Friday , February 28 2020
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Gregor Samsa

Gregor Samsa

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Articles by Gregor Samsa

Triple Yikes!

11 hours ago

Especially 50 seconds in.

Guggenheim’s Scott Minerd says the coronavirus crisis is possibly the worst thing he’s ever seen in his career: "This has the potential to reel into something extremely serious" pic.twitter.com/xLhhNm3u7t
— Bloomberg TV (@BloombergTV) February 27, 2020

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S&P’s Beastly Streak: Five Consecutive Red Candlesticks

2 days ago

Extremely ugly price action today with the S&P reversing a 54.30 point gain to close down 11.82 points, carving out a 5th consecutive red daily candlestick.
Such an ungodly losing streak is relatively rare and has not happened since the 2018 nightmare before Christmas bear market — yes, don’t let the idjits mislead you, Q4 ’18 was a bear market from its September intraday high to the Boxing Day intraday low (-20.21 percent).
Red candlesticks are usually associated with bear market action.  The market closes lower than its opening trade.  The opposite price action is true in bull markets.
As we write, S&P futures are down 40 points, right at the key December low price of 3070.30, a must hold, by the way,
“If that December low is taken out to the downside in the first quarter of the

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The Supply Chain Gangbangers

2 days ago

I had a conversation last night with a friend who works in construction management. She said her side of the business is screeching to a halt as the company can’t get materials and furniture out of China.   True story.
WTF?   Construction is in the nontradeable sector and this is a relatively small local construction firm.  It exposes how interconnected the global economy is — one massive loop of billions upon billions of feedback loops.   Now you understand why it is so difficult to get economic forecasts correct?
I asked her if lower interest rates would help.  She laughed her FAO.
Blank Sailings From China
This is a must video, folks.  I learned a new term – “blank sailings”, which are up 67 percent at the Long Beach port.

             Click here to view the video
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The Stock Market’s Key GPS Coordinates

3 days ago

Ugly two daze of trading.   In fact, two of the four largest point drops in the history of the Dow Jones Industrial Index.   The S&P500 is now sitting right on a key Fib level at 3124.74.
Now What?
A  bounce is coming.  It’s the quality of that bounce that counts.
All the disciplined trend traders have been blown out and the market is still far from cheap.
The first stop to the upside is to recapture the 100-day at 3164.18.   Then the key fibs at 3183.61 and 3188.17.
To the downside,  the December low at 3077.33 is an absolute must hold with the reinforcement wall at 200-day at 3044.57.  That is less in percentage terms than today’s sell-off.
“That was conveyed to me by a guy named Lucien Hooper, who was a contributor to Forbes and worked for Thomson Mckinnon Securities, back in

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Curse Of The Magazine Cover Strikes Again!

4 days ago

Wow, the Economist had almost perfect timing.
After publishing the following cover on Thursday, the Nasdaq 100 is down 7 percent in two days.

Regression To The Mean
So, is there anything to the Magazine Cover Jinx?    We wrote and are reposting our thoughts from a few years ago.    It goes something like this:
The superstar or outperformance of the subject attracts attention and intense public focus and eventually a magazine cover
The outperformance does and can not last forever, often peaking as the magazine cover goes to press
The subject’s performance eventually regresses to its average performance
Ergo the conspiracy of the Magazine Cover Jinx
Simple.  QED
Originally Posted on September 8, 2017
Why do stocks and assets markets crash?
Why is there is a Sports Illustrated jinx

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Stonks Finally Mugged By A Dose Of Reality

4 days ago

After watching this incredible bubble go up every-freaking-day and the speculative fever feed on itself, the market finally got its reality check today.
Tied For Second Largest Point Drop (rounding up)
Today’s flop marks only the third time in history where the Dow closes down over 1,000 points and only missed second place for the biggest point drop by 1.66 points.  Not even in the zip code for the largest percentage drop, however.
Start Of The Big Bad Bear?
So is this the start of the big one?  Who the heck knows but stonks are still at extreme valuations (see chart below) and it is not exactly the greatest global economy ever.
Mo QE 
The drumbeats for interest rate cuts and more QE from the Market Socialists are about to begin soon.  What a farce.
Didn’t Moses once say,

“Let thy

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Why We’re Big Fans Of Johnny “Cash”

7 days ago

Of course, if Larry M.’s Lehman-like drawdown scenario is realized, haven flows and shorts will pile into long-notes and bonds as a proxy short but we have no interest in trading fixed-income securities with a 100 bps negative real yield.
Instead, we wait patiently on the beach counting cash and listening to Johnny.
It’s just one of those rare times in an investor’s life where,

But most won’t.   Greed is a powerful thrust.
Its February release suggests that 66 per cent of respondents expect equity prices to keep rising this year, well above the 56 per cent reading recorded in early 2019, or 51 per cent in early 2016, ahead of the last election. Indeed, the current level of bullishness tops even the optimism seen in early 2007.
This sounds like good news. But there is a catch: each

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COTD: Bank Lending Divergence

9 days ago

COTD = Chart of the Day
Big divergence in bank lending to consumers and businesses.  Consumer lending y/y growth fairly steady but hard to tell what is causing the steep fall-off in the growth of lending to the corporate sector.  C&I loans have traditionally financed inventory builds but how much inventory do Facebook, Mr. Softie, and Google hold?
This could go either way.  We shall soon find out, however.

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Coronavirus Pandemic: The Next Two Weeks Are Critical

10 days ago

Chris Martenson. Ph.D. from Duke in Toxicology is very good on this topic and one of the first out with a correct analysis of the coronavirus.  We posted his first video when there were only a few thousand cases reported.
Take the 25 minutes to get more informed.
“Japan is going to the place where it is going to blow up next.”
[embedded content]

Exponential Growth

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Now, Which POTUS Inherited A Mess?

11 days ago

Wow!
President Trump likes to repeat the fictitious notion he inherited an economic mess but his hair is on fire over Obama’s factually based tweet this morning.

Eleven years ago today, near the bottom of the worst recession in generations, I signed the Recovery Act, paving the way for more than a decade of economic growth and the longest streak of job creation in American history. pic.twitter.com/BmdXrxUAUf
— Barack Obama (@BarackObama) February 17, 2020

Did you hear the latest con job? President Obama is now trying to take credit for the Economic Boom taking place under the Trump Administration. He had the WEAKEST recovery since the Great Depression, despite Zero Fed Rate & MASSIVE quantitative easing. NOW, best jobs numbers….
— Donald J. Trump (@realDonaldTrump) February 17,

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Two Charts Keeping Us On The Beach

11 days ago

I’ve seen fire and I’ve seen rain.  I’ve seen manias the public thought would never end. Until they do.
This ain’t our first rodeo.  We have seen these types of asset bubbles many times during our career, especially when you include our emerging markets daze.  We have learned two certainties:
Valuations are the gravity that ultimately brings markets back to reality, i.e., asset prices regress to mean valuations
 Very few, and mostly liars top-tick and always get out at the top
The young Python Algo ‘bots driving stocks do not have this kind of context or history.
Supply Driven Bubbles
The current bubbles are slightly different in nature as we perceive them driven by the new supply-side economics, where both public and corporate policies have induced asset shortages of risk-free

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The Clash Of Generations

12 days ago

These selfish fucking boomers. They completely fuck the planet then be like “we’ll be dead before it matters so we’re goin to the beach ✌️”
God I fucking hate boomers. pic.twitter.com/40kErHhE0Y
— ฿ully (@BullyEsq) February 16, 2020

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COTD: Coronavirus Risk To Manufacturing

13 days ago

The holiday is over, but few people are back in offices and factories…the effects of covid-19 will be like those of SARS in 2003: a sharp shock to Chinese growth, followed by a strong rebound. But SARS may not be a reliable guide. China’s economy accounts for 16% of GDP today, up from just 4% then. It has become enmeshed in supply chains of mind-boggling complexity, and just-in-time production leaves little room for delays.  – Economist
That Was Then, This Is Now

Hat Tip:  Mike Bird  @Birdyword
Run to our post, The Global Supply & Demand Shock Of The Coronavirus, which we wrote waaaaaaaay before the MSM jumped on this story.
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Why The Millennials Feel The Bern

15 days ago

The Global Macro Monitor has been writing about the Clash of Generations for years, and way before the headlines and data that are now starting to show up in the MSM.   See here.
The fight taking place between the moderates and the progressives in the 2020 Democratic primary is just another manifestation.

The nation’s finances are almost as skewed toward the elderly as its politics are. Americans 55 and up account for less than one-third of the population, but they own two-thirds of the nation’s wealth, according to the Federal Reserve. That’s the highest level of elderly wealth concentration on record. The reason is simple: To an unprecedented degree, older Americans own the most valuable real estate and investment portfolios. They’ve captured more than 80 percent of stock-market

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Low-Cost Universal Health Care With A Record Budget Surplus?

17 days ago

How can it be?

     See the full DW article here
The following video on the German health care system is a must view, folks.
Take the 10 minutes and watch.
If not, study the charts.
The German system is completely private consisting of two plans: 1) SHI — Statutory Health Insurance — for those making under $60k per year, is made up of a highly regulated sector of competing not-for-profit private companies, and 2)  PHI – Private Health Insurance.
Upshot
Better healthcare at a lower cost.  Ich bin ein Berliner, baby!
You listening Amy, Mike, and Pete?
[embedded content]
Hat Tip:  Roro @rorotrader
Germans Much More Satisfied Than Americans 

Less Than U.S. Health Care

Two-Tier System – Public and Private Options

Less Wait Times

Much Lower Prohibitive Costs

Source:   All Charts Are

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Coronavirus: It’s The Second Derivative, Stupid!

24 days ago

Double yikes.   Arrest this beast!  Please!
On a business trip meeting with many firms with huge exposure to China.  Concern in their community definitely growing but still a bit clueless about the seriousness of the growing crisis.  I give them about two weeks before full blown panic sets in.

Today is day 20 (Feb 4) of REPORTED infections and mortality.
Ncov19 has already infected 300% more than the PEAK of SARS, and Swine flu took 47 days to rech the same point. Ncov19 is still growth exponentially.
NCv19 mortality has exceed the Swine Flu and day 47 of SARS. pic.twitter.com/hbslek0med
— Jim Bianco (@biancoresearch) February 5, 2020

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The Global Supply & Demand Shock Of The Coronavirus

28 days ago

Our analysis of the impact of the Coronavirus is a work in progress and nobody knows the endgame.  It is still the early days of the epidemic, and its dynamics will take time to understand. The scale of the impact will depend on how contagious and lethal it reveals itself.
There is a supply shock to global manufacturing as many factories in the world’s supply chain will be shuttered for longer, which shifts the global supply curve left, increasing-price and production pressures.  Ergo component shortages, higher prices, and lower production.
The 2 percent decline in the U.S. stock market and collapse in bond yields are signaling a potential global aggregate demand shock that offsets the supply shock.

As of Friday, 10,000 cases have been confirmed by China, surpassing the total from

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Our Kafkaesque World Encapsulated In One Tweet/Video

28 days ago

See here for a good primer on the term Kafkaesque.

“So disorienting and illogical”

Screening for guns but no screen if you’re packing at the state Capitol.   WTF?

That’s less than a chip shot away from the logic of the three monkeys now taking place in the Nation’s Capitol.

Weirdest thing about guns in the Kentucky Capitol: if you have one, you’re told to walk around the metal detector. Others must pass through and get wanded. pic.twitter.com/Oqxl9hvl0I
— Joe Gerth (@Joe_Gerth) January 31, 2020

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Tesla Is Off The Charts

January 29, 2020

Tesla is gapping up 12% after hours after releasing earnings.
We know several shorts who have been destroyed over the past six months.   The stock is up 270 percent from its June lows.  Rather stunning.
This comes after the company reported positive net income in the Q3 earnings report.
Still,  auto revenues grew by just 1 percent in 2019, but up 18 percent sequentially in Q4.
GAAP net income was down 25 percent on the year and 27 percent sequentially.
Vehicle deliveries climbed to over 100k for the time.
We are watching closely how these high fliers, including Apple, behave over the next few weeks.
The price action in Tesla, among others, is more of a macro thingy than micro, in our opinion.   Very Bubblicious.  We never learn.

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Copper Flop

January 29, 2020

If true, quite an impressive slump…

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iPhone Back To Positive Revenue Growth, Will The Stock Return To Fundamentals?

January 29, 2020

Apple’s stock has been on a tear ever since the company’s quarterly year-on-year iPhone revenue growth went negative.  Of course, the market had anticipated it and sold-off prior to the hard data coming out.   As the following chart illustrates,  Apple’s stock rose 88.9 percent as the iPhone revenues simultaneously experienced four quarters of y/y negative growth in its 2019 fiscal year.
Show most any stock jockey/algo the following chart and we bet they will deny it.

The iPhone still makes up over 60 percent of the company revenues.  Wearables are on a tear, up 37 percent with services still showing strength, up 16.92 percent year-on-year.
As much as Wall Street wants to disbelieve,  Apple is still a hardware company, deriving over 85 percent of its revenues from products that

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Coronavirus Spreading To Heart of China Manufacturing

January 26, 2020

BREAKING: Shantou, a city in Guangdong province with nearly 5.5 million people, will be put on total lockdown from midnight
— BNO Newsroom (@BNODesk) January 26, 2020

Coronavirus scare starting to hit big manufacturing cities and is definitely going to have a much bigger effect on the global economy.   Shantou is one of China’s “Santa’s Workshop” with a huge toy manufacturing base in the Guangdong province.
Guangdong is the most populous province of China and the 15th-largest by area. Its economy is larger than that of any other province in the nation and the 6th largest sub-national economy in the world with a GDP size of 1.47 trillion US dollars (9.73 trillion Chinese yuan) in 2018. — Wikipedia
China is the world’s largest toy manufacturer, producing around 70 percent of the

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Panic Spreads In The Twitterati

January 25, 2020

The following Tweet is startling.  Dr. Feigl-Ding is from Harvard.
Make sure to watch the video we posted earlier for background on defining R0.

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Global Auto Sector Hit Hard By Coronavirus

January 25, 2020

By Taleb’s pure definition, the Coronavirus is a true “Black Swan.”
The first cases of the pneumonia-like coronavirus were reported in Wuhan, China on Dec. 31, 2019. Since then, the virus has spread to various other countries, including Thailand, Japan, the Republic of Korea and the United States.
Wuhan is one of China’s “Motor Cities” and home to numerous auto plants supplying the world’s largest market for cars.
General Motors (GM), Nissan (NSANF), Renault (RNLSY), Honda (HMC) and Peugeot owner PSA Group (PUGOY) are among several companies that have large manufacturing plants in Wuhan — ground zero of the outbreak.  GM partners with SAIC and Dongfeng Motor Corporation, one of the country’s largest auto groups, with their 6,000 employee facility in Wuhan making up about 10% of GM’s

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