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As President Trump’s demands that funding for his border wall be included in a bipartisan border security bill continue to fall on deaf ears, the president once again blasted intransigent Democrats for refusing to cooperate on the wall, claiming he wouldn’t have needed to send another 3,600 troops to the border if we had a “real Wall” in place.

As “tremendous numbers” of people travel through Mexico toward the US border, Trump has sent a “Human Wall” of soldiers to defend against the next round of migrant caravans. But if the wall had already been built, the advancing caravans would be a “non-event.”

Tremendous numbers of people are coming up through Mexico in the hopes of flooding our Southern Border. We have sent additional military. We will build a Human Wall if necessary. If we had a real Wall, this would be a non-event!

— Donald J. Trump (@realDonaldTrump) February 5, 2019

The tweet followed a Politico report claiming that Trump isn’t planning to declare a national emergency to circumvent Congress and build the wall during the State of the Union on Tuesday.

But the calls for a wall of military personnel beg the question: Is this the human wall that Trump has in mind?

via ZeroHedge News http://bit.ly/2DVz8MR Tyler Durden

Authored by Patrick Buchanan via The Unz Review,

“Once that picture with the blackface and the Klansman came out, there is no way you can continue to be the governor of the commonwealth of Virginia.”

So decreed Terry McAuliffe, insisting on the death penalty with no reprieve for his friend and successor Gov. Ralph Northam.

Et tu, Brute?

Yet Northam had all but sworn Saturday he had no knowledge of the 1984 yearbook photo and that he was not either man in the photo.

McAuliffe, who is considering a run for president, joined Kamala Harris, Elizabeth Warren, Bernie Sanders, Cory Booker, Julian Castro and Joe Biden in the pile-on. All had washed their hands of Northam.

That a moderate Democratic governor is near friendless in a fight for his life reveals much about the Democratic Party.

Earlier last week, Northam was at the center of another blazing controversy. He had backed legislation to permit abortions up to birth.

And then he volunteered that, if a child were born after a botched abortion, the “infant would be resuscitated if that’s what the mother and the family desired, and then a discussion would ensue between the physicians and the mother.”

Northam seemed to be not only endorsing third-trimester abortion, but infanticide, “mercy killing,” the murder of a living but wounded baby after birth. A public outcry forced the legislature to back off the bill.

Then the photo from the yearbook of Eastern Virginia Medical School surfaced. Yet, in term of moral gravity, which is worse?

Public advocacy of late-term abortions with an option to execute babies who survive, or a stupid and insensitive 35-year-old photo of two beer-drinking guys, one dressed up in Klan costume, the other in blackface.

Other Democrats are saying that even if Northam is not in the “racist” photo, he admitted to putting shoe polish on his face, to imitate Michael Jackson and his moonwalk, for a 1984 dance contest.

To some Democrats, third-trimester abortions are a step forward for women’s rights. Gov. Andrew Cuomo was cheered in Albany for enacting a law to guarantee late-term abortions should Roe v. Wade be overturned.

By week’s end, Virginia Democrats were bewailing the “horrible” history of their state, where, in 1619, the first slave ship arrived at Point Comfort with men and women from Africa who would work the plantations until the Civil War ended, 250 years later.

One cannot rewrite history.

Four of America’s first six presidents – Washington, Jefferson, Madison, Monroe – were Virginians. All were slave owners. Richmond, the capital of Virginia, was the capital of the Confederacy. The commander in chief of the Confederate armies was a Virginian, Robert E. Lee.

Northam attended Virginia Military Institute, where Thomas Jonathan (“Stonewall”) Jackson had been Instructor of Artillery. The VMI cadet corps fought proudly in the Battle of New Market.

The most memorialized of Virginia’s heroes, in its monuments and statues, are colonists, Revolutionary War and Confederate soldiers and statesmen, and 19th- and 20th-century senators and governors. Almost all supported slavery or segregation.

When the Warren Court outlawed segregation in 1954, Virginia and the South replied with the Dixie Manifesto, declaring open defiance and “massive resistance” to the court order to integrate.

Not until Nixon’s presidency was the order carried out.

In recent years, there has been a running debate about what kind of country America is.

Is she a blood and soil nation, a separate people, with their own unique history, heroes, holidays, language, literature, myths and music? Or is America a propositional nation, united solely by its values, whose mission it is to transmit these values to mankind?

The question raised this weekend, however, is even more divisive.

Is America a good country, or has she, like Virginia, such a past of sins and crimes as to make her eternally ashamed and for which she should make eternal amends? Does America owe the world?

Should Western civilization be held responsible for what it has done through the centuries to persons of color the world over? Should we conduct a purging of monuments to all of America’s “white racists,” as antifa and its allies are determined to do in Virginia?

The Democratic Party may believe that by throwing Northam to the wolves it will satisfy these forces. It won’t.

We are at the beginning of a Kulturkampf to purge America of all monuments and tributes to the white males who created, built and ruled the country, and once believed that they, their nation, their faith, and their civilization were superior to all others. And, without apology, they so acted in the world.

Those two guys drinking beer in blackface and Klan robes and a hood thought they were being funny, but to the unamused members of a radicalized Democratic Party, there is nothing funny about them.

And, after Northam, these intolerant people will demand that the Democratic Party nominate a candidate who will echo their convictions about America’s past.

via ZeroHedge News http://bit.ly/2Gvly4H Tyler Durden

Scrambling after reports about his steamy relationship with former “So You Think You Can Dance?” host Lauren Sanchez was exposed by a series of reports published by the National Inquirer, Amazon founder and CEO Jeff Bezos pulled a $20 million Super Bowl advertisement for his space exploration company Blue Origin after it was revealed that Sanchez – who runs a photography company – shot some of the footage for the ad, according to the New York Post.

And instead of running the Blue Origin ad, Bezos had the Washington Post scramble to put together an ad featuring a voice-over provided by Tom Hanks (who famously played legendary Post editor Bob Bradley in the movie The Post) in just one week.

Since that ad aired, some on twitter have complained that the $5.25 million spent by WaPo on the ad spot would have been put to better use by hiring more journalists for the paper’s newsroom.

$5.25 million could pay for 10 journalists making $50,000 a year for 10 years.

— Jason Riley💎 (@OMGROFLOLJK) February 3, 2019

The melodramatic ad also accrued criticism for the awkward timing: Buzzfeed, Vice, HuffPo and a handful of other media outlets had just announced layoffs that would impact hundreds of journalists. WaPo had previously disclosed that it purchased the spot when it became available last week. Though it’s not clear whether the WaPo ad took the slot formerly reserved for the Blue Origin commercial, or whether one of the other Amazon commercials did.

Amazon aired ads for its Alexa digital assistant as well as its Amazon Prime service. Meanwhile, Bezos partied with Patriots owner Bob Kraft (without Sanchez in tow) and was also spotted hanging out with NFL Commissioner Roger Goodell.

via ZeroHedge News http://bit.ly/2BkNoNs Tyler Durden

With the Turkish Lira surging in recent months, largely on the back of recent dollar weakness coupled with lack of Turkish economic horror stories, it had been a while since we got a reminder that Turkey is now a truly authoritarian state in which president Recep Tayyip Erdogan is the country’s de facto dictator, having been granted executive powers last year.

On Tuesday, we got just such a reminder, when Erodgan escalated his campaign to seize the nation’s largest listed lender, Turkiye Is Bankasi, when he urged Turkey’s puppet parliament to vote for the takeover.

Shares of the bank, which is partially owned by Turkey’s main opposition party, tumbled after Erdogan told his ruling AK party’s lawmakers in Ankara on Tuesday that “Isbank will become the property of the Treasury, with the permission of God.”

While the opposition CHP party, which has been repeatedly targeted by Erdogan in the past, doesn’t get any dividends from its 28% stake in Isbank, Erdogan accuses it of “exploiting” the memory Mustafa Kemal Ataturk, the father of modern Turkey, who bequeathed Isbank shares to the party he created in his will. Erdogan, always eager to nationalize any valuable asset so it can then become part of the Erdogan family empire, has contended that what once belonged to the nation’s founder shouldn’t be owned by a political faction, especially not one which opposes him.

Naturally, any ad hoc nationalization by Erdogan of a major financial institution would lead to market chaos and flight of foreigners from the emerging market; predictably Isbank has said in the past that any effort to nationalize it would amount to a financial crime. Meanwhile, CHP has so far resisted Erdogan’s demands to give up its equity stake and its four seats on the bank’s board although it may have no choice but to comply with the “parliament’s” wishes.

And while the AK party lacks the parliamentary majority needed to unilaterally change the laws on the bank’s ownership – for now – according to Bloomberg Erdogan suggested its junior partner in the assembly, the nationalist MHP, would support his legislative efforts to enable the unprecedented takeover.

Isbank shares plunged as much as 6% following Erdogan’s comments and were trading 1.2% lower as of 1 p.m. in Istanbul. The Turkish lira, which inexplicably continues to surge despite Turkey’s ongoing episode of rampant inflation, also trimmed gains, trading 0.2% higher at 5.2067 per dollar.

To be sure, there is a reason why the market may be taking Erdogan’s threats as hollow, which may reflect an effort to energize his base before municipal elections in March: it’s not the first time he has vowed to take over Isbank. In fact, his aides first began floating the idea of nationalizing Isbank in 2015. While so far the bank has resisted Erdogan’s nationalization push, all it takes is for one time to be different.

via ZeroHedge News http://bit.ly/2SsrXnh Tyler Durden

Authored by Lance Roberts via RealInvestmentAdvice.com,

On December 25th, I penned “My Christmas Wish” where in I stated that is was “now or never” for the bulls to make a stand.

“If we take a look back at the markets over the last 20-years, we find that our weekly composite technical gauge has only reached this level of an oversold condition only a few times during the time frame studied. Such oversold conditions have always resulted in at least a corrective bounce even within the context of a larger mean-reverting process.”

“What this oversold condition implies is that ‘selling’ may have temporarily exhausted itself. Like a raging fire, at some point the ‘fuel’ is consumed and it burns itself out. In the market, it is much the same.

You have always heard that ‘for every buyer, there is a seller.’  

While this is a true statement, it is incomplete.

The real issue is that while there is indeed a ‘buyer for every seller,’ the question is ‘at what price?’ 

In bull markets, prices rise until ‘buyers’ are unwilling to pay a higher price for assets. Likewise, in a bear market, prices will decline until ‘sellers’ are no longer willing to sell at a lower price. It is always a question of price, otherwise, the market would be a flat line.”

We now know where the buyers were willing to start buying again.

Let’s take a look at that same technical indicator just one month later.

Now, let me remind you this is a WEEKLY indicator and is therefore typically very slow moving. The magnitude of the advance from the December 24th lows has been breathtaking.

Short-term technical indicators also show the violent reversion from extreme oversold conditions back to extreme overbought.

The McClellan Oscillator also swung from record low readings to record high readings in the same time frame as well.

But it isn’t just the technical change that has had a violent reversion but also the rush back into equities by investors.

Oh wait, that didn’t actually happen.

As noted by Deutsche Bank’s Parag Thatte noted recently:

“While the S&P 500 rallied +15% since late December, equity funds have continued to see large outflows. As Thatte elaborates, “US equity funds in particular have continued to see large outflows (-$40bn) since then, following massive outflows (-$77bn) through the sell-off from October to December.”

This confirms our concern the recent rally has primarily been a function of short-covering and repositioning in the markets rather than an “all-out” buying spree based on a “conviction” the “bull market” remains intact.

David Rosenberg recently confirmed the same:

“Let’s go back to December for a minute. This was the worst December since 1931, mind you, followed by the best January since 1987. This is nothing more than market that has gone completely manic.

To suggest that there is anything fundamental about this dead-cat bounce in equities is laughable. This is an economy, and a market, that couldn’t even sustain a 3% yield on the 10-year T-note. It sputtered at the thought of the Fed taking the funds rate marginally above zero on a ‘real’ basis, even as it feasted on unprecedented stimulus for a such a late-cycle economy.

Yes, Powell et al. helped trigger this latest up-leg, not just at last week’s meeting, but in the lead-up to the confab as well. The Fed has been crying uncle for weeks now.”

As I discussed previously, this also highlights the importance of long-term moving averages.

“Again, as noted above, given that prices rise and fall due to participant demand, long-term moving averages provide a good picture of where demand is likely to be found. When prices deviate too far above, or below, those long-term averages, prices have a history of reverting back to, or beyond, that mean.”

Well, as we now know, the market found support at the 200-week (4-year) moving average. As you will notice, with only a couple of exceptions, the 200-week moving average has acted as a long-term support line for the market. When the market has previously confirmed a break below the long-term average, more protracted mean-reverting events were already in process. Currently, the “bull case” remains intact as that long-term average has held…so far.

However, just because the initial test of the trend has held, it doesn’t mean the correction is over. As was seen in late 2015 and early 2016, the market held that trend during two sequential tests of the lows. While the bulls remain in charge for the moment, it will be whether the bulls can successfully manage a retest of lows without breaking the long-term trend.

The same goes for the 60-month (5-year) moving average. With the market currently sitting just above the long-term trend support line, the “bull market” remains intact for now.

Again, a monthly close below 2280 would suggest a more protracted “bear” market is underway.

The Bounce Hits Our Targets

As I noted in the Christmas report, we were looking for an oversold retracement rally to push stocks back toward the previous October-November closing lows of 2600-2650. The rally has hit, and slightly exceeded those original estimates.

But, we also said that on a monthly basis the rally could extend as high as 2700 which is roughly where January closed.

And, not surprisingly, it all turned out precisely as I stated:

“From yesterday’s closing levels that is a 12.7% to 14.8% rally. 

A rally of this magnitude will get the mainstream media very convinced the ‘bear market’ is now over.”

It is too early to suggest the “bear market of 2018” is officially over.

But, the rally has simply been “Too Fast, Too Furious,” completely discounting the deteriorating fundamental underpinnings:

• Earnings estimates for 2019 have sharply collapsed as I previously stated they would and still have more to go.

• Stock market targets for 2019 are way too high as well.

• Despite the Federal Reserve turning more dovish verbally, they DID NOT say they actually WOULD pause their rate hikes or stop reducing their balance sheet.

• Trade wars are set to continue as talks with China will likely be fruitless.

• The effect of the tax cut legislation has disappeared as year-over-year comparisons are reverting back to normalized growth rates.

• Economic growth is slowing as previously stated.

• Chinese economic has weakened further since our previous note.

• European growth, already weak, will likely struggle as well. 

• Valuations remain expensive

You get the idea.

But more importantly, as recently noted by Sven Henrich, it also resembles much of what was seen at the previous two bull market peaks.

“Note the common and concurrent elements of the previous two big market tops (2000, 2007) versus now:”

• New market highs tagging the upper monthly Bollinger band on a monthly negative RSI (relative strength index) divergence — check.

• A steep correction off the highs that breaks a multi-year trend line — check.

• A turning of the monthly MACD (Moving Average Convergence Divergence) toward south and the histogram to negative — check.

• A correction that transverses all the way from the upper monthly Bollinger band to the lower monthly Bollinger band before bouncing — check.

• A counter rally that moves all the way from the lower Bollinger band to the middle Bollinger band, the 20MA — check.

• A counter rally that produces a bump in the RSI around the middle zone, alleviating oversold conditions — check.

• All these events occurring following an extended trend of lower unemployment, signaling the coming end of a business cycle — check.

• All these events coinciding with a reversal in yields — check.

• All these events coinciding with a Federal Reserve suddenly halting its rate hike cycle — check.

The rally we “wished” for on Christmas has come to fruition. However, it isn’t a rally to become overly complacent in as there remain significant challenges coming from weaker economic growth, rising debt levels, and slowing earnings growth.

But as I concluded in this past weekend’s missive:

“While markets can certainly remain extended for much longer than logic would predict, they can not, and ultimately will not, stay overly extended indefinitely. 

The important point here is simply this. While the Fed may have curtailed the 2018 bear market temporarily, the environment today is vastly different than it was in 2008-2009.  Here are a few more differences:

• Unemployment is 4%, not 10+%

• Jobless claims are at historic lows, rather than historic highs.

• Consumer confidence is optimistic, not pessimistic.

• Corporate debt is a record levels and the quality of that debt has deteriorated.

• The government is already running a $1 trillion deficit in an expansion not half that rate as prior to the last recession.

• The economy is extremely long is a growth cycle, not emerging from a recession.

• Pent up demand for houses, cars, and other durables has been absorbed

• Production and Services measures recently peaked, not bottomed.

In other words, the world is exactly the opposite of what it was when the Fed launched “monetary accommodation”previously. Logic suggests that such an environment will make further interventions by the Fed less effective.

The only question is how long will it take the markets to figure it out?”

I suspect not too much longer.

via ZeroHedge News http://bit.ly/2DkNjtx Tyler Durden

It’s been a while since we posted an update on how “world-renowned commodity guru” Dennis Gartman sees the markets ever since his “watershed” – and correct – so far bullish call that “stocks are headed higher” following Jay Powell’s capitulation, made one month ago. And as one would expect, considering that the Fed has only gotten more dovish since then, there has been no change in Gartman’s stance, and if anything, the authord of the Gartman letter has only gotten more bullish.

Follows the excerpt from his latest Gartman letter.

We remain positive of equities because of what we have said time and time again each morning for the past several weeks and which needs to be re-said here this morning yet again for nothing has changed: the Fed has indeed “changed” its monetary policies and this change was made clear by Mr. Powell’s comments of now more than a month ago and made clearer midweek last week following the FOMC meeting. The comments made by Mr. Powell in the post-meeting press conference made it clear that the Fed’s balance sheet will continue to be run-off through the process of its debt securities maturing but that this process may be more “patiently” pursued than had been previously understood. In fact, this “subtraction by maturation” process, as we refer to it, may actually be reversed if economic realities demand that it be so; that is, if the economy did in fact turn for the worse rather than  the better then the Fed would begin QE again. Thus, rather than pursuing the steady, targeted course of action requiring that $50 billion be allowed to mature-off each and every month, the Fed shall be more “patient” in so doing.

Further, we continue to pay bullish homage to the decision by the Chinese government to cut reserve requirements and taxes made three weeks ago. However, given the lengthy Chinese New Year celebration at the present time, those changes shall
have a lesser effect for a while. Nonetheless, those actions, coupled with the Fed’s change in policy noted above, have had a clear positive effect upon global markets. We are therefore long of equities in generic US terms, but we fear we’ve failed badly in not having added to the initial position for we had considered that we’d done enough simply to have turned away from a bearish perspective at the very proper time and then to have turned bullish of equities properly shortly thereafter. We shall have no choice but to become more bullish and when we do we shall add to our position by buying Chinese shares in ETF form. We’ll wait, however, until the Chinese New Year celebrations are nearly over before taking real action.

All of that said to this point, we still note that our International Index is down a rather material 1,133 “points” or -8.8% from the highs made last January 29th. However, those numbers are rather obviously growing smaller by the day. Too, for the year-to-date our Index is +845 “points” or +7.8%. More importantly, it is now a very material 1,134 “points” above the lows made on December 26th of last year or 10.7% from there. That, as we’ve said repeatedly of late, is indeed impressive for we have held to the investment thesis that market moves of 7% divide what are mere, common corrections… both higher and/or lower… from real, material trend changes. Further, we have held and we have promoted the thesis that until markets have gone past that 7% threshold with some real “sense of authority” we could not say that the trend has changed. So, for a while we were obviously concerned that stocks had risen clearly through that 7% “Maginot line” but had done so on less-than-stellar volume. Further, given the comments attendant to the chart at the upper left of p.1 this morning we are concerned that volumes have once again waned a bit.

At this point, we note that the CNN Fear & Greed Index…which until four weeks ago had been at uncommonly low, single-digit  levels for so much of the previous two months… has made its way to and slightly through 60 and is approaching over-bought territory, having closed yesterday at 64. However, it is not in true overbought territory yet. That requires that this index makes its way to at least 70 and preferably makes its way above 75 and then turns lower.

The history of this index strongly suggests that when it has been to single digits… and especially when it’s been there for some protracted period of time as it was for most of the last two months of last year, culminating on very late December when for a few brief moments of sheer, unmitigated panic it actually fell to 2!!! …a rally of some material nature follows. The CNN Index is continuing to prove its worth and so until it rises above 70…and then turns down….we’ve really no choice but to remain bullish. History continue to tell us that that is the proper course of action and as we said here yesterday and as we said last Friday, we are not of the mind to argue with History for once again History is a harsh mistress.

And there you have it: Gartman will remain bullish until everyone else is just as bullish.

via ZeroHedge News http://bit.ly/2UK2Aep Tyler Durden