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 last week
It was a reversal week for the Dollar & Treasury rates. Both closed up with a somewhat of a bang. In contrast, it took S&P the final hour & a closing rally to close up on the week.
US Indices:
- VIX down 5.5%; Dow up 94 bps; SPX up 23 bps; RSP up 80 bps; NDX down 74 bps; SMH down 2.1%; RUT down 5 bps; MDY down 7 bps; XLU up 1.1%;
Key Stocks & Sectors:
- AAPL up 92 bps; AMZN up 85 bps; GOOGL down 1.5%; META down 1.4%; MSFT flat; NFLX up 2.1%; NVDA down 7.8%; MU down 6.6%; BAC up 2.5%; C up 1%; GS up 25 bps; JPM up 3.1%; KRE up 17 bps; EUFN up 21 bps; ; SCHW up 1.1%;
Dollar was up 1.1% on UUP & up 91 bps on DXY:
- Gold down 43 bps; GDX down 1.9%; Silver down 2%; Copper up 38 bps; CLF down 1.3%; FCX down 70 bps; MOS up 18 bps; Oil down 1.9%; Brent down 25 bps; OIH down 1.7%; XLE up 96 bps;
International Stocks:
- EEM down 1.2%; FXI down 11 bps; KWEB down 2.8%; EWZ down 1.9%; EWY down 2.5%; EWG up 65 bps; INDA up 1.1%; INDY up 1.3%; EPI up 91 bps; SMIN up 98 bps;
Rates along the Treasury Curve rose with long duration yields rising more than short duration yields.
- 30-year Treasury yield up 11.6 bps on the week; 20-yr yield up 11.6 bps; 10-yr up 11.6 bps; 7-yr up 10.9 bps; 5-yr up 6.6 bps; 3-yr up 6.2 bps; 2-yr up 1.2 bps; 1-yr up 2.6 bps;
- TLT down 1.8%; EDV down 2.4%; ZROZ down 3%; HYG flat; JNK down 4 bps; EMB down 93 bps;
A simple chart of last week shows how a steep move up on Friday afternoon put the S&P in the green for the week:
We could be completely wrong about this but the last hour’s action on Friday reminded us of the old “Paris March” tactic often used then on Friday afternoons. On the other hand, this up move began with upbeat economic data released on Friday after the open. It shows, at least to us, that the combination of upbeat consumer data along with Fed cutting rates is the key to the market’s ability to go & stay up.
Dow made a new all-time high this past week. Will the S&P follow soon?
- Jason@3PeaksTrading – NYSE cumulative New High/Low differential making fresh highs near everyday lately. One of my fav metrics I track for more medium term trend bias. $SPY should follow to fresh highs after that strong close yday
Is any discussion complete without the historically inaccurate & racist term “fibonacci numbers”? (given no recent doubt about Arabic writer-Mathematician al-Khwarizmi (780-820) quoted the same in his famous treatise Arithmetic of Hindus or its 12-century Latin translation Algorithmo de Numero Indorum. ).
- Jason@3PeaksTrading – $SPY forming that bullish handle/flag in cup pattern that likely sees new highs this week. As I have been saying a sideways ‘correction’ thru time was likely and thats what the past two weeks showed. Meanwhile market breadth was expanding strong all week as I warned. I couldn’t believe how many bearish caution replies I got this week, even some fools calling me crazy for being long😂 It will be crazy when SPY hits 580 then 600 in coming months since those are the fibonacci extensions on the chart
For those who prefer to look at the dark side:
2. Treasury Rates
Komal Sri-Kumar raised a red flag for Chair Powell on this past Monday saying Powell runs the risk of inflation picking up from variety of sources including rent & warns it is too soon to signal victory. He also said the Fed is no-longer data dependent & they will interpret the incoming data the way they need to cut rates on September 18.
Jonathan Krinsky of BTIG said on CNBC on Friday – Fade the Strength in Bonds. He added that “September-October are the two worst months in bonds; October has been down last 8 of 9 years; September pretty much the same“.
On the other hand, David Rosenberg warned on Friday that “their recession indicators are flashing red“.
3. Geopolitical
Interesting how isolated geopolitical events get an economic dimension. One example is the isolated port of Gwadar in Balochistan becoming a link to a discussion about Bidenization of Xi Jin Ping.
3.1 Balochistan-China-NaPakistan
On last Sunday August 25, 2024, we discussed the background of the Baloch people & their struggle against the CPEC (China-Pakistan economic corridor) in Section 4.3 title Fighting over a tempting asset? At that time, we didn’t even have the foggiest notion of what was going to come or what has become of the Balochi fighters who were helplessly fighting the NaPakistani army in the sparsely populated Balochistan province.
The next day August 26, 2024 (25th night in USA), the Baloch Liberation Army (BLA) launched a stunning attack across the highways of Balochistan that killed 130 members of the Napak Army & Security force, out which 104 reportedly were soldiers & 26 were Panjabi government personnel in plainclothes.
The Napaki military camp in Bela (about 590 km from Gwadar – see the pink-yellow stripped area) was attacked in a first case of direct attacks on Napaki Army. The other attack was in the Musa Khil province (about 1100 km away adjacent to Kalat dot in the northern pink area) that is adjacent to the Panjab province, the heart of the Napaki establishment. These are NOT small isolated targets.
These attacks were reportedly carried out by the Majeed Brigade that is now described as the tip of the Balochi spear. They had been trained by & had been working with the Tehreek-e-Taliban – Pakistan (TTP) force that has been attacking Napakistan since their split up with the Afghani Taleban. Guess the students turned out to be better & more effective than the teachers because the TTP itself has never been able to kill over 100 Napaki Army personnel one day. The planning must have been intense given the simultaneous attacks across such a large geography. The 3 minute CNN-TV18 clip below is helpful because of its written points at the bottom of the screen.
The above clip states (as do others) that the the gunmen stopped the buses in Musa Khil, made the passengers get down, checked their IDs & systematically killed the Panjabi residents while letting go all others. This is a clearly racial-geographic reprisal against the occupation & decades worth of abuse of the Balochi people by the dominant Panjabi population.
Now to the geopolitical ramifications beyond the stunning internal Napaki implications of the above Operation Herof. Take a look at the 4-minute English-language clip below especially from minute 2:18 onwards. You will notice a large military delegation from the Chinese army meeting with the Prime Minister of NaPakistan.
This was not merely a massive attack on Napaki military but a direct attack on the China-Pakistan-Economic Corridor of which China’s control of the Gwadar port is the critical prize.
Now recall the phrase One Belt One Road – everybody talked about this bold strategic drive that was going to make China the dominant trading & investment partner rivalling the British trading powerhouse of 19th century. Look how even Wikipedia describes the China-Pakistan-Economic-Corridor (CPEC):
- CPEC is seen as the main plank of China’s Belt and Road Initiative,[11] and as of early 2024, is the BRI’s most developed land corridor. CPEC’s potential impact on Pakistan has been compared to that of the Marshall Plan, undertaken by the United States in the post-war Europe.[12][13][14] Pakistani officials predict that CPEC will result in the creation of upwards of 2.3 million jobs between 2015 and 2030 and add 2 to 2.5 percentage points to the country’s annual economic growth.[15] As of 2022, it has enhanced Pakistan’s export and development capacity and provided 1/4th of its total electricity.[16]
That was the promise. Today’s reality we quoted last week:
- “now this strategic port sits EMPTY & as Chinafile.com reported in March 2024 – “There Is No CPEC in Gwadar, Except Security Check Posts”. This is true all across NaPakistan in all the projects built by China. “
This reality is the direct result of the Balochi resistance to Chinese presence & Chinese expulsion of Balochi people from their own land. But that was the near past, it seems. Watch & listen to a fighter-spokesman stating their message in plain English in 52 seconds:
- “A simple & clear message to China. China, you came here without our consent; supported our enemies, Pakistan military, in wiping out our villages. But now it’s our turn. Baloch Liberation Army guarantees you that CPEC will fail miserably on Baloch ground. President Xi Jin Ping, you still have time to quit Balochistan or you will witness a retaliation from Baloch sons & daughters that you will never forget.”
Can President Xi Jin Ping surrender to the Balochis & withdraw from Gwadar & the CPEC project? We don’t think so. Dictators do not generally out-survive the destruction of their most cherished public initiatives. Is that why you saw a large Chinese military delegation meeting with the NaPakistan Prime Minister?
What can he do? The bigger problem for his military & their visible helplessness in dealing with it was displayed 2 days ago that Lt Colonel Khalid Ameer of the NaPaki army was kidnapped with his relatives by the Pushtun TTP & then released unconditionally because of intervention of his Village Elders & the Afghani Taleban in Kabul.
This shows that the Napaki military & the Afghani Taleban have reached a kind of live & let live arrangement. However the TTP or Pakistani Taleban that now is a power in the Khyber-Pakhtunkhawa province of Napak (green portion in map above) is still fighting the Napaki army.
That & their now teacher-student relationship with Balochi Liberation army makes the Baloch resistance far more lethal than it was before.
Getting back to President Xi Jin Ping, we keep reading that he is in ill-health & he might even be in a Biden-like role in which he is trotted out to meet foreign leaders for about 15 minutes or so & then retires to leave the discussion to his “gang of 4” that includes his wife & the foreign minister.
Getting back to the Government of NaPakistan, traders all across that land (stan) of the Moral & Religious Purity (Pak) shut their shops this week to protest the soaring electricity prices & the new taxes imposed by the government.
Notice none of the old Muslim friends of NaPakistan are stepping in with financial aid. That may not simply be a rational, sound decision to not throw away their own monies, but it may also have something to do with what we read about China playing Hardball with Napakistan Government on one end and USA playing Hardball with Napakistan on the other.
If this is not enough, we read reports that this week Pakistan supplied ammunition to BanglaDesh!!!
3.2 BanglaDesh
Last week we pointed out that in past instances in which Leftists & Islamists had worked together to topple regimes, Islamists within a few months had thrown out the Leftists. We expect that to be the case in BanglaDesh as well.
But to our surprise, the first rebellion against the so-called students came not from leftists but from a nationwide organization of law enforcement called BanglaDesh Ansar & Village Defense Force. According to Wikipedia, it is the largest paramilitary force in the world & has 6 million active & reserved members. Watch the interaction between the “students” and members of Ansar in the capital Dhaka on Monday August 26, 2024:
In a surprising development. Muhammad Yunus – the new appointed leader of BanglaDesh and reportedly a close friend of Hillary Clinton plus a donor to the Clinton Foundation- removed the ban on Jammat-e-Islami. Jammat-e-Islami is an Islamic organization whose founder believed that, according to Wikipedia:
- “politics was “an integral, inseparable part of the Islamic faith,” and that Islamic ideology and non-Islamic ideologies (such as capitalism and socialism, liberalism or secularism) were mutually exclusive.). Jamaat seeks to spur an Islamic revival, implementing Islam as a universal religion …”
This is one of the early steps of the Yunus-led BanglaDesh Government? How will this Jammat organization work with the student groups that claim to be secular?
If that was not enough, this week the Yunus Government also released Jashimuddin Rahmani, the leader of the Ansarullah Bangla Team (ABT), an al-Qaeda-affiliated terrorist group. This was around the same time BanglaDesh was reportedly buying ammunition from NaPakistan. As the WION clip below points out,
- “Rahmani’s release comes on the heels of a violent jailbreak in BanglaDesh earlier this month. As per reports, on the 6th of August, over 500 inmates escaped high-security prison in Northern BanglaDesh shepur district … following an armed attack by a mob. Among those who allegedly escaped was a high-ranking ABT leader Ikram Ul Haque, the India Operations Head of ABT.”
All this in the last one week! Is the Yunus Government now trying to re-create BanglaDesh into a terrorism-sponsor like NaPakistan was or perhaps still is? What do Bill & Hillary Clinton think of their protege now & his recent dalliance with Al-Qaida? Will the world’s large companies still continue to do business in an Al Qaeda sympathizer country?
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