We are going to keep this week’s letter short and to the point. We are sick and tired of the political charade that is ongoing in DC with the tariffs and the SC vote. For us general Americans deserve better and we will just leave it at that. As for the markets, US Treasury yields have risen above the 3% threshold and in no doubt in further anticipation of next week’s FOMC 25bp hike. We aren’t a big fan of the FEDs slow drip process, we would rather they just hike the FED FUNDs above the 10yr rate and be done with it. With the ECB and BOJ firmly entrenched in continuing QE operations, the world will certainly absorb a relatively hawkish FED. Further evidence is mounting that the FED itself has become somewhat impotent and that these 25bp hikes amount to nothing more than buying time till the next crisis. Where they will most certainly peg long rates below 2.5%. Anyway, the global corporations have done their own fair share of monetary printing.
What do we mean? Well, take a look at their liability side of their balance sheets- chalk full of Trillions of debt. Although its a liability to them, its an asset to someone else, if they can continue to roll said debt and pay said interest. Have these liabilities and assets been used to secure further funding? No doubt. But that is a quant study for another day- though we are quite sure the data will point to such activity. We certainly know that the C-Suite is happy with all the debt, when all you have to do is issue stock option incentives, buy back said stock via debt issuance and voila, reap the benefits all the way to your nearest Nasdaq favorite tech company, or pot company. Speaking of has anyone heard of Tilray or seen their chart at least? We have, and we are sure the SEC might want to take a look at it as well.
Ok here is just a sample of what has peaked our interest this week. Nat Gas is definitely on our radar and considering everyone in the global warming camp is forgetting that gigantic ball of hydrogen in the sky and the power to heat is just as powerful as the power to cool. Nobody and we mean nobody have looked at the Arctic Ice Mass Balance data, at least not like we have, its growing and its above multidecadal levels, what does that mean? It means snow in summer, just ask Canada, or are we just going to jump right from Summer and skip Fall altogether? Anyway, Nat Gas has perked up lately and we feel the chart is one to watch, shown here:
We are also closely monitoring global equities, they have jumped lately and even the Nikkei has shown signs of life, hitting levels not seen since, well 1992:
The Dow has even picked up some steam, although it seems to be running into a short-term channel top here: