In what may be the biggest shock from today’s European parliamentary elections, President Emmanuel Macron is set to suffer a blow with French voters set to hand a victory to Marine Le Pen’s National Rally, picking the vocal Eurosceptic and nationalist over the former Rothschild banker.
Macron’s Republic on The Move will have just 22.5% of the vote compared with 24% for Le Pen, according to pollsters Ifop. With Macron and Le Pen neck and neck ahead of the elections, the outcome will be a humiliation for the liberal politician who said before the elections that everything less than 1st place would be a defeat.
Rounding out the The Greens were third with 13%, the conservative Republicans got 8%, while the implosion of the Socialists continues, coming in dead last with just 6.5% of the vote.
Macron’s default took place even as turnout was up around 10% points from 2014, however the increase was particularly marked in regions where Le Pen’s party has gained ground in the past years. In other words, as establishment apathy gets entrenched, the populist vote is increasingly demanding to be heard.
It gets worse: to the shock of globalists and statists everywhere, this is Le Pen’s second straight victory in the EU vote. In 2014 she beat the conservatives by 4 percentage points with Macron’s Socialist predecessor Francois Hollande trailing in third.
As Bloomberg notes, the result is a setback for the 41-year-old Macron who played a more prominent role in the campaign than any other European leader as he sought to mobilize voters.
The president is fighting for legitimacy as he tries to persuade the rest of the European Union to pursue tighter integration. Polls in Germany showed Chancellor Angela Merkel’s Christian Democrats came first, although with fewer seats than last time.
“For Macron this was a defining election and it’s him who made it like that,” said Bernard Sananes, president of Elabe polling institute. “Finishing second would mean a sense of isolation in Europe.”
Today’s vote followed months of relentless protests which have seen looting and vandalism in Paris. Macron responded with a raft of new spending plans and tax cuts to appease the Yellow Vest movement but the measures failed to convince voters.
via ZeroHedge News http://bit.ly/2HEHRFc Tyler Durden
According to conventional wisdom, anybody who has remained bearish on global markets since the financial crisis has not only lost a boatload of money, but has missed out on the opportunity to cash in on one of the most torrid bull markets in recent memory. They should also be out of business, insolvent or both.
However, as Horseman Global’s Russell Clark has proven over and over again, this is not the case at all. . A few years back, we anointed Horseman “The world’s most bearish hedge fund” for a very simple reason: Of all existing asset managers, Horseman may be the one with the biggest and longest net short position in history. Just look at the chart below, which shows not only that Clark’s net exposure was a remarkable $-60.58% (after -88.14% in March), with a gross short position of 108%, but that he had been effectively net short since 2011.
Yet, to assume that Clark has either thrown in the bearish towel, or somehow lost his shirt over the past ten years would be a mistake. Actually, his fund outperformed the S&P 500 for the period between 2012 – when he first went net short – until the end of 2018, only underperforming in 2016. In 2014, Clark posted double-digit returns when oil prices cratered (he was short). In 2013, he made money shorting Brazilian equities. He started with just $111 million when he took over the fund in January 2011, but AUM peaked at $1.5 billion in 2015.
However, the fund’s inconsistent performance (it’s not unusual for Horseman to be up or down 5% in a single month) has alienated some investors who are uncomfortable with the volatility, even as Horseman has bested most other hedge funds in terms of performance, as one former investor told Bloomberg.
Tim Ng, chief investment officer of Princeton, N.J.-based Clearbrook Global Advisors LLC, says his fund pulled its money for similar reasons. “The stretches of negative performance and the high volatility of monthly returns became a consistent drag on our portfolio’s overall return, which prompted us to redeem,” he says.
But after a bruising Q1, when Clark got crushed by the torrid rally in US equities, more LPs have pulled out, and AUM has shrunk to just $713 million.
And unfortunately for Clark, after a dismal Q1, the fund’s losses more than doubled in April, when the Fund was down a was a staggering 12%, which has brought its total loss YTD to more than 25%.
Unfortunately for Horseman investors, in April the fund suffered a 12.23% drop as the market melted up just ahead of Trump’s renewed trade and tech war on Beijing and Huawei. The drop was the second worst month in the hedge fund’s history after it lost 12.73% in September 2011, when the market ripped as many shorts (Clark included) pressed their positions after the US downgrade by S&P.
So what happens next? Well, as we noted two weeks ago, Clark is convinced that the crash is almost upon us, warning recently that “the stars are aligning, and the markets are complacent,” and urging clients to “get the popcorn ready, it’s showtime.”
But not quite yet, because as Clark wrote in his latest investor letter, “your fund lost 12.23% this month. Losses came mainly from the short book.“
What follows are excerpts from Clark’s latest letter to investors explaining just what happened in April, and also why the fund may be in for a remarkable recovery in May:
The fund went seriously wrong this month. And as it went wrong, I could see that this was going to be very bad news for me. Not only was I losing a large amount of my own money, I was losing investors’, friends’ and family’s money. I was also losing trust and respect and causing untold problems to the very small group of people out there who are still willing to back macro funds, or funds that are willing to use a short book.
Normally when the fund is performing poorly, it is easy for me to pick out what went wrong and why. What went wrong, is that the semiconductor stocks have been the best performing sector this year. The problem is, it is hard to understand why these stocks have rallied so hard. Earnings are poor, chip prices are falling, Chinese capacity is coming on stream and inventories are high. These are not the conditions for new highs. It is very unusual behavior.
To be sure, we posted our own observations on the bizarre outperformance of semiconductor stocks in early 2019, especially in the context of what the March Beige Book said was “semiconductor orders from China plunging the most since the collapse of Lehman”, predicting the SOX party should have been long over.
A subsequent report by IHS Markit also found the semiconductor market was lurching into the worst-in-a-decade downturn in 2019, and noted that the 7.4% decline in semi revenue will mark the semiconductor industry’s biggest annual percentage decrease since the Great Recession year of 2009, when chip sales plunged by nearly 11%:
Going back to the Horseman letter, Clark writes that “one reason we were so heavily short semiconductors was because I felt I had a good hedge to the semis in a large short USD position, and a long basic materials position, often in areas that had large shorts against them. I typically choose a long book that is meant to protect the fund from the short book as markets are squeezed higher. But in this case the long book was not working.”
And when he says “heavily short”, he isn’t kidding: as the next chart shows, even more so than his financial short, Horseman’s biggest short was a massive -30% net position in semis. No wonder the fund got crushed in April, if only due to semis.
Clark continues, writing that instead of dwelling “on why semiconductors were going up, I looked at why our long book was not doing so well. On a day to day basis, materials look great. Iron ore prices are back to 2008 highs, oil has bounced with markets and Chinese cement prices are strong. I decided to dig deeper and look at the global steel market. And here was where I was most surprised. Chinese steel production was growing at 9% year on year, while the rest of the world was contracting. When I looked at the Chinese property sector, USD debt has returned to the leading companies. Suddenly everything became clear.”
And just in case it isn’t clear to everyone, he explains:
Markets turned around in 2016 when it became obvious that the Chinese policy of cutting capacity and pushing up commodity prices was the real deal. This was Chinese policy to create inflation internally to the benefit of corporates and the financial sector. However, it seems these polices have been reversed, and share prices of Chinese steel companies and banks are beginning to reflect these problems again. If the US dollar stays strong, and China cannot create inflation internally, then they are going to be forced to devalue. Many of the long positions of the fund began to reflect this at the end of April, including mining stocks and currencies.
This Chinese weakness explains the move in tech and semis this year. Investors are busy rotating out of classic emerging market assets such as commodities, steel, capital goods and autos, and moving it to “secular” growth stories like tech, utilities, healthcare and staples. Semis are pushed higher by these flows, even with bad earnings and worse outlooks.
So what does that mean for portfolio of “the world’s most bearish hedge fund”? While we already know the bad news, here’s some good news: On the core themes of higher volatility and autocallables blowing up, both are made more likely according to Clark, who notes that “semis are also still shorts, and so are autos, financials and aerospace. But commodities are a problem. And so we are selling large chunks of the long book.”
This began in April and will continue in May. I have a rule that when I cut a profitable position (which is most of the commodity longs) I cut a loss-making position (which has mainly been in the short book) so the gross is falling, even as the net stays very short. We have also cut the longs Australian dollar, Euro and Chinese yuan positions from the FX book.
Finally, now that doubts are emerging that 2019 is a mirror image of 2016 and the first Shanghai Accord with Chinese policy beginning and attempts to reflate the world failing, “the likelihood of sustained inflation is beginning to disappear” according to Horseman. As a result, “deflation again looks more likely, just as it did from 2011 to 2016.” The punchline:
And just like we did back then, it’s time to move the portfolio back to a deflationary positioning. We have begun to add 30-year treasuries to our existing Japanese Government Bond position. Your fund is long bonds and short equities (and long volatility).
As for whether the disastrous April plunge in the fund’s P&L will repeat, the best new for Clark is that after a relentless ramp higher, none other than Donald Trump came to Horseman’s rescue, with the recent return of US-China trade – and the most violent escalation in global tech war – meaning that much if not all of the April losses are now revered, and Horseman will have a far better YTD performance after May.
The question, as always, is whether LPs will have the patience to keep invested in such a volatile, stomach-churning hedge funds as the one which, with its money where its mouth is, claims month after month that the Fed is not only wrong, but on the verge of failure.
* * *
One final point: Clark’s assiduously dedicated contrarianism has earned him a cult following among professional investors. Though his name isn’t as widely known as an Ackman or a Loeb, his interview with RealVision was one of the company’s most requested videos from 2018, largely thanks to his reputation built up on these pages over the past 5 years as the “world’s most bearish hedge fund”, yet one which stubbornly refuses to throw in the towel.
Despite a wave of redemptions in 2016, 2017 and 2018, Clark, who keeps the bulk of his own wealth in Horseman, has retained an unflappable confidence in his investing view: “When people hate you and write terrible things about you, it tends to be the best time to invest.“
via ZeroHedge News http://bit.ly/2K1ZobO Tyler Durden
American farmers have some of the most corn acres left to plant, last week, than any other date on record, reported the Crop Progress Report -written by the United States Department of Agriculture (USDA).
The USDA warned corn planting is currently at 49% complete, behind the 80% five-year average.
Corn emerged from the ground 19% vs. 10% last week, 47% a year ago
Soybeans planted 19% vs. 9% last week and 53% a year ago
Soybeans emerged 5% vs. 24% a year ago
Spring wheat planted 70% vs. 45% last week, and 76% a year ago
Spring wheat emerged 26% vs. 10% last week and 34% a year ago
Cotton planted 44% vs. 26% last week and 50% a year ago
Winter wheat 66% g/e vs. 64% last week, and 36% a year ago
Kansas 60% g/e vs. 56% a week ago
As of last weekend, Iowa farmers had 70% of their corn planted versus the 89% five-year average. Illinois farmers had 24% of their corn planted versus the 89% five-year average. Indiana farmers had 14% planted versus the 73% five-year average. In the western Corn Belt, farmers had 70% of their corn planted versus the 86% five-year average.
“Disastrous weather conditions have led to an anomalous amount of corn yet to be planted across the United States. After 10-20 inches of rainfall since the beginning of April, field are wet and even flooded in parts of the corn belt. This has prevented farmers from planting corn this Spring, forcing a decision between planting into June (very late for healthy corn), switching their planting to soybeans, or taking prevent plant insurance to cover portions of their crop losses. With the trade war ongoing and impacting price, switching to soybeans is not as attractive as it would be in a typical planting year, putting farmers in a precarious situation, having to choose between the choices discussed above. Heading into June, the weather may become a bit more favorable, but wet risks still exist across the US Ag Belt, adding more frustration to an already frustrated ag sector,” said Meteorologist and owner of Empire Weather LLC., Ed Vallee.
Corn futures moved up 2.33% in 69 hours since the report was published, hitting levels not seen last May when the trade war escalation crashed the commodity 20% in 33 days.
Corn future markets gave “[exploded] higher as of late based off late planting figures,” said Jason Rotman, president of Lido Isle Advisors.
“The market is very short these markets so don’t be surprised to see continued rallies in wheat and corn,” he said, adding that “there is still a big surplus of soybeans.”
Sal Gilbertie, president and chief investment officer at Teucrium Trading, said: “Too much rain in all the wrong places, both over the weekend and in the current forecasts, have traders concerned about late planting for corn and potentially poor wheat quality.”
— Ed Vallee | Empire Weather LLC (@EdValleeWx) May 21, 2019
A perfect storm is developing across the Midwest: farmers are having difficulty planting corn because the weather is too wet. So the alternative is soybean, but because of the trade war, the grain’s export to China has been cut off, which means oversupply conditions will remain. On top of that, if farmers want to collect a government farm bailout, they will need to plant soybean, again, will lead to oversupply conditions.
via ZeroHedge News http://bit.ly/2wjqEul Tyler Durden
So much for the border crisis being a charade – Gov. Grisham went to the Swamp to beg for help.
The radical-leftist governor of New Mexico, who sent National Guard troops packing in February, needs federal help now, it seems. She’s in the Swamp to beg for funding as illegal immigrants overwhelm the state. After months of neglecting the border cities and towns, toeing the DC elite party line of no “crisis” here, and facing a veritable citizens’ revolt in the Land of Enchantment, Governor Michelle Lujan Grisham is demanding federal government assistance for the dire situation – one she exacerbated through indifference to constituents.
Michelle Lujan Grisham
And it comes on the heels of yet another county drawing a line in the sand and refusing any further influx of illegal immigrants seeking asylum. Sierra County, boasting a population 11,116 and a 21% poverty rate, joined Otero and Lincoln counties in passing resolutions opposing the relocation of migrants to their communities.
This isn’t just happening in these three counties, either – it’s an untenable and cruel situation being thrust on an impoverished state by government officials who seem to be mere puppets for the Democratic Party.
According to Deming City Administrator Aaron Sera, in Luna County, buses unload between 300 and 500 immigrants each day. As a town of a 14,183, it has been mercilessly overwhelmed by the governor’s dangerous game of partisan politics. Even larger enclaves, such as Las Cruces, have been overrun with illegal aliens, completely depleting community and local government resources as they’re forced to house and care for 6,000 asylum seekers – and all in a matter of four short weeks.
Drawing An Uncrossable Line
Otero County Commission Chairman Couy Griffin is a vocal detractor of what he believes are dangerous decisions coming from Grisham. Griffin is an advocate of legal immigration and stands firm in the belief that sheltering illegals sends the wrong message to other Central Americans, who see an opportunity to enter the United States illegally. “If you begin to feed pigeons in the parking lot, pretty soon you have every pigeon in town,” Griffin said. He has asked President Trump to close the border after resources were removed from a local, heavily trafficked checkpoint.
Tripp Stelnicki, the governor’s spokesman, claims there is no evidence humanitarian aid would encourage other Guatemalans, El Salvadorans, or Hondurans to make the trek north. Well, it isn’t much of a deterrent, either.
The Watershed Decision
In February, Grisham made national news for thumbing her nose at the president, her citizens, and national security when she sent the National Guard packing. She blithely stated: “New Mexico will not take part in the president’s charade of border fear-mongering,” and received a blast of positive kudos from Democrat toadies in the Swamp. It fit their narrative perfectly and from a border state to boot.
But three short months later, after recall and impeachment petitions, shameful national news coverage of cities and towns overwhelmed by the “charade,” and 31 of 33 counties expressing their disdain for Grisham through resolutions, the governor is now asking President Trump and the Department of Homeland Security for their help.
“The governor wants to continue to urge the federal government to increase its personnel on the border as a means of improving the logistical and communications output,” said spokesman Tripp Stelnicki, whose head must be spinning like a top after Grisham’s desperate about face. He also hinted that the events in Otero County may be spiking fear in Grisham as other municipalities and counties are jumping on Griffin’s bandwagon. And frankly, no one is buying what Grisham is selling anymore.
Steve Pearce, Chairman of the New Mexico Republican Party, who ran against Grisham in 2018 for the role of governor, reminded:
“She declares there’s no crisis. She removes the National Guard and now she’s there asking for money. Everything in her actions indicate that she believes there’s a crisis, but yet she will not dedicate the resources or request to her colleagues in Congress to start passing the laws that will change the situation there.”
The Trump administration will ensure that resources for the state are granted but it won’t come for free – there will a pound of flesh extracted from the foolish New Mexico governor to be spiked and paraded through the 2020 election. Perhaps after a disastrous first quarter in office, Grisham will begin to listen to her constituents. But it’s doubtful – which is why a recall or impeachment is still being pursued by citizens. What should terrify the governor is this highly motivated electorate, bent on removing her from office – and that describes the uprising in the Land of Enchantment to a “T.”
via ZeroHedge News http://bit.ly/30MIeFa Tyler Durden
Tehran and Washington haven’t had formal diplomatic relations since the Iranian Islamic Revolution deposed the Shah back in 1980. And according to one senior official with the Islamic Revolutionary Guard Corps., there’s good reason for that.
Negotiating with the US, said IRGC Rear Admiral Ali Fadavi, is like “negotiating with the devil,” and negotiating with the devil, as the Quran says, “bears no fruit.” Fadavi was quoted by Iran’s Fars News agency during a discussion of the longstanding rupture in diplomatic relations between the two countries. Last month, President Trump designated the IRGC a “foreign terrorist organization.”
Fadavi went on to denounce the growing American military presence in the region as the “weakest in its history,” and added that the influence of Iran’s regional arch-rival Saudi Arabia was “the weakest in its history,” according to RT.
Because of unspecified “credible” threats involving Iran, the Pentagon has been steadily expanding its military presence in the region. The USS Abraham Lincoln carrier strike group, stationed near the Persian Gulf, was recently joined by three guided-missile destroyers. A B-52 bomber squadron is on alert at a base in nearby Qatar, and Trump has reportedly signed off on a plan to send another 1,500 troops to the region to reinforce the American presence in Iraq, as well as a dozen fighter jets and a drone fleet.
Washington has claimed that its latest show of force has helped stave off the Iranian threat and deterred attacks, according to Acting Defense Secretary Patrick Shanahan.
But as long as Iran is threatening to start stockpiling enriched uranium again, it’s unlikely Washington will back down. Europe, Russia and China have tried to mediate the conflict, but with both sides growing ever-more-belligerent, the prospect of a full-on military conflict looms larger by the day.
via ZeroHedge News http://bit.ly/2JI5Kh1 Tyler Durden
I’ve been making arguments for months that Donald Trump’s trade war with China is the height of stupidity. While Trump has the power to do what he’s been doing – sanctioning actors and applying tariffs – some power is best left not used.
The simple fact is that America is uncompetitive. This is at a deep and structural level. It’s at an education level. And this is something Trump’s trade team and his adherents refuse to admit.
When it comes to manufacturing and assembly, U.S. workers are not worth the money they are paid. Period.
And China has an abundance of skilled labor unseen elsewhere, says Cook:
“The products we do require really advanced tooling, and the precision that you have to have, the tooling and working with the materials that we do are state of the art. And the tooling skill is very deep here. In the US you could have a meeting of tooling engineers and I’m not sure we could fill the room. In China you could fill multiple football fields.”
Cook credits China’s vast supply of highly skilled vocational talent:
“The vocational expertise is very very deep here, and I give the education system a lot of credit for continuing to push on that even when others were de-emphasizing vocational. Now I think many countries in the world have woke up and said this is a key thing and we’ve got to correct that. China called that right from the beginning.”
Is this Tim Cook talking or Mike Rowe?
Rowe argues all the time that “we don’t value work, anymore.” VoTech schools struggle. Thousands of solid, honest jobs go unfilled. Kids are sold on the idea of college as the only path to a good job and a stable future.
And that is simply not true. The reason it is no longer true is because of the simple adage of Ron Paul’s, “When you subsidize something, you get more of it.”
We have diverted so much money and capital to education that we have cheapened its value in the labor market while encouraging two generations of kids to go heavily into debt to chase some dream of fame or fortune that had an ever-shrinking probability of ever coming true.
$100,000 for a Women’s Studies degree will not train you to run a production line. It won’t get your air-conditioner fixed. And it won’t prepare you to take responsibility for your wasted time and energy.
We hear this all the time. “Job Openings are at record levels” and they are according to the BLS.
But the flip side is that wage growth has been stagnant. And it is only just now approaching something close to sustainable. This speaks to a labor market completely out of phase with the needs of the society. You can laud Trump for fixing some of this, certainly, but it’s not going to fix the underlying structural problem of malinvestment.
This is not China’s fault. This is our fault. It’s our fault for diverting trillions upon trillions to uneconomic and wasteful projects and staggering amounts of bureaucracy to administer them over the past two generations.
It’s our fault that a cultural malaise of self-indulgence begun by the Baby Boomers has had the downstream effects of growing nihilism among their children and grandchildren who face a lifetime of debt slavery and poor mate-choice selections.
It’s our fault that we fueled an empire with cheap debt and cheaper attitudes towards life and are now angry that many Americans don’t have a viable future as the wealth of the nation was sucked up into the ruling class and its quislings.
Don’t worry, China’s headed down the same road we are on, they just are just getting hitting the on-ramp while we’re heading for the unfinished overpass.
But blaming China for this loss of expertise in things we used to be great at is the wrong approach to solving the underlying problem. We have to address the way money flows through this society. We have to admit that central planning doesn’t work.
I laugh when I hear commenters on my YouTube videos or on Zerohedge in response to my articles complain about the ‘dirty ChiComs stealing our tech’ and all the rest of the insanely stupid, xenophobic talking points spoon-fed to these oh-so-original thinkers by the very banksters and oligarchs they think they’re fighting.
They are no better than the special snowflakes on the left screaming about ‘white privilege’ and ‘the patriarchy.’ It’s all just a reflection of a society unwilling to look itself in the mirror and realize that we’ve met the enemy and he is us.
All things come in cycles. We grew so rich rebuilding the world after World War II that we thought we could have not only guns and butter but that we were entitled to it because we were the instrument of goodness in a blighted planet.
I get what animates Trump to do what he’s doing. But it’s not going to work.
You can’t take back by force that which was freely given away. You have to work for it. You have to earn it. It doesn’t matter if you were screwed over by your government and employer. That’s not China’s fault.
China’s earned its wealth. Has some of that money that came in over the past thirty years been malinvested? Absolutely.
But listen to Tim Cook and listen hard. Most of its hasn’t. All I ever hear about is the ghost cities and the highways to nowhere. The trillions in shadow banking debt and the imminent (since 2012, btw) housing collapse.
And yet, that is all simply projection for the crumbling infrastructure, hollowed out rural towns, and yawning funding deficits that all this debt created here at home.
If you want to fix America. Fix America. But don’t punish the Chinese while we’re at it. To fix America will require access to that market in a web of mutually beneficial trade with them not shutting us out of it.
Tim Cook understands this. Trump’s rampage against China will hurt Apple in ways that won’t be reversible. If you think Trump will stop with his blacklisting Huawei you aren’t paying attention.
And no matter what happens, he won’t pay the price. We will. Because for all of the money we over-invested in education the one thing we didn’t do was teach the basics of economics, knock-on effects and the opportunity costs of putting faith in the hands of the most venal people on the planet, politicians.
It looks as though everybody, including the media, is starting to understand that Elon Musk’s once grandiose “Hyperloop” idea, to be built by The Boring Company, isn’t the futuristic game changer that it was pitched as. In fact, it’s looking more and more like a very rudimentary idea that’s been around for decades: a car in a tunnel.
And people are catching on that this is not what Musk repeatedly talked about when baffling the public with bullshit publicly describing the idea of a Hyperloop. Over the weekend, the author of a new article for Jalopnik about the Hyperloop couldn’t help but simply refer to it as “a scam” on Twitter.
Indeed, 6 months ago the world laughed heartily in unison when the idea of mass transit via electrified skates for frictionless movement was instead substituted by a Tesla Model X bumping its way through an underground tunnel like an amusement park ride at about 50 miles an hour.
Back then, Musk claimed that the bumpiness was only temporary: “That bumpiness will definitely not be there down the road—it will be smooth as glass.”
And a new video on The Boring Company’s Twitter account does seem to show that the track has been paved. It shows a vehicle purportedly traveling at 127 miles an hour through a single file tunnel, ostensibly beating out traffic and ushering in a new era of transportation – right?
— The Boring Company (@boringcompany) May 24, 2019
Wrong. That one video hasn’t stopped people from noticing that the vision of a network of underground futuristic tunnels has simply turned into one small paved tunnel that can fit one car at a time. And of course it beats traffic above ground: the car has the right of way, the whole way, and there’s no wait to use the tunnel and no traffic underground.
And now that the company has signed a $48.6 million contract to build a “people mover” – whatever the hell that means – through Las Vegas, others are noticing that the vision of the Hyperloop idea, seen here in this graphic…
…is likely going to be very different from the reality: cars, doing regular car things, underground.
And why the switch, according to Elon Musk? It’s “simple and it just works,” he said on his Twitter.
And how bad can your futuristic green energy project be when the liberals over at the San Francisco BART Twitter account are trolling you?
We carry 28,000 people per hour through our Transbay Tube under the bay because of the capacity of a train. That’s nearly twice as much as cars over the bay. Why wouldn’t you prioritize something that carries far more (and safely with automatic train control) over cars? https://t.co/2Hu3uzu2ND
Sorry no weekend video this weekend, instead I just wanted to offer some commentary on some of the macro charts I recently posted on twitter. The larger message of all of these charts: Intervention is ultimately coming be it in the form of rate cuts and/or QE. It’s just a matter of the how and the when. Intervention is needed as the macro wheels are turning. Like it or not intervention remains the lifeblood of these markets, they just can’t do without and every bull case in the past 10 years has remained entirely dependent on it.
To perhaps most succinctly summarize the state of markets:
Support of equities and remaining in control so far: The Fed, buybacks and political jawboning.
Going against equities: Macro reality.
Upside triggers this year: Potential miracle saves in form of a China deal and somehow a Brexit deal by the end of October perhaps with new political leadership.
Potential downside triggers this year: The weight of the emerging macro picture wrestling control away from the forces of intervention.
And this macro reality is painting a consistent picture across the board and I’m just highlighting a few of these:
Durable goods year over year:
No expansion, regressive growth similar to the lead up to the 2008 recession.
Median sales prices of homes sold year over year:
It’s the 3rd largest reversion to negative since 1970, the previous 2 examples of this magnitude coincided with recessions.
Real retail sales growth year over year:
Anemic and regressive, there’s no evidence of expanding growth, rather it’s flirting with negative territory.
Blame the $AMZN factor all you want, but note the above data also correlates with jobs in the retail trade:
It’s also flirting with recessionary precedent.
Real gross private investment year over year:
There’s zero evidence that tax cuts have supported any investment growth at all. It remains weak and shows no expansion. We all know where the tax cut money went: Buybacks.
So consumers are not expanding their sales activities and businesses are not expanding their investments.
But unemployment is so low, isn’t that great?
Yes it is at the moment, but it’s always great at the end of a cycle. The problem with the lowest unemployment rate in 50 years is that there is no history that suggests it can last for an extended period of time. If you’re lucky maybe a year or 2, maybe, if you’re very lucky.
Cycles end, that’s a fact of life. Also a fact: 99.9% of time unemployment is higher than the current data point which means the next big move in the data is up not down.
And where exactly is the great expansion in employment growth? Considering all the supposed tax cuts and ‘greatest economy ever’ it all looks rather muted and stalled:
Where is the net employment growth to come from? It’s not from demographics, in fact demographics are a ticking time bomb:
Not only has the growth rate been declining for years it’s dropped to negative. Without population growth the entire growth curve is running into trouble. You think it’s an accident that real growth has continued to decline for decades from cycle to cycle?
No, it’s no accident. Demographics are the big thing driving it all. Scream curbing immigration all you want, but the fact is fertility rates are dropping hard. 2018 saw the lowest birth rate in 32 years. Blame technology, blame economics and housing prices, blame whatever, but the fact is birth rates are declining, working population growth has been declining and is now negative. Best of luck financing entitlements, pensions, social security, the whole works.
You know what this all means. You do, because you’ve already seen the impact of these long term trends. In order to keep the growth illusion alive ever more debt has to be taken on to sustain it all. Hence you have this:
Ever higher debt to GDP and again expanding deficits which will balloon much higher when the next cycle turns in earnest.
Slowing growth, expanding deficits, regressive population growth models, vast debt expansion and it’s reflected in the data everywhere:
The world has run into a growth wall with no central bank having been able to normalize policy. It’s an epic historic failure the consequences of which will come to bear on the world in the years to come.
How to handle the next economic crisis? Frankly I don’t think anybody knows and nobody wants to see it happening on their watch, hence all the desperate efforts to extend the cycle with easy money.
And all of this is happening with rates still a historic low. And when I say historic, here’s a broader context of the absurdity of it all:
There is ZERO evidence that any of these markets can sustain themselves on an upward trajectory without intervention. And this too we already know, because we’ve seen it time and time again:
General aside comment on the chart above: If price can stay above the middle trend line, bulls should be ok for now, see a sustained close below it: Watch out.
But now we are at the end of a long cycle and they’ve done their best to re-inflate asset prices following the December correction.
Yet the data sets above are overtly flirting with recessionary territory.
And so are some of the yield curves:
And markets so far this year: New highs in select indices on negative divergences with a MACD cross-over looking to fail into month end (unless we see a big mark-up rally) coinciding with a rejection of the 2009 trend line, while the 10 year is dropping despite new highs with unemployment at a cycle low:
Why does it matter? Because that too happens at the end of each cycle:
Relative to the January 2018 highs most market indices remain weak:
And recent highs on $SPX and $NDX have masked the pronounced weakness in equal weight:
What we’re witnessing now is a battle for control of price. Remember: Supportive of equites: The Fed, buybacks and political jawboning. And these forces all want equities higher, because they need them higher.
And hence perhaps it’s no accident that $SPX once again closed the week right at the monthly 5 EMA a key pivot of support, but also note the the monthly bearish engulfing candle.
Close May above the monthly 5EMA and the June/July seasonality window may once again drift markets higher and fill some of the open gaps above.
Close May below the monthly 5EMA, or worse, below 2800 on $SPX and more weakness may unfold that could set off technical patterns with much further downside to come, i,e. the 0.5 fib, the implied technical target of this potential pattern:
Such a move would represent macro reality asserting control. But, by that time, be assured that the screams for intervention would be deafening.
Bottomline: The macro data is stating clearly the slowdown did not end in Q1. It has extended into Q2. GDP looks to have a 1% handle. Without a China deal uncertainty will remain, given the negativity surrounding such a deal a positive resolution would trigger a massive rally, without such a deal equity prices may have to contend with further downside if certain levels break to the downside. But China deal or not and with apologies to Tina Turner: The larger macro wheels are turning, markets keep on burning, and before you know it they’re rolling, rolling toward the next round of intervention.
* * *
For the latest public analysis please visit NorthmanTrader. To subscribe to our market products please visit Services.
via ZeroHedge News http://bit.ly/2whPwmc Tyler Durden
Along with the cookouts and beautiful Memorial Day Weekend weather, President Trump offered plenty of distractions for any Americans still tuned into their news feeds – from photos of his golf outing with Shinzo Abe to his presentation of the ‘first-ever’ US President’s Cup.
Tonight in Tokyo, Japan at the Ryōgoku Kokugikan Stadium, it was my great honor to present the first-ever U.S. President’s Cup to Sumo Grand Champion Asanoyama. Congratulations! A great time had by all, thank you @AbeShinzo!! pic.twitter.com/nwwxJl6KXH
Meanwhile, in China, President Xi was busy exhorting the rest of the world (presumably excluding the US) to cooperate with Beijing in developing new Internet, big data and artificial intelligence resources in a letter to the China International Big Data Industry Expo, which kicked off Sunday in the southwestern city of Guiyang, according to state-run business newswire Xinhua.
Beijing has an obvious use-case for improved big-data resources: Optimizing its growing surveillance apparatus. And with the White House reportedly mulling Huawei-style bans on companies involved in building said apparatus, it’s unsurprising that Beijing is already casting about for international support.
Chinese tech and Internet giants dominated the big data expo, which drew some 26,000 representatives from nearly 55 countries to marvel at China’s emerging leadership in the big data industry. Huawei, Tencent, Alibaba and other Chinese firms were heavily represented.
China also used the opportunity to denounce Washington’s blacklisting of Huawei.
The Huawei ban is a “rough” disruption to the market, Wang Zhijun, vice head of the Ministry of Industry and Information Technology, said in an interview on state broadcaster China Central Television. He urged the U.S. government to stop “unreasonable suppression” of China’s integrated circuit and electronic companies.
While Trump and Abe were on their golf outing, Global Times Editor-in-Chief Hu Xijin trolled Abe on Twitter.
President Trump’s Japan visit lasts 4 days. The special attention Washington attaches to Tokyo is largely a result of tense China-US ties. Japan should make more requests of Trump. Don’t be afraid of him. Trump will take efforts now to maintain stability of US-Japan alliance.😀
Bottom line: As Washington steps up its aggressive trade rhetoric, Beijing is stepping up its efforts to recruit more geopolitical allies to free itself of its reliance on American tech – while reminding the world that it can create serious disruptions in the global supply chain with very little effort.
via ZeroHedge News http://bit.ly/2HCNTG7 Tyler Durden
After posting a video of a young recruit talking to the camera about how service allows him to better himself “as a man and a warrior”, the US Army tweeted, “How has serving impacted you?”
As of this writing, the post has over 9,600 responses. Most of them are heartbreaking.
“My daughter was raped while in the army,” said one responder. “They took her to the hospital where an all male staff tried to convince her to give the guy a break because it would ruin his life. She persisted. Wouldn’t back down. Did a tour in Iraq. Now suffers from PTSD.”
“I’ve had the same nightmare almost every night for the past 15 years,”said another.
Tweet after tweet after tweet, people used the opportunity that the Army had inadvertently given them to describe how they or their loved one had been chewed up and spit out by a war machine that never cared about them.
This article exists solely to document a few of the things that have been posted in that space, partly to help spread public awareness and partly in case the thread gets deleted in the interests of “national security”. Here’s a sampling in no particular order:
“Someone I loved joined right out of high school even though I begged him not to. Few months after his deployment ended, we reconnected. One night, he told me he loved me and then shot himself in the head. If you’re gonna prey on kids for imperialism, at least treat their PTSD.”
~
“After I came back from overseas I couldn’t go into large crowds without a few beers in me. I have nerve damage in my right ear that since I didn’t want to look weak after I came back I lied to the VA rep. My dad was exposed to agent orange which destroyed his lungs, heart, liver and pancreas and eventually killing him five years ago. He was 49, exposed at a post not Vietnam, and will never meet my daughter my nephew. I still drink to much and I crowds are ok most days but I have to grocery shop at night and can’t work days because there is to many ppl.”
~
“The dad of my best friend when I was in high school had served in the army. He struggled with untreated PTSD & severe depression for 30 years, never told his family. Christmas eve of 2010, he went to their shed to grab the presents & shot himself in the head. That was the first funeral I attended where I was actually told the cause of death & the reasons surrounding it. I went home from the service, did some asking around, & found that most of the funerals I’ve attended before have been caused by untreated health issues from serving.”
~
“My dad was drafted into war and was exposed to agent orange. I was born w multiple physical/neurological disabilities that are linked back to that chemical. And my dad became an alcoholic with ptsd and a side of bipolar disorder.”
~
“i met this guy named christian who served in iraq. he was cool, had his own place with a pole in the living room. always had lit parties. my best friend at the time started dating him so we spent a weekend at his crib. after a party, 6am, he took out his laptop. he started showing us some pics of his time in the army. pics with a bunch of dudes. smiling, laughing. it was cool. i was drunk and didn’t care. he started showing us pics of some little kids. after a while, his eyes went completely fucking dark. i was like man, dude’s high af. he very calmly explained to us that all of those kids were dead ‘but that’s what war was. dead kids and nothing to show for it but a military discount’. christian killed himself 2 months later.”
~
“I didn’t serve but my dad did. In Vietnam. It eventually killed him, slowly, over a couple of decades. When the doctors were trying to put in a pacemaker to maybe extend his life a couple of years, his organs were so fucked from the Agent Orange, they disintegrated to the touch. He died when I was ten. He never saw me graduate high school. He never saw me get my first job or buy my first car. He wasn’t there. But hey! Y’all finally paid out 30k after another vet took the VA to the Supreme Court, so. You know. It was cool for him.”
~
“Chronic pain with a 0% disability rating (despite medical discharge) so no benefits, and anger issues that I cope with by picking fistfights with strangers.”
~
“My parents both served in the US Army and what they got was PTSD for both of them along with anxiety issues. Whenever we go out in public and sit down somewhere my dad has to have his back up against the wall just to feel a measure of comfort that no one is going to sneak up on him and kill him and and walking up behind either of them without announcing that you’re there is most likely going to either get you punch in the face or choked out.”
~
“Many of my friends served. All are on heavy antidepressant/anxiety meds, can’t make it through 4th of July or NYE, and have all dealt with heavy substance abuse problems before and after discharge. And that’s on top of one crippled left hand, crushed vertebra, and GSWs.”
~
“Left my talented and young brother a broken and disabled man who barely leaves the house. Left my mother hypervigilant & terrified due to the amount of sexual assault & rape covered up and looked over by COs. Friend joined right out if HS, bullet left him paralyzed neck down.”
~
“My cousin went to war twice and came back with a drug addiction that killed him. My other cousin could never get paid on time and when he left they tried to withhold his pay.”
~
“It’s given me a fractured spine, TBI, combat PTSD, burn pit exposure, and a broken body with no hope of getting better. Not even medically retired for a fractured spine. WTF.”
~
“Y’all killed my father by failing to provide proper treatments after multiple tours.”
~
“Everyone I know got free PTSD and chemical exposure and a long engagement in their efforts to have the US pay up for college tuition. Several lives ruined. No one came out better. Thank god my recruiter got a DUI on his way to get me or I would be dead or worse right now.”
~
“I have ptsd and still wake up crying at night. Also have a messed up leg that I probably will have to deal with the rest of my life. Depression. Anger issues.”
~
“My grandfather came back from Vietnam with severe PTSD, tried to drown it in alcohol, beat my father so badly and so often he still flinches when touched 50 years later. And I grew up with an emotionally scarred father with PTSD issues of his own because of it. Good times.”
~
“Hmmm. Let’s see. I lost friends, have 38 inches of scars, PTSD and a janky arm and hand that don’t work.”
~
“my grandpa served in vietnam from when he was 18–25. he’s 70 now and every night he still has nightmares where he stands up tugging at the curtains or banging on the walls screaming at the top of his lungs for someone to help him. he refuses to talk about his time and when you mention anything about the war to him his face goes white and he has a panic attack. he cries almost every day and night and had to spend 10 years in a psychiatric facility for suicidal ideations from what he saw there.”
~
“My best friend joined the Army straight out of high school because his family was poor & he wanted a college education. He served his time & then some. Just as he was ready to retire he was sent to Iraq. You guys sent him back in a box. It destroyed his children.”
~
“Well, my father got deployed to Iraq and came back a completely different person. Couldn’t even work the same job he had been working 20 years before that because of his anxiety and PTSD. He had nightmares, got easily violent and has terrible depression. But the army just handed him pills, now he is 100% disabled and is on a shit ton of medication. He has nightmares every night, paces the house barely sleeping, checking every room just to make sure everyone’s safe. He’s had multiple friends commit suicide.”
~
“Father’s a disabled Vietnam veteran who came home with severe PTSD and raging alcoholism. VA has continuously ignored him throughout the years and his medical needs and he receives very little compensation for all he’s gone through. Thanks so much!!”
~
“I was #USNavy, my husband was #USArmy, he served in Bosnia and Iraq and that nice, shy, funny guy was gone, replaced with a withdrawn, angry man…he committed suicide a few years later…when I’m thanked for my service, I just nod.”
~
“I’m permanently disabled because I trained through severe pain after being rejected from the clinic for ‘malingering.’ Turns out my pelvis was cracked and I ended up having to have hip surgery when I was 20 years old.”
~
“My brother went into the Army a fairly normal person, became a Ranger (Ft. Ord) & came out a sociopath. He spent the 1st 3 wks home in his room in the dark, only coming out at night when he thought we were asleep. He started doing crazy stuff. Haven’t seen him since 1993.”
~
“Recently attended the funeral for a west point grad with a 4yr old and a 7yr old daughter because he blew his face off to escape his ptsd but thats nothing new.”
~
“I don’t know anyone in my family who doesn’t suffer from ptsd due to serving. One is signed off sick due to it & thinks violence is ok. Another (navy) turned into a psycho & thought domestic violence was the answer to his wife disobeying his orders.”
~
“My dad served during vietnam, but after losing close friends and witnessing the killing of innocents by the U.S., he refused to redeploy. He has suffered from PTSD ever since. The bravest thing he did in the army was refuse to fight any longer, and I’m so proud of him for that.”
~
“My best friend from high school was denied his mental health treatment and forced to return to a third tour in Iraq, despite having such deep trauma that he could barely function. He took a handful of sleeping pills and shot himself in the head two weeks before deploying.”
~
“Bad back, hips, and knees. Lack of trust, especially when coming forward about sexual harassment. Detachment, out of fear of losing friends. Missed birthdays, weddings, graduations, and funerals. I get a special license plate tho.”
~
“My son died 10 months ago. He did 3 overseas tours. He came back with severe mental illness.”
~
“I’m still in and I’m in constant pain and they recommended a spinal fusion when I was 19. Y’all also won’t update my ERB so I can’t use the education benefits I messed myself up for.”
~
“My dad served two tours in middle east and his personality changes have affected my family forever. VA ‘counseling’ has a session limit and doesn’t send you to actual psychologists. Military service creates a mental health epidemic it is then woefully unequipped to deal with.”
~
“My best childhood friend lost his mind after his time in the marines and now he lives in a closet in his mons house and can barely hold a conversation with anyone. He only smokes weed and drinks cough syrup that he steals since he can’t hold a job.”
~
“After coming back from Afghanistan…..Matter fact I don’t even want to talk about it. Just knw that my PTSD, bad back, headaches, chronic pain, knee pain, and other things wishes I would have NEVER signed that contract. It was NOT worth the pain I’ll endure for the rest of life.”
~
“My cousin served and came back only to be diagnosed with schizophrenia and ptsd. There were nights that he would lock himself in the bathroom and stay in the corner because he saw bodies in the bathtub. While driving down the highway, he had another episode and drove himself into a cement barrier, engulfing his Jeep in flames and burning alive. My father served as well and would never once speak of what he witnessed and had to do. He said it’s not something that any one person should ever be proud of.”
~
“I was sexually assaulted by a service member at 17 when I visited my sister on her base, then again at 18. My friend got hooked on k2 and died after the va turned him away for mental health help. Another friend serving was exploited sexually by her co and she was blamed for it.”
~
“I spent ten years in the military. I worked 15 hour days to make sure my troops were taken care of. In return for my hard work I was rewarded with three military members raping me. I was never promoted to a rank that made a difference. And I have an attempt at suicide. Fuck you!”
~
“I actually didn’t get around to serving because I was sexually assaulted by three of my classmates during a military academy prep program. They went to the academies and are still active duty officers. I flamed out of the program and have PTSD.”
~
“My father’s successful military career taught him that he’s allowed to use violence to make people do what he wants because America gave him that power.”
~
“While I was busy framing ‘soliders and families first’ (lol) propaganda posters, my best friend went to ‘Iraqistan’ but he didn’t come back. He returned alive, to be sure, but he was no longer the fun, carefree, upbeat person he’d previously been.”
~
“My husband is a paraplegic and can’t control 3/4 of his body now. Me, I’ve got PTSD, an anxiety disorder, two messed up knees, depression, a bad back, tinnitus, and chronic insomnia. I wish both had never served.”
~
“This is one of the most heartbreaking threads I’ve ever read.”
~
“I am so sorry. The way we fail our service members hurts my heart. My grandfather served in the Korean War and had nightmares until his death at 91 years old. We must do better.”
~
“My Army story is that when I was in high school, recruiters were there ALL the time- at lunch, clubs, etc.- targeting the poor kids at school. I didn’t understand it until now. You chew people who have nothing at home up and spit them out.”
~
“I was thinking about enlisting until I saw this thread. Hard pass.”
~
“I hope to god that the Army has enough guts to read these and realize how badly our servicepeople are being treated. Thank you and god bless you to all of you in this thread, and your loved ones who are suffering too.”
Everyone has my unconditional permission to republish or use any part of this work (or anything else I’ve written) in any way they like free of charge. My work is entirely reader-supported, so if you enjoyed this piece please consider sharing it around, liking me onFacebook, following my antics onTwitter, throwing some money into my hat on Patreon orPaypal, purchasing some of my sweet merchandise, buying my new book Rogue Nation: Psychonautical Adventures With Caitlin Johnstone, or my previous book Woke: A Field Guide for Utopia Preppers. The best way to get around the internet censors and make sure you see the stuff I publish is to subscribe to the mailing list for my website, which will get you an email notification for everything I publish. For more info on who I am, where I stand, and what I’m trying to do with this platform, click here.
