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.

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Was Helsinki Trump’s “Jane Fonda” Moment?

It has been over three years since President Trump first launched his successful campaign for the highest office in the land.  The then unconventional candidate, and now president:  has broken almost every rule in the political playbook; is a walking civic faux pas;  has brought a new 24/7 reality show inside the beltway, and turned Washington into the “Greatest Show On Earth.”  The ratings are going through the roof!

We are not big fans of the president’s policies, or the person, but we have to admire the man as one of the world’s greatest trolls.  He can set his political opposition’s heads on fire at will, and you know he loves it.

As a very close friend, and a Trump supporter, told me on Sunday,  “he has set the world on fire!”  He doesn’t have children, by the way,  so he worries less than I do.

Trump Is Finished, Trump Is Finished.  No, He’s President

Countless times President Trump has committed the “unpardonable sin” that would end his candidacy, weaken or end his presidency, and send him to the political dustbin.   So they told us.

Yesterday in Helsinki feels different, however.

Standing with Vladimir Putin at his side, the president effectively sided with the old KGB spy.  Stating “the United States has been foolish,” the president questioned the veracity of his own administration and the conclusion of the U.S. intelligence community the Russian government hacked the 2016 presidential election to help Trump win.  Nothing new he hasn’t said before, but standing next to the Russian president?  Jaw-dropping.

The president is now on the defensive with his tweet this morning about how great his meeting with NATO  and “even better meeting” with Putin went, and is “sadly” not being reported – “the Fake News is going Crazy!”

Not so.  The criticism and condemnation of yesterday’s Helsinki presser is universal and widespread,

Even Abby Huntsman,  the Fox News Channel Anchor/Co-Host of Fox & Friends Weekend, and daughter of the president’s current ambassador to Russia, Jon Huntsman, tweeted yesterday,

By the way,  we supported Jon Huntsman when he ran for president in 2012, in  which his campaign got zeto traction.  He left office as the governor of Utah with an 80 percent approval rating, has a first-rate intellect and impeccable character, and positioned in the sweet spot of the political spectrum,  in our opinion.  Watch that guy.

Water Cooler Talk To Predict Elections

Finally, I am a big proponent  of political “water cooler talk,” such as political cartoons, satire,  jokes overheard on the train home, etc., to get a better feel for the political landscape and mood of the voters.  Even as artificial intelligence and big data become more ubiquitous, predicting the outcome of elections is becoming increasingly more difficult and more uncertain.  Those damn ‘bots and millennials with cell phones!

We suspect the Helsinki debacle may have been President Trump’s “Hanoi Jane’s (Fonda) Moment,” the abomination of desolation,   and is going to turn many, including the military, and  especially officers, against him.   Times may be a-changin’ for the president.  We have said it before and have been wrong.

Let me finish with a personal story from an earlier life and then I will post some of the latest political cartoons making the rounds.

By the way the ‘toons are observations, data points for us, and not endorsements.   They do reflect what we see as a changing mood,  They are now coming fast and furious.   We suspect there are several web scraping algos to measure the mood of the political cartoon world and make predictions.

Lech Wałęsa Goes Ice Fishing

Right after the Berlin Wall fell, the new Republic of Poland, headed by President Lech Wałęsa, hired me as an economic advisor to help the government restructure its external debt.  Recall, Wałęsa, a cult hero of Ronald Reagan and the American conservatives,  co-founded and headed Solidarity (Solidarność), the Soviet bloc’s first independent trade union.  He won the Nobel Peace Prize in 1983.

We loved wearing our Solidarność t-shirts in college.  It was code and a symbol for conservative students to recognize and were safe with each just as the fish symbol was for early Christians during their persecution during the 1st century Roman Empire.   Frickin’ tribalism is killing and ripping us apart but it was not as bad as it is today when I was in college.

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Many credit Solidarity, coupled with the election of a Polish pope in 1978, Karol Józef Wojtyła, who took the name John Paul II, as a significant catalyst in the fall of the Soviet Union.

Front Seat To History

I had a front seat to witness Poland’s conversion  from communism to democracy and a market economy, and had the honor to help contribute to the country’s transformation.  Poland is now an emerging market economic superstar.   It is sad to watch the country join, along with many others, the slow drift away from liberal democracy to authoritarianism.  The Poles are good people.

Nevertheless,  I worked for a relatively high-level, high profile public official, the U.S. equivalent to, say, the Deputy Secretary of Treasury and spent many hours in the Ministry of Finance.   Late in President Wałęsa’s term, I began to hear jokes about the president circulating among the bureaucrats throughout Ministry.

After hearing the following joke from a high ranking public official, I knew Wałęsa had lost the respect of the Polish people, and there was no way in hell he would be re-elected. My emerging market buddies thought I was crazy.

President Wałęsa lost the 1995 presidential election by 1 percent to former Communist Aleksander Kwasniewski.

The President Goes Ice Fishing

Lech Wałęsa decided to go ice fishing last Sunday afternoon.  He cut a hole in the ice and dropped his line.  After 10 minutes he had no bites.  The president hears a voice from above, “there is no fish here!”  He had a little too much vodka the night before and so, at first, he thinks he is just hearing voices. 

Lech pulls his line and moves 10 meters north, cuts another hole in the ice, and drops his line.   After 15 minutes,  no bites.  Another voice from heaven rings out, “I told you, there is no fish here!”.  

The frustrated president lashes out, “Who is that.  Is that you, God?”.  No answer.

Wałęsa decides to give it one more try. 

He moves another 10 meters, cuts a circle in the ice, and drops his line.  After 30 minutes, a thunderous voice from heaven shouts,  “Mr. President,  I told you there is no fish here!”.  

Now very frustrated as the fish aren’t biting and God isn’t answering, President Wałęsa shouts at the top of his lungs, “Who is that?  Is that you, God?  I am Lech Wałęsa, the president of the Republic of Poland, I demand to know who is speaking to me.  Damn it!”

After about a 30-second pause, the voice from heaven responds.

“I am the manager of this ice skating rink!”

So there you have it, folks, not a political statement just a data point, an observation, deduction, and prediction.   The political water talk, which led me to the conclude Wałęsa would not re-elected, could not have been part of an algorithm, AI, or machine learning program.

Algos don’t drink beer and vodka with Polish bureaucrats.  They do, however, spy on their Facebook pages.  How likely would it be a government official  make such a public joke about their boss on a Facebook page?  Not very.

Sometimes it really does pay to have boots on the ground.  There is still hope for us human analysts.

Massive Lavender Wave Coming In November

We believe there will be a massive “lavender wave,” in the November midterms.  Lavender is the color combination of pink and blue.

In a recent poll, the president’s approval rating among men is 54 percent positive and 45 percent negative. Among women, it’s 32 percent positive and 65 percent negative.   There are many more women registered voters than men.

In elections, women are also more likely to vote in higher numbers and have done so for decades.  Women have casted between four and seven million more votes than men in recent elections.

Moreover, the revulsion toward the president among women has not only made them more likely to vote but has turned them into activists.  Women are running for office this year in record numbers.

Recall it was the African-American women who put Doug Jones over the top in Alabama’s special U.S. Senate election against Roy Moore last year.  Exit polls showed that 98 percent of black women supported Jones.

Do the math, folks.  Listen to the water cooler talk, read the cartoons.   The Dems will control the House, and probably Senate come next January.   PredictIt gives the Dems a 68 percent probability of taking back the House but only a 30 percent chance taking the Senate.   We will take that bet, a 3,600 percent compounded annual return.

Here Comes The Walk Back 

President Trump is now out trying to clean up yesterday’s mess by parsing the language from the Putin presser,

“In a key sentence in my remarks I said the word ‘would’ instead of ‘wouldn’t,'” Trump said. He explained he reviewed a transcript and video of his remarks.

“The sentence should have been: ‘I don’t see any reason why it wouldn’t be Russia,'” he said. “Sort of a double negative.”

“I think that probably clarifies things pretty good on itself,” Trump said.  — CNN

Wow!   Very Clintonesque.

“It depends on what the meaning of the word ‘is’ is. If the–if he–if ‘is’ means is and never has been, that is not–that is one thing. If it means there is none, that was a completely true statement – President Clinton, August 1998

Too late.  President Trump’s  “Hanoi Jane” moment is, and has been, in the books for some time.

As Ron Insana tweeted yesterday,  markets are incapable of incrementally pricing big tectonic shifts.   That is why they crash when the shit begins to hit the fan.

 

Trump and Putin’s Helsinki summit relationship, as skewered by cartoons

Please view the cartoons and tweets not as a partisan but as a sociologist or social psychologist, trying to better gauge the political climate in the United States.

We look forward to the hate mail and threats.

 

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Why Markets Believe Fat Tails Are Fairy Tales

Insana nails it.

It is also called denial or the inability to distinguish between cyclical issues versus structural shifts, for example.   Such as using monetary policy to deal with demographic issues.   Stabilization policies or structural reform?   Call in the IMF or World Bank?  Or the Pope?

Markets In The Land Of Pharaoh

It does feel the markets are in Egypt, however.  The land of de Nile.

The post-war international order is more at risk of unraveling – and we are not saying its demise is imminent – than is currently priced.
Global Macro Monitor, July 11, 2018

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Netflix Swan Dives After 1 Million Membership Miss

July 16, 2018
Fellow shareholders,

We had a strong but not stellar Q2, ending with 130 million memberships. Membership growth was 5.2m, the same as Q2 last year, but lower than our 6.2m forecast.   –  Netflix Investor Relations

Down 14 percent in A.H.

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12 Ways To Make You Smarter

 

 

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Source:  WEF

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QOTD: The Good Ol’ Daze

Whether the problem is rising inequalityeconomic stagnation, or technological disruption, nostalgia offers relief from socioeconomic angst. But far from being innocuous, infatuation with a mythicized past is shaping our politics in dangerous ways, not least by creating fertile ground for jingoistic leaders who are happy to exploit nostalgia for their own ends. – EDOARDO CAMPANELLA

(QOTD = Quote of the Day)

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Week In Review – July 13

Summary

  • Italy and euro periphery continue to stabilize
  • Turkey 10-year rates still blowing out, up almost 600 bps YTD
  • U.S. corporate credit spreads tighter on the week
  • Argentina IMF program starting to take hold as currency 6 percent stronger in July
  • Most global stock indices having a decent month
  • VIX back down to a 12 handle
  • Commodities weak.  Keep copper on the radar

Commentary:  The S&P closed the week at its highest level since January correction. There have not been three consecutive green weekly candlesticks since January highs, however.   It feels the S&P is ready to break above the critical 2802 level as earnings season kicks into high gear.  Already up over 3 percent in July, so history suggests not much juice left in the battery.

Inflation probably running hotter than expected.  Watch to see if Chairman Powell throws some shade on the market.

The market also thinks the “trade war” is nothing more than virtual reality.   Tell that to the farmers.

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Vive la France!

 


Wow!

Everybody got it wrong from the machines to the bookies.   There is hope for us mere humans.

The ex-ante MIT Algo had France losing to Brazil in semi-finals.   The humans (bookies) had Brazil taking home the World Cup.

 

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Today’s victory erases the bad memory of the Zinedine Zidane’s infamous headbutt – coup de boule –  and red card which cost France the 2006 World Cup to Italy.


Hats Off To Croatia

The algos didn’t give them a chance.

Croatia’s GDP is about the same size as the economy of Tulsa, Oklahoma and has a population the size of the Bay Area in Northern California.

An amazing feat to make the finals.

Hope the French victory gives eMac a nice “kick” in the polls.

 

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Sector ETF Performance – July 13

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Global Risk Monitor – July 13

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Nonlinear Thinking 10 Future Technology Predictions

A bit dated but better late than never.

These technologies all have staying power. They will affect the economy and our politics, improve medicine, or influence our culture. Some are unfolding now; others will take a decade or more to develop. But you should know about all of them right now.

Subscribe: https://goo.gl/Zotl2Z

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