Green growth

Posted on December 14, 2018 by macromon

Just Do It

In this episode of Business Planet we focus on the efforts underway to encourage innovation and transform industry in Europe. …

READ MORE : http://www.euronews.com/2018/12/14/gr…

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The Mechanics Of Happiness

Posted on December 13, 2018 by macromon

https://twitter.com/zonephysics/status/1072923141977063425?s=21

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Inflation With A Draghi Tatoo?

Posted on December 13, 2018 by macromon

During this morning’s ECB press conference,  Super Mario sent a clear message to the markets:  the ECB’s printing press, QE, is a permanent fixture in the central bank’s arsenal or “toolbox.”   If you’re not inferring from his words that inflation is the end game, what are you thinking?

Why isn’t QE effective in Venezuela or Argentina?

Maybe because the countries’ central banks went to to the well (printed money) too many times in the past wrecking confidence and demand for the local currency.

The reserve status of a currency, which, by itself, generates intrinsic demand, does not last forever and demand is not infinite.

Inflation The End Game

That is why, listening to Mario and other central bankers, we believe inflation is the end game, folks.   Not yet,  and maybe not the next crisis.

There will be, most certainly, a few big deflation scares in the interim,  which will sow the seeds of the big inflation as the central bankers fire up the printing presses again and again.  Probably in the form of some kind of “People’s QE” monetizing unfunded pension liabilities and a universal basic income (UBI).

We are not taking a political position for or against the pension fix or UBI, but are fairly certain it won’t accomplish what policymakers think if funded by QE.

The advanced economies need structural fixes starting with dealing with the huge and growing disparity of wealth and income.

Kafkaesque

It’s Kafkaesque that market pundits and the POTUS are screaming at the Fed to stop raising rates with a zero real Fed funds rate.  Something is rotten in the state of  Denmark  the economy, folks.

No more cyclical tools to fix structural problems.   Let’s get it on with it.

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The Profundity Of An Autistic Second Grader

Posted on December 13, 2018 by macromon

I have been off the desk a few days traveling.  Spent yesterday at a center for children with learning disabilities.  What an incredible and enlightening experience.

My oldest daughter, a psychology graduate, who is now a behavioral therapist working with autistic children always exhorts me not to stereotype these kids as gifted, savants, you know, kind of like Rainman.

It’s hard for me not to, however, as my middle daughter had a good friend in grammar school with medium to severe autism.  She always won the school spelling bee — second to her was not even close — and went on to do very well at the higher level competitions. Yeah, yeah, yeah, I get it, one example.

Nevertheless, no matter their condition, they are all special and gifted.  We all have a responsibility and duty as members of the Lucky Sperm Club to help these kids recognize their gifts and realize their full potential.  Actually, it’s a commandment.

Then there is this.

2nd Grade Austim

Source:  fatbraintoys.com 

Take a few moments to stare at the above test and think about it, folks.  Who’s the genius?

Wonder how this kid would interpret the current market conditions?   I’d bet on him/her over the perpetual cheerleading, buy the French dip, lemming market pundits and parrots.   Any day and every day.

Always looking for new, alternative, and rigorous analysis and perspective.

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The S&P Is In Doji City – Key Short-term Levels

Posted on December 10, 2018 by macromon

What a Dragonfly Doji Indicates

When it forms at the bottom of a downtrend, the dragonfly doji is considered a reliable indication of trend reversal. This is because the price hit a support level during the trading day, hinting that sellers no longer outnumber buyers in the market. If the security is considered to be oversold, which may require the assistance of additional technical indicators, a bull movement may follow in the days ahead. This may be a chance for additional entry points, especially if the market has a higher open on the following day. – Investopedia

Nice reversal today right at the 2018 closing low.

The S&P500 formed another, though not perfect (the body is a bit long), Doji candlestick today, which has four times indicated a short-term reversal during this brutal Q4 correction.

Note also the Fibonacci retracement levels have been reset as the S&P500 broke its recent correction low at 2603 today.

Key Short-term Levels 

The first level to the downside which needs to hold, especially on a closing basis, is Friday’s close at 2632.57, the closing low of the Q4 correction.   The next support is 2581, the 2018 closing low.

On the upside is the first Fibo at 2667 and then reclaiming the 20-day moving average at 2703, or 2.5 percent higher.   Baby steps.

Noise

Let us reiterate; it’s futile to call short-term moves, especially in today’s ‘bot/algo driven markets.  Scalpers and day traders make money based more on their discipline than on being a guru trying to time the noise.

Our short-term analysis is done only to indicate pivots for disciplined entry and exit points for the trading set.   Long-term investors should view it as entertainment and noise, though we believe the current market environment is one of those few times during an investor’s life they should be less exposed to risk.

Wait for the blood in the street to increase exposure.  There will be blood.

 

S&P

 

S&P_Chart

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Deutsche Bank – Nein Schadenfreude

Posted on December 10, 2018 by macromon

DB_Schadenfreude

Source:   Urban Dictionary 

Hat tip to Holger for pointing this out in the morning.

Didn’t we post something to the effect yesterday?

We expect the term “Counter-Party Risk” to become all the rage of the market experts into year-end as Deutsche’s stock circles the drain.

Sounds like the German government is preparing for a bailout of DB.  Merging two weak banks will require a significant injection of capital.  Who will, if any, be bailed in?   – GMM,  December 9th

Deutsche Bank stock hit another all-time low in Frankfurt this morning,  down to €7.26 before bouncing, to close the day down 4 percent.

DB_Stock

The large U.S. banks didn’t participate in today’s yuuge reversal.  DB’s death spiral may be one reason why.

It’s schadenfreude to see your competition circling the drain unless it’s systemic.

Deutsche Bank … is one of the most important net contributors to systemic risks in the global banking system. These findings underline the importance of ensuring the resilience and stability of the bank.  – IMF, June 2016

 

DB_Market Cap

DB Is No Lehman

In our last post on DB, we noted the bank is no Lehman Brothers.  The German government will never let their flagship go down and already rumors of a bailout/merger is coming.

They better get on with it before things go sideways nonlinear.

When credit officers charged with counter-party risk in large financial institutions see charts like the one above,  they are not exactly inspired with confidence and thrilled to approve bigger or even extend current counter-party limits.  WATCH THIS SPACE!

You heard it here waaay first.  If you’re gonna panic, always better to do it before everyone else.

Keep this one on your radar, folks.

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Watching Gold

Posted on December 9, 2018 by macromon

Gold is looking interesting.

Fundamentally, it shouldn’t as the Fed is tightening the screws on liquidity, the ECB is ready to stop the printing press, and international reserves continue to decline.

Check out the chart. 

Higher lows since August,  a breakout of a crude cup-and-handle formation, and what looks like the coming test of the 200-day at 1257, which has rejected the gold price over the last year almost as many times I was in high school asking girls out on dates.

Could be gold is sniffing out an escalation of the U.S.-China conflict or it could be something altogether different.

Chinese media reports that the situation in the South China Sea is expected grow more intense over the coming year, with one senior military official also declaring that China should be prepared to attack United States naval vessels, should the U.S. violate Chinese “territorial waters.”

Dai Xu (戴旭), who is President of the Institute of Marine Safety and Cooperation, as well as a PLAAF Air Force Colonel Commandant, was quoted by the tabloid Global Times saying the following.

“If the U.S. warships break into Chinese waters again, I suggest that two warships should be sent: one to stop it, and another one to ram it… In our territorial waters, we won’t allow US warships to create disturbance.” – Taiwan News, December 9th

Double yikes.

Hope Mike Pence and John Bolton, who appear to be driving a Two-China Policy in the administration, at least to us, are reading the above.

Don’t say we didn’t warn you about a hotter Taiwan Straight, way back before it came on the radar.  See here and here.

All part of the Thucydides Trap, folks.

We will be a buyer with a close above the 200-day with a tight stop.

 

Gold

Posted in Gold, Uncategorized | Tagged , , | 13 Comments

Week In Review – December 7

Posted on December 9, 2018 by macromon

Summary

  • Another fugly week for stocks.  It’s really shaping up to be a Trapper John year — full of bull and bear traps making it difficult for traders to make money.  The ‘bots have won, folks
  • Transports down over 8 percent for the week, which has only happened 21 weeks in the past 70 years, of which 12 have occurred in the new century.   The last time was during the European Debt Crisis in 2011
  • Yields are starting to come in over worries about the economy.  We think the Fed’s cave to the president’s pounding was a mistake, sent a bad message and confused the markets.  The funds rate is still negative in real terms.  Let’s see how inflation comes in this week
  • The flattening yield curve, which is highly distorted by past monetary action and the Treasury front loading new issuance, may cause a self-fulfilling prophecy as so many in the market still, mistakenly, in our opinion,  use it as a signal as the economic health of the nation.   Viable economies usually don’t “fall out of the sky,” which begs the question, “is the U.S. economy viable” or excessively dependent on asset markets?
  • U.S credit continues to have a horrendous Q4
  • The Dollar index a tad weaker.  EM currencies still adjusting to their wild “summer of love volatility”
  • G5 stock markets led the equities lower last week
  • Crude stabilizing.  Iron Ore was pounded last week

Commentary:  Feels like the S&P has traveled a million miles 1.61 million kilometers this year.  Two 10 percent corrections this year and don’t yet count out another.  The S&P sits at a critical level after testing the 2621-23 on Thursday and Friday.    If that level doesn’t hold, and we don’t expect it to, the Q4 correction low at 2603 is a 90 percent probability, which, if that breaks,  brings the 2018 low at 2532, about 4 percent lower, in play.

You knew this type of price action in 2018 was coming.

Going into Q1, the S&P500 had delivered positive returns for 16 consecutive quarters or four straight years. The chart illustrates how rare the streak has been over the past half-century.

Minsky-esque!

Apr1_Q_Rtns

Our Global Risk Monitor illustrates that 2 of the 4 quarters (2nd and 4th) in 2018 will deliver negative returns.

What to watch:  Aside from the key S&P levels, the BREXIT vote on Tuesday,  U.S. inflation mid-week, Super Mario and the ECB on Thursday, which is big as QE is set to end in Europe, and Deutsche Bank stock making new lows.  We expect the term “Counter-Party Risk” to become all the rage of the market experts into year-end as Deutsche’s stock circles the drain.

Sounds like the German government is preparing for a bailout of DB.  Merging two weak banks will require a significant injection of capital.  Who will, if any, be bailed in?

Upshot:  Don’t like it here.  Think we are in a bear market.  Bears markets do bounce hard, however, as we have seen time and time again this year.

Capital preservation folks.  Scalpers and traders can have this market.

 

S&P

Week_Chart_2

DB Stock Making New Lows and CDS Blowing out – Counter-Party Risk

Week_Chart_1

 

Week_2018_ETFs

 

Week_Table

 

 

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Best Christmas Ad Of The Season

Posted on December 8, 2018 by macromon

You have to be a father to really appreciate this one, folks.  Even if you’re not, still priceless.  Click it and enjoy.

 

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Sector ETF Performance – December 7

Posted on December 8, 2018 by macromon

ETF_Day

ETF_W

ETF_Q

ETF_YTD

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