traders and investors should expect more extreme weather  market conditions.

Didn’t you see this coming?


To be fair to Adam,  we took the headline a bit out of context to make our point.  Please read his article here.

Discount The Street

During my days on Wall Street, it was stunning to watch how many would sell their souls and anything else to help them make their year-end bonus.  I specifically remember a sales pitch by some bozo about how the Mexican Peso was going to become the next dollar, less than 12 months before it fricking blew!   We laughed him out of the office.

This is one reason why Mr. Market is so cold-blooded,  doesn’t correctly discount risk, and tends to have a one in every 10,000-year event (high sigma crash) almost every 10 years.

So, folks, when listening to the Street, bubble vision, the market talking heads, and even central bankers and policymakers,  take heed the words of the great American author,  Upton Sinclair.


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QOTD: Pick Your Poison, Or Not

QOTD = Quote of the Day

Both propositions are equally uncomfortable in today’s market.   Also, partially explains why the default investment strategy is now passive.

When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing, – Chuck Prince,  Former CEO of Citigroup, July 2007



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Major Global Stock Market Caps

Global Market Capts.png

Hat Tip: @jessefelder

Our Favorite Valuation Metric

We had to post our favorite macro stock valuation measure.   Some caveats come with the comps, including exchange rate translation.

Global Market Capt_2
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The ‘Bots Are Coming For The Priests

Good, God!

  • A mechanical ‘priest’ has recently begun conducting Buddhist prayers in Japan. It is not the first attempt to deliver religious teachings and advice through the use of a programmed machine.
  • And Catholic Christians may soon find spiritual advice from a tiny 40-cm robot SanTO, developed by Gabriele Trovato, a roboticist and assistant professor at Japan’s Waseda University, after Trovato finishes perfecting his device in Peru.
  • In Germany, there is a BlessU-2 robot that looks like a hybrid between an ATM terminal and US comic Jeff Dunham’s puppet of Ahmed the Dead Terrorist. The robot is reportedly designed to engage in philosophical debates about the future of religion and the potential of artificial intelligence.  – Sputnik International

Just think of the coming spike in moral dilemmata.

Here’s one, for example.

  1. Does confessing sins of adultery with a sex robot to a robotic priest absolve you of sin?
  2. Is the affair with the robot adultery?


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Be Skeptics Of Macro Data In The Two-Speed Economy

Dig deeper, folks.

Our good friend, David Jones, sent the following IBD piece over this evening.


If you been following GMM over the past week, you know we are knee-deep in the Federal Reserve’s distribution of wealth data (see our last post here).

As the distribution of income, and especially wealth,  become so top-heavy and skewed toward the top few percent, the macroeconomic data are becoming more difficult to interpret to ascertain the true wealth and economic health of the nation. Diminishing and making the aggregate data increasingly meaningless for many.

Instead of looking at the aggregated macro data, it would be much more informative to breakdown all the data by household income percentiles to see where the economic gains and pains are accruing.

IBD_1The data are just not available on a broad scale, however, and one should fully understand how to interpret the statistics, especially when it comes to averages.  That is to be skeptical and try and keep them in context by fully realizing we are now in a two-speed economy: 1) the economy for the very well-off, and 2) the economy for the majority of the rest of the participants.

We put together a little parable to help our readers.

The Central Tendency Problem Of A Seattle Dive Bar

Three young lawyers, having just passed the Washington State Uniform Bar Exam, are celebrating in a popular dive bar in Seattle.  It’s relatively early and they are the only patrons in Get Shorty’s.

Joe, the bartender, is a student at the University of Washinton studying statistics.   The young new lawyers begin lamenting about the massive student debt they have taken on over their seven years of university and law school.  Carol, a Harvard Law grad, owes $300k; Greg, a Yale law grad from Australia, is $250k in debt, and Constantin, a UCLA and University of Chicago graduate, owes $150k.  

Joe, kind of shocked, asks the three if they own any financial or real assets, to which they answer, “nada, zip, zero, it’s all human capital. Tell me it ain’t so, Joe!”   

Joe decides to calculate the average and median net worth of the group of young barristers for a school project.  Surely, both, a very negative number. He then decides to keep a running total of the mean and median net worth or wealth of his customers as his shift progresses.   

Suddenly, the door swings open and in walks Bill Gates, who sits at the bar and orders a Cherry Cola. Joe’s project starts to get interesting.   

Twenty minutes later, Jeff Bezos walks in to have a pop with his billionaire buddy. Joe is elated.

The average net worth of the Get Shorty patrons at that time has now swung from -$233k to $43.7 billion just in a little over 30 minutes.   Joe, the bartender, is stunned by the data. 

He then calculates the median net worth, which has moved from just -$250K for only the three young lawyers to just -$150K, including Gates’ $105 billion and Bezos’ $113.4 billion of wealth. Joe is now a bit more skeptical of the average net worth/wealth data but perplexed by the divergence of the mean and the median data.

Joe finally understands and internalizes that statistics always need context, can lie, be used to mislead, and be misinterpreted.  

Nevertheless, Carol, Greg, and Constantin toast Bill and Jeff for making them multi-billionaires on average for a brief and shining moment.


Know thy stats.  

Be somewhat skeptical, especially when looking at the current macroeconomic data.

Joe’s analysis should have at least taken into account the variance of the data, including the standard deviation, and the lower moments of central tendency, such as the skew and kurtosis, i.e., the measures of the data distribution’s shape and its tails.

Real Life Macro Economy Example: 

2019 Q1:  Average U.S. Household Wealth =  $803.3K   
                  Median U.S. Household Wealth =   $112.5 K  

America’s Two-Speed Economy Moving In Different Directions

We are going to hold off on presenting some very explosive data and charts that show the polar opposite direction that America’s two economies are moving, including, mainly, the relative decimation of the wealth of the lower middle class and bottom 50 percent until later next week.

Percy Bysshe Shelley’s aphorism, “The rich get richer and the poor get poorer, is ringing more true as America approaches the 2020 presidential election and we believe will have an outsize impact on the results, as it did in the 2016 election.

Stay tuned, folks.


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“Deals Galore” Coming This Fall


Looks like the “Fab Four” – China, North Korea, Iran, and the Taliban — are queuing up just as we wrote about earlier this week,

Deals Galore? 

We also wonder if the Administration is on the verge of a “deals galore” flurry with, say, China, North Korea, Iran, and the Taliban (“the Fab Four”) before the election?  We are perplexed by, and the way John Bolton exited the White House yesterday,

And as impulsive and unpredictable as the president’s actions may be, firing Mr. Bolton reveals a certain consistency in Mr. Trump’s worldview: Though attracted to never-been-done theatrics like bringing the Taliban to Camp David or meeting with Mr. Kim, the president is also moored by suspicion of military adventures and has a huge appetite for deals.

What Mr. Trump really wants from his foreign policy is a diplomatic victory as he heads into his 2020 re-election campaign. — NY Times, Sept 10th

Why do we have that sinking feeling the “Fab Four” are licking their chops and looking at each other, thinking

Time to feast!    – GMM, Sept 12th

New York Magazine out with a must-read piece today (Hat tip:  ThinkInTheMorning).

The following are the money quotes but make sure to click on and read the entire article.


  • President Trump has not given up on his idea that the week marking the 18th anniversary of 9/11 should also be let’s-make-deals-with-thugs week
  •  Kim Jong-un’s displeasure had been part of his thinking in firing national security adviser John Bolton
  •  the last straw for Bolton was his strenuous objection to Trump’s plan for a secret Camp David summit with Taliban and Afghan leaders
  • those regimes won’t forget the aborted Taliban summit — and the lessons it provided on Trump’s negotiating tactics — so easily
  • Inviting Taliban leaders to Camp David in spite of this tells foreign adversaries that a body count is no impediment to dealmaking with Trump
  • It appears a major reason the Camp David summit was hastily arranged in recent weeks — and fell apart even more quickly — was Trump’s desire to put his own stamp on a deal that negotiators had been working on for a nearly a year
  • The lesson here for foreign leaders is that if you want a deal with Trump, deal with Trump. The president apparently cut the National Security Council — whose entire reason for existing is to coordinate across government agencies — and most of the government out of his plan to hug it out with the Taliban
  • Both Tehran and Pyongyang will look at what emerged over the weekend and see how desperate Trump is for splashy deals, and the accompanying photo ops
  • It has been clear for weeks now that a funny shuttle diplomacy has been taking place between Washington and Tehran
  • All of which suggests the drama surrounding Trump’s aborted Taliban summit and Bolton’s sudden exit were just the back-to-school preview for a fall of Trump-style diplomacy, in which personality is everything, the U.S. diplomatic infrastructure is near-irrelevant, and a soupçon of violence just might help your case.
  • Buckle up  – NY Magazine, Sept 13


Quadruple Fracking Yikes!

This is a very disturbing article.

The “Fab Four” are lining up and preparing to feast on a politically desperate, unprepared and ignorant president, who thinks he “knows more than…the Generals.”

One would think the body politic and markets would see right through this.  That is the cutting of meaningless “all show and no dough” Potemkin deals, especially after all the economic and diplomatic carnage that Trump’s posturing has brought upon the country and the world.   But nothing surprises us anymore.

Hey, it’s politics, folks, no rational thinking needed.  Just wave that flag, close your eyes, click your ruby red shoes together and repeat, “the greatest deals ever.”

Primus inter pares

The U.S. position, both economically and diplomatically, would have been so much stronger had the country remained in the Trans-Pacific Partnership (TPP) and the original Iran deal.   America will be weaker and less safe with these deals, if realized.

America First among equals (primus inter pares), always trumps America First and is much more effective in serving the national interest and keeping America safe.  History has proven it.

No surprise, however, The Art of the Deal, since the administration has come to power, has repeatedly shown that it is driven by impulse with no strategy,  all sizzle, no steak and no gain, all pain.


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Fast And Furious In The Global Bond Market

Ugly price action in the global bond markets.  That was fast!

What the yield curve does signal, at least to us,  is that there is a massive global bond bubble and that central banks have lost control of their curves, which kind of scares the bejeesus out of us when we start to think about it. — GMM,  August 15th



For months, the world watched in stunned amazement as, alongside the relentless increase in global negative yielding debt which more than doubled in 2019 from $8 trillion to $17 trillion, the Austrian century bond due 2117 exploded higher and almost doubled in price from just above par to an all time high of 220 in late August.

What a different just a few weeks – and a smattering of good news – makes the euphoria is now officially over and as 10Y Treasury yields surge to 1.90% from a record low of 1.42% on September 3, now that downward momentum has been broken and CTAs are accelerating in the other direction, the Austrian century bond is doing what its Argentina peer did last month: it is tumbling, and as of the close of trading in Europe was down over 20%, officially entering a bear market.  — Zero Hedge


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Better Than Bitcoin

TMOAB = The Mother Of All Bubbles

– Rather than pay Germany to hold their money, some lenders have flocked to Austria’s “century bond”, which yields 0.9%

– If the ultra-long-term market rate fell by 1.1 percentage points, the bond’s value would double.

– If ultra-long rates rise to 2%, the bond would lose 40% of its value; at 5%, its price would fall by 75%. Lenders seeking safety may face a rude surprise. – Economist 

Here’s to hoping the Euro zone banks have not  loaded up on these “risk-free” beasts.



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