Submitted by Eric Peters, CIO of One River Asset Management
Here We Go Again
“Here we go again, right near the highs, people bearish,” said the CIO. “It’s not that they’re explicitly short, I don’t know anyone who is, it’s more that they’re hedged, underweight,” he continued. “The economy is slowing, geopolitical risks keep rising, but there are so many things to worry about that the Fed remains in play – now they’re restarting QE while assuring us it’s anything but QE – and no one can afford to miss another leg higher,” he said. “The irony is that the worst possible thing for this market would be a pause in the bad news.”
Told You So
“If I wound the clock back and told you this is where we’d be,” said the CIO, “Impeachment inquiry, trade war, slowing economies, renewed easing, rising wages, shrinking margins – you’d have said the S&P 500 would be trading at 2000.” The S&P closed at 2970. “And if I told you the Iranians and Saudis would be in a hot war, you’d have said oil would be $100.” WTI crude oil is $55. “Typically, this would mean stocks will break higher, but there’s so much going wrong, and so many policy manipulations, that I don’t trust anything right now.”
A few weeks back, when the whistleblower blew, betting website odds of Trump completing his 1st term plunged from 84% to 71% (last traded at 69%). Biden’s odds of being the Dem nominee fell from 26% to 22% (last traded 23%). Odds of Warren being the Dem nominee jumped from 41% to 51% (last traded 47%). Odds of a Dem presidency win in 2020 remained broadly unchanged at 58% (last traded 55%). Dem retention of the House was steady at 75% (last traded 75%). Republican hold of the Senate was unchanged at 68% (last traded 65%).
According to Nate Silver’s FiveThirtyEight, public support for impeachment/removal rose 2 points this week to 48.8% (with 43.6% not in support). 58% support an impeachment inquiry while 38% don’t support an inquiry. 53.7% disapprove of Trump and 42.1% approve. Fox News reported 51% of voters want Trump impeached and removed from office (+9% jump from July). 40% do not want him impeached/removed (All these polls were taken before Giuliani’s Ukrainian business associates were arrested, and before Giuliani came under investigation.)
“Like the NBA, we welcome Chinese censors into our homes and hearts,” read the faux apology from South Park (the only TV I watch). Its creators mocked Chinese censorship, human rights abuses, hypocrisy. A backlash against China’s communist party dictatorship is going mainstream in US pop culture, supercharging our conflict. Beijing erased South Park from its internet. “We too love money more than freedom and democracy. Xi doesn’t look like Winnie the Pooh at all. Long live the great Communist Party of China. May the autumn’s sorghum harvest be bountiful. We good now China?”