A new resolution introduced by Senators Ted Cruz (R-TX) and Bill Cassidy (R-LA) would “properly identify” Antifa as “Domestic Terrorists.”
Introduced Thursday, the resolution defines Antifa as “a movement that intentionally combines violence with the group’s alt-left positions,” and “represents opposition to the democratic ideals of peaceful assembly and free speech for all.”
The measure then lists several examples of Antifa behavior, including:
Assaulting conservative journalist Andy Ngo in February and June of 2019, putting him in the hospital.
Doxxing ICE employees.
Confronting an ICE officer when he went to pick up his daughter from summer camp, as well as plastering “his name and photo” on flyers outside his home labeling him as part of the “Gestapo.”
Explicitly rejecting the authority of law enforcement to
After Ngo was beaten and robbed by members of Portland’s Antifa cell, a GoFundMe established for the journalist raised $195,680 out of its original $50,000 goal after an outpouring of support.
As noted by The Blaze, however, labeling Antifa as “Domestic Terrorists” may also require an entirely new law.
federal law does not have the same clear-cut designation for domestic terrorism organizations that it does for foreign terror organizations (FTOs), explained Andy McCarthy in a 2017 column at National Review.
“There are federal-law processes for designating foreign and international terrorism because defending against foreign threats to national security is primarily a federal responsibility,” McCarthy explained, because foreign operatives have fewer civil rights protections than American citizens and that the best weapon against domestic terror is local law enforcement, not federal. –The Blaze
Portland, meanwhile, is mulling a ban on wearing masks at protests in an effort to crack down on Antifa violence.
via ZeroHedge News https://ift.tt/2JPhbkX Tyler Durden
Following June’s dip in ‘hope’, UMich Sentiment was expected to improve in preliminary July data but it disappointed in most aspects.
Headline Sentiment rose from 98.2 to 98.4 (but missed 98.8 exp)
Current Conditions dipped from 111.9 to 111.1 (missing 112.8 exp)
Expectations inched higher from 89.3 to 90.1
Still close to the best level in more than a decade
“ Favorable trends in personal finances remained widespread,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement.
“These favorable financial expectations were supported by gains in household incomes and wealth.”
June’s surge in buying conditions dipped in preliminary July data…
However, perhaps most notable – given The Fed’s focus – longer-term inflation expectations spiked from 2.3% to 2.6%…
The Consumer Expectations Index falls as inflation expectations rise, signifying that consumers view higher inflation as a threat to economic growth.
“Consumers’ views appear to be more consistent with the stagflation thesis, which holds that inflation and unemployment move in the same direction. This thesis is more consistent with how consumers process and organize diverse bits of news about the economy.”
Additionally, the reading of expectations for personal finances rose to 136, matching the highest level since 2004.
The share of households that expected interest rate increases fell to 44%, the lowest since May 2013, while 19% expected rates to fall, the most in 10 years.
via ZeroHedge News https://ift.tt/2XY54vT Tyler Durden
“I don’t know, lad. It’s like no cheese I’ve ever tasted. Let’s try another spot. ”
Tomorrow is the 50th anniversary of Man on the Moon. Extra points for anyone who gets this morning’s moon connected quote. This morning’s photo is my completed Lego Lunar Lander. Yep. I know what you are thinking… 50 years after spending 4% of US GNP to enable Man to achieve the technological marvel of reaching the moon, the small boy who watched it has gone back to playing with Lego. It’s confirmation mankind’s evolutionary curve has peaked and it’s all down here for now.
(Fellow Baby Boomers – that’s the first time I’ve touched Lego since the kids were young, and its brilliant fun! Go buy some. I’m thinking of putting a Lego play pit in the office!)
Back in the Real World
Netflix shook markets. It was a “Wake up smell the coffee moment. It’s amazing how folk have woken up to the reality: Netflix is struggling. FANG becomes FAG. Which means Netflix’s days as a market disrupter are over.
It pioneered streaming as a business, but now is facing competitive pressures it can’t hope to beat with its current model. Its high content spending to capture subscribers appeared to be working in a competition free environment, but today’s reality is subscribers have choice where to go for quality content. Netflix’s library of classics are going back to their owners, and even they admit their current production wasn’t good enough to attract new customers. Which means they have a problem going to the market for more money to spend on more content to attract customers – who are going elsewhere.
If that all sounds a bit familiar – go remind yourself what happened to Blockbuster.
And then there is Boeing. If you think a $5 bln accounting charge is the end of the B737 Max saga, then think again. That number will cover the costs of the airlines forced to reschedule and cancel flights, replacement aircraft, and other charges from customers, but I don’t think it will cover the planned class action suites being envisioned by the families of the 346 dead passengers. Nor will it cover potential regulatory fines that may be levied. I suspect $5 bln is just a first number.
The damage is still piling up. There is still no clear timeline to get the plane back in the air. They are piling up on Airplane maker’s parking lots. They cost lots to build, and Boeing doesn’t get its money till they are delivered. US Transportation Secretary Elaine Chao said: “The FAA will lift the aircraft’s prohibition order when it is deemed safe to do so. That is the bottom line. There is no timeline.”
What’s Boeing’s problem? Fixing the Max is proving more difficult than ever expected. After years of essentially letting Boeing inspect and certify itself, I’m told the FAA are making sure they are being seen to be involved, and are “supervising” every aspect of the fix. The company is still working on software patches to solve the issues, but apparently every solution thus far has uncovered more problems. The flight control computers on fly-by-wire aircraft are enormously complex – a software patch isn’t a simple solution, which is why Boeing got such heat earlier this year for paying Indian software engineers $9 to write new code!
And then there is the legacy effects. Pilots have made clear they don’t want to fly the plane. Passengers are not going to be happy. Boeing have a patch for that as well.. If you are going on holiday next year on a Ryan Air flight and your plane looks suspiciously new, and it’s got Boeing 737 8200 written on the nose, then you a flying in the Death-Trap B-737 MAX!
Quick word about Brexit: Arg!
The next chapter in this riveting saga of Britain tearing itself apart might get gory. Yesterday, Parliament voted to take a no-deal Brexit off the Table. That means our new Prime Minister – I shall give my considered view of whichever one of them wins on Monday – has to craft a New Deal with Europe, ask for another extension, or call a general election with the aim of getting a parliament that will support a no-deal. It could also result in a government that revokes Article 50!
Which means… we are exactly where we were a few months ago. There is not a majority in Parliament for any kind of deal. Therefore.. a general election beckons. And Boris (yep, its looking nailed on) may as well go for it early September. More woe and uncertainty. Excellent. Lets start gaming sterling..
Have a great weekend.
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In yet another unprecedented move from our iconoclastic president, President Trump bashed New York Fed President John Williams in a tweet on Friday morning, saying the Fed doesn’t deserve any credit for engineering what has become the longest period of economic expansion in US history.
Yesterday, Williams sent the S&P 500 back into the green after he appeared to suggest that the Fed would deliver the 50 bp rate cut that the market so desperately craves. However, the NY Fed soon walked back Williams extremely dovish comments, saying Williams’ words didn’t reflect “potential policy actions” at the FOMC meeting later this month.
Now, Trump is praising Williams for acknowledging yesterday that the central bank raised rates too quickly, then bashed Williams for trying to take credit for the booming economy.
I like New York Fed President John Williams first statement much better than his second. His first statement is 100% correct in that the Fed “raised” far too fast & too early. Also must stop with the crazy quantitative tightening. We are in a World competition, & winning big,…
….but it is no thanks to the Federal Reserve. Had they not acted so fast and “so much,” we would be doing even better than we are doing right now. This is our chance to build unparalleled wealth and success for the U.S., GROWTH, which would greatly reduce % debt. Don’t blow it!
Trump then insisted that there’s almost no inflation, which means the central bank should acquiesce to his demand to slash interest rates by a full percentage point and launch QE4.
While the USD and short-dated Treasury yields have unwound their post-Williams move after the central bank’s walkback, US stocks opened higher…so they rallied on the comments AND the walk back.
At this point, economists and analysts agree that the Fed’s December rate hike was a mistake. And we’d bet money that Neel Kashkari is probably fuming about how the president hasn’t noticed his eagerness to cut to -1%.
via ZeroHedge News https://ift.tt/2JGOR5q Tyler Durden
The Strait of Hormuz these days seems to be what the streets of Compton used to be in the 90s. Yesterday, Iran’s Revolutionary Guard said it has seized a “foreign vessel” for smuggling fuel. And this morning, news came in that the US has shot down an Iranian drone in the Strait of Hormuz, after it allegedly threatened a US warship. About a fifth of global daily oil consumption (c. 21 million barrels) passes through the Strait each day. Moreover, tensions between the US and Iran are more likely to increase than not (don’t forget Iran also shot down a US drone last month). So don’t expect a smooth ride for oil prices this summer.
From the Strait of Hormuz, to back to Europe. According to Bloomberg sources, ECB staff is looking into potentially reforming its inflation target from “below, but close to 2%” to perhaps a policy band around 2%. Such a band would explicitly make the inflation target symmetric (something President Draghi favours), which means that the ECB can better signal willingness to overshoot the target for a short while. As such, it can reinforce inflation expectations if it is seen as a signal of more (or a prolonged period of) loose monetary policy. However, our ECB watcher Bas van Geffen cautions that the risk of such a symmetric band is that the market could also interpret the lower bound as ‘good enough’, especially if inflation keeps undershooting the ECB’s aim. Suppose the band is 0.5%. This implies the ECB might target an inflation rate of 2.5%, but it also implies that an inflation rate of 1.5% is within the ECB’s target band. Hooray, the ECB has achieved its inflation target by simply changing the definition of the target. What does that mean for its credibility? To avoid that situation, a symmetric band should probably be accompanied by more stimulus to rekindle inflation expectations.
Staying in Europe, geographically at least, the chance of a hard Brexit just became a bit smaller. The UK parliament voted for an amendment that in effect blocks the Prime Minister’s ability to prorogue parliament. Candidate PM Boris Johnson has repeatedly said he would not rule out proroguing parliament, which would in effect stop parliament from voting against a hard Brexit before the October 31 deadline. Importantly, the amendment passed with a 315 to 274 vote, which sends an important signal to Johnson. Namely, that he will face fierce opposition from parliament if he tries to pursue a Hard Brexit. The pound sterling rose on the news, but is likely to stay volatile as the next Brexit-deadline nears.
Over to emerging markets, where the FX streets can be quite rough too. Bank of Indonesia (BI) cut interest rates by 25 bps yesterday to 5.75% and has signaled it is willing to cut rates more as it “sees open space for accommodative monetary policy “, even though inflation is within BI’s inflation target band (3.3%) and the country is enjoying decent economic growth (5%). The South African Reserve Bank (SARB) also cut its interest rate by 25 bps to 6.75% (as we expected), citing weaker business confidence, weak economic growth (SARB cut its growth forecast for South Africa in 2019 from 1% to 0.6%) and ZAR strength as of late. As such, BI, SARB and Bank of Korea (which also cut rates yesterday) have joined a growing list of central banks loosening monetary policy, seemingly taking advantage of strengthening EM currencies.
However, we believe the recent strength of EM currencies will be overshadowed in the medium term by a gloomier world economic outlook, a resurfacing US China trade war and resulting negative sentiment towards emerging markets. Indonesia, for example, not only depends heavily on China for exports, IDR is quite sensitive to US monetary policy and market sentiment given the country’s twin deficits and high amount of US dollar-denominated corporate debt.
via ZeroHedge News https://ift.tt/2Y2JwsO Tyler Durden
Mixed in with complaints about the amount of media coverage devoted to supporters at his Wednesday night rally chanting “send her back” about Rep. Ilhan Omar (D-Minn.) as he dug in on his attacks against the first-term congresswomen and three of her colleagues, President Trump took a twitter moment to do the “told you so” dance on Puerto Rico’s political crisis, and to blast establishment operative Tom Friedman for his hypocrisy… no holds barred.
With massive protests in the streets, Trump was quick to claim vindication for his criticism of Puerto Rico’s corrupt and incompetent government and political class, including San Juan mayor Carmen Yulín Cruz.
“A lot of bad things are happening in Puerto Rico.
The Governor is under siege, the Mayor of San Juan is a despicable and incompetent person who I wouldn’t trust under any circumstance, and the United States Congress foolishly gave 92 Billion Dollars for hurricane relief, much…
…of which was squandered away or wasted, never to be seen again. This is more than twice the amount given to Texas & Florida combined.
I know the people of Puerto Rico well, and they are great. But much of their leadership is corrupt, & robbing the U.S. Government blind! “
A lot of bad things are happening in Puerto Rico. The Governor is under siege, the Mayor of San Juan is a despicable and incompetent person who I wouldn’t trust under any circumstance, and the United States Congress foolishly gave 92 Billion Dollars for hurricane relief, much….
….of which was squandered away or wasted, never to be seen again. This is more than twice the amount given to Texas & Florida combined. I know the people of Puerto Rico well, and they are great. But much of their leadership is corrupt, & robbing the U.S. Government blind!
Then the President switched his focus, mocking New York Times opinion columnist Thomas Friedman’s appearance and dismissing the writer as a “phony” after he penned a column calling the president a “racist” and “woman-abusing jerk.”
“Thomas ‘the Chin’ Friedman, a weak and pathetic sort of guy, writes columns for The New York Times in between rounds of his favorite game, golf. Two weeks ago, while speaking to a friend on his cell phone, I unfortunately ended up speaking to Friedman.
We spoke for a while and he could not have been nicer or more respectful to your favorite President, me.
Then I saw the column he wrote, “Trump Will Be Re-elected, Won’t He?” He called me a Racist, which I am not, and said Rhode Island went from economically bad to great in 5 years because the…
…Governor of the State did a good job. That may be true but she could not have done it without the tremendous economic success of our Country & the turnaround that my Administration has caused. Really Nasty to me in his average I.Q. Columns, kissed my a.. on the call. Phony!“
Thomas “the Chin” Friedman, a weak and pathetic sort of guy, writes columns for The New York Times in between rounds of his favorite game, golf. Two weeks ago, while speaking to a friend on his cell phone, I unfortunately ended up speaking to Friedman. We spoke for a while and…
….he could not have been nicer or more respectful to your favorite President, me. Then I saw the column he wrote, “Trump Will Be Re-elected, Won’t He?” He called me a Racist, which I am not, and said Rhode Island went from economically bad to great in 5 years because the…..
….Governor of the State did a good job. That may be true but she could not have done it without the tremendous economic success of our Country & the turnaround that my Administration has caused. Really Nasty to me in his average I.Q. Columns, kissed my a.. on the call. Phony!
US big cap stocks have rallied to new highs in recent months, but just as in the rally from the low of the February 2018 mini-panic to the September/October 2018 peak, sizable divergences between different indexes have emerged in the process. New highs in the big cap indexes (DJIA, SPX, NDX) are once again not confirmed by small caps (RUT), the broad market (NYA) and a number of sub-sectors (such as the DJTA which is included in the chart below; according to Dow Theory, the DJTA must confirm moves in the DJIA to validate its trend).
From the top: weekly charts of DJIA, SPX, NDX, RUT, NYA and DJTA. The recent new highs in the three large cap indexes have not been confirmed by small caps and the broad market. Note also the sizable RSI/price divergence in the DJIA (which is mirrored by SPX and NDX) – this is a sign of faltering momentum that is often seen ahead of trend changes.
We last discussed a “lengthy non-confirmation” in mid-September 2018 (see “US Equities – Approaching an Inflection Point”). Everything we said about the phenomenon at the time applies to the current case as well. In fact, it could well be argued that the current spate of non-confirmations is even more ominous as they are stretching over a time period of approximately 18 months by now (the broad market represented by the NYSE Index has yet to overcome its January 2018 peak).
US big caps are diverging from European and Japanese stocks as well, which have failed to reach new highs in the recent rally. It is also noteworthy that stocks and junk bonds have studiously ignored weakening macro-economic data in recent months – the rationale is apparently that an impending easing of monetary policy by Fed and ECB is more important than the economy’s poor performance and the prospect of lackluster earnings. The idea seems to be that a resumption of monetary pumping will immediately arrest and reverse recent economic trends, which is quite a leap of faith.
More non-confirmations: S&P 500 Index vs. FEZ (Euro Stoxx 50 ETF) and the Nikkei 225 (all weekly).
Government bonds and gold have rallied strongly as well this year, and while these markets also reflect rate cut expectations, they normally don’t move in the same direction as stocks for very long. It is a good bet that something will eventually give. Considering the recent yield curve inversion, investors buying stocks and corporate bonds are probably too sanguine about what lies ahead.
The Roaring 20s vs. Today
In April we briefly discussed parallels between the current time period and the late 1920s (see “A Trip Down Memory Lane”). What prompted us to look into this was the fact that the sharp correction in the (normally) seasonally strong October-December period last year was actually a spitting image of the late 1928 correction. As it turned out, this was far from the only similarity between the two eras.
Incidentally, market participants ignored a weakening real economy in the final stretch of the 1920s bull market as well: economic data deteriorated noticeably in the course of 1929, but that did nothing to curb the stock market’s advance – at least initially.
Two women studying the ticker tape in a stock broker’s office in St. Paul, Minnesota in 1929.
Below is a long term chart comparison as a supplement to the charts we showed in April. Interestingly, there is quite a strong resemblance between the stock market patterns of the 1914-1930 and 1997-2019 periods. The cyclical bull and bear markets of the two eras differ slightly in terms of extent and duration, but the basic patterns look remarkably similar.
It should be noted to this that chart pattern similarities are not unusual per se – all liquid markets exhibit self-similar fractal patterning – both across different time frames and over different historical periods. At some point, these patterns will always diverge – particularly self-similarity between historical periods is usually quite limited.
It is fairly easy to find close correlations over time periods of one year or less, and more often than not they have no predictive value. Nevertheless, we find these long term pattern similarities quite interesting:
Booms and busts in the stock market from 1997 to 2019 and from 1914 to 1930. It is of course possible that the “acceleration phase” of the current bull market still has further to go, but the increase in market volatility, weak money supply growth, historically high valuations and the divergences discussed further above all suggest that a trend change is probably not too far off.
Conclusion
The divergences between the different indexes at the very least represent a heads-up that another correction is likely to begin fairly soon. In view of the increase in market volatility since the January 2018 peak, the next downturn will probably be quite a doozy again.
via ZeroHedge News https://ift.tt/2JNmNvU Tyler Durden
Jeffrey Epstein’s former IT contractor, Steve Scully, says that he ended his business relationship with the 66-year-old pedophile over hordes of young women all over his infamous private island, as well as an extensive collection of photographs depicting topless women displayed in the island’s various compounds, according to Good Morning America.
“There were photos of topless women everywhere,” said contractor Steve Scully, who said he worked for Epstein for six years beginning in 1999. “On his desk, in his office, in his bedroom,” Scully, a 69-year-old father of three girls, said of the private island dubbed “Little St. James.” –GMA
Of note, the FBI found a “substantial collection of photographic trophies of his victims (p. 12) and other young females” at Epstein’s Manhattan residence.
Scully told ABC News that he owned and operated a telecommunications business on nearby St. Thomas island when he was hired by Epstein to set up a communications network on Little St. James, also known as ‘Pedo Island.’ He visited the island over 100 times, and says that his memories of Epstein are ‘vivid.’
“He was the most intense person I ever met,” said Scully.
Epstein wanted phone or internet access nearly everywhere on the 72-acre island, Scully said, including in a secluded cove that the financier referred to as “the grotto.” Given his work in high-volume financial trading, Scully said, Epstein “never wanted a call to drop” because of weak digital coverage on the island.
The island’s primary compound was arranged in a “Danish style” layout — with individual bedroom suites in individual buildings surrounding a courtyard, Scully recalled, including a pair of large cockatoo statues lording over the island’s gardens. He said that at one point, he recalled Epstein wanting to change the name of the island from “Little St. James” to “Little Saint Jeff.”
According to Scully, that the strange ‘temple’ structure was actually a gym, which contained a massive framed photo of a topless woman.
On July 6, Epstein was arrested on charges of sex-trafficking of minors, and has been held at the Metropolitan Correctional Center (MCC) in lower Manhattan where he awaits trial. On Thursday, Judge Richard M. Berman denied his request to be released under house arrest pending trial.
Epstein, who maintained close ties with former President Bill Clinton and several other prominent individuals, has denied the charges.
New York Police Department (NYPD) took Epstein into custody at the Teterboro Airport in Bergen County, New Jersey, after he returned to the United States by private jet from France, sources told ABC News.” data-reactid=”24″ type=”text”>For those interested in a closer look at Epstein’s island, check out ‘Rusty Shackleford’s’ YouTube channel full of HD drone footage.
New York Police Department (NYPD) took Epstein into custody at the Teterboro Airport in Bergen County, New Jersey, after he returned to the United States by private jet from France, sources told ABC News.” data-reactid=”24″ type=”text”>For example, here’s a peek inside one of the very buildings Scully was talking about. You can see an Apple computer monitor in the window.
New York Police Department (NYPD) took Epstein into custody at the Teterboro Airport in Bergen County, New Jersey, after he returned to the United States by private jet from France, sources told ABC News.” data-reactid=”24″ type=”text”>
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In October 1950, as U.S. forces were reeling from hordes of Chinese troops who had intervened massively in the Korean War, a 5,000-man Turkish brigade arrived to halt an onslaught by six Chinese divisions.
Said supreme commander Gen. Douglas MacArthur:
“The Turks are the hero of heroes. There is no impossibility for the Turkish Brigade.”
President Harry Truman awarded the brigade a Presidential Unit Citation.
In 1951, Turkey ended a neutrality dating to the end of World War I and joined NATO. In the seven decades since, there has been no graver crisis in U.S.-Turkish relations than the one that erupted this week.
Turkey has just received the first components of a Russian S-400 air and missile defense system, despite U.S. warnings this would require the cancellation of Turkey’s purchase of 100 F-35 Joint Strike Fighters.
“The F-35 cannot coexist with a Russian intelligence collection platform that will be used to learn about its advanced capabilities,” said the White House.
The sale has been canceled. The Turkish pilots and instructors training in the U.S. are being sent home. Contracts with Turkish companies producing parts for the F-35 are being terminated. Under U.S. law, the administration is also required to impose sanctions on Turkey for buying Russian weaponry.
Wednesday, the Pentagon warned Turkey against military action in an area of Syria where U.S. troops are deployed. The Turks appear to be massing for an incursion against U.S.-backed Syrian Kurdish forces Ankara regards as terrorist allies of the Kurdish PKK inside Turkey.
How America and Turkey avoid a collision that could wreck NATO, where the Turks field the second-largest army in the alliance, is not easy to see.
U.S. hawks are already calling for the expulsion of Turkey from NATO. And expulsion of U.S. forces and nuclear weapons from the Incirlik air base in Turkey in retaliation is not out of the question.
President Recep Tayyip Erdogan sounds defiant: “We have begun to receive our S-400s. … God willing, they will have been installed in their sites by April 2020. … The S-400s are the strongest defense system against those who want to attack our country. Now the aim is joint production with Russia. We will do that.”
While potentially the most crucial of recent developments in the Middle East, the U.S.-Turkish situation is not the only one.
The UAE is pulling its forces out of Yemen as Congress seeks to restrict U.S. support for Saudi forces fighting Houthi rebels there and to sanction Riyadh for the murder of Washington Post columnist Jamal Khashoggi.
If the UAE pulls out, and the U.S. cuts its military aid, the Saudis cannot prevail in a war they have been unable to win with our help after four years of fighting. And if the Houthis win, the Saudis and Sunni Arabs lose, and Iran wins.
This week, to strengthen the U.S. presence for any confrontation with Iran, President Donald Trump is sending 500 additional U.S. troops to Saudi Arabia.
While the U.S. and Iran have thus far avoided a military or naval clash that could ignite a major war, the “maximum pressure” sanctions Trump has imposed are choking Iran’s economy to death. How this ends in a negotiated resolution and not a shooting war remains difficult to see.
In Doha, Qatar, the U.S. is negotiating with the Taliban over the conditions for a withdrawal of the 14,000 U.S. troops still in Afghanistan. And with the Taliban controlling more of the countryside than they have since being ousted from power in 2001, and conducting regular suicide bombings in Afghan cities and towns, it is hard to see how this Kabul regime and its army prevail in a civil war when we are gone, when they could not while we were there.
In this new century, leaders of both parties have plunged our country into at least five wars in the Middle and Near East.
In 2001, after ousting the Taliban and driving al-Qaida out, we decided to use our power and ideas to build a new democratic Afghanistan. In 2003, we invaded and occupied Iraq to create a pro-Western bastion in the heart of the Middle East.
In 2011, Barack Obama ordered U.S. planes to attack Colonel Gadhafi’s forces in Libya. We brought him down. Obama then backed Syrian rebels to overthrow the dictator Bashar Assad. In 2015, U.S. forces supported a Saudi war to roll back the Houthi rebels’ victory in Yemen’s civil war.
None of these wars has produced a victory or success for us.
But taken together, they did produce a multitrillion-dollar strategic and human rights disaster. Meanwhile, China gained much from having its great rival, the world’s last superpower, thrashing about ineffectually in the forever wars of the Middle East.
“Great nations do no fight endless wars,” said Trump.
Yes, they do. As the British, French, Germans, Japanese and Russians showed in the last century, that is how they cease to be great nations.
via ZeroHedge News https://ift.tt/30FoLoT Tyler Durden
When even the otherwise bullish Goldman Sachs says that something wicked this way comes, and that the VIX is far too low for the coming close encounter, it probably makes sense to listen.
In his latest note published earlier today, Goldman’s derivatives quant, Rocky Fishman, points out that – with the S&P hugging the 3,000 level – the VIX and S&P realized volatility are not far from 2019 lows, as are many global index volatility levels. Indeed, while implied vol, i.e., VIX, may be just inches away from single digits, realized volatility over the past month has been even lower, or just 8%, which is marginally above recent lows set in April and September, while the VIX has been in the 12 and 13’s.
That said, while the VIX may be low, it could certainly be lower. As Fishman points out, “it is normal for the S&P to see low vol as the index deliberately tests new highs,” and he further adds that the mid-12 level in the VIX when the SPX first closed above 3000 “was actually higher than the VIX was when most levels above 2400 were first reached”; as a reminder the VIX spend much of the second half od 2017 below 10.
Yet even so, Fishman – and by implication Goldman – is confident that the market is too complacent, for the simple reason that there are just too many catalysts coming up, the least of which is the upcoming July Fed meeting:
To the extent expectations of Fed easing were the drivers of the recent equity valuation expansion, the coming FOMC meeting will be closely watched for indications of the extent of potential Fed easing over the next year.
Additionally, over the next two months there will also be debt ceiling negotiations and another Brexit deadline. And while Goldman expects trade negotiations with China to wrap up well before 2020 elections there is a high probability of market-moving trade developments in the coming months as well.
As a result, “the combination of these events and weakening economic growth seem incongruous with very low vol, and we expect higher vol in H2 than in 2019-to-date.”
Not convinced? Then here is JPMorgan’s Market Intelligence team, which has listed what it believes are the top 6 risks for markets right now (via themarketear.com)
Monetary expectations – If the big upcoming decisions (ECB on 7/25 and/or the FOMC on 7/31) were to disappoint, the multiple expansion process could stall (or reverse)
Earnings – the earnings risks have actually declined a bit in the last few days. Loan growth is one of the best proxies of underlying economic activity and this was a bright spot in bank earnings (bank earnings overall were mixed w/NII-NIM and trading coming in mixed-to-bad but loan growth was strong and loan growth guidance was actually raised by a few firms). The qualitative tone from bank CEOs/CFOs also has been sanguine, at least relative to sentiment among investors. This doesn’t mean the 2020 EPS consensus will improve but it should stop bleeding (for now).
US-China trade – Substantive negotiations don’t appear to be occurring but neither side is very eager to escalate tensions at the moment (notwithstanding the occasional bellicose utterance from Trump). Note that headline risk may be skewed slightly to the upside to the extent the Commerce Department begins handing out some (partial) waivers for Huawei or if China makes a few (token) agricultural purchases
Global Growth – data lately has been better-than-feared and while growth has certainly cooled from 2018 and earlier in 2019, evidence suggests trends may be stabilizing (the 7/17 Beige Book certainly doesn’t point to an economy in need of aggressive easing).
Non-China trade – Trump won’t ever not talk about trade but the risk of the US imposing incremental tariffs on Mexico, Eurozone (autos), Japan, etc., doesn’t seem very high
US fiscal policy – fiscal policy in Washington is never easy but neither side is showing any appetite to weaponize the debt ceiling and that is all stocks care about (whether or not a shutdown happens is another story but this isn’t something the SPX would be terribly bothered by).
Of course, none of this matters any more. As Richard Clarida delineated the Fed’s new thinking, the US central bank is no longer data dependent, but is pre-data dependent – i.e. a pre-cog Fed – and the Fed will no longer respond to data that is, but to what the Fed believes the data will be. And since at at some arbitrary point in the future the economy will certainly contract and a recession (or depression) will ensue, this is now a sufficient reason for the Fed to cut rates as much as it wants at any given moment. Which is precisely what it will do in three weeks, in the process likely sending the VIX back under 10.
via ZeroHedge News https://ift.tt/2GeFVlB Tyler Durden
