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The machines have achieved their short-term goal (getting the S&P above its 50-day moving-average), next is getting green for the month.
Once again, the US market open triggered a panic-buying bid under mega-cap US Tech stocks…
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In the latest public disagreement between President Trump and his top military advisor, Defense Secretary Jim Mattis on Wednesday said that when it comes to North Korea, diplomatic solutions remain on the table after he was asked to respond to a tweet by President Trump that said “talking is not the answer.”
“No, we are never out of diplomatic solutions,” Mattis said in an exchange with pool reporters before meeting with his South Korean counterpart Song Young-moo in the Pentagon. “We continue to work together, and the minister and I share a responsibility to provide for the protection of our nations, our populations, and our interests, which is what we are here to discuss today.”
As discussed this morning, in his first tweet discussing the recent North Korean missile launch, Trump tweeted that “The U.S. has been talking to North Korea, and paying them extortion money, for 25 years. Talking is not the answer!”
The U.S. has been talking to North Korea, and paying them extortion money, for 25 years. Talking is not the answer!
— Donald J. Trump (@realDonaldTrump) August 30, 2017
The market slumped briefly (the dip was quickly bought) after Trump appeared to be signaling that the administration was shifting tactics a day after a White House statement said “all options are on the table.” Mattis and Secretary of State Rex Tillerson have repeatedly said the top priority should be a diplomatic solution with North Korea. On Tuesday, U.S. Ambassador to the U.N. Nikki Haley called the test “absolutely unacceptable and irresponsible,” noting that North Korea has violated “every single security council resolutions have had” and suggesting a hard-line shift in US policy.
As Reuters reports, Mattis made the comment during a media availability before the meeting, in which a reporter is allowed to ask a question on behalf of the press corps, which is then distributed to news outlets. Photographers and videographers are also allowed in.
After initially saying “no” after being asked whether the U.S. was out of diplomatic solutions, the reporter pressed Mattis over what options can still be taken.
“Now you’re testing us here, you know,” Mattis joked. “We bring you up here to take pictures.”
#SecDef Mattis on #NorthKorea: “We’re never out of diplomatic solutions…” http://pic.twitter.com/KVtRIqymYh
— CSPAN (@cspan) August 30, 2017
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An international nutrition study spanning more than a decade has turned up unexpected findings that researchers say should cause health experts to reconsider global dietary guidelines.
The ongoing Prospective Urban Rural Epidemiology (PURE) project has found both saturated and unsaturated fat intake linked to better heart health, that a high-carb diet is a better predictor of health risks than fat consumption, and that the health benefits of fruit, vegetables, and legumes like beans and chickpeas may plateau at three to four servings per day.
The new analysis, presented at the European Society of Cardiology meeting this week in Barcelona, included 135,000 adult participants between ages 35-70 living in Africa, Europe, North America, South America, south Asia, southeast Asia, China, and the Middle East.
These participants responded to food-intake and lifestyle surveys between between January 2003 and March 2013, with an average follow-through of 7.4 years. Researchers considered health outcomes for participants through March 31, 2017, recording 5,796 deaths in total and 4,784 “major cardiovascular events” such as strokes, heart attacks, and heart failure.
Overall, carbohydrate intake in the highest versus lowest consumption groups was associated with 28 percent higher risk of death.
“Our findings do not support the current recommendation to limit total fat intake to less than 30 percent of energy and saturated fat intake to less than 10 percent of energy,” said Mahshid Dehghan, a nutritionist from Canada’s Population Health Research Institute at McMaster University. Dehghan is the author of one of several papers on the latest PURE-study findings.
Dehghan recommends “a total fat intake of about 35 percent of energy” in conjunction with lowering carbohydrate intake.
Looking Again at Legumes, Fruits, and Vegetables
Perhaps most notably, while higher fruit, vegetable, and legume consumption was associated with lower total mortality risk and less risk of death from non-cardiovascular causes, this benefit appears to max out at three to four servings, or around 375-500 grams, per day.
“Previous research, and many dietary guidelines in North America and Europe recommended daily intake of these foods ranging from 400 to 800 grams per day,” said Andrew Mente, lead researcher on the fruits and veggies study published this week in The Lancet. “Our findings indicate that optimal health benefits can be achieved with a more modest level of consumption.”
Fruit intake was linked to lower risk of death from heart disease and from other causes; frequent consumers of legumes had lower rates of death from all causes and from non-cardiovascular causes; and raw vegetable intake “was strongly associated with a lower risk of total mortality,” while “cooked vegetable intake showed a modest benefit against mortality,” Mente and his team found. (See more data from the study here and Mente’s presentation to the European Society of Cardiology here.)
Cut Some Carbs, Keep the Fat
Looking at the link between macronutrients and heart disease, researchers found high carbohydrate consumption—defined as diets where more than 60 percent of calories come from carbs—increased the risk of overall death (though not the risk of heart disease or death from heart-related causes specifically).
Meanwhile, eating saturated, monounsaturated, and polyunsaturated fatty-acids was associated with lower death risk.
“Each type of fat was associated with significantly reduced mortality risk: 14 percent lower for saturated fat, 19 percent for mono-unsaturated fat, and 20 percent for polyunsaturated fat,” according to the study. Higher saturated fat intake was also linked to a 21 percent decrease in stroke risk. (See more data from the study here, and Dehghan’s conference presentation here.)
The same group of researchers also looked at the effect of fats and carbohydrates on blood lipids like cholesterol, triglycerides, and apolipoprotein. They found that LDL cholesterol, a measure that informs many government dietary guidelines, “is not reliable in predicting effects of saturated fat on future cardiovascular events.” A better predictor, they found, is apolipoproteins A and B levels—something no one is talking about.
“For decades, dietary guidelines have focused on reducing total fat and saturated fatty acid intake based on the presumption that replacing [saturated fats] with carbohydrate and unsaturated fats will lower LDL [cholesterol] and should therefore reduce” heart and metabolic problems, noted Dehghan. But these recommendations rely largely on North American and European populations. “PURE provides a unique opportunity to study the impact of diet on total mortality and [heart disease] in diverse settings, some settings where over-nutrition is common and others where under nutrition is of greater concern,” she said.
Not surprising, then, that their conclusions challenge common assumptions about nutrition.
But don’t ditch grains entirely just yet. As Mente reminds us, the research supports the idea that high-carb diets are bad, but not necessarily that low- or no-carb diets are optimal. “It’s [the high-carb eating] population that needs to reduce carb intake to more moderate levels,” he said. “Our data doesn’t support low carb but certainly it supports a moderate carb intake of 55 percent.”
Mente also cautions against confusing population-level effects with individual risk reduction. “The effects are modest effects, in the neighborhood of a 20 percent reduction in relative risk,” he said. “So if the annual [absolute] risk of mortality is 1 percent, it would be reduced to 0.8 percent. At the individual level, it is tiny…. Having said all that, at a population level, if these small effects are true and not due to confounding, they would translate into thousands or even millions of fewer deaths annually, depending on the size of the population, if the exposure is common which is certainly true for diet.”
At any public health level—with the aim of better government dietary advice—”the findings are important,” he said.
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Berkeley Mayor Jesse Arreguin has had enough of violence bursting from protests of right-wing speakers in his city and at University of California Berkeley. So in order to end it, he wants the speakers to shut up, go away, and go bother somebody else.
Weekend violence from black-clad antifascist provocateurs disrupted a “Rally Against Hate” in Berkeley, and 13 people have been arrested. After the protest, Arreguin decided to buckle under the threat of the “thug’s veto” and asked U.C. Berkeley to cancel an upcoming Free Speech Week at the college in September, where people like Milo Yiannopoulos are scheduled to speak.
“I’m very concerned about Milo Yiannopoulos and Ann Coulter and some of these other right-wing speakers coming to the Berkeley campus, because it’s just a target for black bloc to come out and commit mayhem on the Berkeley campus and have that potentially spill out on the street,” Arreguin said.
Yes, there is clearly some sort of trap being set here. There are an unknown number of people on each side in this ongoing public political battle especially invested in turning speech into violence. In this particular case, it seems most likely that violence is going to originate from the self-described “antifascist” side, as it has previously.
But let’s be clear here. It is the job of Arreguin, the city government of Berkeley, and its police to protect the right of people within its borders to speak without facing violent responses. This is not some sort of additional source of frustration and labor for the city. One of the primary expectations of a city government is to protect the civil liberties of the people within its borders, and the right to speak freely and demonstrate peacefully are among those liberties.
Arreguin is hardly the only mayor to attempt to use violence as an excuse to abandon the responsibility to protect freedom. The mayor of Portland did the exact same thing in May when an apparently unstable man turned violent on a train and stabbed and killed two people. It was clearly a bizarre, isolated incident, yet Mayor Ted Wheeler made a huge performance out of trying to ban right wing protests in the city as a result.
Virginia Gov. Terry McAuliffe also just banned demonstrations temporarily at a statue of Robert E. Lee in Richmond while the state comes up with more regulations over the correct way they’ll allow citizens to protest.
U.C. Berkeley should resist Arreguin’s request, and Americans should reject the idea that violent reactions can be used as a justification for giving up on free speech. Instead, citizens need to be demanding that cities do a better job of both protecting protesters and holding individuals who engage in acts of violence criminally responsible.
It may be messy and it may not be easy (people intent on violence are masking their faces for a reason), but it’s nevertheless the only real way of working through this current phase of public political resistance and coming out the other side with our rights intact. If Arreguin is not up for the job of protecting the people in his city from violence, he should consider whether he should be mayor.
He did propose another solution, one that is also terrible. He wants to possibly classify “Antifa” violent activists as a “gang.” Such a proposition shows either an unwillingness or inability to hold individuals responsible for their own behavior and attempts to establish collective guilt. It would use California law as a tool to suppress the freedom of association rights of people who are classified as being in a gang rather than to punish actual criminal conduct.
And California’s gang law enforcement is a mess as it is. A state audit in 2016 found very poor oversight and accountability within the system, resulting in people being added to the gang member database without supporting evidence that they should be there. You better believe that if California classified “Antifa” as a gang, there’d be some police officers looking to declare any mouthy protester who engaged in even nonviolent civil disobedience to be a member.
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Free trade deals like NAFTA are beneficial for everyone, even as President Trump continues to signal his hostility toward them.
A. Barton Hinkle writes:
Among the endless injuries Donald Trump has inflicted upon the country, few might do more lasting damage than leading so many Republicans to abandon their commitment to free trade. Millions of people could end up poorer because of it.
“We are in the NAFTA (worst trade deal ever made) renegotiation process with Mexico & Canada,” the president tweeted while Houston was drowning. “Both being very difficult, may have to terminate?”
The awfulness of NAFTA is a refrain for the administration; not long ago the U.S. trade representative, Robert E. Lighthizer, claimed “at least 700,000 Americans have lost their jobs due to changing trade flows resulting from NAFTA. Many people believe that the number is much, much bigger than that.”
Many people do indeed. Many people also believe the moon landing was fake, George W. Bush knew about 9/11 before it happened, and Barack Obama is really Muslim. Many people are often full of it, as is Lighthizer.b
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Little more than a day after Dara Khosrowshahi decided to accept the Uber board’s offer to become the embattled ride-share company’s new CEO – after the company’s top two candidates dropped out of the running – he received a welcome-aboard present that was just so…Uber.
Namely, a report in the Wall Street Journal claiming that the DOJ is in the “preliminary stages” of an investigation into whether Uber executives violated the Foreign Corrupt Practices Act by allegedly paying bribes to government officials. Based on what it finds, the Justice Department may or may not decide to open a full-fledged FCPA investigation into Uber.
According to WSJ, it’s unclear whether US authorities are focused on one country or examining activities in multiple countries where the company operates. But if we had to guess, we’d bet that any alleged wrongdoing probably happened in China, where bribery and corruption proliferate. Uber’s foray into the world’s No. 2 economy famously ended in defeat one year ago when it sold its China division to local rival Didi Chuxing in exchange for a stake in the combined company.
In his first public remarks since accepting the job, Khosowshahi described the chance to run the ride-hailing startup as a “once in a lifetime opportunity.” But like they say: be careful what you wish for. Because, as Khosrowshahi absorbs his first blows in the unceasing media assault on Uber, he’s probably thinking to himself that he didn’t realize just how good he had it at Expedia – where his 12-year tenure was unblemished by scandal.
To add another layer of irony: He hasn’t even left yet.
Here’s WSJ:
“Even before he takes the job as Uber Technologies Inc.’s new chief executive, fresh challenges confront Expedia Inc. CEO Dara Khosrowshahi, with news of a federal bribery probe into Uber and public disagreement over how the board’s decision to hire him unfolded.
News of the probe, reported by The Wall Street Journal on Tuesday, came after Mr. Khosrowshahi made his first public comments since being voted in as CEO by Uber directors on Sunday. He would succeed Travis Kalanick, the Uber co-founder who was pressured to resign in June following a series of scandals and amid infighting on the board. Mr. Khosrowshahi was selected over two more seasoned executives in Jeff Immelt, chairman of General Electric Co. and Meg Whitman, chief of Hewlett Packard Enterprise Co.”
Khosrowshahi played up his relationship with former CEO and Uber co-founder Travis Kalanick, telling WSJ that “there’s mutual respect” between the two tech titans. We hope, for Khosrowshahi’s sake, that he’s being polite, not naïve. Because anybody who’s been following the Uber saga probably suspects that Kalanick would drive a knife into his successor’s back in a heartbeat if it would hasten his return as CEO.
“Speaking with the Journal at Expedia’s headquarters Tuesday morning, Mr. Khosrowshahi said his contract with Uber still needs to be finalized, but indicated he would take the job. He said Mr. Kalanick would remain involved with Uber and described as “budding” his relationship with the ex-CEO. “I think there’s mutual respect there,” he said.
‘He’s the founder of the company, he’s an incredible visionary, so he will be involved with the company going forward,’ Mr. Khosrowshahi said. ‘Exactly how, exactly when, is something that’s really up to Travis and the board.’"
When asked about the controversy surrounding his selection as CEO – he was chosen after two more-experienced candidates, HP Enterprise’s Meg Whitman and recently retired former GE CEO Jeff Immelt, publicly withdrew their candidacies – Khosrowshahi defended his selection.
“Mr. Khosrowshahi declined to discuss the controversy around the CEO search, saying ‘there has been too much obsession with the process.’
Despite the drama at Uber, Mr. Khosrowshahi said the offer to run it was too good to pass up. ‘It took a couple of pokes to get me interested,’ he said, ‘but the opportunity at Uber is once in a lifetime.’”
He added that his “first priority” at Uber would be focusing on the company’s employees, who’ve been without a leader for nine weeks.
“That part of the business maybe hasn’t been focused on as much,” he said, “and that comes first for me.”
But as much as Khosrowshahi would like to shoot the breeze by the water cooler, we imagine he’ll soon be busy putting out fires as the federal government is in the middle of multiple investigations into the company’s alleged misdeeds.
As WSJ notes, Uber faces growing pressure from U.S. authorities. In addition to the preliminary bribery probe, the Justice Department is separately pursuing a criminal investigation into “Greyball,” a software tool employees used to evade law-enforcement officials. And earlier this month, Uber settled Federal Trade Commission charges that it didn’t offer sufficient privacy protections for its users. The company didn’t admit nor deny the allegations as part of the settlement.
Good luck with the new job, Dara. You’re going to need it.
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While the concept of 'independence' among the unelected central bank cognoscenti is as cute as the tooth fairy or santa claus, it is nevertheless defended by those on high as sacrosanct to our very democracy. That is until The Wall Street Journal's editorial board finally had enough of Fed officials joining the 'resistance' against financial reform…
Janet Yellen didn’t run for President, but you wouldn’t know it from her policy démarche Friday at the Federal Reserve’s annual Jackson Hole retreat. The Fed Chair unleashed a defense of post-crisis financial regulation that shows how political the world’s central bankers have become.
“Already, for some, memories of this experience may be fading—memories of just how costly the financial crisis was and of why certain steps were taken in response,” Ms. Yellen said.
She added that regulatory changes “should be modest” and retain the superstructure built under Dodd-Frank.
Ms. Yellen’s comments followed a blunter recent warning from Fed Vice Chair Stanley Fischer, who told the Financial Times that “one can understand the political dynamics of this thing, but one cannot understand why grown, intelligent people” would “reach the conclusion that” you should “get rid of all the things you have put in place in the last 10 years.” Thank you, Senator Warren, er, Fischer.
This is extraordinary. Fed officials are launching a political campaign to retain their vast discretionary control over the American financial system. The brazenness of the effort shows how far afield central bankers have roamed from their traditional remit of monetary policy, which Ms. Yellen barely mentioned. You’d think she’d focus on that duty given that the Fed faces a watershed as soon as next month as it decides whether to begin rolling back the $4.5 trillion balance sheet it has amassed since the 2008 financial panic.
The size and scope of that balance sheet is itself a political intrusion because the Fed’s bond purchases are a form of credit allocation. The purchase of mortgage securities favors housing, while the Fed’s focus on long-duration bonds has been a deliberate attempt to push investors into riskier assets.
These decisions haven’t done much for the real economy, which has grown at a historically slow pace since the recession ended in June 2009. But the Fed has succeeded in lifting some asset prices, and no one knows what will happen to those prices once the Fed begins unwinding its portfolio. Perhaps it will all unfold without a hitch, but some very smart people aren’t as sanguine.
As for the stability of the financial system, Ms. Yellen and Mr. Fischer are at pains to assure us that, due to their efforts, all is well. “Banks are safer,” she says, thanks to capital and liquidity mandates and the wisdom of financial regulators. Oh, and “credit is available on good terms.”
But Ms. Yellen wasn’t nearly as optimistic about lending in the later Obama years. She often fretted that tight credit conditions were limiting growth, and the facts bear out that concern. Bank lending in the current expansion has trailed that of seven previous recoveries, and lending for small business has been especially slow. None of this is cause for Fed triumphalism.
Banks are safer, but they should be after eight years of modest expansion. The real test of financial stability comes in times of economic stress, when interest rates rise or investors get nervous and rush to safer assets. The system has already had one liquidity panic, in October 2014, when the yield on U.S. Treasurys moved some 40-basis points in a day.
You have to ignore history to believe that regulators are suddenly so wise that they know the current regulatory regime will prevent the next crisis. The Fed misjudged the economy in the mid-2000s and kept feeding easy credit that produced the housing bubble. Fed officials Ben Bernanke and Tim Geithner then underestimated the financial risks in early 2008 when the stresses were already apparent.
That’s one reason to support a financial regime with high levels of capital to defend against potential losses but with less regulatory micro-managing. This is the trade-off that House Financial Services Chairman Jeb Hensarling has proposed, which contrasts with the lower capital and lower regulatory barriers that the Trump Administration seems to prefer.
This is the debate we should be having, but the Fed wants Americans to believe that Dodd-Frank is gospel and the only alternative is to return to pre-crisis policies. The irony is that Ms. Yellen is thus associating the Fed with the post-crisis status quo that has been splendid for Goldman Sachs and giant banks that have gained market share and can afford higher regulatory costs.
Ms. Yellen did concede that “there may be benefits to simplifying aspects of the Volcker rule” that limits propriety trading, which is the least she can do since the rule as written is more than 950 pages of text and explanation. But until she runs for public office, she and the Fed ought to stick to executing regulatory policy rather than trying to dictate it.
Ms. Yellen’s term as Fed chair expires early next year, and her Jackson Hole foray is a signal to President Trump about what he can expect if he reappoints her.
The Fed needs a leader who won’t bend to political pressure. But it also needs a leader who understands the limits of the Fed’s political role.
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As the world becomes more environmentally aware, all eyes are on finding sustainable, long-term solutions to replace the use of non-renewable materials such as fossil fuels. Great steps are being taken to reduce greenhouse gases, notably carbon emissions, with recruiters like NES constantly looking to place talented individuals into key positions within the energy industry – but what could Europe’s renewable energy revolution have in store for the industry?
International power grid
Believe it or not, a relatively quiet mission is currently underway to create an economically significant and internationally successful power grid. It will help many countries benefit from natural resources like never before. It may sound like something from a futuristic movie, but an impressively intricate project has already begun to connect Britain to Norway’s huge hydroelectric power supplies.
The project will take years to complete, but when finished power lines running through a Norwegian mountain near Kvilldal will connect to Blythe in Northumberland via the longest undersea power cable in the world, stretching 450 kilometers.
The plan? To allow the UK and Norway to import and export natural power sources. The UK could import 1400 megawatts of electricity, enough to power over 750,000 homes. Norway will benefit from wind energy exported from the UK in a scheme that’s both intelligent and efficient.
The trade of surplus energy
The trade of surplus energy from one country to another forms the backbone of Europe’s renewable energy revolution. Using power interconnectors to link nations together in an eco-friendly way is a logical step when it comes to reducing emissions. But what does this mean for the future of energy usage?
An international power grid can theoretically produce more reliable energy supplies by helping to reduce the effects of intermittent energy produced by renewables such as wind and solar power.
Northern European countries, for instance, that produce large amounts of energy from the wind can trade electricity with sunnier European climates offering reliable and efficient solar power. The use of surplus energy is an innovative and forward-thinking approach to reducing the carbon footprint here on Earth and, if successful, could go a long way to reducing greenhouse gases. A successful international network of natural power could also drive down wholesale energy prices as people are given an alternative to how they fuel their lives.
Interconnectors already in use
With the Norwegian-UK project well underway, it’s also worth noting that interconnectors are already being used. The UK is connected to electricity sources in France and Ireland. Interconnectors in multiple other countries, including Belgium are in the advanced stages of planning or construction. Indeed a new interconnector linking the UK with France has recently been approved and looks set to power up to two million homes ensuring Britain’s energy supply is continuously resilient.
Europe’s large-scale renewable energy revolution will potentially make the world a greener environment with cleaner living gathering momentum across the globe.
Pay with rays
These changes are having a great impact behind the scenes but they are far from the only differences we’re seeing. Pioneers are keen to promote the virtues of ‘going green’ to cut down emissions.
The SolarChange foundation is even offering people the chance to generate more than just energy from their solar panels. Its cryptocurrency SolarCoin is in the mold of Bitcoin and can be earned by anyone who produces power from the sun’s rays as a bonus on top of the cash they can earn. It’s part of a drive to promote this form of energy generation and trade across the planet.
Projects such as this prove that whether it’s a top-down large-scale pipeline project or a tech-friendly bottom up groundswell, the renewable energy industry has a number of sources of potential growth which should help this industry to thrive going forward.
Could these be the final days of fossil fuels, complete with the wars and pollution that go along with them?
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This remains a market in which traders are, for lack of a better word, “confused” (another good word is “paralyzed” as we observed one month ago).
For the latest confirmation of this, look no further than Bloomberg’s macro commentator (and former hedge fund manager) Richard Breslow, who in his latest macro note admits that “truth be told, there are very few of us who know what’s going on with the equities markets.” The other problem is that despite all the “fundamental analysis, valuations, metrics and the like” by financial professionals, the market appears to move in jagged discontinuities, with little logic or rationale, immune to the best financial “hot takes.”
Inevitably, Breslow writes, “the market doesn’t carry through as promised and it’s inevitably made clear that it has nothing to do with that day’s investing thesis but some nefarious and exogenous influence.”
Almost, as if, it’s all in the hands of central bankers… Or maybe not that nefarious, and risk prices simply act as they (illogically) would in a robot-eat-robot, or perhaps algo-eat-algo, world (a perverse cannibalization that has been puzzling the FT recently).
The good news, is that Breslow believes he may have stumbled on the solution to everyone’s problem: how to trade this painfully rangebound, seemingly irrational market:
So put all this aside and concern yourself with how each equity market is behaving around its 21- and 55-day moving averages. Almost every index respects these indicators and traders should love the opportunities presented when the two lines cross. All the words you hear mean little if you’ve not been given the sign.
The P&L punchline: “Risk off is when the 21-dma crosses lower versus the 55-dma. That’s when you know you should be scared. When the opposite occurs, feel free to go back to ignoring the front page news.“
While Breslow highlights just how predictably responsive to this 21/55 narrative both the EURUSD and USDJPY have been the big test will be ES, which while stuck in a tight range, may be about to break out:
Two weeks of a lot of noise seemingly signifying nothing has caused the 21 to inch stealthily lower and it hovers, as we speak, 5 points above the 55. If, not when, they cross it’s likely that you’ll have a clearer sense of what to do. Nota bene, close but no cigar, doesn’t score points in this particular game.
Will investing, and trading, indeed be as simple as Breslow makes it appear? The answer should emerge in just a few days when the S&P’s 21- and 55-DMA cross. The result could be violent.
* * *
Richard Breslow’s full note below:
Truth be told, there are very few of us who know what’s going on with the equities markets. On any given day, they’re going to collapse, never go down again or must be sold or bought on any strength or weakness, as the case may be. And, like congress, many, if not most, people hate the group as a class (index) but love their personal representative (sure winner). The simple truth is that this asset class’s fate is being clouded by the fact that the question is being framed all wrong. And as scientists of the market we should know better than to forecast (kind choice of words) market direction while ignoring the maxim, “garbage in, garbage out.”
Day in and day out we’re inundated with analyses of valuations, metrics and the like. We get our regular instant armchair take on the latest geo-political outrage. After all, who understands this stuff better than foreign exchange salesmen? And a lot of time we’re just simply exhorted to love or hate a given bourse based on the perceived charisma or odiousness of the head of state.
Macron’s dreamy, so of course after he rewrites the utterly entrenched labor laws of France, overhauls the economy into a hotbed of innovation, he will turn his full attention to European-wide structural problems. Rumor has it, he can also make an incredible vegetarian foie gras. How can you not be optimistic about everything Europe? Other leaders must be given no quarter on any issue as a matter of principle. I mention this only because if you look at a chart of the euro versus the dollar, yesterday’s spike and subsequent failure above 1.20 looks distinctly like a middle-finger pattern.
Inevitably, the market doesn’t carry through as promised and it’s inevitably made clear that it has nothing to do with that day’s investing thesis but some nefarious and exogenous influence.
So put all this aside and concern yourself with how each equity market is behaving around its 21- and 55-day moving averages. Almost every index respects these indicators and traders should love the opportunities presented when the two lines cross. All the words you hear mean little if you’ve not been given the sign.
Risk off is when the 21-dma crosses lower versus the 55-dma. That’s when you know you should be scared. When the opposite occurs, feel free to go back to ignoring the front page news.
The euro has been on a tear since April. How do you know when it starts to be a relative performance issue for European stocks? The end of June, just as soon as the technical signal flashed.
Is USD/JPY weakness becoming a problem for Japan? Let’s see, but be aware the lines crossed yesterday.
Which sets up a really interesting question. The one you all actually care about. The S&P 500 looks like it’s stuck in a tight range. Where it goes nobody knows. Follow the lines. Two weeks of a lot of noise seemingly signifying nothing has caused the 21 to inch stealthily lower and it hovers, as we speak, 5 points above the 55.
If, not when, they cross it’s likely that you’ll have a clearer sense of what to do. Nota bene, close but no cigar, doesn’t score points in this particular game.
Don’t you wish all of life was this easy?
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A video posted to YouTube shows a plainclothes detective in King’s County, Washington, approach a motorcyclist with his gun already drawn and accuse him of reckless driving and speeding before identifying himself as a cop.
“Give me your driver’s license or I’ll knock you off this bike,” the detective tells the motorcyclist, Alex Randall, later threatening to “dunk him” if he moves his bike.
The detective ignores multiple requests by Randall for permission to take off his helmet and turn off his bike to hear him better.
The detective identifies himself as police only when Randall tells him he’s sorry that he gets panicked when there’s a gun drawn on him. At that point the cop had already pulled the man’s wallet out of his pocket.
Eventually, the detective gets around to asking Randall why he was driving 100 miles an hour. Randall doesn’t give an answer—and why would he given the road rage the detective had just displayed?
The detective does not write Randall any citations, even though he tells Randall what he allegedly did was an “arrestable offense” and that he could impound his bike if he wanted to.
Randall says he’s filed a complaint with the sheriff’s department and the county’s Office of Law Enforcement Oversight. “I am still conducting an independent investigation and will make a follow up video once it concludes,” Randall writes in the description of the YouTube video he posted.
King County Sheriff John Urquhart insists it is never appropriate for his officers to wield a service weapon in that way. Urquhart, however, decided to place the detective, who has not been identified, on administrative leave rather than fire him.
“There’s nothing standard about approaching a driver with a pistol out. That should not have happened,” Urquhart told the local Fox affiliate. He also stressed he hadn’t yet gotten the detective’s side of the story.
Randall says Urquhart called him personally to apologize. But how sorry can the sheriff be? If he’s truly interested in reducing this kind of behavior, monitoring YouTube for viral videos and then handing out administrative leaves isn’t sufficient. The process for disciplining and dismissing cops who show a reckless abandon for the rules they are supposed to follow, ought to be taken seriously.
You can watch Randall’s YouTube video here:
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