The last time the 50-day moving average crossed below the 200-day moving average - the so-called 'Death Cross' trigger - was in Sept 2015 (which preceded a 17% tumble in European stocks tumble)...
Germany's DAX is just as ugly as trade war concerns add to worries...
The top U.S. general in the Middle East testified before Congress this week and dropped several bombshells: from signaled support for the Iran nuclear deal, admitting the U.S. does not know what Saudi Arabia does with its bombs in Yemen and that Assad has won the SyrianCivil War.
U.S. Army General Joseph Votel said the Iran agreement, which President Donald Trump has threatened to withdraw from, has played an important role in addressing Iran's nuclear program.
"The JCPOA addresses one of the principle threats that we deal with from Iran, so if the JCPOA goes away, then we will have to have another way to deal with their nuclear weapons program," said U.S. Army General Joseph Votel.
JCPOA, or Joint Comprehensive Plan of Action, is the formal name of the accord reached with Iran in July 2015 in Vienna.
Trump has threatened to withdraw the United States from the accord between Tehran and six world powers unless Congress and European allies help "fix" it with a follow-up pact. Trump does not like the deal's limited duration, among other things.
Votel is head of the U.S. military's Central Command, which is responsible for the Middle East and Central Asia, including Iran. He was speaking to a Senate Armed Services Committee hearing on the same day that Trump fired Secretary of State Rex Tillerson after a series of public rifts over policy, including Iran.
Tillerson had joined Defense Secretary Jim Mattis in pressing a skeptical Trump to stick with the agreement with Iran.
"There would be some concern (in the region), I think, about how we intended to address that particular threat if it was not being addressed through the JCPOA. ... Right now, I think it is in our interest" to stay in the deal, Votel said.
When a lawmaker asked whether he agreed with Mattis and Chairman of the Joint Chiefs of Staff General Joseph Dunford's position on the deal,Votel said: "Yes, I share their position."
Mattis said late last year that the United States should consider staying in the Iran nuclear deal unless it was proven Tehran was not complying or that the agreement was not in the U.S. national interest.
A collapse of the Iran nuclear deal would be a "great loss," the United Nations atomic watchdog's chief warned Trump recently, giving a wide-ranging defense of the accord.
Iran has stayed within the deal's restrictions since Trump took office but has fired diplomatic warning shots at Washington in recent weeks. It said on Monday that it could rapidly enrich uranium to a higher degree of purity if the deal collapsed.
Syria
Votel also discussed the situation in Syria at the hearing.
During the Syrian army's offensive in eastern Ghouta, more than 1,100 civilians have died. Syrian President Bashar al-Assad's forces, backed by Russia and Iran, say they are targeting "terrorist" groups shelling the capital.
U.S. Ambassador to the United Nations Nikki Haley warned on Monday that Washington "remains prepared to act if we must," if the U.N. Security Council failed to act on Syria.
Votel said the best way to deter Russia, which backs Assad, was through political and diplomatic channels.
"Certainly if there are other things that are considered, you know, we will do what we are told. ... (But) I don't recommend that at this particular point," Votel said, in an apparent to reference to military options.
Republican Senator Lindsey Graham asked whether it was too strong to say that with Russia and Iran's help, Assad had "won" the civil war in Syria.
"I do not think that is too strong of a statement," Votel said.
Graham also asked if the United States' policy on Syria was still to seek the removal of Assad from power.
"I don't know that that's our particular policy at this particular point. Our focus remains on the defeat of ISIS," Votel said, using an acronym for Islamic State.
In a stunning exchange with Democratic Senator Elizabeth Warren, Votel admitted that Centcom doesn't know when U.S. fuel and munitions are used in Yemen.
"General Votel, does CENTCOM track the purpose of the missions it is refueling? In other words, where a U.S.-refueled aircraft is going, what targets it strikes, and the result of the mission?" Warren asked.
"Senator, we do not," Votel replied.
The Senator followed up, citing reports that U.S. munitions have been used against civilians in Yemen, she asked, "General Votel, when you receive reports like this from credible media organizations or outside observers, is CENTCOM able to tell if U.S. fuel or U.S. munitions were used in that strike?"
"No, senator, I don't believe we are," he replied.
Showing surprise at the general's response, Warren concluded, "We need to be clear about this: Saudi Arabia's the one receiving American weapons and American support. And that means we bear some responsibility here. And that means we need to hold our partners and our allies accountable for how those resources are used," she said.
Given the state of affairs in his beloved European Union right now Mr. Juncker and company are doing a lot of lying.
It is rare in politics to get that kind of honesty from a politician, especially one currently in office. But, Juncker's statement shouldn't be a surprise to anyone who is even a semi-serious political observer.
It's why I find it funny that the Democrats and Antifa-Left get so bent out of shape when Donald Trump exaggerates or outright lies. To him it's a tactic. Catching Donald Trump in a falsehood is like trying to ladle water with a sieve.
So, by the Juncker Maxim, things must be getting very serious because the amount and type of lies being thrown around by people who are supposed to know better have been staggering.
To the point that Russian Foreign Minister Sergei Lavrov said, "I simply don't have any normal terms left to describe all this."
Lavrov has been the world's most effective diplomat over the past few years, effectively talking to and cutting deals with people who should hate him and Russia's policies. What it highlights is that Lavrov and his boss, Vladimir Putin, have been effective simply because they make a deal and keep to it.
They are the opposite of Mr. Juncker. When things get serious they become honest, speaking with one voice.
Part of that comes from having a single administration in power for the past 17 years. It's easy to keep to agreements when those in power don't change. The U.S.'s diplomatic history with North Korea, for example, highlights the problems of shifting domestic political winds in Washington.
But, that part stems from the way these men comport themselves on international stage.
So, watching the hyperventilations of of Theresa "Gypsum Lady" May and her Foreign Secretary Boris Johnson over the poisoning of Former Russian double-agent Sergei Skripal and his daughter Yulia means there is a lot more going on here than anyone cares to admit.
The quick reversals from European leaders as well as Donald Trump from their initial skepticism of May and Johnson's bloviating tells me that not only are they lying but they are being forced to lie by some vaguely unseen hand.
It's not just that the Neocons are losing, like I talked about in my last article. It is that stench of desperation that's everywhere right now.
The level of histrionics, lying and insanity over Former Assistant FBI Director Andrew McCabe's firing is telling. From McCabe himself, to his disgraced former boss, James Comey, the level of mendacity, chutzpah and, frankly, evil on display is impressive.
I guess the situation's been serious for a long time for the lies to come this easily to their tongues.
This week we had the staged walk-outs by high school students over the Parkland, Fl shooting calling for gun control. How desperate are those clinging to power behind the scenes that they've turned to weaponizing mal-educated children to do their bidding?
His Ideas Resonated Better in the Original German
The French Foreign Ministry instructing its diplomats to not travel to Syria is also telling. It's all about lying to support the narrative that Assad and Putin are the bad guys.
The Reuters article I just linked to spends more column inches perpetuating the lie that there are no humanitarian corridors in Eastern Ghouta, Syria, even though there are plenty images, video and reports of thousands of civilians having been liberated from ISIS/Al-Qaeda-linked jihadists.
But it mentions reports of chlorine gas attacks, again neglecting to say anything about the Syrian Army liberating a major chemical weapons facility in their advances against US-backed proxies.
How bad is the situation behind the scenes in the financial markets that Goldman-Sachs CEO Lloyd "Doin' God's Work" Blankfein suddenly decides it's time to step down? Derivative book that bad, Lloyd?
Or did you bet that Gary Cohn would get Trump to heel to allow Goldman to finish destroying Europe?
Long-established diplomatic norms and rules of conduct are simply thrown out the window because they need to be to induce hysteria to take people to war, otherwise, a war-weary, anxiety-ridden population will turn on their own governments.
So, Theresa May tells Russia to prove to her they're innocent to distract from her betrayals on Brexit.
This is a joke, Right?
Boris Johnson threatens Putin directly and the moron in charge of Britain's defense department screeches for the Russians to 'shut up and go away.' Presumably he said it from his safe space rubbing his safety pin like Captain Queeg.
Meanwhile Mr. Juncker continues to lie about everything as it pertains to Brexit negotiations because the EU's financial situation must be that serious. If it weren't they wouldn't be trying to shake the U.K. down for tens of billions of euros.
Look around you, step back from the craziness and see the bigger picture. When you do you just see a bunch of incompetent, venal people covering their asses. While a lot of what I write here could be considered 'conspiratorial' I would disagree.
In fact, I rarely, if ever, chalk up to conspiracy that which incompetence explains far better. As a root cause analyst, I prefer Occam's Razor to Alex Jones.
Yes, there are groups of people with power conspiring to achieve personal and societal goals which are anathema to life and decency.
But, that doesn't mean that because they have power they are competent at wielding it. In fact, power makes you lazy. Winning makes you complacent and, eventually, stupid.
Does anyone with any shred of self-respect believe that thirteen Russian trolls armed with Tweetium could derail Hillary Clinton's presidential campaign? Really?
When the more obvious answer is that Hillary and her backers thought they had perfected the art of rigging an election and never conceived of losing. It never crossed their minds until a few days before the election and internal polling forced Obama to campaign in Michigan on her behalf.
And he only did that to help himself, since he was in up to his neck in all of her dirty laundry.
The Theory of the All-Powerful Putin is a childish and nonsensical as the Alt-Right's blaming Jews for everything.
The Gypsum Lady is trying to save her government by invoking it now. So is Nikki Haley at the U.N., Mika Brzezinski at MSNBC, George Soros and David Brock, the leadership at CNN, Google, Facebook and Twitter. The bigger the lies get, the more desperate you know they are.
All of the Obama administration traitors — Samantha Power, James Brennan, Susan Rice, Robert Mueller, Comey, McCabe, Eric Holder, etc. — lie every time they open their mouths. It their narrative fails it means the end of not only their careers, but the plans of the incompetent globalist oligarchs who fund and power them.
And those are the stakes in play here.
Ye Gods, and I haven't even brought up the Saudi Arabians, yet. Or the attempted military coup against the U.S. pet in Ukraine, Petro Poroshenko, from within his own government, no less.
Talk about gross incompetence!
While I'm not sanguine about how all of this plays out, I refuse to give into hysteria and add to the cacophony. It serves no purpose.
The markets still believe, as they always do, that 'cooler heads will prevail.' But, markets aren't allowed to believe anything else. The central banks ensure that. The sheer size of the money at stake makes it nearly impossible to move much of it without inducing even more panic.
So, the default position of most money managers is sit tight and hope.
But, hope is not a plan or a path to the stars. It is, as I've said before, the worst thing in the world — that which you have when you have nothing else. But, changes are coming, war or the collapse of the post-WWII institutional order or both.
As I've pointed out, banks are getting nervous, emerging market central banks are positioned for radical currency defense. Rates are rising and dollar liquidity is falling. Bitcoin and gold are screaming this. If there was ever a time to get to cash it's now.
The acceleration of events since Putin's speech on March 1st is itself accelerating. Windows are closing fast. It's time to get serious.
The record inflow also came one week after JPMorgan warned that based on the recent "erratic behavior of retail investors... and the spreading of equity ETF outflows out to non-US equities"the idea that retail investors will serve as the marginal buyer of equities in the current environment was in jeopardy, "especially after buying an unprecedented $100bn of equity ETFs in only one month during January."
Not for long though, because as we reported on Saturday, just hours after BofA was "stunned" by the record "wall of money" flooding into stocks, JPMorgan was as well, and in his latest "Flows and Liquidity" note, JPM's Nick Panigirtzoglou wrote that "equity ETFs saw a very big inflow of $34bn this week (Monday to Thursday). This is by far the highest weekly equity ETF flow ever, driven almost entirely by US equity ETFs."
"Equity ETFs saw a very big inflow of $34bn this week (Monday to Thursday). This is by far the highest weekly equity ETF flow ever, driven almost entirely by US equity ETFs." - JPM pic.twitter.com/0o0cM4mouQ
— zerohedge (@zerohedge) March 17, 2018
According to JPM, this means that "there is little doubt that, following an interruption in February, retail investors have resumed their equity ETF buying in March" at least until the market's next sharp swoon."
There was more good news. In a two weeks ago report, according to Morgan Stanley, market liquidity defined as the available size at the top of the book in the US equity futures market - i.e. how many futures can trade without impacting price - had tumbled to near record lows, and failed to rebound since the February volocaust.
Not anymore though because at the same time as retail investors resumed their equity ETF buying, emerging as the marginal buyer of equities again," JPM found that "equity market liquidity appears to have rebounded sharply and is also normalizing.
Ameria's largest bank shows this in its own prop version of market liquidity in Figure 2, "which updates a price to volume based indicator of volatility for the S&P500 Emini futures contract to proxy for market liquidity. This proxy is called the Hui-Heubel liquidity ratio in the academic literature and captures the impact of volumes on prices or market breadth. This liquidity indicator appears to have normalized to before February correction levels."
Predictably, this is generally good news for the bulls, and refutes JPM's worries from two weeks ago; as Panigirtzoglou writes, "contrary to our previous fears, the two near-term downside risks for the equity market we had mentioned previously, market illiquidity and the absence of retail support, appear to have diminished."
Which simply means that, as noted above, "retail is once again the marginal buyer of equities."
What's the not so good news? Well - for one - the rather strange fact that despite the record inflow into stocks last week, the market actually closed down for the week.
So what is holding the equity market back then?
As it turns out, JPM asks just that same rhetorical question, and says that the most likely answer is the apparent cautious stance of institutional investors. JPM then explains why it knows this:
The unwillingness of institutional investors to add risk can be seen in their betas to the equity market. Equity Long/Short hedge funds have been reluctant to raise their betas in recent weeks. Their most recent betas (for the period Mar 5th to Mar 14th) appear to be below their levels at the beginning of the year. And these beginning-of-year betas were far from elevated; in fact, they were just below historical averages. The equity betas of Discretionary Macro hedge fund are still hovering around zero. And those of CTAs have gone down rather than up vs. the previous weeks. The only betas that have increased in the most recent period between Mar 5th to Mar 14th are those of RiskParity funds. This is not surprising given their vol targeting and given the normalization in both equity and rate vol spaces.
Confused? Don't be: as we explained yesterday, the selling by institutions to retail has resumed.
Institutions resume dumping to retail:
— zerohedge (@zerohedge) March 17, 2018
"retail investors have resumed their equity ETF buying, emerging as the marginal buyer of equities again" - JPM
And once momentum-chasing retail investors have served their purpose and soaked up enough of the equity inventory held by institutions, that's when the rug gets pulled from under the market, a crash follows and the entire cycle repeats itself as panicked retail investors dump into bid and sell at any price, and when institutions are no longer "cautious", and instead jump in to take advantage of the coming firesale.
Meanwhile, it may come as a surprise to some, but ever since the financial crisis, institutions have been the most stubborn sellers of equities in the world.
Incidentally, the above chart showing relentless selling by virtually every investor class in the past decade means there is just one question for traders: when do the stock buybacks finally stop?
