THE FED AGAIN

I mean unless you are devoted to another daily Russia Trump conspiracy story, the only real news out there is the Fed.  Janet was up on the Hill today making it clear I thought that this might be her last hurrah.  In the mean time it was about an upbeat report as one could have expected: with the exception of lower than expected hourly earnings and inflation (?), everything is looking good.  Equities responded with another record-setting day and bonds were benign.  Anticipation is building in regard to second quarter earnings even among airlines and especially banks.  The latter bunch should really knock it out of the park as all the stars aligned in the past three months.

But the really interesting event of the week was the nomination by the Trump administration of Randal Quarles as a member of the Fed, as a Vice Chairman and the head of Supervision finally filling the seat occupied by the unconfirmed Big Danny (unconfirmed due to having never been proposed, having no chance of being confirmed, having...oh, forget it).  With all the talk of Draining the Swamp, there is no more of a D.C. Insider than Mr. Quarles.  Bush 41 and 43 insider, Carlyle Group, this dude is Son of the Swamp Monster.  Then again, from what I hear he's not a bad guy with few ideological hang-ups and he will certainly come to the position without the madness of Big Danny and with considerably more real world experience which is exactly what is needed.  Things are looking up all over.  Remarkably, with the headlines dominated by the political reporters, it is surprising to note that The Donald is actually getting stuff done which...without any plan on his part other than some serious serial dumbness...under the radar.  Genius?  Ha!  But it's happening.  Guy's off to Gay Paris tomorrow to meet with the new French Prez.  Not a word among the talking heads about that.   Macron may just find common cause with this guy from the standpoint of attempting to demolish the status quo of Euroland (Germany, if you haven't been paying attention).  Problem is I'm not at all sure as for what purpose.  Allons Enfants!  Could be a good ride.

THE MADMAN RETURNS

"Where the hell you been?"

"The Keys.  Just got back on Monday.  Wonderful."

"You stop?"

"For now.  Told you I was going to. Should have done it a couple of years ago.  This is really Coo-Coo land."  But I still read the Journal and still have the screens although their damn expensive for what I do now but there's some good stuff.  Like today.  Did you see the story on Greek Bonds?"

"You mean the greatest investment in the past year except you can't sell 'em because nobody trades 'em?"

"That's the one!  So tell me something banking wiz, if nobody trades 'em, how do you value 'em?"

"You didn't lose the habit of asking awkward questions down in the Keys did you?  You make a S.W.A.G.--you know what that is right? A Sophisticated Wild-Ass Guess."

"Just like..."

"Yes, just like 2007.  That's what you were going to ask, right?  And yes, they are all being held at cost or better by everybody in Euroland even though somebody tried to blow up the former Prime Minister with a letter bomb today.  And yes, the ECB holds a bucketful, and no, nobody cares."

"Not a short, eh?"

"Not even for a Mad Man."

"Reassuring.  Nothing has changed in five months...hell nothing has changed in ten years!  Except for my gold buddy Trump Who is right where he wants to be, the Biggest Swinging..."

"OK, OK.  I get the picture.  You really know him well?"

"Well enough...from golf, charities.  He gives away a lot.  Should have been a trader.  Biggest set ever.  Problem is he's always all in.  You know you just have to be right 51% of the time.  This guy thinks he's right ALL the time and he scares the crap out of people so they dump the positions."

"So why don't the call him Mad Donald?"

"You know what, Charlie? I don't know.  Maybe because he don't drink.  I don't know. Now The Original...I've been known to have a cocktail..."

"Or six."

"Or eight if the truth be known.  Tell ya what though.  He's got some smart guys around him.  But what the hell do I care.  I bought a house in the Keys."

" You what!  You!"

"Me.  Charlie, this could go either way.  In fact it could go either way about five times!  I can't trade this gig.  Still should be all over the place but like you say, nobody cares.  So Mad Max is no more. I'm becoming respectable."

"It's called age, Max"

"For you, Charlie but not for me! Still have the condo for you-know-who.  She won't make a big move.  Me neither I guess, but I'm done, I really am.  You told me to do it  I owe it to you......you bastard!"



I don't know how to feel about this.  Max is about the last of a breed and without people like him I'm not sure we are better off.  There are things about this business...it's feel I guess the thing that machines do not have.  Max was better than 51%.   Not a lot but when you are you make a lot of money.  Too bad.  Then again, the Keys are great in the winter.  He says it's not big but it does have four bedrooms and fish all over.  My Man Max!bonds

HEARD AT DINNER

"Good"

" Very good.  I am most surprised.  I would not have expected it.  From where did you bring the chef?"

"From nowhere.  He lives right here."

"Truly?"  That surprises me even more."

"It's a Jewish neighborhood."

"He is Jewish!"

"No, no!  But if you want good like this go to a Jewish neighborhood.  I mean, where do they go on Christmas? "

" I never heard of this in Iowa."

"You never hear about a lot of things in Iowa.  Great state though.  Great people.  They love me.

"You are full of surprises."

"Yep.  Been that way all my life.  Here, try the Moo Goo Gai Pan.   Melts in your mouth...oh by the way sport, we just blew the crap out of an airport in Syria."

"ARRRGGGGGER,"

It's true a swear it.  I know a guy who knows a guy who talked to a guy who was there...well almost there.  He might have tapped the conversation.  Happens a lot these days.  But you might want to keep in mind the "face" thing.  The Donald just dumped all over Mr. Xi very much in public and no one can tell me it wasn't purposeful.  Then again, the guy is lucky.  He had a dream opportunity and used it to his advantage.  But, and it is a big BUT, how will Xi react?

Anyway, The Donald stunned everybody, the jobs number at 98,000 absolutely stank,  the last two month were revised downward and absolutely no one cared.  Nothing moved...nothing.  So, what me worry?  A georgeous weekend in the Fly Over Zone with T & S's peonies racing skyward, happy as hell like everybody else.  She's happy so I'm happy.  I think.

Have a great weekend!

QUARTER END

With a bit of a whimper to be honest.  I keep marveling at the attempts of those in the know to explain what is going on.  Today there were competing stories in the same newspaper, one explaining how the the Trump rally/economic push hasn't materialized whilst the other was marveling at the 13% growth in equities since the election and inflation finally reaching the Fed's target of 2%...yep, 2%.  We made it!  Hallaluya...I think.

Trying to make sense of all of this I called He Who Knows All Things.

"What do you make of all this?"

"I donno."

This is very troubling because HWKAT is the source of last resort.  Fear, cold, grasping fear right in the middle of the gut.

" I was speaking with [expletive deleted] who of course hates Trump. There is no doubt the...ah...elites on both coasts and of both parties wants the guy out.  Then again, except for the hard left among them no one can really express why.  So I asked ED straight out whether he was sorry he didn't throw his hat in the ring when he had the chance.  Funny response.  He said he really believed he could do better.  Then why not, I asked.  He said he had asked himself that a number of times and had no answer.   The fear of losing was all he could come up with.  And I thought, 'God, have we all become so self-absorbed that the fear of public failure even for a guy this successful is too much to contemplate!'"


"Think they'll get him?"

"No, I really don't.  Tell you why.  From a lot of standpoints this quarter is going to look pretty good and every day the sun comes up the fear of the world ending becomes less and less.  Watch the earnings and particularly manufacturers.  With consumer confidence through the roof that sector has to be good.  If the bank guys didn't get too pleased with themselves and got hammered when bonds went on that roller coaster ride, they should be terrific.  But never underestimate how dumb some of these guys can be.  Even ED agreed.  Said next week could be critical, however."

"The Chinese?"

"Very good.  Big meeting.  We see how good a deal guy he is.  There are a lot of trade-offs."

"Such as?"

"Look they need us probably more than we need them, but they have one big leverage point."

"The little fat nut.?"

"Yep.  If he goes away...I mean really goes away...Lin gets a lot.  He has real problems; probably greater problems than we realize.  And neither he nor the country has that much time.  Forget about the 5000 year patience of the Chinese.  That works when the next rice paddy is a  journey to another country.  These good little socialists know what's out there and there's 600,000,000 of them who ave not experienced any of it.  Next week is a very big one for our Accidental President..  Forget about everything else."

I hung up thinking HWKAT is a pretty smart guy...who left me no better off than I was before I dropped a dime...trying to make sense of this

WHAT THE HECK...!

That's what my grandson says when things don't go his way which is generally all the time because he's eight.  That's the way I felt this morning when the consumer confidence number came in at 126 which hasn't been seen around these climes since Trump was in short pants, followed shortly there after by manufacturing which was up, the Ford Motor Company announcing further U. S. expansion and the equity markets which surged on the news leading to a closing number on the DOW of up 150.      Sure enough. Stan Fisher pops up to express the view that things are looking pretty good and yes, there will be two more increases this year.  Trump then trashed a couple of more Obama self-made laws with the stroke of HIS PEN and needless  to say, the 10 year closed at 2.43%; everything to which I had alluded yesterday was out the window.  How dumb do I feel cannot be described here.

Well not everything.  In trying to save face let's classify all of e above as "event risk" and the ol' blog don't look so bad.  It may not be reflected in the statistics gang, but the vol in these markets is way up there...perhaps not in manner as measured today but as we old guys understood it way back in the past century--and more so--where if the right guy in London caught a cold everybody started sneezing.  The other thing is that at this little precise moment in time we are not getting much warning from standard sources as to trending events as the media seems to be totally obsessed with anything that might in any way lead to Trump's impeachment a very little as to what the hell is going on in the world.  Yes, you are right: me too.  We are too much into the guy from either one side or the other...or no side for that matter. Time to start getting real.

What today's events do point out, however, is that the economic mood of this country, despite the presence of THIS President has changed to a far more bullish outlook which is not just limited to the Fly-Over Zone.  And you have to give the guy credit:  he appears unfazed by anything.  I have to be honest and admit that I am enjoying it.  Never a dull moment as is said.  Tax policy seems to be next on the turn table waiting for a spin and there was even some pointed talk today in some circles about having a go at Dodd/Frank which would be a very good thing indeed.  Forget about the EPA and coal; that's a side show the issues involved to be settled by the market and the future--at least with $3.00 gas--appears relatively clear.  If the optimism out there proves correct, fixing the financial infrastructure of this country will be far, far more important...and that also includes getting a handle on such things as the so-called "shadow banking system" which has grown like Topsy in the past ten years.  A big part of the "fix" is finally getting the regulatory piece right.  What the heck.  We'll never get a better chance

JUST WHEN YOU THOUGHT...

...things couldn't get more confusing, along comes today.  Let's review the bidding.  As late as two weeks ago we knew a couple of things for sure:

1.  The Fed was going to have at least three tightening events this year
2.  Manufacturing was on the move
3.  Confidence was way up
4.  There was a ray of sunshine Over There
5.  If you were going to do one thing this year it was stay the hell away from bonds.

Today, the 10 year was at 2.34% from 2.52% and every thing else we knew we found out we didn't. This has been some ride which shows no sign of ending as long as the political parties in this country...and Over There as well stop lobbing absolute bombs at one another.  Yes, the more moderate right came out ahead in Holland which knocked prospects for Mme. LePen down a notch or two but back she comes aided by an apparent infusion of serious cash from a Russian financial institution...SACRE BLU!..a few terrorist inspired murders and a solid showing in the tri-partite debate.  Then of course Greece has been rediscovered and Italy, which has been below the radar has suddenly popped up with recent economic performances which somewhat lag behind those of the aforementioned Greece.  Hozzat happen?  But the big one is next week when, if all goes according to plan, Mrs.May pulls the trigger on BREXIT just as the Euros finally figured out that if (when?) the Brits leave there's going to be hell to pay for those who are left...assuming there is anything left in which one might remain.

The Donald of course didn't help things with what was, honestly, a pretty crass handling of Angie who just wanted a handshake after all.  In a world which for some years now has given itself over to form rather than any substance you would think the guy would be smart enough to play the game at least a little bit.  Nope, not yet but then again he's in the White House with a couple of billion and a wife that makes the former First Lady of France look like the third runner up in the Miss Lug Nut Pageant and I'm going through the fourth  iteration of the new kitchen design.  Maybe that's it: the real world he seeketh not.  Assuming one knows what Beeth the Real World.

I suppose this is a long way of saying we are probably vulnerable to multiple event risks in multiple locations with probably less agreement and coordination among governing parties in the west as we have seen in a long time.  However, I am reminded of the sage wisdom of the great Henry Kissinger who once stated in remarks regarding his former boss that, "zum times it is gut to have people zink the President is a little crazy, ja?"   Funny, a lot of people thought and still think Henry is a bit crazy. Yeah, like a fox, nein?  

BUDGET GAMES

The Donald released his budget for fiscal 17-18 And of course it was declared dead on arrival by every politition across the Fruited Plain.  Then again, for the past eight years the nation has moved forward without any semblance of an approved budget kind of like T & S for the past half century or so.  The Donald seems to about as much concern as she does so why all the fuss?  Once again, I don't know, but the guy just seems to roll on with nary a care except for the things that are important to him.

Take today for example.  Angie came to town in what was billed in often breathless terms as a sit down critical to the entire western establishment.  Would the American President temper his words and positions, having finally realized how critical the relationship with Germany is?  Now of course that is assuming that it didn't realize that already but as to the tempering bit...nope, not a bit.  The words that followed were polite, often accompanied by a smile but pointed on both sides and more direct than anyone who has been around these things can remember.  Not even Obama and BiBi who hated each other were this direct in public.  I make no judgement on the event, but clearly this is a different kind of guy and to her credit...and who would have thought otherwise...Frau Merkel was clearly up to task.  So watching this I said to myself, "Self, maybe in these times it's not bad to have the leader of the most important country in the world and the leader of the most important country in Europe, who after all are REALLY on th same side at the end of day, prepared to go toe to toe to sort out the differences rather than waste time and effort in a diplomatic two-step."   The "establishment" and certainly the editorial board of Foreign Affairs may not like it but maybe it's not such a bad thing.

Anyway, back to the budget with today's affirmation that this is a different guy.  the Donald says he's going to cut expenditures at the EPA and at the State Department.  He has Sexy Rexie at State who in case you missed it ran Exxon and knows a thing or two about cutting costs.  Gang, I suspect that what he says is going to get cut is going to get cut: nobody in this mob is running for reelection and could therefore give a damn as to the politics or the opinions of others.  I mean, after all, what do you do after running Exxon?  Well, I suspect if you are looking for a new challenge you take on the biggest management challenge of all...the Department of State.  A comparison that may or may not prove useful:  Exxon, the most powerful and successful energy company in the world, is run with 20% of the people employed by Petrolios Mexicano.   Now not even the Department of State is that inefficient (nor, to be truthful, is it any where near that corrupt) but the comparison might give one a different view as to why Tillerson was picked...not for his diplomatic skills although they are clearly present, but for his management ability.  Before you drain the swamp you have to kill the alligators.

Anyway, it's St. Patrick's day and I'm going to go marinate a few ice cubes in honour of that fine Roman of years past whom the Irish have claimed as threir own.  He drove out the snakes from Ireland, you know...or maybe it was alligators.  Do you think that Till....nah, impossible.

Purses, anyone?

SHOW TIME

Like every thing else, The Donald has taken the air out of everything with his scheduled speech to a joint session of Congress.  All day long there have been leeks, predicting just what it is the guy is going to say.  Now I never met President Trump but I have a lot of friends, past and present, who banked the guy and one of their common themes was that you never knew what the guy was going to say or do.  Which is why this little fireside chat...which ruins the best tv night of the week by the way...might be one to which to pay attention not necessary for it's content although that will be important, but for how bad a miss the prognosticators will register.  If he stays true to form, the next four years could be a roller coaster ride of monumental proportions.  Is that good or bad?  Who knows.  Might be fun, however...or not.

Anyway, I wish I could change the script but until it is determined where this guy is going to wind up in a governing sense, nothing of importance is going to happen although I think that on the finance side with the two hit men from Goldie in place when the stage lights go on what ever happens is going to happen very fast. Speculation on that later in the week but right now I'm settling in waiting for the Show on the Hill to start.  I hope they hand the guy the right speech.  After the  act the unmentionables put on in Hollywood on Sunday I don't think I could take it.  Then again, there are a lot of people in that town who are dumber than Warren Beatty.  Scary, isn't it.

AS I WAS SAYING...

Well, we moved.  Catastrophe.  5400 to 3600 with half the closet space.  Trouble and Strife managed to find wedding gifts as yet unused .  We haven't gone to the mattresses but to the packing boxes and on top of it all my desk top died, I lost tuns of stuff and trying to write on an iPad for me is impossible.  Short and sweet until I get a new big machine and clear out a place to put it.  But for all of you that have inquired as to my existence I will be forever grateful.  And so...

Speaking of mattresses, Big Danny Tarullo--as predicted I might add-- announced on Friday that he has fled the coop.  The greatest eat shake-down racket of all time was about to end with the new Capo di Tutti Cappi,  Donaldo, now running for the show.  Danny's underboss, Crazy Lizzy, damn near got wacked by the head of the Hill mob the other day and Danny saw the handwriting on the wall.  Gone, finito and not a tear shed.  So with half of the retired legions of Goldman Sachs running anything financial in Washington here comes Christmas a bit early this year for the Street.  And if the stock market is any indicator, for a lot of other people.  I've been speaking with a lot of local business guys here in the fly-over zone and there seems to be a common thread: not too many people like the President as a person but a lot voted for him because of a belief that he would reduce regulation.  As one guy told me in Illinois last week: "Catapiller does't give a damn, they just spend $50 million on lawyers and they're in compliance.  But it kills me."   Never thought about the little guy...that's how far down it goes.  And as for the community banks...they think Trump is the second coming. Forget about approval ratings; these people would vote for him again in a heartbeat...unless he doesn't come through on his promises.  If that happens, he's dead meat in...as he would put it..an unbelievable manner.

What else has gone on?  Well, the Euros have managed to make things even worse if one could imagine that and as I try to get back up to speed I think I will start there...from France to Greece with a few stops in between.  It's been quite remarkable given the problems facing our friends Over There that there has been very little reportage.  Trump simply takes the air out of the room and out popular press (and theirs) are quite prepared to spend countless hours covering one perceived mis-step after another and criticizing the knot on his tie in the hope that something sticks and POOF, he disappears while a couple of very real crises are bubbling up amid the Zone.  It falls to us I guess to bring light unto the darkness but a warning!    It may not be every day for a while until I get organized.  We fly tomorrow.

WHAT TO SAY

I  donno.  Stocks are up, bonds are down, the dollar is up, and it looks as those things are going to stay that way.  The remarkable sector is of course financials which six months ago were cold as ice, and now?  The 10 year closed at 2.60% today which means at some point there has to be a rotation in to capture this yield but everything is so bullish that I wonder when.  That might come if the Democrats can convince enough electors to elect Hilliary but unless that happens, The Donald seems to be the dominating force in all phases of this market.  As far as the markets are concerned the guy hasn't put a foot wrong...of course he has yet to do anything of consequence but visions of sugar plums are dancing in people's heads all over the Street.

The foul winds are all international.  While economic sentiment has grown increasingly positive in regard to the EU, the political issue grow more negative by the day.  The Italian banking system will face a terminal point by the first week in January and the afor-mentioned political/financial crisis in Greece will begin to take center stage by mid-January.  All these have the potential to become flash points for market disruption.  And then there is China.

Trading in the Chinese sovereign debt market was suspended today in Shanghai in the face of plummeting prices no doubt reflecting the actions in the U.S. and the strength of the dollar.  The market is almost entirely internal but obvious has consequences for the Yuan as well as risk indicators throughout China and the region.  What is going on?  No idea, but aside from my ignorance the scarier thing is I don't think anyone has any real idea either.  Now I do know that the Chinese have been talking to anyone they think might have a handle on the near term consequences of a Trump administration or for that matter the actions of a Trump administration.  Nor do I think they have gotten an outline with which they are satisfied.  Things move quickly in China.  The herd instinct is alive and well.  It is to be watched closely.

That's it for this year except for a few interludes on issues that might arise.  Check in from time to time for insightful insights.  God!  That's too much even for me!

Later, gang.

OLD HOUSE, NEW HOUSE

Ours.  We've spent the past few days selling our present abode and buying a new one, so this is going to be short.  It has been an emotional experience which also makes it hard to write.


OK, we can probably say we are in the midst of a bond rout with the 10 year closing today yielding 2.44%That is one hell of a move since the election boys and girls indicating that suddenly the entire Street and a good part of the investing world are positive on The Donald or at least what he might mean for the economy.  Whilst I normally pay little attention to the consumer confidence number this week's move upward to over 100% was equally extraordinary.  Of course equities are like a rocket ship aided in no little degree by the announced deal to cut oil production ...more on that in a bit.

Tomorrow brings the jobs report which suddenly is more or less meaningless absent the political ramifications.  Estimates are up 180,000 but once again the quality of what is being reported is open to serious question.  In an age of big data one would think that there could be more of a delineation between bedpans/burgers and quantum physics hires but one has to really struggle to find it.  Memo to President Elect: better reporting is something we desperately need along with believable data which half the time we haven't received.  but right now there are a lot of people around the world staring with shock and awe at where the U.S. appears to be headed and whether Mr. Trump's promises in regard to role of government are about to be fulfilled.  If there is one consistency since his election it is that his Cabinet appointments are doers--you may not like what they do but there are damn few theorists named so far.  To think this is not being closely watched globally is to be sadly mistaken...especially Over There.  That election cycle is coming around at precisely the wrong time for Europe's entrenched interests even in Italy which of course votes this Sunday (Memo to Us: the whole world votes on Sunday, why can't we?).  And even there, the word is "change;" we just don't know what kind it will be.

Finally...oil.  The agreement will last in practice for about a month and then the leaking will start and become a flood.  My buds in the West Texas Town of El Paso tell me there's more damn oil and gas out around their place and in the Permian than anybody ever dreamed about and Good Ol' Donald gonna let us go git it.  And don't forget them Mexicans, they say.  They gotta get their production up and they need us and the money to do it which they only git if Good Ol' Donald gits himself a deal on NAFTA otherwise that boy just gits up and walks away from the table.  Now I don't know whether these guys are right or not but in this business it's a lot what people believe that counts.  They are believers.

Jobs number tomorrow.   Whoopy damn-do.

THE ROUT CONTINUES

The ten year actually hit 2.30% today before falling back to 2.26%.  It's been orderly but clearly there is some real blood-letting about and may well be more before this is all over.  For a bunch who were damn near proclaiming the end of the world two weeks ago if Trump won, everyone seems to have jacked up their economic projections and with those their expectations on interest rates.  The Obama legacy is considered ruined; the Clintons dead politically; the Democratic Party shattered; Conservatism rampant.  All nonsense of course but for you non-American readers there is something quite important to keep in mind politically.  In two years we will have another election and this one will involve over 30 Senators from Trump states with a lot of those seeking reelection being Democrats.  Trump needs two decent years and if he gets them he may have an unassailable majority in the legislature over the remainder of his term.  Look for him to hit the ground running in January with his new mantra being not "The Art of the Deal" but "The Art of the Doable."  The guy will look for successes and consequently, I suspect, that the dreams of radical change held by some people on the right might not be fulfilled in the first two years of a Trump Presidency.  After 2018...look out.

Where might the problems lie?  Oddly, perhaps, I do not believe domestically.  Europe to me is a serious question mark as there is no doubt that the forces which powered BREXIT and Trump are at work which could very well result in the dissolution of the Union or at least the beginning thereof.  It is vital, I think, that European leaders recognize that an economic union is far more important than the dream (myth?) of a political union; at least one as is now envisioned.  NATO for the time being is vital and I suspect that the cadre of advisers around Trump will convince him of that.  As to claims that NATO can only survive in a strong political union...rubbish.  NATO best times were when there was no Union at all.  It is not the politics but the threat, and there is a threat exacerbated for the past eight years by--rightly or wrongly--Putin believing that Obama was an empty suit.  There will be a period of assessment on both sides as the new year start.  Trump, whether he realizes it or not has a strong hand, particularly if the pundits are correct and the economy takes off.  Whether he plays it well remains to be seen.

I'm especially interested in the Cabinet appointments for Defense and Treasury--less so for State.  Frankly, State doesn't count for much any more given its stewardship for the past eight years which has turned it into almost an after-thought.  If he gets it right and with is what is clearly a mandate of sorts the guy just might pull this off.  We'll know pretty soon.  What is quite surprising is that it appears that his gang have actually been planning this for some time in stark contrast if one would remember, to the opening months of the Obama Presidency where the rule of the day was chaos.  Who knew?  Not the the New York Times...that's for sure.  If you want to have some fun, read the Gray Lady for a few days.  She has lost it...completely lost it.  Delicious.  And thus ends my political commentary.  Back to Banking and finance...I promise.

OK, I ALMOST GIVE UP...ALMOST

I was listening to CNBC this morning when Little Paulie Krugman came on.  "Wait a minute...that's not Little Paulie," said I.  "That's Donald Trump!"  If one couldn't recognize the voice one could not have told told the difference.  There was Trump parroting all of Paulie's column in the Times earlier this week.  Gobsmacked.  Then it dawned on me:  what is the real estate developer's First Commandment?  "Thou shalt not use thy own money."  What an idiot.  Of course Trump will gear up the good ol' US of A just like he geared up everything else in his life including himself.  In short, said me to my self, "we're doomed."

I wandered around in a daze until lunch time then when out with a classmate of mine and had a couple of beers.  Another not-so-good idea.  Home for a nap and woke up...refreshed!  That lasted about 1/2 hour.  Flipped the TV on and discovered that the DOW, the S & P and the NASDAQ were a RECORD highs!  Wait a minute, hadn't it been announced that there had been a record outflow from equity funds this year and a record inflow into bond funds?  Quick research...yep, sure had.  So how...why...well of course. It's a totally trader's market, which in the past would have meant that this thing is so overbought as to be...well, I don't know what...but this isn't the past.  Then again, if you had bought the ten year in December you're up 30%.  Want to make more money?  You should have bought the Long Guilt at the same time.  You're up 50%.  Want to keep it going?  Buy any currency--any--against the dollar and you are a winner.  Want to do even better?  How 'bout the Ruble.  Hell, there about to invade the Ukraine again.  Just a thought...to go along with the Turkish Bonds of yesterday.  Just keep in mind that when the entire world seems to be in a negative interest rate environment, it is the U.S. Dollar--the currency with the highest yielding fixed income obligations--that is the cheapest.  Which also means if you think about it that this is all going on without the "carry trade" because the currency risk will kill you.

Something's happening here; what it is ain't exactly clear, but the little economics and monetary theory with which I grew up has been turned on it's head.  Now either we are in a whole, new world  or if this thing ever decides to return to what is supposed to be normal, it is not going to be a gradual thing.  It's going to be a mess akin to what He Who Knows All Things referred to the other day as when the guy yells "FIRE" in the crowded theater.  In the mean time I'm depressed.  Not so much that I'm giving up but enough to take the day off tomorrow and enjoy the Dog Days.  Too much barking every where else.

Monday.

WORKIN' ON THAT TAN

Another beautiful day today.  Few more of these and I'm going to look like George Hamilton helped immeasurably by Janet & Co, doing exactly what everybody thought they would do; leave everything in place, say there is less risk out there (translation: we got BREXIT all wrong) and hold out a bit of hope for a rise in September.  On the latter point, forget it.  There is absolutely no chance of a rate rise two months before the election from this Fed.  None.  So we cruse along without a care in the world-- except for around here because the Cubbies are beginning to slip.  Somehow, I don't think the world order will be affected.

The big news today, just breaking I might add, is hat the new stimulus program widely expected...and in some quarters feared...from the Bank of Japan apparently will not happen.  I just glanced at exchanged rates in Asia a moment ago and the Yen was surprisingly strong yet again based it seems on the BOJ expressing that there is no need for a new stimulus package.  Caught me out as I would have been short but as I don't have two Yen to rub together no harm done.  Tomorrow's markets will be interesting.

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It's politics, but I have to comment on this.  Just when the news cycle was heading into top speed in covering Bill Clinton's speech at the convention last night..."In 1971 I met this girl..." up pops The Donald and kills the entire story line with an absolutely beauty:  "Russia, if you can find those 30,000 Emails, you'll make some real friends among these press people (pointing) here"  WELL!  All hell broke loose with the NY Times accusing Trump of asking Russia to spy against the United States and that was the gentlest of the criticism.  Trump plays these guys like a tin drum.  Never for a moment did the Times consider that among all the nations in the world that own a computer the only one that might NOT have the Emails is the United States.  Of course they have been hacked...even the FBI has much admitted that.  But that raises another question for this most extraordinary of all elections.  If the Emails do contain damaging information on Mrs. Clinton as many suspect, is she now and could she be compromised in the future by a foreign power who has that information.  It is the electronic generation version of the oldest intelligence ploy existing, the HONEY TRAP.  If anybody figures that out and brings it up, let me know would you?  I'll be in the sun.  Until November.