Econemotion goes to Youtube and FOMC plus Tesla, Apple, Google and More

Thanks everyone for joining us for this week’s Econemotion brought to you by Mike Agne of Magnelibra Capital Advisors. You can find our blog page at www.econemotions.com where we write our weekly thoughts in hopes that we can provide you with unique insights upon markets, trading and risk.

I am the manager of Magnelibra Capital Advisors which is an NFA registered CTA, that manages individual accounts and executes the Blue Dragon Discretionary Program, a long/short relative value futures and options trading program. Feel free to visit our website at www.magnelibra.com and follow me on Linkedin as well.

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Today we are going to cover the AG Barr testimony, we will touch upon Tesla, Apple, Google and Merck. We had the FOMC meeting today and we will go over what transpired there and then we will go into a few tech charts that we feel should be on every investor and traders radar.

First let’s start with the Senate judiciary committee hearing today which saw AG Barr testify about the Mueller report and all the alleged Russian interference.

As expected, the Dems bashed Barr calling him a liar and using other pressure tactics. Given the man he is, of course he didn’t waiver, but it was fun theatrics none the less. We can always count on Zerohedge for pictures that sum this up and yep this Popcorn popping Czar pic works for us as well:

…Or as Trump tweeted “NO collusion NO Obstruction” then he said this BAD ACTIONS DONE BY THE OTHER SIDE, we think that is the real story and it will unfold over the coming months.

Anyway, AG Barr is supposed to appear before the House tomorrow but word on the street is he will not attend. Anyone with some sense of logic and intelligence should see through all of this. The fact that there has been this much money spent and this much time wasted, just to find absolutely nothing is crazy. In fact, we are a year and a half away from another election and this is still going on.

I just want to point out two things, number one, who really benefited from this whole investigation? Obviously the Democrats at the midterms and number two, wouldn’t you think the sensible thing to do in terms of sitting Democrats, knowing that there was no collusion found, and now there is potential investigation into the Democratic party in terms of “spying” on the Republican candidate, wouldn’t you think some of these Dems would start to distance themselves? It all seems surreal. But its going to be fun watching it all play out.

If you want to follow this story more closely, I highly recommend a few sources, one Sarah Carter, who is regularly on Fox news and for the more open minded of my followers, Praying Medic and Dustin Nemos both of which are on twitter and YouTube.

Zhedge posted an article about the US Govts increased interest payments now hitting some $600 billion dollars:

They talked about how this is a major cause of concern. We here beg to differ as we live in a financial construct governed by debt, where by money is debt and if debt is money well then why are we afraid of its rising? Can GDP grow without increased money or increased debt…#NO so we aren’t in the camp of worry and panic. What should be worrying everyone is the fact that we continue to pay for such terrible prognostications such as in this same article they pointed out the fact that the OMB is projecting a budget surplus by 2024…can you imagine…with all this debt and interest and they are saying surplus…what planet do these idiots live on. Anyway don’t be alarmed, we have a fiat system by which we rely upon a private party to fund our government so what Minsky was implying may not accurately depict his eventual debt implosion "Minsky Cycle" because being the reserve currency of the world and knowing full well the scarcity of actual dollars, you better bet your bottom dollar that we are far from implosion, far from hyperinflation and rather, we believe the US is in a very strong position…for now…but that could all change.

As far as financial reserve currency protection, the US govt has it, but we can’t say the same for some corporations out there in particular Tesla, which should be the poster child for Unicorns. As wolfstreet.com pointed out, Tesla’s recent SEC 10Q disclosed just how much pollution credits aided their net loss, meaning if it weren’t for the $200 million in ZEV regulatory credits, Tesla would have lost a whopping $917 million, $200 more than actual reported, With actual operating cash flow a negative $1.13B:

But what do we know..oh wait Fidelity has been dumping its Tesla shares as Paul M. Huettner pointed out some of their funds have been busy liquidating millions of shares. So, it’s not retail dumping, but rather the big guns, well and insiders as well:

As far as their chart, well everyone and their mother have been dip buyers down to $250, but it seems like the wherewithal is being tested here…will Elon the Unicorn pull some magic Saudi Arabian knight to come to the rescue? We doubt it!

Apple earnings were out and "Apple Surges On Blockbuster Guidance Despite Tumbling iPhone Sales, China Revenues."(Zhedge) Who cares about declining revenues right, no trend in this chart is there?

…what really has investors stoked is the 77-cent dividend an increase of 4 cents plus the $75 billon dollar buyback…rinse recycle repeat we suppose…return some of that cash, which is now down to $113 Billion down 30% from its highs:

Next up we thought that Merck’s earnings boosted by Keytruda and sales of vaccines, oh yea as Yahoo finance reports, “Higher vaccine sales in particular Gardasil, which prevents a cancer-causing sexually transmitted virus. Sales of key childhood vaccines, including one that prevents measles, jumped 27% to a total of $496 million. Merck is the only U.S. supplier of the measles-mumps-rubella vaccine and has increased production amid the country's worst outbreak since measles was declared eradicated here in 2000. Well we hope you get the picture! If you don’t here is a chart from Statista, these things are worth billions:

Today we had Fed Powell leaving rates unchanged and telling us that he doesn’t see a strong case for either raising or lowering rates, so a little something for everyone to chew on. However, the AI bots NLPs were a bit slow to react to the monetary policy implementation notice, which saw the FED reduce the IOER to 2.35% from 2.50%. We talked about the dilemma in last weeks video and how the effective FED FUNDs rate was trading higher than IOER and well the FED has reacted. Anyway, we saw a massive whipsaw in everything, as Equities, bonds and yield curves all rose, now found themselves under attack. The about face can be seen here in the US 10y yield which plunged below 2.46% to only rise above toward the 2.52% level in late trading.

We feel the FED will continue to find itself between a rock and a hard place as conditions tighten as equity resiliency maintains…however something will eventually break.

Ok let’s look at a few technical charts, beginning with the US 10yr which continues to magnet the 2.50% area.

Next up Google which took a juicy 9% hit from its highs so far and we gotta say, this chart is not looking so hot trading below the 200period VWAP.

When we look at the FAANGs vs the SP500 as Magnelibra often does because we trade pairs, we can see that the other tech giants aren’t making up the ground Google has lost and this could lead to a momentum shift, we will follow this trend channel closely for any indication of further breakdown in the tech sector vs the overall market.

Speaking of Tech, the Nasdaq did a complete 360 after the FOMC and given Google’s negative technical and fundamental setup, we may be seeing the beginning of a larger breakdown, but 7697 here is super key for us and would present further downside probing if breached.

The SP500 has clearly seen a rejection at prior highs around 2960, this technical backdrop will most likely need follow through in the coming days and we would suspect some “catching a falling knife” dip buyers to be left with some bloody hands here.

Finally, we leave you with a decent head and shoulders gold futures chart. 1288 is our initial key here as if it can’t make it above there, we feel sellers will continue to maintain control and as the FED stated they aren’t ready to ease off the hike pedal just yet, Gold may be in for some further downside probes.

The Economist is reporting on the ongoing and what is seemingly a proxy war again with Russia, China and the US as pro Maduro forces backed by Russia/China clash with western backed Juan Guaido. We hope and pray for a peaceful resolution as its truly the people that always suffer and this is turning into a humanitarian nightmare. Western Media is basically on blackout much like they did with the ongoing Yellow Vest movement in France, but we hope you stay informed of this situation.

Ok that’s it folks, you can view our video presentation of this blog post at our Econemotions YouTube channel, link is here: Econemotion YouTube Channel