Best Clutch Goal Of World Cup, So Far

Posted on June 24, 2018 by macromon

What a great match between Germany and Sweden yesterday.  The Germans won it in last minute with this goal.  Super entertaining! 

https://twitter.com/worIdcupfan/status/1010616734561300481

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Week In Review – June 22

Posted on June 24, 2018 by macromon

Summary

  • The S&P500 is trying to establish a new trading range above past resistance at 2742, the .618 Fibonacci retracement level of the current correction. It held last week.  Watch that critical level for support
  • Bond markets remained volatile but finished little changed on the week x/Greece, which was in big on its debt deal, and Mexico 10-year yield down 24 bps
  • Corporate credit spreads a bit wider
  • Spain and Italy sovereign spreads out 10-15 bps
  • Argentina peso stronger on back of IMF program
  • Euro/dollar a smidgen stronger
  • Big sell-off in German, China, and Philippines stocks
  • Crude up over 5 percent on less than anticipated OPEC supply increase

Commentary:  Q2 GDP should be out soon, and many are expecting 4 percent plus growth.  There has been a nice improvement in capital spending, which we suspect is dominated by big Tech CAPEX spending on the buildout of the Cloud.   Investments in AI and labor reducing technology,  mind you.

The world’s biggest tech companies have clearly gotten that memo. Aggregate spending for 2018 among the 10 largest tech companies is approaching $100 billion each for capital expenditures and R&D, according to new research from Jefferies. Capital expenditure commitments and R&D outlays are seen rising 47% and 24%, respectively, this year. The biggest spenders, which should come as no surprise, are Amazon (AMZN – Get Report) , Alphabet (GOOGL – Get Report) and Facebook (FB – Get Report) .

“We view their outsized investments as positive in extending their leadership for years to come,” says Jefferies analyst Brent Thill of the spending plans of the big three tech names.  – TheStreet.com 

Increased investment spending should lead to a decent bump in Q2 GDP growth to the upper 3 percent.   Better, but far from  “greatest economy ever.”   The chart below illustrates that y/y quarterly GDP growth since 1948 has averaged 3.2 percent and 2.2 percent since 2000.  The data for 281 quarterly y/y growth observations show a relatively normal distribution with a slight negative skew.

Jun24_S&P500

 

Jun24_Core Capital Goods

 

Jun24_BigTech CAPEX

Jun24_GDP_growth

 

 

SwanLake_Table

 

Week_2018_ETFs

 

Week_Table.png

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Sector ETF Performance – June 22

Posted on June 22, 2018 by macromon

ETF_D

ETF_W

ETF_M

ETF_Q

ETF_YTD

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Global Risk Monitor – June 22

Posted on June 22, 2018 by macromon

RiskMon_1

RiskMon_2

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Nonlinear Thinking: The Future of Farming

Posted on June 22, 2018 by macromon

Stunning.  Vertical farm is 100x more productive per foot and only 10 percent of the water than regular farm.  Hydroponics, baby!

See our 2011 post here.

A warehouse in New Jersey is using technology to enhance how crops are grown in a world facing overpopulation. In this week’s Sunday Spotlight, NBC’s Morgan Radford discovers how seasons don’t matter and flavors are controlled in this evolving industry. 

» Watch the latest fromTODAY:   http://bit.ly/LatestTODAY

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Swan Lake – June 21

Posted on June 21, 2018 by macromon

The euro periphery was rocked today by the rise to power of two populist Eurosceptic political powers, which has called into question the country’s membership in the euro.   Italian 10-year sovereign spreads out 22 bps.   Euro banks weaker

EM

EM relatively stable as Argentina solidifies IMF agreement. Brazil 10-year yield up another 25 bps, and 244 since April 30.

SIFIs

An index of the Global Systemically Important Financial Institutions (G-SIFIs) has  decoupled from the S&P50 and Nasdaq, losing around 18 percent YTD.    Something is not quite right.  Watch this space.

 

Jun21_Global SIFIs

 

SwanLake_Table

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Eurozone Finance Ministers Weigh Up Debt Relief

Posted on June 21, 2018 by macromon

At the 20th Eurogroup meeting of Eurozone finance ministers, the Greek economy was on the agenda. They are weighing up the question of debt relief for Greece as well as the surveillance of its economy in the years to come.… READ MORE : http://www.euronews.com/2018/06/21/eu…

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Swan Lake – June 20

Posted on June 20, 2018 by macromon

The Global Macro Monitor defines “macro swan” as any global macroeconomic or financial event with the capacity to spill over into world markets causing risk aversion and lower asset prices.  – GMM

Another relatively quiet day on Swan Lake.

Italian 2-year yields continue to come in with the sovereign curve steepening by 16 bps today.

Deutsche Bank continues to flounder, and now down 40 percent YTD.

Brazil 10-year and currency the weakest of the lot today.

The risk markets caught in a struggle between better economic growth in the U.S. relative to the rest of the world,  tighter money, and valuations.

North Korea

Just a quick note on North Korea.  Glancing at headlines over the days since the Trump-Kim summit, it appears China is coming out the big winner.

We noted yesterday there will be no deal without President Xi’s blessing.

The FT is out with a piece today on North Korea’s preference for the Chinese economic model.

When Donald Trump outlined his vision for the economic development of North Korea, he played on western ideals of luxurious apartments with sea views.

But just days after a landmark summit with the US president, North Korean leader Kim Jong Un has made clear he has a different model in mind: China.

… As the scramble for North Korea picks up pace, however, it is becoming clear that Pyongyang is veering not towards unfettered capitalism but rather a state-guided model along the lines of its huge neighbour. Beijing — with its long history of friendship and political affinity with Pyongyang as well as its geographical proximity — appears poised to reap its dividend.  – FT

We are not taking a victory lap but we can honestly say “you heard it here first.”

Our best case scenario is the South and North move closer together, but also closer to China.  China’s influence and power in the region is on the rise while the U.S. is in decline.  – GMM,  April 28

China’s chief goal in the region is to exert its relative influence and diminish American power.   It looks, to us,  Xi is manipulating the North Korea situation to obtain that objective.

The danger is that the Chinese and North Koreans push too hard and Trump becomes embarrassed and believes he’s been played.   Then all hell breaks out on Twitter.

 

Jun20_NorKo_Map

Source:  FT

Jun20_NorKo_Official Jobs Ratio

Jun20_NorKo_Wage Growth

 

SwanLake_Table

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Greece’s economy at a turning point?

Posted on June 20, 2018 by macromon

Eurozone FInance Ministers will on Thursday settle the future of Greece’s debt relief programme. After 8 years of austerity, the country is showing signs of progress. But Greeks abroad show no sign of coming home, according to a recent survey.…

READ MORE : http://www.euronews.com/2018/06/20/gr…

 

 

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Swan Lake – June 19

Posted on June 19, 2018 by macromon

Surprisingly few ripples on Swan Lake today.

The Turkish lira, Argentine peso, and SA rand a bit weaker.

We are stunned at the complacency in the markets given the hawkish Fed and now coupled with trade war jitters.   These are tectonic events.

Many believe the admin’s hardline on trade is just the “Art of the Deal.”  Haven’t we learned anything in the last 15 months?   There is no method to the administration’s madness.  It’s all impulse, one transaction at a time.

Furthermore,  many think the Chinese will run out of tit for Trump’s tat.  Total nonsense!   President Xi orders the domestic market closed to Apple products. with the world’s largest market cap, and its lights out for the U.S. equity market.   See here.

FED

Finally, the Fed has already reduced its SOMA portfolio by $116.3 billion since October, and we estimate another $250 billion into year-end.   The cumulative $360 billion reduction by the end of December is not insignificant and equivalent to almost 10 percent of the U.S. adjusted monetary base.

We expect a market epiphany sometime soon.

 

Jun19_SOMA_Port

 

SwanLake_Table

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