Thursday, October 13, 2016

What'd you miss?

That's just a little spin on the song "What'd I miss?" from the Broadway hit Hamilton which has been on non-stop repeat in my household since my kids bought the album (side note - it is really good if you like history and/or modern music - listen to Cabinet Battle #1 for a sample and note there is some mildly nsfw language).

Overnight we received another data dump from China which will fuel concerns about a global slowdown in consumer demand and stocks are reflecting that mood right now (most European markets are down about 1%).  This will take us a back to the September tantrum levels (when the markets sold off over the hint of rising interest rates.) and the next move may be interesting. 

Here are some of items that caught my eye so far this week:

* The idea that there is cash on the sidelines waiting to rush into the markets may be a fallacy as liquid assets as a percentage of household wealth sits at its lowest levels since the dotcom bubble (1999).

* Railroad intermodal cargo fell for a second consecutive quarter.  Last time that happened was .... say it with me.... yep, 2009.

* HSBC made headlines yesterday forecasting an imminent crash saying that earnings expectations and valuations have become "unmoored from corporate realities". I'd argue that we've been unmoored from reality since at least 2014 but tomato, tomahto.

* Consumers reporting that they may miss a credit card payment hit its highest level since 2014.  Most worrisome was a real increase in those reporting concerns with incomes over $100,000 - which is indicative of a stretched high-end consumer.

* Alcoa kicked off earnings season with a face plant (don't be confused by $AA's stock price - they did a 1 for 3 reverse split last month) and Goldman said that once again expectations are way too high for Q3 earnings.


Tuesday, October 04, 2016

An Interesting Distraction

With 30+ days to go in the US election cycle we could all use a little distraction.  Enter a quick little quiz brought to you by the fine people at MIT called the moral machine.

The quiz debates the issue of autonomous driving and if confronted with a question - ie, crash the car and kill three passengers or drive straight into 4 pedestrians crossing against the light, which would you chose?  After you take the test you'll see where you stand relative to others who have taken the test (let's just say you don't want to be a dog in my version of the future).

While it seems like a bit of a silly experiment, the reality is that autonomous driving is coming faster than anyone predicted and since the greatest danger to computerized driving is the unpredictable actions of humans around the cars, there may come a time when the computers will have to develop their own moral compass for situations like these.

You can visit the MIT site here and just click "start judging" to determine who gets to live another day in our robot driven future.

Friday's market turn around was nothing short of amazing given the bad info upon which it was based.  If you remember, everyone was very concerned about Deutsche Bank having a Lehman moment (though I'd say they are more Bear Sterns, but tomato, tomahto) when a bunch of tweets hit twitter about a "deal" that had been reached with the Dept of Justice (allegedly reducing their fine from $14 billion to $5.4 billion).  These tweets from random sources with little supporting information were then picked up by a French news agency which gave the story further credibility. 

Well, over the weekend we learned that not only is there no deal in place, the CEO of Deutsche Bank hasn't even met with the DOJ yet.  Deutsche Bank's stock has stabilized and remains off the Friday morning lows, however the insurance on Deutsche Bank (CDS if you watched the Big Short) has not receded at all indicating that there is still ample fear in the market re: DB.

Lots of interesting reading coming in the next few posts.