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Happy Martin Luther King Day!
It's Martin Luther King day so the markets are closed.
It's a good day to read his "I Have a Dream" speech – really is amazing when you think of the great social change in this nation that was set in motion by one man with a vision. Here's a great video of the actual event.
It is a testament to the power and effectiveness of Dr. King's movement that, even to those of us who were alive at the time, it seems like it must have been another world where a man had to speak out against such injustice as if it wasn't obvious to the majority of people that segragation, whether by law or by practice, was an outrage.
Sadly, many of the lessons he taught us have already been forgotten, some great quotes:
- Nonviolence is a powerful and just weapon. which cuts without wounding and ennobles the man who wields it. It is a sword that heals.
- Nonviolence means avoiding not only external physical violence but also internal violence of spirit. You not only refuse to shoot a man, but you refuse to hate him.
- It is not enough to say we must not wage war. It is necessary to love peace and sacrifice for it.
- The hope of a secure and livable world lies with disciplined nonconformists who are dedicated to justice, peace and brotherhood.
- Human progress is neither automatic nor inevitable… Every step toward the goal of justice requires sacrifice, suffering, and struggle; the tireless exertions and passionate concern of dedicated individuals.
- Never forget that everything Hitler did in Germany was legal.
- We will remember not the words of our enemies, but the silence of our friends.
- The past is prophetic in that it asserts loudly that wars are poor chisels for carving out peaceful tomorrows.
- A nation or civilization that continues to produce soft-minded men purchases its own spiritual death on the installment plan.
- A nation that
…
Will this rally ever stop – or even pause?
Despite the slowing growth, trade issues and 6 months of protests in Hong Kong, the Shanghai Composite Index rose 22% last year because – why not? – everyone else is ignoring the macros, why shouldn't Chinese Traders too?
I mean, seriously, TSLA is delivering about 100,000 cars in Q4 and about 350,000 cars for the year while Nissan delivers 350,000 cares PER QUARTER – and they are in 5th place in US Sales (where Tesla only sold 36,000 cars as the rest are global sales). This is part of the problem traders have as they don't differentiate numbers when they hear about Tesla's "amazing" market share. It's not amazing at all – it's only slightly better than Volvo in the US and, internationally, Volvo kicks their ass!
Today is the day!
What a boring weekend!
It will be a good test to see how rational traders are getting (if at all) in this ultra high-value market environment. Bank America (BAC) and Wells Fargo (WFC) are also expected to be making less money than they did last year and they too are at year highs – might be an interesting time for a little correction?
So much for shorting the Nasdaq.
The entire planet's GDP is about $90Tn and it grew at 3.5% so there's $3.15Tn, so I guess maybe the entire World put 2/3 of their 2019 growth into those 5 stocks but the rest of the markets did expand as well – up 24% Globally – and that means we're right about the $100Tn mark in global equities, having started 2018 at $77.5Tn.
That's kind of crazy, but crazy is pretty normal these days so we'll just have to go with the flow and see what happens, I suppose. In an unfortunate coincidence last night, 
All this peace breaking out has sent Oil (
$153,498!
Whee, what a ride!
Happy New Year!
The attack, the most forceful move yet by the U.S. to target Iran-backed militias, represents a fresh escalation of tensions between the U.S. and Iran and undermines relations between Washington and Baghdad. It drew condemnation from across the political spectrum including Iraq’s most influential Shiite cleric Ayatollah Ali al-Sistani, and revived calls for the departure of American forces, which returned to Iraq in 2014 to help fight Islamic State.
Greetings from Thailand!
Merry Christmas!
The momentum is still going.
'Twas the weekend before Christmas and all through the mall,
According to UBS, Online Sales are currently 16% of Retail Sales and will rise to 25% by 2026, which could, in turn, force up to 75,000 additional stores to close, including 20,000 clothing stores and 10,000 consumer electronic stores. Moody's lowered its outlook on Department Stores heading into the holiday season but it shouldn't affect things much as retailers like Macy's (M), Kohls (KSS), Gap (GPS) and L Brands (LB) are already in the bottom 20 of the S&P 500 in 2019 performance.
This is not the first time Trump has been accused of flashing the White Power symbol during a speech and it's a very interestering time to be stirring it up again, what with him being impeached on the same day and all but 
I say we give Trump a pass on using the OK sign because 
I don't think people understand math.
Will this one matter? It's hard to say. There are plenty of people who go outside in lightning storms and very few are actually struck by lightning. That doesn't mean it's safe to go out in a lightning storm and those who don't go outside are never struck by lightning while those who do are only rarely struck by lightning. The people who stay inside are not foolish and the people who go outside are not really foolish either – as statistics are very much on their side.
Go KC!
We have a Trade Deal – now what?
Dow 30,000 or 10,000?
As to the "Trade Deal", although not fully announced, it seems that China is agreeing to purchase $50Bn worth of US Agricultural Products (they used to buy $40Bn anyway) in exchange for $50Bn worth of tariff reductions so, essentially – we are GIVING China $50Bn worth of Agricultural Products and the differenct to the Treasury will, of course, be paid by the American people – as usual. What a deal!
"
The trade war has hit swing states particularly hard. In seven of the top swing states (Florida, Iowa, Michigan, Minnesota, Ohio, Pennsylvania and Wisconsin), Americans have paid a combined additional $7.66 billion in taxes because of these tariffs. In Michigan alone, businesses, farmers and consumers have paid an additional $1.8 billion in taxes. For the month of October, people in these seven states have paid an extra $687 million, including almost $138 million in Ohio alone.
500,000 Jobs!
There's a bit of noise in the report as 
Also note that 3.1% increases in labor costs are ahead of the sub 2% official inflation rate and that puts the squeeze on Corporate Margins and, as labor gets tighter, wages tend to go even higher. That's why Trump is trying to force 1M people off food stamps and back to work – his Top 1% buddies need to put supply back into…
Trump is at the NATO meeting – which means he's not meeting with China or his handlers in Russia – so a mixed blessing there but there's a looming Dec 15th deadline on trade and no progress is being made and that is spooking investors. Trump also has no friends at the NATO meeting – even Boris Johnson won't talk to him as he's facing an election and people already think he's "too Trumpy."
Getting ready for Thanksgiving?
Macy's has been entertaining the idea of SPENDING about $1.5Bn to build 1.2M feet on top of the existing structure and use that space to generate about $1Bn a year in rental income. They already have to maintain the building so, aside from the building costs – they wouldn't be taking on a lot of running expenses – so it's a very good idea and, when you consider that Macy's "only" drops about $1Bn a year to the bottom line (on $25Bn in sales) – it's a GREAT idea.
We might have another trade deal!
The Futures are up again – yawn!
Democratic candidates on Hong Kong ran on a central theme of "Five Key Demands" from the protests, which boil down to this:
The madness continues!
Water freezes at 32 degrees.
For example, trade could be up 3% from last year but, if the Dollar is 5% weaker, then our Import Spending would rise 8% while our Export Revenues would fall 0.2%, leading one to conclude that the trade gap had widened by 10%. Of course, it's much more complicated than that because each trading partner has their own currency exchange and some goods are price flexible and some are not and some, like Oil, are priced in Dollars anyway. All in all it's enough to make your head spin if you think about it – so most people don't.
What are they so afraid of?
In fact, the headline in the South China Morning Post is: "
Curiouser and curiouser.
Uh oh! The last time I started making Alice in Wonderland references about the stock market being ridiculous was 
And now there's no trade deal – again.
As you can see, the NYSE has indeed been drifting along under the 13,500 line for two years after breaching it early in 2018. The NYSE is the…
Speaking of which, I guess I will have a better publicist as we move some of our Member Portfolios over to TheStreet.com starting with our 
Here we go!
James McCord: One of the Watergate burglers who used to be in the CIA and the FBI. Security officer for the Committe to RE-Elect the President (CREEP). McCord wrote a letter to Judge Sirica claiming the defendents had pled guilty under pressrue and committed purjury. In January 1973, WH Security Liaison Caulfield had told McCord the White House would grant him clemency, money and a job if he accepted his prison sentence and didn’t testify against members of the administration. When McCord relayed he had been offered clemency “from the highest levels of the White House” before the Senate Watergate committee on May 18, 1973, Nixon’s ties to the efforts of the White House to break into Democratic National Committee Headquarters finally surfaced.
Wow.
Perhaps if Trump hadn't already had Barr make a fool of himself attempting to exhonerate the President in the Meuller Report, Trump would still have some political capital to spend but the sheer volume of scandals surrounding the President makes it hard for Barr to be the point man defending every crime – lest he himself become an impeachable obstructor.
I feel like we're playing Peek-a-Boo!
Another day near 3,100 on the S&P.
Meanwhile, 
Also according to Bloomberg
The Dow is up another 125 points (0.5%) this morning.
Our market rally has clearly been led by the Information Technology sector, which is up 36% and companies like Apple (AAPL), Chipotle (CMG) and Target (TGT) are up over 60% for the year, boosting the large-cap sector. The S&P 500 is now trading at 20 times the earnings of it's components - another all-time high and significantly higher than other countries are trading.
How "great" are things?
Undercounts in the census lead to under-representation in Congress and Trump has already kicked over 300,000 people out of the country, leading to an environment of fear that will cause census responses to go even lower as people are suspicious that it's a trick to get them to reveal relatives who are potentially illegal. Imagine if you were a Jew in Germany in the 30s…
Now China is saying they doubt there will be a Trade Deal.
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Things are going up, up, up – so why worry?
Dividends are very nice.
We're slipping again.
Tesla (TSLA) made money!
Tesla sold 97,000 cars in Q3 and are now guidling 360,000 for the year, at the lowest end of their 360,000-400,000 range they have been promising all year. Also, the mix of cars has shifted to a vast majority of Model 3s, accounting for…
Earnings are now a mixed bag.
It's one long Sunday for me as I just flew in from California.
Here we are again.
In other words, Trump's erratic behavior is now threatening the Dollar's role as the World's reserve currency – Putin couldn't have done more damage to our country if he had bombed us than Trump has done – and this mess can't be cleaned up easily. Losing our status as the World's reserve currency could put us just a step or two away from bankruptcy – just like companies with too much debt that get downgraded are thrown into chaos.
Doesn't this seem to happen a lot?
Why are we in cash?
Happy Indigenous People's Day!
Meanwhile, with a pause in the Trade War in the works, President Xi has turned his attention back to Hong Kong and warned over the weekend that "
Of course China wants to make a deal.
More Trade War!
Mostly, we're waiting.
Is it easier for China to forces their citizens to buy 175% more US merchandise, whether it's good or not or should China make more of an effort to make up the 10% of their merchandise sales to the US by making their easier-to-get-along-with trading partners happy? While it would be nice to "fix" the trade issues with the US – it certainly isn't the desperate situation for China that Trump paints it to be when talking to the very uncritical suckers who still support him.
More free money!
MADNESS!
The ISM Report was, I would say, NOT good.
We have Auto Sales today, coming in all day long but, so far, they have sucked in Europe and Asia, with double-digit declines for many companies – that hasn't been helping and the Futures are off another half a point this morning. Over in Japan Toyota, Honda and Nissan all reported double-digit declines for the US Market in September but the month began and ended on a Sunday and Labor Day was early so it's not really as bad as it seems – just tough comps to last year. Still, the money won't be there for the end of Q3 – that's what matters.
Is Impeachment an Elitist move that shifts power away from the voters?
This is week 17 and 
And we're back (again).
It's not all bad…
I threw that last one in there to remind us that the planet is dying and we're wasting time worrying about whether or not Trump might be lying about…
Wheeeee – it's so much fun to watch this from the sidelines!
So it's going to be chaos for the next few weeks but don't worry, we have TEN (10) Fed speaches to guide us through the rest of the week, starting with Chicago's Charlie Evans, 
Let's see what kind of trouble the World got into over the weekend:
Here we are again!
Powell left the door open to “a more extensive sequences of cuts” if needed, but stressed this was not what officials expect. Instead, he described the situation as one “which can be addressed and should be addressed with moderate adjustments to the federal funds rate.” Updated quarterly forecasts showed officials split over the need for rate cuts this year. Five didn’t want to move. Five saw a quarter-point reduction warranted, while seven saw 50 basis points of easing needed by year-end — half of which was delivered on Wednesday.
Here we are again.
Trunp has added over 10% to the entire National Debt of the United States in just 2 years (the 2016.5-2017.5 budget was still Obama's). You can see the way the budget explodes higher as Trump's tax cuts take effect and he's boosted Government spending, almost all of it military, at the same time – pretty much everything the Republican's used to run against…
And THAT is how you make $5,000 PER CONTRACT trading oil into the weekend!
NEGATIVE 0.5%!
What a crazy week already.
Here we are again!
It's quiet time.
We'll see how the trend is going today.
What a night it's been!
Hong Kong protests are getting worse, not better and we're now 60 days away from a "NO DEAL" Brexit that will throw the EU into chaos and UK Prime Minister, Boris Johnson has said he will call for new elections (they can do that) if Parliament tries to block…
To trade or not to trade?
There's a huge move up in the Futures this morning simply because 
We're down a lot for the month.
And up we go again!
It's all about Jackson Hole on Friday though all we're really going to get there is more Fed spin and, as I noted in yesterday's Live Trading Webinar, I'm getting more and more inclined to cash out our portfolios while we can as we're finding less and less things to buy and, as value investors – that's a pretty good sign the market is putting in a top – 
Of course, as usual, the markets are reading it wrong and, as usual, traders have absolutely no grasp of history as, historically, the Fed raises rates in a GOOD market and LOWERS rates in a bad market – ESPECIALLY at the top of a bad market as they attempt to forestall a looming disaster so the cut of July 31st was a warning – not a bullish signal!
Well, here we are.
Trump says we're "
More free money!
The delayed tariff date will also boost orders into the holidays and give us a better Q4 than we probably would have had as people rush to beat the tariffs with their orders. That's something that will blow back on us next year, but Trump won't have to run on next year's GDP as it won't be over by the election so this year is his "report card" and, like his school career – the President is willing to cheat to get a C.
A bit of a roller-coaster, right?
As you know, the bond market is already pricing in a Recession with the inverted Yield Curve, Germany and South Korea are both very close to recessions already, with almost no growth in the first half and Global Industrial Production and Manufacturing is also very near the contraction line below 50. Trade Growth is, of course, negative and not looking like it's going…
China is boiling over.
Hong Kong Airport is one of the World's busiest, with hundreds of flights each day, it's closure disrupts a lot of business in Asia and, long-term, if people begin to feel they can't rely on it, there could be major economic repercussions.
We're making some progress.
Don't be fooled.
In addition to the currency move, Beijing said that Chinese companies had suspended purchases of U.S. agricultural products, and that the government has not ruled out putting tariffs on U.S. farm goods purchased after Aug. 3rd. China’s Central Bank said Monday’s depreciation was “due to the effects of unilateralist and trade-protectionist measures and the expectations for tariffs against China.” People’s Bank of China Governor, Yi Gang, said that China…
Can America seem more our of control?
And again, this is ONLY shootings with AT LEAST 3 people being shot in a single incident. So far, in 2019, we average 1.2 of those every day, :no_upscale()/cdn.vox-cdn.com/uploads/chorus_asset/file/8319829/gun_homicides_developed_countries.0.jpg)
The US…
What a mess!
Whaaaaaaah!
The ECB left their rates unchanged at last week's meeting but our beloved Commander in Chief has made it very clear that he will not tolerate any more responsible monetary decisions by our own Fed and he will get his rate cut or 
How will July end?
With interest rates near their lower band, a key transmission channel of unconventional monetary policies – quantitative easing, yield curve control and forward guidance – has been to entice investors to take greater risk and hunt for yield outside of the traditional investment-grade bond market. This has inflated stock valuations, made junk bond yield look like investment-grade, and increased housing prices in major cities where real estate is a prized possession. All of…
We take advantage of this foolishness all the time in our options plays, where mispricings occur daily and I'm certainly not saying that Google, with their $60 per share in annualized earnings, don't deserve a $1,200 (20x) valuation – it's just that is certainly didn't really generate that kind of interest yet and it's a good example of how many, many stocks in this market are severely overpriced – having risen to all-time highs on very thin trading which povides very little support should sentiment ever turn negative.
Are we there yet?
Despite leaving rates unchanged, Draghi did say that they expect rates to remain at the current level AT LEAST through the first half of 2020. 10-year notes in Europe currently yield 0% and, taking into account transaction fees AND…
Politics!
Market-wise, we're sitting right on that 3,000 line on the S&P this morning as the Futures have dropped overnight, giving up about half of yesterday's gains. Mueller is testifying at 8:30 and…
5%.
The Justice Department is “taking the position that anything outside the written pages of the report are things about which presidential privilege hasn’t been waived,” the former U.S. official said. That, in and of itself, is obstruction of justice but only the Attorney General can bring those charges – and he's the one doing the obstructing! Trump invoked the broad privilege claim just minutes before the committee 
We're waiting on the Fed.
On the whole, expect to see the usual…
We did not hold it.
So far, so good.
$246,000,000,000,000.
While the Chinese Government is "only" about 100% of their GDP in debt, Chinese Companies make up for it with their own $21Tn pile of debt, 155% of their current GDP. In fact, Chinese firms accounted for 42% of all Corporate Bonds issued in Emerging Markets this year and the IIF says there are now serious risks of default next year and in 2021. Sonja Gibbs the IIF’s Managing Director for Global Policy Initiatives, said:
And we keep going higher!
350%!
Ignorance can truly be bliss in a bull market as traders are content to ride stocks like Amazon to the moon while more cautious investors might have taken some off the table half a Trillion Dollars ago. Just yesterday, AMZN gained 1.5% or $15Bn in market cap despite the fact that only $10Bn worth of shares…
A new portfolio!
TODAY is the day!
Traders are keying off "Fed will act as appropriate to sustain expansion" which indicates they are 100% behind this rally but it's a bit of cherry-picking as Powell is also saying we are on track to hit the inflation target (so easing makes no sense) and the "worries" he has for the economy are still Trade and Brexit (and their effect on…
To ease or not to ease…
That's the difference between thinking like a child and thinking like an adult, of course and, as our friends in the UK like to point out – Trump is essentially a giant baby with low attention span who likes to repeat catchy phrases with little understanding of the underlying issues and has an absolute melt-down if he doesn't immediately get what he wants.
Wow are "THEY" trying hard to sell you this rally.
There's not much going on this week.
Meanwhile, my theme of the week is gathering steam as now 
2,982.
The Dow is up 250 points pre-market.
Notice that 87 S&P 500 companies have already pre-announced negative guidance for Q2 and, when we get back from the Holiday weekend next Monday, we'll begin to see those Q2 earnings reports. So, while we hedged heavily into the weekend – just in case the G20 went badly – we will be using those hedges into Q2 earnings season, albeit less aggressively as we sell some covers as well.
We've got high hopes!
Wheeee, what a ride!
At least it's not 2,800.
Meanwhile, tensions with Iran continue to heat up as Iran's President Hassan Rouhani called the White House “mentally retarded,” dismissing the Trump administration’s 
There's a whole lot of nothing going on this week.
One major data-pont that has us worried is Factory Activity, whichhas gone into contraction in the US, Europe and Japan and is sitting at decade lows 
It's quad witching day!
We are so close – again.
More free money!
We're wating on the Fed.
Housing, as always, is a major driver of the economy and it's kind of hard to ignore it when it begins to falter – but that's exactly what the market is doing at the moment. This is where the panic is coming from as even a 1% rise in rates last year has caused a 10% decline in housing activity and we NEVER came close to getting back to our pre-2008 levels in the first place.
Day 6 of the rally.
All is well, again.
Hope reigns eternal.
We are hitting our goals.
Cuba's economy is 20 times bigger than Puerto Rico and they mostly trade with countries in South and Central America – not Russia – not at all. Canada is 10% of Cuba's trade but it's dominated by Venezuela, more than 1/3 of the total and Venezuela's a mess and that hurts Cuba.
We import $346Bn worth of goods from Mexico and a 25% tariff tax, paid by the…
This is not good!
"Sell in May and Go Away."
Unfortunately, Trump has chosen to bluff when he had no idea what cards China held and now it turns out they have a very strong hand and are not afraid to play it. It is simply not possible for the US to fill their demand for rare earth materials without China and Trump has pushed China into a corner where they may have to retaliate to our sanctions with this, er, trump card they've been holding the whole time.
Speaking of things that were up to you – congratulations to all who stuck it our with us on 
Up and down we go – but mostly down.
The President is losing it.
Not again!
We did get a nice pop this morning on Natural Gas, which was our long idea from