SB's "Weekend Bits & Bites" 😏

Stay cool...😎

Isn't it about time that Joe switched from 'club-flavoured' ice cream...

Source: ZeroHedge

...to this?

If not in President Macron's 'G7 old-cronies club,' at least former President Trump was loyal to and achieved many victories for the American people during his four years in office. (Perhaps Macron was still smarting from the slap on the face he received the other day by a fellow countryman.😒)

The Trump administration accomplishments can be found, in their entirety, at this archived link...an impressive feat during only a four-year presidency.

* UPDATE June 16...

The Geneva, Switzerland U.S./Russia 'sunglasses' summit took place today between President Biden and President Putin...where it was merely a 'talk about more talks.'

So, what gifts did Putin get from Biden?...sunglasses, a pipeline to Europe, sanctions lifted, a return of Russian diplomats to the U.S., a list of 16 U.S. critical infrastructure entities that are 'off-limits' to cyberattack by Russia (does that mean that everything else not on the list is OK to be attacked?...bizarre!), and the opportunity to answer dozens of questions from reporters and spew his propoganda on international TV for 55 minutes at the conclusion of the summit without challenge by Biden, because he wasn't at that solo press conference! Why not, Joe?

What gifts did Biden get from Putin?...nothing...and the 'privilege' of being the 'second act' to Putin in his 20-minute scripted solo press conference that followed, taking pre-screened questions from only 5 reporters...and the humiliation of being the 'bridesmaid,' not the 'bride.'

 

US Fed Makes Emergency 50 Basis Rate Cut & US10YT Drops Below 1%

U.S. Federal Reserve Chairman Jerome Powell announced an emergency federal funds rate cut of 1/2 percentage point to 1 to 1-11/4 percent today at 11:00 am ET...this follows a conference call with G7 Finance Ministers and Central Bankers this morning.

The following is their statement.

Chairman Powell's press conference can be viewed in the video below.

The big takeaway word that he uttered was "uncertainty"...which I've mentioned extensively in my latest posts over the past week...so, trade with caution!

So far, other Central Bankers have remained silent as to their intentions.

As I write this post Tuesday at 1:50 pm ET, the US10YT is continuing to plunge to new 60-years lows and is now below 1%...signalling there's not a lot of confidence in further demand for higher equity prices (as per my recent post)...and further corroborating the need for a much larger remedy, as I emphasized in this recent post, not only by the U.S. government, but by other world leaders, as well.

But the time for that is likely long gone, so, to repeat, trade with caution!

Volatility is here to stay, especially if the SPX:VIX ratio is unable to retake and hold above 80, and then 100!

President Trump's European Wrecking-Ball Tour

* See UPDATES below...

THE FALLOUT

One month after sabotaging the G7 meeting with his refusal to endorse the Joint Statement that was released (with which he originally agreed), President Trump met with NATO allies last week and, subsequently, British Prime Minister May, and criticized all of those world leaders in one way or another (he also rudely kept 92-year old Queen Elizabeth waiting in the heat for her meeting with him), he then met with Russian President Putin, long considered a foe of the U.S., and publicly failed to hold him accountable for meddling in the 2016 election. Instead he praised him at a press conference immediately following their meeting yesterday...as illustrated in the following video.

Furthermore, he played a victim (in front of his adversary) with his denials and accusations surrounding his election, which made him appear as a weak and pathetic whiner...rather than as a commander-in-chief of the most powerful country in the world. Hillary Clinton continues to play a victim, but she lost her presidential bid...Trump did not, but acts as though he did.

Even long-time Trump ally, former Republican Speaker of the House, Newt Gingrich, was critical of his performance...

For an interesting take on that press conference, check out this article by former Chief Assistant U.S. Attorney, Andrew McCarthy.

President Trump's damage-control statement that he made today failed to believably rectify his many blunders, nor did it assuage the gravity of his entire fawning posture on full display towards Mr. Putin at this press conference. Today's explanation (where he changed one word, "would" to "wouldn't"), unequivocally, did not fit the context in which his original statement was delivered (it's clear from his statements made just prior to and after the word, "would," that what he originally said at the press conference was what he did, in fact, intend to say)...nor did it excuse the entirety of his self-damaging remarks he made yesterday.

Muted U.S. Market Reaction Post-U.S./NOKO Summit

* See UPDATE below...

U.S./NOKO SUMMIT

Further to my article of June 3 (and my many follow-up comments/updates), I'm left wondering what planet I'm living on after witnessing a get-together with President Trump and Chairman Kim in Singapore last night.

At the conclusion of their meeting they signed a rather sketchy Joint Statement, which can be read in full here (part of it is shown below). Apparently it's not even as strong as past statements signed by previous U.S. Presidents and NOKO leaders.

We'll see where things develop in the future.

Excerpt from the Trump-Kim Singapore Summit Joint Statement

During brief comments to the press in several breaks throughout the summit and at his subsequent press conference, Mr. Trump was full of flattering remarks about Mr. Kim, while in the same breath, he continued to disparage his allies, especially PM Trudeau...his 'punching bag du jour.' He shouldn't be surprised that America's trading partners would retaliate with their own tariffs in response to his...he knows full well that they have their own countries' interests to protect and will do so, regardless of his personal opinions about them.

I got a kick out of this analysis of his post-summit remarks by CNN. World-wide responses to the summit and agreement are mixed.

Really???...NOT if he treats them like he did Otto Warmbier

(whose parents are suing NOKO for torturing and murdering their son)!

President Trump ends military drills with South Korea, calling them "provocative war games"...a description normally used in propaganda by your opponents.

Seriously?...He continued with his erratic and odd behaviour as he delivered threats to punish Canadians for PM Trudeau's retaliatory tariffs through snarling teeth and with scolding finger-wagging gestures...this came only hours after publicly scoring his relationship with Trudeau as a 'ten' in his press conference that immediately followed the G7 summit. So far, Mr. Trudeau has taken the high road and has refrained from engaging in such pejorative attacks, with the full backing of Canadians...I wonder if Mr. Trump has the full backing of Americans.

And, does this now mean that he will 'feel foolish' again if he's compelled to use tough rhetoric in the future on Kim...or, now that he's exposed this character weakness for Kim and the world to witness, will he continue with his over-the-top flattery of him no matter what?

Who can now take him seriously when he lashes out and uses harsh language with anyone?

MUTED U.S. MARKET REACTION

Meanwhile, U.S. futures markets were muted overnight in their reaction to this news and are slightly up as of 12:00 noon ET today.

If President Trump continues with his steel and aluminum tariffs, and implements additional ones as he's already threatened to do, we'll see how a world-wide trade war impacts inflation and how quickly Central Bankers then raise interest rates (or dispatch further monetary QE measures) to combat that effect.

That may have more effect on markets than future talks with NOKO.

FINAL THOUGHTS

So, will common sense prevail when it comes to President Trump, allies, and trade wars? Do actual (correct and proportional) facts matter to Mr. Trump? We'll see...for the time being he's cozying up to NOKO, China (ZTE) and Russia (inviting them back to rejoin the G7, which was NOT supported by G6 leaders).

* UPDATE June 13...

A slightly more hawkish tone was present in today's FOMC press release regarding future U.S. interest rate increases, including two more for this year...(click here for Fed meeting calendars, statements and minutes). Of note in Chairman Powell's press conference was his announcement that he will hold a press briefing after every Fed meeting beginning in January of next year.

How U.S. Major Indices closed today...

President Trump: Not A Proven Win-Win International Political Deal Maker

* See UPDATES below...

A NO-WIN FOREIGN POLICY

It's clear that President Trump's "America First" policy does not produce a "win-win" outcome for it and other world trading partners...at least, it has not been proven, yet.

So far, he's only been successful in tearing up prior agreements related to the Trans Pacific Partnership, the Paris Climate Agreement, the Iran JCPOA, and has threatened to tear up the NAFTA with Canada and Mexico (see this Global News article: "Reality check: No, the U.S. doesn't have a $17B trade deficit with Canada"..."So the real trade balance with Canada is positive in the U.S.'s favour"...to the tune of "around US$12 billion") as reported by both Statistics Canada and the Office of the United States Trade Representative.

Although he is in current trade talks with China, he has not been successful in negotiating a new trade agreement with Canada and Mexico, nor has he been successful in negotiating any other bi-lateral or multi-lateral agreement that I'm aware of, including a peace agreement between Israel and the Palestinians.

In fact, he has exacerbated tensions in current NAFTA negotiations by slapping hefty and punitive steel and aluminum tariffs on these two closest trading allies, as well as on the European Union...under the guise of "national security" concerns.

He has also increased tensions with these and other countries by tearing up the above-mentioned agreements without replacing them with new agreements.

Inasmuch as the economy of the U.S. is in far better shape than its counterparts, with improved GDP, lower unemployment, rising wage growth, job growth, low inflation, lowered income taxes, reduced business and banking regulations, a comparatively lower dollar (although it has strengthened a bit this year), high business and consumer confidence, increased business capital spending, along with continued growth in its stock markets (likely due to his domestic agenda, much of which he has already implemented), it's inconceivable that Mr. Trump would want to risk all of those gains by taking a hard-line, "winner-takes-all" foreign policy approach by starting trade wars with countries that don't even pose a national security risk and which would create widening and unsustainable imbalances.

THE EVIDENCE

Just look at the evidence as reflected in these world markets and currencies.

U.S., European, and Chinese Financials

As can be seen on this S&P Sector Summary, the U.S. Financials sector finished in second place today.

The Daily chartgrid below shows these sectors, along with the S&P 500 Index. As can be seen, price is trading around either the 50 sma (red) or the 200 sma (pink).

The graph below shows the gains/losses in these sectors since December 2011. The Financials have performed the strongest, with a gain-to-date of 20.78%.

The Daily chartgrid below contains the YM, ES, NQ, TF, XLF, the major U.S. banks, Visa, and Mastercard. With the exception of Morgan Stanley, they are all trading near their 50 sma...although the TF is a bit weaker than the other 3 e-mini futures indices.

This close-up shot of the XLF shows that price broke below the uptrend line from the December 2011 low, re-tested it and pulled back to rest just above its 50 sma of 15.14...an important support level, along with its 1000 sma (green) at 14.86 and its 5-Year Volume Profile POC of 14.79...ones to watch. A break and hold below those levels could send the S&P 500 Index further below its Daily 50 sma.

The 15 minute chart below of the SPX shows price struggling to recapture last Wednesday's high of 1374.71...a must if price is going bounce and reverse its recent pullback with conviction...also, a must is a break and hold above the Daily 50 sma of 1376.60.

I'd add the following two Daily charts of the European Financials ETF (EUFN) and the Chinese Financials ETF (GXC).

The EUFN has been much weaker of late than the GXC...it's struggling to get back above its 200 sma...a break and hold below 16.00 could confirm intense financial weakness in Europe, as the ECB's LTRO 2 has not had any positive impact yet...in fact, quite the opposite...one to watch!

The GXC is trading in between its 50 and 200 smas...a break out and hold on either side is necessary to re-establish a trend (say above 71.00 and below 66.45).

In summary, the XLF, U.S. banks, Visa, Mastercard, and the SPX are worth watching closely over the next couple of weeks to see if upside leadership can be maintained in order to reverse this recent pullback in the equities market, particularly in view of the upcoming meetings of the IMF and World Bank Group (April 20-22), the G20 (April 20), the Fed (April 24-25), and the G7 (tentatively April 24). Also, the EUFN and GXC may give some clues as to world financial sentiment, which may or may not affect the U.S. markets.