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Mark's Market Blog

10-25-15: It's The Future!!!

By Mark Lawrence

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On Wednesday we hit S&P 2040, the next resistance level, and blasted right through it. The tea leaves are shouting out that it's clear sailing now until at least about next June, when the S&P should be around 2250 or so. I'm not so confident the sailing will be all smooth. Anyway, not much news this week and the markets are very happy to finally have not much news.


S&P 500 May 2 2014 to October 23 2015

This is it, it's the future now. No more of that boring past stuff, that's all over. The future officially started on October 21, 2015.

Canada had elections and took a hard left turn. Justin Trudeau, the 43 year old son of former rock-star prime minister Pierre Elliot Trudeau is the new prime minister with an outright majority in parliament. Pierre dominated Canadian politics from 1968 to 1984. The outgoing prime minister is Steven Harper, a conservative. I'm certain Hillary is very excited by this result - a major election where a nearby country swings liberal and elects a family member of a former leader. Trudeau immediately called Obama and informed him Canada would be withdrawing their combat aircraft from the middle east. Obama said the two leaders are "committed to strengthening the countries' joint efforts to promote trade, combat terrorism and mitigate climate change." Trudeau has vowed to take a more "balanced" approach in the middle east instead of simply supporting Israel and to take in 25,000 Syrian refugees by the end of the year. He also said his government will be an enthusiastic actor in climate change legislation.

The IMF says the middle east cannot tolerate more than five years of low oil prices. According to the IMF report the middle east countries have not saved enough wealth for intergenerational purposes - unlike Norway, which has saved two years of GDP, equivalent to the US having savings of $34 trillion instead of $17 trillion of debt. All of the middle east oil producers are now taking in less money than they spend; most of them need oil prices of $80 to $100 to break even. It's believed by many in the US that Obama is a muslim, but Obama has presided over more political and economic devastation in the muslim world than any conservative could ever have imagined possible.

For a few weeks I've been talking about the coming dollar short squeeze. Emerging market debt has been on a tear for eight years. First rule of physics: there are no exponential curves in nature. Or finance. I promise you, the tide is starting to go out and soon, in Warren Buffet's immortal words, we're going to see who's been swimming naked. We were promised after 2008 that Wall Street would deleverage. Nah, they kept right on, they just moved it to other countries.

Ahmed Mohamed, the 14 year old muslim boy who was detained by Texas police for putting the guts of a 40 year old Radio Shack digital alarm clock into a bent up metal case and bringing it to school, was offered a scholarship by the Qatar Foundation for Education, Science and Community Development (QF) for Ahmed to join the prestigious QF Young Innovators Program. Less than 24 hours after the young clock repackager met Obama his family announced they will be leaving the US for Qatar.

Best Buy has a new robot, Chloe. You tell her what you want, and she gets it out of an amazon-like wall of supplies. And McDonalds is testing a new touch screen ordering system in many stores. Minimum wage? Mandatory Obama care? Companies are preparing to say, "Bring it."

Another new week, the media is screaming about new gun deaths. Out of control, right? Actually gun deaths are dropping off fast in the last 20 years, but that's not the point my friends. Besides, bullets contribute to global warming.

Worried about heart disease? There's a new public enemy #1. It's not red meat or saturated fats or gluten or carbs. It's a chemical, trimethylamine N-oxide (TMAO), produced by your gut bacteria when you eat meat, eggs, fish or dairy fat. TMAO is released when most people eat foods high in carnitine or choline. TMAO seems to be the chemical that irritates your arteries leading to hardening of the arteries, poor circulation in your hands and feet, and heart disease. A five year study of 720 heart failure patients released last year showed that patients with high TMAO had 3.5 times greater death rate than those with low TMAO, even after adjusting for all the traditional risk factors like weight, blood pressure, cholesterol. Vegetarians have different gut bacteria and can eat meat now and then without producing much TMAO. I'm from Green Bay and I have to admit to you that giving up cheese seems tragic and scandalous to me.

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