Archive for February, 2017

State of the Union Trump speech

Posted: February 28, 2017 in Uncategorized

Technically it is not a State of the Union address sd Trump has just been elected.

But the address that Trump will give Congress tonight is of the utmost importance.

This rally has been based on Trump promises and the tax promised has just been deferred to before July.

Now Trump better start delivering or the market can turn fast.


Meet Trump’s Gods of War

Posted: February 24, 2017 in Uncategorized

President Trump chose some good people in his Cabinet and often some controversial figures in different positions.

But he chose two real American Warriors in his military advisers and left them to their own devices (so without imposing political agendas, which I do not think they would accept anyway)

Let’s introduce them

General Mattis, Secretary of Defense, Class 1950.

His career highlights are several

  • Commanding the Seventh Marine Regimen was one of the first to enter Kuwait against the forces of Saddam Hussein
  • He Commanded Task Force 58 in Afghanistan (First Marine to have such a command in history) and took Kandhar which was the capital of the Taliban
  • In Iraq he took part of the liberation of Al-Falluja and “re-wrote” the books about counter insurgency and the “hearts and mind”

He is a frontline General and his Marines can testify that directly in the various combat operations.

He is also famous for his blunt phrases in “Apocalypse now” phrases like

“We’ve backed off in good faith to try and give you a chance to straighten this problem out. But I am going to beg with you for a minute. I’m going to plead with you, do not cross us. Because if you do, the survivors will write about what we do here for 10,000 years”

He is a front line General not scared to take matters in his hands (and his marines can testify that directly). An American Warrior indeed.

Lt. General McMaster – National Security Adviser – Class 62

His career highlights are several

  • In the Gulf Wars,took by surprise,  with just 9 state of the art Abrams M1 tanks, destroyed over 80 Soviet and Chinese tanks part of the Iraqi Republican Army without any losses. This battle became a study case for the entire US Army
  • In Iraq, in Tel Afar, he practically re wrote the book on how to defeat the insurgency and Tel Afar was one of the first Iraqi town where Al Qaeda got defeated on the field.
  • He then became one of the main teachers in tactics and wrote several books that are must-read in the US Army.

Again, a full on warrior with a lot of “on the ground” experience and left thinking.


Definitely if you are Islamic State, Russia or China, you should be scared of this two American Gods of War.

This also shows that Trump can be depicted “strange” by the media – but is more clever than most thinks. Even in his most crazy speeches – he is not crazy – just pushing the boundaries.

Could President Trump make America great again? Time will show, but the odds are more even than people thinks.


Markets, February 2017 (update)

Posted: February 22, 2017 in Uncategorized

Since December my systems told me that this markets had a destination around SP500 2,380 -2,420 – with a potential blow off phase till circa 2,500.

Sincerely even I was not believing them myself – but they look true to form.

At the same time the risks, as it is seen by Institutional investors are continuously rising – so much so that institutional are constantly in and out of the market since the 9th January.

Ho we quantify risk?

A few ways (and mind you they all point in the same direction)

Treasury Bond yield 10 year 9zero risk) shot up 50% since July 2016

TED spread (future contract, 3 months, US T bond (zero risk) versus eurodollar 3 month). It is up 70% since 2013 (2003 -2007 went up 76% before the crash).

Vix is around 11 (very low/bullish) since January. Only before the GFC stayed so low for so long. At the same time the SKEW (probability of a black swan crash event) is 136.93 (this is a recent indicator with clean data since 11. The maximum level reached is 154 at Brexit).

Gold is up 18% sine mid December

Investors Intelligence Advisors’ Sentiment Survey went up to 61.8 (only better in 2007 pre crash and in July 2014 (and in October we had the biggest crash since 2009 due to Ebola/Europe crisis).

Currency, with a lower US dollar, again does not match the stock market pattern.

So all of this tell you that the institutional investor are seeing great risks in this rally.

For all these risks the market trend  is still in uptrend and could continue being like this for still a few months (or not).

Some other technical indicators say that now the market can have an uptrend maximum of 10% and a downtrend max of 45%.

Trump: a US Games of Thrones

Posted: February 20, 2017 in Uncategorized

Article 25 is actually not far away for real.

Already a few senators (Blumenaur -Dem. Oregon), Franken (Dem-Minnesota), Lieu (Dem- California) between others, hinted at the eventuality.

Article 25 (US President dismissed as unfit for command) has been invoked 6 times (two against Nixon and the others for medical reason (temporary as the President was going under medical procedures).

While it allows the Vice President to take over, the President can challenge it and to defeat a President the Congress needs to have a 75% majority.

But let’s take a step back.

The supposed “craziness” of Trump stems from several high level leaks about Trump and his advisers phone calls (supposedly secret) and partly to Trump own behaviors and the media “interpretation” of his behavior.

The leaks stems from an authorization that Obama signed (the 12th January 2017!!) that allows the NSA to share its data collected with 16 US agencies.

At the moment I did not connect the dots, but now it appears that this NSA sharing has allowed a lot of people (some of who certainly hates Trump, for example the EPA (Environmental agency), the US Border Patrol and others) to access and leak secret documents.

So there is an orchestrated move to discredit Trump and his administration so to be able to call Article 25.

President Trump could be crazy, but he is not stupid – just unconventional.

He started with what the media (and non Middle US viewers) depicted as a unhinged interview and then it was followed with a “back to basics” campaign style rally in Florida with his core supporters.

The interview and the rally is aimed squarely (and correctly) to his core supporter of Mid-America. The 80% zero asset citizens that constitute its power base.

The message is clear. If you raise Article 25, I can raise the masses with a clear message – the elites together with the media are enacting a soft coup and I could start a civil war (and lot of the zero asset people in US are part of the army and definitely armed).

But this game of throne scenario goes beyond the US.

How the President Trump behaves does implicitly reflects on the various European elections and the populist parties. Already the populist Netherlands party is losing some voters as the media make people be scared of populist figures like Trump (and they do not talk of the quite successful populist vote on Trump). It is an “heart and mind” operation to influence the future of the West.

You can believe me or not, but there are more truths out there -always think about what anyone is telling you.


Article 25 for President Trump?

Posted: February 18, 2017 in Uncategorized

Article 25 allows the Vice President with the consent of the inner cabinet to remove the US President as unfit for command.

Whatever the truth is, it seems the media wants to represent President Trump  as unfit for command.

They could be paving the way for such a transition (golpe?) . The media campaign is similar to Syria, Serbia etc.

A transition could make President Pence, but it would be considered a golpe from the elites by a large US population and lead even to civil war.

Interesting times.

The US Deep State wins again

Posted: February 17, 2017 in Uncategorized

The US Deep State won again.

The Deep State got rid of security adviser Flynn.

He was the main responsible of the foreign policies of Trump that broke with the past.

As now you can see Russia is back to be an enemy, Iran the evil kingdom.

There are legal preparations for the US to intervene both in Yemen and Syria with the excuse to create safe zones.

So President Trump just became another puppet of the Deep State.

It won again as the other victory is when the Deep State neutered Obama with the 2008 Reverend Jeremy Wright controversy. Funny enough it happened in March 2008 – just over a month into President Obama presidency. With President Trump they acted slightly faster not to allow him to do something irreversible.

Logically there were no need to take action with the Bush Presidents or Clinton as they were already part of the oil-weapon lobbies.

I know it sounds almost conspiratory and quite like 007 Spectre (unfortunately without 007 to take it down),  as President Eisenhower said – it is  powerful and unchecked lobby of the military and oil apparatus which became  stronger due to the Cold War.

Australian Dollar

Posted: February 17, 2017 in Uncategorized

Well the Australian dollar beat the consensus and went high up to USD77 cents surfing the iron ore and Trump trade wave.

Technically speaking, if it breaks USD77/78 cents (likely), it could surge to USD83 cents.

But USD72 cents to USD 83 cents is a kind of its “pattern zone” and does not represents a break in the trend.

The Purchase Parity Power of the USD is circa USD 70 to USD 72 cents and the USD is a kind of mid period on its strong cycle with the start of the rising rate cycle from the FED.

So technically it should be a spike that could last 6 to 8 months since the start and then again go back to the area USD 72 cents.

What could break this pattern is actually President Trump. If the proposed tax changes do not work or implicitly make the US Debt balloon even more (in March there is the new US Debt Ceiling debate and, with the infrastructure plan, the US Debt could balloon to USD25 trillion).

But unless literally in the US things start to go badly wrong – this issue will prop the AUD to USD 83cents and the normal pattern will re establish itself.

US Deep State (update)

Posted: February 14, 2017 in Uncategorized

In January, 1961, just days before he handed over the US presidency to John F. Kennedy, outgoing Republican president Dwight Eisenhower delivered one of the most sincere and concerning speeches of any departing American leader.

“This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence – economic, political, even spiritual – is felt in every city, every state house, every office of the federal government. We recognise the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.

“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes …”

This second level of government, practically managed by the weapon and oil lobby in Washington, is referred by the insiders as Deep State.

The Deep State has only grown from the 1960s and the source of numerous conspiracy theories).

This second level of Government (or being less conspiratorial, this powerful lobby) has always their powerful advisers close to the President (in this case Mattis (weapons)  Priebus (CIA), Tillerson (oil), Mnuchin (Wall Street), Cohn (Wall Street)) gives a powerful continuation of powers no matter if Obama, Clinton or Trump is the president.

So, in a sense, what happens with Trump would have happened (under different media image) with Clinton.

And the system needs a war and now it is aiming at Iran (China was always a diversion, as a war with China can inflict too much damage) or some other targets

As you would have noticed, specially in foreign policy, is starting to adapt to the instructions.

President Trump can always rebel and go is own way, even if his Chief White House Strategist Bannon said in an interview with Vanity Fair “(Trump is a)blunt instrument for us … I don’t know whether he really gets it or not”.

Logically President Trump, unpredictable as it is, could rebel. But he would need to pay attention to history.

October 2, 1963 President Kennedy signed an order (for precision, as it is controversial, NSAM, 11 October 63, 263 section 1-B (1-3) to withdraw 1,000 military advisers from South Vietman (out of 17,000) by December 1963.

22 November 1963 JFK got killed. Strange coincidence.

UPDATE: sorry my article was so precise that I could not point out something.

President Trump has a very good survival instinct and obeys his masters.

Iran : Yemen has been designated as a “terror area” and, with Syria, Trump agrees in the creation of safe zones (precursor to intervention). He even discussed safe zones in Syria.

Russia: Trump says that Crimea has to be given back

General Flynn, national security adviser, probably will be substituted by Vice Admiral Harward, ex Lockheed Martin (F35 Stealth jet)  CEO in UAE.

The US Deep State needs enemy and wars to justify the spending (USD514 billion in 2014)

From the Star Trek series – a famous episode when  Captain Kirk is confronted with an no-win scenario (and he rigged the system to win it).The test was considered a no-win scenario because it was impossible for the cadet to simultaneously save the Kobayashi Maru, avoid a fight with the alien  Klingons and escape from the neutral zone with the starship intact

Trump as a similar unwinnable scenario where it is almost impossible to save the US economy after almost 93 month of expansion (3 longest streak, 1850 (120), 1960 (106)and at the same level of the 1991 (93) – average 58.5)

The first one is the one spurred by the media at large that Trump economic agenda simply will not work as they are not well thought and will provoke trade wars so US will stall and go in recession by US Summer 2017.

It is discussed every day in the media so i will not delve further into it.

The second scenario is the one in which the Trump policies (tax cuts and infrastructure spending) do work for real.

In this case the issue is that these policies are coming too late in the economic cycle (US already in recovery mode and with employment capacity almost at full level).

Such a large stimulus will likely push the US hourly wage increase over 3%. This is the indicator that the FED is looking the most to decide if and when rise the interest rates.

The Fed will slam the breaks (increase interest rates) and plunge the US in recession by US Summer 2018.

Could President Trump rig the system as in the movie. Yes but a bit much to explain how in this blog.

The stock market has stalled

Posted: February 9, 2017 in Uncategorized

The US market has been for over 36 trading days without a 1% move (Market Data Group) – the longest streak in history! Practically a somnolent market with a positive bias.

The only two markets that have been quite violent were the ForEX and Gold

This is due to essentially three causes

– President Trump policies have a positive implication, but the uncertainty is at max level and some policies do not make much sense (without the border adjustment tax the US Debt will balloon to over USD25 billion )

-The economic and corporate conditions are really improving and actually Europe is behaving better than ever since 2008 – but the political uncertainties are rising fast.

-The FED is saying that it will raise interest rates, but cannot do it meaningfully as the US Debt would go out of control.

What now?

Usually after  pause, there is a brutal catalyst (70% of times to the downside).

As everybody knows the downside, what could be the upside?

Well after the “failed” immigration ban, it seems that Trump is taking a pause to understand what went wrong.

He really wants to fulfill his election promise and he elected  President’s Strategic and Advisory Forum composed by the most powerful US CEOs. If he starts listening and push forward the corporate tax cut the market will definitely cheer and market could “gap up” 5 to 8%.

In Europe two things would be seen as positive.

If Macron, French Center Socialist candidate, succeed to create a gap against Le Pen – it would be positive.

If Shultz, SPD German chancellor candidate, starts to poll better against Merkel it would be a positive (Shultz is a pre Europe at any cost*) and with more pro growth and wage increase policies it would be a positive.

*Shultz, as President of the EU,  have been heavily criticized at Brexit times as he said the following words

“The British have violated the rules. It is not the #EU philosophy that the crowd can decide its fate”.

Really? Well, the crowd is the people and in democracy the people is the one that SHOULD decide. Or maybe we just found out that the European Union is not supposed to be a democracy. Interesting!