Category Archives: Economy

The Macro View: Amigos Ride On

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As symbolized by the 3 Amigos, the macro backdrop is riding on to its destiny. That forward destiny is a top in stocks vs. gold (Amigo 1), a rise in long-term interest rates to potential if not probable limits (Amigo 2) and an end to the yield curve’s flattening trend (Amigo 3).

When our zany friends complete the journey, big changes are likely in the macro markets.

Let’s take a checkup on each Amigo and consider some implications as well. (more…)

Semi Canary Still Chirping, But He’s Gonna Croak in 2018

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Since January 2013 we have been using the worldwide Semiconductor Equipment industry as a leader within the Semiconductor sector, which is an economic cyclical leader itself. That month we noted a positive move in Equipment bookings, which became a (3 month) trend that spring. This trend was used to project positive economic signals to come.

Through some turbulence in 2014 and 2015 the sector has remained on ‘economic up’ along with our cross reference indicator, the Palladium/Gold ratio right up to the current time as the economic Canary in a Coal Mine has kept on chirping.

But on November 21, two days before the sector topped I derisively poked at the mainstream media for hyping the Semiconductor Equipment sector with its bold headlineFund manager looks beyond ‘FAANG’ stocks and finds even bigger winners for 2018. Talk about eyeball harvesting and greed stimulation. (more…)

Some Extraordinary Extremes

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Hello from Linz, Austria! I had a long but mercifully uneventful day of traveling. First flying from SFO to Copenhagen. Next flying from CPH to Munich. And finally securing a vehicle to drive from Munich to Linz. Austria isn’t a big country. In the span of 4 hours, you can go from the west to east borders. I’ll finish the journey into Slovakia tomorrow afternoon.

I grew up driving a stick, but it’s been quite a few years before I’ve done so. It turns out that pretty much all the rental cars here are manual. That was a little disturbing to me, since it’s awkward enough to be driving in a foreign nation, but just to add to the sauce, the entire nation seemed to be mired in a thick fog. I obviously made it OK, however, as I drove a couple hundred kilometers and am typing to you right now.

Anyway, I’ll try to keep good ol’ Slope propped up during my travels (which are pretty jam-packed with real-life tasks) until life normalizes next Tuesday/Wednesday. Here are a few extraordinary charts I wanted to share just to show you – – as if you needed any more convincing – – what bizarre times we inhabit. (more…)

Semi Bullish?

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As an email from [omitted] entitled “Cyclical Indicators Soar” hits my inbox, I thought I’d update a cyclical indicator of another kind. You know, the friggin’ cyclical indicator that preceded them all? Why, it’s none other than our Canary in a Coal Mine, the Semi sector and in particular, Semi Equipment. The progression and projection we used back in 2013 was Semi Equipment → Semis → General Manufacturing → Jobs → Completely bubble headed euphoric mania with a business friendly corporate stooge in the White House. Okay, well I just added that last part in, but you get the point.

The answer to the title question is no. We’ve put forth reason to believe that the earliest of birds, the Semi Equipment sector, may have issues in 2018. What’s more, this warning to ignore a MarketWatch article and the newly bullish fund manager it highlighted came exactly 2 days before the SOX index made its top. (more…)