Gillum’s Dramatic Decision To Un-Concede Didn’t Work Out As He Expected

Florida’s Democratic gubernatorial candidate Andrew Gillum may regret his decision to un-concede to his GOP opponent Ron DeSantis, after the final tally netted Gillum just one additional vote

Last week Gillum took his previous concession to DeSantis off the table, announcing “I am replacing my words of concession in an unapologetic call that we count every vote,” after DeSantis led by just .41% of the vote, or around 33,600 votes out of more than 8 million votes cast.

“The margin was 0.41 percent out of more than 8 million votes cast, outside the 0.25 percent threshold needed for a manual recount,” reports the Sun-Sentinel. The former Tallahassee mayor stopped short of filing a lawsuit to try and force the recount to continue, however despite picking up just one vote – Gillum still hasn’t conceded despite what appears to be an insurmountable lead by DeSantis.

“A vote denied is justice denied — the State of Florida must count every legally cast vote,” Gillum continued. “As today’s unofficial reports and recent court proceedings make clear, there are tens of thousands of votes that have yet to be counted. We plan to do all we can to ensure that every voice is heard in this process.”

In other Florida recount news, the Republican Governor Rick Scott’s lead over incumbent Sen. Bill Nelson (D) grew by nearly 1,000 votes following a machine recount – a difference of around 12,000 votes, or enough to trigger a manual recount. 

Scott has urged Nelson to give up.

“Our state needs to move forward,” Scott said. “We need to put this election behind us, and it is time for Bill Nelson to respect the will of the voters and graciously bring this process to an end rather than proceed with yet another count of the votes – which will yield the same result, and bring more embarrassment to the state that we both love and have served.”

2 minute woman?

Meanwhile on Thursday Broward County submitted the results of its recount two minutes after the state’s 3pm deadline, voiding the results of its machine recount. Rick Scott says that Broward County Supervisor of Elections Brenda Snipes intentionally delayed the results so that the would be invalidated, after it was revealed that Scott would have seen a net gain of 779 votes if Snipes had submitted the results on time

“Basically, I just worked my ass off for nothing,” said Broward County election planning and development director Joseph D’Alessandro. 

“We uploaded to the state two minutes late so the state has chosen not to use our machine recount results,” said D’Alessandro, adding “They are going to use our first unofficial results as our second unofficial results.”

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Foreigners Dump US Treasuries As They Liquidate A Record Amount Of US Stocks

Earlier this week, DoubleLine’s Jeff Gundlach held his latest webcast with investors in which he warned that as a result of rising hedging costs, US Treasury bonds have become increasingly unattractive to foreign buyers. This can be seen in the chart below which shows the yield on the 10Y US TSY unhedged, and also hedged into Yen and Euros. In the latter two cases, the yield went from over 3%, to negative as a result of the gaping rate differential between the Fed and ECB or BOJ.

This is also why, as the next chart from Gundlach showed, foreign holdings of US Treasurys have been declining in recent years, and dropped to just over 36% as a percentage of total holdings, the lowest in over a decade, as domestic holdings of US paper have risen to just shy of 50%, and near all time highs.

Which brings us to today’s latest monthly TIC data which showed that, as Gundlach would expect, the holdings of the two largest foreign US creditors, China and Japan, declined to multi year low.

As shown in the chart below, China’s holdings of U.S. Treasuries fell to the lowest level since mid-2017 as the world’s second-largest economy sold US reserves to stabilize the yuan which has been depreciating in recent months due to the ongoing trade war.

Chinese holdings of U.S. Treasuries declined for a fourth month to $1.151 trillion in September, from $1.165 trillion in August, a $14 billion decline. Despite the drop, China remained the biggest foreign creditor to the U.S., followed by Japan whose Treasury holdings also dropped by $2 billion to $1.028 trillion, the lowest since 2011.

Investors have been searching for clues whether China is dumping its vast holding of U.S. Treasuries to retaliate against U.S. tariffs, though Beijing has given no indication it’s doing so; meanwhile while the TIC data is relatively accurate, it tends to be revised rather materially which is why it is certainly possible that China’s real holdings, when adjusted for valuation and currency changes, are far lower.

Of course, instead of selling Treasurys, China may have decided to hold on to its reserves and allow the yuan to depreciate against the USD, but not too much: so far 7.00 has emerged as a “red line” for the PBOC. The Chinese currency has already depreciated more than 4 percent against the dollar in the past year amid signs of an economic slowdown and capital outflows. In September, China’s foreign-exchange reserves stockpile fell by $22 billion to touch the lowest level since July 2017, however much of that number was due to valuation adjustments.

Going down the list, while Russia’s Treasury liquidation was well documented in June and July, two new aggressive sellers of US paper emerged in the latest data: France, whose Treasury holdings declined from $118.4BN to $97.7BN…

… and Ireland, which sold over $25BN Treasuries in September, bringing the total to $290BN.

Not everyone was a seller: the infamous Belgium, host of Euroclear, added $10 billion to $164.7BN, likely working on behalf of some unknown foreign entity, while Saudi Arabia added another $6.6BN, bringing its total to a record $176.1BN, perhaps in hopes of showing Trump just what a good friend of the US it is.

Finally, away from US Treasuries, and looking at total flows, foreigners added a total of $7.5BN in long-term US securities, led by nearly $30BN in Agencies.

What was perhaps more notable is that in September, foreigners sold another $16.9BN in US stocks, the 5th consecutive month of selling, matching a record long stretch of foreign sales of US equities, and one during which official and private foreign investors sold a total of $102 billion over the past 5 months, a record high.

The bottom line: Trump told the world he doesn’t need its generosity to either fund the US deficit or prop up stocks, and according to recent data, the world has taken up Trump on his dare, and has been actively liquidating US securities.

Source: TIC

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Weekend Reading: Why This Isn’t “THE” Bear Market…Yet

Authored by Lance Roberts via,

After two significant corrections during 2018, this has to be the beginning of a “bear market,” right?

It certainly is possible given the headwinds that are starting to weigh on corporate outlooks such as ongoing trade wars, weaker revenue growth, a strong dollar, and higher interest rates. However, despite these concerns, there are three things which suggest the necessary psychological change for a more meaningful “mean reverting” event has yet to occur.

Interest Rates

During previous market declines, where “fear” was a prevalent factor among investors, money rotated from “risk” to “safety” which pushed Treasury bond prices higher and rates lower. Despite two fairly strong corrections in 2018, bonds have not attracted the “flight to safety” as investors remain complacent about the future prospects of the market.


A look at the Volatility Index (VIX) confirms the same as the bond market. Despite the two corrections, the VIX never spiked to levels consistent with “fear” that a correction was in process. Currently, the VIX remains below the average level of the index going back to 1995 and during the “October massacre” failed to even rise above the level seen in February of this year.


Another “fear trade” which has failed to show any fear is that precious yellow metal. Again, despite two major corrections, gold has failed to find buyers in a “safe haven” trade. In fact, despite consistent calls that gold was needed to offset inflation, it has failed to find any support from investors who continue to chase market returns.

Here is the point – the pickup in volatility this year should have dislodged investors out of their “passive investment slumber.” Yet, there is no anecdotal evidence that such has been the case. There are two possible outcomes from this current situation:

  1. The majority of investors are correct in assuming the two recent corrections are just that and the bull market will resume its bullish trajectory, or;

  2. Investors have misread the corrections this year and have simply not yet lost enough capital to spark the flight to safety rotations.

Historically speaking, the “herd” tends to be right in the middle of the advance at very wrong at the major turning points.

There is mounting evidence that we may indeed be at the beginning of one of those turning points in the market. If that is the case, investors are likely going to find themselves once again on the wrong side of history.

The “real” bear market hasn’t started yet. When it does we will likely see traditional “safe haven” investments telling us so. It will be worth watching gold and rates for clues as to when the masses begin to realize that “this time is indeed different.” 

Just something to think about as you catch up on your weekend reading list.

Economy & Fed


Most Read On RIA


 Interview with Mike “Mish” Shedlock

Research / Interesting Reads

Treat their incessant optimism, in the future, with skepticism. Watch what they do not what they say.” – Doug Kass

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Crude & Credit Crash, Stocks Slide As Bonds See Best Week In 19 Months

Well that another week… “are you not entertained?”


China had an exuberant week (as the rest of the world limped lower) led by Shenzhen and CHINEXT (the small cap/tech indices)…


European Stocks were lower on the week, led by Italy…


Early dovish comments from The Fed’s Clarida sent the USD  and TSY yields lower and stocks higher, then Trump comments on China were thoroughly embraced by equity algos but not FX or bond markets…


US Futures show the Clarida jump and the Trump jump and the late-Friday jump…


Late-day weakness spoiled the fun for the day…Nasdaq dropped into red along with Trannies…


On the week, only Trannies managed to close green…


Materials and Real Estate managed gains and Utes scrambled to unchanged on the week…


Nvidia made the headlines as the crypto-collapse hit demand and sent the stock from being up 50% YTD to down 15% YTD in a few weeks…


Credit markets crashed notably this week (impacted by GE’s collapse)… with IG spreads blowing out 10bps – the biggest weekly spread widening since Feb 2016…


Signaling more pain to come for stocks…


Treasuries were well bid all week – especially in the belly…


Notably the longer-end of the curve steepened notably this week…


10Y Yields broke through the 50DMA…


5Y yields plunge 15bps on the week – the biggest drop since April 2017 (after worst week since September 2017) – blowing back below 3.00% to close at 2-month low yields…

NOTE – 7Y yield also closed below 3.00% for the first time since September 17th.

And before we leave the rates markets, it is notable that the market is rapidly losing faith in The Fed – 2019 rate-hike expectations (red) have collapsed, and 2020 and 2021 are now expected flat or a modest rate cut…


The Dollar Index broke below a key level this week – 97…


While Yuan strengthened against the USD… (note today’s spike after Trump’s trade comments)


Yuan weakened notably in the last few days against gold…(seemingly drawn back to its latest peg around 8500 Yuan per ounce)


Cryptos had an ugly week as, among other things, Bitcoin Cash fork uncertainty sparked derisking…


Copper bounced today after Trump trade comments, PMs managed to hold the week’s gains but WTI plunged…


Of course, all the big headlines were taken by crude, which is down for the 6th week in a row, crashing to a $54 handle and its lowest level since Nov 2017…


And as WTI plunged, NatGas super-spiked…


While all eyes were on WTI, Canadian Western Select Crude crashed to a record low…


It seems that 5 ounces of silver is just too rich in this new regime for a barrel of oil…


Gold spiked above its 50- and 100-DMA this week…


Just as credit is flashing red, so are commodity markets – most notably, Lumber…


Finally, we note that monetary policy divergence is at a major turning point that has not worked out well in the past…

And, just in case you were banking on buybacks bringing your bullish portfolio back to life, consider this…

$800BN spent on buybacks year-to-date, and the index is… unchanged!

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Bridgewater’s Dalio: ‘Fed Rate Hikes Are Hurting Asset Prices’

While the Federal Reserve is soliciting advice about how it should rejigger its approach to monetary policy, Bridgewater Associates founder Ray Dalio has a suggestion: Maybe the central bank should pay more attention to its “unofficial” third mandate.

At least since the appointment of Fed Chairman Alan Greenspan (the progenitor of the infamous “Greenspan put”) in the late 1980s, the central bank has openly tailored policy to address its dual Congressional mandate: maintaining stable prices and maximizing employment.

But since the stock market started to wobble in late September, a new “executive mandate” has emerged, as President Trump has attacked Fed Chairman Jerome Powell  for ruining his party by insisting on raising interest rates. As far as Trump understands, there’s no good reason why the central bank couldn’t wait another 2-6 years before taking away the punch bowl, so to speak. And as fate would have it, Dalio, who has expressed reservations about the president’s behavior and policies, agrees, according to CNBC.

Ray Dalio: Fed raised rates to the point where they’re hurting asset prices from CNBC.

Before moving ahead with its plans to raise interest rates back to “neutral” (or beyond), the central bank should examine monetary policy’s impact on asset prices, and maybe err on the side of caution. Because right now, the central bank is hurting asset prices. And also possibly Bridgewater’s returns.

DALIO: Right now, the Fed expects to raise it one more time this year. And probably three – two or three times next year. I think there’s a problem in terms of asset prices. I think that rate of increase would not be able to be made because we’ve raised interest rates to a level where it’s hurting asset prices. We have now, a flat yield curve. We have — in other words, the — you can now get in a two to five-year note, you can get about 3%. And you have no price, no material price risk. So, we’re in a situation right now that the Fed, I think, will have to look at asset prices before they look at economic activity. It’s a difficult position because that stimulation that they have, in the form of those tax cuts, is a big stimulation into the capacity limitations as we have low slack. So that the economy itself will pressure them to raise rates. I think probably too much. I think we have a supply/demand problem for bonds that will particularly come next year and the year after. In other words, because of that tax cut and the deficits, we’ll have to sell a lot more bonds and United States itself can’t absorb that quantity of bonds. So we’re going to have to sell those bonds to investors in other countries. You look at the portfolio of those, and they have a lot of those that are sort of overweight in that bond. So I think there’s a supply/demand imbalance and a difficult position for the Federal Reserve. It’s a risky situation.

Given Powell’s suggestion that interest rates are nowhere near neutral, and that the central bank intends to hike at least until we get there, Dalio isn’t the only hedge fund titan urging the central bank to slow down (he’s not even the only one speaking Thursday in Greenwich, where Paul Tudor Jones also highlighted the risks surrounding the one-two punch of the deficit expansion combined with rapid rate hikes).

But seeing as Thursday was a day that ended with “y”, Dalio took care to remind his interviewers that, regardless of what the Fed does, we’re already in the “seventh or eighth inning of the business” cycle, and that the US is facing risks that we haven’t seen since the 1930s, like an “emerging power” (China) solidifying its position as our largest economic competitors.

DALIO: Well, you know, there’s the short-term debt cycle, long-term debt cycle and productivity. We’re in the late stages, maybe the seventh, the eighth inning of the business cycle, right? We’re in the part of the cycle where there’s been a lot of monetary easing. Central banks bought $15 trillion worth of assets, pushed them up a lot. We had the benefit of a corporate tax cut, all of that stimulation, and as a result, we’re in the late part of cycle where there’s a tightening of monetary policy. And you know, so it’s kind of the late part of the cycle with assets fully priced. And in terms of the longer-term debt cycle, we’re at a point where interest rates are comparatively low, the capacity of central banks to ease monetary policy is limited, United States is limited, and other counties it’s limited. So that’s where we ar. We’re in a position also where we have the emerging power China competing with the United States, an established power, as an effective power competitor. That’s very much like the late 1930s. So that’s where I think we are.

Probably since the interview was taking place just miles from the conglomerates former headquarters, Dalio’s interlocutors couldn’t resist asking for his thoughts on the credit-market story du jour: Whether or not GE’s rapidly deteriorating investment-grade credits could become the first fallen angel to signal a broader collapse. But his hosts were disappointed: Try as they might, they couldn’t goad Dalio into sounding the alarm on the junk bond market. Instead, Dalio said the real risks are bound up in CLOs and leveraged loans.

SORKIN: And, Ray, talking about bubbles, do you worry about high-yield bonds? We were having a conversation earlier today actually about General Electric, a Connecticut-based company whose debt has come under a lot of pressure of late.

KERNEN: Boston based.

SORKIN: Now Boston based, yeah.

DALIO: the — a lot of the high-yield debt market has gone into leveraged loans and CLO. And so, as a result, it’s off balance sheet — I mean, it’s private. And there are parts of that market more than the particular high yield debt market; although if I was to take double “b,” some triple “b” types of debt, I think that it’s more than fully priced.

The interview concluded with Dalio offering a few choice pieces of advice for the state of Connecticut: As its capital city teeters on the verge of bankruptcy, the state would probably manage to attract investment if it created a “special economic zone” in downtown Hartford where companies would be free of any tax burden.

It could be a very effective economic development policy, he said.

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A Million Americans Are Living In RVs As The American Dream Is “Redefined”

Authored by Michael Snyder via The American Dream blog,

Could you imagine living in an RV on a permanent basis?

On the one hand, such a lifestyle can offer a sense of freedom that is absolutely exhilarating.  Instead of being tied down to just one place, you can freely travel the country and live anywhere that you want.  Such a lifestyle makes it easy to escape the cold in the winter and the heat in the summer, and if you don’t like your neighbors you can literally leave the next day. 

But of course there are a lot of negatives too.  Life in an RV can be extremely cramped, there is very little privacy, and most people have to cut their possessions way, way down in order to fit all their things into an RV.  Living on the road constantly can get really old, because you have to sacrifice many of the comforts of a traditional home in order to live such a lifestyle on a full-time basis.  But without a doubt, more Americans are choosing to go this route than ever before.  In fact, the RV Industry Association says that a million Americans now live in their RVs full-time…

A million Americans live full-time in RVs, according to the RV Industry Association. Some have to do it because they can’t afford other options, but many do it by choice. Last year was a record for RV sales, according to the data firm Statistical Surveys. More than 10.5 million households own at least one RV, a jump from 2005 when 7.5 million households had RVs, according to RVIA.

Living in an RV is certainly a lot less expensive than living in a traditional home, and that is one of the big things that is drawing people to this lifestyle.

A 30 year mortgage is essentially a suffocating lifetime financial commitment for many people, and so a lot of Americans are choosing to embrace the RV lifestyle in order to escape those financial chains.  One family that the Washington Post recently interviewed says that they are “redefining what the American Dream means”…

“We’re a family of four redefining what the American Dream means. It’s happiness, not a four-bedroom house with a two-car garage,” said Robert Meinhofer, who is 45.

The Meinhofers and a dozen others who spoke with The Washington Post about this modern nomadic lifestyle said living in 200 to 400 square feet has improved their marriages and made them happier, even if they’re earning less. There’s no official term for this lifestyle, but most refer to themselves as “full-time RVers,” “digital nomads” or “workampers.”

Some are willingly choosing the RV lifestyle because they want more freedom, but others are doing it out of economic necessity.

But in almost every case, those living the RV lifestyle still need to work, and the jobs that they are able to get often don’t pay very well

Most modern nomads need jobs to fund their travels. Jessica Meinhofer works remotely as a government contractor, simply logging in from the RV. Others pick up “gig work” cleaning campsites, harvesting on farms or in vineyards, or filling in as security guards. People learn about gigs by word of mouth, on Workamper News or Facebook groups like one for Workampers with more than 30,000 members. Big companies such as Amazon and J.C. Penney even have programs specifically recruiting RVers to help at warehouses during the peak holiday season.

So it can be tempting to dream of hitting “the open road”, but the reality of the matter is that many of these people spend long hours cleaning public toilets or stuffing boxes for big retailers.

For other Americans, even the RV lifestyle is out of reach financially, and so they are living in their vehicles.

Even though the U.S. economy has supposedly been “booming” for the last couple of years, the number of Americans that live in their vehicles has been rising very rapidly.  In fact, CBS News has reported that the number of people living in their vehicles in King County, Washington increased 46 percent in the past year alone…

The number of people who live in their vehicles because they can’t find affordable housing is on the rise, even though the practice is illegal in many U.S. cities.

The number of people residing in campers and other vehicles surged 46 percent over the past year, a recent homeless census in Seattle’s King County, Washington found. The problem is “exploding” in cities with expensive housing markets, including Los Angeles, Portland and San Francisco, according to Governing magazine.

Meanwhile, the ranks of the homeless continue to surge all across the country as well.  More than half a million Americans are currently homeless, and that number just keeps getting larger and larger.

All of the things that I have just shared with you are signs that the middle class in America is rapidly evaporating.  Once upon a time, America had the largest and most vibrant middle class in the history of the world and homebuilders struggled to build new homes fast enough to keep up with the demand.  But over the past decade the rate of homeownership in the U.S. has fallen steadily as the middle class has shrunk.  More people than ever are living in RVs, in their vehicles or on the streets, and this trend is going to accelerate greatly once the next economic downturn kicks into high gear.

But I definitely do not want it to seem like I am dissing the RV lifestyle.  Members of my own extended family are living in their RVs by choice, and they seem to absolutely love it.

If living in an RV will enable you to escape the rat race and live a much happier life, then go for it.  The RV lifestyle is not for everyone, but many that have made the jump say that they will never go back.

And considering the times that are ahead, being able to relocate very rapidly is a good option to have.  There isn’t a whole lot of room in an RV, but at least you can pick up and leave whenever you like.

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A Graphic View Of The Rolling Bear Market 

By now, global investors should understand that a new regime of rising interest rates, quantitative tightening, trade tensions, and currency crises in emerging markets, could suggest that a worldwide rolling global bear market has developed, one that could spill into the US in 2019.

“In fact, the bull has turned into a bear in many places: a growing number of equity indexes across the globe have slipped into ‘bear’ territory – commonly defined as a price drop of 20% or more from their highest levels in 52 weeks. The share of bear stocks by index is catching up all over the world too – from West to East, from developed to emerging markets,” said Reuters.

Measured from 52-week highs, the performance of the MSCI All World Index has stalled but does not appear troubling. Taking a look at the S&P500 and European STOXX600, for example, are not yet in ‘bear’ market territory. Reuters indicates that a closer examination reveals the share of constituents in bear markets in both these indexes has exploded in 2018. As for China, 90% of the country’s stocks are in a vicious bear market as of November while CSI300 has declined more than 20% since mid-2018.

The Bull-Bear Divide, the difference between bullish and bearish sentiment surveys conducted monthly by the American Association of Individual Investors, shows that US investor optimism of the stock market is quickly fading into 2019.

In addition to the disturbingly graphic view of global bear markets above, Fed vice chairman Richard Clarida on Friday emphasized the Fed’s growing concerns of the global economy, warning that there is “some evidence of global slowing.”

This confirms what we said on Wednesday in our Powell post-mortem: “the Powell “Fed put” is still hundreds of points below the current level of the S&P,” which means the spillover in the global bear market could force US stocks much lower in the next couple quarters. 

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“The Pain Trade Is Higher” – Kolanovic Quadruples Down On Bullish

Say what you will about JPMorgan’s quant “Gandalf” Marko Kolanovic, he sure is persistent in his bullishness.

Having declared an all clear for stock three times in a row (first on October 12, following the systematic puke, then one week later on Oct. 19, and finally one again on Oct. 30 when stocks hit their recent lows), and for good measure, once more after the midterm elections when he said that a split congress was the best outcome for markets just before stocks tumbled once more and wiped out the entire post midterm gain in one session (just when Gartman said to short stocks), the JPM Quant is back again, quadrupling-down on his bullish outlook, with what is his fourth note in one month urging JPM clients to buy stocks because – in his view – two key market risks, trade war and aggressive Fed tightening, have effectively dissipated.

In his latest note released moments ago, Kolanovic writes that in line with his previous research, “we think that equity market sentiment is held back by two key risks: the Fed hiking beyond the neutral rate and escalation of global trade war.”

But perhaps no more, because as he explains, or rather infers, “today there are significant positive developments on both of these market risks. Fed vice chairman Richard Clarida indicated that the Fed may stop at the neutral rate (rather than continue hiking beyond the neutral rate), which might be interpreted as an effective “rate cut.”

Maybe, but whereas Clarida’s statement sparked a rally in 10Y yields and a dramatic plunge in the dollar which slumped to 1 week lows, stocks barely reacted. They did, however, respond to the second catalyst mentioned by the JPM quant, namely Trump’s rehash of the same optimistic outlook vis-a-vis the China trade war that the US president trots out at every opportunity to deliver a soundbite, and stocks bought it, sending the Dow Jones over 200 points higher at one point, before fading much of the gain.

As Kolanovic notes, the second development that cements his bullish posture, is “Trump’s statement that he may not need to impose more China tariffs and that the “China list is pretty complete, four or five things left off” (from the original list of 142 requests, i.e., 96% of items have been addressed).”

According to the JPM quant, “naively interpreting the likelihood of a deal by the number of items addressed would indicate a significantly increased probability of a trade deal.

Meanwhile, going back to his favorite topic, market technicals and fund positioning, Kolanovic says that “equity positioning of systematic strategies (volatility targeting, CTA/Risk Parity) as well as net exposure of Hedge Funds remain very low (0-10th percentile)”, implying that any residual selling pressure to sell from quants is non-existent.

To the JPM strategist, “this, along with record levels of Q4 buyback activity, suggests the pain trade, and therefore most likely outcome, will be the market going higher into year-end.

Will Kolanovic’s latest attempt to bottom-tick the market be successful, or will human and algo traders again fade his bullish reco, instead crowning Gartman the winner in this bizarre tactical standoff, we’ll know in exactly 45 days. That said, coming on the same day when Bloomberg has an article titled “‘Get Me Out’: Investors Sour on Market Strewn by Tape Bombs” and which carries quotes such as the following:

  • “Everywhere you look, something’s blowing up”
  • “Just about anything can create panic, create contagion, and it doesn’t have to be something that makes sense.”
  • “People are saying, ‘Get me out across the board.’ Everyone is anxious. I am anxious. You buy a good company and hope for the best and pray it doesn’t get destroyed.”
  • “When this thing finally finds a bottom, panic will be everywhere.”

… we may now be beyond the point where technicals, or Trump’s daily trade optimism, or even the Fed’s controversial dovishness matters, and instead traders will look to sell every rally now that buy the dip...

… no longer works, and behavioral triggers are far more important for stocks than fundamentals, technicals or even the best central bank intentions.

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Pentagon Fails Its First-Ever Official Audit

Authored by Jason Ditz via,

After generations of being a black hole down which money goes, never to return, a team of 1,200 auditors tried to give the Pentagon its first ever comprehensive audit, just to see where all that money went. Unsurprisingly, it went poorly, and was declared a failure.

How bad the failure was is something of a mystery at this point, with officials refusing to disclose the exact results, or even ballpark how much money is unaccounted for. The only clue to the sheer scope of the matter is that they believe it will take “years” to sort out.

And if there was one thing more dependable than the Pentagon failing an audit and missing an undisclosed, but vast, amount of money, it’s officials downplaying the matter. Deputy Defense Secretary Pat Shanahan told reporters that the Pentagon “never expected to pass it” in the first place.

Indeed, Shanahan insisted that even though the Pentagon failed the audit, the fact that they even bothered to do an audit at all “is substantial,” and shows effort toward compliance.

That said, he said the issue of audits is “irritating to me.”

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Is This The Most Underrated Risk To A Brexit Deal?

A brewing leadership challenge and the prospect of more ministerial resignations has kept the coverage of the slow-moving Brexit trainwreck focused squarely on the 568-page draft Brexit treaty that UK Prime Minister Theresa May is desperately struggling to ram down the throats of Tory Brexiteers. Much of this struggle has focused on what many believe are too-vague parameters surrounding the mechanism for the UK to exit the EU customs union if the transition period is extended, or the trade ‘backstop’ triggered, should negotiations over a future UK-EU trade deal drag on past the December 2020 transition period deadline.


But the UK isn’t the only party that has reservations about the final deal, which must not only pass muster in Westminster, but also meet approval from all 27 European Union governments. And in a report published Friday morning, Buzzfeed reminded the world that this outcome – taken as a given – isn’t entirely assured.

Though European capitals largely welcomed the draft Brexit deal after more than a year of contentious negotiations, notes seen by Buzzfeed suggests that some capitals swallowed the deal only after objecting to certain aspects. These could still prove unpopular when as the deal is being finalized, or when it eventually comes up for a round of votes.

According to the notes, various European capitals raised questions about the treatment of common fisheries, the possibility of extending the Brexit transition period and how social security systems would be coordinated, among others.

The element of the deal that met perhaps the most resistance from Europe, as capitals questioned the wisdom of granting the UK access to the single market during the transition without Britain reciprocating access to its water.

But the hottest issue for many governments is the lack of an agreement on fishing rights in UK waters. British negotiators have demanded that the issue be excluded from the backstop and the withdrawal agreement, committing only for it to be part of negotiations about the future.


A number of EU governments feel that a promise to negotiate about it doesn’t provide the required legal clout, the notes reveal.

During Thursday’s working group, French representatives noted that granting the UK access to the single market through the backstop without Britain reciprocating access to its waters in return was a problem for France.

Spain, Belgium, Ireland, Portugal, and Denmark also raised similar concerns, asking for greater clarity on how the British carveout for fish would work in practice, and how their respective industries would be protected should the backstop arrangements kick-in.

The Commission explained that the July 2020 date — set out in the withdrawal agreement as the moment to take stock of the status of trade talks — was important as it was when the member states themselves would start discussing future fishing quotas.

Unfortunately for May, she has little wiggle room on her end. Given that her grip on power is already tenuous, May can’t afford to lose the support of the 13 Scottish Tories, including Scottish secretary David Mundell, who signed a letter to the prime minister ahead of Wednesday’s cabinet meeting threatening to walk if May didn’t promise to withdraw from the Common Fisheries Policy – which gives EU fishermen access to UK waters under a quota system – immediately.

The idea that fishery policy could make or break a Brexit deal might seem ridiculous to outsiders. But like they say: Sometimes the goings on in Westminster are indistinguishable from an episode of “The Thick of It”.

via RSS Tyler Durden