US-Mexico Trade Deal Lives With Canada: USMCA Rather Than NAFTA
Oct02

US-Mexico Trade Deal Lives With Canada: USMCA Rather Than NAFTA

At the last minute last night the US and Canada cut a deal, so now Canada is on on the deal to change NAFTA to USMCA. I think the name change is the biggest part of it, even though Trump still claims that NAFTA was “the worst trade deal ever” and the new deal makes relatively minor changes in it, especially if one considers what would have been the case if the US had actually joined the TPP, as most of the environmental, labor, and intellectual property parts of the new deal (the environmental and labor parts largely improvements, if not too dramatic) were already agreed to by Mexico and Canada when they joined TPP, which they belong to along with all its other members aside from the US. Beyond continuing NAFTA and adding the TPP parts, the main changes are in the auto industry and the dairy industry, the former mostly affecting Mexico, the latter mostly affecting Canada.Between the restrictions on outsourcing and the $16 per hour limit on imports, there may be some shifting of auto parts production from Mexico to the US and possibly Canada as well. This will lead to job losses in Mexico, but there may be some Mexican autoworkers who see wage boosts also. The auto deal has little impact on Canada aside from Trump retracting his threat to impose tariffs, which was opposed by GM and Ford as well as the UAW thanks to the profound integration between the US and Canadian auto […]

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Island Of Innovation & Plays Of Safety
Oct02

Island Of Innovation & Plays Of Safety

Echoing the words of his European counterparts, Chairman of the US Commodity Futures Trading Commission Christopher Giancarlo (AKA Crypto-Dad), has stated that… However, these statements aren’t even half as bullish as a recent speech delivered at the United Nations by the Prime Minister of Malta, and I quote… “Can we solve stalemate diplomatic negotiations by applying algorithms that can avoid war? Can we disarm terrorists using the latest technologies? Is it possible to know immediately which remote parts of our planet need international humanitarian assistance? Could we create new organs for people so no one dies on a donor list? Can we live the day when humanity can be told that there is a cure to all cancers? Only time will tell, but it is the accessibility to advance technology that will lead to solutions.” The small Mediterranean island has now officially positioned itself on the world stage as the “Blockchain Island.” Today’s Highlights New NAFTA & Italian Crisis More or Less Brexit Risk Off Sentiment Traditional Markets North American markets rejoiced yesterday on the news that… Markets rallied through the morning, with the NSDQ100 reaching a new all-time high. However, there was a notable turnaround after lunch that saw a lot of the gains disappearing. Asian stocks were not as happy about the above headline as there is now more pressure on China and Japan to put together their own deals with Donald Trump. European markets, on the other hand, are almost entirely focused on Italy at the moment. The budget plan that is due for submission by October 15th is […]

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Bitcoin Daily Forecast – Tuesday, Oct. 2
Oct02

Bitcoin Daily Forecast – Tuesday, Oct. 2

Bitcoin markets fell slightly during the trading session on Monday to kick off the week but bounced a bit to show signs of life again. Ultimately, the market looks likely to challenge this downtrend line again, and if we can finally break above there, then we could get this rally going and reach towards the $7500 level, perhaps even the $8250 level. Alternately, we could roll over and reach towards the $6000 level underneath, which has been massive support. If we were to finally break down below that level, then we could unwind rather drastically. I am still relatively bearish of this market, but I also recognize that we are at an inflection point, and it’s very likely that we will make the decision relatively soon. However, I think that we need to be patient and allow the market to decide which way it wants to go before putting money to work. As mentioned previously, we could break above the downtrend line, but if we break lower, then I think the market unwinds to the $5000 level rather rapidly. I think we probably break down below there as well, so that would be the beginning of the next leg lower. However, there’s always a third possibility, meaning that we could just drift sideways through the triangle, which would have this market going sideways for quite some time, meaning that we will have negated the pattern, and it’s likely that the market would essentially sit still for some time if that’s […]

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Morning Call For Tuesday, Oct. 2
Oct02

Morning Call For Tuesday, Oct. 2

Overnight Markets And News Dec E-mini S&Ps (ESZ18 -0.26%) this morning are down -0.20% and European stocks are down -0.93% at a 1-week low on ramped-up Italian political concerns. EUR/USD (^EURUSD -0.42%) slumped to a 1-month low and the yield on Italy’s 10-year government bond surged to a 4-1/2 year high of 3.4% after Claudio Borghi, head of the budget committee in Italy’s lower house, said Italy would have solved its fiscal problems if it had its own currency. European Commission President Juncker responded by saying “recent announcements by the Italian government have raised concerns about its budgetary course” as he warned of a Greek-style crisis in Italy. Stock prices recovered from their worst levels after Italian Deputy Prime Minister Di Maio said the Italian government is not willing to exit the euro or the EU. The political turmoil in Italy prompted a rush to safety to German bunds as the 10-year bund yield fell to a 2-week low of 0.408%. Asian stocks settled mostly lower: Japan +0.10%, Hong Kong -2.36%, China and India closed for holidays, Taiwan -1.20%, Australia -0.75%, Singapore -0.39%, South Korea -1.21%. Japan’s Nikkei Stock Index posted a fresh 26-3/4 year high after Japan Sep consumer confidence unexpectedly rose and after USD/JPY soared to a 10-3/4 month high Monday, which fueled a rally in Japanese exporter stocks. The dollar index (DXY00 +0.34%) is up +0.37% at a 4-week high. EUR/USD (^EURUSD -0.42%) is down -0.45% at a 1-month low on Italian political risks. USD/JPY (^USDJPY -0.10%) is down -0.11%. Dec 10-year […]

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Amazon Raises Minimum Wage To $15 Amid Rising Criticism On Pay
Oct02

Amazon Raises Minimum Wage To $15 Amid Rising Criticism On Pay

Shares of Amazon.com (AMZN) are in focus on Tuesday after the company announced plans to raise the minimum wage for all U.S. employees, effective November 1. The higher pay comes amid a wave of criticism from politicians, including Senator Bernie Sanders, about its treatment of warehouse workers. $15 MINIMUM WAGE: Earlier this morning, Amazon announced a new $15 minimum wage for all of its U.S. employees. Effective November 1, the higher minimum wage will benefit more than 250,000 Amazon employees — including part-time and temporary employees — as well as another 100,000 seasonal employees, the company said. The company said the new minimum wage will also apply to its subsidiaries, including Whole Foods, and that all of its Operations and Customer Service employees will see an increase, including those who are already making $15. Amazon said the effect of the higher pay will be reflected in its forward-looking quarterly guidance. MOUNTING CRITICISM: Amazon and CEO Jeff Bezos have been under mounting criticism from Senator Bernie Sanders and other politicians about its pay and the conditions of its warehouses. Sanders and Rep. Ro Khanna last month introduced legislation to tax corporations for every dollar that their low-wage workers receive in government health-care benefits or food stamps. The bill, called the Stop Bad Employers by Zeroing Out Subsidies, or BEZOS, Act, is aimed at companies like Amazon and Walmart (WMT), whose workers rely on public assistance. Sanders had previously targeted Amazon and CEO Jeff Bezos, contrasting Bezos’ wealth — he has a net […]

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Risk Premia Forecasts: Major Asset Classes – Oct. 2, 2018
Oct02

Risk Premia Forecasts: Major Asset Classes – Oct. 2, 2018

The expected risk premium for the Global Market Index (GMI) was unchanged in September, holding steady at an annualized 5.0% — matching the estimate in the previous month. The performance forecast for GMI (an unmanaged market-value-weighted portfolio that holds all the major asset classes) reflects premium over the projection for the “risk-free” rate for the long run. Adjusting for short-term momentum and medium-term mean-reversion factors (defined below) trim’s GMI’s ex ante risk premium to an annualized 4.6%, which is also unchanged from August. Both estimates remain moderately below GMI’s historical performance for the trailing 10-year period through last month. The benchmark earned an annualized 6.6% risk premium for the decade through September 2018, well above the current 5.0% long-run forecast for GMI. The forecasting engine for the forward-looking estimates is an equilibrium methodology (defined below) that uses three inputs: risk (return volatility), the relationship of assets (return correlation), and an assumption of GMI’s expected market pricing of risk (Sharpe ratio). The data is based on historical market results starting in December 1997 — the earliest date that offers prices for all the major asset classes (e.g., inflation-indexed Treasuries began trading in the late-1990s). The “risk-free” rate is defined as the yield on zero-to-three-month Treasury bills. All forecasts are likely to be wrong to some degree, but the projections for GMI are expected to be somewhat more reliable vs. the estimates for the individual asset classes. Predictions for the market components are subject to greater uncertainty compared with aggregating forecasts, a process that may cancel out […]

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