David Kotok: Discussion of Financial Markets with Chuck Jaffe – Money Life (Radio)

David Kotok, Chief Investment Officer/Co-Founder, Cumberland Advisors, joins Chuck Jaffe on his program, Money Life, for an interview about what to expect for 2020.

David-Kotok-Radio-Money-Life-Blue

LISTEN BELOW OR AT THE LINK HERE: https://soundcloud.com/user-195074568/david-kotok-discusses-financial-markets-on-money-life-with-chuck-jaffe

Cumberland Advisors Podcast - Listen on SoundCloud
Like this interview? Listen to a previous 2018 interview David had with Chuck.

 

If you like this interview, many more are to be had at the moneylifeshow.com website.

NOTE: 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.


If you like podcasts, check out this one from 2015 featuring David Kotok talking about his background and Camp Kotok with Barry Ritholtz. They also talk about the history of Cumberland Advisors since its founding, and delve into fundamental principles of investing and valuation.


Links here
https://itunes.apple.com/us/podcast/masters-in-business/id730188152?mt=2

And here
http://www.bloomberg.com/podcasts/masters-in-business/




Cumberland Advisors Market Commentary – Turkey & Trump

Here is an updated report from Al Jazeera on the Turkey ceasefire and related developments. While it reflects network leanings, they are much different from the CNN-Fox distortions, and more facts may often be gleaned.

Market Commentary - Cumberland Advisors - Turkey & Trump
https://www.aljazeera.com/news/2019/10/turkey-military-operation-syria-latest-updates-191017051518215.html

Next we have the presidential tweeter’s self-proclaimed brilliance, hard on the heels of Pence and Pompeo’s trip to Ankara to meet with President Erdogan. He tweeted this at 2:17 PM on Thursday:

“This is a great day for civilization. I am proud of the United States for sticking by me in following a necessary, but somewhat unconventional, path. People have been trying to make this ‘Deal’ for many years. Millions of lives will be saved. Congratulations to ALL!” (https://twitter.com/realDonaldTrump/status/1184895160871571456)

President Trump also remarked that the Kurds “didn’t help us in the Second World War. They didn’t help us in Normandy.” Actually, the Kurds were our allies in both World War I (http://www.kaiserscross.com/304501/407043.html) and World War II (https://www.dailykos.com/stories/2019/10/9/1891413/-The-Kurds-did-help-the-Allies-in-WWII). In both conflicts they fought with distinction in the Iraq Levies, which were troops recruited by the British to fight on the soil of Iraq, Palestine, Cyprus, the Persian Gulf, Albania, Greece, and Italy.

And here’s a personal statement from and report about a 100-year-old Kurd who fought with the allies in WWII: https://www.rudaw.net/english/kurdistan/13102019. Ahman Mustafa Delzar responded to the ill-informed tweet: “Trump was not born then – that is why he does not know that the Kurds participated in the war.” He explained, “The Levies were mainly Assyrians and Kurds and a smaller number of Arabs. I was the 8,000th Kurd who joined the Levies during the Second World War.”

The bottom line is well-summarized by this Washington Post article: “Trump’s retreat in Syria turns into a mess” (https://www.washingtonpost.com/world/2019/10/14/trumps-retreat-syria-turns-into-mess/).

The following Atlantic piece by Joseph Votel and Elizabeth Dent provides additional trenchant detail on the negative effects of Trump’s decision to withdraw: “The Danger of Abandoning Our Partners,” https://www.theatlantic.com/politics/archive/2019/10/danger-abandoning-our-partners/599632/. (General Votel is currently a nonresident Senior Fellow on National Security with the Middle East Institute (MEI). As commander of CENTCOM, General Joseph Votel oversaw U.S. military operations across the Middle East, including the campaign against the Islamic State in Iraq and Syria, from March 2016 to March 2019. Elizabeth Dent is likewise a non-resident fellow at MEI, focused on counterterrorism, and worked in various capacities at the State Department for the US Global Coalition to Defeat ISIS from 2014 to 2019.) The authors conclude that Trump’s Syria policy reversal “threatens to undo five years’ worth of fighting against ISIS and will severely damage American credibility and reliability in any future fights where we need strong allies.”

Nevertheless, the president declared on Saturday, Oct. 19 that “We’ve had tremendous success I think over the last couple of days,” adding, “We’ve taken control of the oil in the Middle East” – a claim that observers had difficulty in connecting with the situation in Syria.

Dear readers, there is no rational way to seek an investor path through the bewildering twists and turns of present American foreign policy, if policy it be. It changes continually; and its disruptiveness, accompanied by constant, corrosive hyperbole, makes macro-dependent investing a high-risk adventure.

Here’s our position. We don’t own the Turkey ETF. We see the entire Middle East as a risky place. Think about it. Saudi gets attacked, and drones disable 5% of global oil production. Then nothing happens. Next, two missiles hit an Iranian tanker. Still nothing happens. Now, hundreds of ISIS fighters have escaped, and the lives of hundreds of thousands of Syrian Kurds are at risk. What will happen next?

US policy seems to be lurching toward isolationism in fits and starts, in deadly counterpoint to domestic political turmoil. Remember, Senators McConnell and Graham have both strongly repudiated Trump, as did over two thirds of House Republicans when they joined all the Democrats in an anti-Trump vote on Wednesday, Oct. 16.

On Oct. 14 McConnell said, in part, “For years, the United States and our Syrian Kurdish partners have fought heroically to corner ISIS and destroy its physical caliphate. Abandoning this fight now and withdrawing U.S. forces from Syria would re-create the very conditions that we have worked hard to destroy and invite the resurgence of ISIS. And such a withdrawal would also create a broader power vacuum in Syria that will be exploited by Iran and Russia, a catastrophic outcome for the United States’ strategic interests.” (https://www.courier-journal.com/story/news/politics/2019/10/14/mitch-mcconnell-issues-second-major-statement-syria-crisis/3977983002/). McConnell followed that statement with further remarks on Oct. 16. They can be viewed here: https://www.courier-journal.com/story/news/politics/2019/10/14/mitch-mcconnell-issues-second-major-statement-syria-crisis/3977983002/.

Senator Graham expressed his views in a series of tweets on Oct. 16 tweets, at https://twitter.com/LindseyGrahamSC. He minced no words: “The worst thing any Commander in Chief can do is to give land back to the enemy that was taken through blood and sacrifice. I fear those are the consequences of the actions being taken right now.”

We remain overweight domestic US oil production, exploration, and natural gas. We remain fully invested in our domestic US ETF strategy and in our quantitative strategies (three of them).

Now a personal note.

My family members served in one branch of the military or another for several generations and during multiple wars. I personally attended a special NATO multi-country officers’ course in the 1960s. The British were the hosts. My task partner happened to be a Dutch colonel. I met and worked with WWII veterans in uniform and worked with others who served in their countries’ underground networks, fighting the Nazis.

Alliances matter. Long-term, tested alliances matter a lot.

Experienced leaders know that trustworthy allies are hard to develop and easy to lose. You don’t throw them under the bus. And you certainly don’t brazenly recite insults based on a false understanding of history, offending your friends and emboldening your enemies.

David Kotok, US Army. In memory: Leslie Kotok, US Navy. In memory: Sam Serata, US Air Force. In memory: Oscar Hacker, US Army. I’ll stop there. There are several more.

David R. Kotok
Chairman and Chief Investment Officer
Email | Bio


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 Commentary – Impeachment

Impeachment is a political process. We watch it unfold with strenuous claims and counterclaims, as we did with the Nixon and Clinton episodes. We are writing about it because it impacts markets: Political outcomes impact policy, and that is where impeachment intersects markets. With the Clinton debacle, policy was little changed; but with the Nixon outcome, change was huge.

Trump impeachment - market-changing event?

We’ll start by providing readers with a little background on the history of impeachment in the United States, and then examine the current presidential impeachment process and surrounding issues from the perspective of financial markets and investors’ decision-making.

“The House has impeached 19 federal officers. Of these, 15 were federal judges: thirteen district court judges, one court of appeals judge (who also sat on the Commerce Court), and one Supreme Court associate justice. Two were Presidents: Andrew Johnson and Bill Clinton; both were later acquitted by the Senate.” (https://en.wikipedia.org/wiki/Impeachment_in_the_United_States#Federal_impeachment_investigations_formally_commenced_and_officials_impeached)

“The House of Representatives has initiated impeachment proceedings only 64 times since 1789, only 19 of these proceedings actually resulting in the House’s passing Articles of Impeachment, and of those, only eight resulted in removal from office (all federal judges).” (https://en.wikipedia.org/wiki/Impeachment#United_States)

Astute readers may notice that the Wikipedia numbers cited above omit two individuals who faced impeachment. These were a US Senator (William Blount, 1797) and a Secretary of War (William Belknap, 1876). (https://history.house.gov/Institution/Impeachment/Impeachment-List/)

Senate convictions of presidents have never occurred in US history. When faced with that possible outcome, Richard Nixon resigned before the House could vote on the articles of impeachment and thus before impeachment proceedings reached the Senate.

Impeachment proceedings create uncertainty for market agents. They also distract government. But they run their course in time, and markets normalize after the events.

Impeachment proceedings can alter political outcomes, which can, in turn, change policy; and markets then respond to those policy changes. Polls show that the Americans are deeply divided regarding impeachment, along party lines. It is far too early to say how impeachment proceedings will impact the 2020 election, but we will obviously be watching carefully.

(Chart source: “GOP’s Collins Blasts Trump’s ‘Spy’ Comment: Impeachment Update”: https://www.bloomberg.com/news/articles/2019-09-26/whistle-blower-report-to-be-made-public-impeachment-update)

Here is the official text of the whistleblower complaint against Donald Trump, in PDF format: https://intelligence.house.gov/uploadedfiles/20190812_-_whistleblower_complaint_unclass.pdf

Intended by the nation’s founders as means to prevent abuses of power, impeachment is also one tool of the political process. For investors, the Trump impeachment issue has to be evaluated as to whether or not it is a market-changing event.

(WSJ, Sept. 29, 2019) “Impeachment’s Role in History: Part Legal Creature, but Mostly Political”: https://www.wsj.com/articles/impeachments-role-in-history-part-legal-creature-but-mostly-political-11569776731/

William A. Galston, a Senior Fellow in Governance Studies at Brookings, suggests that impeachment proceedings against a president, historically speaking, have been influenced by three factors: (1) a president’s approval rating, (2) public support for the impeachment process, and (3) bipartisan support for impeachment in the House of Representatives. Galston looks at what we know about each of these factors today in a must-read analysis, and he suggests that one issue will be whether Americans of both parties have time to assimilate relevant information and formulate opinions grounded in what they learn.
(Brookings, Sept. 27, 2019) “Impeachment and public opinion: Three key indicators to watch”: https://www.brookings.edu/blog/fixgov/2019/09/27/impeachment-and-public-opinion-three-key-indicators-to-watch/
Reports this weekend of Sept. 28-29 suggest, however, that things will move quickly in the House.
(USA Today, Sept. 29, 2019) “Nancy Pelosi has put the Trump impeachment inquiry on a fast track. Here’s the plan, timeline and key players”: https://www.usatoday.com/story/news/politics/2019/09/29/nancy-pelosi-impeachment-inquiry-trump-ramps-up-plan/3791214002/

In the meantime, past and current news reports address the context and the import of Trump’s call to the Ukraine on July 25 and the White House’s subsequent handling of the records of that call.

(NY Times, May 9, 2019) “Rudy Giuliani Plans Ukraine Trip to Push for Inquiries That Could Help Trump”: https://www.nytimes.com/2019/05/09/us/politics/giuliani-ukraine-trump.html/

(Bloomberg, Sept. 27, 2019) “Ex-U.S. Attorney Moore Weighs In on the Legal Implications of Trump’s Ukraine Call”:  https://www.bloomberg.com/news/videos/2019-09-27/ex-u-s-attorney-moore-weighs-in-on-the-legal-implications-of-trump-s-ukraine-call-video

(Reuters, Sept. 29, 2019) “In pushing probe of rival, did Trump enlist the U.S. government?”:  https://www.reuters.com/article/us-usa-trump-whistleblower-machinery/in-pushing-probe-of-rival-did-trump-enlist-the-u-s-government-idUSKBN1WE0B5
(WSJ, Sept. 28, 2019) “Embarrassing Leaks Led to Clampdown on Trump’s Phone Records”:  https://www.wsj.com/articles/embarrassing-leaks-led-to-clampdown-on-trumps-phone-records-11569710889/

On Sept. 27 former national security adviser Susan Rice acknowledged that the Obama administration moved transcripts of conversations with foreign leaders onto the same top-secret server where the Trump administration stored Trump’s recent phone call with Ukrainian President Zelensky. She stated, however, that calls “were never moved over unless they were legitimately in their contents classified.”

(The Federalist, Sept. 28, 2019) “Susan Rice: Obama Put Call Transcripts On Top Secret Server, Too”: https://thefederalist.com/2019/09/28/susan-rice-obama-put-call-transcripts-on-top-secret-server-too/

The system to which the Trump team moved the call with Zelensky is managed by the National Security Council’s Directorate for Intelligence. It stores “codeword-level” intelligence – for instance, intelligence about covert operations or the movement of military assets. Just a few people in the White House and a few in the national security community have access to this codeword-protected server. Thus, says Elaine Kamarck, “… it is surprising that a conversation with President Trump considered appropriate enough to release to the public would have been stored in such a secret place.

“Democrats and Republicans with Top Secret security clearances should be able to view [the server’s] contents. If what they find are mostly highly sensitive records of covert operations, then the president may have an easier time convincing the Congress that he has not abused his power. But if they find other instances of secret communications with Ukraine or with other foreign governments that involve the personal political interests of the president, the case for impeachment may get much stronger.”

(Brookings Institution, Sept. 27, 2019) “Is Ukraine simply the tip of the iceberg for impeachment?”: https://www.brookings.edu/blog/fixgov/2019/09/27/is-ukraine-simply-the-tip-of-the-iceberg-for-impeachment/

The Clinton impeachment process accelerated with the evidence of a notorious stain on a dress. Nixon’s demise was triggered by an 18-1/2–minute tape erasure. Will the evidence being amassed against Trump prove to be more substantial and damning than in either of these cases; or will it, as Trump asserts, turn out to be merely a hoax, the made-up products of a witch hunt?

In any event, the impeachment process will profoundly affect US politics and governance in the runup to the 2020 elections. This article from the Wall Street Journal (Sept. 28, 2019) summarizes the risks: “What Matters This Week in the 2020 Race” – https://www.wsj.com/articles/what-matters-this-week-in-the-2020-race-11569643261?

Clearly, added political risk is being posed by Trump’s behavior (his mentioning of civil war, his demanding to know the identity of and threatening consequences for the whistleblower, who must now have protection).

(New York Times, Sept. 30, 2019) “Trump Seeks Whistle-Blower’s Identity”: https://www.nytimes.com/2019/09/30/us/politics/trump-schiff-treason.html?smid=nytcore-ios-share

(Politico, Oct. 1, 2019) “Grassley breaks with Trump over protecting whistleblower”: https://www.politico.com/news/2019/10/01/grassley-trump-whistleblower-014715

In response, Senator Mark Warner, the ranking Democrat on the Intelligence Committee, said on Twitter that Trump’s attacks on the whistleblower is a threat to both government accountability and national security.

(Bloomberg, Oct. 1, 2019) “Impeachment update: Warner decries Trump’s whistle-blower attack”: https://www.theedgemarkets.com/article/impeachment-update-warner-decries-trumps-whistle-blower-attack

The issue of Joe Biden’s and Hunter Biden’s involvement with Ukraine has to be evaluated as a separate matter, one potentially impacting the election. Trump is making every effort to distract attention from his own actions while raising negative allegations against Biden. In order to assess the ultimate impact of this political strategy for the 2020 election, investors must consider both the facts regarding the Bidens’ involvement in the Ukraine and the potential impact that attacks can have, independent of facts, on voters’ opinions and behavior.
(The Guardian, Sept. 29, 2019) “Rudy Giuliani: Ukraine sources detail attempt to construct case against Biden”:  https://www.theguardian.com/us-news/2019/sep/29/rudy-giuliani-ukraine-biden-trump-impeachment

(Burisma Group, May 2014) “[Hunter] Biden outlines his mission for the Company”: https://burisma-group.com/eng/news/burisma-holdings-board-member-hunter-biden-outlines-his-mission-for-the-company/

(Al Jazeera, May 2015) “[Obama] White House: No conflict with Biden’s son working for Ukraine gas company”:
http://america.aljazeera.com/articles/2014/5/14/ukraine-biden-gas.html

(Bloomberg, May 16, 2019) “Ukraine Prosecutor Says No Evidence of Wrongdoing by Bidens”
https://www.bloomberg.com/news/articles/2019-05-16/ukraine-prosecutor-says-no-evidence-of-wrongdoing-by-bidens
(The Hill, Sept. 26, 2019) “Solomon: These once-secret memos cast doubt on Joe Biden’s Ukraine story”:  https://thehill.com/opinion/campaign/463307-solomon-these-once-secret-memos-cast-doubt-on-joe-bidens-ukraine-story

(NBC, Sept. 25, 2019) “There’s no evidence for Trump’s Biden-Ukraine accusations”: https://www.nbcnews.com/politics/2020-election/there-s-no-evidence-trump-s-biden-ukraine-accusations-what-n1057851

As Trump and his personal lawyer have sought means to damage Joe Biden’s bid for the presidency, and as the Democratic-led House of Representatives now launches its impeachment inquiry, we find ourselves watching two versions of America’s political process in use against each other. Outcomes remain to be seen.

Finally, I will share an excerpt of Bob Brusca’s thoughts on fair play, the ethics and politics of impeachment, and the effects of this latest three-ring political circus on the real business of running the country:

No one is above the law and everyone deserves fair play

“It is ironic to find myself defending Trump, a man I do not like. But he is president and the office matters. And I do like some of his policy stands especially on trade where we (as a country) have a great deal invested.  The Democrats are constantly undercutting him and have set back the President’s ability to negotiate especially with China where a nearly done-deal was set back by Democrats undercutting Trump and giving the Chinese second-thoughts earlier this year.  Now Democrats are holding up the NAFTA replacement treaty (USMCA) and there is a question of whether a prescription drug bill will go ahead.  Yet, the Republicans hold such a substantial margin in the Senate that there will have to be some really significant wrong doings to impeach Trump and remove him- not just trumped up errors in judgement. It actually seems quite impossible. Yet the House presses on and will ignore real business. The House leadership realizes how touch and go this is.  House members have not voted articles of impeachment against Trump. That would require their members putting their names on record as ‘for’ impeachment and it would require naming the charges.  If these acts by Trump are so reckless then vote articles of impeachment. If not then stop playing this in-between game that is going NOWHERE (queue playing of Nowhere Man by the Beatles, the new official song of the US House of Representatives).”

Right now Cumberland remains fully invested in our US stock market ETF strategy. Our quantitative strategies are also fully invested. Our bond strategies continue the barbell. Of course, this course can change at any time.

David R. Kotok
Chairman and Chief Investment Officer
Email | Bio


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.




Stocks keep tanking

Excerpt from Politico

By BEN WHITE
10/03/2019

David-Kotok-Quote - Trump Loss

Stocks keep tanking — The Dow is down about 800 points over the last two days. President Trump blamed Democrats and the impeachment battle but it’s much more complex than that. The sharp declines began with the terrible manufacturing number.

Market analysts MM spoke to attributed the swoon to trade war impact as well as the possibility that Sen. Elizabeth Warren (D-Mass.) could emerge as the next president. The other big issue: Trump’s totally unpredictable response to impeachment pressure.

Cumberland’s David Kotok tells MM of the sell-off: “Impeachment, the trade war and failing foreign policy under Trump’s US leadership (Iran, Saudi, North Korea, Venezuela, etc) are coalescing. Fed bashing hurts Trump. Blaming everyone else is now a failing strategy for Trump. He can save himself with a trade deal but time is running against him. Market smells a Trump loss and a Warren victory.

Read the full story at POLITICO.com .


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.




White House debates economic stimulus plans

Excerpt from Politico

By BEN WHITE
09/12/2019

MORE FED BASHING — It’s old hat by now. But Trump went hard after the central bank again on Wednesday, calling Chair Jay Powell and his colleagues “Boneheads” for not cutting rates to zero or below. Interest rates, of course, are not the problem with the economy. And negative rates have not done much good elsewhere. They would also deplete the Fed’s recession-fighting toolkit for no good reason.

Cumberland’s David Kotok emails: “Zero and then negative interest rates have created a monstrosity in Europe. It worsens daily. Trump’s call for Americans to follow Europe into this quagmire would harm every saver, every insurance company, every bank in America. No wonder his approval is falling off a cliff. Trumpanomics of Fed bashing and trade war are an economic menace to the United States.”

Read the full story at POLITICO.com .


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.




Trump: ‘Boneheads’ at the Fed Should Drop Interest Rates to Zero, or Lower

Excerpt from The Fiscal Times

By Michael Rainey
09/11/2019

President Trump blasted the “boneheads” at the Federal Reserve Wednesday for failing to reduce interest rates to zero or below.

“The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term,” Trump tweeted.

Trump framed the issue in part as a matter of competition with other advanced economies. “We have the great currency, power, and balance sheet … The USA should always be paying the the [SIC] lowest rate. No Inflation! It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing. A once in a lifetime opportunity that we are missing because of “Boneheads,” he wrote. But many economists say the negative interest rate policies in Europe and Japan are nothing to envy, and are likely harmful in the long run.

David Kotok of Cumberland Advisors said that “zero and then negative interest rates have created a monstrosity in Europe,” Politico reported, and Kotok warned that Trump’s desire “to follow Europe into this quagmire would harm every saver, every insurance company, every bank.” Along the same lines, Deutsche Bank CEO Christian Sewing said last month, “In the long run, negative rates ruin the financial system.”

Read the full story at The Fiscal Times & Yahoo News .


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.




Trashing Fed ‘Boneheads,’ Trump calls for central bank to cut interest rates to ‘ZERO’

Excerpt from Politico

By QUINT FORGEY
09/11/2019

President Donald Trump on Wednesday called on the Federal Reserve to slash U.S. interest rates “down to ZERO,” admonishing chairman Jerome Powell and other leaders of the U.S. central bank as “Boneheads.”

“The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt,” Trump tweeted. “INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term. We have the great currency, power, and balance sheet.”

David Kotok, chief investment officer at Cumberland Advisors, said that “zero and then negative interest rates have created a monstrosity in Europe,” and warned Trump’s demand “to follow Europe into this quagmire would harm every saver, every insurance company, every bank” in the U.S.

“Trumpanomics of Fed bashing and trade war are an economic menace to the United States,” he added.

Read the full story at POLITICO.com .


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.




Cumberland Advisors Market Commentary – Does Trump-Navarro Equal Smoot-Hawley?

George Santayana said “Those who cannot remember the past are condemned to repeat it.”

Market Commentary - Cumberland Advisors - Global Trade

In an article titled “The Smoot-Hawley Tariff and the Great Depression,” authors Theodore Phalan, Deema Yazigi, and Thomas Rustici assess the role the Smoot-Hawley Tariff Act played in the Great Depression:

“In 1930, a large majority of economists believed the Smoot-Hawley Tariff Act would exacerbate the U.S. recession into a worldwide depression. On May 5 of that year, 1,028 members of the American Economic Association released a signed statement that vigorously opposed the act. The protest included five basic points. First, the tariff would raise the cost of living by ‘compelling the consumer to subsidize waste and inefficiency in [domestic] industry.’ Second, the farm sector would not be helped since ‘cotton, pork, lard, and wheat are export crops and sold in the world market’ and the price of farm equipment would rise. Third, ‘our export trade in general would suffer. Countries cannot buy from us unless they are permitted to sell to us.’ Fourth, the tariff would ‘inevitably provoke other countries to pay us back in kind against our goods.’ Finally, Americans with investments abroad would suffer since the tariff would make it ‘more difficult for their foreign debtors to pay them interest due them.’ Likewise, most of the empirical discussions of the downturn in world economic activity taking place in 1929–1933 put Smoot-Hawley at or near center stage.” (https://fee.org/articles/the-smoot-hawley-tariff-and-the-great-depression/)

In 2019, nearly every economist disagrees with the Navarro-advised Trump tariff policy. At our recent gathering in Maine we polled the group, which represented about $2 trillion in assets under management and thousands of households and many hundreds of thousands of beneficiaries of retirement plans and millions of investors and savers in the US. Asked about Navarro, 1 supported him, 36 opposed, and 3 weren’t sure. Asked about the Trump trade policy, about 3/4 of our group opposed it and saw it doing increasing damage to the US.

The late Allan Meltzer noted in A History of the Federal Reserve Volume 1: 1913-1951 that “Research suggesting a small effect [i.e., from tariffs] ignores the pronounced effect on farm exports, distress, bankruptcies, and bank failures in farm states” (p. 564, note 299). Readers are invited to check the rising bankruptcy statistics in farm states in 2019. The Trump-Navarro trade policy is responsible; the correlation between the Trump trade war and rising distress is very high.

How historic and vital are the fundamental economic lessons of the Smith-Hawley Tariff Act and its consequences? As Milton Friedman and Anna Jacobson Schwartz note in A Monetary History of the United States, 1860–1967, “To find anything in our history remotely comparable to the monetary contraction of 1929–1933, one must go back nearly a century to the contraction of 1839 to 1843” (p. 299, chapter 7). I recommend that readers who wish to take a deeper dive study all of Chapter 7.

Dear readers, this is a brief response to the events of Friday, August 23, 2019. I could easily add 100 citations.

Peter Navarro owns the advisory role and the argument in favor of the present US trade war policy. President Trump owns the decisions. Together they are digging a hole, and that hole is getting deeper. Market agents know it. Farm-state voters know it. Financial agents know it.

No matter what Navarro says and whom Trump blames, the truth is that the responsibility for the economic slowdown and the financial volatility lands squarely on the Oval Office desk and in the lap of the president and his advisors. He does not have the courage to admit an error. He avoids any self-blame. He constantly bashes the Fed since it (and Jay Powell) is a convenient and distracting target.

There is a fitting adage attributed to Will Rogers: “If you find yourself in a hole, stop digging.”

Mr. Navarro, Mr. Trump, read history. You are digging a deeper and deeper hole for the nation and the world. Stop digging.

David R. Kotok
Chairman of the Board & Chief Investment Officer
Email | Bio


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UBS Sees No Fed Rate Cut Until at Least 2021

UBS Sees No Fed Rate Cut Until at Least 2021

June 18, 2019

David Kotok, Cumberland Advisors Chairman and CIO, and Laura Kane, UBS head of Americas investing themes, discuss their outlook for the Fed. They appear on “Bloomberg Daybreak: Americas.”

David R. Kotok - Fed Rate Cut - Bloomberg

Watch at Bloomberg TV or in the embedded player below.




Trump revs up his Wayback Machine

Excerpt from…

Trump revs up his Wayback Machine

In a single week, the president leaned heavily into economic theories from as far back as the 18th century.

By BEN WHITE (bwhite@politico.com; @morningmoneyben)
06/20/2019 05:15 AM EDT

Cumberland-Advisors-Robert-Bob-Eisenbeis-In-The-News

Stanley Fischer, the former Fed vice chair, said at a forum Tuesday that slashing rates right now following pressure from Trump “would destroy the independence of the Fed,“ adding “it’s not something that should be done.”

Economists also note that monetary policy remains fairly loose and that one or two cuts is not likely to address damage from Trump’s trade policies.

“Realistically, a cut in rates is not going to counter the damage to farmers trying to sell their soybeans,” said Robert Eisenbeis, chief monetary economist at Cumberland Advisors and former research director at the Atlanta Fed. “A rate cut is pretty far removed from the damage the administration is doing with their tariff policy. If you are a farmer or a car maker trying to figure out what to do, it doesn’t help you.”

Trump also signaled this week that he may not wind up cutting a deal with China.

Read the full article at POLITICO.com .


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.