Pre-Market Update

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Trade War Vacation Maybe?

Closely weighing the back and forth commentary while considering coming events, the messaging I gather directly from China's state media to the people, as well as the somewhat rooted political positioning (both sides) to this point, I think macro strategist's Cameron Crise's take this morning is a sound one:

Pre-Market Update (video)

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Chart of the Day: Economists Concerned

Per the latest Wall Street Journal Survey of Economists, it ain't just us.

Quotes of the Day: Concerning Trends and Under-The-Surface Stressors

Be it via Fed policy, or fiscal manipulation (per below), when the powers that be attempt to undo the negative consequences of their own actions (without undoing those actions themselves), well, history has proven time and again; that's how debt-fueled asset bubbles are formed.

Pre-Market Update, And A Troubling Trend (video)

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Mission Impossible For The Fed

If this, from Bank of America's foreign exchange strategist Athanasios Vamvakidis doesn't sound familiar, well, then, you haven't been reading our blog:

Bonus Quote of the Day

These words from one of history's great speculators are most instructive during times like these:

Quotes of the Day: China -- at this point -- isn't biting...

Like I said in this morning's video, despite the fact that no China to U.S. phone calls took place as claimed over the weekend, the market is treating it as near-term bullish nonetheless, as it signals the President's willingness to deal.

Pre-Market Update, And What You Should Know About "Trade Deficits"

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Quote of the Day: A Challenging Market Environment

Macro strategist Cameron Crise characterizes well this challenging environment:     emphasis mine...

Market Update (video)

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Mulling Over The Latest....

As I mull over all of the latest this Sunday afternoon -- Friday's speech by Fed Chair Powell, China's retaliation, Trump's retaliation to China's retaliation, highlights from this weekend's G-7 summit, violence in Hong Kong, the results of my weekly macro analysis (the PWA Index a little less red (but still red), the technicals continuing to worsen), how currencies are trading as I type, and so on -- I see little that would inspire me to, at this point, offer up anything that smacks of optimism for stock prices going forward. 

This Week's Message: The Risk/Reward Setup

In our year-end 2017 client letter I expressed my general bullishness, as the macro setup was about as good as I'd seen in my 3-decade+ career. I also expressed, however, that a trade war ("protectionism") would put my bullish thesis to the test.

Pre-Market Update (Video)

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This Morning's Log Entry

This morning China finally announced retaliatory tariffs in response to the latest from the U.S. (the 10% on $300 billion beginning 9/1 and 12/15); of course futures immediately rolled over (but not quite as much [yet] as you might expect).

Manufacturers Ain't Feeling It!

In case you're wondering what happened to this morning's strong rally; at 6:45 am (pdt), exactly when stocks began selling off, Markit's U.S. Manufacturing Purchasing Managers Flash (advanced [i.e., 85% complete]) Index for August was released.

Pre-Market Update (video)

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Quote of the Day

I've reintroduced Brexit into our macro narrative of late because it (the UK leaving the EU with no trade deal come 10/31, that is) indeed carries serious ramifications for global markets.

"It Always Is Debt That Gets You"

Economist Diane Swonk, in just over a minute, pretty well sums up our overall messaging herein of late.

Which is, the consumer's in decent shape, the industrial space isn't, and there's huge risk in the corporate bond market. 

When she talks about "the next traunch up" in corporate debt, she's referring to the BBB risk I've been pounding on the past few weeks:

Pre-Market Update (video)

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The Risk/Reward Setup

Being committed to always maintaining a discerning, if not skeptical, eye when it comes to data, trends, our own analyses, etc., we are forever challenging and testing our own theses in our perpetual effort to keep our clients' portfolios positioned within the most favorable risk/reward setup.

Bonus Quote of the Day

I sympathize with the following from Zero Hedge this morning:

Pre-Market Update (video)

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Quote of the Day

I couldn't agree more with economist Peter Bookvar. In fact, if the powers that be would take his advice (but it would have to be relatively soon), I'll become a raging bull on the stock market:

Quote of the Day

Couldn't resist the headline ("Everything Seems Like A Trap Now"), as it speaks to my message in this morning's video commentary: 

Brief Commentary On The Latest Action (video)

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This Morning's Log Entry

8/19/19 Monday

While the weekend didn’t deliver a rolling back of the yet to be rolled out (pending) tariffs effective 9/1 and 12/15, which I thought could happen, and, thus, send stocks sharply higher this morning, stocks are looking to open sharply higher this morning nonetheless.

Really Gotta Dig Deeper! And, In Closing, A Personal Note to Clients

President Trump's top economic adviser Larry Kudlow did his job well as he made the rounds this morning.

His message being that strong retail sales and low unemployment prove that there's no recession in sight:

Positioned for Pain

Not that they're always right, but folks who speculate in futures for a living are no doubt bright, and you can bet that they're deep in the weeds of information and general conditions when they place their bets.

Bear Markets Ain't Easy (Video)

Dear Clients,

Today's video commentary is more encompassing, and therefore longer, than most, but these are unusual times, and we are, therefore, taking unusual measures within your portfolios.

Bonus Quote of the Day: No Bluffing on Brexit? maybe...

Stocks spiked to the highs they're presently holding this morning on this headline:

Quote of the Day: Remember that Brexit volatility? If not, you may shortly...

Switching topics for a minute; remember all that Brexit volatility of 2016? Well, we're within weeks of potentially revisiting it.

This Week's Message: Near-Term Setup and Longer-Term Possibilities (video)

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The Undying Faith in Central Banks

If you're wondering what's holding up the longest bull market in history amid what in my view is a steadily deteriorating backdrop, as the 1-minute clip below demonstrates, it's an amazing, and undying (until, that is, it's too late) faith in the power of central banks.



Well, while I respect the gentleman's opinion, that's not my take. 

Interest rates are unequivocally not the problem, and lowering them here will not inspire fundamental economic growth. And the notion that if they're going to fall that "you push the cycle out further" is the definition of cherry-picking history. 

Lots Of Damage To Repair Before We Get Bullish Again!

Take a look at the S&P 500 futures contract action from yesterday's close to now (10 minutes before the open):

Quote of the Day: China's Now Playing Offense

Clearly, China is now playing offense.

Here's from Hu Xijin, editor and chief of the state-owned Global Times on Twitter this morning:

What Politicians Will Do When Staring Down Defeat

Sorry, can't help it, this one's simply too revealing not to share.

Video Commentary On The Latest Action

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This Evening's Log Entry

8/13/19 Tuesday

Just as the market appeared to be fading (this morning) what looked like your classic snap back rally during a corrective phase lower, the White House announced that it was making some exceptions to the "no-exceptions" 10% tariff on the balance of all Chinese imports. Apparently some items will be exempt, and others won’t get hit with the tariff till 12/15.

Big Rally This Morning -- And -- Data of the Day

Wow! The Dow's up 400 points as I type! All on news that the U.S. and China plan to talk by phone over the next two weeks, and that the U.S. is not going to hit 100% of all remaining imports from China with a 10% tariff come September 1. 

If you've harbored any doubt about where the ultimate concern lies, rallies like this should disabuse of you of that thinking.

Question of the Day

Bloomberg's Garfield Reynolds asks the essential question of the day:

Headline of the Day

Just so you know it's not just us, this just hit the wires:

"Goldman Sachs Cuts Growth Forecast As Trade War Triggers Recession Fears"

The Present Risk/Reward Setup Demands Action

While typically the third year of a first-term presidency is one where we’d expect market-friendly political forces to provide a tailwind for stock prices, in this age of populism and protectionism we’re seeing precisely the opposite. 

This Week's Message: Caution Warranted!

For this week's message, after commenting on the latest from our proprietary macro index, I'm going to simply copy and paste yesterdays internal log entry, which we posted for you here on the blog (worth reading again!), then re-post this morning's video (worth watching again!). These pretty well sum up our current assessment of general conditions.

Video Commentary: The Short-Term Noise, And My Longer-Term Concerns

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China's Not Aiming To "Fix" The U.S. Stock Market

While some outlets reported that the market's strong rally today occurred on essentially no news, which could imply that it rallied on a lack-of-news, Bloomberg's Eric Weiner shares (below) my view that -- other than a raft of short-covering (which was likely huge given the levels breached) -- it (the catalyst, that is) was all about last night's yuan fixing, which China set at a level strong enough to allay growing concerns that a currency war was brewing.

Bonus Quote of the Day: More Borrowing To Come, But, Alas, No Expansion To Come With It

Bloomberg analyst Benjamin Dow speaks to the phenomenon I outlined in this morning's log entry; i.e., the stimulus-boosted stock market advance (read bubble) that often comes when central bankers realize the world's in deep doodoo. He also hints at the potential systemic risk that's been subtly speaking to me through the numbers; which is the bulging corporate debt level, too much of it at BBB:

Quotes of the Day: Bonds Look Silly Right Here

There's no pearls of wisdom, or perspective, in macro strategist Cameron Crise's morning muse, just an observation that what's happening in the debt market is getting "pretty silly":

Brief Commentary On The Latest Action (video)

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This Morning's Log Entry

8/8/19 Thursday

Should history repeat – assuming we receive confirmation from the PWA Index over the next several weeks that last week’s -2 was the real deal – stocks will stage a multi-week-to-month rally, purely on monetary and (where it can be had) fiscal stimulus, as authorities attempt to avert the coming recession.

Looking Inside The Next Recession

Here's an excerpt from my last Sunday entry to our internal market log, where I express my assessment (the good, the bad and the ugly) of current general conditions, and further explain what I eluded to in this morning's video regarding potential stressors that could make the next recession a rather rough one:

Video Commentary: Tweets, China, The Fed, Globalism, The Economic Cycle and The Charts all in one (albeit brief) sitting...

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Options Collar Explanation For Clients (video)

The following is specifically for subscribers whose portfolios we manage:

Dear Clients,

Below is a 10-minute video presentation where Nick explains and illustrates the mechanics of the hedging strategy we're proposing and implementing. This will answer many, if not all, of our questions.

Absolutely take the 10 minutes and take this in!

Thanks!

Marty

This Morning's Log Entry

8/6/19 Tuesday

In classic technical fashion -- after yesterday's drubbing -- U.S. equity futures are rebounding in the premarket this morning. European equities are catching a nice bid as well.

Quote of the Day: China Manipulating Its Currency -- in which direction??

Hedge fund manager Kyle Bass, in a CNBC interview, essentially confirmed the point I made in this morning's video commentary:

Video Commentary on Today's Action

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Throwing Kitchen Sinks At One Another (and a post script for every client to read)

Over the weekend Beijing “asked” state-owned companies to cease purchasing U.S. farm products; which is consistent with how their approach to the trade war has evolved in recent weeks. And, to exacerbate matters, the PBOC, which “fixes” each day the range in which they allow the yuan to trade against the dollar, is as I type allowing an exchange rate of north of the psychologically-important 7. This has global currency markets freaking out, and the President tweeting “currency manipulation!”

This Week's Message: The Futility of the Fed

ATTENTION, ALL CLIENTS SPECIFICALLY (NOT APPLICABLE TO NON-CLIENT BLOG SUBSCRIBERS), IF THE TERM "OPTIONS HEDGE" IS FOREIGN TO YOU, YOU'VE MISSED A RECENT EMAIL FROM ME AND NEED TO CLICK HERE , WATCH THE VIDEO, THEN CONFIRM (VIA EMAIL TO ME OR TO STAFF) THAT WE ARE TO SEND YOU SOME PAPERWORK.

Here's this week's message:

In case you haven't noticed, there's a lot going on in the world today -- and much of it carries implications for financial markets that demand close scrutiny.

Brief Commentary On Today's Action (video)

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Feels Like A Mexican Border Tactic...

Yesterday's China tariff news that roiled the market is starting to feel like a Mexican border tactic (the 5% threat that got Mexican authorities to Washington the next day to "make a deal"), based on this from CNBC this morning:

This Morning's Log Entry: Unambiguously Negative News!

8/2/19 Friday (Update)

Within a minute of posting the below, stock futures turned positive on this news:

"Trump is "open to delaying or halting the 10% tariff on 9/1" if China were to take action between now and then - CNBC"

Now turning red again.

Like I've been saying since this all began, it'll be the market that ultimately puts an end to it. But, given my comments earlier regarding the EU, and the latest (highlighted in previous blogs) regarding Vietnam, India, etc., there's much more market-moving stuff to play out before this ends...

8/2/19 Friday 

As I type, the S&P future contract is pointing to a 0.4% decline at the open. That’s far too sanguine given the potential downside related to Trump’s decision to apply 10% (albeit that’s not the previously-threatened 25%) tariffs on remaining (till now un-tariffed) Chinese imports. We’ll see…

Brief Commentary on Today's Action (video)

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Quotes of the Day

Like I said in this morning's log entry, for the moment, bad data will be good news for stocks.

This morning's hugely important ISM Manufacturing Index came in at a "disappointing" (assuming you prefer a strong economy) 51.2, yet again declining from the previous month, while missing economists' expectations. And, yes, the Dow went from essentially flat to up 200 points as I type.

This Morning's Log Entry

8/1/19 Thursday

Yesterday saw the market take a dip when Fed Chair Powell didn’t offer up the promise (or enough of one) of future rate cuts traders were hoping for. Equity futures are coming in flat at the open this morning.