JUN
3 18 SIT EC y POL
ND denounce Global-neoliberal debacle y propone State-Social
+ Capit-compet in Econ
ZERO HEDGE ECONOMICS
Neoliberal globalization is over. Financiers know it, they
documented with graphics
The market continues to tread water
currently. The
current question is whether it can keep its head above
water until it is rescued, or will fatigue finally drag it under...
See Chart:
The good news is that we did gain a VERY small bit of ground
over Friday’s close, but not much.
There wasn’t any “bad news,” so to speak,
so the “mediocre” news is that despite
the solid rise in the markets from Tuesday’s low, we remain very range bound
between the 100-dma and the closing highs over the last couple of weeks as
shown below. The tan shaded area is the current consolidation process from the
March highs.
See Chart:
HOWEBER our current
equity exposure remains under strict guidelines:
- Overweight
cash in portfolios as the “risk” of a failure has not been absolved as of
yet,
- Positions are
carrying a “tighter than normal” stop-loss level, and;
- We will
quickly add negative hedges as necessary on any failure of support.
See Chart:
Historically,
sharply rising rates have been a catalyst for a debt-related crisis. As long as everything remains
within the expected ranges, the complicated “math” behind
trillions of dollars worth of financial instruments function properly. It is when those boundaries are
broken that things “go wrong” and quickly so.
In just 365-days, Bear Stearns stock
went from $159 to $2, with about half of the loss occurring within a few weeks.
See Chart:
Bear Stearns was the warning shot
for the financial markets in early 2008 that no one heeded. Within a
couple of months, the markets dismissed Bear Stearns as a “non-event” and
rallied to a higher level than prior to the event, and almost back to highs for
the year.
Remember, there was “nothing
to worry about” at the time, even though the Fed was increasing
interest rates, as the “Goldilocks economy” could handle
tighter monetary policy. Sure, housing had been slowing down, mortgage
delinquencies were rising, along with credit card defaults, but there wasn’t
much concern.
Importantly, our current equity
exposure remains under strict guidelines:
- Overweight cash in portfolios as the “risk”
of a failure has not been absolved as of yet,
- Positions are carrying a “tighter than
normal” stop-loss level, and;
- We will quickly add
negative hedges as necessary on any failure of support.
See Chart:
Today, we
are seeing similar signs.
Interest rates are rising, along with delinquencies,
defaults, and a slowing housing market. But no one is concerned as the “Goldilocks
economy” can clearly offset these mild risks. And no one is paying attention to, what I believe to be, one of
the biggest risks to the global financial markets – Deutsche Bank.
See Chart
Despite the improvement of the markets on Friday, there has been little done to solve the issues that plagued
the market this week.
- Italy is still a problem
- The elected officials in both Spain and
Italy are not particularly “EU” friendly with both recent appointments
primarily anti-establishment officials.
- The “Trade War” is just starting to
heat up with tariffs begin levied on multiple countries and products.
- China is still a “wild card” in the
current negotiations.
- Deutsche
Bank, as discussed below, is a major issue of concern.
- Fed
continues to tighten monetary policy despite signs rates are already
becoming problematic.
I suspect these issues will likely
bubble to the surface again over the next several weeks.
As noted above, we
are still giving a 70% weighting to a more bullish outcome for our holdings. While
there are those who wish to focus on the other 30% and proclaim we are bearish,
I assure you we are not.
However,
when it comes to investing, and the financial markets, nothing is a certainty. Disregarding the potential for a negative outcome
layers excessive risk into portfolios which can damage long-term returns. As
I penned previously:
“It should be obvious that an honest assessment of uncertainty leads to
better decisions, but the benefits of Rubin’s approach, and mine, goes beyond
that. For starters, although it
may seem contradictory, embracing uncertainty reduces risk while denial
increases it. Another benefit of acknowledged uncertainty is it keeps you honest.
Oh, and just one last chart. During
2007, and into 2008, the S&P 500 traded sideways in a 150-point range. That
range was extended to 300-points before the crash actually occurred.
See Chart:
15-RISK
MANAGEMENT RULES
This is probably a good time to review the 15-risk
management rules we employ in our process.
While
our fundamental, economic and price analysis forms the backdrop of overall
risk exposure and asset allocation, the following rules are the “control
boundaries” for all specific actions.
- Cut losers short and let winner’s run. (Be
a scale-up buyer into strength.)
- Set goals and be actionable. (Without
specific goals, trades become arbitrary and increase overall portfolio
risk.)
- Emotionally driven decisions void the
investment process. (Buy high/sell low)
- Follow the trend. (80% of
portfolio performance is determined by the long-term, monthly, trend.
While a “rising tide lifts all boats,” the opposite is also true.)
- Never let a “trading
opportunity” turn into a long-term investment. (Refer
to rule #1. All initial purchases are “trades,” until your investment
thesis is proved correct.)
- An investment discipline does not work
if it is not followed.
- “Losing money” is part of the investment process. (If
you are not prepared to take losses when they occur, you should not be
investing.)
- The odds of success improve greatly when
the fundamental analysis is confirmed by the technical price action. (This
applies to both bull and bear markets)
- Never, under any circumstances, add to a
losing position. (As Paul Tudor Jones once quipped: “Only
losers add to losers.”)
- Market are either “bullish” or “bearish.” During
a “bull market” be only long or neutral. During a “bear
market”be only neutral or short. (Bull and Bear markets
are determined by their long-term trend as shown in the chart below.)
- When markets are trading at, or near,
extremes do the opposite of the “herd.”
- Do more of what works and less of what
doesn’t. (Traditional rebalancing takes money from winners
and adds it to losers. Rebalance by reducing losers and adding to
winners.)
- “Buy” and “Sell” signals are only useful if they
are implemented. (Managing a portfolio without a “buy/sell”
discipline is designed to fail.)
- Strive to be a .700 “at bat” player. (No
strategy works 100% of the time. However, being consistent, controlling
errors, and capitalizing on opportunity is what wins games.)
- Manage risk and volatility. (Controlling
the variables that lead to investment mistakes is what generates returns
as a byproduct.)
Everyone approaches money management
differently. This is just how we do it.
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"It is essential that we freeze all discretionary spending to ensure we can support the crucial
functions that keep the state operating..."
As we noted
in March, New Jersey's fiscal situation is so dire that new
Governor Phil Murphy has proposed taxing online-room booking, ride-sharing, marijuana, e-cigarettes and Internet
transactions along with raising taxes on millionaires and retail sales to
fund a record $37.4 billion budget that would boost spending on schools,
pensions and mass transit.
The proposal which is 4.2% higher than the current fiscal
year’s, relies on a tax for the wealthiest that is so unpopular it not only has
yet to be approved, but also lacks support from key Democrats in the legislature, let alone Republicans. It also
reverses pledges from Murphy’s predecessor, Republican Chris Christie, to lower
taxes in a state where living costs are already among the nation’s
highest.
See Map
NJ Composite Cost of Living
[ Which State is next? ]
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US
DOMESTIC POLITICS
Seudo democ y sist duopolico in US is obsolete; it’s full of frauds & corruption. Urge
cambiarlo
"It is
unlikely that the White House can convince trading partners that tariff threats
are credible without also convincing financial markets."
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“Construction and maintenance will be funded
by private donations and no taxpayer money will go to the foundation”? That’s what an Obama Foundation spokesperson said.
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US-WW ISSUES (World & War): M-East .. plus
Global depression is on…China, RU, Iran search for State
socialis+K- compet. D rest in limbo
"If
the U.S. rolls out trade measures including tariffs, all the agreements reached
in the negotiations won’t take effect."
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"It is
undeniable that… there are soldiers that are stationed there and there are
weapons that are deployed there. It is a symbol of China’s sovereignty. The
weapons have been deployed for national defense."
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“This change allowed the
government to get hold of the under-the-mattress gold to help stabilise
the banks and the underlying economy,”
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WAR
ERUPTS BETWEEN ITALY'S GOVERNMENT AND SOROS: "YOU PROFITED FROM THE DEATH
OF HUNDREDS OF PEOPLE"
Soros:
"RUSSIA, RUSSIA, RUSSIA"
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SPUTNIK and RT SHOWS
US inside GEO-POL n GEO-ECO ..News
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NATO stations to be wiped out world-wide if WW3 breaks..
Starting in ISR and COL
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Only international
currency for trade & banking will stop cryto currencies.. it is up
to IMF-reformed
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RT SHOWS
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NOTICIAS IN SPANISH
Latino America looking for alternatives to neoliberalism to
break with Empire:
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-[[ En el calor de hoy cualquier árbol seco del
pasado da sombra ]]
[[ Si es asi: a España lo desvalijaron desde que
se ejecutó a F Franco
y ya no quedo nada para los nuevos bribones de la seudo-democ ]]
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China replica a EE.UU. y lo acusa de
"coacción" Lease blakmail
, arsonimo o Chantaje
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GLOBAL RESEARCH
Geopolitics & Econ-Pol crisis that leads to more
business-wars: its profiteers US-NATO
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PRESS TV
Global situation described by Iranian observers..
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