Notes From Underground: Will He Or Won’t He? (Only His Son-In-Law Knows)

August 14, 2018

On Monday, Rick Santelli and I unpacked a great deal in the few minutes we were allotted on CNBC. The Turkish story remains a key to the global financial markets. The U.S. equity markets interpreted that as all-clear, and the narrative of a dynamic U.S. growth story sustains itself.

(Click on the image to watch me and Rick talk Turkey.)

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Notes From Underground: The World Is Talking Turkey

August 12, 2018

For a long time now, we at NOTES FROM UNDERGROUND have been discussing the danger of Turkish President Erdogan in his role as a potential disruptor to stability in the Middle East. Last week’s violent action in Turkey’s stock and currency markets is just one element of the instability for which Erdogan can be held responsible.

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Notes From Underground: In Light of Declining Volume and Volatility … A Repost

August 7, 2018

The markets remain locked into the latest tweet from either politicians or CEOs. Whether it’s about tariffs or taking a company private, the Twittersphere has the ability to move markets for a nanosecond. Regardless of the algos and the continued march of passive investing NOTES FROM UNDERGROUND believes that Hyman Minsky has entered the room. A Minsky moment occurs when complacency leads to increased risk-taking while using increasing leverage. It is not market valuations that disrupts markets but rather the amount of debt that needs to be serviced. Can future cash flows ensure that the vast amount of debt can be managed? Leverage is a great aphrodisiac but if priapism results the exit strategy can elicit great pain. The markets are built on record debt.

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Notes From Underground: Chairman Powell, Ask the Wizard for Some Courage

August 1, 2018

The FOMC issued a very bland statement on Wednesday after its two-day meeting. Why did they bother convening for two days to deliver a policy statement that they phoned in last month. In my opinion, Jerome Powell missed a perfect opportunity to flex the FED‘s independent muscles by NOT RAISING RATES. The recent GDP data, inflation measures and robust jobs market provided ample evidence that the market is in need of another interest rate hike.

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Notes From Underground: Central Bank Palooza

July 30, 2018

Coming on the heels of my first Kenny Chesney concert I am viewing the synchronicity of central banks as a reflection of the rhythms of global financial repression. Last Thursday, the ECB issued its last statement before the summer recess, while this week we have the Bank of Japan tonight, the FED on Wednesday and the Bank of England on Thursday.

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Notes From Underground: Areas of Global Macro Concern

July 24, 2018

President Donald Trump’s continuous tweeting creates volatility in the markets but the impact lessens as participants become hardened to the vagaries of the tweets. An area that does concern me, though, is the amount of insider trading I suspect is taking place.

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Notes From Underground: The Sins of Wages

July 17, 2018

Tuesday was the first round of the Federal Reserve Chairman Jerome Powell’s semi-annual testimony to Congress. The Senate Banking Committee questioned Powell about recent Fed decisions and looked for some guidance as to how the FOMC viewed the current state of the domestic and global economy. There were many questions about the impact on the economy from the Trump tariffs, which the Fed chairman adroitly evaded and put the onus on Congress, where it rightly belongs.

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Notes From Underground:

July 16, 2018

On July 11, I discussed many of the current issues confronting the financial markets with FRA’s Richard Bonugli and Peter Boockvar of the Bleakley Group. These podcasts are an important way for me to communicate with some of the brightest minds in the global financial world. It allows me to express ideas and have true discourse to help clarify ideas for the readership of NOTES FROM UNDERGROUND. Pour your favorite libation and drink deep from the efforts of some of the best minds in the financial industry.

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Notes From Underground: The Summer Doldrums

July 10, 2018

There are storms brewing but for the moment markets are stuck in the Doldrums waiting for the winds to increase in velocity. The issues confronting the market are all too familiar as NOTES FROM UNDERGROUND has been categorizing for the previous months.

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Notes From Underground: The Tweets Controlling the Market Gyrations

July 1, 2018

Now that the first six months of the year have come and gone, the markets have a cacophony of events to look forward to as algos react to price, and fundamental macro analysts are trapped between WHAT OUGHT TO BE. The current concerns over tariffs, trade wars, strife between friends/allies, political uncertainty in Europe, Middle East conflagrations, the Russia/Saudi alliance on energy, Chinese growth concerns, RISING U.S. INTEREST RATES AND INCREASED QUANTITATIVE TIGHTENING (along with elevated TREASURY FUNDING NEEDS), decrease in capital inflows into emerging market economies leading to potential dollar funding concerns and U.S. Congressional elections. Yet, the markets remain are not pricing in the relevance of such concerns. Wise traders and investors do not fight markets but profit from the opportunities presented. To do otherwise is mere commentary. So to paraphrase John Maynard Keynes: When the facts change so do I, what do you do madam?

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