Yahoo Finance: David Kotok on Recession, Consumer Spending Power, & Oil/Gas Prices

Yahoo Finance: David Kotok on Recession, Consumer Spending Power, & Oil/Gas Prices

Yahoo Finance - David Kotok (recession & gasoline quotes) & Trucking CEO_ We have to do a lot to bring drivers back to industry [Video]

Yahoo Finance’s Adam Shapiro and Julie Hyman are joined by Jetco CEO Brian Fielkow and Cumberland Advisors Chairman & CIO David Kotok to discuss oil and the future of the trucking industry.

David Kotok of Cumberland Advisors: “Every penny down or up in the price of gasoline is a billion and a half direct disposable income in American consumers’ pockets. We have just had a huge infusion of spending power with a drop in the oil price.”

Watch the embedded video from Yahoo Finance below or at this link: https://news.yahoo.com/trucking-ceo-lot-bring-drivers-174355387.html


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Mnuchin tweets Trump denial as Republicans warn against firing Fed chairman

By BURGESS EVERETT, BEN WHITE and VICTORIA GUIDA
12/22/2018 03:50 PM EST – Updated 12/22/2018 08:21 PM EST

Cumberland-Advisors-David-Kotok-In-The-News

Financial markets have cratered in recent days amid a partial
government shutdown, rising interest rates and signs of a slowing
economy. Shelby said Trump did not bring up the prospect of firing
Powell at a lunch with congressional Republicans on Saturday.

Wall Street traders and money managers argue that the president would
inject chaos and uncertainty into already fragile markets if he fired
the Fed chair because he doesn’t like his interest rate decisions,

“Market agents may disagree on the policy but they respect the
person,” David Kotok, chief investment officer at Cumberland Advisors,
said of Powell. “The nation is best served if the president avoids the
personalized attacks. Markets want an independent and skilled Fed chair,
not a Trump patsy.”

It’s unclear what specifically Trump can do to Powell. The president
can remove a member of the Fed board only “for cause,” which does not
include policy disagreements.

Read the full story at POLITICO.




This is why presidents shouldn’t mess with the Fed


Excerpt below of “This is why presidents shouldn’t mess with the Fed”

New York (CNN Business)1. Fed in the hot seat: President Donald Trump may have boxed Federal Reserve chief Jerome Powell into a corner that neither of them want to be in.
Wall Street widely expects the Fed to raise interest rates on Wednesday. But Trump told Reuters last week that another rate hike would be “foolish.” He said on Fox News: “Hopefully the Fed won’t be raising interest rates anymore.”

Yet Trump’s repeated attacks on the Fed mean the central bank may not be able to pause now — even if it wanted to. Forgoing a rate hike, one that was already baked into the market, would rattle nervous investors and prompt talk that the Fed is caving to White House pressure.

“It would shock markets if they didn’t hike and it would show political capitulation,” said David Kotok, co-founder and chief investment officer at investment firm Cumberland Associates. “Trump’s attacks on the central bank are of no help to anybody.”

And bigger picture, the Fed must protect the central bank’s reputation for being independent. Without that, investors could lose faith in the stability of the system.

“History records the misuse of central banks influenced by political forces resulting in inflation and eventually hyperinflation. Venezuela, Zimbabwe, the Weimar Republic,” Kotok said. “The importance of central banks’ independence cannot be overstated.”

Read the full article This is why presidents shouldn’t mess with the Fed at CNN Business.





Cumberland’s Kotok Sees ‘Return to Normal’ in U.S. Markets

Watch the embedded video or at Bloomberg.com: https://www.bloomberg.com/news/videos/2018-12-12/cumberland-s-kotok-sees-return-to-normal-in-u-s-markets-video


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

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November Jobs Report Means U.S. Trade Stance Isn’t Working

Excerpt below of “November Jobs Report Means U.S. Trade Stance Isn’t Working”

By Allison Prang Cumberland-Advisors-David-Kotok-In-The-News

The November jobs numbers are showing the effect of U.S. trade policies, according to Cumberland Advisors chairman and chief investment officer David Kotok.

“We have more and more evidence of growth rates in the U.S. slowing” and they peaked in the second quarter, Mr. Kotok said Friday. “The slowing is the creeping damage of protectionism.”

Read more coverage of the November 2018 Jobs Report at WSJ.com.




Today’s Employment Report

Peter Boockvar summarized a view of this Pearl Harbor Day employment report. We agree with him.

Here’s Peter: “Bottom line, the moderation in the pace of job gains coincides with the recent uptick we’ve seen in jobless claims. It’s hard not to wonder how much of this is due to a business pause on the labor front with all the cloudiness on trade and tariffs. Construction seeing only a job gain of 5k could also be reflecting the slowdown going on in real estate, both residential and commercial. Manufacturing job gains did hang in as companies front loaded inventory builds.” (Peter Boockvar, email to subscribers, Friday, December 07, 2018 8:53 AM)

Market Commentary - Cumberland Advisors - Employment Report

In our interview with the Wall Street Journal this morning we enumerated and discussed the anecdotes we see from our client base in over 40 states. There is a slowing underway because of Trump-Navarro Trade War protectionism. It is getting worse, as one would expect. We see it in New England in the lobster industry. We see it in the Western US in construction. We see it in employment composition and businesses’ deployment of assets as they build inventories in anticipation of tariffs. And we see it in delays of capital expenditures as entrepreneurs are bewildered by Trump administration inconsistencies.

Simply put: You cannot make business decisions and investment decisions based on Twitter rampages. That doesn’t work.

The Fed’s Beige Book confirms these anecdotes in reports from the twelve Federal Reserve regions. DataTrek has a compilation out this morning. We have copied and pasted it below. The key to today’s employment report is that the data from the US national report is confirming what the survey data is saying in the Fed’s reports.

Here’s Datatrek:

That’s why we look at the Beige Book when it is released eight times a year, as it offers more color on what’s happening beneath the economic surface than the national data shows. Another word we’ve been closely monitoring in these reports: ‘tariff’. It went from no mentions in the January and March reports to the following times in future editions: April (36), May (22), July (31), September (41), October (51), and December (39).

Clearly tariffs continue to worry businesses across the US, as eleven out of twelve districts mentioned them in the latest report. Also of concern: ‘Most Districts reported that firms remained positive; however, optimism has waned in some as contacts cited increased uncertainty from impacts of tariffs, rising interest rates, and labor market constraints.’ Not dissimilar to this quarter’s market worries… Here’s some key examples of what they’re saying about each topic from the period of mid-October through late November:

Tariffs

• Boston: ‘An industrial distributor said they expected tariffs to contribute 50 to 100 basis points to price increases for their products… Looking ahead to 2019, retailers expressed significant uncertainty about the impact that tariff increases will have on prices–beyond some point, they will pass the increases on to consumers.’
• Philadelphia: ‘One firm reported that it has passed along its costs from 10 percent steel tariffs but that it expects customers to push back if the tariffs increase to 25 percent.’
• Cleveland: ‘Contacts noted that tariffs were lifting prices further down the supply chain. Selling prices rose with less intensity than they did for input costs.’
• Richmond: ‘Wholesale and retail services saw higher prices for goods affected by tariffs… Tariffs were a significant concern noted by manufacturers, as they were believed to raise costs of raw materials, thereby raising prices and lowering demand… Several retailers reported narrowing profit margins as cost of goods increased as a result of tariffs.’
• St. Louis: ‘Contacts expressed concern over the ongoing tariffs leveled at U.S. agricultural products. There are reports of storage shortages as soybeans that are normally exported to China are being stored in large quantities rather than exported.’
• Dallas: ‘Manufacturing sector slowed during the reporting period, and outlooks were less optimistic than they have been all year. Output growth softened notably in November, with the tariffs, labor constraints, and trade policy uncertainty cited as damping factors.’

‘The upshot: several districts continue to express concern and uncertainty about tariffs and potential changes in trade policy. Tariffs have already increased input costs, which many indicate they will have to pass on to consumers if they haven’t already.'” (Datatrek Morning Briefing, Dec. 6, 2018, “Beige Book: Ghost(ing) of Recession Future”)

Markets are already reacting to the outlook for slowing growth. Future Fed hiking is being repriced to fewer and fewer rate rises. There is good reason, as inflation remains subdued while the economy is slowing to a 2% or lower growth rate.

For bonds this is bullish; and for tax-free municipal bonds, which have been yielding higher than taxable Treasury bonds, this is doubly bullish.

For stocks, this removes or lessens the risk that the Fed will go too far with its hiking strategy. It remains to be seen if the stock market will see a glimmer of positive news in this weaker-than-expected jobs report. News of the arrest of a Chinese firm’s executive casts a pall over any trade negotiations.

For POTUS, this is another warning that the Trump-Navarro Trade War policy is accelerating damage to the economy. One at a time, businesses and investors are becoming disillusioned. We are in the camp that the tariffs are damaging and are spreading like a financial cancer. The Trump-Navarro policy is metastasizing.

We again reiterate that we believe the Trump policy is unsustainable. And we believe that the American business community will overcome it. We continue to use the instability in the equity markets to our advantage by selectively adding to our positions. We believe the time to buy stocks is when no one wants them and when the tape is red. If the Trump-Navarro policy leads to a full-blown cold war with China, we will be proven wrong. But if the mounting evidence reaches into policy enough to alter it, we will be right and markets may soar to new all-time highs within the next two years. Time will soon tell.




Dow stages comeback from deep losses fueled by uncertainty on U.S.-China trade deal

Excerpt below of “Dow stages comeback from deep losses fueled by uncertainty on U.S.-China trade deal”

By Taylor Telford, Heather Long, and Thomas HeathDecember 6 at 4:04 PM

Cumberland-Advisors-David-Kotok-In-The-News

U.S. stock markets on Thursday spent most of the day deep in the red in an across-the-board rout triggered by the prospect that a U.S.-China trade deal was in jeopardy.

Investor angst was fueled by the arrest of a Chinese executive that further threatened progress on trade, coupled with omens of a recession in the bond market and a steep drop in oil prices.

“Markets are being flailed by a flurry of worrisome inferences that include the 2-year-to-5-year yield-curve inversion, skepticism toward a near-term resolution to the ongoing trade dispute and the possibility that Friday’s employment report will be strong enough to delay the Fed’s anticipated slowdown in its pace of rate increases,” said Sam Stovall, investment strategist at CFRA Research.

If stocks don’t rebound and interest rates keep rising, it makes it more expensive for businesses to borrow money and invest for the future. That, in turn, slows growth. While the overall economy looks healthy right now, sentiment could shift quickly if markets stay down.

“Trump blames others and says we are imposing tariffs on ‘them.’ Nope. The payment comes from my pocket and yours,” said David Kotok, chairman of Cumberland Advisors. “Business doesn’t know how to plan. So it waits. Capital investment waits. And growth slows.”

Read the full article at The Washington Post.




Trump Trade War Tariffs & Markets

“We’ll not mince words here: The president’s characterization of himself as “Tariff Man” is juvenile and unpresidential. We cannot imagine Mr. Eisenhower, Mr. Kennedy, Mr. Johnson, Mr. Nixon, Mr. Ford, Mr. Carter, Mr. Reagan, Mr. Bush, Mr. Clinton, Mr. Bush or Mr. Obama ever… EVER… making a juvenile statement such as this to any other nation, much less to a nation as consequential as is China. But Mr. Trump has threatened China, and his base has enthusiastically endorsed his comments. We can only shake our heads in wonder and dismay.” Source: Dennis Gartman, his eponymous daily letter, December 6, 2018.

Trump Trade War Tariffs & Markets

We agree. Markets agree. The red on the tape agrees. The flattening yield curve agrees. The deterioration of business sentiment agrees.

Culprits in order of responsibility are POTUS Trump, US Trade Representative (aka Trade War negotiator) Lighthizer, and Trade War advisor Navarro. The new Senate is planning on a debate to limit presidential trade war authority and to relocate US security provisions to the defense department and not commerce. Remember that this entire trade war narrative has been based on an executive branch’s taking a narrow, half-century-old law and interpreting it loosely to permit protectionism.

The Congress can change that. Will they? We will see.

Meanwhile the Trump administration has undone more than half of the benefits derived from tax cut, deregulation, and repatriation. Navarro poorly advised POTUS, who showed poor judgment and now likes his tariff money, since he has misled Americans by creating a de facto national sales tax imposed on the American consumer.

That is correct, dear reader. You and I pay the higher costs tariffs impose. Trump blames others and says we are imposing tariffs on “them.” Nope. The payment comes from my pocket and yours.

Business doesn’t know how to plan. So it waits. Capital investment waits. And growth slows.

We asked Mike Englund of Action Economics to update his slide used last summer on the panel we did together at a Colorado conference on Trade War effects.

We are reproducing his update below. And we thank Mike for a quick reply and superb effort. We endorse and recommend Action Economics as a basic research service. Mike writes,

“Thanks for the request. I revised the slide I believe you are referencing to include an “All China” tariff by 2020, whereby we have the 90-day cease-fire now; then a 25% tariff as previously threatened for January; then tariffs of 10% on the remainder of Chinese goods at some fall deadline, perhaps in August or September; and a hike to 25% at the end of December 2019. This scenario creates multiple ‘ledges’ for a compromise to be made.”

Dear readers, the classic aphorism holds true: In a trade war the guns are pointed inward. No one wins.

To end this misguided and failing Trump-Navarro tariff policy requires an inflection in policy. Because of trade-war-driven economic deterioration and business slowing, we expect a change to come. When it does, growth will pick up, and stock markets will recover. We cannot replace the business and wealth losses already inflicted on Americans by the Trump-Navarro Trade War. But we can stop the bleeding, and it may take the new US Senate to do it.

Stocks are cheap, and American business wants to grow. Our ETF selections continue to focus on domestic US sectors we like. Healthcare is an example.




Morning Money Newsletter – China trade war on hold

Excerpt below of “China trade war on hold”

Almost exactly as we predicted here last week, President Trump and Chinese President Xi Jinping essentially called a trade war cease fire after their dinner at the G-20 on Saturday night in Buenos Aires. Trump will keep the current tariff rate at 10 percent on Jan. 1 rather than goose it to 25 percent. And for now he will not push ahead with tariffs on the next $267 billion in Chinese exports to the U.S.. In return, the Chinese agreed to designate fentanyl as a Controlled Substance, a big win in the battle with opioid addiction in the U.S.

The Chinese also agreed to purchase a “very substantial … amount of agricultural, energy, industrial, and other product from the United States” to cut the trade deficit. China also “agreed to start purchasing agricultural product from our farmers immediately,” welcome news for struggling soybean farmers.

The agreement also set a 90-day clock for more talks aimed at “structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture.” Getting all this done in 90 days will be next to impossible. But significant progress would probably mean extensions.

Cumberland’s David Kotok emails: “Finally a truce in the Trump Navarro Trade War allows this failing protectionism policy to stop spiraling down. Markets will have temporary relief. Damage already done is likely irreparable but a tourniquet can stop the bleeding. This wound will take years to heal.”

Read the full newsletter at POLITICO.




Cumberland Advisors Week in Review (Nov 26, 2018 – Nov 30, 2018)

The Cumberland Advisors Week in Review is a recap of news, commentary, and opinion from our team. These are not revised assessments, and circumstances may have changed in the market from the time of original publication. We also include older commentaries that our editors have determined may be of interest to our audience. Your feedback is always welcome.

Week In Review

MATT MCALEER’S WEEKLY RECAP

Matt gives us the latest from the Equity Desk In this Week In Review for November 26-30, 2018. Our Director of Equity Strategies for Cumberland Advisors tells you how he’s trading and shares some forward thinking. WATCH HERE.

Cumberland-Advisors-Matt-McAleer-Market-Position-Broadly


 

MARKET COMMENTARY

 

Sign up or see more Market Commentary

 


FEATURED VIDEO


John Mousseau joins Matt McAleer this week for a discussion about his week in bonds.

The video is available here.


IN THE NEWS

 

 

 

 


IN CASE YOU MISSED IT

 

    • Bitcoin price WARNING: HILARIOUS moment investor compares cryptocurrency to CHOCOLATE COIN

      David Kotok 1/04/2018

      BITCOIN is as tangible as a chocolate coin a top investor has warned in a hilarious quip about the cryptocurrency. Appearing on Bloomberg, Mr Kotok offered the hosts a “New Year’s gift” – a chocolate coin shaped like a bitcoin. Handing out the sweet treat, he said: “I brought proof that bitcoin can be tangible, here’s a New Year’s gift for each of you.” The delighted presenters asked if the gift was chocolate. Mr Kotok said that the chocolate version of the cryptocurrency had more value than the real thing. He said: “That is a chocolate covered bitcoin, that is the most tangible value you will see in bitcoin.”Continued…

 

  • Europe’s Migration Crisis

    Bill Witherell 12/15/2015

    A European perspective on the complex societal challenges now confronting Europe as it seeks to address a humanitarian crisis and heightened security risks. A reader shares, “In every institution, including education, we take for granted that men and women will mix and work together. My friends’ children are off dating each other and staying over at each other’s houses. Think about this very specifically and you see that the whole basis of social organization will come under pressure if migration continues, or is allowed to continue, on the scale which seems likely. Think about business life, and you’ll see the same thing. The questions to ask are these: How many will come, or try to come, in the coming years? How will they try to live when they get here? What will the reaction of Europeans be? How will all this affect enterprise, investment, and credit ratings?” Continued…

 

 


 

UPCOMING EVENTS

 

    • Adapting to a Changing Climate

      From hurricanes to red tide and sea level rise, learn how a changing climate affects the Sarasota-Manatee region and the state of Florida. Expert speakers will discuss the challenges and impact on Florida and other coastal communities while uncovering the adaptive strategies that bring unique social and economic opportunities. The featured speaker is Bob Bunting, CEO Waterstone Strategies/Scientist/Entrepreneur – January 25, 2019 – Selby Auditorium, USFSM , 8:30 am – 3 pm. Lunch is included. Cumberland Advisors is a sponsor and Patricia Healy, CFA, from our firm will discuss “Climate, Municipal Bonds and Infrastructure” with the audience. Details Here.

 

  • U.S. Manufacturing in a Global Context

    Save the Date! GIC is returning to Sarasota, FL on Friday, February 1, 2019 to partner with the Financial Planning Associates of the Suncoast and Cumberland Advisors. Join us at the Sarasota Yacht Club as we welcome Bill Strauss, Senior Economist and Economic Adviser of the Federal Reserve Bank of Chicago, for a presentation on U.S. Manufacturing in a Global Context. Strauss is a senior economist and economic adviser in the economic research department at the Federal Reserve Bank of Chicago, which he joined in 1982. His chief responsibilities include analyzing the current performance of both the Midwest economy and the manufacturing sector for use in monetary policy. Details Here.

 


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Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

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Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.