Thursday , November 21 2019
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Gregor Samsa

Gregor Samsa

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Articles by Gregor Samsa

World Growth Projections – IMF

1 day ago

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

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Welcome To The Forever Trade War

2 days ago

Are you surprised?  We’re not (see our repost below).

Mood in Beijing about #trade deal is pessimistic, government source tells me. #China troubled after Trump said no tariff rollback. (China thought both had agreed in principle.) Strategy now to talk but wait due to impeachment, US election. Also prioritize China economic support.
— Eunice Yoon (@onlyyoontv) November 18, 2019

Now markets will have to grapple with does Trump carry through with the December tariffs? If not, he looks weak, weak, weak. If so, the stock market is going to get weak, weak, weak.
Thus, President Trump is faced with the choice of protecting the elite 10%, who own 80 plus percent of all stocks or playing Mr. Tough Guy on China to placate his base.
As the Phase One of his physical examination was completed

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Whatever Happened To “Buy Low, Sell High?”

3 days ago

Stock prices are very high and, clearly, Warren Buffett is not a practitioner of the “greater fool theory,” which have made many a trader short-term rich and long-term poor.  Our long-term money and view (until the market breaks) is with Warren, the 4th richest person in the world with estimated wealth of $85 billion.
Yet, the idjits have the gall to mock this man for holding so much cash.  Nothing new, we have seen this picture before in the bubbles of Christmas past.
Investor Warren Buffett took a pasting for ignoring the 1999 surge in dot.com stocks. Now he is enjoying the last laugh, as BBC News Online North America business reporter David Schepp explains.  – BBC, March 2001
Have they not heard or understand his simple investment philosophy that has made him billions?
When

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GDP Now Takes Q4 Forecast Down To 0.3 Percent From 1.0 Percent

5 days ago

The Atlanta Fed’s GDPNow dropped its forecast of Q4 growth to just 0.3% from 1.0 percent. The New York Fed’s GDP Nowcast is showing a gain of 0.4%.
Today’s two economic releases indicating lackluster retail sales, consumers purchases of big-ticket items disappointed, and a dismal -0.8 percent industrial production print for October were largely responsible for GDP forecast revisions.

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The Night the Red Light Went Out in Georgia?

6 days ago

Is Roxane about to put off the Republican red light in Georgia?
Stunning New Poll In Georgia
It ain’t over ‘til it’s over but the latest polling data from the Atlanta Journal-Constitution is nothing less than stunning.   A Republican presidential candidate has only lost twice in the past 40 years:  to Bill Clinton by less than one percent as Ross Perot took 13 percent of the vote in 1992, and to the hometown boy, Jimmy Carter in 1980.    Hard to believe but even Georgia is now in play.
Pelosi Net Favorability Higher Than Trump And McConnell
What really caught our attention in the poll is that, though the data illustrate national politicians are still unpopular in Georgia, the San Francisco liberal, Nancy Pelosi’s net favorability numbers are higher than both Trump and Mitch

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How Central Banks Steal From Savers

6 days ago

This chart is an incredible disgrace and illustrates how conservative savers, especially seniors, have been robbed by the central bankers.  Christine Lagarde’s recent comment fueled our ire,
We should be happier to have a job than to have our savings protected – ZH
And she was talking about nominal rates!  If the central bankers continue to destroy savings, nobody is going to have a job.
Real CD Yields
The chart below hardly reflects the “greatest economy ever.”  It illustrates and asset-driven economy addicted to negative real interest rates and easy money.
The Fed, bowing to political pressure, pushes short-term rates lower hoping to turn that 70-year old pensioner relying on her marginal interest income to pay for 18-holes at the local muni, into a stock jockey to keep the S&P

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Trade Wars And Boeing’s Supply Chain

7 days ago

Boeing’s supply chain is just one example of how global trade friction can affect the company’s plane production.  Boeing recently announced that it will reverse the expected boost in monthly output of the 787 Dreamliner from 14 back t 12 due to the trade war, which among other things, is slowing demand in China.

Boeing’s enormous global supply chain delivers more than a billion parts to its assembly plants every year, everything from buckets full of fasteners to entire wings for its 787 Dreamliner.   Trade uncertainty wreaks havoc on planning and reduces capital spending.

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World’s Fastest-Growing Economies – October 2019

9 days ago

We have updated the GDP growth rates for the 2019 and the 2020 forecasts and ranked the world’s fastest-growing economies in the ginormous table below.  The data are from the October 2019 IMF’s World Economic Outlook.
Note, even though India tops G20 growth in 2019 the economy is expected to accelerate in 2020.  India has been and will remain our favorite emerging market
Africa dominates with the most rapidly growing economies in the world tables.

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Priorities, Priorities, Priorities

9 days ago

Thank goodness POTUS gets it.  The Republic depends on it. Are we embarrassed yet?

Vote for Sean Spicer on Dancing with the Stars. He is a great and very loyal guy who is working very hard. He is in the quarterfinals – all the way with Sean! #MAGA #KAG https://t.co/uX86dES4C5
— Donald J. Trump (@realDonaldTrump) November 12, 2019

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Jamie Dimon On 60 Minutes

9 days ago

Great 60 Minutes interview with JP Morgan CEO, Jamie Dimon, last night.
This is a must view, folks.  Take 15 minutes to watch as it will be a very high return on your time investment.
Jamie is very impressive and his leadership skills shine in the short talk with Leslie Stahl. JP Mo’s private-public partnership in helping to rebuild Detroit is a blueprint for rebuilding the rustbelt, in our opinion.
Here is Dimon on JP Mo’s 2008 government-subsidized bailout/purchase of Bear Sterns.
Jamie Dimon: The CEO of Bear Stearns called me up and said, “Can you lend me $29 billion before the night’s out? Because if I don’t get it, I’m gonna go bankrupt?” And I said– I said, “Even– even I can’t get (LAUGH) $29 billion.”
But then the treasury secretary, Hank Paulson leaned on him to buy Bear

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Beam me up, Scotty, it’s getting too real!

10 days ago

This is stunning.
I never was even close to a Treky but now starting to rethink.  The Starship Enterprise is getting too real.
Jeff Bezos certainly is and betcha was thinking of the mother ship in designing his new delivery system.
The “Star Trek” cameo was Bezos’ idea, all the way. He’s been a fan since childhood, and has told interviewers that Amazon’s Alexa AI assistant was inspired by the patient, know-it-all computer on the Starship Enterprise. A movie-prop Enterprise holds a prominent place at the Kent headquarters for Bezos’ Blue Origin space venture.  – GeekWire
Amazon is building another Disruption city.
Trucking jobs are the most common jobs in 29 out of 50 states in the U.S., and there are millions of people working for the trucking industry in non-driving positions.  –

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China Still Looking For A Rollback

11 days ago

We posted our,  Roll back: The Verb China Is Looking For,  two months ago and China is still looking for a rollback on some of the tariffs that have already been implemented.

What President Trump said is not what the markets expect. But he said "the US hasn’t agreed to a rollback of tariffs". It’s not a flat denial. What’s certain is that if there’s no rollback of tariffs, there will be no phase 1deal. https://t.co/fJEKz9hEFi
— Hu Xijin 胡锡进 (@HuXijin_GT) November 8, 2019

We wondered out loud if President Trump is about to cave and cut another meaningless trade deal — Phase 1, Phase 2, Phase 7, whatever  — which has already caused enormous pain with almost no gain,
So, after all the American economic carnage caused by Trump’s trade war, is the administration about to, or willing

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Highest Paid Public-Sector Employee In Each State

12 days ago

Though the following map doesn’t surprise us, it is a bit disheartening to see where our priorities lie.  Panem et circenses (bread and circuses), baby, even at the public Academy!
If the data are true, there are only nine states in the nation where the highest-paid public-sector employee is not a coach.  No doubt, however, a highly paid coach at a public university operates under different incentives than, say, a third-grade school teacher, where universities are constantly reassessing their return on investment in the football coach.
Does Nevada surprise you?  The new Silicon Valley?
Is your highest-paid state employee the teacher who spends every day of the school year with your children? Nah. It’s most often the football coach.
Football coaches at public universities make, on

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In The Age Of AI – Frontline

13 days ago

This is an absolute must view, folks.
If you want to understand what’s coming and the secular trends over the next fifty years, take two hours and watch Frontline’s, In The Age Of AI.   Huge return on your time.  It originally aired on November 5th.
FRONTLINE investigates the promise and perils of artificial intelligence, from fears about work and privacy to rivalry between the U.S. and China. The documentary traces a new industrial revolution that will reshape and disrupt our lives, our jobs and our world, and allow the emergence of the surveillance society.  – Frontline

Click here to view In the Age Of AI. 
Here is the 30-second promo to spark your interest.
[embedded content]
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Unit Labor Costs Hit 5-year High

14 days ago

Back in the day, before the Great Flood [of Liquidity] and the “world went mad,” the productivity and unit labor cost release could really move the stock market.  I mean, really move the market.  The connection is through expected margins and profits.
Nothing seems to matter anymore, x/ the Fed, at least for now.   The increase in unit labor costs puts further pressure on profits and probably makes Jay Powell squirm a little bit more as it looks like the move is a trend higher.
The monthly annualized unit labor cost came in way above the 2.2 percent expectation,  which included a decline in productivity.  Note, the FRED chart below is the monthly year-on-year change.
Mr. Market
Yes, ma’am, the market can climb higher on silly Tweets but not based on valuations or the fundamentals

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Bid Adieu To The Ownership Economy – Auto Subscriptions?

19 days ago

Wow, now this!   Car subscriptions?  The end of auto dealerships?
Recurring revenue is the new gold.   Microsoft was a wet dawg for years until it moved Windows Office to a monthly subscription basis, which locks in users to a monthly nut rather relying on a sale and upgrade of the software to, say, once every five years.   The development of the cloud also helped.

The market also tends to value the predictability of recurring revenue with a heftier multiple rather than companies with revenue dependent on transactional sales.
Not surprised then to read that even Tim Cook is not ruling out moving Apple’s iPhone to a subscription basis, probably driven out by the reality consumers just are not upgrading and buying the iPhone as they once did.
Under the argument for an iPhone

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Back Home And Powered Up

20 days ago

I Nice to be back home with the power on.  We were under mandatory evacuation since early Sunday morning and have been without power for almost a week.
Thanks to our readers for all the support.
We sense a real outrage and a huge and growing backlash toward the “returning value to shareholders” meme, mainly buybacks, rather than spending on CapX.
Lots of forces converging here, to confirm our hard left turn theme, including the failure of the corporate tax cuts to spark nonresidential capital spending and, closer to home, the lack of CapX by the electric utilities to invest more in maintenance to help prevent the California fires,
Five of the 10 most destructive fires in California since 2015 have been linked to PG&E’s electrical network. Regulators have found that in many fires,

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California Burnin’, Again

25 days ago

Here we go again.  This is getting old, folks.
It’s all the fault of Hillary’s emails.  The Feds just aren’t committing enough resources to find them and “the server”  and the little energy and assets spent to keep California from burning, the poles from melting,  and the seas from rising are just too much, no?    Gotta keep those fracking priorities straight!

SONOMA CO SHERIFF Alert: Civil Emergency Message until 03:45PM nixle.us/BDSLY Reply with a friend’s # to forward

Starting to see a bit of panic and hearing lots of angry talk in the long lines at the gas stations and stores about the anti-science crowd.   If you’re a climate-denying “don’t come around no more.”
The chickens seem to be finally coming home to roost with the climate, the economy (though most are ostriches),

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Enter The Selling Zone 2.0

26 days ago

It’s that time again.
No, not the now annual October fires in California (helluva a Chinese hoax, btw) we’re running from but the S&P moving into the selling zone.
We are reposting a piece we published on the very day the market peaked in July right around here.   The S&P came close to making a new high today, within 1/2 point and couldn’t end the at its closing high of 3025.86.   Close, but no cigar and sometimes a cigar is not just a cigar.
We maintain this is good place to sell and set up shorts again.  We will sell all day up until 3125, at which point, we will cut and capitulate that “this time may be different.”  Arghh.
Stock valuations are at record highs and the markets are so, so gummed up and distorted by government intervention, mainly from the Fed — the ultimate

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San Francisco Is The Tale Of Two Cities

28 days ago

Q:  Why does San Francisco have so many homeless?A:   Because the City has so many billionaires. 

I once had a Twitter war with a Canadian, who was spewing some nonsense from a wing-nut article that San Francisco was a third-world city.   Using the Socratic method in our debate, the first question I asked was if he had ever been to San Francisco?   “Nope.”
Next question:   Do you have a homeless population in your city?   “Yep.”
I then tried to explain the reason why San Francisco has such a high homeless density was because the city is so wealthy, which drives up rents and home prices.  How could SF be a third-world city if it was so wealthy?  It didn’t even register with the peckerhead.
Now we have the data.
Full Disclosure  
I lived in San Francisco for several years.  It’s by

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China Is Now The World’s Largest Official Creditor

29 days ago

Hard to believe the transformation of China over the past forty years.
Just before Deng Xiaoping led a large Chinese delegation in 1974 to a special session of the United Nations,  the story goes, the government made a frantic search through all the banks in Beijing to find the money (hard currency) to pay for the trip.  They could scrape together only US$38,000.   This was the first time the leader of the People’s Republic of China would visit America and he couldn’t even afford to travel in first-class.
In 1981, 90 percent of the Chinese people lived in extreme poverty as defined by the World Bank. By 2013, that number had dropped to less than 2%.
China is now the world’s largest official creditor and home of 285 billionaires, second only to the 705 ultra-wealthy living in the

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The Fall Classic Cometh – Go Nats!

29 days ago

Wow!  I can’t believe it’s been a year since we posted the following piece on the World Series, which begins tonight.  The Houston Astros take on the NL champs, the Washington Nationals in the best of seven games.   Washington, D.C. hasn’t hosted a World Series since 1933 when the then Senators lost to the New York Giants.
The Stock Market and Washington World Series
For the superstitious and those into spurious correlation,  1933 was Dow Jones Industrials Index best year ever, increasing 63.7 percent after the FDR government came to power.  Much of the price action was a big bounce and snapback after the big losses in the prior four years.

Taking the Nationals Senators   
Since attending graduate school and starting my career in the nation’s Capitol,  I have always had an

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Time To Start Discounting A Hard Left Turn

October 22, 2019

“I don’t like the Democrats, but Trump is destroying the Republic!  – Retired Four-Star General (See Admiral McRaven’s editoral below) 
Last week was a very bad week for President Trump and may, in hindsight, be the tipping point of his presidency and the Republican Party.   We list and explain the four political bombshells that exploded, which we believe will work its way through the American political system and eventually adversely impact the risk markets.
Senate Republicans will soon have to choose between Mr. Trump or the rule of law and the Constitution.  Public opinion is quickly moving toward the later, where a majority of the country now supports the impeachment and removal of President Trump.

We suspect public opinion for impeachment and removal will continue to move

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Salute, Mad Dog!

October 18, 2019

Retired four-star Admiral William McRaven: "Our Republic is under attack from the President."
Meanwhile, Mattis is cracking jokes. https://t.co/QbLNV5Xg5p
— Polly Sigh (@dcpoll) October 18, 2019

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S&P500 Traces Out A Spinning Top Daily Candlestick

October 17, 2019

The Difference Between a Spinning Top and a Doji
Spinning tops and dojis both represent indecision. Dojis are smaller, with small real bodies and small upper and lower shadows. The Spinning top has long upper and lower shadows. Both patterns occur frequently and are sometimes used to warn of a reversal after a strong price move. Both types of candlesticks rely heavily on confirmation. A strong move after the spinning top or doji tells more about the new potential price direction than the spinning top or doji itself.  – Investopedia

Can’t believe we’ve been sucked into the daily market noise but the recent price action seems kind of important as to whether stocks either break or breakout here.   See our last two posts here and here.
We are far from the old Japanese rice traders

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Beware Of The S&P’s Doji City

October 17, 2019

In our Saturday post,  Heads Up! Friday’s Rare S&P Shooting Star Candlestick,  we pointed out the S&P500 had formed a rate shooting star Doji candlestick on Friday with price action that had been observed only once since 2010, last Halloween day.
Run don’t walk to view the post, here.
Halloween 2018
Take a look at last Halloween’s S&P shooting star.  The index consolidated the next few days then gapped up with a nice long green candle, which probably sucked in many traders into long positions.  The next day the S&P formed a long-legged Doji before rolling over to eventually crash to the December 2018 low,  forcing the market socialists to call, no scream for a Fed rescue.
Upshot
The key now is to watch the price action next week.
A break on Monday of 2960 (see below for key support

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Most Overvalued Equity Markets – IMF

October 16, 2019

October Datafest
October is always a month of feasting for us macro data junkies as the IMF releases several of their annual reports and databases, such as the World Economic Outlook (WEO) and the Global Financial Stability Report (GFSR).   We have a preference for the IMF economists as they don’t have a pom-pom/cheerleading bias in their analysis with a BTFD or “the market is cheap” tint to their narratives as do many sell-side and buy-side analysts, who almost always seem to be talking their books.   Not all, but several.
“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” — ― Upton Sinclair, I, Candidate for Governor: And How I Got Licked
We know first hand as we’ve worked on all sides.  At several Wall Street investment

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