The Market Radar


We anticipate monitor and comment on market-moving global economic and geopolitical issues.  No dark side brooding, no wanting the world to end, no political rants.  Traders, investors, policymakers, or market observers can’t afford to ignore us.  In one word, perspicacity. 먹튀폴리스|nba중계|mlb중계

An educated citizenry is a vital requisite for our survival as a free people.  먹튀폴리스|nba중계|mlb중계– Thomas Jefferson 먹튀폴리스|nba중계|mlb중계

By seeking and blundering, we learn. – Johann Wolfgang von Goethe

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The Parable Of The Good Salvadoran

It was just past midnight on a Saturday night when the pastor of a popular urban city megachurch, Reverend Jerry Graham Jr. had just finished the bulletin on the billboard sign located on the lawn outside the large modern church structure.  He was in a bit of a hurry to get home and grab some sleep before his first sermon, which was to be delivered at the 8:00 am service the next morning.

Church_Board.png

He took a last look at the sign before leaving for the two-block walk to the church parking garage: “America, love it or leave it.”

Perfect, and very relevant he thought, as the next morning’s  politically charged sermon was titled, “Is the President the Chosen One?”

The Road Down From Jerusalem Down To Jericho

A late-night walk from the church building down to the parking garage was always uncomfortable for the pastor as the church was located in a low-income area often riddled with violent crime.  So much so, that many of his parishioners named the journey to the parking lot “the road down from Jerusalem to Jericho,”  which was one of the most treacherous and dangerous roads in the Holy Land during the days of Jesus of Nazareth.

After about a block, the pastor encountered a group of armed robbers, who, first threw acid in his face to blind him, then stole his wallet, watch, and Gucci sport coat.  They finished their crime by severely beating the pastor leaving him for dead.  The acid burns on the pastor’s face were so bad it made him unrecognizable.

The pastor remained unconscious throughout the night and was still lying motionless on the sidewalk as the members of his church began to arrive the next morning for the 8 o’clock service.  The head elder of the church was the first to arrive and upon seeing the unrecognizable and mutilated body on the sidewalk, he crossed to the other side of the road.

He had much work to do to prepare the church for the five Sunday services and thought the unfortunate soul lying on the sidewalk was just another victim of the violent and criminal immigrants he feared were invading and taking over the country.

The next to arrive was one of the church deacons.  She, too, also crossed to the other side to avoid the body lying by the side of the road.

The Good Salvadoran

Suddenly, Óscar Ramírez, a brown-skinned man emerged from the dumpster just about two hundred yards from where the pastor was robbed and almost beaten to death.  Mr. Ramírez was hiding in the trash can from the immigration authorities as he had arrived in the United States from El Salvador illegally just one week earlier.

He had come to the country in panic after receiving a frantic phone call from his wife, who had traveled north about a month earlier to seek political asylum in a “safer” America, that she and their 3-year old daughter had been separated by U.S. border authorities.  After arriving Óscar Ramírez searched desperately for his wife while living in great fear of ICE, the former U.S. Customs and Immigration and Naturalization Service, which he knew would deport him before he could reunite with his wife and daughter.

As he spotted the body of the man lying beside the road it brought back horrible memories of the violent crime he and his family had suffered in El Salvador, which his wife and daughter were trying to escape in their dangerous trip to the north.

Without hesitation,  Mr. Ramírez ran to help the man and had compassion on him.

He gave the hurting pastor water, tried to comfort him and attempted to wash the acid from his face.  The Salvadoran knew there was a hospital just a few blocks away but was gripped with fear that he would be arrested and deported by ICE if he even came close to a hospital.  The stories of ICE immigration raids on hospital emergency rooms were ubiquitous in the immigrant community.

Knowing exactly what he had to do, even if it risked that he would never see his family again, Óscar Ramírez, the Good Salvadoran, gently lifted the pastor from his pool of blood on the sidewalk and carried him the two blocks to the Good Samaritan Hospital emergency room.

Good Samaritan.png

Risking everything, the Good Salvadoran checked the pastor into the ER and stayed with him until he regained consciousness and the authorities at the hospital were able to contact the pastor’s family and congregation.

Which of these three do you think was a neighbor to the man who fell into the hands of robbers?” 먹튀폴리스|nba중계|mlb중계 먹튀폴리스|nba중계|mlb중계

The expert in the law [religion] replied, “The one who had mercy on him.” 먹튀폴리스|nba중계|mlb중계

Jesus told him, “Go and do likewise.”   — The Gospel of Luke 먹튀폴리스|nba중계|mlb중계 먹튀폴리스|nba중계|mlb중계

Lessons

We retell the parable of the Good Samaritan in a relevant and modern-day context not as a political narrative, though it does take place in the context of our politically charged and divisive culture, which many of our leaders attempt to exploit for their own political gain.

It is not a story to warn about walking on dangerous roads.  It is not a story about open borders nor about unjust or lax immigration laws.  It not a story about medicare for all or universal health care.

It is not a story just about compassion and helping people in need, though that gets us warmer and closer but just a small part of the real truth in the parable.

Evils Of Racism

It is a story about the evils of racism and the hypocrisy of religious acquiescence or direct participation in racism and destructive stereotyping.

To understand this, one must understand the times of first-century Judea, where Jesus and his followers lived. In order to do this, one must understand the relationship between Jews and Samaritans.  This is sometimes hinted at when the parable is told today but it is rarely fully grasped.

Samaritans

Who were the Samaritans?  They were not just the outcasts of Judea but were the despised enemies of the Jews.  “Half-breeds,” half Jewish and half Gentile, who worshipped false gods and were considered traitors.  They were hated more than the Roman conquerors.

The Jews of the day would not even walk in Samaria because they believed the people to be unclean.   They would go far out of their way rather than set foot in Samaria, even if it were a much longer trip.

It doesn’t take much imagination to hear the chants in Jerusalem back in that day to “Send them back! Send them back!”

This is exactly why Jesus used a Samaritan in his parable as they would have been perceived as the least likely to help a fellow Jew.  The listeners when Jesus told the story would have expected a Jew to be the hero of the parable but were likely very shocked and offended to hear in the end that it was……wait for it…….a Samaritan!

Only by understanding this reality,  does the power and true message of the parable convey the main lesson it was meant to when originally told 2,000 years ago and is so very relevant in today’s slouch toward tribalism.

The Parable of the Good Samaritan 

On one occasion an expert in the law stood up to test Jesus. “Teacher,” he asked, “what must I do to inherit eternal life?” 먹튀폴리스|nba중계|mlb중계

“What is written in the Law?” 먹튀폴리스|nba중계|mlb중계 he replied. “How do you read it?” 먹튀폴리스|nba중계|mlb중계 먹튀폴리스|nba중계|mlb중계

He answered, “‘Love the Lord your God with all your heart and with all your soul and with all your strength and with all your mind’[a]; and, ‘Love your neighbor as yourself.’[b]” 먹튀폴리스|nba중계|mlb중계

“You have answered correctly,” 먹튀폴리스|nba중계|mlb중계 Jesus replied. “Do this and you will live.” 먹튀폴리스|nba중계|mlb중계 먹튀폴리스|nba중계|mlb중계

But he wanted to justify himself, so he asked Jesus, “And who is my neighbor?” 먹튀폴리스|nba중계|mlb중계

In reply Jesus said: “A man was going down from Jerusalem to Jericho, when he was attacked by robbers. They stripped him of his clothes, beat him and went away, leaving him half dead. 먹튀폴리스|nba중계|mlb중계 먹튀폴리스|nba중계|mlb중계  A priest happened to be going down the same road, and when he saw the man, he passed by on the other side. 먹튀폴리스|nba중계|mlb중계 먹튀폴리스|nba중계|mlb중계  So too, a Levite, when he came to the place and saw him, passed by on the other side. 먹튀폴리스|nba중계|mlb중계 먹튀폴리스|nba중계|mlb중계 But a Samaritan, as he traveled, came where the man was; and when he saw him, he took pity on him. 먹튀폴리스|nba중계|mlb중계 먹튀폴리스|nba중계|mlb중계  He went to him and bandaged his wounds, pouring on oil and wine. Then he put the man on his own donkey, brought him to an inn and took care of him. 먹튀폴리스|nba중계|mlb중계 먹튀폴리스|nba중계|mlb중계  The next day he took out two denarii and gave them to the innkeeper. ‘Look after him,’ he said, ‘and when I return, I will reimburse you for any extra expense you may have.’ 먹튀폴리스|nba중계|mlb중계 먹튀폴리스|nba중계|mlb중계

“Which of these three do you think was a neighbor to the man who fell into the hands of robbers?” 먹튀폴리스|nba중계|mlb중계 먹튀폴리스|nba중계|mlb중계

The expert in the law replied, “The one who had mercy on him.” 먹튀폴리스|nba중계|mlb중계

Jesus told him, “Go and do likewise.”   –  The Gospel of Luke 먹튀폴리스|nba중계|mlb중계 먹튀폴리스|nba중계|mlb중계

Let us all “go and do likewise this holiday season,” folks.

 

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Discipline Trumps Conviction

Today’s close above 3125 takes us out of our short position, which we started scaling into at 3025.  We are still fairly confident that this market can be bought at much lower prices at some point in the next 18 months.   We hate getting squeezed out up here, which is probably a sign of the top and it won’t be the first time.

We’re going to the beach and patiently waiting with our long-term money and we will be on alert to the downside when the fever and market breaks.   Maybe the MoMo takes the S&P up another 1-2 percent but we don’t know, nor does anyone else, and we have limited pain tolerance.

S&P500 Returns

The S&P500 closed today, up exactly 25 percent on the year.   An up year after the ugly Q4 2018 crash and a subsequent strong first-quarter bounce is no surprise, folks.

There has not been one year since 1950, not one, where the S&P has increased by more than 10 percent in Q1, after experiencing a negative prior year, which didn’t close the year up less than 20 percent.  It’s Newton’s Q1 Law of S&P Momentum.   – GMM,  April  1, 2019

S&P_Q1

By the way,  the data in the above table illustrate how we calculated 3025 as the beginning of the selling zone.  It was our extrapolation of the average return for years with similar short-term histories.   Our trade worked out twice this year before the latest ramp.

The above data also show that this year’s strength is a mirror image of the extreme weakness in Q4 2018 but look at the yield curve at the end of Q1 versus the other years.

If the market closes here for the year, it would be the 13th best annual price move for the S&P since 1950.  Another 60 S&P points higher by year-end would move it into 6th or 7th place.

Really?   Does the economy and earnings justify these gains?

Yield Curve

The yield curve is almost meaningless in a world where central banks own half of the U.S. Treasury coupon curve though their positions in bills are very light historically.  At the end of 2007, for example, before the Fed moved from an OMO to a QE monetary policy, the U.S. and foreign central banks held 44.05 percent of outstanding T-bills versus just 12.64 percent 먹튀폴리스|nba중계|mlb중계 at the end of September.  This, of course, distinguishes between repos and asset purchases on the Fed’s balance sheet.

We suspect this is a major reason for the cash crunch in the money markets.   More in later post.

Why Is The Market Rising?

It is for silly reasons that the market is rising or, should we say, the prevailing narrative of why it is moving higher.

Expectations of some sort of faux-China trade deal, which we get — any cessation of economic hostilities between the two world superpowers is a good thing but the market has rallied quite a bit already.   There will be no resolution to the economic competition and long-term conflict between Chimerica, which has been the main driver of corporate earnings and global growth for the past 25 years.  The world economy will be much weaker than when the trade war began with no resolution in sight, and we don’t think a “Phase 1” deal is going to move the real economic needle much.

Furthermore,  the Fed’s massive repo intervention (SOMA portfolio has not grown much) to stabilize the money markets is not exactly positive in our book.  It is a signal the monetary distortions and huge debt issuance over the past decade are beginning to come home to roost.

Nevertheless, the markets can remain irrational longer than we can remain solvent.

The market strength has been more of a technical matter, in our opinion.  Lack of supply as corporates have taken out massive stock with buybacks, the move to passive investing, and the greed & fear of FOMO.

Sustainable Levels   

This market needs some very accelerated global economic growth to sustain these levels. Growth is difficult in such a highly indebted world, however, as interest rates can’t move higher to their equilibrium levels.  The large stock of debt is going to act as a governor on growth as a break out in market rates will break the market and break the economy.   And that, folks, is why the central banks are in their current feeding frenzy.

What will be the big negative shock that shakes the tree loose?   Your guess is as good as ours but it shall come.

Cut Quick And Keep Losses Small

Our total loss in the short position is a little over 2.3 percent.  Keeping losses small allows you to fight another day.  We know it’s pretty tight stop but that’s the downside of playing with leverage.

Moreover, we are more comfortable to be flattish and missing another, say, one or two percent but will continue to move our target sale prices higher and wait for the market to break.

As my first trading boss on Wall Street used to preach to me almost daily, ” I don’t like being long when the fundamentals are not supportive.  The bottom can drop out of the market.”

Hear ya’, boss.

On to the next trade and, now, it over the woods and through the snow and to Grandmother’s house, we go.

Have a great Thanksgiving, folks.

S&P500

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China Trade Talks And Presidential Stengelese

All right everyone, line up alphabetically according to your height. – Casey Stengel 

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Party Like It’s 1999

Geez…all roads seem to lead to skewed distributions, be it: 1) household wealth ;  2) excess reserves held by a few large SIFI banks, and, 3) stock market returns (narrow breadth).   Not healthy.

 

 

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Is Real Populism On The Way?

The new cover of Time thinks so.

Time

Real populism is usually rooted in left-wing economic policies of soaking the rich, import-substitution trade policies and zero concern of protecting the wealth of the elites, which is mostly held in the financial genre of public and private equity (around 60 percent).

Asset_Allocation_By_Percentile Group

In 2016, the Democratic Socialists of America (DSA) had 5,000 members; since then, its dues-paying membership has multiplied more than tenfold. 먹튀폴리스|nba중계|mlb중계 This new energy on the left terrifies chief executives and billionaires, and yet many of them have been voicing similar alarms about a crisis of capitalism. Ray Dalio, the billionaire co-chairman of the investment firm Bridgewater Associates, warned in April that America faced a “national emergency” in capitalism’s failure to benefit more people, and he pronounced the American Dream lost. The anti-capitalist impulse has some purchase on the right too. Before he pushed a tax cut that lined the capitalists’ pockets, Donald Trump ran, most improbably, as a Republican skeptical of the financial elite’s loyalty to Americans. On Fox News, Tucker Carlson has entertained a surprising skepticism of capitalist doctrines and said positive things about Warren. – Time

Trump’s populism is one that cuts taxes for the rich, make cosmetic tweaks to trade deals as not to upset the markets, and leans heavily on the Fed to lower interest rates to keep the stock market inflated.   In other words, a Trojan Horse for the 1 percenters but he puts on one helluva great circus to entertain the base.

Not absolutely sure if it’s going to be 2020 — the predictions markets have cut Elizabeth Warren’s chances of winning the nomination in half in the last month — but maybe a pop lighter version until the demographics are stronger, but it is coming, folks.  You can bank on a People’s QE.

 

YouGov.png

 

Long pitchforks.  Long inflation.

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Ronald Reagan Must Be Rolling Over In His Grave

There are facts, as established and documented in the Mueller Report, and there are conspiracies, created and propagated by the Russian GRU and Vladimir Putin, and held by the President of the United States and his followers.

The Russia expert [Dr. Fiona Hill] commandeered the national spotlight to tell the conspiracy-minded members on the committee — she didn’t use the word Republican and she didn’t have to — to stop peddling that Ukraine, not Russia, was interfering in the 2016 election.

To do so is to advance “a fictional narrative that has been perpetrated and propagated by the Russian security services themselves.” — Chicago Sun-Times

Ronald Reagan, in his worst nightmares, would have never believed his own party could or would ever carry the Russian government’s water and be spreading their propaganda. Bad Moon Rising.

먹튀폴리스|nba중계|mlb중계

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This “Chinese Hoax” Is Already Getting Old But Just Beginning

Our power is going to be shut off again.  That’s three times in the past two months!

The Chickens Are Finally Coming Home To Roost

We suspect this is the first pitch in the top of the first inning in a long-game of survival of the human species.   Trump is correct in the above tweet: the concept of global warming is making us very non-competitive.

Unlike the politicos who run the U.S. government, however, we are believers in science —- preponderance of evidence over beyond a reasonable doubt —  and evolution, so we agree with the assessment of the vast majority of scientists and hoping some technology disrupters come along and save the planet.  They are and will be, battling some very powerful interests, however.

Fix The F%*king Grid, Please!

While we’re at it, let’s fix the friggin’ grid

If the utilities, such as PG&E, would have spent more on CapX than buying back stock and paying dividends, and used a larger portion of their cash flow for CapX to modernize the grid’s infrastructure, the lights might be on tomorrow.   They should start, by burying the live wires underground.

Maybe if Trump Towers New York is underwater in five years, the ex-POTUS and his free-basers may then become believers.   Nah, it’s in the bible,

He said to him, ‘If they do not listen to Moses and the Prophets, they will not be convinced even if someone rises from the dead.’ 먹튀폴리스|nba중계|mlb중계  – Book of Luke

 

PG&E

ISIS Is Coming

By the way, we hear quiet whispers and sense a small bit of concern after ISIS issued their Flames Of War poster a few weeks ago, encouraging their disciples to ignite wildfires across the U.S. and Europe.

ISIS_1

As wind-whipped wildfires char parts of California, ISIS supporters distributed a propaganda poster showing a flaming street in San Francisco accompanied by one of their fire-themed slogans.

With the headline “Flames of War,” the photoshopped image depicts the 400 block of Geary Street, with an ISIS flag perched above the vertical sign for the Touchstone Hotel. Two heavily armed jihadists stand in the middle of the street, alight with embers in addition to the buildings on the block.

The image was circulated online last week at about the same time as the beginning of the Kincade Fire north of San Francisco in Sonoma County, which may have been sparked by power lines during intense winds.  –  homelandsecuritytoday, Oct 29th

That’s all we need, more National Enquirer-esque conspiracy hysteria.  God forbid another big fire breaks out in California during the next week.

Fear Of Wildfires and Japanese Internment During World War II 

Fears of wildfire sabotage are nothing new to America.

It is a little known fact, at least in the group we hang with, that one of President Franklin Roosevelt’s main justifications of interning Japanese Americans in the West during World War II was the fear of wildfire sabotage.

Hysteria swept the country after Pearl Harbor, and especially after the Japanese bombed the town of Goleta, California — that’s UC Santa Barbara, folks — from a submarine in the Pacific, taking out a small oil field and setting fire to a local orange grove.  This convinced Roosevelt to make the shameful move that would stain his legacy forever.

We must guard against Japanese incendiary bombs and incendiary fires during the dry season,” FDR wrote the head of the Bureau of Budget. “This is essential for our national future.”

…Roosevelt decided that the Japanese-American roundup was necessary to save U.S. timber reserves. He then took to the airwaves asking Americans to patrol forests and report potential sabotage

“Uncontrolled fire, even in normal times, is a national menace,” he proclaimed. “Today … when agents of our enemies are seeking to hinder us by every possible means, it is essential that destructive fire be brought under stricter control in order that victory may be achieved at the earliest date.”  — Douglas Brinkley, CNN

There you have it, folks, a little history, which is becoming increasingly relevant for all the wrong reasons.

See you when the lights come back on.

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Trade And Tariff Hysteresis

Hysteresis in the field of economics refers to an event in the economy that persists into the future, even after the factors that led to that event have been removed. – Investopedia

I first heard the term hysteresis applied to trade and explained by a young Paul Krugman at a World Bank luncheon years ago.  Though he was using the exchange rate as the exerting force on import and export markets, he explained it in simple terms,

If you put enough pressure on a spoon by bending it for a long enough period of time, it will never return to its original position. So to it is with export and import markets.  – Paul Krugman, paraphrased 

The simpletons think if tariffs are only just paused, or if some are even rolled backed, we are going back to the “good ol’ daze.”  Yeah, right.

Pity our poor farmers, who are caught up in this mess.

Running Out Of Free Lunches

We are almost out of free lunches, folks, and will be posting only sporadically unless your support increases.   Donate whatever you think is fair by clicking on the PayPal button just below the Twitter and search icons on the upper right-hand side of the blog.  You do not need a PayPal account and can use almost any credit card.

Don’t be a free rider.  Thanks, so much.

free rider

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World Growth Projections – IMF

In case you missed the IMF World Economic Outlook (WEO) growth projections,  here you have it.  Forecasts are a guide, not a constitution.

World Growth Projections

World Growth Projections_2

 

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COTD: Recession Triggers

COTD = Chart of the Day

Nice chart from Mark Zandi from Moody’s Analytics.

Recession Triggers

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