A Journal of Independent Research, Analysis,
 Opinion and Insight

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Attention Paid-Up Subscribers: To read or print the entire current issue as a single document, use the "easyprint" feature in the "Nav bar" to the right to open it, or any of WOWS' individual features, as an Adobe PDF file, and then print it. Alternatively, you can click "more" at the bottom of this paragraph and then click the red Adobe icon that appears. Your second click will download the full issue .pdf file of WOWS' latest issue to your computer, a process that -- depending on the file size and your connection speed -- might take more than the blink of an eye. Then, depending on preferences you've set on your device, it will either open automatically or show up in your downloads folder, waiting to be opened. [More]
Hedging Risks
ProShare’s Simeon Hyman: Dealing With Rising Rates, Inflation
Are we having fun yet? In case anyone still hasn’t figured it out, there’s a nasty beast on the prowl, doing his ursine best to crush rabid speculators and innocent waifs alike. A noxious stew of inflation, higher rates and QT aroused him from his long hibernation, PDQ. 

All that — undeniable after the harrowing market week that just was — was pretty darned evident even at the end of last week. That's when Simeon Hyman, the global investment strategist and head of investment strategy at ETF powerhouse ProShares Advisors graciously spent an hour sharing his perspectives and best ideas for coping mechanisms — and winning strategies — in today’s inhospitable investment landscape.

Shades of 2000/2001
The Markets Have Just Stepped On Well-Trodden Path
5/13/22 8:00 AM
By Albert Edwards
If GMO’s ‘premier league’ investor Jeremy Grantham is right and we’ve just ‘enjoyed’ the fifth great bubble of the modern era, the coming bust will surely be devastating.

Following the market turmoil of the past few weeks, this might be a good time to revisit my end-2021 key predictions of ‘surprises for 2022’, which I summarise here in a few lines.

Significant Losses
The Valuation-Led Bear Market Is Racking Up Red Ink
5/13/22 7:00 AM
By Andrew Lapthorne
Global equity markets continue to struggle as bond yields jump higher. The MSCI World was down 1.2% last week, with Europe and Asia seeing the worst of the returns last week and with MSCI Europe losing 4.4% in euros and Hong Kong’s Hang Seng off 5.2%.

Fear, Yes!
Capitulation, Not Yet
5/13/22 6:00 AM
By Doug Ramsey
The Major Trend Index remained negative for the week ended May 6th, and the movements within the four factor categories did not yield any changes to their respective composite scores. Net equity exposure in the Leuthold Core portfolio is at 42%; the Leuthold Global portfolio stands at 45%.

The Market Is Broken
So Fix It...
5/13/22 5:00 AM
By Tim Quast
“The market structure is a disaster.”

That’s what Lee Cooperman said in a CNBC conversation yesterday (May 10) with “Overtime” host Scott Wapner.

What he thinks is wrong is the amount of trading occurring off the exchanges in so-called dark pools and the amount of shorting and short-term trading by machines.

Negative Thinking
Why TIPS Yields Have Been Sub-Zero For Past Two Years
5/13/22 4:00 AM
By Paul Kasriel
Treasury Inflation-Protected Securities (TIPS), which are marketable securities, compensate the investor for inflation by marking up/down the principal of the outstanding security every six months by the six-month CPI inflation/deflation rate. The fixed coupon rate on the originally-issued TIPS is applied to the adjusted principal every six months.

FX Rout
Monetary Policy Divergences, Slower Growth Weigh On EM
5/13/22 3:00 AM
By Dimitri N Balatsos
Large monetary policy divergence is the main cause for the rout of the JPY, EUR, GBP and CNY (see Fig 1 below).

Triggering the rout in mid-March was rising “hawkish” chatter by FOMC members and a couple of regional Fed presidents.

90% Down Days
An Internal “Bottom” But Unlikely The Bear’s Final Curtain
5/13/22 8:20 AM
By Blaze Tankersley
I had a lot of questions about the internal/external low sequence we have been talking about. An internal low is said to occur when the majority of single stocks have washed out and made their local lows, the external low is when the index itself bottoms. [More]

Countertrend Drop?
10-Year Yields Looking Vulnerable To Nasty Decline
5/13/22 7:20 AM
By John Kosar
The yield of the benchmark US 10-Year Treasury Note is now testing the 3.05% to 3.35% area, a formidable historical benchmark levels for these yields that is unlikely to be appreciable broken, if at all, without at least a significant corrective move back below 3.00% our Strategic (quarterly) outlook is for benchmark long-term U.S. interest rates to correct lower from here, our work does not yet indicate a Tactical (monthly) buying opportunity in long term Treasury prices proxies like the CBOE Treasury Yield 10 Year Note Index (TNX). [More]

Crossroads & Bleeding
U.S. Dollar Faces Decision Point, EMs Battered
5/13/22 6:20 AM
By Andrew Addison
Because of the Fed meeting yesterday and the market’s reaction to it, I will review/update our stock recommendations in the next TIV.

The weekly closing chart of the US DOLLAR Index shows a potential triple top forming. [More]

Moving Crypto Markets
Elon Musk Tweets And Their Impacts On Coins, Investor Protection
5/13/22 8:00 AM
By Lennart Ante
Elon Musk, one of the richest individuals in the world, is considered a technological visionary and has a social network of over 69 million followers on social media platform Twitter. [More]

AI and Fund Managers
Sorting Out Best Predictors Of Future Performance
5/13/22 7:00 AM
By Ron Kaniel, Zihan Lin, Markus Pelger and Stijn Van Nieuwerburgh
We show, using machine learning, that fund characteristics can consistently differentiate high from low-performing mutual funds, as well as identify funds with net-of-fees abnormal returns. [More]

Who Foots The Bill?
A Deep Dive Into Who Carries Burden Of Corporate Income Tax
5/13/22 6:00 AM
By William G Gale and Samuel I Thorpe
Standard analysis of the corporate income tax assumes shareholders bear the burden of taxes on excess returns. [More]

Rise Of The Engineer
Inventing The Professional Inventor During The Industrial Revolution
5/13/22 5:00 AM
By W Walker Hanlon
Why was the Industrial Revolution successful at generating sustained growth? Some have argued that there was a fundamental change in the way that new technology was developed during this period, but evidence for this argument remains largely anecdotal. [More]

Winding Down
Mortgage Refinance Boom Cooling As Rates Heat Up
5/13/22 4:00 AM
By Liberty Street Economics
Total household debt balances continued their upward climb in the first quarter of 2022 with an increase of $266 billion; this rise was primarily driven by a $250 billion increase in mortgage balances, according to the latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data. [More]

Acute Observations, May 13, 2022
Perceptive Commentary from April 23-May 13, 2022
5/13/22 8:00 AM
Matt Levine
In one sense, there is nothing surprising about a public-company CEO telling employees that (1) they should try to make money and (2) if they are doing things that lose money, they should do less of them rather than more. In another sense, this is the CEO of Uber. “It’s clear that the market is experiencing a seismic shift,” says Khosrowshahi, “and we need to react accordingly.”

Anyway stocks were down last week; the S&P 500 index has gone down each of the last five weeks, and things seem especially rough in the tech industry.