Come to a Reason Happy Hour with Matt Welch in Austin on September 26!

||| Walter Bibikow / DanitaDelimont.com Attention, friends o’ Reason anywhere near Austin, Texas: Let’s have some adult beverages and lively conversation TOMORROW from 5:30 to 7:00 p.m. at a joint called Swift’s Attic!

I will be in town to moderate a panel at the Texas Tribune Festival featuring Libertarian Party National Chair (and Phoenix mayoral candidate) Nicholas Sarwark, Texas gubernatorial candidate Mark Tippetts, and Indiana Senate candidate Lucy Brenton, so we can talk about that stuff if you’d like. Or you could just regale me with stories about bats and bands and tacos. You decide! Here are the details (including all-important RSVPs):

Who: All 21-and-over friends and frenemies of Reason are welcome!
What: Happy Hour with Austin pals, featuring Matt Welch
When: September 26, 5:30-7:00 p.m. We may stay out later…
Where: Swift’s Attic, 315 Congress Ave, Austin, TX 78701
RSVP: abbey-dot-lee-at-reason-dot-org.

See you there!

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Signs Of The Gold Apocalypse: M&A And Fund Extinction

Authored by Tom Luongo,

For bear markets to truly end investor sentiment has to get to a point where they would rather walk on broken glass than buy that asset or asset class.  We’re reaching that point in the precious metals market.

In conjunction with that we also have to see arrogance on the part of short-sellers convinced that all rallies will be sold, keeping a lid on prices.  It doesn’t matter if buyers come in at higher prices or above significant technical support levels, they will push because they become convinced this is a one-way trade.

We see this in the government bond markets as well.  In traderspeak it’s called the [Insert Head of Central Bank Here] Put.  The Greenspan Put begat the Bernanke Put which morphed into the Yellen Put.

Over the past few months we’ve seen sign after sign that the gold and silver markets are nearing the end of their bear markets.  These are signs of extreme distress.  The first I’ve already mentioned, record speculative short positions among futures traders.

Then there was the re-balancing of Vanguard’s $2.3 billion Gold and Precious Metals fund into the Global Capital Cycles Fund, trimming exposure to precious metals to 25% of AUM — Assets Under Management.

And now we’re seeing the M&A (Mergers and Acquisitions) phase of the bear market.  Where companies begin merging to shave costs after having already cut back on production to preserve cash flow.

It was just announced that American Barrick Corp (NYSE:ABX) and RandGold Corp (NASDAQ:GOLD) are merging into one company.  The largest mining company by market cap in the world at around $18 billion.

Primary silver producers like Endeavor Silver (NYSE:EXK) are shuttering high-cost mines in this pricing environment.  Well run companies with low debt and strong balance sheets don’t do mergers like this, they tough it out or go on a hostile raid of assets under-valued by the market.

There is always something that stands in the way of Gold’s breakout.  I’m as frustrated by it as anyone else in the space.  But, the reality is that gold at this point is the retail investor’s hedge against government instability and loss of institutional faith.

I’ve made the point before and I’ll make it again, the last gold bull market was primed to go for two years before it finally began in earnest.  Gold made a low in 1999 but it took until after 9/11 for it to finally move above the important technical levels to force short sellers and heavily-forward-hedged producers like Barrick to lift their hedges and cover.

9/11 kicked off the last one, in my view.  The history on it is clear.  The U.S. government was attacked bodily that day which tore at the world’s view of its primacy.  The response from then FOMC Chair Alan Greenspan was to radically lower interest rates and open the liquidity taps.

That fueled the first leg of the decade-long bull market.  Then when his replacement Bernanke began pulling back and raising rates, he imploded first the marginal commodity markets, resulting in Bear Stearns’ failure and then a housing market collapse as the hot money turned cold and the banking system seized up.

Gold fell from $1033 to $681 during 2008 and the only response from the Fed was “Print, Baby, Print!”

This did not engender confidence. Gold’s second and more explosive wave of its bull market nearly tripled its price in just over two years.

Eventually, the central banks coordinated policy in 2011, the Swiss pegged the Franc to the Euro, Merkel was re-elected and that commitment to stability provided enough cross-market liquidity and confidence to rein in gold.

Because retail demand took off in the wake of the Bush v. Gore debacle and then an attack on U.S. soil for the first time since Pearl Harbor.  It lasted until the central banks finally coordinated action to soothe the worst fears of the financial markets in September 2011.

So, is that happening today?  No.  The rumblings are there.  Brexit, Italeave, the bureaucratic coup against Trump, this idiocy surrounding Kavanaugh’s confirmation, Syria, the end of coordinated QE from western central banks.

All the pieces are in place.  All that’s left is the catalyst.

But, everyday we see another headline of a major player in the space throwing in the towel is another data point that we are getting closer to that catalyst.

There is an extreme amount of leverage and misallocation of capital thanks to a decade of central bank largesse and destroying price discovery in the most important markets in the world, the sovereign bond markets.

Given that state of affairs when the catalyst occurs – Trump is impeached, Brexit fails, Merkel is overthrown in Germany, a King Leopold moment, or simply the outbreak of hostilities between the U.S. and Russia over Syria – it will be the ride of a lifetime for gold investors.

And an incredibly stressful time to be alive.

*  *  *

Join my Patreon because you think stress is bad.

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Nike Tumbles After Missing On Gross Margins; China, Latin America Sales

Moments ago Nike reported Q1 earnings which beat on the top and bottom line, with EPS of 67c beating the estimate of 63c (with a 14% tax rate), on revenue of $9.95BN, also just above the $9.94BN, if not quite above the high end of the forecast range which stretched to $10.20BN.

And yet, the stock reaction was rather negative, and that is being attributed to some on the modest miss in the Q1 gross margin which printed +44.2%, just below the consensus estimate of +44.3%.

Furthermore, a geographic breakdown of revenue shows that while revenues came in stronger than expected in North America and EMEA, they missed in China and Asia Pacific/Latin America, as follows (courtesy of Bloomberg)”

  • 1Q North America rev. $4.15 billion, estimate $4.10 billion
  • 1Q EMEA rev. $2.61 billion, estimate $2.60 billion
  • 1Q Greater China rev. $1.38 billion, estimate $1.40 billion
  • 1Q Asia Pacific & Latin America rev. $1.27 billion, estimate $1.30 billion

Nike also reported inventories of $5.2 billion, which unlike the build in prior periods was flat year over year, “primarily driven by a clean marketplace with healthy inventories across all geographies due to strong full-price sell through on new innovation.”

“We are delivering stronger global growth and profitability than we anticipated entering this fiscal year,” said Andy Campion, Executive Vice President and Chief Financial Officer, NIKE, Inc. “While foreign exchange volatility has increased, our underlying currency-neutral momentum continues to build as we transform how NIKE operates, drives growth and creates value for our shareholders.”

The company also announced that during the first quarter, NIKE repurchased a total of 17.8 million shares for approximately $1.4 billion. As of August 31, 2018, a total of 167.2 million shares had been repurchased under the company’s existing $12BN repurchase program for approximately $10.1 billion. In June 2018, the Board of Directors authorized a new four-year $15 billion share repurchase program that will commence upon the completion of the current program.

As a result of the geographic weakness, and the modest margin miss, the stock stumbled, dropping as much as 4%, before recovering some of its after hours losses.

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WTI Drops After Surprise Crude, Gasoline Build

WTI extended gains today after OPEC signaled it may not replace Iranian oil that’s disappearing from global markets as U.S. sanctions loom, but slumped off its highs of the day after Trump slammed OPEC for “ripping off the world.”

As Bloomberg noted, OPEC shrugged off the threat to Iranian supplies over the weekend, spurring some of the world’s most-sophisticated traders to forecast a return to $100-a-barrel oil. At such prices, crude demand “will be annihilated,” Petromatrix GmbH’s Olivier Jakob said.

“The market is assuming that OPEC will behave as they claimed they will at this meeting, but I don’t think that’s necessarily something that will be long-lived,” said Thomas Finlon, director of Energy Analytics Group in Wellington, Florida. A big reduction in Iranian exports “will cause the market to tighten up.”

Trump said OPEC is “ripping off the world,” in an address to the United Nations today.

 

API

  • Crude +2.903mm (-1.5mm exp)

  • Cushing +260k (-150k exp)

  • Gasoline +949k

  • Distillates -944k

A surprise crude build and Cushing stocks rose…

WTI (Nov) hovered at $72.30 into the API print (caught between OPEC and Trump comments) but kneejerked lower (back below $72) on the surprise build in crude and gasoline inventories.

“Oil prices at $72.00 is quite an interesting level we haven’t seen in a long time,” said Phil Streible, senior commodity broker at RJ O’Brien & Associates LLC. “Brent and WTI have been some of the better performing commodities over the last week, so you’re definitely going to have fund managers jumping on board trying to ride that wave a little bit higher.”

The bulls are levering up too, as Bloomberg notes that the total number of options traded on Brent crude surged on Monday to about 274,000 contracts, the highest ever, data showed.

The flurry was driven by record call trading — including bets on $100 a barrel or more — as the global benchmark reached an almost four-year high and major oil trading houses publicly predicted the return of triple digit crude for the first time since 2014.

“If Saudi Arabia doesn’t want to play ball with Trump and lift production then higher prices are a self-fulfilling prophecy,” said Richard Fullarton, founder of London-based oil hedge fund Matilda Capital Management. “That seems to be the trade for the next quarter.”

However, not everyone’s so bullish, we note Brent crude prices are set to stabilize in $70-$80/bbl range into the end of year as “another supply catalyst beyond Iran would likely be needed for prices to meaningfully break to the upside,” Goldman Sachs’ analysts including Damien Courvalin say in note Tuesday.

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Is The FOMC Drift Finally Dead?

Submitted by Kevin Muir of The Macro Tourist

Way back in August of 2013, two FRBNY staffers wrote a paper titled, “The Pre-FOMC Announcement Drift”. It was a great paper by David Lucca and Emanuel Moench which highlighted the tendency for the S&P 500 to rise in the period right before FOMC meetings.

The data they used was from 1994 to 2011 and it showed a clear pattern of the S&P 500 being bid going into the FOMC announcement.

The ‘tourist’s version

I have talked about this phenomenon in the past, and inevitability, a bunch of readers have chimed in to let me know that this anomaly has largely disappeared.

So, today I decided to do the work and update the FOMC Drift study for the past eight years.

I did it a little differently to save myself some time, but the gist is largely the same.

Instead of focusing on the intra-day data, I have taken the much easier route of calculating the returns for the day before the FOMC announcement (T-1), the day of (T+0) and the day after (T+1). Then I calculated the average daily returns of all other trading days not included in this set.

Here is the cumulative gain for each of those series since 1997 (as far back as Bloomberg let me go):

For the return of the “other days”, I straightlined the average of all days not in the set.

What jumps out immediately is how profitable this strategy was during the period from 2006 to 2009. The next easy observation is the steady rise from 2009 to 2015.

However, over the past three years, the strategy has definitely flatlined. Here are the individual returns for the T+0 days:

Look closely at the recent data. It’s less volatile, with larger declines and more muted rises.

So yeah, my readers (as is usually the case) are way smarter than me and have correctly identified that this strategy has recently been a push.

I am not ready to give up on it yet. This period also coincides with a relatively hawkish Fed.

It’s probably no coincidence that the Federal Reserve made its first hike in almost a decade on December 15th, 2015 and this was also the point where the FOMC Drift stopped working.

Given the change in the Fed’s policy bias, it would have been reasonable to forecast the FOMC Drift turning into the FOMC Skid, but yet the strategy has simply treaded water since that time. To me, this is encouraging. Wait until the Fed finally stops tapping on the brake – this strategy’s alpha might not be completely dead, merely taking a well deserved breather. I contend the FOMC Drift shouldn’t be banished to the dustbin just yet…

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Trump Attempts a Sweeping Reduction of Legal Immigration by Executive Fiat

Immigration RallyWhen it comes to slamming immigrants, the Trump administration is nothing if not tenacious. It failed to browbeat Congress into cutting back legal immigration—the kind that the Republican Party used to think was swell because these people were playing by the rules—in exchange for legalizing Dreamers or those who have grown up as Americans even though they were brought here as minors without proper authorization. So now it’s trying to reduce legal immigration through administrative means. It has slashed the refugee cap to its lowest level ever, it is making the asylum program unusable, it is taking work authorization away from the wives of high-skilled workers, it is making it far harder for people with H-1Bs visas to hang on to their visas, and so on.

But none of that compares to its “public charge” rule, which was originally leaked in the spring and was finally released on Monday. The final rule turns out to be better than the initial horror. But as expected, the administration is using its executive authority not just to slash legal immigration but to remake the family-based system—the one that conservatives loved when they believed in family values—along lines that Congress has explicitly rejected several times. If President Barack Obama had used his executive power so expansively to allow more immigration, Republicans would have surely gone bonkers.

The administration’s rule will give immigration bureaucrats sweeping powers to deny citizenship, green cards, or visa upgrades to any immigrant it deems a “public charge.” But its definition of public charge has nothing to do with the spirit of the 1891 law that it is invoking. That law was meant—in the frank language of its time—to keep out “idiots, lunatics, convicts” or otherwise indigent or disabled folks who couldn’t earn a living and would therefore become a ward of the state. In 1999, the Clinton administration defined “public charge” as anyone whose cash benefits through programs such as TANF (Temporary Assistance for Needy Families) and SSI (Social Security Income) accounted for 50 percent of their income. In other words, people primarily dependent on welfare.

Trump’s proposal would turn all that on its head.

As Vox‘s Dara Lind explains, the Trump plan breaks down benefits into two different categories. One is benefits that “can be monetized”—i.e., that have a dollar value attached to them—such as TANF, SSI, food stamps, and Section 8 housing benefits. The other is that cannot be monetized: Medicaid, low-income Medicare Part D assistance, and subsidized housing. She explains:

There are three tests, based on these categories, to reach the threshold for reliance on public benefits in a way that could all but disqualify an immigrant from a visa or green card:

  1. Individual use of “monetized” benefits over 12 consecutive months that total more than 15 percent of federal poverty guidelines for a single-person household ($1,821 in 2016), or
  2. Individual use of “non-monetized” benefits for more than 12 months in any previous 36-month period, or
  3. Any individual use of “monetized” benefits plus individual use of “non-monetized” benefits for more than nine months in any previous 36-month period

Under this system, the Cato Institute’s David Bier estimates, if an immigrant with a family of four uses $2.50 per day in cash and/or non-cash benefits, he or she will be denied a visa upgrade.

This is a little bit better than the administration’s original threshold of $1 per day for a single person or 50 cents per person for a family of four. And it won’t count welfare use by the American kids of immigrants against their parents’ visa petitions. Still, it’s pretty bad even from the standpoint of those who say “immigration, yes; welfare, no.” Why? Because instead of walling off the welfare state from immigrants so that more immigrants could be admitted, it is using the welfare pretext to stop immigration. Immigrants already by and large aren’t allowed to use means-tested federal cash benefits unless they are green card holders who’ve been in the country more than five years. This new rule won’t bar them from more welfare—cash or non-cash. It’ll just count its use against their immigration status. It is tantamount to saying “welfare, yes; immigration, no.”

And the administration will not just count the use of past benefits against prospective immigration applications. It will count predicted future use, giving immigration bureaucrats sweeping powers to weigh a “totality of factors.” Having a large family, for example, will be a “negative factor.” So will having a health condition while not having private health insurance, or being under 18, or over 65. On the flipside, having a household income between 125 and 250 percent of the Federal Poverty Guidelines would be a positive factor in favor of ltetting them in and an income over 250 percent would be a “strongly weighted positive factor.”

The only ones who’ll make it for sure under these rules are young, high-skilled singles making big bucks. Everyone else will be at the mercy of officials wielding those weights as weapons.

The Tump plan’s defenders claim that it is basically trying to emulate Canada’s point system, which gives preference to youth, skills, and linguistic ability. But that’s disingenuous. Canada uses its point system to expeditiously process twice as many immigrants as the United States on a per capita basis. The Trump administration wants to use theirs to restrict immigration.

Furthermore, Congress rejected this approach when it refused to pass the Bush-era comprehensive immigration reform bill. So Trump is basically doing an end-run around Congress—something that drove conservatives berserk when Obama attempted it on a much smaller scale by giving a temporary reprieve from deportation to about half of the country’s 11 million unauthorized immigrants. Indeed, Obama’s programs were a one-time thing for a finite number of immigrants. Trump’s scheme would apply to all future immigrants.

Anyway, Canada’s point system isn’t all that it’s cracked up to be. It is better than the U.S. system in many respects, but it has problems of its own; notably, its emphasis on high skills deprives the Canadian economy of the low-skilled workers it also needs. It had to rectify that problem by creating the Provincial Nominee Program, which gives provinces vast latitude to recruit the immigrants—high- or low-skilled—that best suit their economic needs.

Restrictionists have long aspired to slam America’s doors to all but the very selective few. This Trump scheme is a giant step in accomplishing that end. The good news is that in two months, at the conclusion of the notice and comment period, the government will almost certainly be sued to stop it.

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A Million Little Things Hopes You Want More Emotion-Driven Dramas: New at Reason

'A Million Little Things'Two new shows premiere tonight: Melodramatic, soapy A Million Little Things and kind of fun, kind of dumb comedy Single Parents. Television critic Glenn Garvin reviews them both:

Everybody’s comparing ABC’s new melodrama A Million Little Things to its fellow feel-good-now-feel-bad soap This Is Us. No doubt the success of This Is Us (average weekly viewers: 17.4 million) encouraged ABC to take a shot on form of programming long considered moribund by the network suits.

But for a clue to the real origins of A Million Little Things, listen to ABC’s advertising pitch about a group of friends jolted by tragedy: “They discover that friends may be the one thing to save them from themselves.” If that sounds a bit like “In a cold world, you need your friends to keep you warm,” the advertising catchphrase for the 1983 movie The Big Chill, you’re onto the real inspiration of A Million Little Things.

View this article.

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Dow Drops, Silver Pops, & Bond-Sellers Stop

At today’s close?

 

China was down in the early session (catching down to US markets after being closed) then flatlined in the afternoon session…

 

Italian stocks extended the outperformance as Spain lagged…

 

Futures show US equities starting to slide in the pre-market then reverse at 11amET, but Dow and S&P were unable to hold their algos bounce as Nasdaq surged… (ugly close)

 

On the week, Nasdaq remains the leader, Trannies the loser…

 

FANG stocks extended yesterday’s panic-bid ramp…

 

Treasury yields popped early in but faded lower as the day wore on. 30Y ended very modestly lower and the rest of the curve slightly higher in yield…

 

10Y Yield broken above 3.11% early on ended the day almost unchanged…

 

And the yield curve flattened modestly…

At the shorter-end, we note that the eurodollar curve is no longer inverted across Dec 19 to Dec 20…

 

The Dollar slipped lower on the day reversing overnight gains…

 

Yuan slipped lower…

 

The Argentine Peso plunged after the central bank governor unexpectedly resigned…

 

Cryptos had an ugly day after headlines on Mt.Gox Trustee selling…

 

Silver surged today as gold and crude trod water…

 

Silver notably outperformed Gold…

 

Sending the Gold/Silver ratio tumbling to 3-week lows…

 

Finally, we will give Gluskin Sheff’s David Rosenberg the last word – a reminder of what happened when Consumer Confidence was here before…

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Sweden Manhunt Underway After Car Accelerates Into ‘Crowd Of 100 Children And Teachers’

Police in Sweden have launched a manhunt after an assailant drove a car through a large crowd of approximately 100 children and 10 teachers, according to the Daily Express. 

A spokesman for Sweden’s police service said that children “threw themselves” out of the way of the car, which “accelerated into the group of students and teachers,” injuring two. 

“He drove into two of the students. One was injured on the wrist and possibly the other student was also injured,” said the spokesman. 

Police are searching for any information on the incident, which occurred at approximately 1pm local time as the group from Mjallby secondary school was walking from Hinnedalsvagen to Grundsjon for a reported social event. 

The vehicle is described as a “black or dark blue Saab” which was traveling at around 25 miles per hour when it drove into the crowd. The driver immediately fled the scene, and witnesses were unable to say if it was a man or a women. 

Last April, three people were killed and eight injured when a truck ran into a crowd on a Stockholm street in what authorities described as an act of terrorism. 

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“Can You ‘Feel’ The Complacency?”

Authored by Lance Roberts via RealInvestmentAdvice.com,

Yesterday, the market sold off modestly over continuing concerns of “tariffs” and trade wars. At least that was the headline reason. The real reason was simply that the market is overbought in the short-term and traders were taking profits in a light-volume session. As shown in the chart below, the sell-off yesterday is now turning previous resistance, when the market broke out to new highs, into support. As long as the market holds here over the next few days, we continue to expect a further, albeit bumpy, advance to 3000 by year-end.

In this past weekend’s missive, I wrote:

“However, between now and then, the markets will likely continue to try and push higher as investor confidence continues to swell, pushing investors to take on ever increasing levels of risk, particularly as it appears as if the economy is firing on all cylinders…

With the move in portfolios back to full target allocations, there is not much for us to do right now except to remain on the lookout for the risks which could rapidly take away our performance…At the moment, we are in good shape just to sit back and ‘watch the show.’”

Interestingly, that statement triggered an interesting email:

“Can you feel the complacency in your weekly newsletter? Just sayin’…kinda eerie. I know you know the risks, but to say at this point we need to sit back and ‘just watch the show’ as the S&P plows on to 3000 and beyond. It sort of puts you on the same side of the crowded ship with everyone else. How many times have you ingrained when everyone agrees something is going to happen, something else likely will.”

No, I haven’t abandoned all reason.

In the short-term, we have to participate with the “running of the bull” as long as possible. This isn’t the first time, that I have discussed being long-biased in portfolios. Here is what I recommended previously:

“Risk taken when valuations are rich and market action is poor can produce losses that entirely cancel the successful investment actions of other periods. Though periods of unfavorable valuation and market action can occasionally produce positive returns as well, they don’t produce positive returns reliably enough to justify the risk.

We continue to believe that bonds will continue to outperform stocks as they have most of the time over the last seven years and that stock market speculators will pay the price for overpaying for stocks.

However, for now, you need to be invested in the market and take advantage of this oversold rally. It will look and feel like we are entering a new bull market leg. The media will cheer it, they will ‘poo-poo’ the bears, and they will ensure you that the worst is behind you. It won’t be.”

By the way, that was on December 1st, 2007.

There are a lot of similarities between today and 2007.

Bullish trends were solidly in place.

And, just as in 2007, there was a clear preference of equities over bonds as well.

Of course, speculative fervor should not be surprising given the economy is of the LEAST concern since 2007 according to a recent Gallup survey.

Individuals are not only overly confident in the economy, but they are even MORE confident of “forward returns over the next 12-months” than they were in 2007, and only slightly shy of 1999.

And overall consumer confidence was only higher in 1969 and 1999. (The confidence composite is the average of both the University of Michigan and Census Bureau surveys.)

Of course, all of these indicators, when at similar previous levels, preceded some of the largest mean reverting events in the history of the financial markets.

Will this time be different.

Not likely.

But that doesn’t mean it all falls apart today. Tomorrow. Or even next month.

The one thing about bullish sentiment is that it begets more bullish sentiment. The more the market rises, the more ingrained the belief comes that it can only go higher. In a “Pavlovian” manner, as each “dip” is bought, the “fear” of loss is eliminated repeatedly teaching investors they should “only buy” and “never sell.”

This cycle can, does, and will last longer, and go farther, than logic would dictate.

This is why, as I noted over the weekend, we remain bullishly biased in portfolios for now.

“We are well aware of the present risk. Stop loss levels have been moved up to recent lows and we continue to monitor developments on a daily basis. With the trend of the market positive, we want to continue to participate to book in performance now for a ‘rainy day’ later.”

That “rainy day” is coming.

Just as it was in 2007. While market participants were all “giddy” about the prospects for the markets and a “Goldilocks economy,” there was a laundry list of things that had begun to issue warnings signals.

Currently, we have a growing list of warnings which are being quickly dismissed, and “priced in,” by the markets such as:

  • Growing divergences between the U.S. and abroad

  • Peak autos, peak housing, peak GDP.

  • Political instability and a crucial midterm election.

  • The failure of fiscal policy to ‘trickle down.’

  • An important pivot towards restraint in global monetary policy.

  • An unprecedented lack of coordination between super-powers.

  • Short-term note yields now eclipse the S&P dividend yield.

  • A record levels of private and public debt.

  •  Near $3 trillion of covenant light and/or sub-prime corporate debt. (eerily reminiscent of the size of the subprime mortgages outstanding in 2007)

  • Narrowing leadership in the market.

But, for now, this “wall of worry” has yielded little concern.

The more the market rises, the more reinforced the belief “this time is different” becomes.

As I wrote previously:

“This is why we have been saying for the last two weeks – the market is rising and you need to be invested…FOR NOW. However, this is not the next great leg of a bull market so this will be a good rally to liquidate positions into and begin setting your portfolio up for more protectionary investments going into [next year].”

That was on December 7, 2007.

Are we complacent?

Absolutely not.

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