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The Roller Coaster Ride continues

Trump will pull out of WTO. Dump NAFTA. Maybe NATO. And yet more Trade War.

Anything we’re in now, we’re out tomorrow. It’s “America First.”

This is all new.  None of it planned.  No White Papers. Just tweets. Hence disturbing. Unpredictable. Turbulent. Volatile.

This week’s NASDAQ. Not a pretty picture. But probably what we face in coming months:

Nasdaqthisweek

Respected BCA Research put out “Special Report” called Three Policy Puts Go Kaput; Downgrade Global Equtiies to Neutral:

Three macro “policy puts” are in jeopardy of disappearing or, at the very least, being repriced:

+ Fed Put: Rising inflation has made the Fed more reluctant to back off from rate hikes at the first hint of slower growth or falling asset prices.

+ China Put: Worries about high debt levels, overcapacity, and pollution all mean that the bar for fresh Chinese stimulus is higher than in the past.

+ Draghi Put: Bailing out Italy was a no-brainer in 2012 when the country was the victim of contagion from the Greek crisis. But now that Italy is the source of the disease, the rationale for intervention has weakened.

These factors, along with additional risks such as mounting protectionism, warrant a more cautious 12-month stance towards global equities and other risk assets. The fact that valuations are stretched across most asset classes only adds to our concern.

A neutral stance does not imply that we expect markets to move sideways. On the contrary, volatility is likely to increase over the balance of the year, with the next big move for global equities probably being to the downside.

You can read the full report here: Click BCA Research 

The New York Times ran a big piece A Recession Signal Is Flashing Yellow. It all has to do with the yield curve:

YieldCurve

There’s evidence a flattening yield curve can predict the next recession.

I’m not getting crazy and suggesting you dump all your shares. Here are some sensible strategies for this weekend:

+ Read the Times’ full narrowing yield curve article Click here.

+ Look carefully at what you own. Are there some stocks that should be trimmed because you’re unsure of their prospects (e.g. Boeing and Raytheon). And stocks with heavy exposure to Europe and China.

+ Do you have a 15% cash cushion? That seems reasonable in uncertain times.

+ Do you have buy orders in on your favorite stocks at ridiculous prices — say 20% below?

+ Are you keeping an eye on your stop loss orders? 15% is a good number.

+ Don’t watch the market. It’s going to get even crazier.

+ Don’t let all this nuttiness hurt your weekend.

+ If you have the stomach, invest a little crazy money in some gambles, e.g. IQ, SHAK, SHOP, NOW, DOCU and INTU.

If Amazon had not bought PillPack, I would have. 

pillpack

They put your day’s pills in one packet. Watch the video. It’s brilliant. Click here. 

Your children should all own a little stock.

Good to own are companies whose products they use. All kids have Nike shoes. Look what the stock has done this year.

NikeThisYear

Wonderful car rescue technology

Why do I think this is so funny? Watch it fully. It’s short.

Wimbledon Tennis is starting soon.

Meantime, The Tennis Channel is re-running old good matches.

Wimbledon

Tennis is still the only way to get “free” exercise. You run around chasing a ball, trying to outfox the guy on the other end. An hour or two later, you’re sweating and you feel great. Keep Moving is our mantra.

Old but wonderful

A Jewish father was very troubled by the way his son turned out and went to see his rabbi about it.

“Rabbi, I brought him up in the faith, gave him a very expensive Bar Mitzvah and it cost me a fortune to educate him. Then he tells me last week, he’s decided to be a Christian. Rabbi, where did I go wrong?”

The rabbi strokes his beard and says, “Funny you should come to me. I too, brought up my son as a boy of faith, sent him to university. It cost me a fortune and then one day he comes to me and tells me he wants to be a Christian.”

“What did you do?” asked the man of the rabbi.

“I turned to God for the answer,” replied the rabbi.

“What did he say?” asked the man.

He said, “Funny you should come to me…”

* * * * *

Marilyn Monroe, on being served matzo-ball soup:

“Isn’t there any other part of the matzo you can eat?”

HarryNewton
Harry Newton, who wonders “If it could happen here?” Of course, not. … My thoughtful, but worried, friend emailed me this morning “This is a pretty good guess of where we’re headed.” Click here. 

Have a great weekend. Be thankful we’re not at war and there’s good tennis on TV. Especially 8PM on Sunday night — Strokes of Genius. The Tennis Channel.

 

  • Jerry

    In the Midwest where I live Trump is so loved. He’s almost like a saint. People mill about coffee shops and bars speaking of how great the tariffs are; how much we love it when President Trump trashes journalists; how beautiful is Melania; how wonderful it is that Trump will get to choose another-anti-abortion Supreme Court justice. I have never seen a political figure loved this much. Maybe Eisenhower, but I wasn’t born yet. Oh, and we hope that Trump pulls out of NATO, etc. We’re very much in favor of total isolationism.