#ECB has also gone down as well

[starseedfxofficial]

Dollar Flexes Muscle: DXY Surge and Fed Moves Explained Dollar Dominance: Why the Greenback is Flexing and What It Means for You Did someone say comeback? The U.S. dollar's been out here putting in the work, and it's showing. After three straight sessions in the red, the DXY (Dollar Index) has decided it's had enough and is bouncing back, out-muscling its peers and reminding everyone why it's the heavyweight champ. So, why the sudden flex from the dollar, and how should you, the savvy trader, adjust your game plan? Let's break down the latest moves with insights that’ll help you stay a step ahead. When the Dollar Lifts Weights, Everyone Notices Today, the U.S. dollar is flexing like it just came back from the gym—pumped up and unmissable. A notable uptick in U.S. bond yields has certainly played a role, like a shot of pre-workout for the USD, fueling its rally. The DXY is now hovering close to yesterday’s peak of 106.63, proving that sometimes a little pressure is all you need to come out swinging. What’s next? The market’s watching the latest Fed speeches—Barr, Cook, Bowman, and Collins are lined up to share their takes. Traders might want to keep an eye (or both) on their screens; Fed hints are like Easter eggs in your favorite video game—easy to miss but full of opportunities. Euro Gets Dragged Along—But Not in a Good Way The EUR/USD pair took a short-lived vacation above 1.06 overnight but is now back down, closer to where it started. It’s like those times you see a great restaurant but can’t get a reservation—it just couldn’t hold its ground. The Eurozone wage data for Q3 jumped to 5.42% from 3.54%, and you’d think that’d be a reason for some euro enthusiasm, right? Well, not quite. The market had other plans, and the impact was like adding sprinkles to a cake that nobody’s eating—nice, but not game-changing. The EUR/USD is currently hovering just above yesterday’s low at 1.0523, and with ECB heavyweights Lagarde and de Guindos set to speak later, you can bet traders are hoping for some direction beyond the typical central banker script. Yen’s Short-Lived Geopolitical Drama Yesterday, the yen had a little geopolitical boost—like a dramatic twist in a TV series that got everyone talking. Unfortunately, it didn’t last long. USD/JPY is back to its usual trend, resuming its rise since the U.S. election. It’s printed a fresh week-to-date peak of 155.84, reminding everyone that the yen's appeal seems fleeting these days. If you blinked, you probably missed the yen’s shine—and if you’re a trader, you know that timing is everything. Sometimes it's like trying to catch a frisbee in the dark; even when you think you’ve got it, it’s already gone. Pound's Inflation Surprise: Is Cable Up for the Challenge? GBP/USD had a bit of a moment too, with inflation metrics coming in hotter than expected—across the board. Cable bounced from below 1.27 to a peak of 1.2714. The year-over-year services print also hit right where the MPC (Monetary Policy Committee) forecast it. If you’re keeping score at home, this makes for some compelling movement. Picture it like a springboard—the pound gets a little push, then rockets up. Now the question is: can it stay there, or will it come back down once the excitement fades? Antipodeans Get Left in the Cold It’s not all sunshine and roses for everyone, though. The Australian and New Zealand dollars are both on the back foot today, trimming recent gains. With few fresh macro drivers to stir the pot, the USD’s strength is leaving the Antipodeans in the dust. It's like showing up to a party where the host forgot the snacks—not much happening, so they’re hanging around but not making waves. The Quiet Chinese Yuan Move And finally, let’s talk about the yuan. The People’s Bank of China (PBoC) set the USD/CNY midpoint at 7.1935, a bit lower than the expected 7.2386. To be honest, it’s kind of like hitting a slightly different note in a song that’s already pretty predictable. A subtle shift, sure, but hardly enough to get people dancing in the aisles. Yet, as traders know, these small moves can eventually lead to something bigger. It’s like the butterfly effect—except instead of a butterfly flapping its wings, it’s the PBoC adjusting the midpoint by a fraction. Takeaway Tactics for the Savvy Trader So, what can you do with all of this information? Let’s get tactical: - Ride the Dollar Wave: The dollar’s on a surge, driven by rising yields and a general safe-haven vibe. Consider how this influences pairs like EUR/USD or GBP/USD. Remember, when the big greenback flexes, the other currencies have to scramble to keep pace. - Watch the Fed Speak Like a Hawk: We’ve got multiple Federal Reserve speakers today, and while not every speech will be groundbreaking, the market’s ultra-sensitive right now. If you’re day trading, keep an ear out—a small slip of the tongue could translate into a big pip movement. - Eurozone Data Not Always What It Seems: The wage hike in the Eurozone didn’t help the euro much, did it? The takeaway? Not all good news is equal. Sometimes the market simply shrugs. Don’t get too excited just because the data looks rosy—dig deeper to understand what the market cares about. - Keep Your Eye on the Yen for Sudden Moves: Yesterday’s geopolitical lift for the yen was short-lived, but there’s always a chance for more. Keep a flexible mindset—and, as always, stay nimble. - Mind the Antipodeans: The AUD and NZD aren’t having a great time today, and with macro drivers on the light side, they could be at the mercy of USD movements. Opportunities might come for a bounce, but timing is crucial. What’s Next? The dollar is in the spotlight, and everyone else is along for the ride. This isn’t a time to be complacent—you’ve got the tools, you’ve got the news, now it’s about putting them into action. Want more insights, tools, and ways to navigate these turbulent waters? Don’t forget to check out our resources to stay sharp, stay informed, and most importantly, stay profitable. After all, in the world of Forex, the only constant is change, and the best traders are the ones who know how to adapt. Ready to uncover more game-changing insights? Tap into our exclusive economic indicators and latest news at StarseedFX Forex News Today. Plus, don't miss our in-depth Forex courses and community membership for those elite tactics you won't find anywhere else. —————– Image Credits: Cover image at the top is AI-generated   Read the full article

[billehrman]

The Other Side

The Other Side

Who would have thought that we would be talking about the potential for an overheating economy at this juncture?  Well, we are.  Investors have been caught on the wrong foot, holding record levels of cash and bonds while being underweight in equities.

What has changed so quickly? Vaccines that are safe and wildly effective beyond anyone's expectation are here. The only remaining question is how quickly they can be rolled out across America and the rest of the world. We know that there will be around 70 million doses available before year-end that will build exponentially as we move through the winter into spring. It is expected that there will be enough availability here such that all of us could be vaccinated before late spring and that the whole world could potentially be vaccinated before the end of 2021. While Pfizer and Moderna are first out of the gate, we expect to hear from J & J and several others in 2021 with potentially only one dose needed to be effective and/or oral delivery systems rather than shots. All of this is simply miraculous with tremendous investment implications as we return to life as we once lived.  However, there will be some permanent changes that we will need to consider when investing. For instance, some work at home will be permanent, as will increased online utilization for shopping, business, and other services that were once done in-person.

While we expect a difficult few month ahead as the number of cases and deaths rise here and abroad, yet it is time to focus on the other side in just a few months when the weather warms, vaccines are rolled out, openings are accelerated, and pent-up demand is slowly filled. Life will partially revert to how it was before the virus but clearly with some permanent changes. Add to that multiple stimulus plans pushed by a Biden administration and finally an all-in Fed. We expect the Fed to remain all-in for at least for another 18-24 months until we think they will be on the horns of a dilemma. They will face inflation above 2% on a sustained basis with higher-than-expected unemployment, as corporations have learned to do more with less. What will they do?

The stock market has had a marvelous few weeks as optimism built regarding vaccines along with a Biden win. It is generally accepted that the economy will slow during the winter but then begin a rapid and sustainable recovery by the spring running at least through 2022, which is as far out as we are comfortable forecasting at this time. A great deal will hinge on fiscal, monetary, and trade policy decisions down the road.

We still believe that the markets have far more to run as we expect earnings and cash flow to be much stronger than the consensus for 2021 and 2022 as we see a meaningful increase in operating margins ahead as corporations have learned a lot from the pandemic, including a sharper focus on their strategic objectives. Quite frankly, we are amazed at how much operating progress has been made already with plans to do significantly more in the years ahead. We expect record operating margins, profits, and cash flow in 2021 and 2022 with along with an accommodative Fed trying to cap rates, will lead to higher stock prices. But not all stocks will perform. There will be a continued rotation out of the pandemic beneficiaries, especially the defensive stocks, to companies with positive operating leverage benefitting from an economic recovery here and abroad. You need to maintain some exposure to technology as the long-term fundamentals remain unparalleled, but price does determine value.

We no longer have to wonder about a potential vaccine. The news will only get better as we hear from other companies in the months ahead. Availability will only get more plentiful too. We are optimistic that distribution can be done in an orderly and effective way such that we all can get vaccinated before the summer here and worldwide before late fall. We and the world will be open for business once again!

The second most important thing to focus on as investors is a Biden administration. We have always admired Janet Yellen, so her selection as Treasury Secretary is fine by us. It supports our belief that Biden will work both sides of the aisle fostering deals to get things done, unlike Trump. Let's see if he is successful in brokering a more moderate, near-term stimulus bill at less than one trillion through Congress before year-end. That would be a positive sign and very good for all of us. It remains clear that Biden/Democrats have big spending proposals on the horizon that will support those most in need and have growth initiatives like for infrastructure. Clearly, Biden would need to control the Senate to pass extensive spending programs and tax hikes to pay for them, so we will have to wait to see the outcome of the Georgia run-off.  One way or another, we expect many stimulus plans in 2021, which will only add fuel to an already recovering economy.

We are also closely watching Biden's foreign policy moves. While he will attempt to be a consensus builder on many major issues abroad, self-interest will dominate. For instance, the ECB, especially Germany, is unlikely to come down hard on China's policies as China is their largest market. Notwithstanding, we expect global trade to pick up meaningfully in 2021 and 2022, adding to world growth and higher inflation, especially as supply constraints exist. Look at copper prices.

The Fed is in a Catch-22 as it wants to see the economy fully recover and have gone out of their way to say that they will let the economy run hot with inflation running above 2% for a sustained period. While their policy was always to pre-empt unwanted inflationary pressures, that is not the case now, so what happens when/if inflation raises its unwelcome head for a sustained period? Remember that there are multiple trillions of excess liquidity sloshing around in the financial system looking for a home. Stocks and industrial commodities are our asset classes of choice. Continue to sell bonds.

Investment Conclusions

Global growth is on the cusp of a sharp acceleration as we get our arms around the pandemic. Just take a look at the rapid recovery in China since their cases/deaths peaked months ago. We fully expect a synchronist global recovery that will accelerate throughout 2021 into 2022. While interest rates have bottomed for the cycle, the market will increase further, driven by higher-than-expected earnings growth, dividend increases, corporate buybacks, and lots of M & A.

We have positioned our portfolios accordingly, emphasizing global industrials and capital goods, commodities, transportation, and special situations. Our technology and new norm beneficiaries, which was the source of our significance outperformance this year, has declined to a slightly less than a market weight as we diversified into new areas. And we own no bonds.

Our investment webinar will be held on Monday, December 7th, at 8:30 AM EST. You can join the webinar by entering https://zoom.us/j/9179217852 into your browser or calling +646 558 8656 and entering the password 9279217852.

Remember to review all the facts; pause, reflect, and consider mindset shifts; look at your asset mix with risk controls; do independent research and …

Invest Accordingly!

Bill Ehrman

Paix et Prospérité LLC

917-951-4139

[marioswart-blog]

But they have feelings

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Bombs Away Former NHL enforcer Dave Brown, now a Rangers scout,was working with some Wolf Pack players Thursday. One of them was really impressed. "He's the king," tough guy Dale Purinton said. (10) Civil servants: in years gone by, it was staff from the Revenue Commission who were racking up the overtime by making sure all those chip vans were charging VAT on their batter burgers https://www.nfljerseyscheapcollection.com. This year, it will be people from the Pensions Board trying to persuade punters to think about saving for their retirement. We wish them luck with number 7 above..

He played one game with Chicago, where he was behind Tony Esposito and Gerry Desjardins on the depth chart, and this was his only time game in the National Hockey League. He was selected by Calgary Cleveland in the 1972 WHA General Player Draft, although his rights were traded to the Alberta/Edmonton Oilers for cash. Brown won 21 games over two seasons as the backup to Jacques Plante..

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[marikyuu]

I miss the PlayMindcrack server. :c I miss playing Missile Wars.

[fxforecast-blog]

Forex Today: Safe-haven Yen eases on trade optimism, Brexit hopes underpin Sterling

Hopes of progress in the US-China trade talks kept the safe-haven Japanese yen on the defensive and continued benefitting trade-sensitive Australian and the New Zealand Dollar. The British Pound remained well supported by renewed Brexit optimism and the prevalent US Dollar selling bias provided a modest lift to the shared currency during the Asian session on the last trading day of the week. The US President Donald Trump on Thursday characterized the first day of trade talks between the top US and Chinese negotiators as very good and said that he is planning to meet Chinese Vice Premier Liu He on Friday. Adding to this, a White House official said that the talks had gone probably better than expected and raised the possibility of a currency agreement, as a part of partial trade deal this week. Meanwhile, the Sterling was the best-performing major currency on Thursday and posted its largest daily percentage gains since March after Irish Prime Minister Leo Varadkar said that a Brexit deal could be clinched by the end of October. Varadkar said that they have identified a potential path forward on the Irish border issue and how to avoid a hard border, paving the way for the resumption of EU-UK Brexit talks on Friday. On the other hand, the Greenback failed to capitalize on the positive trade-related developments and remained depressed amid increasing odds of further monetary easing by the Fed. Thursday's softer US consumer inflation figures reinforced market expectations that the Fed will cut interest rates again at its upcoming meeting on October 29-30 and kept exerting some downward pressure on the buck.

President Trump: China talks went very well today, will continue tomorrow President Donald Trump: We're going to see if we can make a deal with China President Trump to meet China's Liu He at 18:45 GMT - White House Brexit: Britain is proposing a "pared-down free trade agreement" to end the Brexit stalemate - Sky News Federal Reserve's Mester: US is likely to avoid a serious downturn

Key Focus Ahead

In absence of any major market-moving economic releases during the European session on Friday, the incoming headlines from a meeting between Finance Ministers from EU member states might influence the shared currency. Apart from this, Friday's key focus will be on the resumption of EU-UK Brexit talks, which should act as an exclusive driver of the market sentiment surrounding the British Pound. Later during the early North-American session, the release of Prelim UoM consumer sentiment index from the US and Canadian monthly employment details will be eyed for some impetus. This coupled with any fresh trade-related developments might further contribute towards producing some meaningful trading opportunities on Friday. EUR/USD: Key resistance scaled ahead of Draghi's speech, US-China trade talks pivotalThe European Central Bank (ECB) President Draghi is scheduled to speak at 09:30 GMT. The outgoing President is expected to reiterate his dovish stance. The EUR, however, may show resilience, as the markets seem to have priced in the ECB's recent easing. Also, currently the focus is on the dovish Federal Reserve expectations and the US-China trade talks. GBP/USD consolidates overnight strong gains to 2-week tops, just below mid-1.2400sThe GBP/USD pair was seen oscillating in a narrow trading band through the Asian session on Friday and consolidated the overnight upsurge to over 250 pips, triggered by renewed hopes that the UK and the EU can reach a Brexit deal. The British Pound turned out to be the best-performing major currency on Thursday after Irish Prime Minister Leo Varadkar said that a Brexit deal could be clinched by the end of October. USD/JPY adds 20 pips on President Trump's commentsThe demand for the anti-risk Japanese Yen (JPY) weakened on the US President Trump's positive trade-related talks, allowing USD/JPY to jump by more than 20 pips. President Trump, while speaking at a campaign rally in Minneapolis, said that trade talks with China are going well and that a deal could be reached. President Trump will be meeting Chinese Vice Premier Liu later today. Gold steady below $1500's as positive case from geopolitics firm-upGold is currently supported in the $1,490-$1,496 tight range in Asia, despite an informal confirmation from Trump, speaking at a campaign rally, boasting how well trade talks are going with China. Risk has rallied yet Gold is at a standstill ahead of highly anticipated high-level trade talks later today in Washington when Trump and Vice Premier Lui finally meet.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

[calacuspr]

Calacus Weekly Hit & Miss – Maria Andrejczyk & Yorkshire CCC

Every Monday we look at the best and worst communicators in the sports world from the previous week.

HIT - MARIA ANDREJCZYK

Winning an Olympic medal is the pinnacle for most athletes, particularly those in track and field events for whom the Olympic Games is the ultimate prize.

Polish javelin thrower Maria Andrejczyk came close at Rio 2016 when she finished fourth with a best attempt of 64.78, missing a place on the podium by a margin of just 0.02cm.

In 2019, her career took a back seat when she underwent surgery after being diagnosed with an osteoma, a benign bone tumour.

Remarkably, she fought back and after surgery, she was able to restart training for the Olympic Games in 2019 and won the silver medal at Tokyo 2020 with a throw of 64.61 metres.

Maria later said that she wanted to put the medal to good use and so sought a worthy cause and told Polish television: “The true value of a medal always remains in the heart. A medal is only an object, but it can be of great value to others. This silver can save lives, instead of collecting dust in a closet. That is why I decided to auction it to help sick children.”

Via a Facebook fundraiser, she soon identified a young boy named Miloszek Malysa, who has a heart defect, who needs life-saving surgery.

"I didn't spend long thinking about this, it was the first fundraiser I came across and I knew it was the right one," she said.

"He already has a head start from Kubus – a boy who didn't make it in time but whose amazing parents decided to pass on the funds they collected…And in this way, I also want to help. It's for him that I am auctioning my Olympic silver medal.”

According to Małysa's mother, Monika, there were no longer any viable options to help the boy in their home country, Poland, with their last hope being an operation in Stanford, California.

After starting the auction off at 200,000 zloty ($51,000), Maria announced that Żabka, a Polish supermarket chain, won the auction with a bid of $125,000.

"It's with the greatest pleasure that I give to you, Żabka, my medal which for me is a symbol of struggle, faith and the pursuit of dreams despite the many challenges," she added.

"I hope for you it will be a symbol of the life of which we fought for together."

Zabka then announced that they would return the medal to Maria.

"We were moved by the beautiful and extremely noble gesture of our Olympian," it wrote on Facebook.

"Therefore, we decided to support the collection of funds for the sick Miłoszek. We also decided that the silver medal from Tokyo will remain with Mrs. Maria, who showed how great she is."

The money raised will allow Małysa to get the necessary surgery at Stanford University Medical Center and underlines yet again how the sport of sport can change lives and how sports stars can be role models, making a positive difference to society.

MISS – YORKSHIRE CCC

Yorkshire County cricket Club have not done themselves any favours following the conclusion of a year-long independent investigation after former player Azeem Rafiq accused them or racism.

Rafiq, a former captain both of England’s Under-19s and Yorkshire’s Twenty20 side, first spoke publicly about his experiences at the club last September and claimed that "institutional racism" left him close to taking his own life.

Last November, after he first gave evidence to the panel appointed by Yorkshire to investigate his allegations, and two members of the panel stood down to act instead as witnesses, Rafiq’s lawyer spoke of her “serious concerns about the initial handling of Azeem’s complaint and the people appointed to be involved in that process”.

The 100-page report upholds many of Rafiq’s allegations – but when it will be made public, and how much of it will be redacted, remains uncertain while the ECB wrote to the club last week to ask for a copy of the findings.

Yorkshire have offered him their "profound apologies" after "several of the allegations" were upheld but Rafiq was understandably frustrated.

He said: "A year of pain, a year of trying to get people to listen, a year of giving people an opportunity to do the right thing and we end up with a statement that turns racism into inappropriate behaviour."

“We’ve waited a year for this report and they are still trying to bury it,” Rafiq told ESPNcricinfo.

“The ECB’s own anti-discrimination code states that any alleged breach must be investigated and dealt with in a ‘timely’ fashion. Well, it’s been more than a year and no one has been held accountable and nothing has changed.”

Given the gravity of the investigation, Yorkshire should have been complete transparent about the findings and done everything to address Rafiq’s concerns once the report was finalised.

The club said in a statement that the scope of the investigation went beyond solely examining Rafiq's allegations, also considering whether they were institutionally racist.

"The investigation has been in depth and far from easy. Sadly, historically, Azeem was the victim of inappropriate behaviour."

Rafiq responded: "To try and say that these are historical things, yes there are things that are 10 years ago but predominantly most of my allegations relate to people that are still there in leadership positions.

"It's like saying 'we're going to punch you, knock you down and then pick you back up'. To be honest I'm absolutely sick and tired.

"I'm sick and tired of giving these people, the game, Yorkshire Cricket Club, the ECB, everyone, an opportunity to the detriment of myself. The damage that this last 12 months has caused me… I don't know when I will actually know that."

The speed at which Yorkshire have dealt with the complaints and their approach to dealing with them does not suggest that they understand the seriousness of the allegations or the damage that the situation has done to their reputation.

The ECB Chairman, Ian Watmore, then demanded that Yorkshire deliver a copy of the report to the governing body. “We respect the independent process behind the review, and the club’s legal responsibilities to all parties. We also understand the frustration at the length of time this investigation has taken.

“Now that the club has a full copy of the report, we have today written to Yorkshire to formally request a copy, together with a timeline for publication.

“It has taken considerable courage for Azeem Rafiq to speak out, and it is right that his experiences should have been thoroughly investigated. We now look forward to receiving a copy of the report promptly to enable us to fulfil our role as the ultimate regulator of the game.”

Clearly there is still work to do, especially as some of those who Rafiq complained about remain at the club.

He added: “To try and tone racism down to inappropriate behaviour ... straight away for me, I find it really difficult to understand what they think they are doing. At the end of it [the statement] there is some sort of apology, but it is spoilt by the words that are used to try and minimise what my allegations were.

“I want to know which of my allegations have not been upheld. I am very comfortable, I have a lot of proof to back up the things that I am saying. I wouldn’t think twice about making sure people see that proof because I am not having, for any second of the day, a statement that turns my sufferings of over a decade into ‘inappropriate behaviour’.

“Most of my allegations are about people who are currently at the club in leadership positions so to try and say these are historic allegations from a long time ago — yes there are some things on there that go back to the start of my career, but the majority of them are about people who are still there and from during my second spell at the club.

“I have got a message for them: it isn’t going away, I am not going away. If they really want to deal with this properly, the start of it is accountability. I think the chief executive, the director of cricket, everyone who was in that room when I said it, and the inclusion and diversity manager whose front room I sat in and cried my eyes out, I think they need to go. It’s as simple as that.

“The patience is gone, it’s completely gone. I am not going to put myself through any more mental turmoil. It is time for this to be dealt with properly.”

[billehrman]

Responding to Change, Again!

The financial markets continued to rally big time last week as global tensions eased with the United States and China making meaningful conciliatory gestures.

Specifically, Trump postponed the imposition of 5% extra tariffs on Chinese goods by two weeks to mid-October so that China could celebrate its October 1National Day without a fresh escalation in tensions. China responded by making substantial agricultural purchases and delaying added tariffs on many U.S imports until mid-December. China also announced a huge list of U.S. imports that would be exempted from tariffs. In addition, there were comments from both sides that there could be a narrower deal now followed by subsequent deals down the line. Maybe both sides finally recognize the pitfalls to their economies if the trade conflict escalates out of control. Remember that Trump wants to get re-elected next year while China wants to succeed on Made in China 2025.

None of this went unnoticed by the financial markets. Stocks continued to climb, bond prices fell as the yield curve steepened, the dollar fell, and industrial commodity prices rose while precious metals fell reflecting reduced global tensions. Underneath the hood there was huge rotation in the stock market out of defensive names into more economically sensitive ones that were selling at recession level valuations. Fortunately, we began to shift the composition of our portfolios 10 days ago adding some financials, capital goods/industrials and commodity companies while reducing some of our more defensive holding including gold stocks.

While it is impossible to be certain if there is an “all clear” at this point as we live in a VUCA (volatile, uncertain, complex, and ambiguous) environment, we must act and react accordingly as the cards turn up one way or another. And we hedge. We have made four major shifts in the composition of our portfolios over the last year dictated by events: the Fed over tightening last October; the Fed capitulating in December; trade tensions ratcheting up big time late spring; and now. Paix et Prospérité has outperformed the indices (especially the hedge fund inde) over this period and over our career as we respond to change quickly. As our tag line states, we review all the facts; pause, reflect and consider mindset shifts; analyze of our asset mix and risk controls; do independent fundamental research and invest accordingly.  Right now, the wind remains to our back as more liquidity is being provided by the monetary authorities than is needed in the real economy thus boosting the value of risk assets.  

Remember that another round of global monetary ease has just begun: China cut the bank reserve ratio freeing up $126 billion of added bank liquidity; the ECB cut its target rate to minus 0.5% and reintroduced a program to buy more eurozone debt;  the BOJ may cut again next week or wait until its next meeting to see the effects of the proposed retail tax hike October 1 on its economy; and we expect the Fed to cut the funds rate by an additional 0.25 points on September 18.

Let’s review some of the key data points reported last week that support or detract from our view that the U.S markets remain undervalued and are preferred over other markets until there is more certainty on trade and/or major fiscal/ regulatory policy changes are actually passed in key overseas economies.

The United States

The majority of economic data reported last week supports that the U.S economy remains in great shape led by the consumer combined with huge fiscal stimulus. Just read some of the following stats which serve to underline the strength of the U.S consumer: the index of consumer sentiment rose to 92.0 in September, current economic conditions rose to 106.9 and the index of consumer expectations increased to 82.4. Wow! It was also just reported that August retail sales advanced more than expected rising 0.4% from the prior month, led by motor vehicles and on-line purchases, after an upward revised 0.8% increase in July. In the first week of September, initial unemployment claims fell to only 204,000, an indication of continued employment strength. The U.S. budget gap widened to more than $1 trillion dollars in the first eleven months of the fiscal year, up 19% from a year ago, as government spending rose 7% while receipts increased only 3%. Don’t forget that the most recent two-year budget deal will expand the deficit by several hundred billion providing additional stimulus to the domestic economy.

It was also reported that core CPI and PPI accelerated slightly in August with core CPI, excluding food and energy, up 2.4% from a year ago and core PPI, also excluding food and energy, up 2.3% from August 2018. Ironically, inflation expectations moved lower in August. Manufacturing data reported last week support continued weakness as inventories are rising faster than sales and capital spending remains constrained

Despite rising inflationary pressures and the recent steepening in the yield curve, we still expect the Fed to cut rates by an additional 0.25 point on September 18. If not for trade issues and real weakness overseas, we would vote against lowering rates further. After all, our economy is doing just fine. And we expect Trump to do whatever is necessary, including reaching some interim/partial trade deals and cutting taxes on the middle/lower classes, to boost the U.S economy and stock market in 2020 before the Presidential election. China

We have not changed our view that China needs a trade deal more than the United States. We mentioned last week that exports, even in dollar terms despite the weak yuan, fell for the fourth consecutive month in August. Since the trade war began a year ago, China has cut taxes, lowered bank reserve requirements, weakened its currency and sharply increased fiscal stimulus especially on infrastructure projects. Notwithstanding all of these moves, their economy continues to slow, and companies are shifting their supply chains out of China as fast as humanly possible. None of this has gone unnoticed by the government and may explain some of their recent conciliatory moves on trade delaying some tariffs, removing some products from the tariff list including soybeans and pork and finally announcing major purchases of agricultural products.

We believe that the government wants to make a deal with Trump knowing full well that Trump needs a deal to get reelected and that the Democrats may even be more difficult to negotiate if elected than Trump. We would only consider investing in Chinese consumer companies at this time.

Eurozone/England

The ECB did exactly what was anticipated last week lowering its key interest rate and launching a program to buy additional bonds. Big deal if there is no demand for money. Industrial production has continued to decline, exports are weak and capital spending has slowed to a halt. We can only hope that Christine Lagarde, when she becomes head of the ECB in November, can convince the finance ministers to change their debt rules that currently limit spending. Draghi has tried but unsuccessfully.

We remain very pessimistic on the outlook for the Eurozone. We do not see added fiscal stimulus soon; we do not see needed regulatory reforms; we do not see trade deals with the U.S.; and we see Brexit on the horizon. Why invest here?

Japan

Japan remains on the cusp of raising its retail sales tax to 10% on October 1.  Second quarter growth slowed to 1.3%, weaker than anticipated, and the third quarter growth started on an even weaker note as machinery orders slowed dramatically. Here again, we do not see how it would help its economy if the BOJ cut rates further from a negative 0.1% rate and increased its debt buyback program. And how can the government increase fiscal stimulus with its current debt load to GNP? Japan is really stuck between a rock and hard place captive to global trade conflicts and the inability to raise domestic spending. Why invest here?

Conclusions

While we are hopeful that a trade ceasefire can be reached, there can be no certainty so we remain open minded and are willing to change if events dictate. Clearly there were some concessions made on both sides last week which were meaningful, but a real trade deal is anything than certain. We believe that both sides are trying to find a middle ground and will hopefully take baby steps to achieve a series of trade deals that encompass both the trade imbalance and IP.

What we know for sure is that all monetary bodies are extremely accommodative, creating more liquidity in the system than is needed by the real economy. Clearly this helps all risk assets. The Fed is next on deck to cut rates this week. We continue to believe that our 10- and 30- year bond yields are too low viewed against the continued strength of our economy with inflationary pressures increasing somewhat. We were pleased to see that over $170 billion of corporate debt has been refinanced in just the last two weeks significantly reducing interest costs, lengthening terms, and boosting profits/cash flow. Finally, the U.S government is considering issuing 50+year bonds next year. Great news!

Despite the recent rise in the market over the last three weeks, we continue to believe that it is undervalued selling at slightly above 17 times prospective earnings with the 10- year treasury yielding 1.9% and the 30-year treasury yielding 2.3% with bank capital/liquidity ratios so high. Isn’t it amazing how quickly the pundits changed their view over the last few weeks? Fortunately, we began to shift the composition of our portfolios two weeks ago focusing on a change in tone from both China and the United States, continued dovish words out of all monetary bodies and finally comments heard on corporate conference calls.  The untold story is how well corporate America is performing despite a VUCA environment.

The bottom line is that the wind continues to our back for investing as we are able find great companies with superior managements, winning strategies, rising volume, profits, cash flow, and free cash flow selling well beneath intrinsic value. Here again, look at Buffett’s bond yield v.s earnings yield matrix. Pretty straight forward decision for investors.

We began shifting the composition a few weeks ago away from defensive stocks which were over owned selling at historically high multiples to more economically sensitive stocks selling at recession multiples generating huge free cash flow with dividend yield well above even the 30-year treasury bond. Many of these investments provide multiple ways to win like UTX mentioned last. We maintained our exposure to technology, cable with content, retail like HD and TGT, telecommunications, airlines and many special situations. We added banks, capital goods/industrials, industrial commodities and machinery. We own no bonds and are flat the dollar.  

We are looking forward to our inaugural “Investment Committee” webinar tomorrow, September 16 from 8:30 am – 9:15 am EST. We will begin the webinar with a review of the global investment environment and after our 15-minute presentation, we will open up the call for your questions.  You can join the webinar by typing the following in your browser: https://zoom.us/j/9179217852. To ensure a better experience you may wish to download the free Zoom software from the Zoom download center onto your computer for the best possible experience: https://zoom.us/download

Remember to review all the facts; pause, reflect and consider mindset shifts; analyze your asset mix with risk controls; do independent research and…

Invest Accordingly!

Bill Ehrman

Paix et Prospérité LLC

[espnsoccer]

The year dictator Robert Mugabe and a death threat wrecked Nasser Hussain's World Cup dream [ad_1] Beset by illness, diminished by injuries and one Test down against resurgent opponents, England’s cricketers were entitled to feel a little beleaguered as they wandered through the corridors of The Cullinan hotel here last week. If it felt as if they were under siege at their city centre base, though, Nasser Hussain can put their current situation into perspective.The former England skipper still suppresses a shudder when he talks about The Cullinan. ‘That damned Cullinan hotel’, he called it in his autobiography, Playing With Fire, because it was there on the eve of the 2003 World Cup that he found himself at the centre of one of the biggest crises to have afflicted English cricket in the modern era.England were due to play against Zimbabwe in Harare in their opening game of the tournament that February but Hussain and others had become increasingly concerned about reports of widespread human rights abuses perpetrated by the regime of the dictator, Robert Mugabe. Against a background of widespread food and water shortages, there were calls for England to boycott the fixture. Nasser Hussain during the World Cup defeat to India. England went out in the group stageAt the time, comparisons were drawn with the game the England football team played in Berlin in 1938 when all the players in a line-up that included Stanley Matthews gave the Nazi salute before the match. It is an image that still has the power to shock. Hussain and others did not want to be on the wrong side of history this time.Hussain and his team spent several days holed up in the gilded cage of The Cullinan as the affair quickly turned into a political and diplomatic morass. South Africa were keen for the fixture to be fulfilled because they wanted Zimbabwe’s support for their bid to host the 2010 football World Cup. The ICC were desperate for England to travel to Harare for the sake of the tournament.Hussain and his team were left in a quandary. They spent most of their time at The Cullinan debating the issue among themselves, listening to entreaties from the then ICC chief executive Malcolm Speed and from the ECB, who were also keen for the players to travel so they would avoid sanctions from the ICC and who were telling Hussain the moral argument was irrelevant.‘The bloke who was really winding me up was Speed,’ Hussain said. ‘I told him he should come and sit in some of our meetings. Some of it didn’t seem fair: asking Jimmy Anderson, aged whatever, who had just come out of Burnley, to try and make his mind up about politics in Zimbabwe and Mugabe.’ Hussain thought it was unfair the likes of Jimmy Anderson had make his mind up about politics At one stage, Hussain was led into a side room to meet the Zimbabwean players, Andy Flower and Henry Olonga, who had been smuggled into the hotel after their black armband protests in their opening game against Namibia. ‘Those are two very brave men,’ England’s then coach Duncan Fletcher told Hussain after the meeting.Other teams were staying at The Cullinan, too. Hussain remembers a conversation with Muttiah Muralitharan in the breakfast room where the Sri Lankan expressed surprise at England’s reluctance to play in Harare. ‘I didn’t feel like explaining our position over my toast and Vegemite,’ Hussain said.At the height of the deliberations, England received a letter from a group called the Sons and Daughters of Zimbabwe. ‘Come to Harare and you will die,’ it read. ‘And how safe are your families back in the UK? Even if you survive, there are foreign groups who are prepared to hunt you and your families down for as long as it takes, and they will do that in your very own country.’The letter was a decisive factor for some members of the team and in the end, England said they were boycotting the game for security reasons. They forfeited the fixture and, after defeats to India and Australia, they were knocked out of the tournament at the group stage. Hussain were caught out by an affair which turned into a political and diplomatic morassLast week, as England went through their final nets session before the second Test here, Hussain sat in the empty North Stand at Newlands and thought back to those fraught discussions and the conflict that raged between ideological objections to playing in Zimbabwe and his responsibility to players who saw the World Cup as the pinnacle of their careers.‘Even then, I was thinking how would history judge us and judge me,’ he said. ‘Looking back at what Mugabe has done to the country and how that country has gone and recently when it was all discussed again after he died, I felt pleased by the decision we took.‘Even though we fudged it and hid behind security a little bit, my motive was always pretty much “I don’t want to lead an England cricket team in Zimbabwe”. It was because of what the regime stood for and what I had seen and because of speaking to Olonga and Flower. It didn’t sit comfortably with me fulfilling that fixture.‘I also, as a captain, had a responsibility to other people in that room like Nick Knight. We had a pretty good white ball side then. It wasn’t like this side but it was okay and that was their chance, that was their World Cup and that was their one chance. I owed it to them as well that they didn’t look back with regret about missing that chance. Some of them still do. I’m not going to name names but some of them look back and think “that was our chance to have a really good World Cup and we blew it”. England received a letter from a group called the Sons and Daughters of Zimbabwe‘It’s not about me but I have never looked back with regret. Some people doubt the decision we took but I think we did the right thing. At times, I wonder whether we should have gone and taken more of a stand. Maybe that could have been me wearing a black armband in support for them if they were wearing it. I hid behind security in the end. Once you get a letter like that, if you’re a young lad, you are very worried and you are thinking of your family.‘The whole time we were at The Cullinan, it felt like we were under siege... holed up for hour after hour because we swayed one way then the other. And I felt I was under siege personally. I would go from one meeting to another, all trying to pull you in various directions.‘It is part of your job as captain that you have these responsibilities. It is not just tossing a coin and putting a few slips in. You are an ambassador for your country and when you take that job you have to realise that things like this do occur. When they do, you have to show some kind of leadership.’  https://espnsoccer.co/?feed_id=54125 https%3A%2F%2Fespnsoccer.co%2Fthe-year-dictator-robert-mugabe-and-a-death-threat-wrecked-nasser-hussains-world-cup-dream%2F

[therapybg]

The Fall of the Emerald City

There are a number of different impressions on the work of L. Frank Baum in the The Wizard of Oz. You may know that between the book, the stage play and the muslcal versions are lots of multi-dimensional elements. Knowledge "The yellow brick road is a symbol for knowledge: it is a rabbit hole that takes you to wisdom and, which is shaped as a spiral, becoming wider and wider as you go along on it. Dorothy takes the pointed road, but she soon discovers that the yellow brick road splits into more directions."  https://lievarts.com/the-psychology-of-philosophy-an-analysis-of-the-wizard-of-oz-1939/ It is this fragmenting of persepctives which makes it useful for the MK Ultra spooks, politics and mythic narrative, imagery and vivid colors ... Political "Taylor also claimed a sort of iconography for the cyclone: it was used in the 1890s as a metaphor for a political revolution that would transform the drab country into a land of color and unlimited prosperity. It was also used by editorial cartoonists of the 1890s to represent political upheaval." (The Storm) "The 1902 stage adaptation mentioned, by name, President Theodore Roosevelt and other political celebrities. For example, the Tin Woodman wonders what he would do if he ran out of oil. "You wouldn't be as badly off as John D. Rockefeller", the Scarecrow responds, "He'd lose six thousand dollars a minute if that happened."" Subversion " Good Witch Glinda" used an innocent, ignorant patsy (Dorothy) to overthrow both her own sister witch (Witch of the West) and the Wizard of Oz, leaving herself as undisputed master of all four corners of Oz" https://en.wikipedia.org/wiki/Political_interpretations_of_The_Wonderful_Wizard_of_Oz FragmentationFragmenting personalities, creating mirrors, reorienting characteristics, taking a fable and by turns moving it into multiple independent structures, to be called up at will. Useful toolkit when aided by psychotropic drugs and emotional torture. But, I digress......the cyclone that carried Dorothy to the Land of Oz represents the economic and political upheaval, the yellow brick road stands for the gold standard, and the silver shoes Dorothy inherits from the Wicked Witch of the East represents the pro-silver movement.  https://en.wikipedia.org/wiki/Political_interpretations_of_The_Wonderful_Wizard_of_Oz Allegory "Quentin Taylor, for example, claimed that many of the events and characters of the book resemble the actual political personalities, events and ideas of the 1890s. Dorothy—naïve, young and simple—represents the American people. She is Everyman, led astray and seeking the way back home." https://en.wikipedia.org/wiki/Political_interpretations_of_The_Wonderful_Wizard_of_Oz Music and Emotion The song "over the rainbow," the character of Judy Garland and the three other main characters are iconic elements of popular culture.  The same fantasyscape echoes Alice in Wonderland and Charley and the Chocolate factory, a sense of hyper - reality that is intensely colorful, hence memorable (see it's use as a mind control device).

Suggestion If we move the "plotlines"to the current day, where do we see the Emerald City? Who are the "Wizards" of Oz behind the curtain, beside the throne?  In an intel sense it's Comey, Clapper, Obama and Hillary directing their events behind the scenes. Why does Hillary Clinton appear so often in the color green?  That one was a trick question, I know the answer to that one and I think you do too. Green represents everlasting evil, she is the high priest (Wizard). In the banking sense it's vipers, but a rabble of vipers, rather than a cohesive enitity. They were a gutless rabble even in 2007-2008 when all thier pieces were in play,  but people never saw thru it at the time. Their media is rapidly deflating as we go to print. All of their channels, megaphones and toyboys are in the shitter.  Note my use of suggestive imagery :) #Don'tForgetoFlush

Plotlines But, let's say the cabal do destroy Seattle (The Emerald City). The need to pin it on a patsy. They can't claim credit directly, it is to be used for another purpose. What have they waiting in the wings? At the beginning of the plot Dorothy kills a witch by dropping a house on her head.  Just on a simple level let's look at "housing drop kills"as a  motif. https://www.scmp.com/economy/china-economy/article/3011960/china-showing-signs-similar-japanese-housing-bubble-led-its Script Having grown up in a country where a housing bubble was used to transfer our national wealth to the "troika" (the cowardly lion, tinman and scarecrow of IMF, EU and ECB), I'm aware of the technique, but they've used it already in the USA? "Fool me twice, shame on you." GWB It will not work with  property developer in the White House. They might want to bring in a financial crash, but Trump has them stymied on that too, the economy will not implode if a city explodes. He already wants them to collapse, so in that sense they play into his hand and pass over direct control to Him. Discount that one in the short term (you don't have to, I would).

They need a massive event to bring in the NWO bullshit. What would a mass killing by bombing achieve currently(remember they never anticipated Trump's multiple successes, he is a major curve ball)? In the current moment, I don't know (it's still behind the curtain). I do know how they used 911, attacking arab countries in plain sight. That game is already spent too, so what exactly is left? I think they're in checkmate actually. Me The only short term value is killing lots of people, but politically they've been destroyed, financially they're waning, manpower is way down (if you can't pay scumbags, they won't work for you), the terror stuff is gone now the police are doing police work. On the media side we've got them on the run. Christianity is popping up all over the place destroying their secular defeatism.  So whatever they want to bring in is not going to work (in this moment). My best guess is they pull something smaller, to "save face" with their global crew of scum and pull an "abort." Of course, we can't work on that basis (...that bad people won't do bad things), we need to face the facts at hand. If there is a massive event, they get to call in the UN following an Obama EO. That would trigger something alright, uniting already pissed off patriots. It looks like the old civil war gambit (again the republicans win). For that, they'd need to plant the bombing on a Trumpkin. It seems a stretch, nobody I know would believe it. It would be hard to pin it on Putin, so China is the fallguy, but that would simply unite both countries and they lose by default. We've already had that before as well.  Their media assets are pretty much out of credibility at this time. So it's 5th and down deepstate. The "real" Lion has his boot on your neck.

https://twitter.com/ginnylourn/status/1190772435462823936 Forces of Good and Evil One last thing to note. God is already here this time round. " “We dare not harm this little girl," he said to them, "for she is protected by the Power of Good, and that is greater than the Power of Evil. All we can do is carry her to the castle of the Wicked Witch and leave her there.” ― L. Frank Baum, The Wonderful Wizard of Oz The witch is dead (in the water) https://www.goodreads.com/work/quotes/1993810-the-wonderful-wizard-of-oz?page=2 https://en.wikipedia.org/wiki/Political_interpretations_of_The_Wonderful_Wizard_of_Oz https://en.wikipedia.org/wiki/The_Wizard_of_Oz_(1939_film)#/media/File:Wizard_of_Oz_lobby_card.jpg https://www.scmp.com/economy/china-economy/article/3011960/china-showing-signs-similar-japanese-housing-bubble-led-its https://lievarts.com/the-psychology-of-philosophy-an-analysis-of-the-wizard-of-oz-1939/ https://encyclopedia2.thefreedictionary.com/Project+Monarch (Monarch) https://en.wikipedia.org/wiki/Project_MKUltra (MKUltra) http://kommoncents.blogspot.com/2015/05/mk-ultra-laurel-canyon-and-birth-of.html (Laurel Canyon) https://www.independent.org/publications/tir/article.asp?id=504 https://americanhistory.si.edu/blog/populism-oz https://illuminatimovies.net/wizard-oz/ Read the full article

[its-veso]

Will EUR/USD hit the lowest since 2017? It is on the edge

EUR/USD has been falling toward the lowest levels in two years.

Trade headlines and euro-zone data dominate trading today.

Friday’s four-hour chart is showing oversold conditions for EUR/USD.

Hard data has been outweighing hardline views from the European Central Bank – and this sends EUR/USD[1] close to the cliff.

Germany has reported a plunge of 2.2% in Retail Sales in July – more than double the 1% slide – and on top of a downward revision for June’s data. Consumption has been keeping the German economy up amid a manufacturing slump – but this motor is stuttering as well. So far, the government in Berlin has been unkeen to intervene and stimulate the economy.

See New German government needed to spend and lift the euro[2]

The data outweigh hawkish comments from Klaas Knot, the Dutch member of the ECB[3]. Knot pushed back against calls on the bank to resume its bond-buying scheme and said that markets may have gone too far in expectations for stimulus. The Dutchman joined his German counterpart, Jens Weidmann – who also rejected “acting for the sake of acting.” Another German member, Sabine Lautenschlaeger, echoed her colleagues’ words by saying it is much too early for a huge stimulus package.”

However, ECB President Mario Draghi and several other colleagues want looser monetary policy – and may get their way.

Trade calm for now

Currency markets have not only ignored Knot’s comments but also the optimism that stock markets express over the US-Sino trade war. On Thursday, President Donald Trump touted talks between the world’s largest economies – but neither side has confirmed they actually took place.

China has called for calm and focusing on removing tariffs rather than enacting new ones. Beijing has hinted that it would refrain from immediate retaliation to new US levies due out on Sunday, September 1.

However, barring any surprise, Washington is set to slap new duties and China will – even if not immediately – respond with counter-measures that they had already prepared. News from both countries and especially tweets from Trump may rock markets later today.

EUR/USD has been under pressure also due to this calm – the rise in US yields has propped up the dollar.

A busy end to the month

The economic calendar[4] features additional market-moving events. Preliminary Euro-zone inflation figures stand out. Both headline Consumer Price Index (CPI) and Core CPI are projected to stand at 1% year on year. However, initial CPI figures from Germany have missed expectations and this may push the all-European numbers lower.

See EU Inflation Preview: ECB’s aggressive stimulus coming and nothing can change that[5]

Inflation numbers also stand out in the US with the Federal Reserve’s preferred gauge – Core Personal Consumption Expenditure for July. Despite the acceleration of the parallel Core CPI measure for August from 2.1% to 2.2%, Core PCE is projected to remain unchanged at 1.6%.

See US PCE Price Index preview: A brief history of inflation targets[6]

It is essential to note that today is the last trading day of the month and some money managers may rush to adjust their portfolios, triggering high volatility.

Looking into the weekend, there is another significant event apart from the trade tariffs – the German states of Saxony and Brandenburg hold regional elections. The far-right AfD is expected to make gains, eroding support from both the CDU and the SPD – the coalition partners at the national level. – weakening the central government in the continent’s largest economy.

EUR/USD Technical Analysis

EUR/USD has been under pressure since losing the uptrend support line and it is suffering from downside momentum on the four-hour chart. On the other hand, the Relative Strength Index (RSI) is flirting with 30 – indicating oversold conditions – and implying a temporary bounce.

The 2019 low of 1.1027 is critical support. It is followed by the psychologically important number of 1.1000, and then by 1.0960, which was a support line in 2017. Further down, 1.0900 and 1.0810 are noteworthy.

Resistance awaits at last week’s low of 1.1050. It is followed by 1.1090, which was a swing low on Thursday, and by 1.1115, which capped EUR/USD this week and also in the previous one.

Get the 5 most predictable currency pairs[7]

References

^ EUR/USD (www.fxstreet.com)

^ New German government needed to spend and lift the euro (www.fxstreet.com)

^ ECB (www.fxstreet.com)

^ economic calendar (www.fxstreet.com)

^ EU Inflation Preview: ECB’s aggressive stimulus coming and nothing can change that (www.fxstreet.com)

^ US PCE Price Index preview: A brief history of inflation targets (www.fxstreet.com)

^ Get the 5 most predictable currency pairs (www.forexcrunch.com)

from Forex Crunch http://feedproxy.google.com/~r/ForexCrunch/~3/luTQS0ou1FE/

[billehrman]

Buffett and Munger Are Licking Their Chops

The financial markets have been under immense pressure ever since Trump announced that he would be raising tariffs to 25% on the initial $250 billion of Chinese exports to the U.S. on May 10th while also threatening to impose 25% tariffs on the remaining $300 billion of Chinese exports by the end of June unless substantive movement was made in trade negotiations. His administration then threw down the gauntlet by blacklisting Huawei from dealing with our technology companies threatening China 2025. Trump went all in.

The simple truth is that no one knows what the eventual outcome will be to the trade conflict so traders run for cover as the pundits/experts remind us all throughout the day how bad things could get: The sky is falling! As you would guess, cash levels have gone through the roof; investor sentiment has plummeted and even investors are frozen despite historically cheap valuations. Markets hate uncertainty! Bearishness is everywhere which is consistent with market bottoms, not tops. Our market remains undervalued… we see no recession, we see a friendly Fed and we buy great companies with rising earnings, cash flow/ free cash flow with above market dividend yields (far above 10-year treasury yields) and large share repurchase programs.

We think Buffett and Munger must be licking their chops right about now as the earnings yield on stocks as an asset class has further widened its gap to bond yields.

We also know that one tweet could turn things around. So, what to do? While we spent a lot of time over the last few weeks putting the trade war in perspective as exports from China are a tiny sliver of our economy and theirs too, we recognize that it is newsy to embellish the worst-case scenarios which we deem unlikely. We are bombarded all day about the downside risks of the trade war without discussing any of the long-term positives. Do you think that Buffett and Munger listen to CNBC?

We are most concerned about the near-term uncertainties/disruptions all of this creates for consumers and businesses around the world. Clearly companies will accelerate shifting their supply chains and may already have begun buying as much as possible ahead of the June 30th possible cutoff points. And consumers, seeing the possibility of higher tariffs filtering through to higher consumer prices later in the year may buy early altering their historic patterns. It could be a great fall but miserable Christmas for retailers.

The hike to 25% tariffs is a one-off event. It won’t happen again next week or next year. In the meantime, prices hiked for higher tariffs will come down over time as supply chains are shifted out of China and demand will recover quickly. In the end, higher tariffs may be deflationary and stimulate growth. How ironic! An investor, like a company, must take a long-term view making only some small changes along the way to preserve/redirect capital to benefit overall performance. It’s hard playing the long ball sometimes, but we can assure you that Buffett/Munger know that compounding returns over time is the key to success. They measure their success over decades, not years nor months nor days. And they have done pretty well.

The greatest opportunities come at times like this. Are you an investor or a trader?  We can only imagine that Buffett and Munger are looking at the chance to finally commit billions buying stocks and hopefully companies at bargain prices as others panic out of fear. Both of them love to buy as stocks are falling.  Is Apple a better buy at $178 or $210? Munger has probably added to his Chinese holdings big time too which have been hit fallen more than stocks here. They truly look longer term over the valley when everyone is looking in the abyss. They look at the long-term potential for each investment and compare it to its current cost/intrinsic long-term value to come to an estimate of future returns. We try to do that, but we don’t have the Buffett/Munger advantage of having the float of a huge insurance company balance sheet to invest. So, we raised a lot of cash and shifted the composition of our portfolios weeks ago taking some risk off to be in position to take advantage as others panic.

Our one disagreement with Buffett/Munger and the Fed is that we feel that low inflation is NOT transitory therefore the stock market multiple today is way too low. That’s a biggie!

One side note about the recent decline of the markets: while the averages may not have declined much from their recent highs, take a look under the hood and you will find devastation in many sectors of the market, especially if there is any Chinese exposure like semis. As we mentioned weeks ago when we took cash to over 17% of our assets by first selling anything with Chinese exposure and then reducing sectors that were dependent on an acceleration in global growth which we had thought would take place with a trade deal. Yes, we shifted our view!  We added defensive stocks with stable growth/high dividend yields, technology and some additional special situations all with great managements, winning strategies, huge free cash flow, and not penalized much, if at all, by higher Chinese tariffs.

Let’s take a quick look at some of the data points reported last week which for the most part came out on the weaker than expected side:

1.) We were most disappointed with the Fed notes which came out last week. The Fed is one step behind on both the prospects for the U.S. economy and inflation. The Fed is standing pat expecting the economy to do fine and inflation to pick up. Wrong on both counts especially if trade tariffs are increased on all Chinese exports. Low inflation is NOT transitory. We continue to believe that the December Fed rate hike was NOT justified and needs to be reversed. The Fed failed to acknowledge in their notes the impact of our rates on the dollar which continues to soar as the yield differential widens with rates abroad. The U.S. economy needs lower short rates and a weaker dollar. We expect the Fed to lower rates BEFORE the fall.

It was reported last week that U.S. manufacturing survey slumped to a 9-year low in May. In addition, the services index fell to a 39-month low. Both numbers remained over 50 indicating growth continues albeit slowly. New orders for manufactured durable goods fell 1.1% in April after rising 1.7% in March, shipments fell 1.6% after a 0.5% March decrease and unfilled orders declined 0.1% after rising 0.1% the month before. Finally, new home sales declined in April although up nearly 7% from a year ago.

While we have lowered our second-quarter GNP to 1.5%, consumer spending is likely to have accelerated to 2.5% gain from the first quarter. We cannot see the economy really accelerating much beyond 2.25% in the second half of the year led by the consumer without a resolution on trade. We still believe that 2020 will be a better year as Trump pulls out all stops to win the election…. that may include several trade deals. You can bet on it!

2.) The big news out of Europe was the resignation of Theresa May as Prime Minister of Britain after continuing to fail backing for the Brexit divorce agreement. If a hard Brexit occurs, it is not good for anyone. We continue to have a bleak outlook for all of the Eurozone without major financial, fiscal and regulatory reforms. What more can the ECB do at this time? Nada!

Economic activity continues to weaken in the Eurozone and growth is likely to be less than 0.3% in the second quarter and less in subsequent quarters. European stocks are statistically cheap for a reason.

3.) Japan’s economy is not much better than Europe’s. Manufacturing activity fell back into contraction in May as exports fell at the fastest pace in four months. We do not believe that Prime Minister Abe will move forward on raising the sale tax in October although he says that he will. Japan’s economy, as is others, are tied to the success of trade talks with the U.S. and China. We would avoid investing here until we know more on trade.

4.) The re-election of Prime Minister Modi and his government was a real bright spot last week. We continue to favor investing in India as we have all year.

A successful investor, like Buffett and Munger, take the long view investing in great companies when others panic not discriminating amongst investments. Management is the key. Why not listen to both the Home Depot and Lowe’s quarterly conference calls and discern for yourself which one you would want to own longer term? A hint…we own HD! Also listen to Target and Kohl’s quarterly conference calls. Another hint…. we have owned TGT!

We do NOT buy the market. We buy stocks in companies that can excel in any environment. When these stocks go down caught in trading programs, it is an opportunity to add to them at better prices. Buffett/Munger do and say the same thing every time. Maintaining excess liquidity, staying disciplined and being patient are necessities during stressful times like this.

Buffett/Munger are licking their chops as stock prices are falling into their buy zones.

We need to be thankful/remember those who sacrificed their lives for our way of life.

We have added to our defensive stocks that would not be hurt from higher Chinese tariffs…mainly health care and consumer related. We have also added to domestic sectors that benefit from lower interest costs… mostly housing related. And we have added to technology companies that drive security and productivity returns far above the buyer’s cost of capital. While we have reduced our financials somewhat due to Fed’s stubborn stance, we like the sector very much as it is significantly undervalued relative to intrinsic value. And we keep adding to and finding new special situations which are individually unique and have nothing to do with the economy. We have reduced holdings in areas hurt by higher tariffs and lower global growth. Cash is up! We own no bonds and are flat the dollar which will remain strong until the Fed cuts rates.

Remember to review all the facts; pause, reflect and consider mindset shifts; look always at your asset mix with risk controls; do independent research… and

Invest Accordingly!

Bill Ehrman

Paix et Prospérité LLC

[johnmauldin]

The Global Economy Looks Disturbingly Like Japan Before Its “Lost Decade”

After World War II, Japan experienced rapid growth as the US and others helped rebuild its economy.  This led to a roaring expansion that culminated in the 1980s Japanese asset bubble.

It popped in the early 1990s bringing what came to be called the “Lost Decade.” It was really more than a decade, as the early 2000s brought only mild recovery.

GDP shrank, wages fell, and asset prices dropped or went sideways at best. Japan is still grappling with it today.

Now the rest of the world is approaching a period that may be an equivalent of Japan’s “Lost Decade.” It won’t be the end of the world, but it might be more painful than in Japan.  

Japan had little growth due mainly to exports. That won’t work when every major economy in the world is in the same position. Plus, we are headed toward a global credit crisis I’ve dubbed The Great Reset.

Describing this decline as “Japanification” may be unfair to Japan, but it’s the best paradigm we have. The good news is it will spread slowly. The bad news is it will end slowly, too.

I believe we will avoid literal blood in the streets, but it will be a challenging time.

Japan’s Lost Decades

The Lost Decade had monetary roots.

The 1985 Plaza Accord drove the yen higher and inflated the asset bubble. The Bank of Japan tried to pop the bubble with a series of rate hikes beginning in 1989:

Source: Mauldin Economics

Upon reaching 6% in 1992, the BOJ began cutting rates and eventually reached zero a few years later.

Since then, it has made two short-lived tightening attempts, shown in the red circles. Neither worked and that was it; no more rate hikes, period. Japan has now kept its policy rate at or near zero for 20 years.

The BOJ also resorted to large QE-like programs that also had little effect. Meanwhile, the government tried assorted fiscal policies: infrastructure projects, deregulation, tax cuts, etc.

They had little effect, too. GDP growth has been stuck near zero, plus or minus a couple of points. So has inflation.

That said, the BOJ’s asset purchases certainly had an effect. They more or less bought everything, including stock ETFs and other private assets.

Japan is a prime example of faux capitalism. All this capital is going into businesses not because they have innovative, profit-generating ideas but simply because they exist. That’s how you get zombie companies.

The result, at least so far, has been neither boom nor depression. Japan has its problems, but people aren’t standing in soup lines.

Not Working? Double Down

Many say the present situation can’t go on indefinitely, but there’s no exit in sight.

The Bank of Japan has bought every bond it can. Now they are buying stocks not just in Japan but in the US as well. They are trying to put yen into the system to generate inflation. It simply hasn’t worked.

When you don’t have a better answer, the default is to do more of the same. That’s the case in Japan, Europe, and soon the US. Charles Hugh Smith described it pretty well recently.

The other dynamic of zombification/Japanification is: past success shackles the power elites to a failed model. The greater the past glory, the stronger its hold on the national identity and the power elites.

And so the power elites do more of what's failed in increasingly extreme doses. If lowering interest rates sparked secular growth, then the power elites will lower interest rates to zero. When that fails to move the needle, they lower rates below zero, i.e. negative interest rates.

When this too fails to move the needle, they rig statistics to make it appear that all is well. In the immortal words of Mr. Junker, when it becomes serious you have to lie, and it's now serious all the time.

“Do more of what’s failed in increasingly extreme doses” also describes well the Federal Reserve policy from 2008 through 2016.

With little effect from zero rates, the Fed launched QE and continued it despite the limited success and harmful side effects. The European Central Bank did the same to even a great extent, also with little effect.

Which brings us to the next point: why Europe and the US will follow Japan.

Too Much, Too Fast

The Federal Reserve spent 2017 and 2018 trying to exit from its various stimulus policies. It began raising short-term interest rates and reversing the QE program.

In hindsight, it now appears the Fed tried to do too much, too fast. My friend Samuel Rines calculated that when you include the QE tapering, this Fed tightening cycle was the most aggressive since Paul Volcker’s draconian rate hikes in the early 1980s.

They should have started sooner and tightened more gradually. For whatever reason, they didn’t.

And so the complaints began. Wall Street wasn’t happy but, more important, President Trump wasn’t pleased with the rate hikes. But the real deal-breaker may have been the late 2018 market tantrum.

Then the yield curve inverted, coinciding with weakening economic data. That was probably the last straw. The Fed hasn’t exactly loosened, but there’s a good chance it will later this year.

Meanwhile, the ECB’s Mario Draghi had a tightening plan in place not so long ago. That plan is now out the door before Draghi is even close to gone.

So on both sides of the Atlantic, plans to exit from loose money now look disturbingly like those two little circles in the BOJ rate chart when it tried to hike and found it could not.

Worse, we are also replicating Japan’s fiscal policy with rapidly growing deficit spending. In fact, this year we will be exceeding it.

The Japanese deficit as a percentage of GDP is projected to be below 4% while the US is closer to 5%. And given the ever-widening unfunded liabilities gap, the US deficit will grow even larger in the future.

Turning Japanese, I think we’re turning Japanese, I really think so. (With a musical nod to The Vapors.)

The Great Reset: The Collapse of the Biggest Bubble in History

New York Times best seller and renowned financial expert John Mauldin predicts an unprecedented financial crisis that could be triggered in the next five years. Most investors seem completely unaware of the relentless pressure that’s building right now. Learn more here.

[giancarlonicoli]

After a wild 2018, Mark Orsley - Head of Macro Strategy for Prism (and formerly with RBC), is out with a review of his 2018 "Costanza Trades," while offering his comprehensive thoughts for next year.

***

It’s that time of year again. Stockings, dreidels, Festivus poles, and, of course, the inevitable truckload of bank “2019 Year Ahead” pieces cluttering your inboxes which are about as attractive as getting coal in your stockings.  However, these pieces are useful in some regards, as they are very good at nailing the consensus themes and are excellent counter-indicators.  Long time readers will know that The Macro Scan takes another twist at year end, to present next year’s top “Costanza Trades.”

For those of you not familiar with George Costanza, his character on the sitcom Seinfeld could do no right when it came to employment, dating, or life in general.  In one episode, George realizes over lunch at the diner with Jerry that if every instinct he has is wrong, then doing the opposite must be right.  George resolves to start doing the complete opposite of what he would do normally.  He orders the opposite of his normal lunch, and he introduces himself to a beautiful woman that he normally would never have the nerve to talk to. "My name is George,” he says, “I'm unemployed, and I live with my parents." To his surprise, she is impressed with his honesty and agrees to date him!

I find employing the Costanza method to trading an interesting exercise.  Ask yourself this: what are the trades that make complete sense and all your instincts say are right? Now consider the opposite. Basically what you end up constructing is an out of consensus portfolio.

Employing the Costanza method can identify interesting, non-consensus trade ideas that could kick in alpha. Last year’s top 7 Costanza trades netted 5 of 7 WINNERS (some with huge gains), and past years have all been successful: 2017 had 5 of 6 winners (and 1 tie), 2016 had 7 of 10 winners, and 2015 had 7 of 10 winners.  Let’s quickly review last year’s trades…

2018 Costanza Trades:

Long UST 10yrs = trying to work now but a loser as yields were 35bps higher

Long Bunds = winner as yields were 18bps lower

Long EUR/USD = worked early in the year but turned loser, -5%

Short EEM = huge winner, EM crushed 19%

Long IG protection (IG spread wideners)/Short LQD = another huge winner, IG CDX 44bps wider (doubled)

Short Euro Stoxx and Nikkei = both big winners; each index was down 15%

Short Bitcoin vol = worked well all year but has risen recently, still 50-day is 22 vols lower

Bonus: Long active/short passive = going to put this as a tie.  Passive won out most of the year, but is currently getting crushed/about to get absolutely rinsed.  Also, in a classic bottom signal, active Hedge Funds/PM’s were shuttered around the street in Q4 at the absolute worse time.  Active is now starting to have its day, and the passive tsunami is receding.  

Last year’s list was one of the most difficult to develop.  Going into 2018, the market was divided between those who thought risk assets had gone too far and were due for a correction, and those who believed the economy is booming so let the good times roll.  To be fair, both turned out to be true at different points throughout the year.

This year is a piece of cake, as sentiment for risk assets have wildly shifted (for good reason) bearish.  With that, I give you the 2019 Costanza trades in no particular order – or in other words, the trades that you absolutely feel pained to do right now:

2019 Costanza Trades:

Long FANGs

Receive credit protection in IG and HY (aka long LQD and HYG)

Long Eurodollar spreads (EDZ9/EDZ0)

Long Bunds

Short Gold

Long WTI crude

Long AUD/USD

Short EM

Long Bitcoin

Bonus: Long Trump

Let’s go through each and assess the probabilities of Costanza being profitable (probabilities are purely off the cuff estimates for arguments sake)…

1) Long FAANGs

Everyone loved them on the way up in 2018 and you had to own them to keep up with the market but now the FAANG’s, and tech broadly, are contaminated.  

Although street research is once again roundly predicting higher equity indices in 2019 (as they always do - insert rolling eyes emoji), market consensus among those that take actual risk has shifted extremely bearish.  Funds have grossed down or liquidated, RSIs are oversold, and DSIs are near 0.  

However, the next shoe to drop is the retail investor exodus (it has partially started) that could lead to the mother of all passive unwinds.  Imagine the horror on the face of the average investor as they open their Q4/year-end statement in a few weeks and sees the wealth destruction that has taken place in Q4.  The natural investment psyche of the retail investor will be to sell and I think it’s hard for all of us to fathom just how widely owned FAANG’s are within index ETF’s. Therefore, I would have to imagine this trade will not work for Costanza right away, and there is severe risk that a deeper correction could continue into 2019.  

What is the major headwind for Costanza with regards to his FAANG long and tech names more generally?  Government regulation.  Higher rates and wages have been a thorn in the side for margins but more than anything; it is the government’s involvement in Silicon Valley’s business model that has and will continue to be a major hindrance for tech multiple expansion.  There is not much Congress agrees on these days, but Tech regulation, especially with regards to privacy laws, is the one thing.  Ditto in Europe, where the governments are actually playing even rougher.  Some recent data points:

Google CEO Sundar Pichai, who boycotted a Congressional hearing this summer, is now playing ball with Congress saying he supports regulation legislation.

The Federal Trade Commission still has an open investigation into whether Facebook’s conduct violated a previous settlement with the agency.

DC’s Attorney General is suing Facebook for “allegedly letting outside companies improperly access user data and for failing to properly disclose that fact.”

Europe’s new far-reaching privacy laws and anti-trust investigations on tech companies.

Uber being sued for anti-competitive practices.

President Trump has said his administration is seriously looking into monopolistic behavior of Facebook, Google and Amazon.

Those are just a few of many.  The days of uninterrupted, carte blanche for Tech are a thing of the past, and thus a major regime change is happening.  The only question is: is it all priced or not?  The technicals indicate not.  

FANG index formed classic head and shoulder top.  The neckline is broken and the formation targets ~1500 which is still 30% lower form here…

Instinct: margin compression from higher yields/wages, global government scrutiny, and retail investor unwind will lead to a much deeper correction.

Costanza: funds have already purged these names, sentiment is at extreme lows, valuations more reasonable, and Tech is still the wave of the future.

Estimated probability of Costanza being right: 25%.  The days of tech rising unadulterated are over.  I think we can say that conservatively.  In my opinion, the government’s involvement in their business puts a top in tech for quite some time, at least in regards to tech names that have thrived on the collection of consumer data and/or don’t pay enough tax/postage.  If the chart above is proven right, that 30% hole will be tough to climb out of by year-end 2019.  I would rather buy THAT dip than this current dip.  Costanza is a braver man than I.

This also means broad US equity indices will struggle, albeit S&Ps not as much due to the “safe haven” names embedded within that index.  However, since 2001 with similar extreme levels of being oversold, the market has been higher 100% of the time 1-year later, with an average return of 23%.  So Costanza has hope given the magnitude of the selloff and poor sentiment; I just find it unlikely he will be happy in the first half of the year with his FAANG long.  

2) Receive credit protection in IG and HY (aka long LQD andHYG)

A similar call to the above long equities, since correlations run high with credit.  However, there are other issues with credit besides general risk sentiment, namely the massive amount of outstanding corporate debt, the large percentage of that debt that will need to be rolled, and the potential for credit downgrades should the economy enter a recession (which is what the front end rates market is pricing).

The amount of non-financial corporate debt-to-GDP has never been higher…

The US corporate refi tsunami is upon us…

This “maturity wall” which spikes next year and will likely need to be rolled comes at the inopportune time of the collapse in crude oil prices.  The energy sector is a big user of the US credit market.  Thus the risk for 2019 is the US credit market seizes up in the face of the refi wave into a recession.  A toxic combination and we can add in the fact that the European credit market will have less support going forward with the ECB stepping back next year.  

ITRAXX Xover Total Return Index is rolling over…

Instinct: the US economy is saturated with corporate debt and it is time to pay the piper with the coming refi wave.  Everything gets exasperated if the US economy slips into a recession which will lead to higher default rates.    

Costanza: the worst is priced in, GE credit widening is a one off non-systemic issue, and the economy will regain traction especially if Trade Wars are settled in 2019

Estimated probability of Costanza being right: 35%.  I will assign this a little higher probability of working than tech longs.  I am definitely concerned about the “maturity wall” and the trajectory of the US economy in 2019.  For IG to widen out from here, you have to really believe the economy is falling off a cliff in such a way that defaults will finally rise, which then leads to even higher spreads and more defaults.  It is not unrealistic, thus why I believe it is more likely that credit tightening won’t work.   The one major point the credit market has going for it is the technical chart, which says that most of the move is played out.  As opposed to tech charts, IG has reached its spread widener target.  Thus Costanza could argue during his “airing of grievances” that all the bad news is priced.

IG CDX reached the 94bps target on its inverse head and shoulder pattern…

3) Long Eurodollar spreads (EDZ9/EDZ0)

What a difference a year makes.  Last year at this time, I was pounding the table on the coming resurgence of inflation and how the market was underpricing Fed hiking risk.  That successfully played out, but now post-stock market carnage, oil collapse, and peak economic data; Eurodollar spreads are pricing in a recession and rate cuts!  Oh my. So this again continues the theme we have seen in the first two Costanza trades, revealing a market that is very worried about the trajectory of risk assets and the US economy as a whole. When you look at Fed Fund futures pricing for 2019 (using FFF9/FFF0 spread as my guide), you have 1bps of cuts priced into futures, versus an FOMC dot plot that is projecting 50bps of hikes (past ’19 you will discover even more rate cuts are priced in).  So there is quite a gap that will need to be reconciled.  Will the equity market collapse help to slow an already fizzling economy or is there a possibility the economy recovers (China deal?) and the Fed continues on its course to normalize policy?  

Using Prism’s PAM charting tool, we can see the constant maturity equivalent of EDH9/EDH0 has only gone negative 2x in the past 15 years.  In 2006, it continued to flatten hard, but in 2011 it was a false breakdown and recovered higher...

Costanza’s “feat of strength” is taking the other side of the conventional wisdom that the housing, auto, and coming PMI slowdown due to the oil collapse either won’t alter Powell’s mission or will prove to be a head fake like in 2011.  The slowdown in the data this year was likely caused by a front loading of activity pre-tariffs/trade wars (i.e. buy everything Q2 and then sit tight the rest of the year), so there is a chance that the higher economic trend reemerges, especially if the trade talks with China go well early next year (something Trump warned about this weekend).  Costanza could be laughing at the thought he was able to buy ED spreads negative.  

Instinct: the US economy has peaked, the fiscal impulse dissipates early next year, QT increases, and regional surveys are already showing a coming slowdown.  This will lead to a Fed pause now and possible cuts by end of 2019.

Costanza: Powell is still indicating rate hikes and the economy is projected to grow 2.2% with CPI remaining around the 2% target.  The kicker will come if Trump, feeling pressured by lower equity markets, makes a trade deal with China.  The market will be caught wrong footed as the Fed continues to tighten as activity picks up again.    

Estimated probability of Costanza being right: 55%.  Will give a slightly higher nod towards Costanza being right.  Remember, he doesn’t need hikes to win, just no cuts which is a plausible scenario if Trump delivers a market friendly trade deal with China.

4) Long Bunds

There is no possible way Bund yields could go any lower in the face of the ECB ending its asset purchase program, right??  Costanza is saying “easy big fella” (side note: can you name that episode?).  There are plenty of indicators that the Eurozone is careening towards major economic issues.  I want to give a nod to Danielle DiMartino Booth, who is doing excellent, non-consensus economic research over at Quill Intelligence. She points out that the chemicals sector is “arguably the most hyper-cyclical leading indicator,” and using BASF stock as her guide, suggests the Eurozone economy is “poised to hit the skids.”  In fact, she declares Germany to be the “most underpriced recession risk in 2019.”

Interestingly, if you graph BASF stock in Germany (black line) versus Bund yields lagged 100 days (orange line), it would suggest potential financial crisis in the Eurozone which will lead to Bund yields going negative again...

Instinct: ECB, while still reinvesting, ended its APP, Draghi will want to get one hike off before his reign ends towards the end of 2019, the ECB desperately needs to get out of negative rates, Draghi will likely be replaced by someone more hawkish or at least less dovish, and fiscal stimulus to counter the populist movement will all lead to higher rates.    

Costanza: growth has already fallen off sharply, forward indicators suggest potential economic crisis, the ECB is already noting risks shifting to the downside, and there are major political hurdles next year with EU elections

Estimated probability of Costanza being right: 60%. If there was ever a Costanza trade it is this one.  I am not sure there are many Bund bulls out there at 24bps so this is ripe for Costanza to be right.  The chart is saying he will nail this one.

German 10yr yields have formed a head and shoulder pattern that targets -40bps if the 15bps neckline gets taken out to the downside…

Quick side note…

Idea #3 (long Eurodollar steepeners) and #4 (long Bunds) are basically implying that the US/German yield spread will widen once again in 2019 (assuming the ED steepeners are akin to higher US rates which has been the correlation).  I would surely say that even combined, that idea is a Costanza trade.  Most expect a narrowing of the US/German 10yr spread going forward.   Since I hit on the Bund side of the US/German 10yr spread, what could drive US rates unexpectedly higher in 2019 and thus help to widen the US/GE spread?

Increasing deficits leading to increasing supply  

That increasing supply has already led to sloppy UST auctions

At a time the rate of change on foreign demand of UST has moved lower

With wages still remaining firm

All equal the need for higher term premium in the US

Now back to the list….

5) Short Gold

This has been an interesting correlation shift.  For most of the year, Gold has been a pure Dollar play (especially vs CNH), but more recently Gold has picked up risk aversion, namely HY credit according to the Quant Insight macro PCA model.

Gold correlation to DXY (blue) and USD/CNH (green) has gone from negative to zero…

Now Gold is most correlated to VIX and HY credit…

Therefore, Costanza shorting Gold is another bet that risk assets will stabilize and the Gold bulls will be told “NO SOUP FOR YOU!”    

Instinct: risk assets continue to trade poorly and Gold offers portfolio protection for the apocalypse.  

Costanza: gold is losing its luster as a safe haven asset and, if the markets turn 2008-style ugly, it will get liquidated as well.    

Estimated probability of Costanza being right: 51%. No strong conviction here but Costanza is right more than wrong so a slight edge to risk assets stabilizing and Gold returning to its Dollar correlation.

6) Long WTI

One of the most epic selloffs I have seen with a high-to-low collapse of 45% in just two months.  The market narrative is now back to “elevated US production,” and more importantly, the Saudis, post-Khashoggi murder, have increased supply to push prices down for President Trump.

Costanza would be quick to point out that spare capacity is low and the oil market suffers from chronic underinvestment.  That underinvestment only gets amplified with oil prices sub-$50, and we are already seeing Permian producers cut back on capex plans.  Additionally, the widening in credit markets only makes it harder to obtain capital for capex.  So you have the double whammy of lower prices and wider credit spreads, which will feed into the underinvestment theme.  The days of capital inflows are back to 2008 levels.

By most analyst forecasts, even just a flat line of current production will cause a deficit in the supply/demand imbalance in 2019. We don’t need to be oil experts to know that when oil prices fall as precipitously as they did; rig counts fall and production declines.  Now sprinkle in capex intentions being cut, along with credit issues, and that is Costanza’s recipe for higher oil prices.  And, oh yeah, let’s not forget about the coming IMO 2020 regulations (sulfur emission reduction in cargo ships which will require heavy crude to be drawn from supplies to comply).

Instinct: US is oversupplying the market with its light crude, and the Saudis are more than making up for Iran sanctions to appease President Trump in light of the Khashoggi killing.

Costanza: low spare capacity will eventually catch up to the Saudis, and lower prices, lower capex, and a credit crunch will cause US production to flat line at a time when it needs to be increased (plus, the light API grade the US produces is not sought after).

Estimated probability of Costanza being right: 70%.  I think much of the oil decline was technical fund liquidations (most likely large Risk Parity types that were long WTI as their inflation hedge), and all the forward looking supply issues not only remain, but are amplified with lower prices and wider credit.  Costanza is usually right and I think this one is a layup.  Oil prices will be higher than $45 come this time next year.

Use WTI time spreads as your signal when to get long.  As we saw in the fall, time spreads (candles) led spot prices (green line) by about a week.  Thus, if time spreads can break the downtrend, that will be your “tell” to get long WTI like Costanza…

7) Long Aussie$

A slowing Chinese economy and therefore slowing commodity demand, trade wars, and a decelerating domestic housing market have all led to a steady decline in the Oz in 2018.

Will keep this one short and sweet, as it is really the same idea as the other long risk asset trades. The AUD will really benefit from anything positive around the China/Trade War negotiations.  Some sort of deal and the Aussie$ will scream higher.  It’s that simple.

There is one micro issue Costanza should be concerned about and that is the Interest Only (IO) refi wave which will convert those IO mortgages into principle + interest loans.  The reset wave started in 2018 and will increase in intensity in 2019.  This will cause the average borrower to pay about $7,000 more per year in additional payments.  That is a major hit to the housing market via delinquencies, and may be a crushing blow to consumers’ discretionary spending.

The one saving grace for Australia has been the RBA remaining on hold for (jokingly) 37,000 consecutive meetings.  As the below chart shows, at this level of housing collapse, the RBA tends to cut.

Instinct: Australia has felt the effects of the China slowdown and trade wars, along with its own domestic issues.  The currency will need to continue to depreciate to offset that pain.    

Costanza: the equity market weakness will force Trump to play ball with the Chinese which will reverse the AUD higher. Additionally, the new economic weakness in the US and a Fed that could move to cut rates should weaken the USD.

Estimated probability of Costanza being right: 55%. Basically a better long than FANGs and credit, as being long AUD$ could also benefit if the Fed moves to an outright easing bias (which will depreciate the USD vs. the AUD).  Apparently, long USD is now the most crowded trade in the market (according to a BAML survey).   A housing crisis in Australia will be the major headwind for the Costanza long.

8) Short EM

This would be Costanza’s hedge against all the long risk asset bets above.  So why is being short EM anti-consensus at a time risk assets are getting rinsed and everyone has turned bearish?  Through conversations with street analysts and clients, there is, for whatever reason, an insatiable demand to buy the EM dip.  After all, EM has been selling off since January so it should be the first to bounce, right? That thought is “making George angry” and why he is going to take the other side of that.

In a world where the China Manufacturing PMI just went into a contraction, European data is falling off a cliff, and US regional surveys are all pointing to a coming slowdown; is EM growth going to be booming and the place to allocate risk?  I understand that it is a short dollar play, but 2019 could be marked by a major global growth slowdown and balance sheet recessions.  That is not the ideal environment for EM.

The technicals say the selloff is not yet complete, as a bearish head and shoulder pattern has formed targeting an additional 6% lower…

Instinct: EM has already taken its pain, Trump/China deal likely in 2019.

Costanza: global growth slowdown will hurt EM the most, especially if USD funding issues reemerge.  EM has never been a safe haven during growth scares and recessions.  

Estimated probability of Costanza being right: 55%.  All signs point to a poor global growth trajectory in 2019.

9)  Long Bitcoin

That potential bottom has formed a bullish inverse head and shoulder pattern that sets up for a retest of the 1-year downtrend…

The selloff in bitcoin in 2018 was an once-in-a-lifetime move.  From the highs just after New Year’s, Bitcoin spiraled 85% lower to take over as the largest historic bust since the Tulip crisis.  The crypto naysayers had a field day this year.

Costanza would hypothesize that if you believe the US Dollar is losing its hegemony, the US government debt issue is ballooning to unsustainable levels, Europe is in the midst of a populist meltdown, and China is on the verge of a hard landing; why aren’t crypto currencies like Bitcoin as viable a store of value as a yellow rock?

Interestingly, Bitcoin has started to potentially bottom during the December equity meltdown, lending some credence to the theory that investors are becoming concerned with the global environment and searching for new stores of wealth.

That potential bottom has formed a bullish inverse head and shoulder pattern that sets up for a retest of the 1-year downtrend….

Instinct: crypto currencies have no use and are on their way to near worthlessness.  

Costanza: Bitcoin is starting to rediscover its use as an alternative to traditional stores of value.

Estimated probability of Costanza being right: 50%.  No clue and no edge here.  However, it is hitting support levels, it has a bullish formation, and there is extreme bearish sentiment which all reek of a Costanza trade.

Bonus: Long Donald Trump

I cautiously put this in here hoping to avoid all political conversations and opinions, but I think this is an interesting nonmarket, yet market relevant idea.

I don’t think many expect much from POTUS next year, given the House swung to the Democrats and many folks (mostly on the liberal side, to be fair) believe there is looming tail risk that Mueller has enough evidence of some sort of wrongdoing that Trump’s presidency could be in jeopardy.

One could argue whether less Trump or no Trump is good or bad for risk assets.  On the one hand, the more stable Pence could be welcomed by markets, and perhaps if Trump goes, trade war issues dissipate.  On the other, the market rallied on his election victory in 2016, his policies are mostly reflationary, and China has become a legitimate nonpartisan issue.  Therefore, even if Trump is ousted, trade wars likely continue unabated.

The surprise, non-consensus idea would be that Trump crosses the aisle to enact Infrastructure.  Couple that with an earlier than expected China deal, and that is how Costanza will be paid out on a lot of his risk-on calls.  Perhaps the market is underestimating Trump, and he ends up delivering a great deal vs. expectations of a lame duck presidency.

Summary:

As opposed to last year, this year’s Costanza trades (non-consensus calls) have a simple theme.  Costanza is looking for a bounce in risk assets.  What are the realistic paths to get there versus a market that expects more pain?  At least one or more of these have to happen…

Cessation of tariffs/trade wars, which leads to a bounce in Chinese growth and a resumption of the positive growth momentum in the US

A Fed that ends the rate hike cycle and Balance Sheet reduction **coupled with growth remaining ok** (if growth softens further, equities could actually still sell off)

Rebound in the energy complex

US Infrastructure + EU fiscal stimulus + Chinese stimulus (all being discussed currently)

What are the glaring issues that will prove Costanza wrong for the first time in the history of this piece?  To name a few…

US Fiscal Impulse dies out in early ’19 + global QT picks up in intensity

Government intervention in Silicon Valley

Passive unwind into a resumption of the explicit and implicit short vol unwind

The potential for a corporate credit blowup in the US and Europe

Housing busts in Australia, Canada, the US, and Asia  

There is a lot of be worried about in 2019, and I believe we are only in the beginning stages of a risk asset purge.  Costanza is much less worried.

I want to wish everyone a Happy New Year!  I look forward to speaking with everyone again soon and telling you more about Prism’s exciting business model.

[jobsearchtips02]

Cryptocurrency market jumps by over $13 billion driven by bitcoin as major technical event approaches

Mehmet Ali Ozcan | Anadolu Agency | Getty Images

A rally in bitcoin led the cryptocurrency market higher ahead of a major technical event for the digital coin and as industry participants report an increased interest from institutional investors.

Bitcoin crossed $10,000 on Friday morning Singapore time, the first time it has hit that price since February, according to data from CoinDesk. The cryptocurrency had pared some of those gains and was trading around $9,900.75 as of 1: 39 p.m. Singapore time, still representing a more than 6.4% rise from the day before. 

The entire market capitalization or value of the cryptocurrency market had jumped by more than $13 billion from the day before, as of around 1: 39 p.m. Singapore time. That move had been largely driven by bitcoin which makes up most of that figure. The value of the entire market stood at $268.07 billion. 

Industry participants said that a number of factors — from supportive central bank monetary policy to increased interest from institutional investors — has factored into the bitcoin rally. 

Bitcoin suffered two bouts of intense selling in March sending it to a low of around $3,867, a price not seen since March 2019. Since then, the price has rallied over 150%. 

Meanwhile, stock markets, which also saw sharp drops in March, have recovered. The Dow Jones Industrial Average is up 28.4% since its March low. 

“Overall markets have been bullish since the March lows and this is across asset classes, including crypto,” Vijay Ayyar, head of business development at cryptocurrency exchange Luno, told CNBC. “Money printing by the Fed and other central banks globally have given a lot of confidence to investors that the economy will be supported no matter what.”

The U.S. Federal Reserve has announced a number of unprecedented measures to help cushion the economic blow from the coronavirus outbreak. Other central banks around the world, including the European Central Bank (ECB), have unveiled their own stimulus packages. Central bank policies are seen as supportive of risk assets like stocks.

The ‘halving’

Part of the rise in bitcoin’s price since the March low has been anticipation of a technical event known as “halving.”

Bitcoin is not issued by a centralized authority like fiat currencies are. That is why it is often called a “decentralized” cryptocurrency. Instead it is governed by code and is underpinned by a technology known as blockchain.

In the world of bitcoin, so-called miners with specialized high-powered computers compete with each other to solve complex math problems to validate bitcoin transactions. Whoever “wins” this race gets rewarded in newly minted bitcoin. This “mining” activity happens in blocks, which is essentially a group of transactions joined into one. 

Currently, these miners receive 12.5 bitcoin per block mined. The rewards are halved every few years to keep a lid on inflation. On May 12, the reward per miner will be cut in half again, to 6.25 new bitcoin.

The effect is that the supply of bitcoin coming onto the market is reduced. Previous halving events, which happen every four years, have preceded big price increases in bitcoin. 

“For the past few weeks, we have seen additional players enter the BTC market as prices have trended upward in anticipation of the halving event as bulls saw this as an opportunity to buy BTC ahead of a price pop and what many expect will be significant price appreciation,” Matthew Dibb, co-founder of Stack, a bitcoin index fund provider, told CNBC. BTC refers to bitcoin’s currency code like USD for the U.S. dollar.

“This has undoubtedly continued into this week and may even carry over the weekend as the halving draws closer.”

Institutional buying?

Dibb said there are other factors at play as well, including more institutional money flowing into bitcoin.

Paul Tudor Jones, a high-profile Wall Street hedge fund manager, revealed in a message that one of his funds holds a low single-digit percentage in futures on the cryptocurrency, Bloomberg News reported.

“The news that renowned investor, Paul Tudor Jones, has backed bitcoin—publicly praising the asset for its properties as a store of value has almost certainly helped catalyse BTC’s sudden movement into the US$10,000 zone,” Dibb said.

“With monetary easing policies and ‘unlimited’ economic stimuli being recently unveiled across the world, fiat currencies seem set to weaken substantially. This has, in turn, led to bitcoin’s narrative as a ‘store of value’ to gain added traction amongst investors who are seeking to hedge against volatility in traditional markets.”

Bitcoin has often been compared to gold as a so-called safe haven asset during turbulent times for other risky assets like stock markets. However, recently, bitcoin has fallen and risen when stock markets have.

Flashbacks to 2017?

Bitcoin has always been known as a very volatile asset subject to huge price swings. In 2017, bitcoin saw somewhat of a frenzy that sent its price from under $1,000 at the start of the year to a record high of over $19,700 in December that year.

However, in 2018 the price of bitcoin came crashing down to just over $3,000 by mid-December.

Dibb believes that the recent rally is different from what was seen in 2017. 

“This market is not moving purely on the back of retail speculation—and it is primarily Bitcoin which is experiencing gains, not the altcoin market,” Dibb said referring to smaller digital coins. “It is only now that we are really beginning to see institutional and accredited investors operating within the Bitcoin space, bringing a level of market maturity and financial understanding which was all but absent from the cryptocurrency sector as late as 2017 and 2018.”

However, the risk of a substantial drop remains. 

“We have gone from 3K to 10K in 2 months, too fast, too soon. There will be a pullback, and that will determine what kind of crash it is,” Luno’s Ayyar said.

“We could pull back to 8K, hold, and them move higher to 15K. Or we could go right back down to 3K as well. At this point though, one has to be bullish, unless, we see a violent move down. I think the current run up though is part of a larger move up, so don’t think we’ll see 3K again anytime soon. But if we do run up to 15-20K, then likelihood of a big move down and larger correction is higher.” 

Read More

from Job Search Tips https://jobsearchtips.net/cryptocurrency-market-jumps-by-over-13-billion-driven-by-bitcoin-as-major-technical-event-approaches/

[silverforum]

The Top 10 Countries with the Largest Gold Reserves

The World Gold Council reported at the end of last year that physical gold purchases, specifically for national reserves, was at a 50-year high and the second highest total on record. Many countries diversify their reserve funds to be a mixture of assets, but the economic uncertainty and turbulence of the past decade has seen a steady growth in gold buying and an increase in the percentage of reserve funds that physical gold makes up for a nation.

Chief amongst the buyers in 2018 was Russia, who have followed a policy of increasing the nation’s gold reserves for nearly two decades. President Vladimir Putin has been key in this push, but Russia isn’t alone in wanting to move away from the US Dollar as a reserve currency, with China and other nations also taking action to avoid punitive measures from America. The question is: has their gold buying put them high up our top 10 list?

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10) India – 607 tonnes

India is the second most populated country in the world, behind China. It is also the second largest consumer of gold, behind China. Gold is popular in India, and the Metals and Minerals Trading Corporation of India (MMTC) is partnered with Swiss refiners PAMP to provide LBMA-approved metal to the region.

India’s gold reserves are high enough to qualify them for the top 10, but only on the basis of their incredibly large population. Typically, Indian governments do not like buying or holding too much gold, on the basis that they believe it leads to deficits, so the country aims for gold to equal 10% of the country’s overall reserves.

The Reserve Bank of India in Mumbai holds over half of India’s gold reserves, while the rest is jointly held by the Bank of England and the Bank for International Settlements in Basel, Switzerland.

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9) Netherlands – 612.5 tonnes

The Netherlands, in an ideal world, would have less gold in reserve than it currently does. The small European nation had a policy of selling off its bullion in the last decade, but not enough sold, so the country moved away from its eagerness to reduce its holdings.

18% of this total is stored in London with the Bank of England (roughly 110 tonnes), 20% is stored in Ottawa, and 31% each is stored in New York and Amsterdam. Previously the US held 20% more and Holland 20% less, but in 2014 De Nederlandsche Bank repatriated sizeable amounts of Dutch gold.

Fancy yourself as a bit of a coin collector? Why not browse our range of Gold Dutch Guilders.

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8) Japan – 765.2 tonnes

Japan’s gold reserves are approximately 2% of its total reserves. The country is in an odd situation where its traditional policy, to regularly buy gold, was halted in 2011 following the Fukushima nuclear disaster. The country sold gold reserves to help stabilise the economy in the wake of the incident and hasn’t really picked up where it left off.

Another point to consider is the Japanese Yen. This is a safe haven asset in its own right, along with gold, Treasury bonds, and the US Dollar. If anyone were to not need huge amounts of gold in reserve, it would be the creator of a rival safe haven asset.

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7) Switzerland – 1,040 tonnes

Switzerland is famous as a nation of banking, tax exemptions, and geopolitical neutrality. Despite being dogged by rumours of stealing Nazi gold at the end of the Second World War, Switzerland has a strong reputation for financial expertise and facilitating international trade.

The country holds the majority of its gold reserves at the Swiss National Bank in Bern (70%), but for safe keeping it also has 20% with the Bank of England and 10% with the Bank of Canada.

At BullionByPost we stock Swiss gold from two manufacturers - PAMP Suisse and Metalor.

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6) China – 2,141 tonnes

China used to have a policy of mining gold, selling it, and reinvesting into its economy, but as the economy has caught up with major Western nations now, the country has begun building up the percentage of its reserves held in gold.

The Asian superpower had only previously disclosed information regarding its gold reserves on four occasions between 2000 and 2015, but since November the country has issued monthly updates on its additions to the reserve total.

We reported in April 2019 how the People’s Bank of China had added to the nation’s gold reserves for four months in a row, bringing in an extra 42.9 tonnes in that time, but that total as of the end of August is 99 tonnes of gold bullion for 2019. There is also some doubt on how accurate the reports on China's gold reserves actually are.

At BullionByPost we sell Gold Chinese Panda coins, produced by the People's Bank.

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5) Russia – 2,228.2 tonnes

Russia recently leapfrogged China into fifth place for the world’s largest gold reserves. Russia are also the third largest producer of gold in the world. President Putin has aggressively pushed a program of rapidly increasing the nation’s gold reserves over the last 10 years; a policy which had begun slowly a decade before that.

The Russian Federation is often at odds with the United States, and considering the US Dollar is the chief international reserve currency, this puts Russia at a disadvantage.

As of the start of September, Russia has added 109 tonnes of bullion to its reserves, and is rapidly closing in on France as the fourth-largest holder of gold reserves.

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4) France – 2,436 tonnes

France was previously in third place, before selling off 500 tonnes of gold. The Bank of France was actioned to do so by then-Economy Minister Nicolas Sarkozy (President of France 2007 – 2012).

In May 2004, Sarkozy launched the sale and reduced France’s gold reserves by 20%. The logic was to use the money raised to invest in currencies and bonds, and use the interest made to pay off France’s debts.

Gold is held at the Banque de France headquarters in Paris. La Souterraine, as it’s better known, is a secure underground vault for French national reserves, as well as gold owned by the IMF.

One of our more popular collectors items at BullionByPost are gold French Franc coins.

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3) Italy – 2,451.80 tonnes

Italy’s gold reserves are some of the most stable in the world – something which cannot be said for the country’s wider economy. Italy has struggled in the aftermath of the Financial Crisis of 2008/09, and is currently (April 2019) in recession for the fourth time in 10 years.

The nation’s gold reserves however have remained untouched since 1999 – 20 years ago – at 2,452 tonnes approximately. Italy was a notorious exporter in the 20th Century and a hub of European trade. Recent economic distress has reduced the country’s output, but Italy still remains one of the larger European economies – even if it is burdened with significant debts.

In February, BullionByPost reported a dispute between Italy’s coalition government (Five Star & Lega) and the European Central Bank. Lega Nord, the right wing party, accused the ECB of wanting to keep Italy’s gold away from the government and the people, while Beppe Grillo – founder of the Five Star Movement – worried the European bank by blogging about the benefits of Italy selling a chunk of its gold reserves to avert a VAT rise, in a similar fundraising fashion to the French bullion sale.

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2) Germany – 3,367.9 tonnes

Germany boasts the second largest gold reserves in the world. Germany’s gold is held in three places: The Deutsche Bundesbank headquarters in Frankfurt’s banking district, New York’s Federal Reserve Bank, and the Bank of England vaults in London.

Due to the Cold War, most of Germany’s gold was evacuated to ally nations. In 2013, the Bundesbank declared it would repatriate a little over 40% of the country’s gold; 20% held by the United States (300 tonnes) and a little over 20% from France. This was to be achieved by 2020 at the latest, but despite opposition from America, Germany received all of its gold - ahead of schedule - in 2016.

Interestingly, Germany’s information on their holdings is probably the most transparent in the world. The Deutsche Bundesbank pursues this as a deliberate policy, arguing that transparency breeds confidence for investors and the wider public. Some of the bank’s gold is on display for the public to see in their Money Museum in Frankfurt.

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Which country has the most gold? .

1) United States of America – 8,133.5 tonnes

The nation with the most gold reserves is, unsurprisingly, the USA. Their total is by far the largest of all the nations on our list, holding 4,763.8 tonnes more than second-place Germany, but this total is subject to concerns and criticism.

The first problem is accuracy. Documents pertaining to the authenticity of gold bullion held in both New York and at Fort Knox has either gone missing or been destroyed. Rules introduced in 1974 were supposed to mean a one-time check of all America’s bullion, but gold has been found to have been accessed and potentially tampered with since that inspection.

The second is the consideration of foreign gold holdings. The US, like Britain, France and Switzerland, has often been a safe haven for gold bullion reserves in times of civil or national conflict. There are those who believe that America’s reserve total also includes Germany’s national gold reserves (amongst others) which, until repatriation in 2013, were held in New York.

The final part is purity. With much of the US gold reserves from older acquisitions, some experts believe the United States holdings are not fine quality bullion and that, were they melted down and remade into 24-carat bars, the total holding would come down dramaticall

[torentialtribute]

MARTIN SAMUEL: Strauss lost the right to lecture counties when he gave England job to an Aussie

Very polite, most cricket people. That is the only explanation for how Andrew Strauss could protest with the provinces about the absence of English coaches in The Hundred, without being challenged.

After all, who made the Australian coach of England? That was Strauss in his previous role as director of cricket for the ECB. And if England, with 142 years of Test cricket behind them, has no faith in an Englishman, why should Manchester Originals, Trent Rockets or other franchises still throw a ball?

Like another Australian, Tom Moody, takes over the leadership of Oval Invincible as expected, meaning that the Englishman has found a job as head coach in the eight teams that make up The Hundred. Including Moody there will be five Australians (Shane Warne, Simon Katich, Darren Lehmann and Andrew McDonald), and one each from South Africa (Gary Kirsten), Sri Lanka (Mahela Jayawardene) and New Zealand (Stephen Fleming).

Andrew Strauss threw the counties about the absence of English coaches in The Hundred

Although this corresponds to the cosmopolitan nature of the competition and the success of T20 club competitions abroad, it also amounts to a miserably serious failure within the ECB. Warne is not even a coach for God's sake. Lehmann was the head of an Australian regime that has now been discredited.

It could be argued that the counties should have looked elsewhere, but it is not up to them to produce talent. Good coaching is the product of a strong national system, from which provincial opportunities arise. If England doesn't have a coach that is worth a carat, this has about as much to do with the Peaky Blinders as the Northern Superchargers, who barely got a breath before they take the blame.

Strauss, whose triptych shortlist will compete in 2015 against Trevor Bayliss against his Australian countrymen Tom Moody and Jason Gillespie. And nobody claims that Bayliss did not do well. His record in the white-ball game won him the role and with England he won the first World Cup this summer he more than delivered. But that alone does not justify the appointment.

The club game can only be influenced by national events. Undoubtedly, the recruitment of the football association with Sven Goran Eriksson started a process that culminated in even mid- or lower-ranking Premier League clubs watching abroad. And what about the successor of Bayliss? The man who is now in Strauss & # 39; shoes offers no guarantees.

"It would be nice to have an English coach, but we have to get the best guy," said Ashley Giles. Chris Silverwood, one of Bayliss's current assistants and born in Yorkshire, is also being considered, perhaps also Paul Collingwood.

However, this time it is fair to say that the ECB owes English coaches. Via Strauss they conveyed the message that graduates from the domestic game were not suitable for the highest level.

They can hardly be surprised when their newly minted franchises, with so many of the county's future financial cricket, come to the same conclusion.

Athletics do not contribute to running or maintaining the London Stadium, but it costs £ 4 million to the taxpayer every time the seats are reconfigured for a summer meeting.

It was hoped that there would be respite in 2022, by then the upgraded Alexander Stadium in Birmingham will be open for the Commonwealth Games. It is being expanded to 40,000 with work to be completed in the winter of 2021 for an amount of around £ 70 million. Yet at least £ 4 million is saved annually.

West Ham should be free to buy London Stadium when it is Alexander Stadium is ready

Apparently not. British Athletics have indicated that they are still planning to organize annual meetings in London, so a further £ 4 million in conversion costs will be incurred. But the turnout for these events – the Anniversary Games, which go back to a glorious night in 2012 – is declining.

British athletics gave this year's gate 40,000 over two nights, but this includes many guests. For comparison: West Ham receives 19,000 for the fun day from their fans. Once the Alexander Stadium is completed, it should be the home of British Athletics. West Ham would then have the freedom to buy the London Stadium, take it off the government bill, and really take it home.

Checkout? Kyrgios is a British twerp

Who knows what Nick Kyrgios – & # 39; the world's most tiring sportsman – has in store for the US Open next week. Swearing? Spitting? Abuse the referee? Tanking? Perhaps a row with an obvious multiple? It's all on the table. Great tennis? Unlikely.

Kyrgios is spoiled with the myth that he is a box office. But what's great about watching a player wasting his potential? Where is it nice to hear him abusing better men, who are not in a position to answer back, let alone to climb down from the referee's seat and confront this British little Antwerp with the truths he earns?

If Kyrgios stopped acting, he should play well. And if he treated his sport and his talent with respect, he might find out that he is not as good as his giant ego believes. Kyrgios calls Novak Djokovic, Kyrgios calls Rafael Nadal. What does it matter? What matters is the result and Kyrgios has won only one match against the big four.

What is entertaining to see a player like Nick Kyrgios wasting his potential?

He has played Nadal, Federer and Andy Murray – never Djokovic – seven times in slams and achieved a lonely win over Nadal in Wimbledon five years ago. Murray has confronted him with all four slam events and Kyrgios won a lonely set in 13. He lost in straight sets from Federer at the US Open and his most recent encounter with Nadal, this summer, ended in four.

Kyrgios is common in the biggest competitions. He has played in 25 slams and has never gone deeper than two quarter-finals: 13 times in round one, two or qualifying; seven times in round 3.

So if your idea of ​​fun is bad tennis, played with an inexplicable sense of justice, then Kyrgios might be your idea of ​​a superstar. For most, he is a crushing drill.

Pogba & # 39; s ego blamed it … but it is Ole who looked at a mug

Quite handy for Ole Gunnar Solskjaer who reports from his anger behind closed doors, after Het Manchester United straffiasco at Wolves on Monday. Up to that point he started to look a bit soft.

Solskjaer's occupation was always, in part, that he was not Jose Mourinho. He wasn't dark, he didn't leak under the surface, he wasn't manipulative. He was a good, sincere Manchester United hero, with a smile, a cheerful, cheerful attitude and a helpful hotline for Sir Alex Ferguson.

Yet he looked at Molineux for a mug. How can a team of ambition know who their penalty taker is before the kick-off – especially now that football is ruled by VAR? How could Solskjaer have made it clear that the execution of Marcus Rashford is now superior and preferred?

Yes, there is the ego of Paul Pogba. That one man who had missed three of his last eight should even argue with Rashford – regardless of who won the penalty – says many of his team player mistakes. Still, Solskjaer invited that ego to overwhelm the moment if he didn't make it clear before the game that Rashford was now the go-to penalty. In any case, mention a book in case Rashford is not available, but that should be the case. Instead, Pogba spoke the younger man out, and missed, and Solskjaer then had the non-enviable task of defending him.

It later turned out that Solskjaer seemed privately mastered and took Pogba from future punishment duties. . He also has the support of the team. It all sounds pretty handy, it protects the manager's image and puts the blame on Pogba again. In the end, however, it is Solskjaer's task to manage, especially the players with a lot of maintenance in situations with a lot of maintenance. All indications suggest that it did not happen on Monday until it was much too late.

If there was anything positive about the rejected Manchester City goal last weekend, then it was the sight of all those who play that they are adults only in the village and are exposed as cheaters, former referees and many hipsters who told grinning critics that if they had just paid attention in the summer, they would know it was VAR judgment was correct.

They also seem to know the handball rule delightfully. Kevin De Bruyne, the Manchester City player who complained most bitterly, was smugly concluded as an ignorance by people who had cleverly taken over as Ian Holloway.

Of Bruyne's only mistake, fully accepting the official explanation was why the purpose of Gabriel Jesus was not allowed, while it was wrong and based on a fake interpretation.

Van Bruyne was told that every handball in the construction of a goal is a violation, while the rule actually reads: & # 39; It's a violation if a player gains possession / control of the ball after it touched his hand / arm and then creates a target channel. & # 39;

Yet Aymeric Laporte had no way of gaining control or possession of his can deflection, and when the ball ended up with Jesus, he still had to beat several Tottenham players to score. So it is not the law that is a ** but VAR as applied in this country. The error is, as always, human. We have been told that the nods will disappear in VAR, but common sense must prevail for that. There is little evidence to date.

Kevin De Bruyne has been informed that every handball in the run-up to a goal is a violation

Zinedine Zidane has gone from trying to force Gareth Bale from Real Madrid to make him part of his plans for the first team. Most likely Bale is on borrowed time until Eden Hazard is fit.

Still, he performed well against Celtic Vigo and at least he seems to have played in the team. These are the only conditions on which staying with Madrid makes sense. He is far too good and at the age of 30 too young to slip into Chinese backwaters or play for a team outside the elite. Yet Zidane must continue to give him a chance. An even worse option than mid-table or points east would be to sit, unused and unloved, in the stand.

Oliver proud to be Irish until he failed

Oliver Norwood is the captain of Sheffield United in the Premier League. That is a big responsibility and an enormous amount of effort is required. Sheffield United will not survive this season without getting the most out of every member of Chris Wilder & # 39; s team and Norwood is huge for them. It is his first season as a Premier League footballer and the immediate victim is his international career. This week, after 57 caps, he called it a day with Northern Ireland.

Michael O & Neill, his manager, said he made a big mistake. Former player Jim Magilton thinks he will regret it. David Healy, now Linfield's manager, added that the decision evokes faith. Healy could play international football at the same time, Healy insisted. Even Steven Davis did it, Jonny Evans, Gareth McAuley, Craig Cathcart. Even before, players like Neil Lennon, Steve Lomas and Keith Gillespie both did. I did it myself. & # 39;

Do you see anything about that list? All mentioned players are from Northern Ireland. Davis, Evans, McAuley, Cathcart, Lennon, Gillespie and Healy were born there. Lomas was born in Hanover, Germany, but only because his father was in the army. When he was two years old, he lived in Coleraine. Norwood is from Burnley.

Central midfielder Oliver Norwood is captain of Sheffield United in the Premier League

He played for England at the level of Under 16 and Under 17, and then re-appeared in the teams of Northern Ireland from Under 19, and has remained with the country ever since. He qualifies through his grandfather and is a loyal pillar of the O & # 39; Neill team.

Last season, Norwood made himself unavailable for the first four qualifications of the European Championship – and now this. The problem with allowing players to change their nationality is that it makes international football into a jacket that can be tried to measure and thrown away if it doesn't fit.

Norwood was undoubtedly very proud to be Northern Irish – until he felt more proud to play in the Premier League.

Four games in and still no wins for the new Anderlecht-boss Vincent Kompany. After a defeat at home in Ostend on the opening day and a draw with Mouscron and Mechelen, on Saturday brought a 4-2 defeat in Kortrijk, with the player-coach guilty for three goals.

Kompany is an Anderlecht legend and will undoubtedly have time in his first job, but keep it up and a television studio and Super Sunday cannot be far away.

Nobody watches Belgian football here anyway. It will be as if it never happened.

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