Archives of “Creative works” tag

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Highlights from Pres. Trump at the Economic Club of New York

  
Analysis, Politics
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Speaking at the Economic Club of New York

  • Jobs were not plentiful when he took over as President
  • The experts said they had no choice but to accept stagnation
  • I knew working together we could make America even greater
  • Fed moved rates higher far too fast and lowered rates far too low
  • US is competing against other countries and the Federal Reserve does not let us compete
  • Fed puts us at a competitive disadvantage to other countries
  • If we had a Federal Reserve that work with us the US stock market would be up by another 25%
  • last year GDP growth match the highest growth rate in over a decade
  • we want companies to be in America
  • The US has tremendous economic potential
  • Says he thinks US can bring down tax rates further
  • Corporate tax rate could go lower
  • US is pursuing energy independence
  • China has taken advantage of the US because of its WTO designation as a developing nation
  • to be a strong nation the US has to be a manufacturing nation
  • US has added 10,000 brand-new factories
  • Europe is set up terrible barriers for US on trade in some ways more worse and then China
  • No country has cheated US more than China
  • China is devaluing its currency, is dying to make a trade deal
  • We are close to signing a phase 1 trade deal and it could happen soon
  • we will only accept a deal if it is good for United States and US workers
  • China is having the worst year in over 57 years
  • Having strong, substantial negotiations with Japan on trade
  • Calls for passage of USMCA.  If put toward a vote Democrats would vote for today

Is there still a possibility of a no-deal Brexit at this stage?

  
  Analysis
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What if I told you that a no-deal Brexit now hinges on Boris Johnson winning the parliamentary vote tomorrow?

Boris Johnson
Before we get into the thick of things, let us set out what exactly is at stake tomorrow. Clearly, Boris Johnson’s Brexit deal motion is the main event but what does it mean really?

If lawmakers do vote to pass the motion, it means that they have technically voted in favour of a Brexit deal but there is still the issue of ratification and getting Johnson’s deal through the necessary legislative hoops – that includes voting on the withdrawal agreement.
The issue with all of this is related to the Benn Act. Now, the Benn Act requires Johnson to request an extension if Johnson cannot get parliament to agree on a Brexit deal. Hence, if the deal is rejected tomorrow, then there is no issue.
However, if the deal is approved, this is where things may yet get a little tricky.
In such an event, Johnson isn’t compelled to seek an extension and if there are hurdles he cannot overcome in getting his deal to be ratified and implemented, he could just let things run its course and we get towards a no-deal Brexit after 31 October.
Logically, you would think that he would seek a technical extension to get a deal through but possibly and certainly are two different words with very distinct connotations.
He could possibly seek an extension to work out any potential legislative issues and buy enough time to get his deal over the line legally but it doesn’t mean that he will certainly do so.

Is there any way to avoid this altogether?

This is where the vote on the Letwin amendment tomorrow may be rather consequential.
The Letwin amendment sets out that the government is to request an extension of the Brexit deadline, if a deal is passed, up until all the necessary legislative hurdles are overcome to officially put such a deal into place.
In essence, it is an added insurance in case Johnson has other plans up his sleeve.
This means that even if Johnson’s vote passes tomorrow but fails to get through any potential legislative complications by 31 October, he will still be compelled to request for an extension to the Brexit deadline.
While the drama involved in all of this is certainly captivating, it must be said that if we do see Johnson’s deal being passed tomorrow, it is pretty much a given that it should make it through all the significant legislative hurdles and be ratified in due time.
The timeline may now say it should be done by 31 October (two weeks) and that certainly could be plausible if lawmakers decide to work overtime.
That said, even if that isn’t enough time, a technical extension just to get the deal implemented is almost surely the most likely outcome – barring any unforeseen circumstances.

European shares are beaten down. German DAX falls -2.5%. France’s CAC -2.9%

  
Analysis, Global Indices
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Ouch.  European shares take a beating.

The European major indices are closed and the provisional closes are not looking good. The major indices are all beaten down by 2%-3%  declines.
The provisional closes are showing:
  • German DAX, -2.5%
  • France’s CAC, -2.9%
  • UK’s FTSE, -3.2%
  • Spain’s Ibex, -2.7%
  • Italy’s FTSE MIB, -2.8%
In the European debt market, the benchmark 10 year yields are ending the session higher, but off the highest levels of the day.  Below is a snapshot of the current yields, changes and high low yields.
Ouch.  European shares take a beating.
US stocks are also down sharply and trading near lows.
  • S&P index, -1.91%
  • NASDAQ index, -1.75%
  • Dow industrial average, -2.0%

In other markets:

  • spot gold is surging and back above the $1500 level. The price is up $22.34 or 1.51% at $1501.50.
  • WTI crude oil futures is trading down $1.35 on expectations of slower growth. That is down 2.5% at $52.28. The inventory data showed a higher build then expectations today
In the forex, the JPY remains the strongest currency on flight to the relative safety of the JPY. The CAD has taken over as the weakest.  The USDCAD is now trading back above its 200 day moving average at 1.3288.

Oil – more on the Aramco repairs story (could take months, not weeks)

  
Analysis, Crude
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You know how it is, your car is making a funny noise so you take it to the mechanic.

“Yeah, leave it with me, shouldn’t take long”
 
The  you get the phone call, right?
“Yeah …. this looks nasty ….”.
Same with this:
  • Oil – Aramco says repairs to Saudi plant could take many months rather than weeks
WSJ has more on it now:
  • It may take many months-rather than the maximum 10 weeks company executives have promised-to restore operations to full working order,
Journal is gated, here is the link if you can access it.

Most Common Advice is Ineffective

  
Analysis, Education
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“Plan the trade, and trade the plan!” is perhaps the most common advice given to traders. As far as advice goes, it’s well meaning, but unfortunately falls well short of addressing the problem most traders actually face. 

Looking at the advice, it has two parts. The first part says you need a plan. No argument there. But the second part, about executing the plan, that’s where the problems appear. Why?

The two parts to the advice ‘plan the trade’ and the ‘trade the plan’ require two very different skill sets. Without understanding the different skills required, it’s highly likely that you will continue to regularly veer from your plan.

Here’s the disconnect. Planning the trade depends on your intellect. And most of the time, the development of the plan does not occur in the heat of battle.  It’s relatively easily to let your intellect guide you, to be the primary driver when you’re not in the heat of battle. But in the heat of battle, when we have to decide right now whether to enter or exit, an entirely different situation occurs.

At the time of execution, no longer are we cool, calm, and collected. Now, a whole slew of things enters the picture – and many of these things are subconscious to a degree. Our feelings about our P&L, our feelings about our performance, or concerns about how we appear in the eyes of others, etc.

And no matter how smart you are, how much you believe you are not an ‘emotional person’, modern brain science is telling us emotions, including subconscious emotions, are very much a part of our decision making that leads to actions whether we realize it or not. Viewed this way, you can see why the typical advice to ‘plan the trade and trade the plan’ may be well intentioned, but ineffective.

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