Asian, European Countries Roll Back Economic Reopenings As COVID-19 Makes Global Comeback: Live UpdatesTyler DurdenTue, 07/14/2020 — 09:12
US daily cases below 60k
Global daily cases below 200k
Hong Kong imposes new restrictions
France makes mask wearing mandatory in public
Australia cases top 10k.
Iran closes mosques, schools
WHO warns: “there will be no return to normal”
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The number of new coronavirus cases reported yesterday in the US remained below the critical 60k threshold, but from Asia to Europe, economies that only recently appeared to have beaten the coronavirus are now imposing new restrictions to try and prevent a resurgence.
But globally, the number of new cases remained near a recently hit record high, pushing the worldwide total to 13,238,121 as of Tuesday morning. Though crucially, the number of cases reported yesterday came in just below 200k, roughly 30k shy of the record.
The death toll from the deadly virus has reached 575,543 globally, according to Worldometer. Of the currently infected 4,964,306 patients, 4,905,425 were in mild condition, while 58,881 were in serious or critical condition.
Last night (Tuesday morning in HK), Hong Kong announced plans to impose a new lockdown that appears to be even more restrictive than the measures it imposed during the opening weeks of the outbreak. While HK had previously relied on closing borders with the mainland, the new measures focus on suppressing domestic transmission. They include: that face masks will be mandatory for people using public transport and restaurants will no longer provide dine-in services, instead only offering takeaway service.
If an individual doesn’t wear a mask on public transport, they face a fine of HK$5,000 ($645). Gatherings would be limited to 4 people from 50. Gyms, places of amusement and other establishments must shut for a week.
“The recent emergence of local cases of unknown infection source indicates the existence of sustained silent transmission in the community,” the government said in a statement late on Monday.
The Chinese-ruled city recorded 52 new cases of coronavirus on Tuesday, including 41 that were locally transmitted, health authorities said, bringing its total outbreak to 224 people over the past week.
In Australia, Melbourne remains on lockdown while the number of new cases being reported continues to climb, the Australian state of Victoria has recorded 270 new cases of coronavirus, while New South Wales recorded 13, bringing the national total to about 10,250.
As the US outbreak in the Sun Belt nears its peak, the EU is reportedly set to recommend keeping its external borders shut to Americans and most other foreigners for at least two more weeks as fears grow of a second coronavirus wave.
As fears about a resurgence in Asia intensify, the WHO raised concerns over the Philippines’ rising number of new cases, which have swamped some local hospitals as the number of new cases being reported daily hits record after new record.
The proportion of positive cases in the country is gradually increasing from about 6.5% two weeks ago to about 7.8% on Monday, WHO representative in the Philippines Rabindra Abeyasinghe warned.
“This is worrying as it shows that there is continuing transmission. This is also reflected by the increased number of admissions into hospitals,” he said.
Similarly, after recording a record jump in deaths a few days ago, Iran is reeling from its own resurgence, prompting Tehran to close schools, universities, Shia seminaries, mosques and other sites of religious gatherings for at least a week, local state news reported. Iran reported 2,521 new cases and 179 deaths overnight, bringing the total figures to 262,173 cases and 13,211 deaths.
As Catalonian government imposes new restrictions on local hot spots, across the border in France, President Macron warned that the virus “is coming back a little bit” and that starting next week, France will make mask wearing compulsory in public spaces.
During a press briefing Tuesday in Geneva, the WHO warned the pandemic could get far worse if countries around the world do not follow basic healthcare precautions.
“The virus remains public enemy number one,” WHO Director-General Dr. Tedros Adhanom Ghebreyesus told a virtual briefing from WHO headquarters in Geneva.
“There will be no return to the old normal for the foreseeable future,” Tedros said.
White House Leakers Beware; Mark Meadows Has Been Setting TrapsTyler DurdenTue, 07/14/2020 — 09:04
The Trump administration has been plagued with leaks from establishment loyalists — enemies of the administration who feel its their duty to undermine Trump’s agenda. One swamp operative even penned a book, “A Warning” penned by “Anonymous,” who claimed “many of the senior officials in [Trump’s] own administration are working diligently from within to frustrate parts of his agenda and his worst inclinations.”
This traitorous behavior often takes place in the form of anonymous leaks to various MSM outlets in order to harm the duly elected sitting US president.
Tracking down the leakers has been assigned to Trump’s Chief of Staff, Mark Meadows, who joined the Trump administration on March 31, 2020 after serving as the ranking Republican on the House Oversight Committee.
According to Axios, Meadows has notified multiple White House staffers that he’s been feeding certain information to specific people to see what gets passed on to reporters.
“Meadows told me he was doing that,” one former White House official told Axios. “I don’t know if it ever worked.”
According to the report, White House staffers are now on edge, “with multiple officials telling Axios that Meadows has been unusually vocal about his tactics.”
So far Meadows’ efforts have produced one minor leaker.
Trump is especially furious about two recent leaks of classified and sensitive information.
As Politico first reported, the administration has interviewed people with access to the intelligence that the Russians were paying the Taliban bounties to kill American soldiers. A senior White House official confirmed Politico’s reporting that they have narrowed down the list of suspects to fewer than 10 people.
Trump was also enraged when the New York Times reported that the Secret Service rushed him down to the bunker during the protests outside the White House.
So far, Meadows has yet to deliver on either of these high-priority leak hunts. A source familiar with Meadows’ thinking said he is “focused on national security leaks and could care less about the palace intrigue stories.”
On a recent podcast with Ted Cruz, however, Meadows said they tracked down and fired a federal employee who leaked information about a White House social media executive order.
Trump’s previous chiefs of staff were unable(at best) to plug leaks over the last three and a half years — none more so than Mick Mulvaney, who “never netted the sort of catch Trump wanted,” according to the report. One former White House official, however, said that the ‘one time’ Mulvaney did present damning evidence to Trump, the president dismissed it.
Even more via Axios:
In January, Mulvaney asked the White House’s IT department to search the work cellphone records of senior staff. His office gave the IT department the cell phone numbers of the top reporters who cover the White House.
After getting back the spreadsheet and finding senior staff contacts with reporters to be mostly unremarkable, Mulvaney zeroed in on what he thought were some unusual phone calls for White House Counsel Pat Cipollone.
Mulvaney, who had been in a bitter feud with Cipollone, had already told Trump he thought the White House counsel was a leaker.
When he’d made those accusations, Trump replied, “The guy doesn’t even talk to the press. Never has,” said a source familiar with their interactions.
The spreadsheet the IT department produced for Mulvaney in mid-January showed that Cipollone had multiple phone calls with the New York Times’ Maggie Haberman and CNN’s Pamela Brown. But when Mulvaney presented this information to the president, Trump brushed it off and did nothing about it, the former official said.
A former administration official familiar with the impeachment defense defended Cipollone. “Pat was encouraged by the president to talk with the media because the president viewed him as a strong advocate on his behalf. This was part of a coordinated effort.
“It’s important to note Pat made all of these calls from his official phone,” the former official added. “If he was leaking do you really think he’d be doing it from his official phone?”
Told of this incident, Chris Whipple, presidential historian who wrote the definitive book on White House chiefs of staff, called it “unprecedented.”
In this week’s “Technically Speaking,” the “Golden Cross” arrives, but are the bulls safe? As noted two weeks ago, is the 50⁄200 dma crossover is historically bullish for equities. However, with markets facing one of the worst earnings declines on record, could overly exuberant investors be walking into a trap?
“As shown below, the market broke out of that consolidation and triggered “buy signals” across multiple measures. This breakout will give the “bulls” an advantage in the short-term with a retest of the June highs becoming highly probable.”
“The bulls will also gain some additional support from the “Golden Cross” (when the 50-dma crosses above the 200-dma). That “bullish signal” will likely occur over the next week or two depending on market action.”
As noted then, the “bullish supports” for the market kept our portfolio allocations weighted towards equity risk.
The “Golden Cross” Arrives
This week, the “Golden Cross” occurred as the 50-dma crossed back above the 200-dma. As suspected, the media was quick to take note. As noted by this headline from CNBC:
“On Thursday, the S&P 500’s 50-DMA crossed above the 200-DMA. Such is known as a “Golden Cross” and has now happened 25-times over the past 50-years. The long term performance of the S&P 500 following such an occurrence is unabashedly positive.
TPA calculated the performance of the S&P 50010, 20, 40, 80, 160, and 320 days following each of the 25 Golden Crosses since 1970. The average performance is 0.88%, 0.98%, 3.25%, 6.73%, 9.57%, and 15.70%, respectively.
The positive cross has happened 6-times in the past 10-years. The averages for 10, 20, 40, 80, 160, and 320 days following each was 0.53%, 0.89%, 2.64%, 8.17%, 10.45%, and 20.95%, respectively. “
No Guarantee Short-Term
While it is undoubtedly bullish from a historical standpoint, it isn’t always as simple as it seems. As Jeff further notes:
“There were years when using the S&P 500’s Golden Cross as a buy signal was a lot trickier than just owning stocks for the entire 320 days. In the years of 1977, 1984, 1990, 1994, 1999, 2015, and 2019 were years, the signal either did not work or spent long periods in negative territory. ”
Such was a point also confirmed by Sentimentrader.com, where Jason Goepfert has analyzed these types of technical signals for decades. He found they’re “barely useful” as a standalone metric. Take 2019, for example, when a golden cross registered, only completely to reverse a year later with the Covid-19 crash.
“We wouldn’t put a lot of faith in the golden cross by itself. The biggest reason for optimism is that it has reversed what had been a very negative medium– vs. long-term trend. That has led to big gains over the next 6 – 12 months every time over the past 70 years.” – Jason Goepfert
2015 – 2016
An excellent example of a period where the “best of indicators” can lead you astray was in 2015. While the “Golden Cross” has a strong record over 12-months, it doesn’t mean it will be a straight line higher.
At that time, the markets climbed above the 200-dma, combined with a “Golden Cross” as the 50-dma also “crossed the Rubicon.”While the media bristled with bullish excitement, it was quickly extinguished as the markets set new lows as “Brexit” engulfed the headlines.
Importantly, while concerns about a “Brexit” on the global economy were valid, “Brexit” never materialized.
Conversely, the economic devastation in the U.S., and globally, is occurring in real-time. The risk of market failure as “reality” collides with “fantasy” should not be dismissed. It CAN happen.
Such doesn’t mean the next great “bear market” is about to start. It does mean that a correction back to support that reverts those overbought conditions is likely.
The current advance is not built on improving economic or fundamental data. It is largely built on “hope” that:
The economy will improve in the second half of the year.
Earnings will improve in the second half of the year.
Oil prices will trade higher even as supply remains elevated.
The Fed will not raise interest rates this year.
Global Central Banks will “keep on keepin’ on.”
The U.S. Dollar doesn’t rise
Interest rates remain low.
Bankruptcies and Delinquencies will subside.
More stimulus will come from the Federal Government
A vaccine will soon be available.
The pandemic will subside
There will be a “V-shaped” economic recovery
Employment will recover quickly.
I am sure I forgot a few things, but you get the point. There is a lot of “hope.”
However, “reality” may be more disappointing. Such is particularly the case with valuations expensive, markets overbought, and sentiment pushing back into more extreme territory.
There is much that could go wrong.
Technical Review Of The Market
While the “Golden Cross” is certainly bullish over the next 6 – 12 months, it is important to note that markets are currently egregiously overbought on a short-term basis.
Furthermore, speculative excess has certainly become evident in the market on a variety of levels. However, options contracts are an excellent indicator of exuberance. As Jason went on to note:
“In mid-February, we saw that options traders were speculating heavily, a disturbing wrinkle in the positive momentum that markets were enjoying at the time. The pandemic slapped that speculation out of them. For a while.
They returned in force, and by early June, surpassed any previous speculative record. It was enough to push the ROBO Put/Call Ratio to the lowest level since November 2007.
Among all traders, the Options Speculation Index gives us a very good view of the distribution of speculative versus hedging activity on all U.S. exchanges. Once again, it’s above 50%, meaning that they opened 50% more bullish contracts than bearish ones.
Rebalancing The Equity Portfolio
For all of these reasons, this is why we chose to reduce our risk a bit last week.
“For the second time in a single year, we have begun the profit-taking process within our most profitable names. Apple, Microsoft, Netflix, Amazon, Costco, PG, and in Communications and Technology ETF’s.
(Note: Taking profits does not mean we sold the entire position. It means we reduced the amount of our holdings to protect our gains.)”
Taking profits in our portfolio positions remains a “staple” in our risk management process. We also continue to maintain our “hedges” in fixed income, precious metals, and a slight overweight in cash.
We don’t like the risk/reward of the market currently and continue to suspect a better opportunity to increase equity risk will come later this summer. If the market violates the 200-dma, or the current consolidation is breached to the downside, we will reduce equity risk and hedge further.
My colleague Victor Adair at Polar Trading, previously made a valid observation.
“The growing divergence between the ‘stock market’ and the economy the past several months might be a warning flag that Mr. Market is too exuberant. With the Presidential election just over 3-months away, the polls show that Biden may be the next President. The U.S./China tensions have been escalating, and the virus’s first wave continues to spread around the globe.”
I agree. While the markets may be ignoring the risks for the moment, markets have a nasty habit of delivering unpleasant surprises. Such is particularly the case when a handful of “Megacap” stocks are driving the markets higher. (H/T TheMarketEar.com)
What lifted the market higher, can, and usually does, become the catalyst that pulls it down.
It’s Probably A Trap
I can’t explain the current market environment. Yes, it is the liquidity from the Fed. It is also a chase for momentum. Regardless of the explanation, price is driving portfolio management for now.
We can deny it, rail against it, or call it a conspiracy.
But in the “other” famous words of Bill Clinton: “What is…is.”
The markets are currently betting the economy will begin to accelerate later this year. The “hope” that Central Bank actions will indeed spark inflationary pressures and economic growth is a tall order to fill, considering it hasn’t worked anywhere previously. If Central Banks can indeed keep asset prices inflated long enough for fundamentals to catch up with the “fantasy” – it will be a first in recorded human history.
My logic suggests that sooner rather than later, someone will yell “fire”in this very crowded theater.
When that is, is anyone’s guess.
In other words, this is all probably a “trap.”
But then again, “hope does spring eternal.”
Pay attention to how much risk you are taking. The “Golden Cross” doesn’t provide the bulls a “guarantee of safety.”
International Conference on the 75th anniversary of the Liberation of Italy and the End of World War II organised by the Italian Committee No War, No Nato and Global Research.
The great Italian journalist Giulietto Chiesa passed away a few hours after the realization of this Conference.
His last words (Panel 4 and Conclusion) focussed on Freedom of Speech, Freedom of Information, and Freedom for Julian Assange.
“It is essential to join all our forces together, which are significant, “not so small” but there is a fundamental flaw: that of being divided, unable to speak with a single voice. We need an means or an instrument to speak to the millions of citizens who want to know.”
This was Giulietto Chiesa’s Appeal, an act in solidarity pointing to the need to break down social divisions and establish a grassroots movement, nationally and internationally.
His last words were confirmed by the fact that, immediately after the streaming, the online conference was “obscured” because the following content had been identified by the so-called YouTube community as “inappropriate or offensive to some audiences.” That’s what is commonly referred to as Censorship.
A list of participants and index follows
International Conference on the 75th anniversary of the Liberation of Italy and the End of World War II.
In the Panel 4 and in the Conclusions, the last words of the great Italian journalist Giulietto Chiesawho passed away a few hours after the realization of this online Conference:
Freedom of Speech, Freedom of Information, and Freedom for Julian Assange. www.cngnn.it
Participants and index:
Welcome: Jean Toschi Marazzani Visconti (Italy) journalist, writer. 00:00:16