Friday, July 19, 2019

This Week's Message: The Fed Is Compensating For A Policy-Induced Shock

Pay special attention to the areas I highlighted (with special emphasis on the Fed) and watch the 1-minute video clip at the end (I think the folks at BofA are reading our blog ;)):

Thursday, July 18, 2019

A Perfect Cloud Burst??

While the term “perfect storm” sounds so ominous, it is indeed what comes to mind as I consider this week’s economic data, the virtual promise – from the source – of a July fed rate cut, and deteriorating trade relations between the U.S. and China (and, frankly, the U.S. and the rest of the world).

Tuesday, July 16, 2019

Right on Cue

Today’s menu of headlines was a perfect test of the prevailing two market-moving factors; the Fed and the trade war.

Quote of the Day

Like I've been saying, my read of the mood in China the past few weeks is that it has shifted markedly:

Monday, July 15, 2019

Quote of the Day

Jefferies' global equity strategist Sean Darby echoes the points we've been pounding home herein:

This Morning's Log Entry: Perplexed

The next few weeks will be hugely telling in terms of second half prospects. While it might seem an exaggeration to describe global business conditions as being in disarray, that’s the word that comes to mind; earnings outlooks will go a long ways toward confirming whether I’m justified in my description.

Saturday, July 13, 2019

Quote, and Chart, Of the Day

Per my yesterday blog post "Careful What You Wish For", Macro strategist Cameron Crise and I are on the same page:

This Week's Message: General Conditions Via Our Macro Index (video)

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust: 

Friday, July 12, 2019

Careful What You Wish For!

Well, as some might say is a good thing, U.S. purchases of Chinese goods plunged 7.8% (year-over-year) in June. However, Chinese purchases of U.S. goods tanked by a huge 31.4%.

Thursday, July 11, 2019

Video Commentary On The Latest Action

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust: 

Quote (from China) of the Day!

The following tweet from Xu Xijin, editor of China's (state-controlled) Global Times newspaper, is consistent with the hunkering down I've been sensing while reading the Chinese media (each evening) the past few weeks:

Yes, It's All About The Fed, But Just For The Moment

Just to bring home how this moment is all about the Fed, and the prospects for a rate cut, take a look at our one-minute futures charts (left to right, top to bottom) for the Nasdaq 100, the dollar, the VIX (SP500 volatility index), bonds, smallcap stocks and gold on news that inflation rose by 01% (year-on-year [notably higher month-on-month]) higher than expected, and weekly jobless claims came in at 209k, vs 220k expected: 

Wednesday, July 10, 2019

This Morning's Log Entry: Curb Your Enthusiasm!

Right out of the gates in his congressional testimony this morning Fed Chair Jerome Powell offered up precisely what the market wanted; a cautious view of present general conditions that he hints will justify rate cuts to come. Thus, equity futures went from notably red to notably green in an instant.

Tuesday, July 9, 2019

A Not-Pretty Picture

Japanese data (supporting the points we made in our latest weekly message), paints a not-pretty picture of present global business conditions:  emphasis mine...

Yet Another Trade-War-Negative For U.S. Producers

Of course we know the hit that U.S. importers are taking due to the trade war (yes, they write the tariff checks to the treasury, then figure out how to offset [pass on] the cost), however, there's this other, perhaps subtle, but potentially very pernicious disadvantage when it comes to access to one of the world's most attractive labor markets, not to mention the world's largest consumer base.

Monday, July 8, 2019

The Problem That Feeds THE Problem

The President continues to say that if the Fed would cut interest rates the Dow would be at 30,000 and that the economy would rise "like a rocket"!

Sunday, July 7, 2019

This Week's Message: Cherry Pickers' Paradise -- And -- When the White House Once Owned the Fed

Just finished up my weekly deep dive into the market and economic fundamentals and technicals that matter -- on both short and longer-term time frames -- and I'll tell ya, whether you're a bull or a bear, the cherries are presently ripe for the picking, and it's a bumper crop.

Friday, July 5, 2019

The Fed Is Not The Problem!! And Crazy Quote of the Day!

Per Wednesday’s commentary, futures are trading lower this morning on today’s strong jobs report; that’s your cue to start scratching your head.

Wednesday, July 3, 2019

You Should Be Scratching Your Head

Today, true to form for the past few days, the market rallied right into the close (very bullish indicator) and logged yet another all-time high for the major averages!

Tuesday, July 2, 2019

What the Market's Betting On

So, U.S. stocks (SP500) are at all-time highs and fed funds futures are pricing in a 100% chance of a rate cut this month!

The President is touting the best economy in history, and, at the same time, is demonizing the fed for having not yet cut interest rates!

The contradiction embedded in the above sentences is utterly stark 
(all-time high stocks say hugely bullish things about the economy while the need to cut rates says something scary's afoot)!

Manufacturers Echo Our Present Assessment, And Share Our Fundamental Concern

Yesterday's release of the Institute for Supply Management's (ISM) June Manufacturing Index pretty much echoes our present assessment of general conditions overall; expanding, but at a slowing pace.

Monday, July 1, 2019

Quote of the Day

Bespoke Investment Group hit the fundamental (and political) nail firmly on the head in their morning commentary:   emphasis mine...

This Morning's Log Entry

7/1/19 Monday

As expected, futures are rallying hard into the open this morning. Beyond this morning’s spike, and with trade-war-escalation off the table for the moment, the market is set to trade on data releases: Clearly, the trade for the moment is bad-news-is-good-news and vice versa. I.e., weak data releases that support the notion of a Fed cut in July will see stocks higher, strong data, lessening the odds of a cut, will see stock lower -- that is, until we dive into earning’s season, which is right around the corner. At that point the market gets messy, as I suspect we’ll see a good amount of whipsawing as companies express caution going forward (no relief on existing tariffs) against the tone of the data as they’re released.