On Monday, global markets overdosed on “covfefe” — again.

This happens from time to time, and usually, someone comes along with some Naloxone before things spiral completely out of control.

Trump didn’t invent inflammatory Twitter rhetoric, nor was he the first politician to move markets with social media posts. But — and this is the important part — he was the first person to master the process of extracting pure “covfefe” from nonsensical tweets, and his product is potent as hell.

Heisenberg, June 25, 2018

It was finally too much.

“Fuck it, let’s all do one”.


Global markets reached something that looks like a breaking point to start the week as Trump’s incessant trade banter continues to suggest that his “strategy” entails something more than simply rallying the base ahead of the midterms.


On Monday, Harley-Davidson announced it’s moving some production to Europe and in the same filing, said the following:

In the near-term, the company will bear the significant impact resulting from these tariffs, and the company estimates the incremental cost for the remainder of 2018 to be approximately $30 to $45 million. On a full-year basis, the company estimates the aggregate annual impact due to the EU tariffs to be approximately $90 to $100 million.

That comes less than a week after the Daimler warning and it suggests that corporate management teams are starting to get worried.

Stocks trimmed losses late as Navarro tried to walk back multiple reports about looming investment restrictions. Here’s CNBC:

Peter Navarro, one of President Donald Trump’s top trade advisors, said the market was overreacting to fears the administration would restrict foreign investment as part of its trade actions against China and other countries.

Navarro told CNBC that the administration currently does not have any specific countries targeted, despite news reports that had Wall Street reeling over the prospect of preventing companies that had at least 25 percent Chinese ownership from buying businesses that possessed “industrially significant technology.

“There’s no plans to impose investment restrictions on any countries that are interfering in any way with our country. This is not the plan,” he said.

Let’s just call this what it was: a trial balloon that didn’t fucking float. And when Steve Mnuchin tried (and failed) to arrest the slide in stocks, they rolled out Navarro.


For the line fans:


2.86 on the 10Y at one point:


2s10s flattest in 10 years:


And you can expect the flattening to continue until the Fed is forced to take a pause.  “Unlike the ECB, the FOMC is looking through the external risks, comforted by the positive impact of the fiscal stimulus on the economy,” Deutsche Bank wrote, in a note dated Friday, adding that “as the front-end is unlikely to rally substantially as long as the impact of the trade concerns remains muted, the curve is likely to bull flatten in moderate risk-off scenarios.”

“3.12 was it”, Morgan’s Matthew Hornbach writes in a new note, calling the high for 10Y yields in 2018. But remember:

Not looking great for the most crowded trade on the planet as FANG has woefully underperformed the S&P over the last five sessions:



European shares fell more than 2%, the worst day in nearly four months. The Stoxx 600 is sitting near its lowest levels since early April:


Here’s a good lookin’ chart:


Italian bonds sold off and the BTP-bund spread widened back out to 250bps for the first time in three-ish weeks:


Tough day for emerging market equities, which were already in a tailspin. The ETF (EEM) has fallen in at least 8 of the last ten sessions:


Last week, the fund suffered nearly $3 billion in outflows – the most on record:



The JPMorgan EM FX index is looking really dicey, approaching record lows:


Buying the Turkish lira on the assumption that somehow Erodgan’s election victory was a good thing was a bad idea:


The rand fell, breaking a three-day win streak:


Here’s the latest from Nedbank’s Mehul Daya:

In line with our tactical view, we maintain that the rand will end the year closer to 13.00 than 14.00, and as a result our year-end target remains unchanged at 13.10. However, with that being said we can only revise our forecast should our global $-Liquidity measures move into contractionary state. Currently they have merely lost momentum.  We keep an eye on ominous signs from the global equity market, in particular from the world’s most importantly systemically financial institutions, which may swing the bias towards further weakness in the rand sooner than we anticipate:


Overnight, Chinese equities got no relief from the RRR cut as the SHCOMP closed at its lowest in two years and is basically in a bear market:


Hong Kong shares didn’t fare any better, with the Hang Seng falling more than 1% to its lowest close since December 15:


Finally, for your moment of zen…

Speak your mind

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3 thoughts on “Overdose.

  1. I think at this point they are just messing with us. I am loosing money though, today a nice 1.6% drop, but as a wise English man once said ” It’s just money. Pieces of paper with pictures on them so we don’t have to kill each other over a plate of food “. At this rate though, i don’t think we are going to have to kill each other over a plate of food but over covfefe what ever the fuck covfefe is.

  2. I don’t think 1/0 of 1% of the comatose US population even half way understands how efficiently the Chinese have gamed the US on trade issues over the last 10 years…..Barak Obama, snake oil salesman par excellence least of all. Chinese leadership considered him a weak kneed joke. If as always, the game as proposed by the Democrats and their sycophants in the media is to roll over and play dead, instead of being tough for a change I’m sure Xi JinPing, a man with half the brains, a $US500million – $US2billion net worth and a worse haircut then his last two predecessors will be happy to accommodate us. Its the fall of the Roman Empire meets the Barbarians at The Gates….and we in our glorious stupidity and amnesia are the enemy.

    1. Yes, yes the orange 5-ball’s haircut is sooo much nicer than Ping’s. Ping’s looks just like R. Reagan’s, widow’s peak and all, doncha think? And 5-ball’s like Ronald McDonald’s only more downy, kinda like a baby Peking duck’s butt.

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