Summary – A top-down review of interesting calls and comments made last week in Treasuries, monetary policy, economics, stocks, bonds & commodities. TAC is our acronym for Tweets, Articles, & Clips – our basic inputs for this article.
Editor’s Note: In this series of articles, we clude important or interesting Tweets, Articles, Video Clips with our comments. This is an article that expresses our personal opinions about comments made on Television, Tweeter, and in Print. It is NOT intended to provide any investment advice of any type whatsoever. No one should base any investing decisions or conclusions based on anything written in or inferred from this article. Macro Viewpoints & its affiliates expressly disclaim all liability in respect to actions taken based on any or all of the information in this article. Investing is a serious matter and all investment decisions should only be taken after a detailed discussion with your investment advisor and should be subject to your objectives, suitability requirements and risk tolerance.
1.”the market is much stronger than it has a right to be“!
Yabba, yabba, yabba, we said to ourselves when we heard Nancy Tengler say so to CNBC’s Kelly Evans on Wednesday, April 19. We have not heard such a “moral” indictment of the stock market before. And we were not aware that the stock market has a “right” to be at any level at any time. But we do get the outrage underneath that statement of Ms. Tengler’s. So many like her would love to get the stock market to fall at least to a point where they could morally justify adding to their longs.
Let us repeat what we asked last week.
“Could it be as simple as the below?
- Friday might have delivered a higher confidence in the U.S. Banking system
- That in turn reversed the overly steep fall in Treasury yields for the past month
- & simultaneously caused a steep fall in the fear index VIX
- & if the banking system is OK, then the U.S. Dollar should stabilize from diminishing fears of a banking crisis in the USA.“
That theme did continue this week with BAC, C, GS up 1%-1.5% with Schwab up 5.4%; with VIX down 1.8%, with Dollar up about 20 bps and Treasury yields up 6-8 bps across the curve. The major stock indices were flattish to down mostly.
But it is likely that some of Ms. Tengler’s sense of what is right might be supported by the markets in the near term if the comments & charts shared by The Market Ear deliver what is hinted:
- Via The Market Ear – Sat 4/22 – Rates expectation have repriced – In response to Fed speaks, better than feared economic data and perhaps better than feared bank earnings thus far, the rates expectation has repriced. The probability of rate cut in Nov meeting is down significantly whilst the probability of 25bps rate hike is now 88% vs. 70% prior. 21st vs 13th in the 2 charts... source Morgan Stanley
What about the VIX?
- Via The Market Ear – Sat 4/22 – Never underestimate the VVIX – Source Refinitiv
Positioning has improved:
- Via The Market Ear – Sat 4/22 – NAAIM double – NAAIM Exposure 78. Almost a doubling in one month. source NAAIM
So what is now the down vs. up potential?
- Via The Market Ear – ..but downside convexity is back – Latest CTA flow projections via Goldman’s flow guru Scott Rubner:Source GS –
1 week: – flat tape: +$5.7bn to buy, up tape: +$7.1bn to buy, down tape: -$36.2bn to sell
1 month: – flat tape: +$100mm to buy, up tape: +$11.1bn to buy and the “kicker” – down tape: -$222bn to sell
2. From 2008 to 2007!
For the past few weeks, we have been looking at the S&P chart of 2008 to get a sense of what the stock market might do. We began rethinking that last week as we listened to Mr. Lawrence Fink & when we wrote the following in our last week’s article:
- “Listening to Mr. Fink this week was a chilling deja vu experience for us. We recall him being similarly un-bearish in a CNBC conversation with Maria Bartiromo in April-May 2007. By the time he came back to speak with Maria Bartiromo in October 2007, Mr. Fink had turned decisively bearish & used the bubble word. It was a “prophetic” call and it was the perfect time to sell all equity positions. We can’t wait to hear his views about credit issues in July 2023 when he will return to discuss BLK earnings & then again in October 2023. Our guess is he will be decidedly bearish in October 2023 if not in July 2023.”
This change of using 2007 as a better model was cemented when we heard Steve Suttmeier of BAML discuss the SPY/TLT ratio on CNBC with Kelly Evans. Compare the charts below from Jan-Apr for 2023 (this year), from Jan-Apr 2007 & Jan-Apr 2008
January – April 21, 2023 above
January – April 2007 above
January – April 2008 above
The S&P charts in all three look somewhat similar. The stark difference is in TLT performance. Recall also that the recession was officially recognized to have begun in November 2007. The Bernanke Fed cut rates through out in 2008 while the Bernanke Fed kept talking hawkish in 2007 until July-August. And 2007 & 2023 are both the 3-years of the Presidential Cycle.
Now let us look at the January – December 2007 chart:
Compare the above with the January – December 2008 chart:
Both charts show the S&P rallying into late May. The big difference is that TLT in 2007 kept getting sold off & severely underperforming SPY into June end while TLT stayed even with SPY till mid-June and then rallied above the SPY. After a fall in July 2007, the stock market began basing in August & rallied hard in September 2007 with the expectation & delivery of rate cur by the Fed on September 18, 2007. Recall that the S&P high was in October 2007.
The important distinction, in our opinion, is that SPY (stocks) began outperforming TLT (bonds) in April 2007 & that continued into June 2007. But TLT began outperforming SPY in July 2007 & drew even with SPY by year-end 2007. This is consistent with many long term smart strategists & economists saying overweight Bonds over Stocks now.
If 2007 is a better comp to 2023, then that might not work & may actually lose money. That may be even more so if Tom McClellan proves correct with his call made in his April 20 article titled Lead Prices Foretell CPI Changes.
- “Inflation rates have been coming back down from their big post-Covid spike to above 8%. But they are likely to see a brief upturn, if this week’s guest fortune-teller is correct. …. Look for the CPI to make a bit of an inflationary resurgence over the next 1-3 months, and for the Fed and others to get a bit excited about that. But also know that it should just be a temporary resurgence.”
Remember no one expects the Fed to cut rates any time soon unless the data begins cratering as it did in late Q3 2007. But even Neal Dutta of Renaissance Macro said on Friday on BTV Surveillance (minutes 2:02:10 to 2:14:10) that the Fed is likely to back off some time this summer. And he says so despite as he pointed out
- “… auto sales in April are pointing to sequential acceleration; builders are doing the same thing; housing has accelerated; consumers are doing OK because disposable incomes are holding up… ”
So what is Mr. Dutta’s net conclusion from his vantage point as one of the strongest bulls on the economy?
- ” .. I think you can make a case for the next couple of quarters for equities to rally … you can make a case here for risk assets for the next couple of quarters when you get this sort of confluence of slowing inflation, growth holding up, Fed backing off …”
If the bullish economist says so, what does Steve Suttmeier of BAML (he of the SPY/TLT ratio) as well as another Cramer techni-pal say? That’s in the next section.
3. Triangle resolving higher & the largest net short since 2007
First Steve Suttmeier on CNBC Exchange on Friday, April 21, 2023:
- “S&P is trending above its 40-week moving average which has started to rise after defending & testing its 200-week moving average last October; we continue to view longer term trend as secularly bullish & if we continue to build this base that the market is now & spend more time above the 40-week mv, it would argue that cyclically the market could be shifting better also:
Then he discusses the SPY/TLT ratio:
- “the SPY/TLT ratio – we think S&P & stocks are set to outperform bonds; S&P actually outperformed bonds all last year; …. right here right now we are still in an uptrend in Stocks/Bonds ratio & consolidating within a technical pattern, the Triangle; you usually resolve higher from that; which suggests stocks should have another leg up relative to bonds; … the seasonal pattern actually suggests that you Sell April, Buyback any downside volatility in May because … June-August is the 2nd best 3-month period of the year (summer rally); ”
Kelly Evans asked him about the 2008 comparison. His response:
- “... I use moving averages as a guide; … In 2008, the S&P was NOT above its rising 40-week moving average; it was below …. ; in 2008 the S&P had embarked on a trend below its 200-week mv; in 2008, you were in a secular bear market; here at this point, as long as we are above the 200-week mv, we are still in a longer term uptrend”
Below is both a long term and a short term discussion from Carley Garner, a Cramer techni-pal. Ms. Garner has been correct in her technical analysis of the oil sector the last couple of time Cramer highlighted her views. The clip should be watched for her charts & Cramer’s comments. Brief excerpts are below:
- “a bull market can’t survive without bears; bears turning positive is what gives the market the fuel to go higher… By all counts, money managers are extremely negative right now; we have a net short position of 300,000 contracts in S&P futures – the largest net short position since 2007; money managers are not just negative; they are financial crisis negative; per Garner the 3 occasions when large speculators got so negative, we got a nice short squeeze rally every time; these lasted 2 years or more … Garner expects a gradual push higher as these speculators gradually throw in their towels & unwind their positions by buying stocks”
Here is where you need to look at the lines of the charts & pivot points in the clip.
- ” … as long as we hold 3,850 level, Garner thinks we can avoid the next market wipeout; …. Garner thinks we get a monthly close above 4,170; that would be a big deal; that’s a pivot point that takes us back to 2011; it also coincides with the 20-month moving average; … if we can break out above that moving average, she predicts a long-term bull market that could emerge from the rubble; …”
- “look at the RSI, its hovering near 50; the path of least resistance is higher ; … longer term she wouldn’t be surprised if the S&P breaks above 5,000; … that could take a couple of years to play out …”
Then Garner-Cramer take a look at a shorter term chart of S&P futures:
- ” … the hideous decline from late 2021 high to October 2022 low – that represents precisely 50% of the retracement of the COVID rally … next (Hemachandra)-Fibonacci level is 4,300; once we clear that hurdle, she thinks we are headed for new all-time highs ; … if the S&P can clear 4,300, HF analysis suggests 4,500 or 4,800 or potentially 5,100 … given the hysterical negativity, 5,100 is more likely than you believe …. 2023 is a pre-election year “
4. Bonds over Stocks & Real Rates to Zero or Negative
What follows is not contrary to Section 3 and is what actually happened in second half of 2007. First Mary Ann Bartels whom we remember since her Merrill Lynch days. Notice how many smart people are ex-Merrill instead of at-Merrill. In fact didn’t David Rosenberg do a webcast of Merrill Alums recently?
Who knows the American consumer better than Proctor & Gamble? And its CEO said this week that the “consumer is holding up extremely well”. Mary Ann Bartels raised it a level to companies and said “Corporate America has a fabulous balance sheet” and that she does think “we just have a soft landing; Corporate America can get thru and weather that storm“. But she has been favoring the fixed income market since February. Though she thinks we will see a regime change in bonds, Bartels says
- “… we might see the 10-year yield drop to 2.5%; I don’t think that is likely this year but possibly next year“.
That brings us to the hot hand in Interest Rates this year, Priya Misra of TD Securities on Bloomberg Surveillance on Friday, April 21 (minutes 55:45 to 59:53). We don’t know if the Surveillance guys noticed it but that show was when the “twain” actually “met”. The second half of this “twain” is the uber-bullish Neal Dutta whom we covered a bit in Section 2 above suggesting risk markets could work in the next couple of quarters.
What we noticed is that both are now inching towards each other with the first agreement being that the Fed is likely to be done next quarter or so. Both think it is not obvious right now that the data is slowing. Priya Misra thinks that manufacturing is actually a harbinger for the fact that services are going to slow down. Then Ms. Misra gets clearer:
- “Our view is the Fed is going to be torn, really torn, between inflation north of 2% & unemployment starting to rise… I think we don’t know their pain threshold; is it 4%, 4.5% 5%? the market is going to grapple with that for the rest of the year“
Then she gets direct:
- ” … if the economy is in a recession at the end of the year, I think we will be talking about how low the Fed can go in terms of nominal rates? Perhaps 2%, 1%? … If we get that much weakness in the labor markets, the Fed has to take real rates to 0% or negative; …. they are going to be pulled in licking & screaming but they are going to be more aggressive than the market is pricing in” …
How can we end this without a word (tweet really) from David Rosenberg?
- David Rosenberg@EconguyRosie – Apr 20 – Another non-recessionary chart. That is an LOL because the LEI is now down twelve months in a row and has contracted -7.8% on a YoY basis. Track record on depth and duration? Try 100%. Please … fade the bull (-xxxx) narrative on bubble vision.
5. Acceleration of Anti-Indian Hysteria in US Media
We have used the term Brit-Nazi for awhile to show the striking similarity between British treatment of Hindus & German treatment of Jews. In fact, more & more people have begun to realize that the heinous Brit-Nazi thinking was far worse & far more engrained in British intellectual & academic sphere. We gave a quick synopsis with quotes from name-brand British “thinkers” including Mill, Macaulay, Kipling who are still studied & admired in US schools. Those in doubt should take a few minutes to read the quotes from these “thinkers” & from Churchill in our article Hitler & Churchill – Birds of a Similar Feather? The article also quotes Hitler describing British regime in India as his ideal in a speech in 1930.
Now this reality of Brit-Nazi regime in India is getting broader attention:
By the way the plunder described above may be nothing compared to what the British plundered from 1757 on onwards in Bengal, then the richest province in the world. This was detailed by Fund Manager Nick Robins in his book The Corporation That Changed The World.
The last American leader who understood this was the great FDR. President Truman had zero interest & the US had little to no expertise in Asia & India after WWII. So the US Foreign Policy essentially took over from the British policy & embraced British thinking at that time. And that has continued to this day even with so-called experts like Ian Bremmer.
But is it really worth thinking about old Britain & its old views about Hindus? Guess what we saw this week?
Below is the PDF from the Henry Jackson Society:
Want another reason why Brit-Nazi is an appropriate word?
- Emily Carver@CarverEmily – – Worth noting, too, that only a couple of days ago, a junior doctor leader was suspended from his role at the BMA for joking about gassing ‘the Jews’.
In case you did not notice, Anti-Hindu hate or more gently Hindu-Phobia is now rampant in America. Unlike UK, Hindu-American groups have now become active in various states. Two weeks ago, we highlighted the landmark legislation passed by the State of Georgia condemning Hindu Phobia. Look what happened this week:
We first noticed an undercurrent of Anti-Hindu contempt at CNBC in 2006. But the crystalizing moment came on Friday May 16, 2008 when we saw & heard a conversation by CNBC Anchors Erin Burnett & Mark Haines. It was a textbook lesson on how to express your contempt about something by making jokes about it. We covered it in out May 17, 2008 article titled Flagrant Foul on Mark Haines and Erin Burnett – Their conversation about India’s regard for “sacred cows” .
- Then Erin Burnett says “I was worried about you, I said if you came to India, you might have a problem because the cow is sacred here”
- Mark Haines: “I would eat it any way“
- Mark Haines takes off his glasses, leans back, points both his hands at his chest and says: “Look, If I am hungry, if I am hungry, you don’t want to be a sacred cow walking down the street in front of me; I don’t care if you are a sacred cow…” and leans in to the camera for emphasis.
- Erin Burnett laughs.
Mark Haines did call us with CNBC’s VP of Communications. It was clear to us from that conversation that the above was set up for Mark Haines as a “joke”. Who set it up? His co-anchor Erin Burnett or the Producers-writers of that show? CNBC has not yet answered & Erin Burnett has not either.
Sadly, very little has changed at CNBC. They still use the anti-golden rule of “what you wish to condemn, you first mock” it. Now CNBC chooses to mock the name of India’s Prime Minister Modi. They are not unique in that even Biden Administration Officials have done so. But the latter’s is mainly a mistake of ignorance.
But that cannot be said of CNBC’s Carl Quintanilla & Sara Eisen. Mr. Quintanilla, in particular, has been aware of this for a couple of years. In contrast, he has never mispronounced a Jewish name & Ms. Eisen has never mispronounced a Hispanic name to our knowledge. Neither of them have ever mispronounced a Muslim name either. Sadly their disdain of Hindus & Hindu names is shared by a few others at CNBC.
That brings us to the intense & intensely funded campaign run both in US & Europe to unseat PM Modi. The charge laid against him is “illiberalism”. This is also the charge laid against Hindus in general. This is extreme evil in our opinion and gets back to British & America’s British-inherited Anti-Hindu hatred. What makes this so upsetting to Indians is it is coming from America that cherished the Na-Pakistan regime as its child since 1950s until President Biden’s withdrawal from Afghanistan.
What happened to Hindus in Na-Pakistan while America showered money & modern arms on that state? The New York Times wrote on October 15, 2020:
- “At independence in 1947, Hindus composed 20.5 percent of the population of the areas that now form Pakistan. In the following decades, the percentage shrank rapidly, and by 1998 — the last government census to classify people by religion — Hindus were just 1.6 percent of Pakistan’s population. Most estimates say it has further dwindled in the past two decades“.
Every one knows this, even many CNBC anchors. But what has happened to Hindus & what keeps happening to young Hindu girls (raped & forced to marry their rapists & convert to Islam) doesn’t matter to so-called women’s activists at CNBC! Isn’t Nazi the correct label to apply to those who distinguish on the basis of race-religion the atrocities inflicted on young girls?
Of course, far worse is the attitude at Washington Post & at New York Times. But that has become their profession. In contrast CNBC is a business network. And CNBC’s sister network in India, CNBC 18, is the largest Fin TV network in India. Do CNBC US Anchors consult or even speak with their CNBC counterparts in India? If not, why not?
We recall a comment of Ms. Eisen about Republicans in a conversation about India. That started us thinking. Until recently, Indian-Americans have been traditionally Democrats because of their education, jobs & their background. Similarly Indian-Indians of a similar background had also shied away from “Hindu” politics towards more “liberal” parties. However that has changed totally in India. And much of it is due to what they see as Brit-US-inherited contempt towards their incredibly rich intellectual & Dhaarmic heritage.
We see that happening in America among Indian-Americans. To put it simply, we see Indian-Americans moving away from a “Andrew Ross Sorkin” type thinking draped in “liberal” attire towards a “Tucker Carlson” type anti-Woke thinking. Witness the rise of Vivek Ramaswamy into Presidential Politics. His message & call rhymes 100% with the emerging Indian-American mindset.
Why? That brings us to another topic, one which is red hot right now in India. Ask yourselves, have you ever seen any negative articles about the Indian Supreme Court in NYT, WashPost or any US publications with a “liberal” mindset? We have not. Why you ask? Because the Indian Supreme Court is the most elite bastion of British-established BrIndian system in India. They wear the traditional British court robes, demand to be addressed as MiLord and they refuse to allow any Indian language to be used in the Supreme Court of India. Only Britlish, or British English is allowed. And yes, don’t even try to use American English.
And they appoint their own successors to the Supreme Court when they retire. Yes, new Supreme Court judges are chosen entirely by a body of current Supreme Court judges appointed by the Chief Justice.
Wouldn’t it be fun if US Chief Justice John Roberts & his self-appointed committee have the exclusive right to appoint the next Judges to be admitted to the Supreme Court? Imagine how stable his system would be for America? Never a brawl like the one that accompanied senate confirmation of Judge Kavanaugh.
Of course the Indian Supreme Court has gone further. Even questioning the opinions issued by the Supreme Court (or a state High Court) is deemed Contempt of Court. We recall that a home maker in South India being hauled to jail for 2 days because she questioned an opinion of a Judge in a Facebook post. Further, a Judge CANNOT be arrested by the police even when the Judge commits a crime in front of the Police. All the police can do is collect evidence & submit it to the Chief Justice of India’s Supreme Court & he can decide whether to punish the offending Judge or not. We doubt if even the British Royals have this level of privilege in Britain.
So who is left to criticize the Supreme Court of India? Global Press including The Economist, NYT, Washington Post etc. Now you understand why the Indian Supreme Court always sides with the policies/views of Economist/NYT et al?
If this were not enough, the current Chief Justice has gone to a new level to impose his views on 1.4 billion Indians. He has declared that “same sex marriage” is the seminal question before India & he is hearing arguments for & against it. One of his proclamations has stirred his country as never before:
What does the Indian Constitution say? His answer is even more stunning than the above answer to the notion of a man or woman:
If the original interpretation of the Constitution is immaterial, then any diktat laid down by this Chief Justice becomes the new definitive interpretation of the Indian Constitution.
Is there anything the elected Indian Government can do about this? Not much unless they ware willing to draw resources & attention from all the pressing matters of Economic & Foreign Policy.
But wait. Isn’t there an election next May-June to elect the new Parliament? Hmm, is that why this Chief Justice gave a ruling of sorts that seeks to put the Election Commission of India (that runs the election & counts the results) under a 3-member committee comprised of the Chief Justice (himself), the Prime Minister & the Leader of the Opposition? Does that mean that this Chief Justice with the Opposition leader can decide who won the next election via their 2/3rds majority in this committee?
In our opinion, the Supreme Court of India is doing is exactly what the British Colonial & today’s US “liberal” establishment wants. To them, India would be terrific without being Indian or Hindu. That is what the British tried to do and failed since 1757. Now they are trying to do it with overseas-financed Indian political parties and perhaps with the BrIndians running the Supreme Court of India.
Now do you understand why the US media describes PM Modi & his regime as “illiberal”? Trouble is Indians are beginning to understand what “liberal” means in US media:
- Abhishek@AbhishBanerj – Apr 17 – What is liberal privilege? Modi’s Swachch Bharat built 11 crore (110 million) toilets across villages, towns and cities of India. But CJI Chandrachud got more praise in global media for ordering 9 gender neutral toilets in Supreme Court.
This coverage by US Media is now being ridiculed by the new Indian media & Anti-America feelings are running high. And people are beginning to realize that monies from USA & Europe are flooding in to fund these legal fights & to unseat PM Modi. And people are also beginning to see the chain of protests all fanned & broadcast by Western Media.
Getting back to the Muslim-Hindu issue & ardent efforts by the US-European media to intensify it, one serious worry is whether the desperate No-Pakistan government creates a terrorist attack inside India that compels India to retaliate. The current Na-Pak government is desperately trying to postpone the elections in Panjab, elections that are expected to wipe out the current party in power. Suffering from political, terrorist attacks, they might choose to go with the historical unifier – hostilities with India.
If that happens, China could use that opportunity to launch its own conflict against India. What better way to coerce smaller ASEAN states & Taiwan than launching an attack against India? In that context:
- ” … there are multiple trigger points along the 2,100-mile-long Line of Actual Control (LAC) that bear monitoring.1 With both China and India enhancing infrastructure and introducing new and advanced weapons systems on their sides of the disputed border, combined with forward deployments and heightened lack of trust, the chances for continued standoffs that could erupt into local or even full-blown conflict remain high. … “
Add to the above the complete contempt China has for Indians:
A big risk is that Hindus in India realize and accept that they are being treated as sheep mainly because they don’t fight & commit violence. We see that feeling increasing in emotion in some sections of India and we fear it.
It would be much better for Indians to organize to throw out western media companies, especially BBC, and NY Times, Wash Post etc. from India. After all, America essentially shut down RTV, a mouthpiece of Putin and now the US Government, sensibly, has begun acting against Chinese entities in America. That day might be near for British outlets like BBC. Hopefully, US media learns from the Anti-Hindu hate spreading in Britain & cleans up their act.
Finally, an example of how “illiberal” Hindus are:
To those who don’t know, “Minhaz Merchant” is a Parsee name, a name from the minority religion of Zoroastrianism. The Parsees fled to India a long time ago to escape from Muslim persecution from an Iran that converted Persia into a Muslim state.
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