“You Want A Bloodbath?!” New Video Surfaces Of Police Shooting Oregon Protester In Back

On January 2, Ammon Bundy had an idea.

He would use the (re)incarceration of Dwight Hammond and his son Steven as a pretext for the takeover of a remote wildlife refuge. Then, once the facility was “secured,” the occupants would refuse to leave until the Hammonds were released and until Washington made concessions on state’s rights and land usage.

It would be a grand rekindling of the “Sagebrush Rebellion” and Ammon would make his father Cliven (who became a kind of folk hero after staging a jailbreak for his cows who had been imprisoned by the federal government for bovine trespassing) proud.

Of course we all know how Ammon’s “coup” turned out.

He and his compatriots camped out in a snowy shack for a month and Robert “LaVoy” Finicum ended up getting shot by police on the side of the road. Meanwhile America either didn’t understand the cause or else simply didn’t care because when asked to send “supplies” to the aggrieved occupiers the nation sent sex toys and penis-shaped gummy candies. That’s not an editorial comment on the merits of the cause – it’s just a straightforward account of what happened.

Anyway, there was still some controversy surrounding the death of “LaVoy” despite the fact that authorities released footage which pretty clearly shows Finicum reaching into his pocket, not once, but twice as police closed in. Officials would later say that in that pocket was this loaded 9 mm:

On Tuesday, county prosecutors ruled the shooting “justified and necessary” despite the fact that Finicum was shot three times in the back.

Here is footage from inside Finicum’s truck synced with footage from police. We will leave it to readers to determine whether the shooting was indeed “justified and necessary.” 

Finally, here are excerpts from The Oregonian’s account of the dramatic events that led to Finicum’s death:

As Robert “Lavoy” Finicum powered his Dodge pickup over Devine Summit on the state highway north of Burns, he spotted the police van idling on a U.S. Forest Service road.

 

Finicum glanced over at the state trooper in the driver’s seat as he went past.

 

He pointed a finger at him, as if to say “I see you” and kept going.

 

That likely was the moment Finicum realized he and his group wouldn’t make the community meeting planned that evening in John Day.

 

Less than 30 minutes later, Finicum was dead and four other leaders of the Malheur National Wildlife Refuge takeover were in handcuffs.

 

Police knew the leaders planned to travel to John Day in Grant County to the north on the only direct highway there – U.S. 395.

 

They devised a traffic stop by state troopers to allow FBI agents to arrest the group on federal conspiracy charges. By midday, some members of the arresting team positioned themselves on Forest Service Road 2820, which branches east off the state highway toward a snow park near the summit of

Devine Ridge. Another team set up roughly two miles north on the highway, prepared to act as a roadblock.

 

“The sheriff is waiting for us,” Finicum yelled out the driver’s window to the officers and agents staged behind his truck.

 

He puts his hands out the window and invited police to shoot.

 

“Back down or you kill me now,” he said.

 

He repeated twice more that he was going to meet the sheriff.

 

Ryan Bundy, 43, of Mesquite, Nevada, seated behind Finicum with a .38-caliber pistol and two rifles within reach, yelled out the window: “Who are you?”

Finicum echoed him.

 

“Yeah, who are you?”

 

“Oregon State Police” came the reply.

 

“I’m going over to meet the sheriff in Grant County,” Finicum said.

 

Police continued demanding Finicum turn off the truck and surrender, according to officer statements to investigators. But they didn’t move against those in the truck as they waited for a trooper posted at McConnell’s Jeep to bring a launcher with multiple pepper spray rounds.

 

Those in the truck talked about what to do next.

 

“If we duck and you drive, what are they going to do?” Cox asked Finicum. “Try to knock us out?”

 

He noted they still had “50 ass miles” to go to reach John Day. He turned up the volume on country music that had been playing on the radio.

 

“Who can we call?” Bundy asked.

 

“Sheriff Palmer,” Finicum responded.

 

As Bundy and Cox tried to get a cell signal, Finicum continued yelling at police.

 

“You want a blood bath?” he asked. “I’m going to be laying down here on the ground with my blood on the street or I’m going to see the sheriff.”


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What Happens Next: These Six Catalysts Will Determine If The Market Surges Or Crashes

As has been widely trumpeted across the financial media, today was the 7 year anniversary of the March 2009 market bottom: whether this “most hated rally” was worth the $60+ trillion in incremental global debt and the $14 trillion in global central bank liquidity, even as the middle class has been decimated – as we forecast would happen roughly around the time Ben Bernanke unveiled QE1- leading to such outcomes as a global rejection of a failed status quo and the rise of Donald Trump we leave to the historians.

But what everyone wants to know now, is whether this “rally”, both since March 2007 and from the February 11 bottoms, will continue, or whether it will finally fold, and become the most overdue bear market in history.

To be sure, nobody knows the answer, but here are three bullish and three bearish catalysts, i.e., the “P’s“, which according to BofA’s Michael Hartnett (who is still selling into strength) will determine where the market goes from here.

Top Trumps, by BofA’s Michael Hartnett

The big risk rally since Feb 11th has been led by the 4 “C’s” of Commodities, China-plays, Credit & Consumer, all on the back of bearish investor sentiment and the highest cash levels since Nov’01. We are concerned that complacency is creeping back in (both VIX & VDAX back at 200dma), and we do not think policy-makers will beat expectations at the ECB (3/10), BoJ (3/15) and FOMC (3/16) meetings. Therefore we remain sellers into strength; watch the relative performance of HYG/TLT, AUD/JPY & XLE/SPY for signs of buyers’ fatigue and risk-reversal. In March, our new BofAML MVP Model recommends going “long” Japan, Canada & Norway equities, paired with “shorts” in the Netherlands, Italy & US equities.

 

BofAML’s base case (Table 5) and recent revisions to economic and market forecasts reflect a “reset” of 2016 expectations, rather than the likelihood of “recession” which has once again receded in recent weeks. Our 2016 US growth forecast is now 2.0%, down from 2.3% some weeks ago, and this low forecast of growth is mirrored in other developed economies (Eurozone 1.5% from 1.7%, Japan 0.7% from 1.2%). BofAML now expects two 2016 rate rises by the Fed (down from three earlier in year). Bond yield forecasts have been revised downward, although our assumption is that yields will rise, rather than decline, in coming quarters. And key FX rate and equity market forecasts have been revised to reflect the on-going struggle for sustainable economic growth.

 

These forecasts certainly hint at a deflationary trading range for major asset classes. So what are the “top trumps” that could send bond, credit and equity markets substantially higher or lower than currently expected:

 

Bull catalysts

  • Positioning: the brunt of the bear market has already happened and cash levels are mountainous.
  • Policy: Fed sticks to its guns on rate hikes; ECB/BoJ do not cut rates further; meanwhile an EM rate-cutting cycle is ahead of us, and the Doha Accord signals the
    low in oil prices is behind us; heavy hints of G7 fiscal stimulus.
  • Profits: both the US & China PMI’s move back above 50; Asian exports stop contracting (note the Feb contraction in China export growth of -25.4% was worst performance since May’09 – Chart 8); crucially, to sustain gains in equity and credit markets, we need to see a). US productivity growth acceleration and b). G7 consumption growth improvement…both are necessary to cause big, sustained upward moves in EPS forecasts

 

Bear catalysts

  • Positioning: redemptions cause investors to unwind the “last of the long” positions in quality stocks and investment grade corporate bonds.
  • Policy: ECB & BoJ QE is greeted by investor repudiation, i.e. a rise (not a fall) in both European & Japanese bond yields and a stronger euro & yen.
  • Profits: US activity falters through the spring – note the ominous trend in US small business confidence (Chart 9); meanwhile a credit crunch and concerns of GREXIT, BREXIT, and the end of the Schengen Agreement causes European economic activity and profits to surprise to the downside.

 

Hartnett concludes with the following notes to traders:

  • Cash mountain. Cash levels are very high (for some investors >1/3 in cash); QE failure, China, illiquid public markets, fragmenting political & social backdrop, poor risk-reward, most quoted reasons for “long cash, short conviction” position.
  • Sell-into-strength. Majority of investors in “sell into strength” mood; debate swirls around “level” & “timing” with SPX 1950-2030 & mid-March most favored.
  • No US recession. US widely seen as very unlikely to experience recession thanks to US consumer; that said, a Fed hike in the next six months would be big (positive) surprise to investors; bigger problem for investors is that US economy in “bad Goldilocks”, i.e. US economy not hot/strong enough to lift global GDP & EPS; but not cold/bad enough to induce global coordinated policy response.
  • No US$ bear market: no-one arguing for bout of cyclical US dollar weakness.
  • QE failure: investors increasingly regard policy meetings as a selling catalyst, not a buying catalyst; central banks can no longer turn “water into wine”.
  • Black dragon: first derivative China plays (Brazil, Miners, China) could be right to increase exposure to these on a 3 year view, but the second derivatives (Sydney/ Vancouver Real Estate) are too high; EM more interesting in world of low growth, low yields.
  • Extreme policy solutions mooted. Extreme markets/macro leading investors to countenance more extreme policies going forward: GREXIT in the summer, or a breakup of the Schengen Agreement, as a solution to the migration crisis problem; a summer BREXIT, as British are willing to exchange short-term economic risks/uncertainties for an assertion of sovereignty, control of immigration, and a rebuke to the political and economic elites; the abolition of notes and coins in circulation; debt monetization (starting in Japan); sustained period of negative interest rates 2016-2020.

With that said, the one biggest catalyst may come as less than 24 hours from now, and it will be what Mario Draghi says at 2:30pm CET tomorrow. If the devastating December past is prologue, all that “smart money” selling in the past 6 weeks will be explained very soon.


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As Turkey Turns Totalitarian, EU Officials Move to Accelerate EU Membership Bid

Screen Shot 2016-03-09 at 2.33.48 PM

The EU is turning a blind eye to an opposition crackdown in Turkey that’s polarizing society and complicating efforts to find a political solution to the nation’s Kurdish conflict, Demirtas said in an impromptu interview en route to Brussels. European leaders are expected to ink an agreement with Turkey on Monday that will offer faster EU membership negotiations and visa-free travel in exchange for stopping refugees from crossing the country to enter Europe.

Demirtas was speaking two days after Turkish government trustees took over one of Turkey’s primary opposition newspapers in a dramatic raid that sparked clashes between protesters and police. The seizure reflects a broader intolerance of dissent that has also undermined the HDP, who are now largely excluded from mainstream media coverage.

On the same day that authorities took control of the Zaman newspaper, European Council President Donald Tusk, who was in Istanbul, tweeted a picture of himself with Erdogan in front of a pair of golden throne-like seats.

It was almost identical to a photo-op with German Chancellor Angela Merkel last year, which was around the same time that the EU agreed to Erdogan’s request to withhold a critical report on Turkish democracy until after the general election a few days later.

– From the Bloomberg article: EU Making `Big Mistake’ in Turkey Deal

European Union bureaucrats like to portray themselves as enlightened, competent technocrats who nobly represent humanity’s grandest political and economic experiment. Meanwhile, the stark reality is the EU is little more than a bunch of self-interested frauds willing to do “whatever it takes” to preserve their own status and power. When you peel back the EU’s facade of disingenuous humanitarian pledges, what you discover is a putrid cadre of incompetent, corrupt and deeply unethical politicians. A perfect example of this truth was just revealed as EU officials moved to strike a deal with an increasingly authoritarian Turkey in a desperate attempt to stem the refugee flow.

It’s been known for quite some time that Turkey is using the refugee crisis as leverage to pressure on the EU and other “allies,” which makes panicked attempts by EU bureaucrats to strike a deal with Erdogan equivalent to negotiating with terrorists. Too harsh you say? Let’s revisit some recent articles highlighting Turkey’s recent spiral into totalitarianism.

First, from the post So Who’s Really Sponsoring ISIS? Turkey, Saudi Arabia, and Other U.S. “Allies”:

continue reading

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The Sabine Slam: Court Decision Threatens Midstream Sector

Submitted by Charles Kennedy via OilPrice.com,

A federal bankruptcy judge ruled that Sabine Oil & Gas could withdraw from its contract obligations with pipeline companies to ship a certain volume of oil and gas through their pipelines.

The court decision may seem arcane, but it could have major ramifications for both producers and midstream companies. Under the contracts, a company like Sabine Oil & Gas promises to ship a certain volume of hydrocarbons through the pipeline at a set fee. If they fail to do so, they still have to pay the pipeline company for the use of the pipeline capacity.

Sabine Oil & Gas, a struggling producer, says that it can no longer ship enough volume to meet the contractual agreement and it wanted to be let out of the contract. The company went to a bankruptcy judge in Manhattan, who ruled in Sabine’s favor.

The pipeline contracts are very attractive to investors in midstream companies, who love the secure and stable revenue streams that such arrangements offer. The ruling could lead to a lot of uncertainty for the midstream sector. The Alerian MLP Index, an index fund that tracks pipeline companies, fell by more than 6 percent on March 8.

 

Still, the judge ruled that Texas law was not clear enough to make the ruling binding. That likely means more litigation will be forthcoming. “One could see this ruling as something favorable for producers, but it’s something that’s going to play out further in the courts,” Ed Longanecker, president of the Texas Independent Producers and Royalty Owners Association, told The Wall Street Journal. 

More and more oil and gas producers are falling into bankruptcy, and even for those that avoid such a fate, meeting obligations with pipeline companies is becoming more difficult. The cloudy legality around how to get out of these contracts is creating uncertainty not just for drillers, but also for pipeline companies. The latest decision on Sabine Oil & Gas will do little to remove that uncertainty.


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“Some Folks Were Test-Firing Nuclear Missiles…”

Hillary Clinton is “deeply concerned” about Iran’s missile tests, but President Obama proclaims this act does not violate the treaty? With The White House today saying it will “redouble” its efforts to limit Iran’s nuclear ability and noting that the US wouldn’t be surprised to see more test-fires this week, we wonder just what it takes to “violate” the treaty?

 

Source: Investors.com


Of course, test-firing missiles in Iran is totally different from test-firing missiles in North Korea…


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EIA Inventory Report and Oil Market Analysis 3 9 2016 (Video)

By EconMatters

Gasoline demand is driving the oil complex higher, relatively strong gasoline numbers on the refinery input side and the gasoline demand side of the equation. Brent should test $44 a barrel pretty soon, unless something dramatically happens that is unforeseen as of today.

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“Dust Off The Tail-Risk Hedges” MKM Warns US Equities Are Entering A “High Volatility Regime”

"Dust off the systematic hedging strategies, and get re-acquainted with the concept of tail-risk," is the ominous conclusion from MKM Partners' Jim Strugger's latest report. Despite every effort from central banks to maintain a low-volatility environment, the magnitude of the August 2015 'shock' not just for U.S. equities but across asset classes, was great enough for Strugger to conclude that a transition into a high-volatility regime had begun. Given the length of the economic cycle, bull market, and the rise in financial stress globally, Strugger warns a transition to a high-vol regime leaves ultimate damage in the &P 500 averaging 53%.

There have been seven distinct volatility regimes since the inception of the Chicago Board Options Exchange (CBOE) VXO implied volatility index in the mid-1980s, Strugger points out. The average duration of a volatility regime has lasted five years, with the most recent regime from late 2012 to August of 2015 lasting just 2.75 years.

 

Low volatility regimes have been positive for stocks. Periods such as 1991-1997, 2003-2007, 2013-current were historically a time of positive equity market gains, with low implied correlation, flat skew and stable upward-sloping term structure. On average, SPX monthly returns were positive 67% of the time, while spot VIX average 14, which appears a key resistance point today.

Since inception of VIX there have been five prior 40-magnitude VIX shocks, all during periods of structurally elevated volatility.. August was the trigger…

Crucially, U.S. Equities Are Not In a Vacuum…

A major gap has opened up between global financial stress and VIX which is unusual as they have historically tracked each other extremely closesly…

It’s a Global High-Vol Regime

GFSI measures risk via 41 sub-components across a range of asset classes and geographies. It inflected in earlier in 2015 actually preceding the shift in U.S. equity implied volatility…

 

In a worst case scenario, Strugger adds:

Implications are significant since the last two bear markets saw equities cascade lower for 1.5-2 years with ultimate damage in SPX averaging 53%

High volatility market environment calls for a different approach to tail risk

Contrast this with high volatility regimes. Strugger notes that since 1990 the two bear markets and every major equity market drawdown have occurred within high-volatility regimes, of which we have now entered. This points to what is currently a higher-risk environment with deeper equity market pullbacks. Is this a bear market? This “remains inconclusive from a volatility perspective,” Strugger says

“Even if a late-1990s type scenario unfolds and the bull market that began in March 2009 continues for another couple or few years, pullbacks relative to the 2012-2015 period will be sharper and equities will remain vulnerable to higher-magnitude shocks,” he wrote.

He notes fat tail risk and kurtosis can sometimes have an ugly correlation factor and advises institutional investors to “dust off the systematic hedging strategies, get re-acquainted with the concept of tail-risk” and consider volatility strategies that extract profits from elevated implied vol levels. This could include covered call and even put writing under certain circumstances.

“Our starting point for systematic hedging is to own 3-month index puts or put spreads partially financed by the sale of 1-2 month covered calls on individual stocks in the portfolio,” he advises, a strategy that resembles the CBOE S&P 500 95-110 Collar Index (CLL). Strugger also likes covering tail risk through VIX and volatility-linked ETPs (VXTH) in this environment.

Source: MKM Partners

Full report below:

Volatility Regime In Pictures – MKM


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“Are You Not Entertained” By This Close: Dow Back At 17K After Last Minute VIX Slam

Seriously!!!! That Close!!!

 

Your day in the "market"…

 

The "stable" oil market…

 

Following yesterday's noisy drop, today was the echo with a noisy choppy low volume rally as Oil sparked the momentum in the pre-open, but stocks decoupled lower from both JPY and Oil (smashed lower on weak wholesale trade data and a realization that US crude production rose)…

 

Trannies outperformed as The Dow couldn't get too far away from unch… and then everyone panicced to buy at the close..

 

On the week, The Dow clung to unchanged thanks to the panic close, but Trannies lag…

 

No bounce at all in financials – even as Treasury yields rose – but energy obviously bounced (even though energy credit risk rose 6bps to 1262bps)

 

Today saw two legs down – the first from a delayed reaction to the fact that crude production rose in the US and the second as Carson Block commented on the "dead cat bounce" – all that mattered today was defending the short-squeeeze trendline at 1980… What a total f##king joke that close was…

 

And the ramp was all about getting The Dow above 17000!!!

 

But VIX remains totally decoupled once again from global financial stress…

 

Treasury yields rose all day pushing all but 30Y higher for the week…with Fischer's inflation sightings the catalyst

 

Notably the USD Index tumbled as US Inventories data hit – pointing clearly at recessionary pressures building. But JPY plunged…

 

Crude was the day's big winner for absolutely no good reason, PMs were modestly lower and copper gained back half of yesterday'slosses…

 

Gold was triple-slammed overnight… but bounced back…

 

Charts: Bloomberg


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What Matters Most?

Via ConvergEx's Nick Colas,

Today we engage in a simple thought experiment: what 3 pieces of information would you need to confidently call the 2016 end-of-year level on the S&P 500?

 

A brief survey of senior Convergex traders yielded this list: year-end worldwide central bank rates, Chinese GDP growth in 2016, actual 2016 US corporate earnings, the winner of the U.S. presidential race, and the pace of increases in the Fed Funds rate for the year. 

 

When we posed the questions to analyst friends, they added: 2016 U.S. wage growth, 2017 consensus corporate earnings (in December 2016) and any information about a significant geopolitical event.  Everyone agreed oil prices were on the list.

 

All this pushes two other questions to the fore.  First, what’s on your list, and why?  And second, what’s not on any of these lists?  Because maybe that’s what will actually move markets…

The 1920s were a period of immense technological innovation, but that didn’t stop many prominent thinkers of the age from believing that the living could speak to the dead.  Sir Arthur Conan Doyle, creator of the deeply rational Sherlock Holmes, wrote more than a dozen books on the topic.  French Nobel Prize winning physiologist (awarded 1913) Charles Richet was the original “Ghostbuster”, coining the term “ectoplasm” decades before Bill Murray ever got slimed.   Even Thomas Edison thought about building a telephone to reach into the next world.

As a result of this air of respectability, tens of thousands of mystics plied their trade in Europe and the U.S., including one Mary Carter of Cincinnati Ohio.  She had an especially powerful shtick in her repertoire.  During a séance an assistant would place a small clean chalkboard in a box on the table where participants sat.  They would ask their questions of people in the afterlife, and when the box was opened the slate would reveal the answer.  A neat bit of magic, if nothing else.

In the mid-1940s, her son Albert Carter borrowed the idea to create a toy that is still popular today: the “Magic 8 ball”.  Essentially, it was two dice with words (‘Yes’, ‘don’t count on it’, ‘it is certain’, etc.) printed on them, suspended in can of oil with a clear top.  Ask a question, shake the container, and wait for one of the die to float to the surface with your answer.  After he passed on, his partners licensed the idea to Brunswick Billiards as a give-away item to promote the brand.  The container became the now well-known black sphere resembling an 8-ball.

Predicting capital markets action can, at times, feel much like using a Magic 8 ball.  You ask a question, wait, and the market returns with an answer. Sometimes you like the answer, and sometimes you don’t.

But what if that plastic black ball became a crystal one instead?  Those are far older, by the way.  They date back to the first century A.D. – although they came into widespread use during the Victorian age just as the precursor to the Magic 8 ball was a bit of 1920s occult stagecraft.  Something about periods of rapid technological advancement seems to give mankind false notions of grandeur, it appears.

Here is a quick thought experiment I gave to a handful of colleagues and friends this afternoon:

  • I possess a crystal ball that can accurately foresee any future event or financial market asset price except the price of the S&P 500.
  • If your task were to predict where the S&P 500 will close this year, what three things would you want to know from the ball?
  • Since everyone would want to know the price of oil, I offered that up as a freebie. In this game, the price of crude oil will run between $30 and $40/barrel through the end of 2016.

I first asked the senior traders on the Convergex equity desk.  Their replies:

  • The contours of central bank monetary policy between now and year end (timing and magnitude of rate moves).
  • Chinese GDP growth rates.
  • Actual year-end 2016 earnings per share for the S&P 500.
  • If Donald Trump wins the general election.

Then I posed the same question to some analysts. Their answers obviously overlapped with the traders’, but they added:

  • What will be the consensus 2017 earnings estimate for the S&P 500 at the end of this year?
  • Where will junk corporate bond spreads be at the end of the year?
  • What is the Q4 2016 GDP growth rate for the U.S.?
  • What will U.S. wage growth be at the end of 2016?
  • Will there be any major shocks in global geopolitics this year?

 

For what it’s worth, here are my three and a bit of the reasoning behind them.

#1: Is the VIX over 30 for more than 5 consecutive days in 2016?

 

Reasoning: The first quarter of 2016 has seen an unvirtuous circle of negativity on basically everything that matters to equity investors – worries over the global banking system, worldwide deflation, the efficacy of central bank policy, etc.  And yet the CBOE VIX Index never closed above 30.  If things stay quiet – or there’s just a small bout of volatility at some point – equities will likely end the year up or down small (5-10%) from here.

 

Now, if there is any event – geopolitical or otherwise – that pulls the VIX over 30 and holds it there for a week, all bets are off.  The most important lesson of 2016 thus far is that markets now openly question the ability of central banks to create specific economic outcomes.  Negative rates, QE, jawboning, every implement that fills the tool box in a central banker’s work vehicle is being questioned.  And that’s not good for markets. We’re walking a tightrope here, and any large external shock will raise far more questions than answers in the minds of investors.

 

#2: What is the Labor Force Participation Rate in December 2016?

 

Reasoning: This ratio of people in the workforce to total adult population has been declining since 1999, although it stabilized from 2005 to 2008. The drop since, to its current 62.9% from a peak of 67.3%, is a combination of demographic and other factors.  Received wisdom has it that this number will continue to decline for the foreseeable future.

 

The funny thing is that LFPR is at one year highs, right now.  So what will the Federal Reserve make of this number if it continues to rise through the year?  Likely, it will interpret that as an indication that wages are rising fast enough to pull marginally attached workers back into the labor market.  And that will inform their commentary on the trajectory of Fed Funds in 2017 more than just the ‘Jobs Added’ data or the unemployment rate.

 

#3: Where are used car prices at year end?

 

Reasoning: Yes, seriously, this is a thing.  Demand for cars and light trucks have been the single brightest star in the U.S. economy since the Financial Crisis. Buying a light vehicle is the second most expensive purchase most households ever make, so good demand here means the rest of the economy is likely OK.  And the February 2016 selling rate was one of the best of the last decade.  Used car prices are proxies for trade-in values (the higher the better) as well as an indicator of income/spending levels for the 50-70% of American consumers who don’t buy new cars and trucks.

 

We use the Manheim Used Vehicle Value Index as our guide (see here http://ift.tt/1Dcp2hk).  It has been rock solid since 2011, although it’s begun to look a little shakier (down 1.4% in the most recent reading).  There is a huge amount of chatter about the subprime component of new car sales, and I’ve seen enough cycles to know that fear plus negative catalyst equals reality. Yes, the U.S. auto industry is no longer as important to the overall economy as it once was.  But how many cars GM can sell is still a better indicator of the economy than, say, how many Uber rides take place.

As a closing thought (or two):  First, what would your three questions be?  And second, what question is no one asking that will prove to be decisive?

Time to ask the Magic 8 ball.


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This Is Jeff Gundlach’s Favorite (& Scariest) Chart

According to DoubleLine’s Jeff Gundlach, this is his favorite chart – backing his persepctive that equity markets have “2% upside and 20% downside) from here.

In his words: “These lines will converge…”

Chart: Bloomberg

It should be pretty clear what drove the divergence, and unless (and maybe if) The Fed unleashes another round of money-printing (or worse), one can’t help but agree with Gundlach’s ominous call.


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