The Daily Market Catch
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The One Big Thing
I’m back – from ‘Early Christmas’ with Delilah and Moe – and in other news:
- Brexit – The UK is leaving the EU on the 31st January.
- Impeachment – House Judiciary panel approves and advances Trump Abuse of Power Articles.
- Repo – Fed is putting in another $500B to back-stop year-end funding needs.
- Trade War – Trump says 25% tariffs will remain, but new China duties will not take effect Sunday.
I track Unemployment Claims for purposes of visually identifying when inflection points are near – see chart. Add to this the macro backdrop of 500,000 jobs that represent a NEGATIVE adjustment we are going to see soon (prior year March 2018-2019 in Non-Farm Payrolls according to BLS). Come February, BLS will announce revisions. We could see the average job reports have been exaggerated by 40K jobs per month! (H/t @philstockworld).
My Point? The Consumer Matters. Queue Recession Watchers
It only took 12 years, unprecedented stock buybacks and $4.2T added to the Fed balance sheet – not to mention much more easing and added liquidity globally, but…
Cannabis Tax Loss Selling may be nearing an end after a near 50% drawdown in many pot stocks in 2019. With that, the “January Effect” may soon begin.
The average correlation between MJ and the S&P is 30% since the fund’s inception. That means the current correlation (-12.3%) is almost two standard deviations (22 points) away from the average. Datatrek
Important Read: The Repo Crisis Shows the Damage Done by Central Bank Policies
Liquidity is much lower than estimated and leverage is much higher. Daniel Lacalle
Sidebar note: IF the Repo injections are truly temporary, when do markets price in a decline in Fed’s B/S in 2020?
For more charts and links like these check out my twitter feed.
To Great Fishing!
CIO LaDuc Capital LLC
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