Iran/USA dust settling

Posted: January 9, 2020 in Uncategorized

As I thought Iran wants regime survival and calibrated a great show off attack. Lots of noise and no killing.

It gave the perfect de_escalation tool for President Trump that does not want another sand war _ also now US is mostly Arab oil independent.

Logically this will be a long war (well Iranian started in 1983 with the Lebanon barracks bombing…).

The red line that has been crossed is actually the fact that Iranian (Russian Chinese) cannot count anymore on impunity and so they need to calculate very carefully their moves.

Oil and gold retreated, but they do represents a good hedge.

In Iran a passenger Boeing crashed. Although everyone is pointing to an accident the flight path and rate of ascent does not look like it. Iranian will not hand over the black boxes.

My $2 would go to a mistaken identity case shot down by anti_air Iranian projectile (not missile).

Another downing like the one in Ukraine were the truth will be never be known.

2020 really started with a bang!

The killing of the Iranian top general is a Rubicon moment (Julius Ceasar declaring war on Rome) for more than one issue.

The Iranian swore revenge and they will plan attacks. Not a full frontal attack as the Iranian priority is regime survival and they cannot withstand a war with the US and Israel. It will be a series or what they think are not war inducing attacks on US targets for several years (well they are doing that since 1979…).

But the real Rubicon that everyone missed is the US. Since 1983 (Lebanon barracks bombing) Iranians have harassed the US and the US behaved like a huge giant that cannot kill a fly.

The latest Iranian attacks are the downing of a US drone in Iran and several in Yemen, attack a Saudi oil refineries and tankers. At least 11 rocket launches in Iraq.

They were counting that Trump could not move as it is election year and he does not want a new Middle East war. They were wrong.

Their confidence is shown that their top general was in Iraq practically without escort and accompanied by the men held responsible of highjacking airplanes and bombing US Embassy in Somalia (as per Kuwait tribunal sentence).

President Trump showed again is complete unpredictability.

The US empire can fight back wherever and whenever it wants.

And it has to be on everybody calculus. A terminator drone is just a whisker away.

I am not a President Trump supporter, but he did a Rubicon moment. For Julius Ceasar it worked and too many always dismiss him as an idiot. No idiot can become President.

On the Dem Congress lamenting his authority, I shall remind them that their dear President Obama destroyed Lybia without Congress authorisation in 2011. And since then the massacre has been unending. Where they were then?

Trump: the tariff man

Posted: June 3, 2019 in Uncategorized

Trump is escalating war with everyone. Aside China – I agree on it myself – lately is really start to look unhinged.

He placed tariffs on India. He wanted to place tariffs on Australia (then the military convinced him otherwise) and he is placing tariffs on Mexico.

Especially with Mexico it is alarming. He is using the tariffs to try and stop illegal migration.

This is particularly worrying as it set a precedent. “Do as we say or we will sanction tariff against you. Next target could be well be Europe – if Europe does not provide funds for NATO – here we go …tariffs.

This, as a private citizen, it would be coercion. Or Mafia. If you do not pay up – we punish you.

This is really scary – the most powerful state in the world with an unhinged President and a “Dr. Strangelove” (John Bolton) as adviser.

Iran vs USA

Posted: May 16, 2019 in Uncategorized

The tensions between Iran and the US are again rising .

Two Saudi tankers got attacked. There are other few information of a previous sabotage at a oil refinery. Two Houthis drone attacked a refinery deep inside Saudi territories (whereas before where always confined to the border).

There is no proof that it is Iran, but most likely it is. Why?

There is a major sophistication in the attack – the attack were completely undetected . The attack on the ships show an intent to damage and not sink the boats. Even the drone attack were aimed at disrupting – not destroying the refinery.

Most likely is an Iranian signal that they are really not happy of the US crippling sanctions.

The US is steadily building and army in Saudi Arabia and while President trump is against a war, both Bolton (Security adviser) and Pompeo are pining to attack Iran and settle scores that started in the 1970s.

While especially Bolton thinks that would be an easy war – I tend to disagree.

Iran is the supreme specialist in asymmetric war having fought with Israel for decades. It uses proxies very efficiently. Practically beat Islamic State on the ground.

After the virus attack that destroyed the nuclear centrifuges, it even has one of the largest cyber army.

While tariff wars does not scare me, a Iran/ USA war scares me.

It will become suddenly a USA/Saudi/Israel vs Iran -admitting that Russia and China will not intervene openly to support Iran. Oil will pass USD$100 and cripple the economy.

A very scary scenario indeed. Let’s hope that President Trump has control of his dogs of war.

Media and tariffs

Posted: May 16, 2019 in Uncategorized

I am no fan of President Trump, but the media is very biased.

It is true that tariffs have a direct repercussion on the consumer (US and Chinese alike), but running some numbers the number are very low.

An increase from 10% to 25% on USD200 billion is…USD30BN.

Monday stock market rout spurred by the media costed USD700 billion!!

The total taxes that US taxpayers pays each year is USD5.51 trillion and US GDP is USD20.5 trillion. Even if President Trump hit every single Chinese product the number would be USD135 billion.

Too little to have an effect on the US. Also the spat with US farmers is bad…but only for rich farmers. But US consumer is happy as wheat cost 20% less.

All in all is a battle for the US Presidency.

The media, Democratic leaning for the majority are trying to crash the stock market – as this would damage Trump re-eelction pprospects.

President Trump wants to llook hard on China – as Democrats are soft on China – and there is a rising story of the son of ex VP Biden, primary Dem candidate, signing a major private contract just two days after his father visit to China during Obama (as he did with Ukraine.

So, do not listen make your own mind.

US economy misleading data

Posted: March 11, 2019 in Uncategorized

The latest reports on the US data point to a sharp slowdown.

While this could be the real case I would urge not to make assumptions.

January and February have had two large abnormalities.

The longest ever government shutdown. 35 days in which employees would economize and look for part time jobs.

The polar vortex. With temperature of -20 degrees definitely would not go out shopping unless it’s necessities. Definitely not for a new car (auto sales tanked).

So while it could be bad…it also could be the bottom. We simply do not know.

Calendar base (so not analysis) there is always a March low and a good April (April statistically is the best month for US equities).

Markets: and now what?

Posted: March 7, 2019 in Uncategorized

This is the million dollar impossible question.

After the worst December from 1931, we have the best rally since 1991. What did change? Essentially, you can see the arrow, That was the 4th of January where the US Chairman Powell declared in an interview that the FED will be more data dependant (meaning probably at least a pause in the rate hike) and that the balance sheet run-off (the drainage of liquidity due to the end of QE) is not set on an automatic course. Powell even admitted: “We’re human, we make mistakes but we’re not going to make mistakes of character”, in response to a question on whether the change in policy was a result from pressure from the White House.

The issue is that, as new Chairman, he wanted to show the markets that he was different than Chairman Yellen and he was sideblinked by the market for his arrogance. (My December newsletter title – Central Banks errors was correct indeed).

The situation is confusing to say the least.

Technical Analysis.

The violence of the down move graphically asks for a re-test of the bottom around SP500 2,300. The top of the current move should be somewhere about 2,802/2,817 and 2,873/2,920. The base of this move 2,742/2,710. A break of that level will open Pandoras box.

The end of cycle target is still SP3,200 or above. Adaptive analysis indicates that this current rally could still last for 30-60 days (end of May).

Economic Data (which are a bit confusing as the winter was really cold in the US) point to a real slowdown in the US economy (not a collapse), which indicates that this is a Bear Market Rally.

The intervention of the FED in January (and the other reserve banks in February) mixes up the cards a lot. There is an old saying in Wall Street – don’t fight the FED.

It simply says that the FED has too much money and power and you better not bet against it.

On the other side there are the USA/China trade wars (or US vs world trade wars, as President Trump is trying to renegotiate 40% of the world trade holds the other 50% of the rally). The market has been propelled higher by “positive leaks” about the trade talks (although there are still quite large differences especially on Intellectual Property and surveillance). But leaks are not agreements. There was even a funny (or not funny) moment where one of Trump’s senior advisers had to explain what was a Memorandum of Understanding to Trump, on national television.

In March there will be the first serious test of this rally:

-The Federal Reserve notes will show what their future outlook is that will influence the yield curve (the inversion of a part of the yield curve was one of the causes of the December selloff as it is reputed as one of the few real indicators of a sure recession).

-The outcome of the US/China trade talks – while I think that both President Trump and President XI both need a positive outcome, implementation will be key. If the media believe them, everything will be fine (well the media believed that US/North Korea summit was positive and the market relaxed – in reality nothing really changed –  US satellites are still picking up activities at nuclear sites – apart the absence of bellicosity).

-The economy: The Q4 earning season (January-February) was not as bad as feared – over 90% US companies have reported EPS growth over 14% year on year (versus 9% forecast). While good, it is way down 20% and the companies beating expectations have declined. Companies need to be able to improve to sustain gains. Q1 2019 is upon us.

-Technical Analysis – we are at a major barrier, but most investors have missed out on the January/February rebound as they divested heavily in December. The Relative Stength Index is overbought so it warrants caution. But there could be a last leg as there is still a lot of cash on the sidelines (or as they say in Wall Street FOMO – Fear Of Missing Out) and the market feels robust ignoring the negative news.