Tag: news

This is not the normal pre-OPEX panic-ramp, everyone’s buying stocks market…

Some generous National Team action overnight saved Chinese stocks from sinking back into the red YTD…

 

Europe closed green, rallying after US markets opened…

 

Stocks rallied after Peter Navarro appeared on CNBC with Rick Santelli and did not say something earth-shattering (it seems we have a low barrier for what is ‘good’ news again), but then Mueller headlines sparked some de-risking… Dow dramatically outperform

This is the S&P’s longest losing streak of the year (since 12/6/17)

Futures show the overnight dip around the Japanese open (suggested driven by comments from Kuroda, buit it was quickly stabilized)

 

S&P clings to its 50DMA…

 

Stocks also stumbled when WMT was whacked with a whistleblower lawsuit… but once again Boeing was in charge…

 

FANG Stocks were marginally lower on the day but as Bloomberg details, the rally in the FANG block of tech shares and its megacap brethren just surpassed a dubious milestone. An index of 10 tech growth shares pushed its advance to 23 percent so far this year, giving the group an annualized return since early 2016 of 67 percent. That frenzied pace tops the Nasdaq Composite Index’s 66 percent return in the final two years of the dot-com bubble.

The NYSE FANG index has risen 76 percent in the past year, picking up pace from 41 percent in the previous 12 months.

Bank stocks stabilized a little today after an ugly week…

 

Also of note, for the 5th day in a row, VIX is holding at its 50DMA ahead of tomorrow’s OPEX…

 

Treasury yields were broadly unchanged today with the very short-end up 1-2bps…

 

Once again the yield curve flattened to fresh lows since Oct 2007…

 

The Dollar Index screamed back into the green for the week and unchanged from pre-payrolls… This is the biggest jump in the dollar since February…

 

PMs and Copper drifted lower on the day as the dollar ripped but crude bounced higher…

 

Kudlow had a great day after saying “sell gold, buy king dollar”…

 

Another ugly day for cryptos as weakness accelerated dramatically overnight from the losses after Google announced its crypto ad ban but dip-buyers scooped up some in the US session…

 

Finally we note that the only asset class to see its volatility fully normalize since February’s Fiasco is gold…

 

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Authored by Duane Norman via Free Market Shooter blog,

In the wake of the Parkland shooting, a group of mothers from the area made a push to improve safety at schools.  Somewhat surprisingly, they decided to avoid gun control and partisan politics, as Alyssa Alhadeff opted to advocate for a more comprehensive (and politically neutral) goal:

She’s launched a nonprofit called Make Schools Safe (MakeOurSchoolsSafe.org) to lobby for measures to increase campus security such as metal detectors, armed guards, bulletproof doors and windows, and reduced access points. Although Alhadeff respects the fight for gun control, she feels she can most readily make a difference with these initiatives.

The mom, who has two sons, ages 10 and 13, is currently in New York City promoting the nonprofit with the help of six girls between the ages of 14 and 18 — dubbed the Dream Team. All knew Alyssa, and most were there that tragic day.

It was a bit of a shock to see liberals choosing to use their advocacy to promote a sensible position with a strong likelihood of reaching a bipartisan solution, instead of the typical gun-grabbing that emerges from similar tragedies. 

However, no one was likely to be as surprised as Alhadeff when New York City Mayor Bill de Blasio removed all NYPD police officers from NYC schools:

The last NYPD cops assigned full-time to New York City public schools are being moved out — despite nationwide calls for heightened security in the wake of last month’s Florida shootings.

As the nation mourned the 17 victims of the school massacre at Parkland, Fla., the NYPD was removing Sgt. Raul Espinet from his post at Francis Lewis HS in Fresh Meadows, Queens — where he had worked for more than a dozen years. Parents, teachers and students are livid over the beloved cop’s departure.

“My colleagues think it’s outrageous — and really stupid,” teacher Arthur Goldstein said. “We’re not enthusiastic about arming teachers, but we liked having a cop around.”

Why has de Blasio decided to direct his own city in opposition to a solution with bipartisan support?  Apparently it is because he believes firearms at schools are “terrifying”:

“There’s nothing more terrifying than putting more guns in our kids schools,” de Blasio said.

Surely Alhadeff had to question if she was in the right place to push for school safety, as she was in New York City promoting her nonprofit when de Blasio removed the officers from schools.  While the lunacy of gun control has gotten out of hand lately, no one would ever expect our leaders to willingly give schools no means with which to defend themselves from a possible assailant.

Before you hear about New York City’s “low” gun crime rate and about how police officers aren’t “necessary” in NYC schools, it has to be mentioned that early this morning, four people were shot dead in a murder-suicide incident in Brooklyn’s Brownsville neighborhood:

A 14-month-old girl and three men were fatally shot in the head in a possible murder-suicide that was discovered Wednesday morning by a grandmother, police and sources said.

While gun control advocates will certainly fudge the numbers to classify this tragedy as a “mass shooting”, these incidents occur with dizzying frequency in bad neighborhoods in inner cities (like Chicago) which inflate nationwide gun homicide statistics, and are hardly covered at all by the mainstream media, much less sensationalized like other incidents such as the ones in Parkland and Las Vegas.  These tragedies can happen anywhere, and are even more likely to occur at schools if they are confirmed “gun-free zones” with no armed security presence.

Only a guy like de Blasio in a place like New York City could it be considered a “wise” response to remove armed security from schools amid renewed calls for gun control following a mass murder incident… in a school.

It is difficult for gun control and gun rights to find any common ground these days – gun control advocates have resorted to committing felonies to make their political statements, and some gun rights advocates refuse to support even the Fix NICS Act, even with any gun rights infringements stripped out of the bill.  But somehow, Mayor de Blasio has found a way to take the other side of a universally-accepted measure designed to improve school safety, while still continuing his partisan gun-grabbing push on the national stage to make schools “safer” for children.

Already disliked for his anti-police policies that have put a target on NYPD officers’ backs…

…de Blasio has decided he wasn’t content with just police, but has decided to make NYC schools a target as well – which he has done, ironically enough, by removing police officers from the very place liberals and conservatives both agree needs armed protection now more than ever.  

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Forgive us if you’ve heard this one before.

For at least the third time in the past month, a respected national media organization has published a story claiming that President Trump’s legal team is leaning toward advising their client to sit for an interview – albeit with certain restrictions – with Special Counsel Robert Mueller.

Today’s report, published by Politico, bore certain similarities to a story published by the Wall Street Journal last week. Last month, the New York Times reported that Trump’s lawyers were pushing Mueller to accept written answers – a solution reminiscent of Ronald Reagan’s handling of the Iran-Contra scandal.

One of Politico‘s sources said the negotiations were “moving fast”, and that an interview could be arranged soon. Of course, we’ve heard that one before.

“I don’t think it’s months and months out. I don’t think it’s in a week,” said the person familiar with the negotiations. “But I think it’s moving toward closure.”

Given Trump’s litigious reputation, one might expect the president to be comfortable during interviews and depositions of this nature. However, his legal team is worried that what Politico characterizes as the president’s “improvisational nature” could lead to Trump accidentally uttering a falsehood, potentially drawing a perjury charge from Mueller.

Trump is hardly a stranger to legal proceedings: In one 2012 deposition, according to the Atlantic, Trump said he had participated in more than 100 depositions.

But that doesn’t mean Trump is always well-prepared to field complex legal questions under oath. During a 2016 deposition tied to his lawsuit against a chef who backed out of a deal to open a restaurant at Trump’s Washington D.C. hotel, Trump was asked what he did to prepare for the hearing.

“I would say virtually nothing,” he replied. “I spoke with my counsel for a short period of time. I just arrived here, and we proceeded to the deposition.”

Trump added that he didn’t study any documents beforehand.

Before any interview, Trump and his lawyers must complete their sensitive negotiations with Mueller over its terms. Among other things, Trump’s lawyers have argued that the burden is on Mueller to show his investigation can’t be completed without an interview with the president. They have also studied the feasibility of answering questions in writing, as President Ronald Reagan did during the Iran-Contra scandal. And they have made clear their resistance to Mueller questioning Trump more than once.

To mitigate these risks, Trump’s lawyers are seeking clear boundaries for the topics discussed, and the NYT has even reported that Trump’s lawyers were seeking assurances that, should Trump agree to a sit-down, Mueller would see to it that the probe concludes before a given date. Trump’s legal team should already have a clear picture of what Mueller intends to ask: Thanks to his documents requests, Mueller is interested in a broad range of topics from Trump’s firing of FBI director James Comey to how he responded to the theft and leaks of Democratic emails during the 2016 presidential campaign.

“It’s a tug of war both internally and probably with Mueller,” said a senior Republican who recently met with the president. “The end goal for the White House is to get as narrow a discussion as can be possibly negotiated including maybe just answering written questions like Reagan.”

Then again, we’ve also heard reports to the contrary: The NYT’s Maggie Haberman published a report earlier this month about Trump’s growing frustration with his legal team – drawing a tweeted rebuke from the president.

Some legal experts objected to the idea that Mueller might agree to a predetermined end-date for the probe.

Solomon Wisenberg, a former deputy on Kenneth Starr’s independent counsel investigation into President Bill Clinton, said that idea would be a non-starter for Mueller.

“That’s bullshit,” he said. “You accommodate the president but you don’t change the rules for him in a substantive way.”

Notably, one anonymous Trump associate who spoke with Politico confirmed an idea that we first highlighted following the initial reports about the behind-the-scenes bargaining: That is, the notion that Trump’s legal team is using these media reports as a ploy to convince Trump that they at least tried to strike a deal with Mueller. As one strategist points out, Trump’s legal team has crafted a “win-win” scenario for itself.

“It’s a strategy by the lawyers,” the defense attorney said. “Either Mueller will agree to the terms in some fashion, and at least they get something out of it, or he won’t and then they can convince the president not to sit for the interview.”

…Sounds like a pretty good deal to us.

The House Intelligence Committee announced last week that it would be ending its collusion probe – to the horror of the committee’s Democrats, who have pledged to issue a dissenting report.

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Authored by Patrick Watson via MauldinEconomics.com,

At the Strategic Investment Conference 2018, Dr. Lacy Hunt, economist and EVP of Hoisington Investment Management, claimed that “economics is a science” and today it’s more important than ever.

Although economics is not as precise as physics or chemistry, he added, our understanding in this domain gradually advances.

Dr. Lacy Hunt then moved on to overview the current economic situation.

The Debt Situation Is Terrible

Looking from a debt perspective, the situation looks terrible.

Citing the law of diminishing returns, he showed how more and more debt is required to boost output. In 2007, global debt was 276% of global GDP. Today, global debt is 327% of global GDP.

In 2007, a dollar in debt generated 37 cents in GDP growth. In 2017, a dollar in debt created only 31 cents in GDP. Money supply and bank credit are collapsing.

Meanwhile, money velocity is at its lowest rate since 1949.

Adjusting GDP for Vehicle Sales

Hunt then showed how an increase in vehicle sales due to natural disasters artificially boosted GDP.

Between 600,000 and 700,000 cars were destroyed and had to be replaced in the aftermath of US hurricane disasters. This event appears in the economic data as a rise in GDP for the fourth quarter.

However, if we look at GDP minus vehicle sales, the rate of growth drops vastly.

What this phenomenon did was to pull future auto sales into the present. And it adds very little value to the economy. It’s a good example of the Broken Window Fallacy.

So, the bump in GDP growth was due to an anomaly, and the overall trend remains constrained.

The Yield Curve Matters

Hunt wrapped up his keynote at SIC 2018 by stressing the importance of the yield curve.

As a reference, he used the spread between long-term treasuries and the 3-month bill, which has been falling for over 90 months. He suspects that if we get further rate hikes this year—as the Fed suggests—the spread will approach zero and could invert.

“Whether or not it actually inverts is not important,” said Lacy Hunt. What’s important is that similar conditions have preceded six of the last seven recessions.

*  *  *

Get Your Virtual Pass to 2018’s Most Important Investment Conference – Watch and listen to 25 top experts as they discuss their best investment ideas and predictions for the economy, financial markets, and geopolitical relations in Strategic Investment Conference 2018. Grab your virtual pass now!

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JPM’s head quant, Marko Kolanovic, who from a chronic market skeptic has in recent months morphed into a raging bull, is out with a note in which he not only first mocks the bears…

Recently, financial press stories were dominated by fear. This is perhaps understandable given a long period of extremely low volatility before the recent turmoil. Negative stories also tend to attract more attention (clickbait). After running through various negative narratives – inflation, stagflation, hyper growth, rollover of growth, large deficits, tariffs to reduce trade deficits – the most recent bear narrative is trade wars (and particularly one with China).

… only to tease them by forecasting new all time highs…

We argue below that this risk is also very low, and if we take the 2015 turmoil as a template for flows from systematic and fundamental investors, markets are likely to reach all-time highs soon.

… even as his JPM cross-asset colleague John Normand warns that the time to sell  may be approaching, now that the odds of a recession inside 3 years are over 70%.

Or, as Kolanovic would see when looking at the Rorschach test above, just the right conditions for all time highs.

More interesting is the JPM quant’s assertion that Trump will – or should – avoid launching a trade war at all costs, not least of all because he wants to avoid impeachment, which would be far more likely if Trump “destabilizes global markets” impairing the administration’s ‘market scorecard’ and likely leading to an election loss. And, as Marko adds, “lost elections open a path to impeachment, and other complications.”

Which is clearly a sensible thing to say for any bank employee, whose bonus would be similarly “complicated” if Trump “destabilizes global markets.” As for the “revelation” that a market crash could Trump the midterms – and potentially his liberty – well, that’s been the plan since November 8, 2016.

Here’s Marko:

A significant trade war started by this administration would destabilize global equity markets. Should this happen ahead of the November election, it would impair the administration’s ‘market scorecard’ and likely lead to an election loss. Lost elections open a path to impeachment, and other complications. The game is also non-zero sum, as one can both use tough rhetoric and at the same time do little disruptive action (e.g., players as we defined them can ‘have their cake and eat it’). Setting up a diagram (similar to the well-known ‘prisoners’ dilemma’) points clearly that there will be strong rhetoric, but weak or no action that would destabilize equities.

One could argue that a similar analysis can be applied to the risk of the Fed committing policy errors (see figure below, asymmetry in the case of the Fed would be causing a recession, and the public pinning the blame to specific individual central bankers responsible for the decision).

So after telling to the president that he should avoid a market crash if he knows what’s best for him, Kolanovic then goes back to prodding the bears, explaing that since there have been no further shockwaves from the record February VIX spike (which by the way Kolanovic said would not happen), what comes next for the market are fresh all time highs. To wit:

Unless there is a recession, all of these flows tend to reverse within 1-2 months. For instance, short-term momentum turns positive ~1 month after the initial shock, short-term options expire within a 1-month cycle (gamma rolls off), and realized volatility starts declining prompting volatility sensitive investors to buy. This all happened in 2015 and is happening again now. A very simplified price analogy is shown in the figure above, and suggests the market should reach all-time highs relatively soon.

Which, ironically differs substantially with what Kolanovic wrote at the end of January when he said that “In terms of timing market downside risk, we would be more concerned about the period after the Q1 earnings season, when fiscal reforms are likely to be priced in and central banks make further progress on the normalization of monetary policy.”

That would be right now.

Finally, the quant has one last card up his sleeve: if you don’t believe him, then believe JPM’s forecast of over $800 billion in stock buybacks:

There is also a substantial difference between Feb 2018 and Aug 2015. Right now, both macro (synchronized global growth) and corporate fundamentals (tax reform and record earnings) are much better than in 2015. This adds demand for equities and strengthens fundamental reversion flows. For instance, compare current fundamentals to 2015, when we had a US earnings recession, EM crisis, China crisis, Energy, and High Yield concerns. This year, we expect $800bn of buybacks vs. ~$600bn in 2015. The difference ($200bn) on its own, equates to all the value of all recent systematic strategies’ selling. And while systematic strategies will buy back most of what they sold, buybacks will not reverse.

Kolanovic is referring to this chart…

… which incidentally will never materialize if i) rates jump making debt-funded buybacks impossible and ii) if there is a trade war.

None of this matters to Marko, however, who is about as bullish as we have ever seen him:

This is all supportive of the market reaching new highs relatively soon (e.g., with the onset of Q1 earnings season), and is consistent with our previous fundamental and quantitative research.

And so we wait to find out: will Kolanovic be right with his new all-time-high prediction, or will it be Gartman’s turn to finally have a last laugh after his “watershed call” that the market has now topped.

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Live Feed:

NBC Miami is reporting that there are multiple fatalities after a pedestrian bridge collapsed near Florida International University.

Notably, the bridge was brand new – and had not opened yet.

The collapse happened less than a week after crews dropped the elevated span in place over the Tamiami Trail in an effort to provide students a safe route across the busy roadway.

At least two people could be seen taken to ambulances while others were being treated by rescue crews, while at least two cars could be seen pinned by massive slabs of concrete.

NBC 6’s Andrea Cruz, who was near the school, reports that the bridge has completely collapsed.

NBC Miami account @nbc6 reports Florida Highway Patrol confirms that “several people are dead” after Miami pedestrian bridge collapses pic.twitter.com/yF055XsTdx

— MSNBC (@MSNBC) March 15, 2018

Miami-Dade Fire Rescue has treated a total of five patients so far, with one being transported as a trauma alert to Kendall Regional Hospital.

We suspect the infrastructure spending calls will grow once again.

More details to follow…

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We’re beginning to notice a pattern here…

For the second time in the span of a week, the New York Times is once again rebutting reports that Special Counsel Robert Mueller’s wide-ranging probe into malfeasance by President Trump and his associates is finally winding down.

This time, a report from Politico published earlier today claimed that Trump’s lawyers were nearing an agreement on a sit-down with Mueller…

But barely six hours later, NYT reported that Mueller has subpoenaed records from the Trump Organization pertaining to Russia. The request is clearly intended to gather more information about Trump Tower Moscow, which has reportedly become a focus of the Mueller probe. As the Times explains that “The subpoena is the latest indication that the investigation, which Mr. Trump’s lawyers once regularly assured him would be completed by now, will drag on for at least several more months.”

As a reminder, the Moscow deal initially caught Mueller’s attention when he learned that Trump Organization lawyer Michael Cohen had reached out to a spokesman for Russian President Vladimir Putin to inquire about getting the necessary permissions to restart the project, which had stalled.

The Trump Organization has said that it never had real estate holdings in Russia, but witnesses recently interviewed by Mr. Mueller have been asked about a possible real estate deal in Moscow. In 2015, a longtime business associate of Mr. Trump’s emailed Mr. Trump’s lawyer Michael Cohen at his Trump Organization account claiming he had ties to President Vladimir V. Putin of Russia and said that building a Trump Tower in Moscow would help Mr. Trump’s presidential campaign.

Mr. Trump signed a nonbinding “letter of intent” for the project in 2015 and discussed it three times with Mr. Cohen.

Wary of the risks that his tax return might become part of the investigation, Trump publicly warned Mueller during an interview in July that his family’s finances should be off limits to the Mueller probe.

…However, it appears that ship has sailed.

Mr. Mueller could run afoul of a red line the president has warned him not to cross. Though it is not clear how much of the subpoena is related to Mr. Trump’s business beyond ties to Russia, Mr. Trump said in an interview with The New York Times in July that the special counsel would be crossing a “red line” if he looked into his family’s finances beyond any relationship with Russia. The president declined to say how he would respond if he concluded that the special counsel had crossed that line.

While Congressional investigators have demanded documents from the Trump Organization, this is the first time Mueller has done so. The request suggests that Mueller is once again zeroing in on Trump’s finances, and the finances of his associates (and you know what that means)…

The Times added that Trump’s lawyers are still negotiating with Mueller’s team about the parameters of a possible sit-down (or written) interview. Trump recently brought on another Washington lawyer to join the team of lawyers who are handling the Mueller probe.

As far as we know, Mueller’s probe isn’t focusing on collusion so much as it’s focusing on Trump’s and his family’s (i.e. Kushner’s) business ties with Russia and other foreign powers like the United Arab Emirates. Obstruction of justice has also been bandied about, but given that former FBI Director James Comey has already declared during a Congressional hearing that the president didn’t obstruct justice, it might be difficult to convince a jury otherwise. And the notion that the Trump campaign was in direct contact with Putin – and furthermore that their partnership (which didn’t exist) had a meaningful impact on the outcome of the election – has also been discounted…

…That leaves Trump’s incredibly complex and murky financial history. Financial misdeeds proved to be Paul Manafort’s undoing – but then again, he had already been on the FBI’s radar before he even met Trump.

Stocks erased most of their earlier gains on the news…

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After the New York Times revealed that Attorney General Jeff Sessions is considering firing former FBI Deputy Director Andrew McCabe before his pension vests over malfeasance discovered by the DOJ’s Inspector General, the Wall St. Journal’s Del Quentin Wilber reports that McCabe is headed over to the DOJ to beg for his pension.

“Former Deputy FBI Director Andrew McCabe to meet today w/ staff of Deputy Attorney General Rosenstein as final appeal in his poss firing, says person familiar. Decision rests w/ AG Sessions.” tweeted Wilber:

Former Deputy FBI Director Andrew McCabe to meet today w/ staff of Deputy Attorney General Rosenstein as final appeal in his poss firing, says person familiar. Decision rests w/ AG Sessions. devping…story from last night on latest twist in saga: https://t.co/DrWoUS9O1X

— Del Quentin Wilber (@DelWilber) March 15, 2018

Shortly thereafter, Fox News confirmed:

*BREAKING* Fox News has learned former Deputy FBI Director Andrew McCabe is meeting with Senior DOJ Officials now, making his final case to keep his job. I am told one Officials in the meeting is long time senior DOJ official Scott Schools. @foxnewspolitics @FoxNews

— Jake Gibson (@JakeBGibson) March 15, 2018

McCabe stepped down in late January, however many believe he was forced to step down. According to Fox News, McCabe was “removed” from his post as deputy director, “leaving the bureau after months of conflict-of-interest complaints from Republicans including President Trump.”

According to reports, McCabe was set to exhaust his remaining accrued vacation time as service credits towards his retirement – however an early firing would make him ineligible. 

The Wall Street Journal adds:

Attorney General Jeff Sessions is considering a recommendation to fire former Deputy FBI Director Andrew McCabe and could order his ouster this week, shortly before Mr. McCabe’s expected retirement, according to a person familiar with the matter. Mr. McCabe allegedly wasn’t forthcoming with investigators probing the disclosure of information to a Wall Street Journal reporter for an October 2016 story about an inquiry into the Clinton Foundation, said the person. Mr. McCabe left his post in January after he was told to step aside, but had been expected to take leftover vacation time until he was eligible to retire this month after a decades long career with the agency. A spokeswoman for Mr. Sessions said in a statement that the Justice Department “follows a prescribed process by which an employee may be terminated,” and said she had “no personnel announcements at this time.”

Fox News guest Sara Carter has been reporting since January that McCabe allegedly ordered FBI agents to alter their “302” forms – the paperwork an agent files after interviewing someone:

6) The 302 reveals the content of interview as well as identify ALL PARTICIPANTS. The 1023 outlines who met who, where, when, and why.

— TrumpSoldier (@DaveNYviii) January 5, 2018

PJ Media reports:

“I have been told tonight by a number of sources … that McCabe may have asked FBI agents to actually change their 302s,” Carter told host Sean Hannity.

—

“So basically every time an FBI agent interviews a witness, they have to go back and file a report,” Carter explained.

Hannity pointed out that, if true, it would constitute a case of obstruction of justice, and Carter agreed. She said the matter was being investigated by FBI Inspector General Michael Horowitz.

“If this is true — and not just alleged — if this is true, McCabe will be fired,” Carter said. “They are considering firing him in the next few days. If this turns out to be true,” she added.

Moreover, while the NYT reported a confrontation between FBI Director Christopher Wray and McCabe over unspecified findings in the DOJ inspector general report, the Washington Post reported in late January that McCabe is also being probed over his involvement in examining emails found on former Rep. Anthony Weiner’s laptop. 

In other words, for anyone who might cry foul over McCabe losing his pension, it appears that the DOJ can simply point to the mounting pile of evidence from the Inspector General pointing to a laundry list of misconduct… and as a reminder, the IG’s report is due soon, and it will provide a much needed look deep inside what may be ground zero for what many unaffectionately call the “deep state.”

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