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 include 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. Markets this past week
US Indices:
- VIX down 7%; Dow up 2.2%; SPX up 1.9%; RSP up 2%; NDX up 1.5%; SMH up 2.4%; RUT up 1.2%; IWC up 35 bps; MDY up 1.9%; XLU up 3.9%; XLI up 2.4%;
Key Stocks & Sectors:
- AAPL down 54 bps; AMZN up 79 bps; GOOGL up 84 bps; META up 5.3%; MSFT up 1.8%; NFLX up 5.3%; NVDA up 1%; MU up 5.4%; BAC up 3.1%; C up 3.2%; GS up 3.6%; JPM up 4.3%; KRE up 1.3%;
Dollar was up 31 bps on UUP & up 24 bps on DXY:
- Gold up 2.6%; GDX up 5.4%; NEM up 4.51%; Silver up 6.4%; Copper up 2.2%; CLF down 1.6%; FCX up 2%; MOS up 2.4%; Oil up 45 bps; Brent up 7 bps; Nat Gas up 5%; OIH up 2%; XLE up 1.3%;
International Stocks:
- ACWX up 1.2%; EEM up 31 bps; FXI up 1.3%; KWEB down 1.9%; EWZ down 2.2%; EWY down 46 bps; EWG up 4%; INDA down 2.6%; INDY down 1.8%; EPI down 3.6%; SMIN down 1.2%;
And interest rates moved up despite weak economic data:
- 30-year Treasury yield down 1.8 bps on the week; 20-yr yield down 1 bps; 10-yr flat; 7-yr up 1.7 bps; 5-yr up 2.8 bps; 3-yr up 2.9 bps; 2-yr up 5.8 bps; 1-yr up 5.4 bps;
- TLT up 31 bps; EDV up 73 bps; ZROZ up 84 bps; HYG down 24 bps; JNK down 38 bps; EMB up 10 bps;
Treasury rates fell hard on Thursday on weaker economic numbers & a strong 30-yr auction. But on Friday, Treasury rates rallied hard despite economic numbers that were weaker than Thursday’s.
Is the action in the Treasury market weird or technical?
- jeroen blokland@jsblokland – May 11 – ICYMI! This key chart will support a structural move out of #bonds into other asset classes. Structural higher #volatility makes bonds look less attractive within any multi-asset / asset allocation framework.
On the other hand, shouldn’t the below cause Treasury rates to drop?
- Otavio (Tavi) Costa@TaviCosta – This development is certainly worth paying attention to. Lower-rated corporate bonds are starting to crack. Notice the recent divergence between the spreads of triple Cs and single Bs, while other segments of the bond market remain historically complacent. Reflecting on history, this is a common phenomenon during tightening cycles. When the Fed raises rates and volatility decreases, credit spreads hit historic lows, leading companies to inevitably hit a wall of debt as borrowing costs stay elevated. The deterioration among low-rated bonds is highly likely to spread throughout the broader corporate bond market. H/t @RonStoeferle @dailychartbook
What would be a PAIN trade if credit starts weakening big time?
- Trader Z@angrybear168 – May 6 – The pain trade would be for the 10 year to roll over and reach 3 handle by Q4.
2. Stocks
What level & type of pain might the drop of 10-yr yield to 3-handle inflict on stock folks? The 3-handle on 10-year is only another 52-55 bps away. And that might mean 1-2 rate cuts by the Fed, right? But if the Fed stands adamantly flat as the 10-year falls to a 3-handle, then the 10-yr – Fed funds spread would get 1.5%. And that fall in 10-yr rates would happen only if inflation takes a nose-dive. So a Fed remaining obstinate in the face of 3-handle 10-yr & lower inflation would end up imposing a massive Rise in Real Interest rates. What would that do to the credibility of this Credibility-uber-alles Fed?
On the other hand, what if the Fed does lower interests rates in the face of a falling 10-yr yield? As Ed Yardeni says below, rate cuts by the Fed might cause a melt-up in the stock market.
Contrary to our normal practice, we will begin this section with a clip of Signor Yardeni on CNBC Closing Bell in the last 30 minutes of last week. He says we are in very much of a bull market – economic outlook positive; inflation will be lower & we will see new highs in earnings in the next couple of quarters. His numbers are $222 in S&P earnings in 2024, $275 in earnings in 2025 & $300 in earnings in 2026. Based on that, his S&P targets are 5,400 in 2024, 6,000 in 2025 & 6,500 in 2026. That is why, he argues, we might get a melt-up if the Fed cuts rates in this setup.
Jumping back to the first day of last week, we think we heard Jim Cramer say that his techni-pal Carolyn Boroden sees S&P going to 5349.52 & then to 5368 & that she thinks new highs are more likely. Cramer quoted, as we heard, her as saying “we are taking out some key levels that signify strength leading to 1st 5282 & then to 5349“. As we said, the above is what we recall Cramer saying. For more details, please check with Cramer/CNBC.
What does the S&P chart look like?
- Larry Tentarelli, Blue Chip Daily@bluechipdaily – May 11 – $SPX weekly close over 5200. Bullish 10/20-sma cross, pending 10/50X and 20-sma turning up. CPI this week could lead to short term volatility, but Fed hikes are mostly off the table and with rates at 525-550, a Fed put is in place is jobs or the economy soften.
Remember the old Gundlach rule that 10-year Treasury rate moves as the Copper/Gold ratio moves. Now look at the below & imagine the impact on the 10-yr rate:
- Larry Tentarelli, Blue Chip Daily@bluechipdaily – May 11 – Copper miners $COPX clearing the top of a 12-year range and look ready to test higher. Top ideas include: $TECK $SCCO $HBM $FCX
We like both price & market breadth. But we can’t cash in market breadth as we can cash in price. So why look at market breadth if it doesn’t lead to price? Because the below says look:
- Ryan Detrick, CMT@RyanDetrick – Sun – I’m a believer that market breadth leads price. NYSE, S&P 500, and Midcap advance/decline lines all made new all-time highs last week. Small caps are on the verge of new 52-wk highs. All of this should support a potential summer rally.
4. Is Black “African” or “Indian”or Both? Are both Krushna & Krishnaa symbols of Blackness?
You got to hand it to CNBC for their immaculate sense of “racist”-like timing! Just a day or so after a tiny tempest due to CNBC’s habitual feminization of BhagVaan Krishna’s name, a huge storm broke in India on this issue & about Black-skinned Indians in India .
Not only is CNBC’s timing negatively immaculate but their collective memory is legendary in its forgetfulness. Witness our May 15, 2010 article titled Are “Educated” Indians Different From Americans & Europeans? A Case of Two Financial Journalists. The two financial journalists in question were CNBC’s Carl Quintannia & the widely respected Krishna Guha. Mr. Guha is now reportedly a Vice Chairman of Evercore ISI. More importantly, at least for us, Mr. Guha has NOT, since our 2010 article, ever allowed CNBC to use the “Krishnaa” feminization of his name. Kudos & sincere thanks to Mr. Guha.
In contrast, Carl Quintannia has apparently not seen fit to inform his new co-anchors of this intensely insulting use of the feminine “Krishnaa” pronunciation for a man. That is despite his own preference for being called Carl instead of Carla. Perhaps he has forgotten about the 2010 article or, in his position of high income & seniority within CNBC, he perhaps deems worrying about such insults to Indian entities beneath his quasi-white stature!
Just a day or so after that CNBC episode, the meaning & the enormous symbolization of “Krishna” went viral in India because, as PM Modi pointed out, the President of India has the same complexion as that of Bhagvaan Krishna:
(President of India – Draupadi Murmu)
As even Wikipedia knows, the historic name Draupadi is a synonym for Krishnaa, the millenia-old famous adjective for a Dark-complexioned woman (just as Krusna-Krishna is the corresponding adjective for a Dark-complexioned man).
Why did this come up? Because Sam Pitroda, the American resident President of the Overseas branch of India’s Congress Party, the party that is run by India’s foremost white-hereditary party, said amazingly abominable stuff in a TV interview. He said South Indians are of African-origin; Eastern Indians are of Chinese origin; Western Indians (including PM Modi’s state) are of Arab origin and North-Indians are of White origin.
Understand that everybody knows that many North-Indians feel that they are the real Indians & others are of a lesser color & race. But NO ONE had stated this clearly & publicly as Sam Pitroda, the Uncle & Friend-Philosopher-Guide of Rahul Gandhi (beloved of US & EU press) said last week. Everyone understood that Sam Pitroda, a resident of USA, meant that only North Indians were real Indians & of white origin while all other Indians are of foreign-origin.
PM Modi was campaigning in South India that day in Telangan, the state in which Mr. Krishna, the current IBM CEO was reportedly born, and he wasted no time in linking Pitroda’s statement to Bhagvaan Krishna.
Get some one to translate this above clip to understand the enormity of insult of suggesting black-complexioned Indians are Africans & not really Indians. PM Modi says now he understood why Congress Party was vehemently against the election of President Draupadi Murmu – because they thought of her as African because of her skin color. He added:
- “my country will not tolerate the insult of people of my country on the basis of their skin color & Modi (pronounced Mo-thee) will Never tolerate it …. whatever our skin color might be, we worship Shri Krishna whose skin color was just like all of us“.
This is not today’s linkage. Witness below a beautiful poem from 13th century by Great Saint (Sant) Naam-Dev about the beauty of being Black. From an area near Mumbai, he had travelled to North-west India where he presumably encountered some backlash about his own dark complexion. In response, he wrote the poem below (13th century) about a beauty of a Black woman who wears a black dress & black jewels. The poem with an English translation ends in :
- “The creator of Vishnu-Dass Namya is of Black Color; the murti (physical realization) of Krishna is very Black”
If you think Black is or can be beautiful, you might approve of the current leadership of the BJP party, even if American resident Sam Pitroda might consider them “African”:
(PM Modi) (Pres. Murmu), (BJP South leader Annamalai)
BJP is proud of its Black leadership, in contrast with the media club in USA, especially at CNBC. By the way, notice how CNBC anchors deliberately mispronounce PM Modi’s name with a harsh “D” instead of “thee” sound. Does CNBC have North-Indian origin employees named “Modi”? Relevant because now we all understand that some North-Indians think of themselves as “White”.
It is, of course, for CNBC anchors to decide whether they prefer to use the “Mo-thee” pronunciation that ALL Indians use or the whitish-Modi pronunciation some White-Indian people prefer to use. Perhaps they also think of PM Modi as “Arab” as Sam Pitroda, the American resident uncle of white “Crown-Prince” Rahul Gandhi labeled him & his people.
By the way Sam Pitroda, the long-time friend, philosopher & guide of white “crown prince” Rahul Gandhi was forced to resign the day the storm from his comments broke.
Now listen to the southern Black superstar of BJP discuss the comments of Sam Pitroda below:
Finally, you don’t have to go back to the 13th century to find out about color-based fights in love. The recent hit Bollywood film 2 States was about two MBA students from NW India & SE India falling in love but having to convince their parents about skin color credentials vs. educational qualifications. Just watch the sub-titled 3-minute meeting of the two in-laws below:
PS: At least some people at CNBC might remember a TV personality named of Tucker Carlson. We recommend they look up his coverage at FOX of the marches in Kabul after the US withdrawal from Afghanistan. If they do, they will hear Mr. Carlson comment about the white color of many Afghans in the march and also hear him say some of them were more white than himself. But Mr. Carlson never distinguished between those white-complexioned Afghans & other less-white Afghans. Such whiteness-based differentiation seems the sole territory of CNBC anchors, as they differentiate between pronunciations of whitish-Modi name & all-Indian Modi name of non-white color.
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