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

Don’t Be A Free Rider.  Help Us Keep The Lights On.  Contribute with major credit cards by clicking on PayPal widget on the right-hand side of the blog.

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Why You Can’t Fight Distraction – Bloomberg

Bloomberg QuickTake Originals
Research shows that our brains are designed to be distracted. Scientists from Princeton University and the University of California found that our brain refocuses our attention four times every second. So as you read this sentence your brain is periodically scanning your surroundings to see if there is a more important location to focus on.

Video by Abi Morgan


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Chasing The FOMO Titanic Rally

FOMO – (Fear Of Missing Out)

Panic buying is a type of behavior marked by a rapid increase in purchase volume, typically causing the price of a good or security to increase. From a macro perspective, panic buying reduces supply and creates higher demand, leading to higher price inflation. On a micro level (e.g. in investment markets), fear of missing out (FOMO) or buying triggered by a short squeeze can exacerbate panic buying, into a so-called melt-up.  – Investopedia

This whole FOMO thingy is kind of perplexing to us.

We maintain Issac Newton learned the real lesson of gravity in a FOMO trade gone bad,

Back in the spring of 1720, Sir Isaac Newton owned shares in the South Sea Company, the hottest stock in England. Sensing that the market was getting out of hand, the great physicist muttered that he ‘could calculate the motions of the heavenly bodies, but not the madness of the people.’ Newton dumped his South Sea shares, pocketing a 100% profit totaling £7,000. But just months later, swept up in the wild enthusiasm of the market, Newton jumped back in at a much higher price — and lost £20,000 (or more than $3 million in [2002-2003’s] money. For the rest of his life, he forbade anyone to speak the words ‘South Sea’ in his presence. –  Open Culture 

Then, again,  we don’t bother trying to understand the markets anymore as they are no longer markets, and have been essentially nationalized and now tools of the state.

Nevertheless,  let us pontificate one more time.


Yes, I get it and recall my hedge funds days of missing out or being caught on the wrong side of a big rally.  In fact, it resulted in me leaving the industry.

Here’s the short of it:

Venezuela Migraine

I was in Venezuela pre-Chavez for a week to do some due diligence,  “kick the tires,”  and meet with government officials.  After arriving at the Caracas airport (long drive over the hill from downtown) for my return to NYC, with connecting flights through San Juan/Miami, I called my favorite salesman for a market update.

He proclaimed excitedly, “the market is screaming, some bonds are even up 5 percent on the week.”

I had learned, through many expensive lessons, to trim down my long positions when I traveled.

Upon hearing my from my bond sales guy,  I instantly came down with a massive migraine and with no ibuprofen.  I missed another big move, which I thought was unwarranted, but knew I had to go back to the office and explain to my boss, a Master of the Universe legend,  why I was now underperforming.

Making the three connections back to New York,  I spent much of my time in the air in the restroom doing the technicolor-yawn.  After touching down at JFK, I had made up my mind to leave the business and venture out on my own.   True story.

Anyone who thinks trading or investing, especially other people’s money (OPM) is easy, why aren’t you on your yacht in the Caribbean reading this post?

Career Risk Of Missing Out

We understand and have experienced first hand the “career risk” and fear that professional traders and portfolio managers face missing big FOMO rallies, even if they are fully cognizant the moves are unwarranted and unsustainable.  So, dear readers, spare us the email lectures.

Chasing The Titantic Rally 

But this rally?  Almost everyone knows it’s absurd yet some still chase.

It reminds us of passengers chasing down the Titanic, knowing full well it is going to sink before docking at the Chelsea Pier on New York’s West Side but just can’t resist the four days of partying and world-class cuisine.  Seriously?

If you have been around the block a few times, this isn’t the first time you witnessed a Chasing The Titantic rally.

Furthermore, who would of thunk that the rise of daytraders bored without their sport and circus would be leading the charge?


Valuation And Fundamentals

We keep every market we follow or trade,  in the context:  Is it cheap, is it expensive?

For some markets, such as commodities, which trade purely on supply and demand it’s not a relevant query.

Though my background is a trader, one of the first principles I learned as a Wall Street newbie was from my boss who sat me down before bestowing the firm’s capital to my trading book,

“I don’t like being long anything that is expensive without being girded by strong fundamentals.”  –  Tom ____

The current U.S. stock market is at its most extreme valuation levels in history measured by our and Warren Buffet’s favorite metric — total stock market capitalization-to-GDP.  We now estimate (based on a Q2 GDP estimate) the metric at 164 percent, which is 20 points higher than the bubble peak, almost 15 percent on a proportional basis.

Initial Valuations Of New Bull Markets

In addition, the beginning valuation of the new bull market, which began on March 23rd was 105.3 percent, almost double the average starting valuations of all prior bull markets since 1974 of 53.1 percent.  Not a stellar initial condition for a sustainable and stable bull market.


Moreover, the fundamentals are horrendous.  We recognize the current GDP now Q2 estimate of -53.8 percent does not reflect the true underlying fundamentals of the economy.    But nobody knows and can measure the economy’s health as we are still in the midst of the COVID hurricane.   We are taking the under, however.

This is not news to anyone but if you really believe the fundamentals are priced, well,  good for you!


Trump is almost surely going to get thumped in Novie, which will result in higher corporate and capital gains taxes.  You really think that is priced?



Dump Trump Rally?

We will make a small concession that the Trump administration is such a threat to the global trading system and international stability,  the market may be in Dump Trump rally mode — but at these valuations, we are not buying.   Moreover, didn’t the market geniuses tell us that stocks would immediately sell-off if it sensed Trump would lose in November?

We also can’t understand how the President’s advisers think a stock market close to its record highs, coupled with depression level unemployment makes for good politics? Voters may question again, as they did in 2016, who really got bailed out:  Wall Street or Main Street?

See our post, Why The Stock Bull Is A Big Meh For Most Americans.

Azul Congress

By the way,  PreditIt is now giving the Democrats a 53 percent probability of taking back the Senate, which is up from 39 percent since our April 13th post, Prepare For The Senate To Flip.  Some of our Wall Street friends laughed us off over that post but we were putting our money on our analysis and are now up 36 percent in 38 trading days.

We are also looking forward to taking several Benjamins and Grovers from our friends who make their political bets, based purely on emotion.   We made a few bets before the 2016 election that Trump would win the electoral college and Clinton would take the popular vote.  One friend responded to our election eve email, “sure you didn’t make a typo?”

We didn’t bet with our emotion or political bias but based on the analysis of how the Hispanic vote was dispersed throughout the country and an approval rating for Congress, which was less than 10 percent, if our memory is correct.

Here’s to hoping a Democratic government will realize they can only achieve their objectives with a strong economy driven primarily by a healthy and dynamic private sector.  The hard left of the Party still doesn’t seem to get it.  You can’t spend and print your way to prosperity.

Watch The Next Two GDP Prints

Some argue the market rally is pricing in the “recovery.”

There is no doubt a record Q3 GDP growth print is coming, quite possibly by a factor 2x the largest post-war quarterly growth Q1 1950 print of 16.7 percent.  Note the headline number is the annualized Q/Q growth.

The Atlanta Fed GDP now just marked down their estimate today of Q2 growth to — are you sitting down? —  -53.8 percent, which translates to a Q/Q decline of 17.6 percent.


That would put real output at the end of June almost 19 percent below its Q4 2019 level.

Even if headline Q3 GDP comes at a whopping plus 30 percent, the real economy would still be 13 percent below its 2019 end-of-year output.

We estimate the quarterly GDP prints needed to get the economy back to even in the table below.   For example, for a full V-shaped rebound by Q3 2020, the headline number for Q3 would have to print at 127.3 percent.  Not likely.

To get back to even (Q4 2019), the quarterly GDP headline number would have to average 14.7 percent over the six quarters beginning in Q3 2020.  Not likely.

Do you really think the stock market is pricing a V-shaped economic recovery or even understands and has internalized the following scenarios in the table?

Our answer?  NFW!


GDP Now_2



Setting aside the fact the stock market is no longer driven by market forces, including and especially fundamentals,  the only sense we can make of the recent price action is that it signals the beginning of the Venezuelan model.

That is, stocks are sniffing out some big-time future inflation and are the hedge of choice.  Not a zero probability but kind of a stretch at this point.


Bubble, Again

What is most likely occurring, in our opinion, and I haven’t run this piece by our crack stock picker, Carol, who has a much longer time horizon,  is the asset bubbles were only partially allowed to deflate before being reinflated by the largest monetary stimulus in the history of the world.

Even still, unless the market is morphing into the Venezuela model, the stock market in a macro sense is at dangerously high levels and I, personally wouldn’t touch it even with your 50-foot pole.

Carol always reminds us, however, money can still be made in individual stocks and not everybody has the flexibility or the desire to wait patiently in an all-cash/gold position.

One Last Point  

If you have been reading GMM over the years, you know we are big fans of Robert Shiller,

We think Shiller’s best work was Market Volatility and specifically the following,

The Ambiguity of Stock Value

Stock prices are likely to be among the prices that are relatively vulnerable to purely social movements because there is no accepted theory by which to understand the worth of stocks….investors have no model or at best a very incomplete model of behavior of prices, dividend, or earnings, of speculative assets.

Shiller nails it here.  Stock values are ambiguous as there are no models to determine their “true” price.

Macro Ambiguity

Currently, nobody knows the long-term damage that the COVID crisis has done to the economy, how robust the recovery will be or how much hysteresis will exist as the economy fully reopens,

Hysteresis in the field of economics refers to an event in the economy that persists into the future, even after the factors that led to that event have been removed. – Investopedia

In other words,  there’s a lot of macro ambiguity and uncertainty.

Asset bubbles thrive in an environment of ambiguity and easy money.

The passive crowd, quants, technicians, and algos couldn’t spot a bubble if it smacked them square in the face.  Most are just too myopic.

Markets like to go up.  Until they don’t.

As always, we reserve the right to be wrong.

Posted in Economics, Equities, Uncategorized | Tagged , , | 15 Comments

QOTD: Beautiful Or Bleak America?

QOTD:  Quote of the Day


Two Americas


One of the most profound quotes I have come across recently from a best friend, fellow economist, and member of my Socratic Club, a debating society I have belonged for over twenty years.  If you are not following his blog or on Twitter, what are you waiting for?

Click on the link for context.  Context is everything, ya’ know.

We live in a beautiful and a bleak America.  Which you see depends on your zip code, your parents, good and bad luck, government policies, human nature and you.  Yes, you.  Do the right thing and America won’t be bleak, it will be beautiful.  — Think In The Morning


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America’s Reality Show Gets Real: The Moment I Knew America Was In Trouble


  • The U.S. stock market is the most overvalued in history using our valuation metric of stock market capitalization-to-GDP
  • The U.S. has failed to address four major issues, which have now passed their tipping points and has destabilized the American Street
  • The murder and lynching of George Floyd was the spark that tipped the nation over into instability
  • Stability is unlikely to return until the nation’s political leaders address the country’s structural problems of racism, wealth inequality, intergenerational conflict, and it’s political leadership
  • If not addressed soon, the U.S. risks becoming a failed state
  • The spike in day trading, the new sport of America,  is helping to move the stock market higher


Pope John Paul


In our April 25th post, America’s Bearish Day At the Beach, we promised you,

We will share in a post soon about a conversation we had back in early February that confirmed to us the country was in deep shit. — GMM, April 25th

First, let’s review what we believe has caused the events of the past few days.

America Burning

America’s cities are burning due to the confluence of four major tensions, in our opinion, which has finally reached the tipping point and kicked over the edge by the modern-day lynching of George Floyd.   Don’t make the mistake the senseless and gross murder of Mr. Floyd is the only reason why America is burning,  but rather think of his tragic death as the spark that lit the torch.

We warned to expect this type of political instability in our post last Thursday, Time To Fear The American Street.   Even in our small hometown in Northern California,  a day of peaceful protests turned violent when a local high school student plowed his pickup truck into a group of protestors.


“He denied trying to run down any protesters, but indicated that he wanted to fly an American flag past the crowd,” Kucker said. “Due to the fact that no victims came forward, the driver was released pending further investigation.”  – Press Democrat

Watching the video of the red truck draped in America flags plow into the crowd of peaceful, passionate, and angry protesters exercising their First Amendment rights is pretty disgusting.

We can only think of the words of the English writer, Samuel Johnson, who had something to say about this kind of false patriotism, in 1775, 

Patriotism is the last refuge of a scoundrel. – Samuel Johnson 

Flying, wrapping yourself in, or hugging the American flag doesn’t make you a patriot.  Au contraire. Fighting for and defending the principles that have made America great does.

The Explosive Toxic Cocktail Of Four Major Tensions Converging 

We see four major tensions that have exploded in the past week, which we’ll only briefly touch upon and provide you some links for further follow-up.

  1. Racial – culminating in the murder of George Floyd. America has never really dealt with its original sin of slavery and racism.  It’s total bullshit for a white man like myself to know what it is like to grow and live as a black person or minority in America.  The empowerment of white supremacists and dog whistles by the leaders of the U.S. government to the racists that their actions are tolerable and OK has futher fueled tensions and going to be a huge strain on the country for a long-time.
    COVID Hitting African-Americans Hard In addition, go no further than the COVID statistics to see how disproportionately hard the African-American community is being hit.
    Wealth_May 31 

    Collectively, Black Americans represent 13% of the population in all areas in the U.S. releasing COVID mortality data, but they have suffered 25% of deaths…In New Mexico, the Indigenous death rate is 8 times as high as the White mortality rate. In Arizona, it is more than 5 times the rate for all other groups.  — APM

    Where is the outrage?  Why isn’t the White House all over this?  The reality show has now turned real.  What say you, Mr. President?

  2. Wealth Inequality – we have written droves of posts about this issue, warning if the problem is not soon addressed, it was time to get long pitchforks and water cannons, and to start building moats.Wealth_May 31
    Furthermore, a stock market close to its record high, driven by the newly rediscovered sport of day trading,  with unemployment soaring to Great Depression highs is not only a bad look but fuels an already combustible political situation.  It’s now real, folks.
  3. Clash of Generations, OK Boomerdon’t say we didn’t warn you on this one. The GMM has been writing, exhorting, and warning about the disparity between the young and old the past ten years.  Here, we are imploring our fellow comrades to look after the young almost nine years ago,

    The next ten years will surely be interesting.    We at the Global Macro Monitor implore our generation, at least, those who can afford it, to take one for the kids.  If this means we have to play muni golf courses instead of Pebble Beach and Pinehurst and hitting Top Flites instead of Pro V1s (sorry FILA) in our twilight years, so be it.  — GMM, July 2011

    The obsession to “get ours” and change the rules of the game in our favor along the way will be addressed more in-depth in a post we have been working on for weeks, A Nation of Rent SeekersLook for it next week.

    “Everybody in Gen Z is affected by the choices of the boomers, that they made and are still making,” she said. “Those choices are hurting us and our future. Everyone in my generation can relate to that experience and we’re all really frustrated by it.”

    “Gen Z is going to be the first generation to have a lower quality of life than the generation before them,” said Joshua Citarella, 32, a researcher who studies online communities. Teenagers today find themselves, he said, with “three major crises all coming to a head at the Gen Z moment.”

    “Essentials are more expensive than ever before, we pay 50 percent of our income to rent, no one has health insurance,” said Mr. Citarella. “Previous generations have left Generation Z with the short end of the stick. You see this on both the left, right, up down and sideways.” Mr. Citarella added: “The merch is proof of how much the sentiment resonates with people.”

    Rising inequality, unaffordable college tuition, political polarization exacerbated by the internet, and the climate crisis all fuel anti-boomer sentiment.  — NY Times, January 2020

    Similar to the other two issues discussed above, this is very complex and will not go away until its addressed.

    If you’re retired collecting a nice comfortable, but underfunded pension,  it’s time to stop deluding yourself that these kids are continue to make sacrifices to pay for your Carribean cruises.  Start to worry and then do something to help fix the problem.

  4. Anti-Trumpism Backlash – not going to spend much energy on this one as it is self-evident and reflected in his absurd, racist and pathetic recent Tweets.


    We wrote on Thursday,

    Rather than being a stabilizing force and a voice of reason and calm, the President of the United States delights in stoking the divisions and tensions in the country while spewing his conspiratorial garbage 24/7.

    In the words of Anderson Cooper,  “Man, we are in trouble.”  – GMM

    Put down the iPhone, Mr. President, start to lead and address the above issues. That is why the American Street is unstable.  Nefarious forces on both the hard left and right are stoking the viloence, but there would be no violence to stoke if the American Street was calm.

    The bunker in which you hide will not save your presidency.

    WASHINGTON — Secret Service agents rushed President Donald Trump to a White House bunker on Friday night as hundreds of protesters gathered outside the executive mansion, some of them throwing rocks and tugging at police barricades.  – NY Times

The Conversation:  When I Knew America Was In Deep Shit 

In early February,  I drove to San Diego to attend a trade show.  I stayed overnight in the beautiful beach town of San Clemente,  the home of President Richard Nixon’s Western White House.

I awoke on Super Bowl Sunday and headed down to the ocean to grab some breakfast before driving down to San Diego pick up my good friend and colleague at the airport and to prepare to watch my 49ers give an ass-kicking to the Chiefs.  Wrong!

Bear Coast Coffee

I had been pretty bearish on the market at the time and thought how appropriate it was to eat at the Bear Coast Coffee.  I do believe in omens, by the way.

This was about two weeks before the market peaked on February 19th.  I snapped this picture and even thought about posting while I was eating breakfast.

San Clemente,  February 2, 2020


Clean & Pristine San Clemente

San Clemente wreaks of wealth (ranked 11th wealthiest city in the country), multi-million dollar ocean view homes, and I was very impressed by the clean and pristine character of the city.  I thought what a great summer vacation spot for my daughter and me.  Sat next to and had a great convo with a nice couple, who said their son commuted on the Amtrak to high school into Santa Ana.  Great morning.

San Clemente,  February 2, 2020



San Diego Convention Center

After nursing the wounds of the 49ers fourth-quarter collapse, we were about two days into the trade show when an elderly gentleman stopped in our booth and began to chat with my colleague.

Let’s call him Joe and my colleague Jim.  After exchanging niceties, the conversation went something like this.

Joe:   Can you believe what is happening to the world?  The homeless are overrunning the country.  Shitting in public.  You can’t even walk in San Francisco now without stepping in human feces!  Those god damn liberals can’t run anything.  The homeless have even overrun my town of the San Clemente.  God damn it! 

Jim (from back east)No, haven’t really thought about or noticed it. 

[I found out later Joe’s net worth puts him in the Top 1 percent and couldn’t really confirm if he was a college graduate.  I almost jumped in and told Joe he was full of shit and had been sniffing too much Faux News.  I was primed for such a debate as I’ve had many similar Twitter debates with people making the same argument about San Francisco but have, you guessed it, never set foot in the town.  Their perception was all painted by hard alt-right pundits.  

In fact, I was in San Francisco just the prior week and snapped the following picture to use in my Twitter debates.  If anyone can find a human turd in the photo, I will send you $1000.  The same goes for the pictures of San Clemente.  No photoshopping. 

San Francisco,  January 2020


Of course, every city has a homeless problem and San Francisco’s is more acute than most.  But the problem is not as ubiquitous as Faux News portrays.

I also wanted to wrap Joe on the knuckles with the fact that the People’s Republic Of SF sports the most billionaires per capita by a factor 8x the second-highest, NYC, and the city has the highest rents in the nation, which might help explain, in part, its homeless problem.  See our post here.   I bit my tongue and kept quiet.]

The Bombshell

Then the convo turned very ugly.

Joe:  My wife told me the other day she wanted to buy a gun.  I said, “honey, why do you need a gun?  I have several and we have a very good and expensive alarm system for the house.  What’s up.”   She told me, “I don’t want a gun for protection,  I want one to shoot the liberals!”



I thought WTF is wrong with this guy?  I am almost certain he was 100 percent serious.  The dude is not a poor uneducated cracker from some “‘Podunk’ Town In The Middle Of Nowhere”  He’s a one-percenter and lives in the 11th wealthiest city in the nation.

How could this be?  Didn’t he realize he could just have been easily born a crack baby in Harlem if not for being born into the Lucky Sperm Club?

Whatever happened to the noblesse oblige practiced by the likes of the Kennedy clan and George H.W. Bush, the unwritten obligation of people of means to act honorably and generously to others of lesser means?

Right then and there, I realized the country was near a very ominous tipping point.

What Next?

If you think the instability in the American Street is going away anytime soon, think again.  There may be an ebb and flow of calm and violence but unless the underlying issues discussed above are addressed and mitigated the country has crossed the Rubicon into failed state territory.

Trump can continue to talk tough and even send the M1 tanks into the streets but it won’t make a damn bit of difference but to make matters worse.

It’s time to get to work and begin to really address the issues at their very core, America.

All of us united, even if the goal is to save what’s left of our own personal and selfish interests.  The alternative is peril.

We are heading for a big reset, folks.

What About That Stock Market?  

What market?  We view the U.S stock market the same as we do the Venezuelan bolivar official exchange rate.  It’s not a market anymore and has become a tool of the state.

After the Fed effectively nationalized the bond markets, there is very little sense in trying to do analysis based on the traditional metrics and forecast potential returns.

It’s kind of laughable to watch the bulls on bubble vision spiking the football, believing they are such geniuses and fail to recognize the officials (monetary policymakers) throw the game and change rules in their favor on almost E.V.E.R.Y  S.I.N.G.L.E.  D.I.P.!

Moreover, day trading has now become the new sport of America, replacing the NBA and NHL playoffs and the start of the baseball season.  It is certainly fueling stocks higher.


Most Overvalued In History

Nevertheless, using our favorite valuation metric, stock market capitalization-to-GDP,  we estimate the stock market closed on Friday at 159.53 percent, the most overvalued in the history of the times series that we collect — the end-of-quarter Wilshire 5000 Total Market Index to GDP.

Given financial markets have been nationalized and are no longer real markets, we have no idea if stocks are going higher or lower. We’re not involved and have no desire to be.  If Mr. Market does decide to become a market again, look out the f$^k below.

We are the first to admit that we may be wrong, — it wouldn’t be the fitfth, or even the tenth time — and there are opportunities in certain individual stocks.  We are macro boys, however,  and if you want or need to be involved we refer to the opinions of our crack stockpicker, Coach C.

GDP Rebound

The GDP data should experience a record snap back in Q3 — very possible an annualized 20 percent plus Q3 print, which will help valuations a smidgen but the economy would still only have recovered about one-third of the output lost in the first half.   And this assumes America’s intifadah fades out and there is no second wave of COVID.  Bigger ifs by the day.

These stock levels are very dangerous, however, and unless your pricing model resembles that of Venezuela it’s hard to justify being long, in our opinion.





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Microsoft’s New Market Narrative

Why Microsoft Should Be a Cornerstone In All Portfolios

By Carol K.

First, let me state unequivocally I am NOT a Microsoft (MSFT) product fangirl.  Since 2005, I have only purchased Apple (AAPL) products for myself and my children.

Nevertheless, as an investor, it would be short-sighted to ignore the radical transformation Microsoft has undergone under the stellar leadership of Satya Nadella, who succeeded Steve Balmer as Microsoft’s CEO in 2014.  I evaluate potential investments based on facts and do not allow personal preferences and tastes to distort my analysis of a company’s growth potential and future returns.


I could go on forever about Microsoft as a multinational technology company, but I digress for the sake of brevity. The well-informed investor is probably already aware of some exciting and highly relevant developments taking place in Microsoft’s Azure platform.

Azure is Microsoft’s Intelligent Cloud platform, and a growing contributor to Microsoft’s bottom line, where the company now derives approximately 35 percent of its revenues.

I am fully aware Microsoft Azure trails it’s rival, Amazon Web Services (AWS), in terms of penetrating the enterprise cloud computing segment.  However, I’ve become aware of some specific applications of Intelligent Cloud and want to share it with our readers.

AI/Machine Learning

These applications involve the power of Microsoft’s artificial intelligence (AI) and machine learning components of the Azure Intelligent Cloud, which are helping biotechnology companies trying to understand Covid-19.

One company, ImmunityBio (privately held) is utilizing Azure’s capabilities in performing computational analysis to gain insight into the complex protein structure of Covid-19. It is now able to build models in a fraction of the time,  in days, which usually took months of the routine computations and analysis.

 COVID Vaccine

Why is this important?

Any vaccine or antibody therapy will depend on this viral protein structure, and the ability to fully understand it is critical to accelerating the development of a vaccine.

Microsoft’s machine learning application is being used by Adaptive Biotechnologies (ADPT) to collect, sequence, and analyze information on the human immune response to COVID from blood samples of patients who have recovered from COVID.  This collection and analysis of immune response data will also be critical in a successful vaccine.

Valuation Issue

We do have concerns about Microsoft’s current stock valuation, however.

It is impossible to deconstruct what is currently driving the stock.  Is all of the above priced in; or is the recent price action more a reflection of America’s newly rediscovered sport of day trading, which has filled the void of this year’s NBA and NHL Playoffs, and the start of the baseball season?.

Microsoft stock is not cheap when valued by traditional metrics.

Most great companies command a premium valuation, however, and going forward, I believe Microsoft is one such company.

AAA Rating

Not only is it is well-positioned for the high-tech future, but it is also one of the best companies on the planet.  Microsoft is only one of two companies in the S&P 500, which sports a AAA credit rating from Standard and Poor’s,  Johnson & Johnson the other.

The company also has a fortress balance sheet and its CEO, Satya Nadella, is generally recognized as one of the most visionary CEOs in the world.

My opinion, which is never intended to be investment advice, is MSFT should be a core position in any stock portfolio and accumulated pullbacks

The Macro Heads at GMM believes another big sell-off is in the works before any new and real long-term bull market can commence.  I am making sure Microsoft is at the top of my buy list if, and when that occurs.

A significant correction would also provide an excellent opportunity to accumulate and build an overweight position in the stock.

If they are wrong about the market and it keeps heading higher, with commission-free trading offered at most discount brokerages, nibbling or buying a few shares at a time, will be an alternative strategy.

Posts Will Be Sporadic

Finally, let me express how thrilled and honored I am to now be part of the group at Global Macro Monitor (GMM).  I commit to doing my best in sharing what has worked for me as a private investor over the years in selecting individual stocks, which has provided considerable alpha to my portfolios in the past, and, hopefully in the coming years.

I have had a little health setback recently, but nothing this former Marine Captain can’t kick in the ass, so my posts may be a bit sporadic in the next few months.


**I own full positions of MSFT and AAPL and have no plans to buy more shares or sell any shares within the next three trading days. 

The information in this post represents our own personal opinions and are not investment recommendations.  We may or may not hold positions or other interests in securities mentioned in the post or have acted upon what has been written.  

All information posted is believed to be reliable and has been obtained from public sources believed to be reliable. We make no representation as to the accuracy or completeness of such information.

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Time To Fear The American Street

I used to go home every night as a young Wall Street trader worried about how instability on the “Arab Street” would adversely impact my long unhedged positions.  If you have been a reader of the Global Macro Monitor over the past few years, you know we have been concerned about U.S. political stability.

All good traders worth their salt worry 24/7 about just about any and everything, which, by the way, was one of the first traits I would look for in hiring a new trader.  A high propensity to worry about losing money but not afraid to pull the trigger.

POTUS Gone Wild  

Now we are really getting worried

Rather than being a stabilizing force and a voice of reason and calm, the President of the United States delights in stoking the divisions and tensions in the country while spewing his conspiratorial garbage 24/7.

In the words of Anderson Cooper,  “Man, we are in trouble.”

It’s totally outrageous and moves the country closer to a critical tipping point.

November To Remember

Here’s to hoping we can limp to a fair election in November.  Let’s not let the Russian GRU and China’s MSS take a victory lap, America.

We owe it to the men and women in uniform making great sacrifices for us and what America has stood for, and, more importantly, to our children and grandchildren.

Fear The Street

It’s time for investors to fear the “American Street” or to, at the very least,  keep it on your radar.  If that is, markets are still a market and not a tool of the state, which is becoming increasingly debatable.

Stay tuned, folks

Fear the Street

What is this bullshit?  


Source:  PredictIt

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SOTD: Strange Days Indeed

SOTD – Song of the Day

One of readers was incredibly perceptive to pick up a line in our last post, Cue The Economic Recovery, and attribute it to this Lennon song.  Gaaawd, John was good!

Hat Tip: Matthew Lamb

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Cue The Economic Recovery


  • The Russell 2000’s relative performance is now sniffing out the economic recovery, which will be reflected in a record Q3 GDP print, a bounce from the record first-half economic collapse 
  • It is not unreasonable that we will see a record 20-30 percent GDP print in Q3
  • Atlanta Fed GDP Now is estimating a stunning 41.9 percent annualized decline in Q2, which translates into an over 12 percent Q/Q decline, almost as bad as the largest annual GDP decline during the Great Depression
  • Given the huge fiscal and monetary expansion, coupled with the massive market intervention by the Federal Reserve, markets are divorced from their fundamentals and economic reality now more than ever
  • The stock market recovery is not indicative of an impending “rip your face off” economic recovery but more a reflection the markets have been almost completely been nationalized
  • Stock market valuations are at historic and record levels
  • GDP growth will have to average an annualized 10.4 percent every quarter until Q4 2021 for U.S. real output to return to its Q 2019 level

The markets, or what’s left of them, are starting to sniff out the economic recovery.

We see this in one of the very few market signals we still have a modicum of confidence in — the Russell 2000 small-cap index relative performance to the S&P500, which bottomed in late March and, though volatile over the past two months is now starting to trend higher.


Strange Days Indeed

These are strange times for economists and market watchers.  It’s not only difficult to get a grip on how much economic damage has been done by the COVID crisis and lockdown but also to assess what the economy will look like on the other side of the pandemic and how robust the recovery will be.

Moreover, the massive fiscal and monetary expansion, coupled with the extreme financial market intervention by the Fed has rendered almost all market signals useless, in our opinion.  It is next to impossible to derive much information or economic signal from the stock market recovery, for example, because the stock market itself has now become a de facto tool of the state.

Stock Bailout

The stock market, in as macro sense, is supposed to reflect current and future discounted residual cashflows (profits) of the private sector after all liabilities are paid. The Federal Reserve’s recent, and almost blanket guarantee of those liabilities has resulted, in effect, a bailout of the stock market.  Chairman Jerome Powell didn’t have to buy one stock with the Fed’s printed “digital money” to prevent stocks from moving to a much lower level, which would better reflect a more realistic assessment of the economy and future prospects for corporate profits.  C’est la vie.

Economic Rebound

The stock market recovery, then, unless it is pricing an imminent announcement of a COVID vaccine, reflects nothing more than all of the above, in our opinion, and is not a signal of an impending  “rip your face off” economic recovery.  Our best guess is that the rebound, which will be recorded in the Q3 GDP growth number will set a modern-day record in Q/Q and annualized terms, only because of the record economic collapse in the first half.

Don’t be surprised if a 20 or 30 plus percent headline number prints in Q3.  Know thy context, however, that the record number is only the result of the unprecedented economic decline in the first half.   The economy will still have a massive uphill recovery to get back to even and beware of politicians touting “the greatest economic recovery in history.”

More Observations

We are not going into the weeds here but want to point out a few of our observations and best guesses.

  • The Atlanta Fed’s GDP Now forecast for Q2 output has been revised down to a stunning -41.9 percent, or Q/Q decline of 12.7 percent, which almost tops the Great Depression’s largest annual decline of 13.1 percent in 1932 (see chart below).  The Now forecast will change with incoming data, and will be updated tomorrow.


If the –41.9 percent annualized growth estimate for Q2 holds, in order for the real    output to recover fully to the Q4 2019 level:

  • by Q3 ’19 – growth would have to print at 80 percent
  • by Q4 – Q3 & Q4 2019 growth will have to average 34.5 percent
  • by Q4 2021 – GDP growth will have to print 10.4 percent for six consecutive           quarters.  Good luck with that one.





Expect a snapback in Q3, with a headline growth number printing at a record level and multiple of its prior highest.   Unless we find a vaccine sometime soon, stocks are extremely expensive, in fact, at record high valuations, but we have missed this rally and if you want or need to own stocks we refer you to someone with a better track recond,  our stock picker Coach Carol.



Posted in Equities, Equity, Uncategorized | Tagged , | 6 Comments

Steph Curry Is Priceless

This is must view, folks….

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One Of Our Best Trades Ever – Mike Trout

While we are reposting, we thought we’d take a victory lap circle of the bases.  The following was originally posted on 

We’re buyers of Mike Trout’s rookie card. – GMM,  September 1, 2012

Mike Trout

Mike Trout continues to reach amazing new heights, even when he’s not on the field. 

In this case, Trout’s 2009 rookie baseball card — an autographed Bowman Draft Chrome Red Refractor — sold Wednesday at Goldin Auctions for $900,000, tying the modern record for a sports card. USA Today, May 21, 2020

What are the fundamentals, you ask driving the demand for Mike Trout?   It helps he won his third MVP in 2019 at a ripe old age of 28 years placing him rarefied company,

Trout joins fellow teammate Albert Pujols, Alex Rodriguez, Mike Schmidt, Mickey Mantle, Yogi Berra, Roy Campanella, Stan Musial, Joe DiMaggio and Jimmie Foxx as the only players who have won three MVP Awards. Only Foxx, DiMaggio, Berra, Mantle and Rodriguez have won three AL MVPs, and no player has ever won four. He also joins Pujols and Bonds (nine) as the only players with seven top-two finishes in MVP voting. — USA Today, May 21, 2020

Or could it be?  Ya’ think?

Does this have the whiff (pun intended) of deflation?

Originally Posted


The first time we ever saw Mike Trout play baseball it was like watching the real-life version of The Natural,  and thought someday people will say,

There goes [Mike Trout] the best there ever was in this game – Roy Hobbes, The Natural

Moreover, the dude is such a nice and decent guy.

What’s nice about it is Mike is such a good person,” Jim Quinn, the former mayor of Millville [Trout’s hometown], told NBC Sports. “You get some of these superstar athletes that have attitudes and aren’t really genuine, but Mike is a genuinely nice guy.” – GOODSPORTS

We began to hoard all things, Mike Trout.

We’re buyers of Mike Trout’s rookie card. – GMM,  September 1, 2012





We also knew QE was at our back and thought someday the Fed may begin to add baseball cards to its SOMA portfolio, especially if the POTUS collected them and would lean on the FOMC to ease monetary policy in order to inflate their prices  (note, FDR was an avid stamp collector).



We are pretty sure President Trump is not a big baseball fan as he has yet to throw out a ceremonial first pitch on opening day,

Every president since William Howard Taft, the commander in chief famously known for his particularly rotund figure, has thrown a first pitch at an MLB game…Donald Trump, for whatever reason, has yet to engage in the ceremonial practice of throwing the first pitch on Opening Day.   –


Given, no Fed buying and QE backstop we will have to depend on fundamentals — Trout’s productivity — to add value to our trade.   And the fundies are still sizzling,

Baseball has been around for about 150 years and Trout — only 27 years old — is already in discussion for one of the best to ever play the game…Since his first full year in 2012, Trout has averaged 34 homers, 26 steals and 98 walks and has hit .310/.420/.579. No player in the game’s history has racked up more WAR through their age-26 season. Basically, any metric you want to use puts Trout at the top of the game –

I played against some of the all-time greats. Mike Trout is better than all of them. – Dale Murphy



What We Are Buying

Mike Trout Farm Hats.  See here.


We have no doubt the appreciation of the Trout Farm hat, as a collectible, will beat inflation over the years and estimate our great grandchildren will cashing these for thousands of dollars.

Looking for a big price jump when Trout is elected to the Hall of Fame circa 2037!


Relax.  Tune out the ugly politics.  Enjoy the new stock market highs.  Watch some baseball.  Watch the Warriors win their third straight NBA championship.

Then continue to sell this strength while there’s a bid.  We think the S&P makes a nominal new high at 3025-ish before the Big Dipper sell-off or bear market.

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