Archive for September, 2016

Hillary Clinton above the law

Posted: September 29, 2016 in Uncategorized

A few things show how Hillary Clinton is above the law.

The Federal Reserve is supposed to be non-partisan and has hold the interest rates on hold.

She has been grilled by the Republicans in Congress on Wednesday as she is particularly close with Treasury Secretary Lew – very close to Clinton

Fed Governor Brainard donated the maximum allowed individual donation to Clinton and he is seen as potential short listed for US Tresury Secretary under Clinton and previously was an economic adviser to Clinton.

James Comey of the FBI as been grilled himself as new evidence was found on Reddit.com as a simple google search from a journalist found evidence of a request from a Clinton staffer on how to delete VIP email address (if this is not evidence, what is?) in 2014.

 

At 11am, Eastern Australia Time, there is the first debate.

Usually Presidential races bear little real effect on the market, but this time is different.

US institutions have bet big (both phisically as giving money to Clinton and as positions) on Clinton.Also Soros, Bloomberg and other super-investors are staunch Clinton supporters.

So if Trump wins the debate, the October market girations will start early.

UPDATE

It has been done. Clinton seemed more prepared (people against her would say she is the more accomplished liar). Anyway the debate did not sway anybody.

The markets thinks Hillary slightly won (by the look of US Futures or cross US/Mexican Peso).

On line polls seems to favour Trump

Political commentator seem to side with their own political preferences.

The one truly beaten was the presenter  Holt who seemed often at loss about what to do.

EU, ItalExit on the cards?

Posted: September 24, 2016 in Uncategorized

A deep scary break has appeared in Europe after Brexit. The next European meeting will be between Merkel, Hollande and Junker. Italian PM Renzi has not been invited as in his own words “it’s natural they have a meeting without me, there is a deep break and I do not know if it is solvable”.

The deep break is that PM Renzi wants a fiscal stimulus to re engineer growth in Europe while Merkel and Hollande wants to continue the austerity paradigma.

It seems we are approaching the end as described in my 2013 blog: Europe DOA (dead on arrival) by 2020 (in essence I wrote the Euope will be broken not by the market crisus but by politics).

The attack of the Reserve Banks 

Posted: September 22, 2016 in Uncategorized

Well, as widely announced, the Federal Reserve remained put and the next probable hike could be in December, after the US election.

What the market really liked that is that, apart the hawkish tone, the forecasts of rate increases for 2017 are more dovish.

Japan, different but similar,  was softer on negative rates policies (that hurt banks) and implied more stimulus.

So all is good, but the uneasy sensation that the Reserve Banks are starting running low on miracles, persist.

Now the politicians should start working for what they are paid for.

Markets: a brave new world

Posted: September 19, 2016 in Uncategorized

September 2016 is looking a most interesting month.

I always thought the best managers are the one that understand when the market changes.

It was quite a while that the FED talks about rising interest rates, but in September really acted on it.

The yields back up strongly provoking quite massive losses on US  Treasury Bonds (as when yields are so low any move as a price magnification effect.

Now we are entering in an “increasing rate environment” were a lot of positions that proved profitable in the last decade will not work anymore.

At this moment there will be plenty opportunities to escape the massacre as we will “yield back up tantrums” followed by relief rallies as the Reserve Banks will sooth the markets.

But the overall direction of the market and what “works” and “does not works” changed and you, or your adviser, better understand this.

A “rising interest rate” market is much harder for everyone – you can still make money and there are different phases to it – but never yields have been so low – so the usual parameters do not work.

Wow I thought that only children were so naughtyy.

After the EU (Germany)  asked Apple to pay Euro13 Billion in tax…the US Department of Justice asked USD13 billion to Deutche Bank to settle various 2008 mortgage related infringments.

Well I will not be able to tell off my kids anymore when they want the same toy.

Childish behaviour at the very top level. How clever humanity is!

Probably they will settle for just USD11.66 billion (joke, that is the correct convertion of usd/eur…my children do like that,  as I then take the toy…) 

Attached my September 2016 newsletter, properly sent to my clients before the sell off!

scalaprivate_newsletter-september-2016

A lesson from a September sell off

Posted: September 13, 2016 in Uncategorized

As predicted the Fed came to the rescue with dovish comments.

But also a terrible warning. In the sell off there was extreme correlation. All shares gold bond were hit at the same time.

So we need to carefully protect the portfolio as the traditional ways have the potential of  not working in the next downturn

The Fed is drilling in the tightening decision and (from Jackson Hole) ask for more fiscal policy.

The ECB has a nothing to do meeting and call for more Government intervention. 

Bank of Japan is running out of bond.

And Bank of England prefer to have a wait and see.

That is outright scary.

This rally has been underwritten by the Reserve Banks (so.much so that a Deutche Bank study says that it accounts for 40% of the post 2008 rally)…if they leave the scene..all hell would break loose.

The last time they did it and missed it was 1938. The world plunged again into recession and was “saved” only by the Second World War.

I do not think they are that crazy, but we do not know the picture. They could really start to run out of ammo and need to put pressure on the politicians.

When Gods fall it is never pretty.

A sell off on nothing new

Posted: September 10, 2016 in Uncategorized

As I was posting just a few days ago the calm has been shattered.

The trigger in reality as not been the hawkish Fed speak (quite similar to the previous ones) but from the ECB and Draghi not announcing new measures.

It completely confirms that the reserve banks are underpinning this market and whatever they do will make or break the market.

And by the way “silly” Trump just said the same (not so silly as represented?).

Still believe the 20 September the Fed will do nothing and the market will relax a bit (if Fed raises for real…market goes in tailspin and with markets in tailspin usually the challenger (Trump) wins…and the establishment does not like it).