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Author: The Patriot

SocGen Reveals The Best Trading Strategy Of The Year

Despite the recent modest drop in stocks, the S&P remains just shy of all time highs, and near valuations which according to Goldman are at nosebleed levels and which market participants recently admitted are the most overvalued since 2000. Furthermore, with the market seemingly finding itself painfully rangebound in a world where until recently volatility was non-existent, traders desperate for alpha, have been scrambling for a strategy that produces a steady stream of profits. One such trade was proposed overnight by SocGen’s Andrew Lapthorne, who notes that “the only strategy to stand out this year is short-term (1 month) price reversal, which involves selling last month’s  winner and buying the losers.” Here is his overnight note, according to which “Outperformance of reversal strategies points to a market struggling for direction” Equities experienced a bit of a speed bump last week when the S&P 500 fell by more than 1% for the first time since September. The language accompanying this “steep sell-off” was really quite over-the-top, but given that the S&P 500 has declined by 1% or more on just seven occasions over the past year (versus an average of 25 per year historically), perhaps there was a pent-up desire to open the bear’s dictionary, particularly with commentators now having long exhausted the thesaurus for variations on the word “complacent”. There is plenty to be bearish about. Equity valuations are...

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30Y Treasury Yield Back Below 3.00% As Shorts Squeezed To Lowest Since November

10Y yields are back below 2.40% and 30Y below 3.00% as the post-rate-hike curve collapse continues, aided by the biggest short-squeeze since Brexit sending speculative Treasury shorts to their lowest since November. The lofty fiscal expectations surrounding President Donald Trump have begun to subside. Bond bears are having major second thoughts. As Bloomberg notes, in the aftermath of the Federal Reserve’s March policy meeting, speculators cut their short 10-year Treasury futures positions to the lowest levels — or least conviction — since November, Commodity Futures Trading Commission data show. Traders have rapidly scaled back since short positions reached record levels in February as dovish monetary policy signals continue to emerge from the Fed and confidence on the reflation trade wanes. At the same time, Eurodollar traders added to their rate-hike bets – extending the net short to a record 3.009 million contracts… (over $3 trillion notional) Finally, as we noited previously, another factor that bond bears need to contend with is overseas demand for Treasuries. The cost of currency-hedging for dollar assets has cheapened for Japanese investors, with the three-month basis now at the two-year average. Japanese life insurers typically buy domestic bonds in March and foreign bonds in the first half of the fiscal year that starts in April. This may help keep U.S. 10-year yields below 3 percent. For now, real yields are back at pre-election levels…...

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Robots are Taking Our Jobs, and That is a Good Thing

Via The Daily Bell Robots are going to take all our jobs, and it doesn’t matter. We should actually be thrilled about the prospects of automation, because it means freeing up economic resources, including arguably the most valuable resource, time. One analysis says as many as 38% of U.S. jobs could be automated by the 2030’s, and another puts the number at 47% by 2033. As always, many worry about what effect the loss of jobs will have on the economy. But lately, as technology has become more sophisticated, the drumbeat of worry has intensified. “What’s different now?” asked Leigh Watson Healy, chief analyst at market research firm Outsell. “The pace of technology advancements plus the big data phenomenon lead to a whole new level of machines to perform higher level cognitive tasks.” Translated: the old formula of creating more demanding jobs that need advanced training may no longer hold true. The number of people needed to oversee the machines, and to create them, is limited. Where do the many whose occupations have become obsolete go? “I don’t think we have a good handle on this,” said MIT researcher Matt Beane. “The end game scenarios seem kind of severe. From here on in, it’s really, really, really going to change and it’s going to change faster than we can handle.” But economics hasn’t changed because technology has advanced. Labor won’t go away, it will...

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Another DHS “Exercise” Planned: The Risk of Terrorism Drills Becoming Reality

Via The Daily Bell If government had the citizens best interests at heart, we wouldn’t have to worry when they planned an exercise for our safety. In fact, it would be a good thing, if we could trust the government, that they were training so hard to keep us safe in the event of an emergency. But the government does not care about the citizens and is not interested in keeping us safe. You cannot trust the government, and that is why it is always a bit terrifying to find out they have a Homeland Security exercise planned. Even more concerning is that the security exercises increasing target “home grown terrorists” and “right wing extremists.” For instance, a bill passed the House of Representatives last Friday “To require an exercise related to terrorist and foreign fighter travel,” which would involve multiple agencies training for different scenarios. One scenario involves preventing a hypothetical American traveling to a  foreign country to pledge their support to the terrorists. The second scenario outlined, which according to the bill must be included in the training exercise, targets “terrorist infiltration into the United States, including United States citizens.” If the authorization for the exercise passes the Senate, we will be monitoring the available details of where and when it will implemented, because actual terrorist attacks and mass shootings have tended to align with the government’s training operations. Past Exercises Turned...

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