While the political parties continue to play 3 Card Monte with our lives, in the 675 days of the Mueller investigation, let us remind you that over that time, over $2 trillion has been added to OUR debt while over $1 trillion of our tax dollars went to pay interest on the debt they have all created throughout the years. The budget deficit set an all-time February record of $234 billion. AND not one of these miscreants give a crap as all they care about is going after each other in order to be re-elected.

There is currently a lot of talk about interest rates. It is being noted that short-term rates are now above long-term rates here in the states. We are being told that normally, this presages recessions. Before we give you those facts, just remember we have already been reporting to you that parts, if not all of Europe are contracting. Japan is contracting and we are in a definitive slowdown. Some facts:

In advance, we thank the many outlets we use to gather these facts.

There are 18 countries with negative bond yields. This is amazing in light of the fact we are supposedly in the 10th year of a global economic expansion. It may be telling us things are worse than thought as normalized rates would be trouble. Germany’s 10 year yield, amazingly, just went negative. Germany’s manufacturing PMI dropped to a woeful 44.7 in March. That’s a drop 14 out of the past 15 months. Germany’s manufacturing orders index dropped to 40.1, a level not seen since 09.

France’s manufacturing PMI just went into contraction at 49.8. Services PMI lower at 48.7.

Japan’s manufacturing PMI at 48.9. New orders dropped further.

In the past, Bernie Sanders has called for the nationalization of the energy, electric and telephone utilities, drugs, banks, factories and as he put it, “other major industries!” Just had to interject that.

U.S. rates futures now imply a 54% chance of fed cutting rates by December. Glad they have been listening to us. We think it a lot sooner…especially if rates keep heading lower on the long end.

The U.S. now joins Canada and Mexico with an inverted yield curve. Here is an important note. The average fed funds rate at prior inversions was at 6.2%. Current rate is 2.5%. This is a record low for an inversion. The prior low was 2.94% from 1956. The 1 month yield is higher than the 10 year for the  first time since August of 07.

If Japan and Europe are going into recession, be afraid. Be very afraid as it would be happening while their rates are still negative.

1+1 certainly =2 as part of the best performing sectors in the past year are real estate and utilities, the 2 areas that benefit the most from plunging rates. Recent new highs are laden with these groups as well as muni-bond funds.

We can give you all kinds of stats on whether inverted yield curves lead to recession as many are arguing for and against. Many against state the inversion needs to stay for a period of time. Let’s just say it has a pretty darn good record and with many areas around the globe already having issues, one must have a question on whether the U.S. will be immune. We have been stating that if you just watched the bond market, you would think recession but if you just watched the stock market, you would think we were accelerating. (more on that when we talk markets)

Bernie Sanders quote from 1974: “Nobody should earn more than a million dollars!” He advocated a 100% tax rate above this level. Just had to interject that.

As the yield curve inverts, bank stocks, regional bank stocks and other financial stocks did what amounted to a cliff dive this week. The bank index was down 10% in four days. Paying out short and lending long in this environment is like betting on the Knicks….not good.

Speaking of markets, if you watched, read and listened to us late in the week, we talked about a melt-up in Tech. We stated it was this kind of froth that often leads to pullbacks. But that is not the real story. The real story is the bludgeoning in everything financial but also the narrowness that the market is now showing again. In fact, we have listed many areas that are downright bearish while some of the major indices kept moving up.

On top of the financials:

FOREIGN MARKETS while better, have not been nearly as strong as the U.S. and now starting to see a few areas rolling over.

ENERGY and COMMODITIES still not happening. STEEL names are at new yearly lows. (Thought those tariffs were supposed to help!)

RETAIL remains weak. Some names are very weak.

TRANSPORTS act terribly. Even the stronger names getting in some trouble. AIRLINES the worst of.

MANAGED CARE real weak. UNH is in the DOW.

BOEING (BA) used to be the strongest name in the DOW. Now it remains the weakest. One of our 5 worries came to fruition late in the week as one airline cancelled orders.


The RUSSELL 2000 (SMALL-CAPS) and the MID-CAPS continue to under-perform badly.

Thrilled yet? We are just reporting the news. We know some of the major indices have been persistent but this week saw deterioration while TECH, for lack of a better description) melted up. That may have changed on Friday. Friday is only one day. We are well aware but think a possible wake up call as the melt down in financials may have just trumped the melt up in tech. Some of the leading tech names were hit hard. More to come.

Bernie Sanders now is worth millions, has 3 mansions and flies on private jets.


-If we were only watching the bond market, we would think we were already in recession. If we were only watching the stock market, we would think the economy is accelerating. In simplest terms, we are getting quite the conflicting signals.-
-As we write this, amazingly, the 10 year is now yielding 2.473 as it drops markedly again. As we write this, the 1 month yield is right at the 10 year yield. In the past, quite often, this presaged a recession. But again, the stock market has been saying otherwise.-
-As far as the market, we can only describe the past few days in TECHNOLOGY as a mini-melt up. The all-important SEMICONDUCTORS are leading the charge in spite of so many fundamentalists saying the group should be going down. They have forgot the number 1 rule…price first, everything else second. We just have a problem believing we were going into a recession or worse with this group leading. Near term, the big issue is that we are seeing a bit of froth but so far not a biggie. Froth often leads to pullbacks.-
-But we are open to anything. If price changes, we will let you know but something is up. Something is not right with yields tanking like this. We know there is trouble elsewhere around the globe as we have talked about it for months.-
-If this continues:-
-We guarantee that the next move will be the Fed lowering rates. The fed cannot have fed funds above the 10 year yield. This will be a double guarantee if the economic numbers head south.-
-FINANCIALS should under-perform. Short rates above long rates? Not good…and in the past couple of days, most everything financial has been hit hard to the south side while tech has been bought up to the north side. Just a few days ago, these financials were trying to go topside. Exceptional weakness can be seen in the REGIONALS (KRE).-
-UTILITIES will continue to outperform with REITS right behind. These groups love lower rates. Of course, we doubt the REITS stay up if the economy gets in real trouble.-
-Needless to say, it’s getting a little weird out there. We don’t usually watch rates as closely as we watch stocks. This is one of those times.-


A little reversal yesterday but not a biggie but a few things noteworthy.

TRANSPORTS still aint happening and now a name like UNP rolls over. FDX hit hard this morning not going to help.

FINANCIALS were edging out of range but by the close, tucked their head in like a frightened turtle.

Notice how AAPL pulling back…pulled back the NASDAQ. Nothing wrong if it pulls back some more.

HOUSING aint happening. Small and mid still lagging decently.

Why do we mention these areas? Because it is easiest to isolate weakness when a market is ascending.

Fed day today…blah blah easy money!


BOEING (BA) is down $9 this morning. We receive a decent amount of emails each day on our thoughts. Our answer to all is that “WE DON’T KNOW!” People actually get mad when we tell them we just don’t know. We don’t know:

What kind or what size lawsuits there will be.

How long it will take to get the planes back in the air.

How much it will cost to get the planes back in the air.

How many, if any orders will be cancelled.

What kind of government investigations there will be…and there will be investigations on this plane’s approval.

And of course, how the market treats all this. We know there have been some good trading moves both up and down. We know pundits are coming out in droves telling you what kind of value the stock is at these levels. (THEY DO NOT KNOW)

We just do not know the day to day. We can continue to look at support levels. We can look for accumulation and distribution but that can change overnight because of the news.

As always, it is your money.


We write less in better markets because it is mostly in bearish markets we separate from the pack. Remember, wall street is a fully invested, fed driven vehicle. With the central banks, we suspect you could clip off several thousand, if not more points.

The most important part of the equation remains a clear lack of institutional selling. It can start coming out of nowhere but even in the down week, it was just a pullback and we easily segued off the negative side on the Friday reversal two Friday’s ago.

The SEMIS are on the move.

The FINANCIALS set up here.

NEW HIGHS have been picking up but still not even close to very good.


RUSSELL 2000 weak.


MID-CAPS weak.

While better, FOREIGN MARKETS not even close to the U.S. The best markets are strong worldwide markets.

Bullishness and froth are showing up with some huge IPOs coming out.