These particular layoffs aren’t happening because consumers are strung out and have trouble getting financing or are switching down to used vehicles or whatever. They’re happening because demand from commercial customers that ply their trade in the real economy is slumping. Ford announced that it will lay off 130 hourly workers and eliminate one shift from May 8 until the end of September at its Ohio Truck Plant that makes medium-duty F-650 and F-750 trucks. They’re are used by businesses such as…
Less than a month after the latest forecast from JPM’s Marko Kolanovic left something to be desired, when the famous quant said “it is no longer prudent to buy the dip” only for the dip to be furiously bought, whether by algos or ETFs, “Gandalf” is back with another discussion of his favorite topic, and an emphasis on a issue that is near to all traders’ hearts, namely what could lead to a “volatility explosion.
Big Government: You can tell whether a spending agreement is good or bad based on who is smiling: the swamp dwellers, or those who want to drain the swamp. This budget made the swamp dwellers very happy. Shortly after announcing a $1.1 trillion — with a “t” — spending deal to fund the federal government’s domestic and military programs for the next five months, Senate Minority Leader Chuck Schumer called it a “very good deal for the American people.” House Democratic Leader Nancy Pelosi said it “reflects Democrats’ values to protect health care, environment and education.” Senate Majority Leader Mitch McConnell said that “we now have an agreement that both sides should support,” praising the negotiations as “bipartisan and bicameral every step of the way.” The New York Times gushed that the bill “could serve as a template for putting together the next round of spending bills.”
Last week, Bank of America presented 4 reasons why it finally threw in the towel on its long-held bullish small-cap trade reco, among which valuations, growth and confidence, credit and volatility. Today, JPMorgan’s equity strategist Mislav Matejka similarly called for a near-term top in the market, saying key positive catalysts for equities are over for now, and recommended investors use any further near-term strength as opportunity to cut exposure to stocks. Specifically, the JPM equity team notes that while “the big picture supports for stocks remain in place” the banks warns that “the near-term risk-reward might be getting less exciting. Some of the positive catalysts we have been looking for, such as a robust earnings season and the easing in political tail risks, have delivered and are now behind us.”
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. Quant strategies that worship at the altar of price momentum and allocate to perceived risk by asset classes and ETFs that rebalance serve to exaggerate short-term market moves and, as currently structured, result in a virtuous circle of a market that increasingly favors the winners, such as (T)FAANG, and orphans the losers (of these there is a growing list).
Despite extreme valuations, investors’ fear of missing out is looking increasingly desperate. In market cycles across history, that has been an unfortunate impulse. On Monday, the major indices “gapped” higher on relief about the first round of French elections, with another opening gap for the Dow on Tuesday. A gap is a point where the opening price on a given day is materially higher than the prior day’s closing level. The stock market also gapped higher on March 1, which marked the record closing high for the S&P 500 to-date, as the banner headline on the CNBC news ticker read “Best Move: Just Buy Everything?” Gap openings are fairly common when a stock or the broad market breaks out from a significant low, or when crossing above some widely-followed moving average. These “breakaway gaps” are often on high volume, and reflect the coordinated belief among some set of investors that the overall trend has reversed.
We have been in a state of continual warfare since September 11, 2001, and Madison’s warning against the dangers of militarism is surely more relevant today than ever before in our history. For the apparatus of universal surveillance that has invested people like Comey with such inordinate power was born in and is sustained by this state of perpetual warfare.The framers of the Constitution, fearful of the specter of militarism, added to that document a Third Amendment, which says that “no Soldier shall, in time of peace be quartered in any house, without the consent of the Owner, nor in time of war, but in a manner to be prescribed by law.” And yet, thanks to the machinations of the War Party, we are at war, and will no doubt be in that condition for the foreseeable future. So the Third Amendment is no protection against the Comeys of this world, who have stationed their soldiers in our homes – in our computers, our phones, even in our television sets!
Several key Senate Republicans said they will set aside the narrowly passed House health-care bill and write their own version instead, a sign of how difficult it will be to deliver on seven years of promises to repeal Obamacare.Lamar Alexander of Tennessee, who chairs the Senate health committee, and Roy Blunt of Missouri, a member of GOP leadership, both described the plan, even as the House was celebrating passing its repeal after weeks of back and forth. The decision will likely delay even further the prospect of any repeal bill reaching President Donald Trump’s desk.
Emerging-market companies are showing up to the U.S. debt market at the fastest pace ever, and finding plenty of appetite for their bonds. Sales of dollar-denominated notes have climbed to about $160 billion this year, more than double offerings at this point in 2016 and the fastest annual start on record, according to data compiled by Bloomberg going back to 1999. Emerging-market assets tanked after Donald Trump’s surprise election in November, but they’ve quickly recovered, with bonds returning 4 percent this year and outperforming U.S. investment-grade and high-yield debt.
American workers, as a whole, are facing a disagreeable disorder. Their debt burdens are increasing. Their incomes are stagnating. There are many reasons why. In truth, it would take several large volumes to chronicle all of them. But when you get down to the ‘lick log’ of it all, the disorder stems from decades of technocratic intervention that have stripped away any semblance of a free functioning, self-correcting economy.