If the bond market is correct, the U.S. economy is definitely heading into a recession. Over the past 50 years, there have been six previous occasions when the yield on three-month Treasury bonds has risen above the yield on ten-year Treasury bonds, and in each of those instances a recession has followed. Now it has happened again, and this comes at a time when a whole host of other economic indicators are screaming that a recession is coming. Of course we have seen recession indicators triggered at other times in recent years, and the Federal Reserve was able to intervene and successfully extend this cycle on multiple occasions. But now that the global economy is clearly the weakest it has been since the last recession, have we finally reached a breaking point?
Many on Wall Street are taking what happened at the end of last week extremely seriously. According to CNBC, we have not seen a yield curve inversion of this nature in 3,009 trading days…
Short-term government fixed income yields are now ahead of the longer part of the curve, delivering a strong recession indication that hasn’t happened since 2007.
The spread, or yield curve, between the 3-month and 10-year Treasury notes just broke the longest streak ever of being above 10 basis points, or 0.1 percentage point. The two maturities were last below that level in September 2007, a run of 3,009 trading days, according to Bespoke Investment Group.
3,009 trading days is a very, very long time.
And now we will see how inverted the curve becomes, because as Zero Hedge has aptly pointed out, the more inverted the curve become the “higher the odds of a recession”…
Why is the inversion of the 3 Month-10 Year curve – the first since 2007 – such a momentous occasion? Because not only is said inversion the most accurate recession leading indicator, having correctly “predicted” the last 6 recessions with no false positives, most recently inverting in 1989, in 2000 and in 2006, with recessions prompting starting in 1990, 2001 and 2008….
… it also feeds directly into every Wall Street recession model: the more inverted it is, the higher the odds of a recession.
To get an idea of what the models are currently showing, just check out this chart. At this moment, the odds of another recession are the highest they have been since the last one.
Many investors were hoping that the bond market would have better news for us on Monday, but instead things got even worse…
On Friday, markets were spooked when the yield curve inverted, a reliable recession signal though usually not an immediate one. That means the rate on a lower duration instrument rose above a longer duration security’s yield. In this case, it was the yield on the 3-month bill, at 2.44 percent Monday, moving above the 10-year yield, which sank as low as 2.38 percent, a more than 2-year low.
I know that just about everybody in America is writing about the Mueller Report right now, and I just posted an article about it too, but the outcome of that investigation is not going to change the trajectory of the global economy. It has been slowing down for quite some time, and that is the primary reason why we have seen an inversion of the yield curve…
“Yield curves are responding to what they see, to what I believe is a global economic slowdown,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “You don’t see this kind of move in curves, not just here but everywhere, unless you get one.”
Global central banks are already jumping into action, and I expect a tremendous amount of intervention as global economic conditions continue to deteriorate.
But there is only so much that they can do, and even though they have pulled a few rabbits out of the hat in recent years, at some point they are going to completely lose control.
Already, we are starting to see things happen that are very reminiscent of the last recession. For example, we are on pace for the worst year for store closings in all of U.S. history, and another major retailer just announced that they will be closing all their stores…
LifeWay Christian Resources announced Wednesday that it will be closing all remaining 170 stores this year and focusing on online sales. Carol Pipes, director of corporate communications for LifeWay, posted the announcement on the company’s website, explaining that it was “a strategic shift of resources to a dynamic digital strategy.”
Communities all over America, especially the more economically-depressed ones, are going to start looking really bleak as the number of empty buildings continues to rise. This is something that I have warned about for a long time, and now it is happening on a massive scale.
As I end this article, I once again want to mention a factor that is going to have an enormous impact on our economy throughout the rest of this year. The flooding in the middle portion of the nation has destroyed thousands of farms, and the National Weather Service is warning that the flooding that we have seen so far is just “a preview of what we expect throughout the rest of the spring”. This is already the worst flooding disaster for U.S. farmers in modern American history, and it is going to get much, much worse.
We are going to see another huge surge in farm bankruptcies, thousands of farmers will not be able to plant crops at all this year, food prices are going to rise dramatically, and a lot of families all over America are going to have a real problem making their food budgets stretch far enough.
There are so many factors hammering our economy right now. If the Federal Reserve is able to pull another rabbit out of the hat this time, it will be nothing short of a major miracle.
We are literally at a critical tipping point, and it is not going to be easy to pull us back from the brink this time.
via ZeroHedge News https://ift.tt/2USjGXT Tyler Durden
European markets managed gains on the day led by France & Germany…
Bund yields hover near 2016 lows…
US Futures started to ramp as Asia opened, and again as Europe opened then accelerated through the US open, hitting a wall around the EU close and zig-zagging lower from there…
On the cash side, Trannies and Small Caps outperformed with The Dow lagging…Ubiquitous closing panic-bid of course…
The opening spike was yet another big short-squeeze…
Banks managed gains for a change…
AAPL tumbled back below its 200DMA after the QCOM decision…
Credit markets ended the day wider in spread but rallied all day after the gap at the open…
Strong 2Y Auction provided additional support for the entire bond complex as yields barely budged despite equity gains…
30Y refused to budge…
And the yield curve continued to invert further…
The Dollar lifted back to yesterday’s highs as US opened but stuck there…
Crypto limped lower on the day led by Ripple…
WTI Crude managed to extend gains but USD strength sent PMs lower…
WTI held above $60 ahead of tonight’s inventory data..
Since Powell threw in the towel, Bonds (red) and Gold (orange) are notable outperformers with stocks (blue) the laggard and the dollar (green) marginally higher. Notice today’s action saw The Dow lift to unchanged post-Powell before tumbling…
via ZeroHedge News https://ift.tt/2JHg9ut Tyler Durden
A Tesla Model S on Autopilot recently had trouble handling a construction zone on a California freeway – and the entire incident was caught on dashcam video.
In the video, posted on YouTube by OC Detailing on March 25, 2019, the car is following along painted boundary lines in the left lane of a highway. Separating the freeway traffic is a median that, due to construction, moves away from the painted shoulder before moving back and encroaching upon the line, narrowing the area between the painted boundary and the physical border.
As the median begins to get closer to the painted boundary line, the Tesla appears to fail to recognize the physical barrier, clipping it at dangerous highway speeds.
You can watch video of the incident here:
The incident “scratched all the film down the side of the car and destroyed the left front wheel,” according to the video. There were no injuries.
Tesla often reminds drivers in these situations that just because it’s called “Autopilot” doesn’t mean that drivers can take their hands off the wheel or not be attentive. Unless, of course, you’re Elon Musk doing a promotional drive for a national news program.
via ZeroHedge News https://ift.tt/2FyYWOv Tyler Durden
“Mueller Finds No Trump-Russia Conspiracy”, read the front page headline of Sunday’s New York Times. Bit by bit, mainstream American consciousness is slowly coming to terms with the death of the thrilling conspiracy theory that the highest levels of the US government had been infiltrated by the Kremlin, and with the stark reality that the mass media and the Democratic Party spent the last two and-a-half years monopolizing public attention with a narrative which never had any underlying truth to it.
There are still holdouts, of course. Many people invested a tremendous amount of hope, credibility, and egoic currency in the belief that Robert Mueller was going to arrest high-ranking Trump administration officials and members of Trump’s own family, leading seedy characters to “flip” on the president in their own self-interest and thereby providing evidence that will lead to impeachment. Some insist that Attorney General William Barr is holding back key elements of the Mueller report, a claim which is premised on the absurd belief that Mueller would allow Barr to lie about the results of the investigation without speaking up publicly. Others are still holding out hope that other investigations by other legal authorities will turn up some Russian shenanigans that Mueller could not, ignoring Mueller’s sweeping subpoena powers and unrivaled investigative authority. But they’re coming around.
The question still remains, though: what the hell happened? How did a fact-free conspiracy theory come to gain so much traction among mainstream Americans? How were millions of people persuaded to invest hope in a narrative that anyone objectively analyzing the facts knew to be completely false?
The answer is that they were told that the Russiagate narrative was legitimate over and over again by politicians and mass media pundits, and, because of a peculiar phenomenon in the nature of human cognition, this repetition made it seem true.
The rather uncreatively-named illusory truth effect describes the way people are more likely to believe something is true after hearing it said many times. This is due to the fact that the familiar feeling we experience when hearing something we’ve heard before feels very similar to our experience of knowing that something is true. When we hear a familiar idea, its familiarity provides us with something called cognitive ease, which is the relaxed, unlabored state we experience when our minds aren’t working hard at something. We also experience cognitive ease when we are presented with a statement that we know to be true.
We have a tendency to select for cognitive ease, which is why confirmation bias is a thing; believing ideas which don’t cause cognitive strain or dissonance gives us more cognitive ease than doing otherwise. Our evolutionary ancestors adapted to seek out cognitive ease so that they could put their attention into making quick decisions essential for survival, rather than painstakingly mulling over whether everything we believe is as true as we think it is. This was great for not getting eaten by saber-toothed tigers in prehistoric times, but it’s not very helpful when navigating the twists and turns of a cognitively complex modern world. It’s also not helpful when you’re trying to cultivate truthful beliefs while surrounded by screens that are repeating the same bogus talking points over and over again.
I’m dealing with a perfect example of the perils of cognitive ease right now. Writing this essay has required me to move outside my familiar comfort zone of political commentary and read a bunch of studies and essays, think hard about new ideas, and then figure out how to convey them as clearly and concisely as possible without boring my audience. This movement away from cognitive ease has resulted in my checking Twitter a lot more often than I usually do, and seeking so much distraction that this essay will probably end up getting published about twelve hours later than I had intended. Having to read a bunch of scholars explaining the precise reasons why I’m acting like such an airhead hasn’t exactly helped my sense of cognitive ease any, either.
If you want to understand how the mass media duped millions into believing the Kremlin had infiltrated the highest levels of the US government, research the illusory truth effect, the phenomenon which causes people to mistake repeated assertions for truth. https://t.co/5pJMdqe3C2pic.twitter.com/0VG1aRQzd3
Science has been aware of the illusory truth effect since 1977, when a study found that subjects were more likely to evaluate a statement as true when it’s been repeatedly presented to them over the course of a couple of weeks, even if they didn’t consciously remember having encountered that statement before. These findings have been replicated in numerous studies since, and new research in recent years has shown that the phenomenon is even more drastic than initially believed. A 2015 paper titled “Knowledge Does Not Protect Against Illusory Truth” found that the illusory truth effect is so strong that sheer repetition can change the answers that test subjects give, even when they had been in possession of knowledge contradicting that answer beforehand. This study was done to test the assumption which had gone unchallenged up until then that the illusory truth effect only comes into play when there is no stored knowledge of the subject at hand.
“Surprisingly, repetition increased statements’ perceived truth, regardless of whether stored knowledge could have been used to detect a contradiction,” the paper reads.
“Reading a statement like ‘A sari is the name of the short pleated skirt worn by Scots’ increased participants’ later belief that it was true, even if they could correctly answer the question ‘What is the name of the short pleated skirt worn by Scots?’”
Stored knowledge tells pretty much everybody that the “short, pleated skirt worn by Scots” is a kilt, not a sari, but simply repeating the contrary statement can convince them otherwise.
This explains why we all know people who are extraordinarily intelligent, but still bought into the Russiagate narrative just as much as our less mentally apt friends and acquaintances. Their intelligence didn’t save them from this debunked conspiracy theory, it just made them more clever in finding ways of defending it. This is because the illusory truth effect largely bypasses the intellect, and even one’s own stored knowledge, because of the way we all reflexively select for cognitive ease.
You can understand, then, how a populace who is consuming repetitive assertions, innuendo, and incriminating questions on a daily basis through the screens that they look at many times a day could be manipulated into believing that Robert Mueller would one day reveal evidence which will lead to the destruction of the Trump administration. The repetition leads to belief, the belief leads to trust, and before you know it people who are scared of the president are reading the Palmer Report every day and parking themselves in front of Rachel Maddow every night and letting everything they say slide right past their skepticism filters, marinating comfortably in a sedative of cognitive ease.
And that repetition has been no accident. CNN producer John Bonifield was caught on video nearly two years ago admitting that CNN’s CEO Jeff Zucker was personally instructing his staff to stay focused on Russia even in the midst of far more important breaking news stories.
“My boss, I shouldn’t say this, my boss yesterday we were having a discussion about this dental shoot and he goes and he was just like I want you to know what we are up against here,” Bonifield told an undercover associate of James O’Keefe’s Project Veritas.
“And he goes, just to give you some context, President Trump pulled out of the climate accords and for a day and a half we covered the climate accords. And the CEO of CNN said in our internal meeting, he said good job everybody covering the climate accords, but we’re done with it, let’s get back to Russia.”
(And before you get on me about O’Keefe’s shady record, CNN said in a statement that the video was legitimate and disputed none of its content, saying only that it stands by Bonifield and that “Diversity of personal opinion is what makes CNN strong, we welcome it and embrace it.”)
Zucker, for his part, told the New York Times in an article published yesterday that he was “entirely comfortable” with CNN’s role in promoting the Russiagate conspiracy theory the way that it did.
“We are not investigators. We are journalists, and our role is to report the facts as we know them, which is exactly what we did,” Zucker said.
“A sitting president’s own Justice Department investigated his campaign for collusion with a hostile nation. That’s not enormous because the media says so. That’s enormous because it’s unprecedented.”
CNN prez Jeff Zucker: “We are not investigators. We are journalists, and our role is to report the facts as we know them, which is exactly what we did.” https://t.co/DiUjr7Nkbg
“We are not investigators”? What the fuck kind of dumbass shit is that? So it’s not your job to investigate whether what you’re reporting is true or false? It’s not your job to investigate whether the anonymous sources you’re basing your reports on might be lying or not? It’s not your job to investigate whether or not you’d be committing journalistic malpractice with the multiple completely bullshit stories your outlet has been humiliated by in the last two years? It’s not your job to weigh the consequences of deliberately monopolizing public attention on a narrative which consists of nothing but confident-sounding assertions and innuendo?
“We are not investigators.” So? You’re not dentists or firefighters either, what’s your point? That has nothing to do with the mountains of journalistic malpractice you’ve been perpetrating by advancing this conspiracy theory, nor with the inexcusable brutalization you’ve been inflicting upon the American psyche with your deliberate nonstop repetition of bogus assertions, innuendo, and incriminating questions.
The science of modern propaganda has been in research and development for over a century. If you think about how many advances have been made in other military fields over the last hundred years, that gives you a clear example of how sophisticated an understanding the social engineers must now have of the methods of mass manipulation of human psychology. We may be absolutely certain that there are people who’ve been working to drive the public narratives about western rivals like Russia, and that they are doing so with a far greater understanding of the concepts we’ve touched on in this essay than we have at our disposal.
The manipulators understand our psyches better than we understand them ourselves, and they’re getting more clever, not less. The only thing we can do to keep our heads while immersed in a society that is saturated with propaganda is be as relentlessly honest as possible, with ourselves and with the world. We’ll never be able to out-manipulate the master manipulators, but we can be real with ourselves about whether or not we’re selecting for cognitive ease rather than thinking rigorously and clearly. We can be truthful with our friends, family, coworkers and social media followers wherever untruth seems to be taking hold. We can do our very best to shine the light of truth on the puppeteers wherever we spot them and ruin the whole goddamn show for everyone.
It may not seem like a lot, but truth is the one thing they can’t manipulate, whether it’s truth about them, truth about the world, or truthfulness with yourself. The lying manipulators got us into this mess, so only truth can get us out.
* * *
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Bernie Sanders believes that FREE university education a “right, not a privilege.”
His fellow Bolshevik, Alexandria Ocasio-Cortez, also believes that tuition-free university “forms the basis of human dignity” and should be provided for free by any “moral society.”
They aren’t alone in holding these beliefs.
A recent survey conducted by CNBC shows that 60% of Americans support free university.
But what most of these people fail to realize is that there’s an enormous difference between an education and a university degree.
There’s obviously nothing wrong with a university degree. And for some professions they’re vital.
But a university degree is just an expensive piece of paper; it doesn’t actually confer any real knowledge.
An education, on the other hand, develops skills and mental agility to create real value in the world.
And while a university degree can cost you an enormous amount of money (students in America have taken out $1.4 trillion in student debt), an education can be completely free.
There are thousands of free resources out there that people can take advantage of to learn valuable skills.
For example, companies like Microsoft will teach you programming languages – for FREE – and then encourage you to apply for a job with them.
That’s an incredible opportunity to learn real-world, applicable skills that you can use to create an income for yourself.
In the same vein, Google recently announced a partnership with 120,000 libraries across the US to teach people how to code.
And 96% of Americans live near a library.
(That is not counting the thousands of other books you can learn from – for free – at the library.)
There are also websites (like edX.org) where you can take dozens of courses from places like MIT, Stanford, Harvard, etc., all for free.
So every time I hear someone whining about wanting free university education, I always ask them how many online courses they’ve taken. How many books have they read?
I typically receive nothing more than a confused look in return.
But that’s the nature of entitlements: people feel that they should have everything provided for them without having to lift a finger to help themselves.
This mentality is becoming an epidemic in the West.
The Bolsheviks like to talk about education as an ‘investment’. And, to be fair, a more educated society is likely more productive, safer, and prosperous.
But to demand that the entire country invest in people who refuse to invest in themselves first– that’s absolutely ludicrous… and almost guarantees a BAD investment.
Personally I have a number of philanthropic activities and genuinely enjoy doing what I can to help people.
Not too long ago I helped out a wounded US Army veteran who had lost his leg in Afghanistan.
He had been abandoned by the Department of Veteran’s Affairs, and was trying to raise close to $100,000 to have a new surgical procedure performed overseas.
(It was a ridiculous story– the FDA had banned the procedure in the US because they had deemed it ‘unsafe’. Unlike being deployed to Afghanistan, which they apparently think is perfectly safe.)
This guy Joe didn’t wallow in self-pity. He was busting his ass, using every resource he could find to fix his own problem.
That’s exactly the type of person I like to invest in– because you know they won’t squander your investment. They’ll cherish it and grow from it.
I invested in Joe… and as a result of his surgery, he not only danced at his wedding and participated in a 5K, but the FDA has now approved the procedure in large part to his success.
That was a great investment.
Let’s be honest– a lot of people waste away in university. They skip classes, drink beer, and learn nothing.
Others work their butts off to learn and live as much as they can, and genuinely become better people as a result.
This notion of treating them all the same, and investing equally in each of them, is beyond insane.
As a final point, I do want to remind you about another investment in education that I make each year.
For the past ten years, I’ve been sponsoring a 5-day long entrepreneurship workshop in Lithuania.
It’s free to attend– I pay for all of it. Again, it’s an investment. But I only accept people who demonstrate that they’re working hard to help themselves first.
The application deadline is coming up this Sunday (and we already have tons of applications for the year).
But I wanted to send out one final reminder– if you or anyone you know is a bright, talented, self-starter, check out the camp’s website here.
For many of our attendees, it’s been absolutely life-changing.
As extensively documented on this website, 2018 was a disastrous year to forgot for most hedge funds, which suffered another year of underperformance compared to both their benchmark and the S&P500, as most once again failed to generate alpha, resulting in a compensation plunge for the “smartest traders in the room.” Alas, as the latest annual report from New York State Comptroller Thomas DiNapoli reveals, 2018 was also a dismal year for broader Wall Street compensation in particular and the securities industry in general, even as overall profits rose by double digits.
In a surprising turn of events, DiNapoli reported that despite securities industry profits in 2018 rising by 11%, the average bonus paid to industry employees in New York City declined by almost 17% to $153,700. This was not only the lowest average bonus since 2015, it matches the average bonus payment received all the way back in 2005. In other words, the average Wall Street bonus has remained unchanged for 13 years, with the peak still the $191,400 hit in 2006 with 2017 coming close at $184,400. Yet despite the lamentations of investment bankers everywhere, the $154K bonus was still double the average salary for non-financial New Yorkers.
Wall Street’s total bonus pool dropped 14% to an estimated $27.5 billion as employment in the industry increased in New York City. One big caveat: the estimate does not include stock options or other forms of deferred compensation for which taxes have not been withheld.
“Despite a sharp decline in the financial markets in the fourth quarter of 2018, the securities industry still had a good year with increased profits and employment,” DiNapoli said. “Profits grew in 2018 and have nearly doubled since 2015. Bonuses declined in 2018, but the average bonus was still double the average annual salary in the rest of the City’s workforce. It’s too soon to say how the industry will fare in 2019, but trade tensions, a slowing global economy and greater economic uncertainty are all factors that could affect results.”
Every year, DiNapoli’s office releases an estimate of bonuses paid to securities industry employees who work in New York City during the traditional bonus season. Bonuses paid by firms to their employees located outside of New York City (whether in domestic or international locations) are not included. The Comptroller’s estimate is based on personal income tax trends and includes cash bonuses for the current year and bonuses deferred from prior years that have been cashed in.
Despite increased market volatility, and the worst December for the Dow Jones Industrial Average since 1931, the industry had an 11 percent growth in pretax profits for the broker/dealer operations of New York Stock Exchange member firms (the traditional measure of securities industry profits). Profits totaled $27.3 billion in 2018 — up from $24.5 billion in 2017 — the highest level since 2010 and 81 percent higher than in 2015 after adjusting for inflation. Curiously, none of this increase trickled down to workers in the form of higher all in comp.
The report also revealed that employment in New York City’s securities industry increased by 4,700 in 2018 to 181,300 jobs, the highest level in a decade. With solid gains in four of the past five years, employment in the securities industry in the city is still 4 percent smaller than before the financial crisis in 2007. In contrast, the rest of the private sector in the city has grown by 25 percent since 2007.
Some other findings in this year’s report:
Trading revenue was up 22 percent during the first three quarters of 2018, but was down 6 percent in the fourth quarter. For the year, trading revenue was up 17 percent and accounted for 6 percent of total revenue in 2018.
The average salary (including bonuses) in the city’s securities industry ($422,500 in 2017, the latest annual data available) was more than five times higher than the average in the rest of the private sector ($77,100). Nearly one-quarter (24 percent) of the industry’s employees in the city earned more than $250,000, compared with less than 3 percent in the rest of the city’s workforce.
The industry accounted for less than 5 percent of the private sector jobs in the city in 2017, but it generated more than one-fifth of all private sector wages paid in the city. DiNapoli estimates that nearly 1 in 11 jobs in the city are either directly or indirectly associated with the securities industry.
Securities-related activities are a major source of revenue for both the state and the city. DiNapoli estimates that the securities industry accounted for 18 percent ($14 billion) of state tax collections in state fiscal year (SFY) 2017-18 and 7 percent ($4.2 billion) of city tax collections in city fiscal year (CFY) 2018.
And with banks already warning of sharp drops in trading revenue in 2019, the bad news on pay will continue this year. Compensation including bonuses and salaries for 2019 is likely to fall as pressure to lower fees and volatile markets weigh on firms’ revenue, Johnson Associates said last month.
As the MSM pretends we all have goldfish brains and can’t remember that they spent the last two years convicting Donald Trump in the court of public opinion, the New York Postis out with “Mueller Madness” brackets to determine who in the media takes the cake for the peddling the most fiction.
The president’s haters no doubt wish to memory-hole collusion and move on to the next anti-Trump theory. But not so fast: We want to laurel the punditry “champion” — the one who peddled the most nonsensical nonsense, the wildest inanities, the weirdest theories and unsubstantiated stories.
Our contenders are divided into four groups (not unlike NCAA conferences): the print journalists, the cable TV talkers, the Twitterati and the network news reporters and “analysts.” And the brackets are seeded, with the most visible and influential figures contending against the lesser-known.
Following a very aggressive counter rally off the December lows we remain inside the larger trading range of 2018, other than small pullbacks the Q1 rally remains technically uncorrected, but let’s be clear:
Everybody’s chasing reality here: The US administration, the Fed and Wall Street.
The US administration promised 3-4% GDP growth and shrinking deficits. Neither is happening, growth is slowing and we just had the largest monthly deficit in US history.
The Fed went from autopilot on the balance sheet and rate hikes to neither. Key point: They will not tell you a recession is coming and rate cut risk is rising.
Wall Street predicted continued earnings growth for 2019 now we have an earnings recession at least in Q1 with -3.7% earnings growth a growth estimates for full year 2019 may still be too high.
Given the uniformity of overly positive projections that have turned out not to be true, can everyone simply take a step back and acknowledge some uncertainty here? The answer is apparently no. Wall Street is projecting new market highs to come, any negatives that were not projected in the first place are dismissed as temporary glitches and an inverted yield curve? Not a problem. Don’t worry say investment houses such as Goldman Sachs. Never mind that the indicator has a 85% track record of predicting a recession to come.
So nobody predicted the slowdown, the inversion, the earnings recession, but everybody is busy declaring them to be worthy of ignoring. Got it.
I just can’t help myself. Perhaps this is why Brian Sullivan called me “Sven the Sarcastic” on CNBC this morning
And I do get it, as I outlined in the segment above we have 2 potential upside catalysts in front of us.
A potential China trade deal, a carrot that is continuously dangled in front of markets and perhaps hope that there will be a last Brexit miracle. All possible I suppose, but what if there’s a China trade deal, but a recession is still coming? Nobody is asking that question and the underlying reality is again largely ignored.
Some reality based risk factors to consider:
Macro:
Global growth continues to slow and Q1 earnings reports/outlooks can ill afford to disappoint. However a coming jump in growth in Q2 would not be surprising as there have been plenty of previous examples of a weak Q1 GDP picture.
Yield curve inversion has a 85% track record of predicting a recession, yet there’s a lot of denial going on that a recession can unfold.
The Upside: With a China deal and/or Brexit miracle a recession may get delayed and this could result in a major rally yet to come for a final game of musical chairs before the eventual rug gets pulled, but let’s not kid ourselves this business cycle is long in the tooth
The Downside: Recession may come a lot sooner than anybody expects. Case 2000/2001. Markets topped in 2000, yield curve inverted, Fed stopped raising rates and 6 months later we had a recession. Looks very similar to now.
The Fed has removed the market carrot of dovishness by going full frontal dovish last week and markets sold off. The Fed has been a key driver of the 2019 rally. Now that carrot is gone and here we are 10 years after the financial crisis with Europe running negative rates and over $10 trillion in negative yield debt floating about and record corporate debt of over $6 trillion. Quite the recovery.
Technical:
Risk of major topping patterns. Lower highs on all the major indices. Last week the rally stopped just below the January 2018 highs, we need to see new highs or these patterns remain in play.
The 2009 broken trend line has been rejected again. Hence risk remains that Q1 may have been a bear market rally. Unconfirmed (also see “The Reckoning”)
In March the rally diverged significantly and recent highs on $SPX and $NDX were deceiving as they were once again driven by big cap tech while we saw massive underperformance in key indices such as financials, small caps, transports. The message of these indices: Slowdown.
$RUT peaked on February 22nd over a month ago. And look at the underperformance in some of the sectors I mentioned in the interview:
Buybacks are coming out of the system in the next few weeks reducing liquidity.
Q1 earnings and their outlooks. Will companies be forced to reduce outlooks?
And finally: Watch the wedge. It almost broke yesterday, but got saved with gap up today on a relief rally as yields are retreating off of overbought readings on bond and short term oversold readings on indices:
But no worries. Just ignore it all. Perhaps a dovish Fed and a China deal will be enough. What if it’s not?
Did I mention potential major topping patterns?
I guess nobody is asking that question. Too busy chasing reality.
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via ZeroHedge News https://ift.tt/2uu9ide Tyler Durden
Just three months after what many said was a retaliatory move against the arrest of Huawei’s CFO, when a Chinese court ruled in favor of Qualcomm against Apple, banning the sale of some iPhone models across China, now it is – perplexingly – the US’ turn.
Apple shares are tumbling back into the red following a decision by International Trade Commission Judge MaryJoan McNamara recommending an import ban on certain iPhones, due to infringement of Qualcomm patents.
Bloomberg reports that the case is one of two that Qualcomm brought at the trade agency, seeking an import ban on iPhones to give it greater leverage in technology licensing negotiations. Qualcomm says it’s due billions of dollars in unpaid royalties on the iPhone as the two tech giants argue over the value of the chipmaker’s patents.
The commission is scheduled to release its final decision in the other case later Tuesday.
There is some hope for Apple, as the judge’s findings are subject to review by the full commission, which has the power to block imports of products that infringe U.S. patents.
via ZeroHedge News https://ift.tt/2CGMg7o Tyler Durden
“The Special Counsel’s investigation did not find that the Trump campaign or anyone associated with it conspired or coordinated with Russia … to influence the 2016 US presidential campaign.”
So stated Attorney General William Barr in his Sunday letter to Congress summarizing the principal findings of the Mueller report.
On the charge of collusion with Russia, not guilty on all counts.
After two years of hearing from haters in politics and the media that President Donald Trump was “Putin’s poodle,” an agent of the Kremlin, guilty of treason, an illegitimate president who would leave the White House in handcuffs and end his days in prison, we learn the truth.
It was all a bright, shining lie.
Reeling from Trump’s exoneration, big media are now scurrying to their fallback position: Mueller did not exonerate Trump of obstruction of justice.
But Mueller was not obstructed. No one impeded his labors.
As for Trump’s rages against his investigation, they were the natural reaction of an innocent man falsely accused and facing disgrace and ruin for a crime he did not commit, indeed, a crime that had never been committed.
The House Judiciary Committee may try to replicate what Mueller did, and re-investigate obstruction. Fine. This would confirm what this whole rotten business has at root always been about: a scheme by the deep state and allied media to bring down another president.
The Mueller investigation employed 19 lawyers and 40 FBI agents. It took two years. It issued 2,800 subpoenas. It executed 500 search warrants. It interviewed 500 witnesses. And it failed to indict a single member of Trump’s campaign for collusion with Russia to influence the 2016 election.
Which raises this question:
If Mueller could find no collusion, after an exhaustive two-year search, what was the compelling evidence that caused James Comey’s FBI and Barack Obama’s Department of Justice to believe that such collusion had occurred and to launch this investigation?
Sunday, after Barr’s summary of the Mueller report became public, Trump aired his justified anger: “It’s a shame that our country had to go through this. To be honest, it’s a shame that your president has had to go through this. … This was an illegal takedown that failed.”
Is there not truth in this?
Millions of Americans still believe what is now a manifest falsehood — that their president collaborated with Putin in cheating Hillary Clinton out of the presidency. The legal bills of Trump, his family, his campaign aides and his White House staff must be huge. Careers, reputations have been damaged.
The nation has been distracted and bitterly divided over this since Trump’s first days in office. He has had a cloud over his presidency since he gave his inaugural address. Any ability the president had to fulfill his campaign pledge and negotiate with the largest country on earth, Russia, a superpower rival, has had to be put off.
Is it unfair to ask: Who did this to us?
Who led the Justice Department into believing Trump conspired with the Russians? Why did it take two years to discover there was no collusion? Who gave Putin and the GRU this victory by helping to tear our own country apart?
Our establishment is forever demanding apologies. Where are the apologies for the outrageous accusations that Trump was guilty of something next to treason?
Sen. Joe McCarthy did not do a fraction of the damage to the reputations of Dean Acheson or George Marshall that the elite media have done, unjustly and maliciously, to the reputation of Donald Trump.
Years after French Artillery Capt. Alfred Dreyfus was convicted of colluding with the Germans in the late 19th century, and was sent to Devil’s Island, evidence against another officer emerged.
Soon, it was Dreyfus’ accusers who were in the dock of public opinion.
That needs to happen now. The instigators of this investigation, launched to bring down a president, have damaged and divided this nation, and they need to be exposed, as do their collaborators in the press.
The roots of Mueller’s investigation go back to the Clinton campaign’s hiring of the opposition research firm Fusion GPS to dig up dirt on Trump. Fusion GPS hired ex-British spy Christopher Steele. He had sources in Russian intelligence who provided him with the contents of his infamous dossier. This was delivered to a grateful cabal at the FBI, which used it as the basis of a FISA court warrant to surveil the Trump campaign.
The dirt in the Steele dossier, much of it false, would be secretly shared with Trump-haters in the media to torpedo his candidacy; then, when Trump won, to destroy his presidency before it began.
Now that Trump has been exonerated, the story of how his accusers, using the power of the state, almost murdered a presidency with lies, propaganda and innuendo, needs to be brought out into the sunlight.
For democracy dies in darkness, and this can’t happen again.
via ZeroHedge News https://ift.tt/2FB07gu Tyler Durden
