Out-performing Manipulated Insanity

“Impossible” divergence between S&P 500 and two key growth indicators

Biggest ever gap between S&P 500 and productivity

Last week”s NFP jobs number was miraculously boosted by an astonishing change in the seasonal adjustment.

Even at face value all the job growth over the last 6 years has come from those with less than a high school diploma.

Rising recession risks as income falls and debt rises

Today’s weak retail sales data corroborates latest BOA data 

Insider stock buying falls to the lowest on record!

At the same time insiders instruct their own companies to buy shares with debt issuance!

CBIM is already outperforming US equities, with negative S&P 500 correlation, and 60% lower volatility

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“Impossible” divergence between S&P 500 and two key growth indicators

The header chart shows what used to be considered impossible market relationships before central bank policy came to dominate stock prices.

The most powerful growth signals – a flattening yield curve, as well as recorded growth expectations have collapsed this year. Yet stock prices have still made new highs!

Central banks have massively stepped up their buying (as shown in previous notes) to inflate the stock market, because that’s what they do now. However, it is unlikely that this can continue indefinitely.

Biggest ever gap between S&P 500 and productivity

The chart below shows that gap between the S&P 500 and productivity has grown to the widest ever in history.

“There comes a point when “bad news” – like the worst decline in US productivity in 37 years – is unassailably “bad news” no matter how “great” the ‘lower for longer’ easefest is.”

http://www.zerohedge.com/news/2016-08-09/what-happens-next

 

Last week”s NFP jobs number was miraculously boosted by an astonishing change in the seasonal adjustment.

 

http://www.zerohedge.com/news/2016-08-05/jobs-data-nowhere-strong-headline-analysts-throw-todays-seasonal-adjustment

Even at face value all the job growth over the last 6 years has come from those with less than a high school diploma.

” This data underscores how the jobs recovery has been spearheaded by cheap labor, with job gains going disproportionately to the least educated — and lowest-paid — workers, many of whom have to work multiple jobs to make ends meets. This is scarcely supportive of Janet Yellen’s description of a “much healthier” consumer in justifying the Fed rate hike.”

 

https://www.businesscycle.com/ecri-news-events/news-details/economic-cycle-research-ecri-fresh-data-cheap-labor

Rising recession risks as income falls and debt rises

“Disposable personal income growth, adjusted for inflation, grew by 2.2 percent over last year, a full percentage point below March’s 3.2-percent pace. That downshift helps explain two things. For starters, the saving rate fell in June to 5.3 percent, the lowest since last October. Meanwhile, revolving credit growth, aka credit card spending, galloped ahead at a 9.7-percent annual rate.”

3 Things: The Economic Fabric & Rising Recession Risks

Today’s weak retail sales data corroborates latest BOA data 

Photo published for Core Retail Sales Tumble Most Since January

http://www.zerohedge.com/news/2016-08-12/core-retail-sales-tumble-most-January

Insider stock buying falls to the lowest on record!

“According to a data compiled by Bloomberg and the Washington Service that goes back to 1988, the number of officers and directors of companies purchasing their own stock tumbled 44% from a year ago to just 316 in July, the lowest monthly total ever. With 1,399 executives unloading stock, sellers outnumbered buyers at a rate that was exceeded only two other times in the history of the series.

With equities setting records, insider purchases are dwindling, with two buying for every nine that sold. At 0.23, the buy/sell ratio is about one-third of what it was in February and last August, and compares with an average of 0.69 over almost three decades.”

http://www.zerohedge.com/news/2016-08-11/insider-stock-buying-drops-lowest-record

At the same time insiders instruct their own companies to buy shares with debt issuance!

“Luckily for the insiders, they have no problem finding willing buyers of their stock: they instruct their own companies to buyback their shares! 

As Bloomberg observes even as earnings fail to rebound, companies looking to charge up their stock returns with repurchases are turning to debt markets like no time since the Internet bubble. The proportion of buybacks funded by debt rose above 30 percent in June for the first time since 2001, data compiled by JPMorgan Chase & Co. and Bloomberg show. It will only get higher as the demand for any yield reaches panic levels.”

CBIM is already outperforming US equities, with negative S&P 500 correlation, and 60% lower volatility

Despite the extraordinary high risk in US equities, it is possible to take away the risk with a negatively correlated portfolio that can massively outperform the S&P500 even now. In the link below it is shown that CBIM US accounts have negative beta, 60% less volatility than US equities, and yet they are still significantly outperforming all main indexes!

CBIM08112016

Perhaps its time to escape the madness for a strategy that not only should protect investors from an equity bear market, but is already outperforming US equities even while the bull market is continuing.

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