Global Macro Monitor

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The first published account of penguins comes from Antonio Pigafetta, who was aboard Ferdinand Magellan’s first circumnavigation of the globe in 1520. They spotted the animals near what was probably Punta Tombo in Argentina. (He called them “strange geese.”) – Mental Floss

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Who would have thunk it? The most dangerous women’s high school and college sport!

Much of the focus is on cheerleading’s physical toll. It is the most dangerous sport for female college athletes, accounting for 71% of serious injuries, disabilities and fatalities. – The Economist 

Approximately 66% of all catastrophic injuries in either high school or college female athletes occur due to cheerleading accidents. Cheerleading has resulted in one death per year, on average, from 1991 to 2015. – Very Well Fit

Source:  Varsity.com

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The efficient market hypothesis (EMH), alternatively known as the efficient market theory, is a hypothesis that states that share prices reflect all information and consistent alpha generation is impossible.  – Investopedia

Carol K., who is slowly emerging from a coma, has taught me many things.  One major lesson is that investing is not about predicting the future but a process.  And if you get it wrong, don’t get angry but adapt to the new market conditions, get on your horse and get back to even and beyond.  

The last two days really feel like stocks are having an efficient markets moment. That is a more hawkish Fed is being priced and markets are now concerned about their lofty valuations. 

We have resurrected GMM’s S&P Key Levels table, which illustrate what we believe are the most signifcant short-term levels to monitor. 

Note the S&P500 bounced off its 50-day at 4672 today, now a big support level.  A key fibo at 4622, and 4495 (-4.28 percent), the December low, is the one level we are watching closely.  To the upside is 4818 and 4796.56, the all-time high and closing high, set just two trading sessions ago 

A Wiley E. Coyote Moment?

Will the current sell-off morph into a Wiley E. Coyote moment and drive stocks over a cliff allowing them to fall to fair value, which, for most, is much lower?  We seriously doubt it until the Fed begins to remove lots of the stimulus and tighten monetary conditions.  Remember ”three steps and a stumble?” 

We will qualify our postion with an “unless a Black Swan event emerges.”  Given all the hype, a crypto crash may not qualify as a Black Swan but certainly a Grey Rhino, which could do some major damage.   

We suspect it will take much more than three steps for the Fed to shatter glass.  

We have no idea where the market is headed tomorrow but shorts should beware.  There is just too much liquidity and wealth in the global economy.  Earnings for Q4 are going to come in very hot. Moreover, stocks seem the place to be with the new inflation regime and extremely low and negative real interest rates.   

It’s extremely difficult to submerge a beach ball and hold it underwater for any significant time.

To go lower on sustained basis, we suspect the Fed will have to drain a lot of liquidity and destroy mucho wealth before they are done. 

Asset Inflation And Price Inflation Are “Cousins”

Volcker recognized that when he was fighting inflation, he was actually fighting two kinds: asset inflation and price inflation. He called them “cousins,” and acknowledged that they had been created by the Fed. – Politico

The following illustrates the model I believe represents the current (and many years past) market environment.  Love that simplicity and parsamony.

As always, we reserve the right to be wrong. 

Stay frosty, folks. 

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DAWN BANCROFT, a 59-year-old gym owner from Pennsylvania, travelled to the national capital a year ago this week to hear Donald Trump speak, not to commit terrorism. Yet as she marched up Constitution Avenue, with the former president’s instruction to “fight like hell” ringing in her ears, Ms Bancroft apparently mislaid her moral compass.

Forcing a way through the mob outside the Capitol building, she and her friend Diana came to a shattered window and clambered through it. “We got inside, we did our part,” Ms Bancroft later explained in a video message to her children. “We were looking for Nancy to shoot her in the friggin’ brain. But we didn’t find her.”

After hearing the women plead guilty to a misdemeanour last September, Judge Emmet Sullivan wondered “how good people who never got into trouble with the law morphed into terrorists”. 

… Most made no effort to hide their identities. A Texan estate agent plugged her company while live-streaming the attack; an Ohioan kicked in a window of the Capitol wearing a jacket bearing the name and phone number of his decorating firm. The riot, as the biggest prosecutorial effort in American history has already made clear, was the logical expression of Mr Trump’s big lie, proudly carried out by 2,000 of his devoted supporters. To repudiate the violence, Republicans had no alternative but to repudiate the lie. Having failed to do so, they are instead normalising it. – The Economist

How Close Is The US To Civil War? Closer Than You Think

Wow!  The data say the U.S. no longer qualifies as a democracy.  Check out the video. 

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We have updated our tables of the IMF’s forecast and estimates of GDP growth rates for the G20 and the rest of the world for 2022 and 2021.  The post has always been a favorite for our readers.  The 2022 forecast ranks the world’s fastest to slowest growing economies in the ginormous table below. 

The data are from the October 2021 IMF’s World Economic Outlook so are a bit stale and do not reflect the new COVID variants but are close enough for government work and snapshot of the coming year. 

We have also added a chart of world GDP growth to illustrate how disruptive the COVID shock was.  Some advanced economies are now overheating from too much stimulus, including the U.S., and will need to adjust fiscal and/or monetary policy.  It’s is very difficult to forecast during the pandemic.  

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Excellent video and preview of 2022 from The Economist.  Worth your time.

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Great chart from the Economist on how nations are faring during the pandemic using a multiple of indicators.  Those damn Nordic socialist countries are kicking our arse!

The pandemic has created winners and losers—and the dispersion between them is likely to persist in 2022.

In order to assess these differences, The Economist has gathered data on five economic and financial indicators—GDP, household incomes, stockmarket performance, capital spending and government indebtedness—for 23 rich countries. We have ranked each economy according to how well they have performed on each indicator, creating an overall league table (the chart shows the ranking and four of our five indicators). Some countries remain in the economic pits, while others are faring better than they were before the pandemic on almost every measure. Denmark, Norway and Sweden are all near the top, and the American economy has also performed reasonably well. Many big European countries, however, including Britain, Germany and Italy, have fared worse. Spain has done worst of all. – Economist