Monday, December 30, 2019

Quick Update on the Latest

We're at the moment consumed with year-end rotations, etc., but I wanted to just pop in with a super quick update.

Friday, December 27, 2019

Quote of the Day: Pragmatism Needed!!

Chatting with a client this morning I found myself metaphorically using the weather to describe why we're rotating to a new "core allocation" that we believe to be more resilient during turbulent financial conditions than was our previous mix of assets. I said that my job is akin to that of a weatherman; to, in essence, determine whether it’s smart to venture outside without, say, a jacket or a good strong umbrella. You know what I mean...

This Week's Message: The Thing Is

Hearing lots of chatter from the few current bears worth listening to about how sentiment indicators are screaming over-enthusiasm, how valuations are stretched, how we're experiencing a classic "blow off top", how "this is a terrible time to put money to work" and so on. And, yep, I sympathize, at least in terms of sentiment, as our own "Fear and Greed Index" confirms that this market is indeed over-ripe for a fall.

Thursday, December 26, 2019

Bonus Quote of the Day

Here's my third Mandelbrot quote in a row, so you know what I'm currently reading. I must say, The Misbehavior of Markets; A Fractal View of Financial Turbulence is excellent!

Quote of the Day: Unfathomably Complicated

As I take passing note of the war of the pundits (and the everyday squawkers) -- the bulls versus the bears -- I am forever amused (please pardon my condescension) by the sheer simplicity of their respective arguments.

Tuesday, December 24, 2019

Global Economy Has Issues!

As I mentioned recently, we've developed our own macro scoring system for the Eurozone and 19 additional countries (soon to be 22). 

Saturday, December 21, 2019

"Watch What JP Morgan Does"

I've written a bit about, and mentioned in a recent video, the massive challenge the Fed is facing in the repo market; the market where financial institutions take care of their short-term cash needs. I.e., for a variety of reasons, the Fed has had to recently, and aggressively, inject hundreds of billions into what is essentially the plumbing of the financial system -- to keep its pipes from clogging. Hmm....

Entering 2020

Right about now, each year, is when I settle in to pen a letter with "year-end" in its title. The past several turned out to be so voluminous that I broke them into several parts, with the hope that by delivering them in smaller, more digestible bites, I'd capture, and keep the attention of most, if not all, of our clients. 

Friday, December 20, 2019

The Last Eighth

A friend just emailed me asking for a little clarity on the "last eighth" quote from an earlier blog post. I think my answer is worth sharing:

Data of the Day

The final reading of third-quarter GDP confirms our present assessment of overall conditions; consumption remains strong, while capital investment (business expansion), and corporate profits are on the decline:

Thursday, December 19, 2019

Against The Grain... then and now...

Okay, so I want to be very careful with this one, because I am absolutely not making a short-term market call! What I am saying is that exactly a year ago, as the market was careening lower amid the worst December since 1931, we remained steadfast in our then growthy (notably bullish) posture, despite staring into what turned out to be the steepest correction of this entire bull market.

Here are highlights from a few last-December blog posts:

Quote of the Day: A Tale of Two Economies

This week, Fedex reported quarterly earnings that, to put it mildly, were nothing to write home about.

CEO Fred Smith, explaining the what's and the whys, pretty much echoed what has been our messaging herein since late-summer:

This Week's Message: Our F&G Index Is Running Hot!

In a yesterday blog post I highlighted a Bloomberg interview with the head of a venture capital firm that got me reminiscing on personal observations of bubbles past. Having cut my teeth back in the 80s, I've had the good fortune (sincerely) of being professionally intimate with the '87 crash, and every recession, every bubble, every bursting, every bear market, every currency crisis, and every etcetera since.

Wednesday, December 18, 2019

Bonus Quote of the Day: Look For More Stimulus From China

Just read through the summary commentaries on China from folks the article called "the world's most prominent China watchers". Much of the commentary jibes with ours; that China has major structural issues and that, as I suggested in today's (client-only) video, there's very likely some market-friendly stimulus on its way -- that'll likely do little for the real economyI.e., the late-cycle stuff we're seeing virtually everywhere.

Our New Core Allocation (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:

Quotes of the Day: Utterly Concerning

Quotes like these -- the first a line from the teaser for the program referenced below -- tend not to age well:

Monday, December 16, 2019

Chart of the Day: Somebody's Betting On A Big Drop...

Now, don't you go chasing this rally! Of course if you're a client we won't let ya, but if you're a hitchhiker on the blog (it's here for anyone who's stumbled onto it), we can't stop ya, but you should think twice before hopping onto the year-end FOMO (fear of missing out) express.

Client-Specific Video Presentation: A Look At General Conditions and What Lies Beneath

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:

Momentum, Etc., Favors the Bulls -- And -- Be Careful What You Ask For...

Last week's (late-week) rally was an easy call, as a pro-Brexit outcome to the UK election was a given, and because the stock market ramifications of allowing the scheduled tariff hike to occur this weekend were ominous. 

Saturday, December 14, 2019

Quote of the Day: The "Bond King" Says We Were Late In Getting Defensive

According to Jeffrey Gundlach, the founder and manager of DoubleLine Capital, the mammoth $150 billion investment firm, we were actually late in beginning to play defense this summer.

Friday, December 13, 2019

Quote of the Day: Speak No Evil

Just finished John Kenneth Galbraith's "The Great Crash 1929", and, no (NO!), my resoundingly cautious tone of the past several months should not be construed as me anticipating the likes of the 1929 episode (remember, I'm only responding to present general conditions). That said, or, as George Santanaya once said (words to the effect); "Those Who Do Not Learn From History Are Doomed To Repeat It."

Quick Note on This Week's Action

On Monday I suggested that a rally was in the near-term offing; citing pending positive trade news as one of a few potential catalysts.

Thursday, December 12, 2019

This Week's Message: The Crowd

Two big rallies this morning, the first one charted below should come as no surprise; recall Monday's blog post with "Strong Odds Of A Near-Term Rally" in the title.

Wednesday, December 11, 2019

For Better, For Worse

If you want to feel better about the present state of general conditions, take a look at our charts below on small business optimism, hiring and capital expenditure plans (which happen to be components in our macro index):  latest move (reported yesterday) circled in green...

Tuesday, December 10, 2019

Serious Quote of the Day: Morgan Stanley Is Seeing What We're Seeing

As you've noticed, we've remained very guarded, in words and in actions, during the latest leg of this longest-ever bull market.

While I hinted yesterday that we'll continue to closely monitor labor conditions in the industrial space, looks like we're not alone in our concerns even in our own space.

Monday, December 9, 2019

Chart and Quote of the Day: What History (of the unemployment rate) Ultimately Portends

Again, I'm liking last Friday's employment numbers, plus a few other data points have improved lately as well; our macro index went from -8.14 to -2.30 over the past week. Although I think some bullish pundits who've declared last Friday's unemployment number (a lagging indicator by the way) as proof positive that the bears are off track are either overlooking or are unfamiliar with history.

Definitely Strong Odds Of A Near-Term Rally (except for what the VIX says this morning)

With the Fed desperate to not upset markets these days (they meet this week), with the likelihood of a Brexit-friendly outcome to this Thursday's UK election, with the strong odds that the U.S. is not going to allow the scheduled tariff increase to take effect on 12/15, and with this morning's rumor that USMCA (US, Mexico, Canada trade agreement) is about to pass Congress you'd think the market would be screaming higher this morning.

Friday, December 6, 2019

Understanding Your Account Statement: Specifically The Effect of the Options Hedge

Late summer of this year, after 10+ years of riding what is now history's longest bull market, our assessment of general conditions deteriorated to the point where we placed higher (though not overwhelming) odds of a bear market occurring over the coming 12 months than we had at any time since the beginning of the 2008 recession. 

This Week's Message: Debt, Jobs, Trade, Stocks and Our Core Strategy Going Forward (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:

Thursday, December 5, 2019

Beyond Santa

Make no mistake -- well, let's say there's very high odds that -- if the tariff increase on Chinese imports occurs as scheduled on December 15th, Christmas will be ruined for anybody counting on a Santa Claus rally in stocks. Therefore, given the amazing propensity for the powers that be to respond to the slightest hint of stock market stress -- and the fact that they have to agree with the above -- I place high odds on said tariff increase not occurring as scheduled. 

Wednesday, December 4, 2019

Bonus Quote of the Day: Feeling Like We're In The 11th Round

Jim Bianco, Macro Strategist with Bianco Research, is one of today's more sought after articulators  of the state of global general conditions. 

Today, RealVision posted an interview featuring Jim subtitled "How the Fed Effects Equities".

The quote below from the interview essentially echoes my message in yesterday's must-watch video: I.e., as recently as last year at this time our macro assessment had it that the economy and, thus, the stock market could withstand what ultimately morphed into a 20% correction that ran from early October to Christmas Eve. And that, presently, however, our assessment is notably less sanguine:

Quotes of the Day: Don't Be Silly!

Well, no surprises here; equity index futures are rallying pre-market on the following U.S./China trade news:

Tuesday, December 3, 2019

Market and Macro Commentary (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:

Monday, December 2, 2019

It Would Be Crazy To.......

So stocks are selling off a bit this morning, following through a bit on Friday's selloff. Headlines suggest that it's because the President tweeted that the U.S. is going to tariff Brazilian and Argentinian steel imports, at least that was excuse number 1; excuse number 2 followed with another disappointing manufacturing ISM print.

Sunday, December 1, 2019

Please, Keep Working That Noggin!

This one's off-topic, although long-time clients (friends) and I do have personal conversations about lifestyle, longevity, cognitive stamina, and so on, as they approach, and enter, retirement.

Charts of the Day: Preserving Your Wealth

If, being our client, you're remotely concerned about being hedged (muting gains) as the market continues to melt higher, the following might have you feeling comforted, given the risks as we presently see them.

You're In Good Company!

A friend intimated to me last week that the sound of my blogs of late make it seem like the bottom (of the stock market) is going to fall out any minute, or words to that effect.