Monday, January 27, 2014 - Sniffing Out Weakness

Sniffing Out Weakness

by Sinclair Noe

DOW – 41 = 15,837
SPX – 8 = 1781
NAS – 44 = 4083
10 YR YLD + .04 = 2.76%
OIL - .94 = 95.70
GOLD – 12.50 = 1257.50
SILV - .22 = 19.79

Last week was rough for the Dow Industrial, and today started with the blue chips in the red but not by much; it even looked like we might finish in positive territory. Nahh. The markets have been trending downward over the last week due to a mix of concerns. Emerging market strains, anxiety over tapering by the Federal Reserve, and weak manufacturing data from China likely contributed to a pullback. Also, new home sales were weak in December.

The international problems started with a report that Chinese manufacturing may contract for the first time in 6 months. Then Argentina’s central bank limited dollar sales to preserve international reserves that had fallen to a seven-year low. Then there were concerns about a default in the shadow banking system in China. Then there concerns about a corruption scandal for Prime Minister Erdogan’s cabinet in Turkey. Protesters occupied municipal buildings in the Ukraine. Then the South African rand dropped big. Then the whole thing spread. I don’t know what happened in Mexico but the peso took a hit. Bank of America analysts recommended buying the Mexican peso on Nov. 24 as one of their top two Japan-related trades for this year, predicting a rally that would have boosted the currency’s value to 8.4 yen. Instead, the peso slumped 3.5% last week. More than a third of the most-traded emerging-market currencies have already fallen below forecasts.

Neither China, Turkey, Argentina, nor any other country has anything to do with consumer stocks, or most other equities, badly underperforming following an excellent year for the US stock market which was supposed to help consumers through the wealth effect. If you haven’t received your trickle down just yet, don’t hold your breath.

Tech stocks, which by extension are a type of consumer stock, have started to look weak, after being so strong last year. After the close today, Apple whiffed on earnings because they really whiffed on iPhone sales. The company reported that it sold 51 million units, a 6.7% jump in sales, year-over-year, which is lower than sell-side expectations of 54.7 million. The good news is that Apple beat expectations on the top and bottom line, despite weak iPhone sales. Revenue was $57 billion, up 5.6% on a year-over-year basis. EPS was $14.08, up 2% year-over-year. If the market is going to catch a second wind, don’t look for tech, at least not tomorrow.

Has the correction begun? Check back in a few months and we’ll know for sure. If you don’t want to wait that long I understand; waiting for clarity is risky, and we all know you can’t go broke taking a profit. So, some folks are looking at this as a chance to get out while the getting is good. At the very least, make sure you have a prevent defense in your portfolio playbook. And then there’s the whole January Barometer, which posits that as January goes, so goes the rest of the year. We know that January has been ugly, and if you need further confirmation, the financial press has been clinging to thin straws in their never-flinching belief that any decline is a buying opportunity.

A core principle of both fundamental and technical analysis is "a rising tide lifts all boats." If the economy is strong and growing, the vast majority of companies should benefit. We should expect to see this show up in both quarterly earnings reports and higher stock prices. And when prices don’t move higher, that might be an indicator that the financial markets are sniffing out economic weakness in advance. When it comes to the possible end of a bull market though, we need to remember the real driver behind the move in the first place – the Fed. And the Fed is meeting this week to determine policy.

There’s growing evidence that things aren’t as good as the Fed anticipated, but I don’t think we’re at the point where the Fed is going to pull back and stop their tapering, and they certainly won’t reverse the taper. The Fed will probably cut its purchases in $10 billion increments over the next six gatherings before announcing an end to the program no later than December. Treasuries fell today, pushing the 10-year yield up from almost a two-month low.

The state of emerging markets has very little impact on the Fed’s decision to continue taper. Charles Plosser, president of the Philadelphia Fed, said in a January 14 speech: "When we started QE ... there were many economies and emerging markets and other places that were very critical of our policy. Now that we're trying to stop it, they've been very critical of our policy."

Minneapolis Fed President Narayana Kocherlakota, a voting Federal Open Market Committee told the New York Times there are other ways to offer accommodative monetary policy, other than buying bonds. He talked about the Fed providing forward guidance, which is a far cry from cranking up the printing press. And just for the record, Kocherlakota is one of the Fed guys who thinks the Fed needs to do more to expand its efforts to reduce unemployment.

Now that the tapering has begun, the idea of less Federal Reserve stimulus combined with slower Chinese growth and specific concerns in some countries led last week to a full-scale flight from emerging-market assets that could continue this week. Emerging markets have been inflated in recent years by huge amounts of cheap cash created by the Federal Reserve, much of which found its way into developing economies in the hunt for better returns. If it all seems vaguely familiar, it’s because it looks a lot like the wildfire that spread through the developing world and resulted in currency runs that hit the Asian Tiger economies, or Russia,  or Latin America.

There are a few reasons for concern about this latest conflagration. The scale of money that has moved to developing markets over the past decade and now dwarfs the sums which fled in panic 15 years ago. Lending into emerging markets has increasingly been through bond markets, rather than in the direct bank loans that dominated previously and which involved longer-term relationships between banks and the firms and countries. And the growth of index tracking exchange traded funds over the past decade has increased the liquidity and also the volatility, meaning money that flowed in can flow out very, very, fast. Emerging markets have attracted about $7 trillion since 2005 through a mix of direct investment in manufacturing and services, mergers and acquisitions, and investment in stocks and bonds. That was considered hot money, stoked by the Fed’s QE.

The State of the Union is…tomorrow. The State of the Union speech will likely be light on legislative agenda and long on optimism. We have a budget, there probably won’t be another government shutdown, at least until October; there is a chance for immigration reform, maybe. And that’s about it. Don’t look for big legislative vision because it won’t happen. There is an election later in the year and so lawmakers will be yelling at each other for most of the year and trying to highlight their differences rather than creating consensus. That means tomorrow’s speech will likely be long on optimism and framing the national conversation.

These annual updates have become more and more predictable, and less and less inspiring. There will be a new piece of technology; the President’s communications team is urging us to watch what they call the “Enhanced State of the Union” online with a live stream of the address and a split screen format with graphics and charts to highlight key points and statistics. Well, that should be fun. The site is whitehouse.gov/sotu

One chart you won’t see comes today from the Green Party in the European Parliament; it estimates the cost of the implicit guarantee that governments will back large financial institutions, known as “too big to fail”; the price tag in 2012 was 234 billion euros. That is the corporate welfare dished out to big banks in the form of free benefits. The estimates were based on eight academic and institutional studies focused on implicit subsidies. Most of the studies arrive at a figure by quantifying the lower lending costs that large financial institutions enjoy from the market because of governments’ willingness to prop up failing national financial institutions, called the funding advantage approach. Others use a more complex option-pricing theory model.

There may actually be more costs than the studies have calculated. Government backing also creates moral hazard, or the willingness of banks to take outsize risk, knowing there is a lender of last resort. At the World Economic Forum meeting in Davos, Switzerland, last week, Mario Draghi, president of the European Central Bank, said he did not know whether any banks would need to be closed as a result of the central bank’s examination but that the system was prepared to deal with the consequences if any significant problems materialized. Draghi said, “The banks that should go, should go.”

Yea, you won’t hear that in the State of the Union speech, or in the response.

Thursday, January 02, 2014 - Back in the Groove

Back in the Groove

by Sinclair Noe

DOW – 135 = 16,441
SPX – 16 = 1831
NAS – 33 = 4143
10 YR YLD - .04 = 2.99%
OIL – 2.93 = 95.49
GOLD + 17.50 = 1224.00
SILV + .57 = 20.11

I'm back. We'll try to settle into the groove here, starting with a look at the daily economic news.

Financial data firm Markit said its final US Manufacturing Purchasing Managers Index rose to 55.0 last month, beating November's 54.7 reading. So, manufacturing ended the year on a high note, growing in December at the fastest pace in 11 months.

Signs of strength in both the manufacturing and services sector as well as stronger job growth across the economy contributed to the Federal Reserve's decision in December to begin tapering, slowing its monthly bond purchases. I had expected the Fed would wait to begin the taper. I was wrong. It wasn't really a shocking development because we knew they would eventually taper, it was just a matter of timing. The taper hasn't actually started yet, it's only been announced.

One area where we're starting to see some impact is in mortgage rates, now at the highest levels since September. The average rate for a 30-year fixed mortgage was 4.53% this week, up from 4.48%. And Freddie Mac also reports the average 15-year fixed rate climbed to 3.55% from 3.52%.

While a jump in mortgage rates has slowed demand, buyers continued to push prices higher. According to the most recent S&P/Case-Shiller home price index, prices in 20 US cities rose 13.6% in October from a year earlier. Some of the price increase is because there are fewer foreclosures, which typically are sold with discounts. And earlier this week, the National Association of Realtors reported contracts to buy previously owned homes rose 0.2% in November, the first increase in six months, after a 1.2% drop in October that was larger than initially reported.

Meanwhile, Eurozone manufacturing also posted its strongest growth since May 2011, but there were some significant divergences with Germany posting solid growth and France showing a decline.

A separate report showed the ISM  factory index fell to 57 in December from the prior month’s 57.3, which was the highest since April 2011. Readings above 50 indicate expansion.

Russia retained the title of the world's top oil producer for 2013. For a while, the US overtook the top spot from Russia. The Russian oil output rose to a post-Soviet high of 10.51 million barrels per day in 2013, up almost 1.4 percent from 2012. We've seen a huge increase in domestic oil production, but Russia's economy relies on oil revenue and as oil prices declined, the Russians responded by boosting output.

In the US, small businesses increased their borrowing in November. The Thompson Reuters/PayNet Small Business Lending Index, which measures the volume of financing to small companies, rose 1% in November from a year earlier. That would seem to be a leading indicator of continued economic expansion, and maybe an early signal of increased hiring ahead.

Applications for unemployment benefits declined last week to the lowest level in a month. Jobless claims fell 2,000 to 339,000. The number of people continuing to receive jobless benefits dropped by 98,000 to 2.83 million. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs. Those job-seekers rose by about 58,000 to 1.39 million in the week ended Dec. 14. Those extended benefits lapsed Dec. 28 as Congressional Democrats failed in a last-ditch effort to prolong the assistance before the House adjourned earlier in the month. Senate Democrats have pledged to consider a measure to reinstate the aid next week as lawmakers return to Washington.

The expiration of the extended benefits will leave about 25 percent of jobless Americans collecting unemployment insurance payments, down from 38 percent. Since 1946, when data was first collected, the share of unemployed receiving state or federal aid has never dropped below 30 percent.

Thirteen states raised their minimum wage yesterday. Those boosts will provide the country's low-wage workforce with some relief. But in many areas they won't be enough to bridge the gap between what people are paid and what they need to cover basic expenses. None of the states raised their minimum wages as high as $10.10, which is the wage proposed last year by Senate Democrats and later supported by President Obama.

Also yesterday, the Affordable Care Act went into law. Health insurance companies can't turn away anyone because of their medical histories or pre-existing conditions. Prices can't be higher for people with chronic ailments, or for women, and older individuals can't be charged more than three times what younger customers pay. Basic benefits like hospitalizations, prescription drugs and mental health care must be covered. Annual and lifetime limits to essential coverage are gone. And nearly everyone must obtain health coverage or face a tax penalty under the individual mandate.

More than 2.1 million people have signed up for Obamacare. Also, states report 3.9 million people signed up for Medicaid, which is expanding coverage in 25 states and the District of Columbia. Enrollment surged in December as the deadline for January coverage approached.

There are still problems with the website; it's working better than before, but that's not saying much. Some consumers still can't navigate their way, others will find the insurance they chose isn't in place, and others, whose polices were canceled because they didn't meet standards, will suffer lapses in coverage if they couldn't complete applications in time. But it's official now. You can't really undo 2.1 million insurance policies.

The S&P 500 finished 2013 with 30% gains, after posting all time highs for the first time since 1999.  The Dow average climbed 27 percent in 2013 for its best performance since 1995.

The first trading session of January has proven profitable for investors over the previous five years, with the index gaining an average of almost 2 percent that day since 2009. Three rounds of Federal Reserve stimulus and better-than-forecast corporate earnings have helped the S&P rally as much as 173% from a 12-year low in 2009.

Last January, the Dow posted a 5.7% gain for the month, and the S&P was up 5% for January 2013. And we were off to the races. There is a theory that the movement of the S&P 500 during the month of January sets the stock market's direction for the year (as measured by the S&P 500). The January Barometer states that if the S&P 500 was up at the end of January compared to the beginning of the month, proponents would expect the stock market to rise during the rest of the year. The theory comes from the Stock Traders Almanac.

Officially, the Almanac says every down January since 1950 has been correctly called by its Barometer and has a long-term batting average of almost 80%. In some instances a month seems like too long to wait. In those cases it’s possible to make a call after only five days, thanks to a predictive power that’s been almost 90% accurate over the years. You also look to history which says great years tend to be followed by good years. We end up seeing an average increase of 10% in the year following gains of 20% or more 80% of the time.  2013 was only the 6th time since 1929 that stocks finished the year at their annual high, a rarity that has historically preceded price gains in subsequent years by an average of 8.5%. Of course, if you want absolute certainty, you'll have to wait 12 months.

And even if the January Barometer does work, which it probably does, well, you've still got to be in the market, or get out of the market, depending on the signal. There's some old investing wisdom that says that “being right and making money are not the same thing.”

Those of us lucky enough to own stocks are a bit wealthier than a year ago, at least in theory, and depending on exactly what we own, and of course, on paper.  At least part of the rally in stocks has been driven by signs of a resilient, if not exactly booming, economy. It is a far better thing for stocks to be rising than for them to be falling. Despite the steady stream of good news out of the stock market, the majority of Americans still think the economy is getting worse, not better. Of course, only about half of Americans own stock, and that includes those in retirement accounts; they rely on wages, which haven't really budged.

Over the next few weeks and months, we'll likely hear a rash of good news about the economy; or is it a flurry of good news; maybe a passel of good news? No, I think it's more like a rash. The pessimism of 2013 was overdue, so we might expect undue optimism in 2014. And once we find a particular narrative, we'll fit the facts around it. You need to look beyond the headline growth figures. Once the monetary stimulus is exhausted, we'll probably need a new narrative for monetary policy. We still need to see improvement in the labor force. We still have enormous problems in Washington, and the budget issue will be front and center in the coming weeks. We'll need some new technology to lift us to whatever place we need to go. Maybe we'll find it. I hope so.

Monday, January 7, 2013 - I Went on Vacation and Not Much Changed

I Went on Vacation and Not Much Changed

by Sinclair Noe

DOW – 50 = 13,384
SPX – 4 = 1461
NAS – 2 = 3098
10 YR YLD -.01 = 1.90%
OIL + .21 = 93.30
GOLD – 9.90 = 1647.90
SILV - .02 = 30.26

Forty years ago, Yale Hirsch at the Stock Traders Almanac, created the January Barometer. The idea was simple: as the S&P 500 goes in January, so goes the year. This market prediction tool has been correct 89% of the time since 1950, suffering only seven major setbacks. Since 1950, stocks have finished lower for the year only three times after posting gains in January. When the Dow is positive in January, then the rest of the year is positive 83% of the time, averaging additional gains of 9.59%. Compare that to the Dow’s performance when January is negative. In those years, the February-December returns are positive just half of the time, with an average gain of 2.04%.

As with the full-year results, a positive January typically leads to a positive February. When the Dow closes higher in January, February goes on to average a return of 0.57%, and is positive 63% of the time. When January is negative, February is negative more than half the time, and averages a loss of more than 1%. However, an outsized return in January has not necessarily translated into a bigger return for February. If January is up more than 3.5%, the average February gain is not as big as if January is simply positive.

Price movement in January is also a pretty good predictor of price movement in February for individual stocks; not a perfect predictor but usually moving in the same direction about 80% of the time.

Many investors look to the first five days of January as a gauge of where the markets are going for the rest of the year. During the last 40 years when those five first days were gainers, the markets were up for the entire year 85 percent of the time. For example, last year the S&P 500 Index gained 1.2 percent in the first five days of January. As a result, the S&P 500 Index was over 13 percent. That was close to the historical average. Over the last 39 years, the markets gained an average of 13.6% when the first five days of January were gainers.

Conversely, when the first five days are negative the markets were down for the year, but only 47.8% of the time. The indicator therefore, does not work as well on down periods. You should be aware that, in general, during post-election years the markets have not done well. Only 6 out of the last 15 post-election years saw gains in the first five days of the year. It looks like 2013 will be an exception. Maybe, maybe not. That's why they play the game.

The fiscal cliff is behind us, sort of; there are still the actual implications of the implementation of the changes. Then, we have the debt ceiling, which will be the next catastrophic, OMG, here comes another massive economic sky-is-falling event, they'll shut down the government if they don't get cookies for lunch, political tantrum. Before we move to the next news cycle, let's review briefly the fiscal cliff calamity that was narrowly averted, specifically $205 billion in corporate tax breaks, subsidies and tax loopholes. One of the most egregious giveaways included in the New Year's Eve fiscal cliff deal is an extension of a loophole that allows corporations to book US profits in overseas, tax-free accounts. US companies have about $2 trillion in these offshore accounts.

Another corporate tax benefit included in the fiscal cliff deal is a provision known as bonus depreciation, which allows companies that invest in costly equipment to account for depreciation expenses much faster than they otherwise could. In other words, companies can deduct more in expenses now, lowering their taxable income.

Congress has extended the provision each year since 2008 in an effort to spur business investment during the economic downturn. Bonus depreciation is expected to cost $35 billion this year, according to the Joint Committee on Taxation, and those costs are predicted to rise significantly if Congress keeps extending the benefit. The Congressional Research Service issued a report saying that accelerated depreciation is a “relatively ineffective tool for stimulating the economy.”

I guess that avoiding the fiscal cliff is a good thing; it shows the politicians can do something; even if it's the same old, same old.

New Year, things change, but not much. Let's see what the banksters have been up to. Once again the banks are body slamming the banking regulators. The banks have beaten down the tough parts of Basel III bank-capital standards. The global liquidity standards were designed to ensure banks had sufficient capital on hand to survive another Lehman-like crisis, as well as require that capital be high-quality and liquid. There was a lot of fanfare from regulators when the regulations were first announced in 2010, and then the banks started to chip away at the regulations which might require a little cushion against a downturn. The regulators succumbed to pressure. We're all shocked, shocked I tell you. The new capital rules have been expanded to change the definition of what constitutes safe bank capital to include stocks and AAA rated mortgage backed securities.

Now, you're probably asking yourself, “Self, weren't stocks and mortgage backed securities really dangerous and excessively risky investments that were a big part of the financial crises of the recent past?” And of course the answer is – yes. “Self, didn't those risky gambles lead to a freeze on the credit markets and the near collapse of the global financial system?” And again, the answer is – yes. And then you ask: “Self, does this mean we'll see Hank Paulson getting down on his knees to beg Nancy Pelosi to save him from his errors?” And the answer is no; that's not going to happen again, but clearly we haven't learned our history lessons.

In a world of Too Big to Fail banks that have only gotten bigger, the regulators decided that if the banks were to face a crisis, like the recent crisis, the banks would only have to prepare for a world in which they lose 3 percent of their retail deposits, down from 5 percent originally proposed. Complete amnesia when it comes to Northern Rock or IndyMac. And then the banks have four years to gradually phase in the new, scaled down 3-percent requirements, down from the 2-year requirement originally proposed. The banks argued that if they were forced to provide a 5-percent cushion and do so within two years, it would be too much of a burden and they wouldn't be able to do any lending, which might actually help the global economy.

Meanwhile, federal bank regulators announced an $8.5 billion settlement with 10 large mortgage companies in a deal that will end a near worthless foreclosure review program in favor of a new program that authorities say will distribute aid to homeowners "significantly more quickly."

Under the deal, announced by the Office of the Comptroller of the Currency and the Federal Reserve, the mortgage companies will make $3.3 billion in direct payments to "eligible borrowers" whose foreclosures were handled improperly, and will make $5.2 billion available in other assistance to struggling borrowers, such as loan modifications.

This new deal is separate from the $25 billion mortgage settlement to which five large banks agreed earlier this year, though many of the allegations of misconduct are the same. Homeowners have complained for more than five years that the mortgage companies made widespread errors in the management of their home loans, and that in some cases those errors pushed them into foreclosure.

This new settlement replaces a deal struck in April 2011 that established the Independent Foreclosure Review; that program was supposed to give homeowners an unbiased third-party review before the banks could foreclose, and might even determine if homeowners qualified for a cash payout because of mortgage related bank abuses. So, that program never really happened, and today's announcement is basically saying the Independent Foreclosure Review was a complete failure.

What went wrong? Part of the problem is that the third-party independent reviewers actually worked at the banks' beck and call. So, ten different banks will pay out $8.5 billion to end the foreclosure reviews.

But wait, there's more!

Bank of America announced today that it will spend $10 billion to settle mortgage claims resulting from the housing meltdown. BofA will pay $3.6 billion to Fannie Mae and buy back $6.75 billion in loans that the bank and its Countrywide banking unit sold to the government agency from Jan. 1, 2000 through Dec. 31, 2008. That includes about 30,000 loans.

Bank of America said that the loans involved in the settlement have an aggregate original principal balance of about $1.4 trillion. The outstanding principal balance is about $300 billion. Fannie Mae and Freddie Mac, which packaged loans into securities and sold them to investors, were effectively nationalized in 2008 when they nearly collapsed under the weight of their mortgage losses. So, all in all, BofA gets off really cheap.

Fannie Mae issued a statement saying they had “diligently pursued repurchases on loans that did not meet our standards at the time of origination, and we are pleased to have reached an appropriate agreement to collect on these repurchase requests."

And so, there is $8.5 billion for ten banks, and $10 billion in fines for BofA, and you might think that's real money, and it almost is, but keep it in perspective. The six biggest US banks are expected to pay employee bonuses of $38 billion for the past year.

Bank stocks led all other major stock sectors in 2012. The KBW Bank Index rose more than 30% compared to just over 13% for the S&P 500, and Bank of America shares surged 109%--more than doubling in price. And according to a new report from ProPublica, many banks are still trading below book value, despite the gains in share prices, and much of the gain is due to hedge fund speculation.

And so, you're probably asking yourself: “Self, wasn't hedge fund speculation a big part of the near meltdown of the global financial system? Isn't this just part of the multi-trillion dollar derivatives casino? Isn't this the same sort of risky stuff that the London Whale was betting on and which led to $2 billion in trading losses, or $5 billion, or $6 billion in gambling losses?” And the answer is – yes.

A funny thing is happening in the copper markets. The SEC has paved the way for investors to take a direct stake in commodities, rather than through commodities futures. The agency gave the green light to JP Morgan to launch a fund whose shares would be backed by warehoused copper. In practical terms, the SEC handed traders at JP Morgan control over 20 to 30 percent of the copper available for immediate delivery from the London Metals Exchange — the commercial market where companies that use copper go to procure last-minute supplies.

The investors purchasing shares in J.P. Morgan’s fund won’t be buying copper to use, but to store. The intricacies of the fund are complex, but its underlying rationale is straightforward: the more shares investors buy, the more copper is taken off the market. And the more copper that is taken off the market, theoretically the more valuable the copper and the shares become.

Moreover, it’s a no-brainer that this JP Morgan “innovation” will lead to the creation of copycat fund in other markets, most troublingly those for agricultural products.

The SEC asserts that its own study showed that changes in inventory levels at the LME did not have a price impact. If you've ever heard a little theory known as supply and demand, you might reach a different conclusion than the SEC.

The question regarding the LME would be to define what a normal level of inventory would be (a certain level is necessary to handle routine transactions); amounts in excess of this buffer level would be seen by economists as proof that prices were above the true market clearing price unless you had a good explanation as to why not.

Companies that use copper strongly oppose the new fund, and argue that allowing investors to hoard the metal will lead to supply shortages, create substantial price volatility, and distort the market. A group of copper users wrote to the SEC in August, saying: “The implications of this practice would be grave for our companies, our industry, and, indeed, for the U.S. Economy.”

The SEC is undermining provisions in Dodd Frank calling for the CFTC to rein in undue speculation in critical commodities. You might remember that commodities prices moved up in a coordinated manner in 2008. Remember when oil prices jumped up near $150 a barrel? It looked like a speculative bubble, and was, since prices collapsed in the second half of the year. Well, there was similar behavior in other commodities.

Here, you’re allowing investors to intervene with physical supplies. BlackRock has petitioned the agency to launch its own copper fund, one that would be twice as large as JPM’s and will get an answer by February 22. Given that its proposal is identical to JPM’s, it is well nigh certain to be waved through. If the nay sayers are correct, that hoarding by investors will drive prices up, we should see the impact, although the mere announcement of the JPM approval, particularly in light of the pending BlackRock application, may have led speculators to bid up prices in anticipation of the funds’ launch. That too should be measurable, but if the next few months proves the SEC analysis to be wrong, you can bet the agency won’t admit its error and halt the creation of more funds.

Same old, same old.