Archive for the ‘United States’ Category

Notes From Underground: Do You Hear What I Hear?

February 16, 2020

First, the news on the coronavirus continues to be buffeted by media outlets’ urge to be the first to report. The need for speed creates a rash of questionable stories that later get retracted or certainly get less sensational when context is added. When trading around this, I urge caution as opportunity knocks for those traders who can remain patient. There seems to be scientific interest in the failure of the VIRUS to have impacted children. While it is in the early stages of a potential pandemic, according to my source on all things infectious diseases, it is an outcome to watch in an effort to measure the potential impact.

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Notes From Underground: Ho Hum, Time For Another Unemployment Number

February 6, 2020

It has been an interesting first month of trading as markets have gone from searching for inflation fueled by a rise in commodity prices and a weakening dollar, especially in regards to emerging market currencies. The commodity rally coupled with an upward thrust in emerging markets ran into the headwind of the spread of the Coronavirus from Wuhan, China to several other nations. The whiff of inflation was subsumed by the onset of fears of global deflation as investors continue to be concerned about China economic activity grinding to a halt as quarantines are the prescribed remedy for preventing a genuine pandemic.

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Notes From Underground: Looking at 2020 With Imperfect Vision

January 9, 2020

On Monday, I had a chat with Anthony Crudele about the global macro impact on markets in 2020. As I always warn (in an effort to mimic MAO), there are many potential prairie fires in the world that COULD be ignited by a single spark. The Middle East is a potential prairie fire — every year. We were reminded of this over the last week as multiple events in IRAQ/IRAN brought the world to the precipice of cataclysmic outcomes. For now, the situation seems to be contained as GOLD, sovereign bonds and other tools of wealth protection.

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Notes From Underground: Whistling Past the Tombstones

December 29, 2019

As we approach 2020, it seems as though the financial world is unconcerned about the dramatic increase in DEBT. Yes, the airwaves are alive with news of the extremely low level of mortgage delinquencies but fail to discuss the growing delinquency of 90-day auto loans and the $1.5 trillion pile of student loan debt, an albatross for college graduates over the 20 years. Corporate debt has increased by the magic of financial engineering in which share buybacks and dividend increases are greased with the benevolence of central banks caught in a trap of their design.

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Notes From Underground: The Market Has Much to Consider

December 16, 2019

Last week was filled with the culmination of many issues as we had the FEDECB, trade agreement, UK election, impeachment hearings, and even an attempt at resolving the USMCA trade deal with Mexico and Canada.

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Notes From Underground: The Jobs Picture Is Robust, But Where Is the Wage Increase?

December 8, 2019

This is a rhetorical question of course, for the lack of wage growth is to be found in the vast amount of money chasing a global labor pool.

It is capital that had benefited from the last 30 years of the unleashing workers after the fall of the Soviet Empire and the black/white cat policies of Deng in pursuing growth in China. Now that other emerging economies are attracting capital in an effort to create jobs, there still remains a great deal of downward pressure on wages. Even the movement of supply chains out of China will act as a drag on global earnings as manufacturers will act to hold down wages as way of remaining attractive to foreign direct investment. The world has been watching as Chinese earnings growth has accelerated over the last 10 years but one of the outcomes from the Trump tariffs will be to force a slowdown in China’s wage inflation.

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Notes From Underground: All Tweets, No Substance

December 3, 2019

On Monday President Trump sent out an early morning TWEET that sought to admonish the FED for keeping interest rates too high, coupled with an accusation that “two South American have been presiding over a massive devaluation of their currencies, which has not been good for our farmers.” ALL THE PRESIDENT’S MEN IN THE CAPACITY OF ECONOMIC AND TRADE ADVISERS OUGHT TO BE FIRED FOR MALFEASANCE.

This tweet was so off base that it should have forced the media into hyper critical mode to deconstruct its flaws. Brazil and Argentina have not been intervening to depreciate their currencies.

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Notes From Underground: Was Trump Addressing Mnuchin or Powell?

November 19, 2019

On Monday, Treasury Secretary Steven Muchin and Federal Reserve Chairman Jerome Powell met with President Trump at the White House where the duo “advised” and “forecasted” the economy to the president as 2020 election posturing is in full swing. NOTES FROM UNDERGROUND has maintained that Trump used the tariff threat to cajole Jerome Powell into lowering interest rates, weaken the DOLLAR and end the balance sheet runoff that the administration believed has held back the U.S. economy. What was Powell buying insurance against?

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Notes From Underground: So Many Insights

November 5, 2019

On October 31, I had the pleasure of the recording a discussion with Anthony Crudele and the always insightful Jim Bianco. These spots with Futures Television provide context to many things discussed in NOTES FROM UNDERGROUND. I have been fortunate to have been chosen to appear with many high level global macro analysts.

Then on Sunday, I spoke with FRA’s Richard Bonugli and Dr. Marc Faber, one of the most heralded analysts in the global macro world. We covered the important issues for fifty-five minutes. It is my pleasure to share both of these conversations with you all.

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Notes From Underground: Symmetric Inflation Targeting?

November 3, 2019

Yes, the leaves have shed, frost is certainly on the pumpkin and there’s even six inches of snow in Chicago. The news has been clogged with positive results from the recent phone calls between Lighthizer/Mnuchin and their Chinese negotiating partners. Even Commerce Secretary Wilbur Ross was aglow with positive news from his ASEAN meeting in Bangkok, Thailand. President Trump was tweeting about a possible signing ceremony in Iowa.

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