The level of lunacy we’ve reached can be measured by the brouhaha over the presence of Russian photographers in the Oval Office during Sergey Lavrov’s visit: no US photographers were allowed, but the Russians somehow got in and the Paranoid Brigade went into overdrive. They may have planted “bugs” there! No, this wasn’t nutjob Louise Mensch, the queen of the Russia-haters, but “former intelligence officials,” including the former deputy director of the CIA, David Cohen.
File this one away under “Completely Obvious…”Last night the parent company of Snapchat reported a quarterly loss of more than TWO BILLION dollars. Snapchat, of course, is the photo-focused social networking app that’s adored by tweens and adults who still live with their parents…….The company IPO’d just a few months ago with a market capitalization of $30+ billion despite slowing growth and a history of never turning a profit EVER.
What you’re seeing in the political miasma of “RussiaGate” is an exercise in nostalgia. Apart from the symbolic feat of getting a “black” president freely elected in 2008 (remember, Mr. Obama is also half-white), the Democratic Party hasn’t enjoyed a political triumph in half a century to match the Watergate extravaganza of 1972-74, which ended in the departure of Mr. Nixon, the designated Prince of Darkness of those dear dead days. Watergate had had a more satisfying finale than The Brides of Dracula.
ETFGI, a leading research firm on trends in the global ETF/ETP ecosystem, reported today that assets invested in ETFs/ETPs listed globally broke through the US$4 trillion milestone at the end of April 2017, according to preliminary data from ETFGI’s April 2017 global ETF and ETP industry insights report….The Global ETF/ETP industry had 6,835 ETFs/ETPs, with 12,892 listings, assets of US$4.002 trillion, from 313 providers listed on 68 exchanges in 56 countries at the end of April 2017.
Everywhere investors turn, mathematics and machines seem to be rendering human judgment obsolete. BlackRock, the giant asset manager, recently announced it will rely more heavily on computers to pick stocks. Rob Arnott, a leading advocate of mechanical investing approaches, said this past week that it’s “actually relatively easy to beat the market” if you get the math right. Not so fast, says Richard Bookstaber, author of an important and elegantly written new book, “The End of Theory.”
Industry-wide, same-store foot traffic fell 3.3% in April year-over-year. For the past three months, traffic is down 3.9%. Same-store sales in April fell 1.0% are down 1.8% for the past three months, according to TDn2K’s Restaurant Industry Snapshot. Food sales and alcohol sales both were down. As traffic dropped, the average check increased 2.3%, less than the rate of inflation. Q1 had been the fifth quarter in a row of year-over-year sales declines. Now everyone is hoping Q2 will be different. But April’s numbers aren’t auspicious.
While China growth has been slowing, and monetary conditions tightening, few (if any) have predicted any prolonged deflation (let alone a recession), yet overnight – for the first time ever – the $1.7 trillion Chinese bond market inverted, flashing a warning signal to the world that something is wrong. Early on Thursday, the five-year yield rose to 3.71%, breaking above the 10-year yield for the first time since records began – even though the latter, at 3.68%, was near a 25-month high.
Dutch Politician To Draghi: “You Look Remarkably Calm For Someone Who Issues €2.5 Trillion Out Of Thin Air”
Used to a fawning press corps and clueless politicians, perhaps Mario Draghi was expecting a warm greeting, a series of softball questions from Dutch lawmakers, and some late night entertainment on Wednesday when the ECB president made a rare visit to the Hague. Instead, what followed, was an “unenviable grilling” from Dutch MPs for nearly two hours in the country’s parliament today which, as the FT said, left the usually implacable Italian confrontational and riled up as tempers flared and Dutch politicians probed Draghi on the ECB’s record of transparency, and attacked policies they said subsidized southern European countries and harmed Dutch pensioners.
The first six to nine months of a presidential term are arguably the most important thanks in large part to staggered elections put in place by our forefathers. The Bush tax cuts, Clinton’s tax hikes, and the serious groundwork for Obamacare were accomplished during this time frame. President Trump and a balkanized Republican party have taken on ACA repeal/replace during this critical six month window, aiming to use fiscal year 2017 reconciliation (simple Senate majority but “nuclear” to cooperation) to get something passed before the Fall (the current House bill is dead on arrival in the Senate). Then, after this self-immolation, they aim to use the same reconciliation process to get something done on tax reform in fiscal year 2018 (they have a one-pager to work off as of now), and hope to tack on infrastructure and ongoing deregulation going into the 2018 midterm campaign season.
Investors are being blinded by the consequences of the domination of quant strategies (risk parity and volatility trending and others that are geared to algorithm-derived, momentum-based “investing”) coupled with the popularity of exchange-traded funds and their short-term impact on the markets at the expense of the previously lauded but now increasingly disowned high fee-based active managers…..With the specialist system now extinct, when Risk Parity, Volatility and ETFs sell, who will buy?” I have learned through four decades of experience that once most market participants are conditioned to one way of action, the other way quickly may surprise them as rising markets brings rising expectations. In its extreme, long periods of prosperity can produce a Minsky Moment — a condition that may be approaching.