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https://cointelegraph.com/news/ether...hits-1-billion

Ethereum Price Sets 2020 High — Are Investors Buying the ETH 2.0 Hype?

 

1. Frank Holmes
2. [COLOR=rgba(0, 0, 0, 0.9)] 2nd degree connection 2nd[/color]
3. Frank has a premium account

CEO and Chief Investment Officer at U.S. Global Investors | Chairman of the Board of HIVE Blockchain Technologies

1. San Antonio, Texas
2. 500+ connections
3. Contact info

Hive Blockchain had a huge day trading over 30 million shares and up large in sync with ethereum . Hive blockchain mines Ethereum in Sweden on an industrial scale $HIVE.V


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https://images.cointelegraph.com/ima...NkZC5qcGc=.jpg

MARKET ANALYSIS

Altcoin price action has been the talk of the town for the past two weeks — and for good reason. Since the start of 2020, altcoins like Icon (ICX), AION and WanChain (WAN) have surged more than 200%, 120% and 60% respectively, leading some analysts to suggest that a new altcoin season has begun.
https://s3.cointelegraph.com/storage...cd4fc4391a.png

Crypto market daily price chart. Source: Coin360

Now, Ether (ETH) appears to have joined the party, and since the altcoin dropped to $115.95 on Dec. 18, 2018, it has quietly rallied 90% to reach a 2020 high at $220.81 on Feb. 6.


As the crypto market rallied, the amount of Ether and locked-in decentralized finance platforms has also risen. In fact, recently released data from data provider DeFi Pulse revealed that the total value of assets locked in DeFi platforms has risen to $1.01 billion.


Currently, 3.135 million Ether are locked up in DeFi platforms, a slight decline from the Feb. 2 figure of 3.195 million.

https://s3.cointelegraph.com/storage...9bd950aea8.png

Total Value Locked (USD) in DeFi. Source: DeFi Pulse

Since 2019, the value of assets locked up in the DeFi ecosystem has risen from $240 million to $1.01 billion, and analysts believe that the growth in popularity and number of assets staked across DeFi platforms will increase demand for Ether and support a steady rise in the altcoin’s price.

Miners are accumulating Ether
Another bullish signal for Ether is the growth in the number of miners holding Ether. Maksim Balashevich, the founder of on-chain analytics data provider Santiment, recently broke the phenomenon down by explaining that:

“Across the entire Ethereum miner ecosystem, the last three months were marked by stable and undisrupted accumulation.”

https://s3.cointelegraph.com/storage...f46dd7cacf.png

ETH Miner Balances Over Time. Source: Santiment.net

According to Balashevich, the total balance of all Ether mining pools currently stands near an all-time high of 1.69 million Ether ($300 million) and the current accumulation period leads Balashevich to believe that there are “high confidence levels in the project among the majority of block creators, at the very least relative to the current market conditions.”

Investors are bullish as ETH 2.0 approaches

The projected July 2020 launch of ETH 2.0 is another bullish factor for Ether’s price. During a Feb. 6 “Ask Me Anything” session on Reddit with Ethereum network developers, the ETH 2.0 team explained that the network upgrade will not go live until three clients can safely operate testnets for at least eight weeks.

During the session, ETH 2.0 researcher Justin Drake said, “I have 95% confidence we will launch in 2020.” ETH 2.0 will transition the network from proof-of-work to proof-of-stake, and instead of maintaining mining rigs, block validators will be required to stake 32 ETH in order to stake on the network.

The network upgrade could have the early impact of increasing demand for ETH, and it’s possible that miners and investors looking to gain a 5% to 18% staking reward could be accumulating ETH and in anticipation of the ETH 2.0 launch.

From a technical analysis perspective, Ether’s price has made notable strides by breaking through crucial resistance levels over the past two weeks.

ETH/USD broke a key long-term resistance

On Jan. 30, Ether price finally crossed above the 200-day moving average, and a stiff resistance at $179. The altcoin has since rallied 27% since then, and many analysts believe the digital asset is now well-positioned to make a run at $240 conservatively and $300 over the coming months if the crypto market sentiment remains bullish.
https://s3.cointelegraph.com/storage...9226208ef4.png

ETH/USD daily chart. Source: TradingView

Currently, traders are maintaining purchasing volume, and the three white soldiers candlestick pattern that began on Feb. 5 suggests further continuation to the upside but the shorter time frame shows Ether price looking a bit toppy and losing momentum.

Should Bitcoin price correct over the coming days, investors could see Ether give up some gains and pull back to $200 where the moving average of the Bollinger Band indicator is currently positioned.

https://s3.cointelegraph.com/storage...83c78cdec9.png

ETH/USD six-hour chart. Source: TradingView

Below this, the price could drop to $193 where there is support. The relative strength index is in the overbought region on the daily time frame and the six-hour time frame shows the indicator beginning to roll over. The same can be said for the Moving Average Convergence Divergence histogram, where the lightening shade of the histogram candles shows a slowdown in buying.

Ultimately, as the Bitcoin price continues to push higher toward $10,000, Ether’s price is likely to follow by moving higher. Traders are encouraged to keep an eye on trading volume and watch the RSI and MACD in order to determine whether or not the asset has become “too” overbought.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

#Altcoin News#Markets#Ethereum Price#Market analysis

https://www.zerohedge.com/geopolitic...ops+to+zero%29


The city of Hong Kong and its 7 million+ residents have reason to be extremely anxious about the nCoV outbreak that has already caused more than 1,000 deaths on the mainland. Back in 2003, SARS ripped through the densely populated largely autonomous city and killed some 300 people, nearly half the total death toll from the outbreak.


Professor Gabriel Leung, the chair of public health medicine at Hong Kong University, was one of the first officials anywhere in China to suggest that the government was hiding, or simply hadn't yet confirmed, the true extend of the outbreak.


Though Beijing has been touting a 'slowdown' in the number of newly diagnosed cases, few believe that the outbreak has actually crested, even as a huge percentage of the population in the world's largest country has spent the last week huddled inside.

Which is why we feel Leung's latest warning is worth our attention, and yours.


Riffing off of comments from WHO Director-General Dr. Tedros Adhanom Ghebreyesus, who said yesterday that the we might be seeing only 'the tip of the iceberg' in terms of number of cases, Leung said the scientific community's 'overriding concern' is figuring out the 'size and shape' of the iceberg.


Leung added that most experts now believe the virus has a transmission rate of - or r-sub-zero - of 2.5, meaning the average infected individual will transmit the virus to 2.5 others. This also translates to an "attack rate" of 60%-80%, the Guardian reports.

"Sixty per cent of the world’s population is an awfully big number," Leung told the Guardian in London, en route to an expert meeting at the WHO in Geneva on Tuesday.

On Tuesday morning, Chinese health officials confirmed nearly 100 new deaths, bringing the toll to 1,013 as of late Monday.



https://zh-prod-1cc738ca-7d3b-4a72-b...2.11chart2.PNG


If the virus continues to spread at this pace, even a relatively low fatality rate of 1% - which Leung believes is possible once milder, undetected cases are accounted for - could still lead to a massive death toll. Rough calculations indicate that, if two-thirds of the 7.7 billion people living on earth are infected, a 1% mortality rate would still lead to nearly 51 million deaths.


Once all of these other variables have been determined, Leung said he would tell the WHO that the main issues would be figuring out the scale of the worsening global epidemic, and learning whether China's draconian measures have worked to help suppress the spread.

https://zh-prod-1cc738ca-7d3b-4a72-b...0.02.11map.PNG


The upcoming meeting in Geneva, which Leung plans to attend, will bring together more than 400 researchers and national authorities. Some plan to participate by video conference from the mainland and Taiwan.Y

OUR INBOeaturingurateist of must-read stories

"With 99% of cases in China, this remains very much an emergency for that country, but one that holds a very grave threat for the rest of the world," Dr. Tedros said last week.

One of the world’s leading experts on coronavirus epidemics, Leung played a major role in fighting the SARS outbreak and has worked closely with other leading scientists, including counterparts in the UK.

Does Leung really think the virus will infect 80% of the world's population? Or even 60%? Maybe not. The virus has reportedly been mutating and changing as it has spread, and it's still possible it could change in ways that inadvertently help humanity suppress it. For example, it could "attenuate its lethality," as Leung put it.

Epidemiologists and modellers were trying to figure out what was likely to happen, said Leung. "Is 60-80% of the world’s population going to get infected?

Maybe not. Maybe this will come in waves. Maybe the virus is going to attenuate its lethality because it certainly doesn’t help it if it kills everybody in its path, because it will get killed as well," he said.

But if we don't figure out exactly how bad the outbreak has already gotten, it will be much more difficult to stop it from arriving at the worst-case scenarios.

https://moneymaven.io/mishtalk/econo...50mLwsqng0fk3A

Medieval Times Checks
The New York Times reports ‘Like Europe in Medieval Times’: Virus Slows China’s Economy.

More than two weeks after China locked down a major city to stop a dangerous viral outbreak, one of the world’s largest economies remains largely idle. “It’s like Europe in medieval times,” said Jörg Wuttke, the president of the European Chamber of Commerce in China, “where each city has its checks and crosschecks.”

It is becoming increasingly clear that restarting China — the world’s largest manufacturer and a titan of global trade — would be difficult even if the country made major strides in the next few days toward containing the outbreak.

On Monday, Nissan of Japan said it would shut down its plant in Kyushu, Japan, for four days beginning later this week “due to supply shortages of parts from China.”

Other carmakers, like FCA in Italy and Hyundai in South Korea, have already warned that a lack of parts from China could force them to curtail production in their home markets.

The local authorities are taking a tough stance with traffic, meaning workers are struggling to return to their jobs. Many towns and cities have begun imposing two-week mandatory quarantines on arriving truck drivers who picked up cargos in cities with disease outbreaks or even just drove through these areas.

Even factories with enough workers are running into further problems. The packaging industry is almost shut down, so everything from plastic packing to steel drums is running out, Mr. Wuttke said.

Steps to Nowhere
The municipal government in Shanghai, home to more than 20 million people and a vast array of businesses, said only 70 percent of the city’s manufacturers were taking steps to resume production. Few have actually received permission to do so.


Mother May I? No, You May Not.
Coronavirus Death Toll Surpasses 1,000 in Mainland China

CNN reports Coronavirus Death Toll Surpasses 1,000 in Mainland China.

Global numbers: 43,105 confirmed cases; 1,018 deaths

Japan: Two Japanese citizens who had initially tested negative for coronavirus have now been diagnosed with the disease. Japan now has confirmed 163 cases.

Vietnam: Vietnam confirms two more coronavirus cases, including a 3-month-old baby

Thailand: Thailand confirms a new coronavirus case, as its government says the Westerdam ship won't be allowed to dock there.

Singapore: 2-year-old girl among new coronavirus cases confirmed in Singapore

Heads Roll: Heads roll in Hubei over coronavirus outbreak. Two senior officials of the Health Commission in Hubei province, the epicenter of the novel coronavirus outbreak, were fired on Tuesday, Chinese state broadcaster CCTV reported.

The coronavirus threatens the Chinese Communist Party’s grip on power

Good Day FF. Trader

Please send me your personal information by Email to [email protected]

As you know being in this business we need to know our client or associates. "KYC"

Thanks !!!


Have a positive day.


BWM

https://www.zerohedge.com/markets/wh...ops+to+zero%29


Authored by Lance Roberts via RealInvestmentAdvice.com,

As discussed in this past weekend’s newsletter, the market remains overly extended as the recent correction sharply reversed on expectations for more Fed liquidity. However, with the market extremely deviated from the long-term moving average, a correction is once again a high probability event.

“Previously, we discussed that we had taken profits out of portfolios as we were expecting between a 3-5% correction to allow for a better entry point to add equity exposure. While the “virus correction” did encompass a correction of 3%, it was too shallow to reverse the rather extreme extension of the market. The rally this past week has reversed the corrective process, and returned the markets to 3-standard deviations above the 200-dma. Furthermore, all daily, weekly, and monthly conditions have returned to more extreme overbought levels as well.”

https://zh-prod-1cc738ca-7d3b-4a72-b...ate-021020.png


But it isn’t just the more extreme advance of the market over the past 5-weeks which has us a bit concerned in the short-term, but a series of other indications which typically suggest short- to intermediate-terms corrections in the market.

Furthermore, the markets are completely entirely the impact the “coronavirus” will have on the supply-chain globally. As David Rosenberg noted Monday:

“The impact of this virus is lasting longer and the effects, relative to SARS, are larger at a time when the Chinese economy is far softer. The follow-on effects on other markets has yet to be fully appreciated.”

Had the markets completed a correction that reduced the extreme overbought and extended conditions of the market, such would have offset the risk of the “viral impact” to the economy. However, without that correction, the eventual slowdown will likely have a great impact than is currently anticipated.

However, even if we set aside investor sentiment and positioning for a moment, the rapid reversion is price has sent our technical composite overbought/oversold gauge back towards more extreme levels of overbought conditions. (Get this chart every week at RIAPRO.NET)

https://zh-prod-1cc738ca-7d3b-4a72-b...uge-021820.png


What we know is that markets move based on sentiment and positioning. This makes sense considering that prices are affected by the actions of both buyers and sellers at any given time. Most importantly, when prices, or positioning, becomes too “one-sided,” a reversion always occurs. As Bob Farrell’s Rule #9 states:

“When all experts agree, something else is bound to happen.”

So, how are traders positioning themselves currently?

Positioning Review

The COT (Commitment Of Traders) data, which is exceptionally important, is the sole source of the actual holdings of the three key commodity-trading groups, namely:

1. Commercial Traders: this group consists of traders that use futures contracts for hedging purposes and whose positions exceed the reporting levels of the CFTC. These traders are usually involved with the production and/or processing of the underlying commodity.
2. Non-Commercial Traders: this group consists of traders that don’t use futures contracts for hedging and whose positions exceed the CFTC reporting levels. They are typically large traders such as clearinghouses, futures commission merchants, foreign brokers, etc.
3. Small Traders: the positions of these traders do not exceed the CFTC reporting levels, and as the name implies, these are usually small traders.

The data we are interested in is the second group of Non-Commercial Traders.

This is the group that speculates on where they believe the market is headed. While you would expect these individuals to be “smarter” than retail investors, we find they are just as subject to “human fallacy” and “herd mentality” as everyone else.

Therefore, as shown in the series of charts below, we can take a look at their current net positioning (long contracts minus short contracts) to gauge excessive bullishness or bearishness.

Volatility

The extreme net-short positioning on the volatility before to the correction last week, had suggested the correction was coming. However, while the correction reduced the net-short positioning somewhat, it remains at historical extremes. What the more extreme positioning tells us is there is plenty of “fuel” to drive a correction when one occurs.

https://zh-prod-1cc738ca-7d3b-4a72-b...VIX-021020.png


Investors have gotten used to extremely low levels of volatility, which is unique to this market cycle. This complacency, due to low volatility, has encouraged investors to take on greater levels of risk than they currently realize. When volatility eventually makes it return, the consequences to investors will not be kind.

Crude Oil Extreme

The recent attempt by crude oil to get back above the 200-dma coincided with the Fed’s initiation of QE-4. Historically, these liquidity programs tend to benefit highly speculative positions like commodities, as liquidity seeks the highest rate of return.

However, beginning in December, that support for oil prices gave way, and prices have collapsed along with expectations for global economic recovery. We have been warning our RIAPro Subcribers (30-Day Risk Free Trial) for the last couple of months about the potential for this decline.

https://zh-prod-1cc738ca-7d3b-4a72-b...ges/WTIC-1.png

 

1. As noted previously, “Oil completely broke down last week, and collapsed below all of the important levels. Oil is now testing critical support at $51. A failure there and a break into the low $40’s is probable.”
2. The support is barely holding and oil looks extremely weak. However, oil is extremely oversold so a counter-trend rally is highly likely and can be used to “sell” into.
3. Stops Triggered for any direct crude oil positions.
4. Long-Term Positioning: Bearish

Despite the decline in oil prices over the last year, it is worth noting that crude oil positioning is still on the bullish side with 397,000 net long contracts.

https://zh-prod-1cc738ca-7d3b-4a72-b...Oil-021020.png


The inherent problem with this is that if crude oil breaks below $48/bbl, those long contracts will start to get liquidated which will likely push oil back into the low 40’s very quickly. The decline in oil is both deflationary and increases the risk of an economic recession.

U.S. Dollar Extreme

Another index we track each week at RIAPRO.NET is the U.S. Dollar.

https://zh-prod-1cc738ca-7d3b-4a72-b...es/USD-2_0.png

 

1. As noted previously: “The dollar has rallied back to that all-important previous support line. IF the dollar can break back above that level, and hold, then commodities, and oil, will likely struggle.
2. That is exactly what happened over the last two weeks. The dollar has strengthened that rally as concerns over the “coronavirus” persist. With the dollar close to testing previous highs, a break above that resistance could result in a sharp move higher for the dollar.
3. The rising dollar is not bullish for Oil, commodities or international exposures.
4. The “sell” signal has began to reverse. Pay attention.

Much of the bulls rallying cry has been based on the dollar weakening with the onset of QE, but as shown above, that has yet to be the case. However, it is worth noting that positioning in the US Dollar has been weakening. Historically, these reversals are markets of more important peaks in the market and subsequent corrections.

https://zh-prod-1cc738ca-7d3b-4a72-b...USD-021020.png


It is also worth watching the net-short positioning the Euro-dollar as well. Historically, when positioning in the Eurodollar becomes NET-LONG, as it is currently, such has been associated with short- to intermediate corrections in the markets, including outright bear markets.

Net-long Eurodollar positioning has recently started to reverse from an all-time record. While the market hasn’t corrected as of yet, if foreign banks begin to extract dollar-denominated assets to a large degree, the risk to the market rises sharply.

https://zh-prod-1cc738ca-7d3b-4a72-b...lar-021020.png


Interest Rate Extreme

One of the biggest conundrums for the financial market “experts” is why interest rates fail to rise. In March of last year, I wrote “The Bond Bull Market” which was a follow up to our earlier call for a sharp drop in rates as the economy slowed. That call was based on the extreme “net-short positioning” in bonds which suggested a counter-trend rally was likely.
Since then, rates fell back to some of the lowest levels in 10-years as economic growth continues to slow, both domestically and globally. Importantly, while the Federal Reserve turned back on the “liquidity pumps” last October, juicing markets to all-time highs, bonds have continued to attract money for “safety” over “risk.”


Not surprisingly, despite much commentary to the contrary, the number of contracts “net-short” the 10-year Treasury remains at some of the highest historical readings.

R INBOaring a curated list of must-read


https://zh-prod-1cc738ca-7d3b-4a72-b...00k-021020.png


Importantly, even while the “net-short” positioning on bonds has been reversed, rates have failed to rise correspondingly. The reason for this is due to the near-record levels of Eurodollar positioning, as noted above.

https://zh-prod-1cc738ca-7d3b-4a72-b...lar-021020.png


This suggests a high probability rates will fall further in the months ahead. This will most likely occur in concert with further deterioration in economic growth as the impact of the “coronavirus” is realized.


Amazingly, investors seem to be residing in a world without any perceived risks and a strong belief that financial markets can only rise further. The arguments supporting those beliefs are based on comparisons to previous peak market cycles. Unfortunately, investors tend to be wrong at market peaks and bottoms.


The inherent problem with much of the mainstream analysis is that it assumes everything remains status quo. However, such never tends to be the case for long.

“Oil prices down 20% is not a good thing, even if it means lower gasoline prices. This is swamped by the negative implications for capital spending and employment in the key oil-producing regions of the U.S. Copper prices have dropped 11% in just the past two weeks and just above a three-year low, and this is a global macro barometer. Money flowing into bond funds, the lagging performance in the high-yield market, the slump in commodity markets and the weakness, both relative and absolute, in the Russell 2000 small-cap index, surely cannot be making the economic growth bulls feeling too comfortable right now..” – David Rosenberg

We agree.

With retail positioning very long-biased, the implementation of QE4 has once again removed all “fears” of a correction, a recession, and a bear market, which existed just this past summer. Historically, such sentiment excesses form around short-term market peaks.


This is a excellent time to remind you of the other famous “Bob Farrell Rule” to remember:

“#5 – The public buys the most at the top and the least at the bottom.”

What investors miss is that while a warning doesn’t immediately translate into a negative consequence, such doesn’t mean you should not pay attention to it.



It is akin to constantly running red lights and never getting into an accident. We begin to think we are skilled at running red lights, rather than just being lucky.

Eventually, your luck will run out.


Pay attention, have a plan, and act accordingly.

https://www.oftwominds.com/blog.html



China's Fatal Dilemma


February 11, 2020

Ending the limited quarantine and falsely proclaiming China safe for visitors and business travelers will only re-introduce the virus to workplaces and infect foreigners.

China faces an inescapably fatal dilemma: to save its economy from collapse, China's leadership must end the quarantines soon and declare China "safe for travel and open for business" to the rest of the world.


But since 5+ million people left Wuhan to go home for New Years, dispersing throughout China, the virus has likely spread to small cities, towns and remote villages with few if any coronavirus test kits and few medical facilities to administer the tests multiple times to confirm the diagnosis. (It can take multiple tests to confirm the diagnosis, as the first test can be positive and the second test negative.)


As a result, Chinese authorities cannot possibly know how many people already have the virus in small-town / rural China or how many asymptomatic carriers caught the virus from people who left Wuhan. They also cannot possibly know how many people with symptoms are avoiding the official dragnet by hiding at home.


No data doesn't mean no virus.
If the virus has already been dispersed throughout China by asymptomatic carriers who left Wuhan without realizing they were infected with the pathogen, then regardless of whatever official assurances may be announced in the coming days/weeks, it won't be safe for foreigners to travel in China nor will it be safe for Chinese workers to return to factories, markets, etc.


But if China doesn't "open for business" with unrestricted travel soon, its economy will suffer calamitous declines as fragile mountains of debt and leverage collapse and supply chain disruptions push global corporations to find permanent alternatives elsewhere.


Here's the fatal dilemma: maintaining the quarantine long enough to truly contain it (which requires extending it to the entire country) will be fatal to China's economy.


But ending the limited quarantine and falsely proclaiming China safe for visitors and business travelers will only re-introduce the virus to workplaces and infect foreigners who will return home as asymptomatic carriers, spreading the virus in their home nations.


Falsely declaring China safe will endanger everyone credulous enough to believe Chinese officials, and destroy whatever thin shreds of credibility China may yet have in the global economy and community. That will set off chains of causality that will destroy China's economy just as surely as a three-month nationwide quarantine.


Who will be foolish enough to believe anything Chinese officials proclaim after foreigners who accepted the false assurances of safety return home with the coronavirus?


Anyone planning to receive goods via air freight from China might want to digest this report: Persistence of coronaviruses on inanimate surfaces and its inactivation with biocidal agents Endemic human coronaviruses (HCoV) can persist on inanimate surfaces like metal, glass or plastic for up to 9 days.


Air freight takes 12 to 24 hours, add another few hours for packaging, handling and last-mile delivery and that leaves 6+ days for the virus to spread to anyone who touches goods handled by an symptomatic carrier. Maybe the odds of catching the virus via surfaces are low, but maybe not. No one knows, including anyone rash enough to claim that the risk is negligible.

https://www.oftwominds.com/photos202...-virus2-20.png




If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.


Recent entries:
China's Fatal Dilemma February 11, 2020

Controlling the Narrative Is Not the Same as Controlling the Virus February 9, 2020

The Pandemic Isn't Ending, It's Just the Beginning of Global Disorder and Depression February 7, 2020

Pandemic, Lies and Videos: What Were We Thinking? February 6, 2020

When China's Supply Chains Break, so Will the Delusion the U.S. Economy Is Invulnerable February 5, 2020

Projecting "Wave 2" and "Wave 3" of the Coronavirus Pandemic February 4, 2020

Brace for Impact: Global Pandemic Already Baked In February 3, 2020

Second-Order Effects: The Unexpectedly Slippery Path to Dow 10,000 January 31, 2020

Has the Global Economy Finally Exhausted its Good Luck? January 30, 2020

Coronavirus and the "Unsinkable" Titanic Analogy January 29, 2020

Could the Coronavirus Epidemic Be the Tipping Point in the Supply Chain Leaving China? January 28, 2020

Is the Market Grossly Underestimating the Potential Impact of the Coronavirus Epidemic? January 27, 2020

Some Practical Questions about the Coronavirus Epidemic January 26, 2020

Don't Be Too Sure January 24, 2020


January 2020 entries
Archives 2005-2019

https://www.zerohedge.com/health/rab...ops+to+zero%29


Submitted by Michael Every of Rabobank
Happy Valentine’s Day as well as Happy Friday. As markets try to focus in on the latest developments on the Coronavirus they see that events of truly global importance once again rely on Chinese state statistics – and thus, like a Valentine’s Day box of chocolates from Forrest Gump, you never know what you are going to get.


What they can also see is that the leap in new cases yesterday was due to a new testing system, which was being put forward as a revised “stock” and not a “flow” argument. Moreover, today the total number of deaths stands at 1,383, which is showing a much smaller increase from yesterday’s 1,369 than the 242 who apparently died the day before. Not so pleasing is that there is genuine confusion on how many people are being tested; how they are being tested; how they are being classified; and how many people are actually dead.

This kind of confusion is something markets have learned to live with over a little matter like Chinese GDP; it’s not so easy when it comes to something you live or die with, like a virus. Regardless, under the new methodology being applied in China we now have 64,437 cases, so edging closer to the kind of 75,000 total that The Lancet was warning about recently as likely as of 25 January, and which looked like science fiction to some at the time. We also have 4,920 new cases recorded, which while well down from the 15,407 yesterday is still more than double the trend being shown before that.


Of course, there are some voices out there in The Street literally saying that if only one adjusts the data this way or that, or even ignores the new methodology and looks at the less efficient results being done in limited batches beforehand, then the underlying virus trend is once again bullish: Bloomberg leads with “New Virus Cases Slow”: No, they don’t! What we see is that under revised methodology the stock is higher and the flow of new daily cases are now double what they were before. New cases may have slowed from yesterday’s revision-boosted total, but we don’t know what the trend will be ahead under the new system, and what we *can* see is that Covid-19’s scale is far larger than had been originally portrayed.


Meanwhile, Vietnam has just quarantined 10,000 people near Hanoi after a cluster of cases has emerged, obviously trying to stop its infecting the sprawling city itself. Let’s hope it works, because we also have an advisor to the WHO, Ira Longini, estimating Covid-19 could potentially spread to two-thirds of the planet and five billion people. (“Coronavirus Could Infect Two-Thirds of Globe, Research Shows” reported Bloomberg yesterday.)

Of course, that sounds like total science fiction too - but where were we six weeks ago? Imagine that even with a 1% final fatality rate, as opposed to the 2.1% we see almost every day in China (in a way natural data series rarely occur), that would be 50 million people, double that of 1918’s Spanish Flu. Imagine the personal tragedy and the economic disruption. It’s also closer to ‘The Ugly’ scenario that we described among four potential virus futures (“The Bad”, “The Worse”, “The Ugly”, and “The Unthinkable”) in a special report released yesterday.


Yet for markets, it’s still all business as usual, even when the physical economy and the physical activity of banking are being disrupted. The Nikkei is down this morning, but the Hong Kong Hang Seng is up; US 10-year Treasuries are still round 1.60%; and CNY is still stronger than the Lucky 7 level, for example. Indeed, the one currency that seems to be acting as if the virus has some real meaning is EUR, as EUR/USD is edging towards a test of 1.08, but that economic sclerosis arguably long precedes Covid-19 being at root due to EU-19.

Meanwhile, some parts of China are truly carrying on as normal. For example, as Reuters reports “Chinese companies tap ‘virus bonds’ to raise billons quickly”, noting that of the USD2bn in cheap funding rushed to issuance so far, only 1/3 is being used to fight the virus by purchasing masks and air-purification systems, for example, while the rest is being used to bolster balance sheets. “A top glass maker, for instance, plans to deploy the bulk of the money raised to repay bank loans, and a property developer is raising money mostly to restock cash and repay debt.” In other words, little physical preparation to deal with a return to business as usual; and a use of cheap funding to repay other debt.


This should really be showing us the limits of central banks to fight a virus:


TO YOUR IN

“Here is cheap money, take it!”

“Thanks. I will use it to repay debt.”
Which is, of course, the whole process of QE and NOT-QE so far too – just with added:
“Thanks. I will speculate wildly on asset prices,” and
“Here are some dodgy assets, take them off me at face value.”
“Thanks for those. Here is cheap money in exchange.”

Nonetheless, that solid bedrock seems to be all we have propping both markets and the global economy up, long-term consequences be damned.

On which note, it seems odd timing for major central banks like the Fed to be even temporarily allowing a scale-back of liquidity additions starting from today. It may not prove to be a Valentine’s Day massacre immediately, but with the virus still out there, and fears of it spreading faster than it is spreading, it certainly looks like Valentine’s Day meshugga.

https://www.zerohedge.com/markets/ma...ops+to+zero%29


Authored by Lance Roberts via RealInvestmentAdvice.com,

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As noted last week, the spread of the coronavirus has had little impact on the markets so far.

“”The market bounced firmly off the 50-dma and rallied back to new highs on Thursday. While Friday saw a bit of retracement, which isn’t surprising given the torrid move early in the week, the ‘virus correction’ was recovered. Importantly, sharp early-week rally kept ‘sell’ signal from triggering,“

Chart Updated Through Friday

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In review, we previously took some profits out of portfolios as we were expecting between a 3-5% correction to allow for a better entry point to add equity exposure. While the “virus correction” did encompass a correction of 3%, it was too shallow to reverse the rather extreme extension of the market.

The continued rally this past week has fully reversed the corrective process and returned the markets to 3-standard deviations above the 200-dma. Furthermore, all daily, weekly, and monthly conditions have returned to more extreme overbought levels as well.

This was a point we discussed with our RIAPRO subscribers (Try for 30-days RISK FREE) in Thursday’s technical market update. To wit:

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1. On a weekly basis, the market backdrop remains bullish with a weekly buy signal still intact.
2. However, that buy signal is extremely extended and has started to reverse with the market extremely overbought on a weekly basis.
3. This is an ideal setup for a bigger correction so some caution is advised.
4. With the market trading above 2-standard deviations, and testing the third, of the intermediate term moving average, some caution is suggested in adding additional exposure. A correction is likely over the next month which will provide a better opportunity. Remain patient for now.

It is here that investors tend to go astray.
In the short-term, the market dynamics are indeed bullish which suggests that investors remain invested at the current time.

However, on a long-term basis, the picture becomes much more concerning.

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1. As noted above, this chart is not about short-term trading but the long-term management of risks in portfolios. This is a quarterly chart of the market going back to 1920.
2. Note the market has, only on a few rare occasions, been as overbought as it is currently. The recent advance has pushed the market into 3-standard deviations above the 3-year moving average. In every single case, the reversion was not kind to investors.
3. Secondly, in the bottom panel, the market has never been this overbought and extended in history.
4. As an investor it is important to keep some perspective about where we are in the current cycle, there is every bit of evidence that a major mean reverting event will occur. Timing is always the issue which is why use daily and weekly measures to manage risk.
5. Don’t get lost in the mainstream media. This is a very important chart.

Nothing Out Of Kilter

This past week Ed Yardeni via Yardeni Research, made a good point:

“The markets must figure that the coronavirus outbreak will be contained soon and go into remission, as did SARS, MERS, and Ebola. If that doesn’t happen, then there will be a vaccine that will make us feel better. It won’t be a miracle cure coming from a drug company. Rather, it will be injections of more liquidity into the global financial markets by the major central banks.

On Tuesday, Fed Chair Jerome Powell implied that the Fed is on standby to do just that. In his testimony on monetary policy to Congress, he said, ‘Some of the uncertainties around trade have diminished recently, but risks to the outlook remain. In particular, we are closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy.’”

Not surprisingly, the “ringing of Pavlov’s bell” once again sent investors scurrying to take on risk.

Interestingly, however, was that during Powell’s testimony to the Senate Banking Committee this past week, he said:

“There is nothing about this economy that is out of kilter or imbalanced.”

Okay, I’ll bite.

“Mr. Powell, if there is nothing out of kilter or imbalanced in the economy, then why are you flooding the system with a greater level of ’emergency’ measures than seen during the ‘financial crisis.'”

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It is at this point that I feel like Mr. Lorensax from “Ferris Bueller’s Day Off.”

“Anyone…Anyone…”

1. Side Note: The irony of that particular clip, is that Mr. Lorensax is asking his class about the “The Smoot-Hawley Act,” which was intended to raise revenue via tariffs and lift the U.S. out of the “Great Depression.” Just as with Trump’s recent “tariff” and “trade war,” neither worked as intended.

There is clearly something amiss within the financial complex. However, investors have been trained to disregard the “risk” under the assumption the Federal Reserve has everything under control.

Currently, it certainly seems to be the case as markets hover near all-time highs even as earnings, and corporate profit, growth has weakened. If the coronavirus impacts the global supply chain harder than is currently anticipated, which is likely, the deviation between prices and earnings will become tougher to justify.


Scott Minerd, the CIO of Guggenheim Investments, had a salient point:

“Yet as a major economic problem looms on the horizon, the cognitive disconnect between current asset prices and reality feels like the market equivalent of “peace for our time.” The average BBB bond yields just 2.9 percent. A recent 10-year BB-rated healthcare bond came to market at 3.5 percent and subsequently was increased in size from $1 billion to $1.7 billion due to excess demand.

For those investors who perceive the disconnect between risk assets which are priced for a rosy outcome and the reality of the looming risks to growth and earnings, any attempt to reduce risk leads to underperformance.

It is a mind-numbing exercise for investors who see the cognitive dissonance. The frantic race to accumulate securities has cast price discovery to the side.
I have never in my career seen anything as crazy as what’s going on right now, this will eventually end badly.“

Of course, it will.

The only problem, as he notes, is that between now and then, there is a demand for performance regardless of the underlying risk. Or rather, there is a widely adopted belief the markets can never have a decline again as witnessed by an email I received last week:

“Why do you think there will ever be a correction when the central banks are never going to let credit contract. I see no corrections. Ever. When the US enters a recession, the reality is it will be the biggest buy signal yet. There is literally nowhere to go but up in this market.”

The lessons taught by previous bear markets are always forgotten during enduring bull markets which seem without end. The relearning of those lessons are always painful.


The Path Ahead

The path ahead for stocks is much less certain than in late 2018 when we were coming off deeply depressed sentiment levels, and the Fed was rapidly reversing monetary policy from “tightening” to “easing.”
With equities now more than 30% higher than they were then, the Fed mostly on hold in terms of rate cuts, and “repo” operations starting to slow, it certainly seems that expectations for substantially higher market values may be a bit optimistic.


Furthermore, as noted above, earnings expectations declined for the entirety of 2019, as shown in the chart below. However, the impact of the “coronavirus” has not been adopted into these reduced estimates as of yet. These estimates WILL fall, and likely markedly so, which as stated above, is going to make justifying record asset prices more problematic.

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Conversely, if by some miracle, the economy does show actual improvement, it could result in yields rising on the long-end of the curve, which would also make stocks less attractive.


This is the problem of overpaying for value. The current environment is so richly priced there is little opportunity for investors to extract additional gains from risk-based investments.
There is one true axiom of the market which is always forgotten.

“Investors buy the most at the top, and the least at the bottom.”

If you feel you must chase the markets currently, then at least do it with a set of guidelines to follow in case things turn against you. We printed these a couple of weeks ago but felt there are worth mentioning again.

1. Move slowly. There is no rush in adding equity exposure to your portfolio. Use pullbacks to previous support levels to make adjustments.
2. If you are heavily UNDER-weight equities, DO NOT try and fully adjust your portfolio to your target allocation in one move. This could be disastrous if the market reverses sharply in the short term. Again, move slowly.
3. Begin by selling laggards and losers. These positions are dragging on performance as the market rises and tends to lead when markets fall. Like “weeds choking a garden,” pull them.
4. Add to sectors, or positions, that are performing with, or outperforming the broader market.
5. Move “stop-loss” levels up to current breakout levels for each position. Managing a portfolio without “stop-loss” levels is like driving with your eyes closed.
6. While the technical trends are intact, risk considerably outweighs the reward. If you are not comfortable with potentially having to sell at a LOSS what you just bought, then wait for a larger correction to add exposure more safely. There is no harm in waiting for the “fat pitch” as the current market setup is not one.
7. If none of this makes any sense to you – please consider hiring someone to manage your portfolio for you. It will be worth the additional expense over the long term.

While we remain optimistic about the markets currently, we are also taking precautionary steps of tightening up stops, adding non-correlated assets, raising some cash, and looking to hedge risk opportunistically.

Just because it isn’t raining right now, doesn’t mean it won’t. Nobody has ever gotten hurt by keeping an umbrella handy.

https://www.zerohedge.com/markets/ro...ops+to+zero%29


Authored by David Rosenberg via The Financial Post,


There have probably never been as many characteristics of a top as we are experiencing today...


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It is clear that it would have been a very hard sell a year ago that every single risk-on asset class from equities, to corporate bonds, to commodities would end up rallying as much as they did in 2019.

And so perhaps the message for 2020 is to fade all the optimism since fading the pessimism a year ago paid off very well. The sharp slide in Treasury yields this past year does not exactly comport with the risk-on view that has morphed into the consensus forecast.

Fed policy, the trajectory of GDP growth and global economic fundamentals in general all tell a cautionary tale. Both bonds and stocks can’t be right at this moment in time.


We have to choose which asset class has the story right, and history sides with the Treasury market. So, that indeed is how we are tilted for 2020. Defensively positioned — again. In addition, from a total return perspective, a near-20 per cent gain in the long bond not only didn’t hurt you, but meaningfully outperformed the S&P 500 on a risk-adjusted basis and by not having to take on any inherent equity (capital) risk.


Right now, it is critically important to get as close to the truth of clients’ risk tolerance. There have probably never been as many characteristics of a top as we are experiencing today. At some point, as unpopular as contrarianism can be, we all need to ponder deeply about Bob Farrell’s Rule #4:

“Exponentially rapidly rising or falling markets usually go further than you think but they do not correct by going sideways.”

No one really knows how far up the top is, but what happens after the top does not fit into very many people’s risk tolerance. In the meantime, another year of double-digit returns on the highest quality, long duration bonds is our expectation and the interest rate risk associated with them is entirely manageable from my perspective as a market economist.

While I cannot pick the date, I can tell you that this turbocharged debt cycle will end miserably, not unlike 2008 and 2001. Don’t try to time the inevitable mean-reversion trade. Just heed this first Bob Farrell rule of investing on ‘mean reversion’ and know that it’s out there. In nearly 11 years the S&P 500 has soared nearly five fold to multiples (on earnings, sales and book value — take your pick) we have only seen twice in recent history.


Corporate bond spreads off Treasuries are squeezed to levels that fall well short of compensating for imminent default risks, and there really is no reason to wait for the herd to head for the exits. That time will come sooner rather than later because Mother Nature will not tolerate leverage and multiple-expansion supplanting corporate earnings and productivity growth indefinitely.


We recall all too well the euphoria that followed the early 2001 and late 2007 Fed rate cuts and curve-steepening shifts, that then switched to malaise as the recession nobody saw coming took hold in the next few months. The lags between monetary policy and the real economy are both long and variable. We are still feeling the effects of the tightening in Fed policy from 2015-2018, as we were feeling the 2004-06 effects by the time the 2008 recession kicked in.


Remember, it cannot be denied that during the summer months the ‘normalized’ New York Fed recession probability model did breach the 80 per cent threshold, and it cannot be taken back, even if it has receded in response to the Fed’s recent liquidity infusions. The Fed has employed both actual rate cuts, and an aggressive QE4, which in the past two months has more than fully funded the U.S. fiscal deficit. But, with a typical year-long lag, a recession has ensued after the 80 per cent mark has been crossed in the ‘normalized’ New York Fed model every single time in the past five decades.


And, of course, there are ongoing uncertainties around the global trade picture (not to mention the U.S. fiscal outlook) as it pertains to the November 2020 election.

I see little reason for a capex cycle to emerge in 2020 given the wide divide that has opened up on tax policy between the Democrats and Republicans — to the point where even a centrist like Joe Biden is now campaigning on rolling back the Trump tax cuts of 2018.

What business is going to embark on a major multi-year spending project not knowing what the after-tax rate of return on the capital invested is going to look like?

Lately, the equity market no longer seems to trade off the economic fundamentals. Never before has there been such a loose relationship to economic growth. While the GDP recession never did materialize, the median economic sector stopped expanding mid-year and the portion of the economy that is not the consumer has posted no growth at all in the past three quarters.

That may well be a bit of data mining, but it is to show how narrowly concentrated the economy has become.

Not just that, but corporate profits are set to be in a four-quarter recession and investors have barely blinked. More like shrugged. At the start of 2019, the consensus was for a V-shaped earnings recovery to take hold by year-end, but instead of double-digit growth that the consensus had once penned in, Q4 2019 is now seen as coming in at -0.3 per cent on a YoY basis.


If corporate earnings had gone up four quarters in a row and the stock market plunged 30 per cent, such a mismatch would make the temptation to turn bullish irresistible. Please stand by. But what happened in 2019 was the exact opposite. That was not in the consensus forecast at the turn of the year, and the stock market soared by more than 30 per cent.


So, the market has rallied completely on the back of multiple expansion — to the point where the price-to-earnings, price-to-cash flow and price-to-book ratios are all near-one standard-deviations above their historical norms. The price-to-sales multiple for the S&P 500 actually is back to where it was at the 2000 dotcom bubble peak.


The ratio of corporate debt-to-GDP is at all-time highs. In addition to the unprecedented fiscal stimulus at this late stage of the economic cycle, and accompanying trillion-dollar deficits, we also have corporate leverage ratios at record levels. An enormous volume of corporate debt has been issued exclusively for the purpose of buying and retiring shares. This includes both buybacks and acquisitions of other companies. And in classic mature-cycle fashion, we are seeing some cracks emerge in the junkiest parts of the U.S. credit market. This is an area to be focused on as leveraged credits are in an eerily similar situation to what was surfacing out of the subprime mortgage market back in 2007.

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In any event, we are light years away from a stable equilibrium. Leverage, financial engineering and the restructuring of the capital structure that followed the recent M&A wave, have become the defining features of this bull market in risk assets — namely equities and corporate credit. The proverbial canary in the coal mine usually resides somewhere in the credit market (think of LBOs in 1989 and subprime mortgages in 2007).


The bottom line is that this is a stock market that is being driven by flows rather than by economic fundamentals. The ongoing wave of stock buybacks has taken the S&P 500 share count to two-decade lows, so to some extent the equity market now behaves more like a commodity. This was achieved primarily by the issuance of low-rated corporate debt. In addition, the Baby Boomer generation has done its best in a decade-long effort to build retirement savings, primarily in index fund purchases in their retirement plans.


This is the Chinese Year of the Rat. Last year was the Year of the Pig, and there was a whole cosmetics bag of lipstick that was applied, primarily by central bankers. There is just too much air underneath equity valuations and there is no room for credit spreads to tighten any further.

The world’s economic and financial problems have been papered over by even more debt and we now have hit leverage ratios that look to be highly unstable and unsustainable.


In 2020, I smell a rat. The central bank liquidity taps are likely to be turned on even more, but the impact at current valuation levels across the various risk asset classes will be far more muted now than was the case a year ago. And there is always the prospect that the monetary authorities will stay on the sidelines and await a budgetary tax cut or government spending response, which itself is futile given that fiscal policy in most countries is just as tapped out as monetary policy.


There are no easy solutions and it is doubtful that we will have another year where central banks can transform the weakest period for global economic growth in a decade and pull another rabbit out of the hat in terms of massive excess returns for equity and corporate bond investors.



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David Rosenberg is founder of independent research firm Rosenberg Research and Associates Inc.