“You know, I could pull it back a little, if you’d like.”
-Gene Frenkel
No, no, no, Gene. You gotta ring it! (see Saturday Night Live #Cowbell performance for details)
Evidently The Fed taught everyone in the Global Central Market Planning Band how to ring it loudly overnight. Instead of cutting by 25 basis points, New Zealand opted for the panic room 50 basis point cut … and India amped its cowbell up to 35bps from 25.
Then, out of nowhere, came the dudes from Thailand (who weren’t expected to cut rates) just bringing it and ringing it for all of Global Equity Futures to see. And… in response… the South Korean Stock market continued to crash.
Back to the Global Macro Grind…
Notwithstanding what we know about the tangible FOMO US stock market chart-chasers opted for at both the end of April and July, what’s truly unique about these US “investors” is that they have Mr. Wonderful and Jimmy Cramer to cheer them on.
Just like there’s ‘no crying in American baseball’, there’s no stock market cheerleading in Japan.
Evidently there isn’t much to cling to in China either. The Shanghai Composite Index (which has been going down since The Global Cycle started to #slow in Q1 of 2018) was DOWN another -0.3% on the cowbell news.
No worries though, if you have friends who were panicking about the Chinese Yuan on Friday, that was smoothed out in the last 24 hours. So we’re all good there and now these vaunted CB Artists can get back to parting the heavens and smoothing the seas.
In other news from my man DDDD (i.e. The Cycle data that’s driven ALL of these rate cuts, all-time lows in rates, etc.):
- INDUSTRIAL PRODUCTION – this was the worst Industrial Production print out of Germany since NOV 2009. Not much else needs to be said about a -5.2% year-over-year growth rate of manufacturing in one of the world’s largest manufacturing economies. Argentine IP and Mexican Capex were even worse than that in JUN and MAY, respectively.
- EXPORTS - I haven’t seen a single Export Growth rate come out of any key Asian export hub in months that would’ve confirmed the hopeful narrative of investors chasing US Semis stocks to the highs of a couple of weeks ago. Taiwan is the latest country to state plainly, “the global semis cycle has not yet bottomed”.
- INDIA - cuts rates and stocks closed down on the news. It’s fascinating to watch the delta between the institutionalization of performance chasing in the USA vs. how the rest of the world’s financial markets actually price economic risk.
For those of you who haven’t met him yet (we’ll be in Boston meeting Institutional Clients for the next 3 days), The DDDD remains The Data Dependent Darius Dale.
In a meeting with an Investment Committee that oversees $90B in Pension Fund Assets in New York City yesterday, one of the most senior people in the room asked us “why the hedge funds we’re investing with don’t give us this data and/or market view.”
I didn’t know whether I should laugh, cry, or just say something like “Secular Growers.”
Combining the aforementioned real-time-global-economic-data updates with what I outlined yesterday:
- US CONSUMER = 35-month low in the ISM Services report and …
- US Consumer Discretionary EARNINGS moving to NEGATIVE -1.3% year-over-year growth
What could possibly go wrong for those portfolio managers who have seen returns hammered in 6 out of the last 7 days of trading? Moreover with the following real-time-market-data:
- UST 10yr Yield hitting a fresh #FullInvestingCycle low of 1.68% this morning and …
- Gold ripping to another fresh #FullInvestingCycle high of $1490 (+17% year-over-year) this morning
What do I have wrong with my top Asset Allocations to Treasuries, Bond Proxies, and Gold?
The Full Investing Cycle book I’m in the midst of planning got rave reviews by the $90B in AUM we spoke with yesterday. That should surprise no one. It’s how legit “long-term” investors think. Ask Buffett, his Cash position is at max for a reason.
For whom the cowbell tolls? How about the Old Wall’s Bankers? This morning’s continued #crash in Global Bond Yields has compressed the US Yield Curve right back to where it was in December. Is Ole BAC going to “beat” Q3 earnings on that?
Our immediate-term Global Macro Risk Ranges (with intermediate-term TREND signals in brackets) are now:
UST 10yr Yield 1.66-1.94% (bearish)
SPX 2 (bearish)
RUT 1 (bearish)
Utilities (XLU) 58.99-60.70 (bullish)
REITS (VNQ) 87.26-89.78 (bullish)
Financials (XLF) 26.21-27.80 (bearish)
Shanghai Comp 2 (bearish)
Nikkei 205 (bearish)
VIX 15.27-25.20 (bullish)
USD 96.96-98.45 (bullish)
EUR/USD 1.10-1.12 (bearish)
Oil (WTI) 52.54-55.99 (bearish)
Gold 1 (bullish)
Copper 2.51-2.63 (bearish)
Bitcoin 108 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
