“We Are Not Mid-Cycle, Or Even Late Cycle, But Rather End Of Cycle”
by Zero Hedge - August 25th, 2019 8:01 pm
Courtesy of ZeroHedge View original post here.
As Morgan Stanley's bearish US equity strategist, Michael Wilson writes, at this point, the argument between bulls and bears really comes down to one question--are we mid cycle or not, a question which Jerome Powell answered three weeks ago in a way that was not satisfactory to the market?
As Wilson notes, 4 months ago, the bulls were arguing that the Fed's dovish pivot was all we needed because the underlying US economy was in very good shape, with some still suggesting the Fed could raise rates again later this year. When the global economy showed signs of weakness in April and May, the bullish narrative changed to Fed cuts offsetting concerns about trade tensions and spillover to the US economy and markets. There was little mention of any endogenous risk to the US economy at the time and so it was couched as an "insurance cut." This led many to call for a meltup, and for a few weeks that call seemed correct, however that's when the trade war with China escalated sharply, just as many had expected would happen.
Which brings us to today: with the Fed having cut 25bps last month and ending QT 2 months earlier than planned, the bulls are saying the Fed did not do enough and they are now behind the curve. They suggest that the Fed will quickly catch up and economy will be fine because we are still mid cycle and the consumer remains so strong. This, as Wilson sarcastically notes, "is what we call thesis creep in the investment world."
Unlike such "thesis creepers", Morgan Stanley's view on the fundamental picture has been consistent all year. Consistently bearish that is. Here is Wilson again:
We've argued all along that the economy would continue to slow and that the second half recovery most were expecting would fail to materialize for a multitude of reasons. The most differentiated part of our view has centered around the US corporate profits recession that is now happening. If we are going to slip into an economic recession we believe it will be because this profits recession worsens to the point where companies will decide it is time to reduce head count. Part of our call this year was that companies would
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Chaos Continues: Gold Spikes, Yuan Crashes, Stocks Plunge As Asia Opens
by Zero Hedge - August 25th, 2019 7:58 pm
Courtesy of ZeroHedge View original post here.
In early Asia trading, offshore yuan has extended Friday’s collapse, testing the lower edge of the PBOC’s Yuan trading band once again.
Yuan traded as weak as 7.1925 against the USDollar…
Source: Bloomberg
Pressuring the weaker end of the Yuan peg band…
Source: Bloomberg
At the same time, USDJPY is tumbling (Yen strength), testing the lows of the flash-crash from early January…
Source: Bloomberg
Spot Gold has exploded higher, testing $1550…
Source: Bloomberg
With gold rising and yuan plunging, the Chinese currency is at its weakest against the precious metal since 2012…
Source: Bloomberg
US Equity futures are reeling with Dow Futures down over 400 more points…
Treasury futures opened up dramatically, implying a 10Y yield of around 1.36% (around 8bps lower in yield).
Source: Bloomberg
And oil prices are plunging…
Turmoil is coming.
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Appeals Judge Found Shot Dead In Wooded Area Behind Home
by Zero Hedge - August 25th, 2019 7:58 pm
Courtesy of ZeroHedge View original post here.
A Georgia appeals judge was found shot dead on Saturday in a wooded area behind his Albany home, however officials do not believe it was a homicide, according to the Associated Press (via the Washington Times).
60-year-old Judge Stephen Goss served as a Superior Court judge in Albany for approximately 20 years, after which then-Gov. Nathan Deal appointed him to serve as a judge on the Georgia Court of Appeals in August 2018.
Goss brought "dignity and compassion to the delivery of justice all across this great state," said Chief Justice Harold D. Melton, who noted that he was known nationally for his work on substance abuse and mental health treatment programs.
"His legacy is as great as our sense of loss," added Melton. "Our court and this state’s judiciary express our profound condolences to the Goss family."
Gov. Brian Kemp offered his support to the Goss family.
“A native Georgian, trusted counsel, and man of integrity, Court of Appeals Judge Stephen Goss will be sorely missed by countless people across our state and nation,” Kemp said in a tweet. “The Kemp family asks God to give comfort to his loved ones, friends, and colleagues in this difficult time.”
In 2002, Goss founded Georgia’s first felony mental health court and substance abuse treatment program in Dougherty County. It was one of the early programs of its kind in the country, according to his online bio. The program assists those with felony probation or pending felony charges, many of whom have a long history with substance abuse or diagnosed mental illness. For the past decade, the Dougherty County program has been a designated learning site for mental health courts, one of only four in the nation. -Washington Times
Goss was previously chairman of the Council of Accountability Court Judges of Georgia, serving on multiple state and national committees focusing on criminal justice. He is survived by his wife Dee – a middle school humanities teacher, and their three children.
At this time no foul play is suspected.
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Market In Turmoil: Gold Spikes, Yuan Crashes, Stocks Plunge As Asia Opens
by Zero Hedge - August 25th, 2019 7:55 pm
Courtesy of ZeroHedge View original post here.
In early Asia trading, offshore yuan has extended Friday’s collapse, testing the lower edge of the PBOC’s Yuan trading band once again.
Yuan traded as weak as 7.1925 against the USDollar…
Source: Bloomberg
Pressuring the weaker end of the Yuan peg band…
Source: Bloomberg
At the same time, USDJPY is tumbling (Yen strength), testing the lows of the flash-crash from early January…
Source: Bloomberg
Spot Gold has exploded higher, testing $1550…
Source: Bloomberg
With gold rising and yuan plunging, the Chinese currency is at its weakest against the precious metal since 2012…
Source: Bloomberg
US Equity futures are reeling with Dow Futures down over 400 more points…
Treasury futures opened up dramatically, implying a 10Y yield of around 1.36% (around 8bps lower in yield).
Source: Bloomberg
And oil prices are plunging…
Turmoil is coming.
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China’s Patience Runs Out As Beijing Signals It Has “Responsibility To Intervene” In Hong Kong
by Zero Hedge - August 25th, 2019 7:53 pm
Courtesy of ZeroHedge View original post here.
There was a distinct sense of foreboding that the Hong Kong situation is about to take a far worse turn for the worse during this weekend protest, the 12th in a row, which saw the HK police deploy water cannon on protesters, while three police officers who were allegedly chased and beaten by a mob of club-wielding protesters, pulled their revolvers, with one firing at least one warning shot toward the sky.
It was the first time a gun had been discharged since the protests triggered by the now-shelved extradition bill began almost three months ago. However, it won't be the last, and to make sure it is positioned properly when the real shooting begins, China sent the strongest warning yet of using troops on Hong Kong’s streets where Beijing says protests have turned into a “Color Revolution,” a clear indication that China's patience with Hong Kong's insurrection has just about ran out.
"It’s not only China central government’s authority but also its responsibility to intervene when riots take place in Hong Kong," the state-run Xinhua News Agency said Sunday in a commentary which was meant to prepare the local population for the inevitable intervention as it recalled comments by former top leader Deng Xiaoping saying Beijing has to act under such circumstances.
In Sunday’s commentary, Xinhua said Hong Kong’s protests have turned into a Color Revolution aimed at overturning the Special Administrative Region’s constitutional institutions, a signal it was ready to take further action. Previously, Chinese officials had described the protests as having some characteristics of a “color revolution.”
To confirm that it had dotted all of its legal i's, Xinhua also said that Hong Kong’s Basic Law and Garrison Law have relative clauses on possible China intervention.
Echoing the Xinhua commentary was a tweet from the Global Times' Editor in Chief, Hu Xijin, who took a break from commenting on the trade war between the US and China, to prepare the public for what was coming, saying "mobs…
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Morgan Stanley: Don’t Hold Your Breath For Fiscal Stimulus
by Zero Hedge - August 25th, 2019 7:50 pm
Courtesy of ZeroHedge View original post here.
Authored by Chetan Ahya, chief economist and global head of economics
This past week, media reports have indicated that China, Germany and the US could be considering new fiscal stimulus measures. China may raise local government bond issuance to accelerate infrastructure spending, Germany is possibly considering steps to potentially run a budget deficit for the first time in years, and the US may be weighing up a payroll tax cut.
Structural and cyclical challenges argue for fiscal policy action
It’s clear that monetary easing won’t be enough to reverse the deteriorating outlook for global growth. Structurally, weaker demographics, elevated debt and disinflationary pressures (our '3D challenge') are exerting a drag. Declining natural interest rates have meant that monetary policy by itself will not be enough to stimulate aggregate demand and lift inflation expectations. Over the last ten years, the GDP deflator in developed economies has averaged just 1.2%, well below the central banks’ 2% goal.
Cyclical developments have made matters worse. Trade policy uncertainty is pushing global growth to a post-crisis low. Slower growth has sharpened the focus on liquidity trap challenges – long-standing in Europe and Japan – and is raising questions about the effectiveness of monetary easing. Case in point: the G4 policy rate is 0.9%, and the corresponding 10-year government bond yield is 0.5%. We’ve been arguing that monetary policy support can’t drive a recovery as long as trade policy uncertainty stifles private sector confidence and demand.
Decisive moves or disappointment?
We expect the latter. The current cyclical downturn is driven by an exogenous shock (trade uncertainty), and monetary and fiscal policy has largely been reactive. Furthermore, political and legal constraints leave little room for aggressive fiscal action in the near term. While some fiscal stimulus is under way this year, we expect limited further expansion next year (the cyclically adjusted G4 fiscal deficit will rise to 1.5% of GDP in 2019 on our forecasts, from 1.2% in 2018, and will rise marginally to 1.6% in 2020).
In Germany, we think policy-makers will announce additional stimulus mostly in response to recessionary conditions. As our chief euro area economist Daniele Antonucci highlights, Germany’s constitution requires a nearly balanced structural…
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Offshore Yuan Crashes To New Record Low, Tests PBOC ‘Peg’ Band
by Zero Hedge - August 25th, 2019 7:47 pm
Courtesy of ZeroHedge View original post here.
In early Asia trading, offshore yuan has extended Friday's collapse, testing the lower edge of the PBOC's Yuan trading band once again.
Yuan traded as weak as 7.1925 against the USDollar…
Source: Bloomberg
Pressuring the weaker end of the Yuan peg band…
Source: Bloomberg
At the same time, USDJPY is tumbling (Yen strength), testing the lows of the flash-crash from early January…
Source: Bloomberg
Turmoil is coming.
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Tesla On Autopilot “Suddenly Accelerates”, Smashes Into Power Pole, Sparks A Fire, & Causes Thousands To Lose Power
by Zero Hedge - August 25th, 2019 7:44 pm
Courtesy of ZeroHedge View original post here.
With every passing Tesla Autopilot accident that we hear about, more and more people are narrowly dodging death.
This seems to be the case yet again after an NBC Bay Area report revealed that a Tesla on Autopilot had "suddenly accelerated", according to a witness, and smashed into a power pole, sparking a fire and causing thousands to lose power.
A witness who has behind the driver, Mike Evon, said the car "suddenly started to accelerate and then lost control".
"She went on top of the curb, hit some trees, there were pieces of the car flying. And she basically kept accelerating until she hit the final pole that stopped her," he said.
He said the driver told him she was on "automatic pilot" when it happened.
As a precautionary measure, PG&E had to then shut off power for thousands of people in the area.
But the thousands without power would have been just a small inconvenience had the driver and her "toddler passenger" not escaped the crash, or the subsequent fire, safely.
You can watch a brief 45 second video explaining the crash here.
With more and more Teslas on the road being "driven" by more and more people that falsely believe that their vehicles (and Elon Musk) have superpowers, the number of lives being put at risk continues to grow. That’s why we think it is no surprise that the number of accidents involving Teslas – several of which we have reported on this year (here, here, here, and here) – also continue to grow.
And so, we’ve asked before and will ask it again: when is the NHTSA going to do step in and stop this insanity?
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Powell Fails, Trump Rails, & The Failure Of Negative Rates
by Zero Hedge - August 25th, 2019 7:40 pm
Courtesy of ZeroHedge View original post here.
Authored by Lance Roberts via RealInvestmentAdvice.com,
Trump & Powell Square Off
Let’s start with a simple chart:
This has been an impossible market to effectively trade as rhetoric between the White House, the Fed, and China, has reached a fevered pitch.
On Friday, several things happened which have at least temporarily significantly heightened market risk.
Jerome Powell disappointed the markets, and the White House, by sticking with their previous guidance concerning monetary policy actions. To wit:
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We Will Act As Appropriate To Sustain The Expansion (Will cut rates if needed)
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Says Events Since The July Fomc Have Been `Eventful’ (Trade War/Tariffs)
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Carefully Watching Development For Impact On U.S. (China/US Trade)
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Monetary Policy Has No Rulebook For International Trade
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We’ve Seen Further Evidence Of A Global Slowdown (Germany in recession)
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Fitting Trade Policy Into Risk-Management Framework Is a New Challenge
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Fed Faces Heightened Risk of Difficult-to-Escape Periods of Near-Zero Rates (Neg. rates)
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U.S. Economy Has Continued to Perform Well Overall (No rush to cut rates)
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Sees Financial Stability Risks as Moderate, but Will Remain Vigilant
However, this commentary was not a surprise to us. We have suggested for several months the Fed should be slow to use what little ammo they currently have.
“With the markets pushing record highs, recent employment and regional manufacturing surveys showing improvement, and retail sales rebounding, it certainly suggests the Fed should remain patient on cutting rates for now at least until more data becomes available. Patience would also seem logical given the limited room to lower rates before returning to the ‘zero bound.’”
Not surprisingly, Chairman Powell’s comments did not sit well with President Trump who has frequently pressed the Fed to cut rates aggressively. Mr. Powell stopped short of promising any specific monetary-policy easing, saying instead the central bank would “act as appropriate.”
“After Powell’s closely watched speech in Jackson Hole, Trump tweeted,
…
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Precious Metals ADL Predictions Getting Ready For A Big Move
by ilene - August 25th, 2019 7:37 pm
Courtesy of Technical Traders
This weekend we thought we would share some really important data and charts with all of you precious metals bugs/traders (like us). You probably remember our October 5th, 2018 call in Gold that has set off an incredible series of events for all of us. We made a prediction that day that Gold would rotate higher from the $1200 level targeting the $1300 level, then stall and move lower to set up a “momentum base” near April 21~24 before accelerating much higher after June/July 2019. Our original research chart is shown below. But first, be sure to opt-in to our free market forecast newsletter
This incredible research targeted the $1600+ level by September/November 2019. We are only about $70 away from that level right now and we have new ADL research to share with all of our followers.
If you are a fan of our research or you can understand the value of the ADL predictive modeling system and what we have highlighted for our followers – you already know that any future ADL predictions for precious metals should be of particular interest to all of you. What are metals going to do over the next few months and how can you prepare for this move, let us help you try to prepare for this next move.
Check out these exciting charts full of opportunities that we will be sharing.
This Gold Monthly chat highlighting the ADL predictive modeling system results shows why gold traders need to be patient and wait for the next setup. That setup exists over the next 30 days as the ADL predictive modeling system is suggesting that Gold will attempt a downside price rotation to levels near $1490 before attempting another rally back above $1600. This is the next proper price rotation setup that traders need to look for. The second setup occurs in Jan/Feb 2020 where the price is expected to rotate from above $1600 to levels near $1540 before launching into another big rally to levels above $1870.
The Adaptive Dynamic Learning (ADL) predictive modeling system is one…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site