The Dog That Didn’t Bark

The boyz pulled out all the stops today, including a spectacular VIX slam, to squeeze the shorts. This travesty of a market responded as usual. However, what is unusual and interesting is that crude oil is not participating in the bullish euphoria. At least so far today, 3pm, it has extended yesterday’s losses as OPEC jawboning has failed to generate any enthusiasm.

Inventories continue to set new records as OPEC production cuts are offset by weaker demand from a slowing economy. My suspicion is that it will be a  serious sell-off in crude that triggers the next major stock market decline.

Blood In The Sand

The Atlanta Fed forecast for Q1 GDP now stands at 0.5% annualized, in other words not statistically different from zero or even small negative numbers.

Treasuries and equivalents are reacting accordingly, but in stocks it is the same old thing – any attempt to sell down is met with VIX slams and all manner of manipulation to preserve the status quo. Needless to say, this is just building up pressure as the prudent exit stage left, leaving the wild-eyed bulls snorting center stage while the matador sharpens his swords in the wings.

It is not so much that the bulls feel lucky,  but that they are being cozened into a feeling of security by the matador’s assistants.

Trumpets

Markets are all excited because Trump declared that the dollar is “too strong” and Ms Yellen is “not toast.” Not crumpet either, I would say, and Trump clearly knows his crumpet.

Long Distance Travel

One of the implications of self-driving vehicles that I had not thought about is the impact on airlines.

Let’s say I’m traveling from here to, say, New Orleans. Google says it is nine hours by car.

Expedia says it is four and a half hours by plane from Orlando. Plus I need an hour and a half to drive to Orlando, then another hour and a half to navigate TSA, etc. Then at the other end probably an hour to get downtown. Looks like eight and a half hours, except that the car leaves whenever I want, with no hassle, as much baggage as I want, far more comfort, and my food, drink, communications and entertainment of choice. Cost looks about the same for a single passenger, but half for two and so forth. I would say, advantage car. And this is a non-stop airline route.

For even longer trips, a fully autonomous car can keep driving while its passengers sleep – there is no driver, of course. So at least notionally I could make the trip overnight without giving up a night’s sleep, assuming the car had the necessary comforts for sleeping. Which they will.

Looks to me that the autonomous car will disrupt airline transport.

 

 

The End Of Hope

I had hoped that Donald Trump’s presidency would see some change in Washington. The attack on Syria finally dashed this hope.  The neocons’ campaign to demonize Russia has shaken his confidence to the point that they are now back in charge. This is a catastrophe, for which there is no one to blame but Trump.

Almost as seriously, presumably at the urging of the Goldmanites, he has not only failed to even attempt to slow the financial bubble, of which his pre-election statements show he is well aware, but has cynically relished it as proof of his success. This failure is likely to be his downfall.

We are so screwed. Sauve qui peut.

One Picture

Short Memories

Consumer Confidence was reported this morning to have risen sharply, to the highest since December 2000. Stocks rose and bonds fell, taking this news as a sign of economic strength, one presumes. Obviously the buyers do not remember what happened in 2001. when the market fell to a loss of 27% by September.

Oh, and by the way, there is essentially no historical correlation between changes in the reported Consumer Confidence and changes in actual retail spending. Just sayin’

Everything Is Awesome

Apparently CNBC showed this after last Thursday’s close. Just sayin’.

Inflation

There is much noise that the Fed will raise interest rates to combat “inflation.”

Over the last year to the end of February, wages are up 2.8% (nominal). The price of oil, as a metric for energy prices, is up 32%.

Guess what is driving “inflation.”

The Saudis are still pumping as hard as they can, but justifying it on the grounds that they are storing the above-quota output, not selling it internationally. It seems to me that a tank in Saudi and a tank in Oklahoma are pretty much fungible, except that we at least think we know how much is in the Oklahoma tanks.

The bottom line is that global inventories of oil are continuing to expand to new records, more or less on a daily basis. The EIA is forecasting that US shale is set to expand production by 109k barrels from March to April, rising from 4.853mmbpd to 4.962mmbpd, and offsetting OPEC’s entire February production cut.

At some point we are going to see a reaction and that will be the end of “inflation.” For a while, anyway.

Your Bubble Goes Here

From Bill Hester of John Hussman’s staff.