Send In The Marines

Is Yellen "Really" The Best We Can Do

Is there anyone under the age of 75 available to meet with the Chinese? What are the objectives of Yellen’s meeting? Blinken, although barely into his 60s didn’t exactly get much accomplished after being “permitted” by the Chinese to visit. Communication is vital; the message is important but so is the “messenger”. Is Yellen the best we have “on the bench”? Every time I hear the names “Blinken” or “Yellen” I just think about Santa’s reindeer. At least they knew their ways. “God save the queen”, eh Joe?

Yellen Hits China

U.S. Treasury Secretary Janet Yellen began a “four-day” visit to China on Thursday, in hopes of easing tensions between the world's two largest economies. We sent a person who is best known for depicting inflation as being “transitory”; not exactly the correct analysis to lead with as inflation is “embedded”, worldwide. I hope she likes the food.

"We seek a healthy economic competition that benefits American workers and firms and to collaborate on global challenges," Yellen wrote on Twitter. "We will take action to protect our national security when needed, and this trip presents an opportunity to communicate and avoid miscommunication or misunderstanding." In other words it’s a “photo-op”.

Few believe Yellen's visit will accomplish much of anything given the countries place safeguarding national security interests above deepening economic ties. So why is she even there? Yes, communication is key but she’s not the right person to “carry water”.

Yellen will address what the Biden administration characterizes as unfair practices by China. Tell me something new. On Friday she’ll meet with China's Premier Li Qiang and former economy tsar Liu He, a close confidant of President Xi Jinping. I bet they are younger than she is and speak English better than she speaks Chinese.

Chinese analysts suggest Yellen's emphasis on “national security” meant that the U.S. was unlikely to stop the "economic and technological suppression" of China. Is that why she’s there? Has the “big guy” told her to do an “about face” on that one just like he essentially told Blinken to just “stand down” and get a few “selfies” with Xi for the oval office and CNN?

Even though no major breakthroughs are expected, U.S. officials say Yellen will push to open new lines of communication. China’s wants the U.S. to "pay great attention" and tackle China's main concerns on the economy and trade. Trade tariffs imposed by the Trump administration and sanctions against Chinese firms are the country's chief concerns. I don’t think Yellen intends to “flip” on those but who knows. Maybe we’re just looking for a foreign source where we can buy new “spy balloons”. They’re good at making those by just employing technology we’ve developed for them to do so.

There Goes Europe

European shares hit their lowest level in three months as heightened concerns about further interest rate hikes globally dented risk sentiment. The pan-European STOXX 600 index deepened losses by the close to fall 2.3% to its lowest level since late March, while the EURO STOXX 50 index plunged 2.9%. Hey, have you been watching what is happening in France?

STOXX 50 - Barchart

Worries of higher rates for longer periods were exacerbated after U.S. private payrolls increased more than expected in June. The labor market remains strong. The Fed's minutes on Wednesday showed that a united central bank agreed to hold rates steady at the June meeting to buy time and assess need for further rate hikes but face it folks, they’re going higher worldwide. The stage is set for the two additional rate hikes that the Fed alluded to at the June decision; the only question is when.

Germany's two-year bond yield, which is highly sensitive to interest-rate expectations, rose its highest since autumn 2008; remember what happened then? In recent articles posted I’ve compared the results of past economic turmoil, the actions taken and more so those not taken and what resulted. (See “Trouble Continues Brewing” and “What’s Changed Since The Great Depression”) I don’t just write and publish for fun. I’m not trying to scare anyone; I’m just “calling it like I see it”.

Well it took me a while, seems like that’s the case for everything I try to do in today’s hyper-electronic world, but we’re now “attached at the hip” with Barchart. Just “click here” and get a free trial. I’ve been using Barchart for years; best I’ve found. Give it a try for free and take advantage of their webinars; they’re great.

No guarantee but I’m going to do my best to put together a “presentation” on spreads to compliment Sunday’s “The Week That Was & What’s Next”. It’s scheduled to be a part of either the 2nd or 3rd series of courses but it’s something that compliments the upcoming market scenario. In short, it reduces your systematic risk and there’s lots of risk to “systematically avoid” in the markets. Again, no guarantee but I’ll do my best.

I’m just a “young” 68 years old looking to help you become the best damn investor or trader you can possibly be. Everyone learns at their own pace. If you pick everything up the first time through, great but if not email me at david@thetickeredu.com so we can further help. Again, let me know what you want to learn, I’m all ears.

I’m going with Billy Joel’s “We Didn’t Light The Fire” but in many ways our actions, or inactions as they may have been, added “fuel to the fire”. I’m sick and tired of just using bandaids to treat festering wounds. Putting “lipstick on a pig” doesn’t cut it for me; it’s still a pig. Most don’t react until it’s too late often exclaiming they never saw it coming. You’ve been warned; next stop earnings.