Man, I miss that guy…
Global Risk Monitor – March 8
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Tagged bonds, Commodities, Currencies, Global equity markets, Performance, Stocks
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Ten Plus Great Weekend Reads – March 8
- Chinese stocks tumble as ECB and China data spark concerns – FT
- Why bulls on Wall Street are becoming an endangered species – FT
- Here’s why recent stock gains could be just a bear-market rally – MarketWatch
- Man credited with calling the 2008 crisis says the next 20 years in the stock market will ‘break a lot of hearts’ – MarketWatch
- Death of Bond Volatility Has Pimco Fearing for Europe’s Future – Bloomberg
- China’s trading day is starting to influence global markets – Economist
- Why Stock Investors Shouldn’t Watch Business TV – Fortune
- Hiring Growth Slowed in February as Employers Struggled to Find Workers – WSJ
- How Hot Is Your City’s Job Market? – WSJ
- Tech Is Splitting the U.S. Work Force in Two – NY Times
- Prices of prime properties around the world are falling – Economist
- Global Economy Slows, Pushing Europe’s Central Bank to Make a Surprise Move – NY Times
- Pesos to the people AMLO splashes the cash in his first 100 days – Economist
- Venezuela’s long and winding road to debt restructuring – FT Alphaville
- ‘We need it now’: U.S. farm country pins hopes on China trade deal – Reuters
- Trump’s Imperial Overreach on Trade – Project Syndicate
- ECB to Launch New Stimulus in Major Policy Reversal – WSJ
- The Problem With Xi’s China Model – Foreign Affairs
- Five Things We Learned About China’s Economy at Xi’s Policy Summit – Bloomberg
Bonus
- Bloomberg Billionaires Index: The world’s 500 richest people – Bloomberg
- The Richest Woman In The World – Forbes
- Kylie Jenner, social media’s first billionaire youth star – FT
- Carl Icahn’s Comeback: The Raider Rebounds After A Tough Stretch – Forbes
- After Hedge Funds’ Mediocre Year, Investors Still Want More – Institutional Investor
- Leaving Wall Street Behind: Five Former Traders On Starting Over – Forbes
- 10 Breakthrough Technologies 2019 – MIT Tech Review
- Whoever Predicts the Future Will Win the AI Arms Race – Foreign Policy
- The Stigma of Choosing Trade School Over College – Atlantic
- Why is the far right obsessed with gold? – New Statesman
- The New Deal Wasn’t What You Think – Atlantic
- The Top 25 Songs That Matter Right Now – NY Times Magazine
- Stop asking ‘how are you?’ Harvard researchers say this is what successful people do when making small talk – CNBC
- Remembering Dan Jenkins, the Most Influential Sportswriter Ever – Sports Illustrated
PS. In Theory: The Rise of Monopsony
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On This Day In History – March 8
Birthdays
- 1702 Anne Bonny, Irish pirate (date of birth is approximate), born in Kinsale, Ireland (d. 1782)
- 1841 Oliver Wendell Holmes Jr, US 59th Supreme Court justice (1902-32), born in Boston, Massachusetts (d. 1935)
- 1936 Gabor Szabo (any relation to the great Wall Streeter, Andy Szabo?), Hungarian jazz guitarist (Perfect Circle)
- 1939 Jim Bouton, pitcher (NY Yankees)/author (Ball Four), born in Newark, New Jersey
Events
- 1531 Henry VIII recognized as supreme head of Church in England by the Convocation of Canterbury
- 1702 Queen Anne becomes Queen of England, Scotland, and Ireland upon the death of King William III
- 1817 The New York Stock Exchange is founded
- 1838 US mint in New Orleans begins operation (producing dimes)
- 1854 US Commodore Matthew C. Perry‘s second trip to Japan
- 1884 Susan B. Anthony addresses U.S. House Judiciary Committee arguing for an amendment to the U.S. Constitution granting women the right to vote, 16 years after legislators 1st introduced a federal women’s suffrage amendment.
- 1913 Internal Revenue Service begins to levy & collect income taxes
- 1930 Babe Ruth signs a 2-year contract for $160,000 with NY Yankee GM Ed Barrow, wrongly predicts “No one will ever be paid more than Ruth”
- 1934 Edwin Hubble photo shows as many galaxies as Milky Way has stars
- 1962 Beatles, with Pete Best, TV debut (perform “Dream Baby” on BBC)
- 1971 Joe Frazier ends Muhammad Ali‘s 31-fight winning streak at Madison Square Garden, NYC; retains heavyweight boxing title by unanimous points decision over 15 rounds in “Fight of the Century”
- 2013 North Korea terminates all peace pacts with South Korea
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2018 US President Trump authorizes tariffs on steel and aluminum, excluding Canada and Mexico
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Jeremy Grantham: “This one [bubble]… a decline of a different nature”
Great and super fascinating interview with investing legend, Jeremy Grantham, one of the best bubble spotters out there.
- “I arrived in 1964, and America was a fairly equal place with fairly rapid mobility between socioeconomic classes,” Grantham told CNBC’s Wilfred Frost. “Now it’s worse than the U.K.”
- Grantham also said the wealth inequality in the U.S. is approaching that of countries like Brazil and Chile.
We wrote about the nature of this bubble, a “steel bubble” and how its decline will be different than that of past bubbles — that is a rapid popping — which is Grantham’s main thesis,
This asset bubble is different.
It is larger, encompasses almost all asset classes, may inflate much further, will likely last longer than many expect, and will be harder to burst because the global central banks have taken $13-15 trillion in assets out of the markets, creating artificial asset supply shortages, and repressed interest rates to zero or below. Leaving few alternatives but to chase risk assets. – Global Macro Monitor, September 2017
This is a MUST VIEW, folks.
Click here for the full interview
Grab Your Popcorn – Chair Powell On 60 Minutes
See press release here
We Have Lift Off! (in the $)
Can’t believe that was fiddy years past. Going to see the new Apollo 11 flick on Saturday with my 15-year old daughter, who wants to be an astrophysicist.
Back to biz…
The Dixie – “To the Moon, Alice”
Another launch today, the Dixie (dollar index) as Puff The Magic Draghi, Who Lives At The ECB, began the countdown launch at this morning’s European Central Bank press conference,
First, we decided to keep the key ECB interest rates unchanged…expect them to remain at their present levels at least through the end of 2019, and…for as long as necessary…
Second, we intend to continue reinvesting, in full, the principal payments from maturing securities purchased under the asset purchase programme…
Third, we decided to launch a new series of quarterly targeted longer-term refinancing operations (TLTRO-III), starting in September 2019 and ending in March 2021…
Fourth, we will continue conducting our lending operations as fixed rate tender procedures with full allotment for as long as necessary, and at least until the end of the reserve maintenance period starting in March 2021. – Mario Draghi, March 7th
Lift-off!
The euro (57.6 percent of the dollar index) was spanked hard after the ECB presser, now trading at its lowest level since the summer of 2017. It’s not just the euro getting schmoked against the dollar, however, but all the majors are down x/ the Japanese yen, the ultimate haven currency, partly due to the country’s massively positive net international investment position (NIIP).
Ironically, the U.S. has the worst NIIP in the world in absolute terms, and the dollar will someday have to pay the piper. But not yet, bro, Godot has yet to show.
Measured Move Targets
In our February 11 post, Dollar On The Launchpad, which is now an “ex-post must read” we calculated the target levels after a breakout. The cash Dixie does need to clear the December 97.71 intraday high — now less than a gimme away — and have zero doubt it will. The Dixie did close at its highest level since May 2017.
Here are our conclusions and chart from the February 11 post,
Upshot
The dollar goes higher. Breaks through 97.711 high (only 0.6 percent from current levels) with a measured move to 101.722, or a move of 4.8 percent. The emerging market trade is over. Taking profits and moving on. – GMM, Feb 11th
POTUS’ Coming Twitterstorm
As the dollar breaks out, we expect POTUS to begin another twitter rant trying to manipulate Mr. Market. You know, the Market Socialism, we strongly oppose here at GMM and will ultimately result in disaster if continued, IMHO. Do you have any doubts it will?
Here is what POTUS said this past Saturday at the CPAC,
“We have a gentleman that likes raising interest rates in the Fed. We have a gentleman that loves quantitative tightening in the Fed. We have a gentleman that likes a very strong dollar in the Fed. … We want a strong dollar, but let’s be reasonable, you understand. With all of that, we’re doing great. Can you imagine if we left interest rates where they were? There’s no inflation, essentially.” – Politico
Let’s be reasonable! That makes tomorrow’s Nonfarm Payrolls yuuuuge. A strong print and the dollar gets vertical.
Trump will most likely take the markets’ flipping him the bird (which they do to all of us) personally (which I used to do), in our opinion.
So, expect POTUS to soon start stumping for a rate cut from his newest whipping boy, Chairman Powell, to weaken the dollar, and start beating up on the Germans bigly (probably via Larry Kudlow) to implement a big, big fiscal expansion package in Deutschland. Our bet is that a tweet or presser is coming sooner than later, assuming they get it. Recall Kudlow is a B.A. in history with no formal degree in economics. Nice guy, though.
By the way, we suspect much of the German –> Euroland weakness is related to the trade wars.
P.S. Surprised gold not getting spanked harder but it was signaling the coming dollar strength with its smackdown from the recent cash high at $1346ish on February 20th.
Keep it tight, folks. Tail risk increasing that the global economy and politics are sailing into a perfect storm. Emphasis on tail risk — low probability, high impact event. Of course, we are not saying it is a done deal, but the risk is not even remotely priced.
QOTD: Artificial Intelligentsia
QOTD = Quote of the Day
Whoever becomes the leader in this sphere [A.I.] will become the ruler of the world – Vladimir Putin
Global Macro Monitor 