The Fed And Mr. Market

Posted on February 11, 2019 by macromon

Dangling interest rate cuts and QE or is that strawberry a China trade deal?  The whining makes it seem even more real.

Wait!  Is that Kramer?

Posted in Uncategorized | 3 Comments

Week In Review – February 8

Posted on February 10, 2019 by macromon

Summary

  • The S&P kissed its 200-day then reversed bringing most risk markets down with it. Now, analysts are “retrofitting” their fundamental view to downside price action.   Nice skate save on Friday
  • Go no further than local bond markets to confirm the risk-off end of week move. Developed yields in x/Mexico, the Euro periphery and EM out.  Even the French sovereign spread out 7 bps.  Surveillez cet endroit!
  • U.S. credit stable on the week but weaker at the end of the week
  • Dollar stronger with major Latins giving back some YTD gains. The Dixie only 1.1 percent or a chip shot away from taking out its December 14th high at 97.71, which could put the kibosh on the EM rally
  • Aussie stocks led the weak or week
  • Iron ore jumped to its highest levels since 2014 on  Vale concerns. We flagged Iron Ore early as an indicator and signal the old China economy is about to kick in
  • Natural gas ugly and should be higher given seasonals.

Commentary:  On February 3rd we posted,

Thus we expect the market to trade through the .618 Fibo at 2713 and kiss or temporarily pierce the 200-day moving average at 2740, getting the bulls Super Bowl lathered up, before reversing and setting on a new trajectory to test the December low.  – GMM,  Feb 3rd

Check.

We believe the index is on its way but certainly not in a straight line.  Some are betting on a 1990’s melt-up as Fed will have to ease.    That’s possible if the Fed begins easing with the S&P at 1000.   Never have seen such nonsense, however.

The initial conditions in the 1990s couldn’t be more different than they are today.  The mid-’90s was the beginning of globalization, cheap labor from China, India, and Eastern Europe.  Peak America.

Now the reverse is true.  The post-War order, i.e., globalization, is fading fast, and one, and the major reason we are cautious here,  even as a long-term investor, and will steer clear of stocks until they get much cheaper.  We are confident they will.

We don’t like the XLF (financials ETF) chart.  Ugly Doji daily candle to end the week (see chart below) clinging to its 20-day.  Watch this schpace (go lower)!

Natural gas is freakishly low here at this time of year.  Yes, shale supply HELL.   We think it deserves a stab down at these levels, however,  but on a tight leash (which is a danger in itself as Nattie can easily, and often does, move 10% in one day).  Be warned we have lost a ton of money in the “widow maker.”

China back online this week,  Mnuchin and Lighthizer to China for negotiations, mo earnings, CPI, and government funding deadline on Friday.

Senate Appropriations Chairman Richard Shelby (R-Ala.) acknowledged on Sunday that negotiations had stalled, and he put the odds of getting a deal at 50-50.  – Politico, Feb 10th

It will get done.  They are not that foolish.

Happy hunting this week, folks.

 

Ugly Doji On Friday Clinging To 20-day.  Going Lower

Week_Chart3

Week_Chart2

Nattie Down 48 Percent Since Novie In Midst of Polar Vortex

Week_Chart1

Reality Clashes With Presidential Spin

Presidential Stock Performance

EM Should Start To Give Some/More Back With Stronger $

Week_2019_ETFs

Returns For Week, February, and Year-to-Date

Week_Table

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Feeling Rejected?

Posted on February 9, 2019 by macromon

This is rejection.  Freaking stunning.

Posted in Sports, Uncategorized | Tagged | 1 Comment

California über alles!

Posted on February 9, 2019 by macromon

California

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Sector ETF Performance – February 8

Posted on February 9, 2019 by macromon

ETF_D

ETF_W

ETF_M

ETF_YTD

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Global Risk Monitor – February 8

Posted on February 9, 2019 by macromon

RiskMon_1

RiskMon_2

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BFTP: Call Me Comrade!

Posted on February 8, 2019 by macromon

BFTP = Blast From The Past

Does it ever change?

We were going through some old posts this morning and came across this pearl from over eight years ago.   Charges of socialism were also polluting the political environment back then just as they are today.   Branding the other side as “socialist” is going to be the central strategy of one party in the 2020 election.

We are proud that we were way ahead of this last February.  The young are left and prefer Nordic Capitalism over  the American economic mishmash and they finally flexed their political muscle during the midterms, also as we expected.

Socialism Defined

We are trained economists and purists, so it pisses us off more than you know when we hear somebody called a socialist because of their support for Medicare, a 40-hour workweek, or, for that matter, government guaranteed bank checking and saving deposits, subsidies to build a new football stadium or support for mortgage interest tax write-offs.  The American economy is a mix of both the private and public sector.

We define socialism as government ownership of the means of production, especially its “commanding heights.”   Ironically, it does seem we are now moving toward some sort of managed international trade regime, which is about as socialist as it gets, folks.

Enough.  We may have a more in-depth post on this subject over the weekend.

Keep it on your radar.

Our 2010 Mindset

When we wrote the following, our focus was on one thing, and one thing only –  our trading P&L.  We were whipping and driving billions back then and I think our main focus was in Apple’s stock and gold futures.

We have updated the chart, which is totally at odds with what’s currently perceived or being portrayed.  Also, note we were spot on in our prediction of the 2012 presidential election, which was kind of ballsy given Obama’s approval rating was only around 45 percent at the time and heading south, and just after his record shallacking in the 2010 midterms.

The comments are hilarious, but do have some merit.

 

Presidential Stock Performance

 

If this is Socialism, call me Comrade

Posted on December 31, 2010 by 

No politics or partisanship here, “just the facts ma’am”.  The stock market as measured by the S&P500 is up just about 50 percent since President Obama’s inauguration to today’s close.   Only Eisenhower comes close, but not even in the same zip code.   A 50 percent stock move does a lot of “spreading the wealth around” and Joe the Plumber’s pension is in much better shape today than it was in November 2008!

Sure, sure, there are a  ton of reasons to explain the differences, but this is politics folks!    A CapEX spending led economic acceleration and pick-up in hiring in 2011, which usually follows such a strong equity performance,  will make the President look unbeatable same time next year, in our opinion.  Stay tuned.


16 Responses to If this is Socialism, call me Comrade

January 1, 2011 at 7:41 AM (Edit)

Wow. This post almost made me want to go back in time and restore the Soviet Union where I spent first 38 years of my life. Call yourself comrades or anything you want but don’t give me more socialism. Using stock market return as yardstick to prove that policies work and that one president is better than other is plain wrong. Can you say that Bush 41 was a better president than Clinton because stock market grew more? Was Comrade Brezhnev a good communist ruler because the quality of life did improve under his rule. And you know what, I bet the fastest economic growth the Soviet Union and Russia for that matter have ever experienced was under Comrade Stalin. Was he good? He started at a very low point and used all the wrong ideas and methods. But if we only judged by economic growth we should have said that he was the best. If we used the healthcare as measure, Comrade Castro would have been the winner. Not considering the starting point and ways the success was achieved is just wrong. For a fuller picture you should have the unemployment chart included as well.

As far as Joe the Plumber is concerned, does he even have a 401K? Even if he had one, he might have spent it because he does not have a job. But if he has the savings account he got zero and will be getting zero for a long time. He was robbed for you to enjoy the stock market gains. Here is where we need to start talking socialism. Exact same thing was happening in the Soviet Union. The actual prosperity, including big Swiss bank accounts, was only among the party elite, their families and close friends.

Reply

 

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Ten Great Weekend Reads

Posted on February 8, 2019 by macromon

 

WER_Chart2

 

  • The Stock Market Finally Acknowledges Reality – Bloomberg
  • America faces a battle to find buyers for its bonds – FT

…given stagnation in international reserves, there is likely an increased need for this debt to be financed domestically.  – Treasury Borrowing Advisory Committee

  • Dollar Is ‘Best of a Bad Bunch’ in Surprise Turn for Wall Street – Bloomberg
  • The Day The Vix Doubled: Tales of ‘Volmagedon’ – Bloomberg
  • Why Investors Will Still Flock to Negative-Yield Japan Bonds – Bloomberg

 

Negative Yields

  • American manufacturing companies have a spring in their step – Economist
  • Germany’s long expansion comes under threat – Economist
  • Seven Fixes for American Capitalism – Bloomberg
  • A New Americanism: Why a Nation Needs a National Story – Foreign Affairs
  • The Future of Politics Is Coming to Poland – Foreign Policy
  • Trump’s Attack on Socialism Is a Colossal Blunder – New Republic

Bonus

  • The American left needs to find its voice on Venezuela – Fareed Zakaria
  • The Most Corrupt Countries In The World – Forbes

WER_Chart1

  • Leon Cooperman’s Last Year in the Game – Institutional Investor
  • Bill Gross’s fall presages the decline of the investing genius – FT
  • Why Your Superstar Manager May Be Toxic – Institutional Investor
  • All the Fun Has Gone Out of Being a Billionaire – WSJ
  • The Most Innovative Fintech Companies In 2019 – Forbes
  • The Church With the $6 Billion Portfolio – NY Times
  • All relationship problems stem from one persistent myth about romance – Quartz
  • Frank Robinson, MLB’s first black manager, R.I.P.  – NY Daily News

France-Italy row

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Gotta Get One!

Posted on February 7, 2019 by macromon

Posted in Uncategorized | Leave a comment

The Trade Cascade…

Posted on February 7, 2019 by macromon

The genius market pundits are/will attribute today’s modest decline to the following trade tape bomb from CNBC,

Trump is ‘highly unlikely’ to meet Chinese President Xi before March trade deadline  – CNBC

Sorry, the Dow was already down 250 points before the headline on global growth fears.

Nevertheless,  another 500 points lower and Kudlow will be out on the North Lawn touting his optimism about a deal, no?

Chinese Game Theory

Don’t you think the Chinese negotiators know this?  That is part of their game theory in the negotiations?

We maintain our position that the Trump team is outgunned;  POTUS doesn’t understand trade; China is not subject to domestic political pressures to support its stock market; China is still a command economy and, in general,  not subject to market discipline;  Xi owns Kim Young-un and is using the North Korea Potemkin nuke deal as a pawn in a game of 3-D chess with the U.S.,  and, most important, and contrary to what POTUS perceives,  the Chinese have little fear and respect for POTUS threats and policies.

We came across this yesterday in the Digital Journal,

The chaotic nature of the Trump administration, and its isolationist America First rhetoric haven’t impressed the Chinese. They went right ahead with the South China Sea islands project, and the “tariffs war” has achieved no major turnaround in trade policies. To put it bluntly, China obviously isn’t scared of Trump, whether he decides to fight or not. Quite the opposite; his lack of depth and amateurishness in foreign policy may be encouraging them. – Digital Journal

Having said this, we are rooting for the home team but are not that foolish to bet against the China version of Tom Brady (we learned that lesson again on Sunday and are one Benji poorer).

End Game

Cramming all of the above into a “payoff matrix“, we reach the following conclusions.

We won’t cop out to the “uncertainty”  default position of most and have an opinion on the end game:

Trump caves on the big issues, such as structural reform of the Chinese economy and tech transfers and a Potemkin trade deal – a few soybeans here and there – gets done or the “pretend and extend”  negotiations continue with March 1st tariff deadline pushed out. 

Similar to the government shutdown, a lot of pain inflicted on the U.S. economy and individual Americans, farmers, in particular, with little to show for at the end of the day.

Alternative Scenarios

We will give an 8 percent probability Lighthizer gets all his cookies in a final deal and 12 percent Trump blows up and is “surprised” his new BFF President Xi won’t move on the big issues and goes ahead with the March 1 tariff hikes.   Seat belts, please!

Bloomberg gave us a little insight into how the talks are going,

One of Donald Trump’s most persistent economic promises has been to rewrite the U.S. relationship with China. Yet as he approaches a potential deal, some of the very hawks who have cheered on the president’s trade war already fear he may end up falling short.

With less than a month before a March 1 deadline for either a deal or an increase in U.S. tariffs, hardliners inside and outside the administration fret Trump is being outplayed by Chinese President Xi Jinping and seduced by what they see as empty promises.  – Bloomberg, Feb 4th

Fake news?   We report, you decide!

 

Posted in Trade War, Uncategorized | Tagged , , | 1 Comment