Everything you own in the future will be controlled by your voice. That’s what this year’s CES, the world’s largest annual gadget bonanza, has made abundantly clear.

Google and Amazon have been in fierce competition to put their assistants into your TV, your car, and even your bathroom. It all came to a head this week in Las Vegas, where the full line-up of voice-enabled products underscored the scope of each company’s ambitions.

Maybe it seems like a wasteful side effect of capitalism that you can now ask Alexa to lift your toilet cover (or maybe not—you do you), but there’s more to the ubiquity of voice interfaces than a never-ending series of hardware companies jumping on the bandwagon.

It’s tied to an idea that leading AI expert Kai-Fu Lee calls OMO, online-merge-of-offline. OMO, as he describes it, refers to combining our digital and physical worlds in such a way that every object in our surrounding environment will become an interaction point for the internet—as well as a sensor that collects data about our lives. This will power what he dubs the “third wave” of AI: our algorithms, finally given a comprehensive view of all our behaviors, will be able to hyper-personalize our experiences, whether in the grocery store or the classroom.

But this vision requires everything to be connected. It requires your shopping cart to know what’s in your fridge so it can recommend the optimal shopping list. It requires your front door to know your online purchases and whether you’re waiting for an in-home delivery. That’s where voice interfaces come in: installing Alexa into your fridge, your door, and all your other disparate possessions neatly ties them to one software ecosystem. It’s quite the clever scheme: by selling you the powerful and seamless convenience of voice assistants, Google and Amazon have slowly inched their way into being the central platform for all your data and the core engine for algorithmically streamlining your life…

Continue reading at the MIT Technology Review…

From Bloomberg:

Investors can be forgiven for thinking that their mattress—or maybe a money-market fund—isn’t such a bad place to stash cash. Global trade tensions and White House turmoil helped fuel market jitters in the year’s final quarter, when the S&P 500 tumbled 14% from its September high. For the year, the index closed down 4.4%.

Retreating from a volatile market into cash, though, is a famously losing strategy. Investors who try to time the market often miss out on sharp gains that can follow down periods. Those who maintain a discipline in how they approach the markets, meanwhile, can pounce on promising stocks at lower valuations and potentially profit from others’ panic.

Those coolheaded investors are the type of experts who share their views with Bloomberg each quarter, and true to form, our six panelists—while some still sound defensive notes—see promising pockets of opportunity around the globe. These money managers see potential homes for a $10,000 windfall in industries as diverse as oil and European banks, as well as in battered-down areas ranging from the U.S. to emerging markets.

The recent market swings are a good reminder to start the year with a portfolio checkup. Are you diversified across different industries, asset classes and geographies? Do you have at least three months of expenses socked away in safe investments in an emergency fund? Take a look at “The Seven Habits of Highly Effective Investors” for ideas on how to make sure your portfolio enters 2019 in good shape.

Many of the ideas presented by our experts are at work in the mutual funds or investment portfolios they manage. Bloomberg Intelligence ETF analyst Eric Balchunas highlights exchange-traded funds (ETFs) as a rough way to invest around those ideas, and tallies up how his ETF plays performed last quarter.

Filtering out market noise is hard. That’s where our experts can help with solid investing ideas, along with well-reasoned reminders, such as that from panelist Joe Davis of Vanguard to simply “stay calm and carry on.”

Russ Koesterich:

Head for the Oil Patch

Of the casualties in the 2018’s fourth-quarter carnage, energy stocks were some of the worst hit. Even after the recent rebound, the three-month rolling return for the U.S. energy sector as of Jan. 10 was -16% (excluding dividends), while the S&P 500 price return was -6%. The rout has left many of these stocks looking cheap, particularly considering the recent stabilization in crude oil prices.

As of the end of December, the S&P 500 energy sector was trading at a multiple of roughly 1.55 to book value (P/B). That’s the lowest since early 2016 and about on par with the trough valuation during the financial crisis. Valuations look even cheaper relative to the broader market. The current P/B represents nearly a 50% discount, the largest since at least 1995…

Continue reading at Bloomberg…

A traveler carried a firearm on board his flight from Atlanta Hartsfield-Jackson International Airport to Tokyo Narita International Airport earlier this month.

Transportation Security Administration (TSA) acknowledged that the incident occurred on Jan. 2, saying in a statement to The Hill that it “determined standard procedures were not followed and a passenger did in fact pass through a standard screening TSA checkpoint with a firearm at” at the Atlanta airport.

Delta Airlines told CNN that “upon the customer’s disclosure, the airline reported the incident to the TSA.”

Continue reading at The Hill…

Our phones’ GPS and location capabilities are a key part of what make them magical — enabling them to speed our commutes, hail rides, and find the devices when we lose them. These capabilities are also ground zero for the looming fight over defining the boundaries of privacy and acceptable uses of our personal information.

The big picture: Three recent stories show just how common problems with location data can be — and how thorny they’ve become.

1. Cell providers resell location info

• Motherboard’s story exposing a shadowy marketplace in the resale of location data tracking individual phones raised alarms that last week led all the major U.S. wireless carriers to announce they would stop selling the repositories of data that make such tracking possible.
• That’s a relief to anyone who’d prefer to keep their location private.
• Yet we welcome similar reuse of location data that allows services like Google Maps, Waze and Apple Maps to tell us the fastest route between two points.

Continue reading at Axios…

Gold and gold stocks are acting well. And that’s probably going to continue for a while.

You see… as the broad stock market started to sell off in October – and it appears, at least to me, the S&P 500 has entered a prolonged downtrend – the gold sector made a bullish move. It now looks like the sector as entered a prolonged uptrend.

Take a look at this chart of the VanEck Vectors Gold Miners Fund (GDX)…

In early October, GDX rallied above its 50-day moving average (MA) (the blue line on the chart). Even more important, the 9-day exponential moving average (EMA) (the red line) crossed above the 50-day MA as well. This “bullish crossover” often marks the start of an intermediate-term rally phase.

Of course, the buying interest that creates the “bullish crossover” also creates short-term overbought conditions in the stock. You can see how GDX spiked sharply above its 50-day MA in early October. You can also see how GDX traded back down to its 50-day to retest that level as support and to work off the overbought conditions.

Notice, though, how the 9-day EMA drifted back down to the 50-day MA as well. This action usually provides an excellent opportunity to buy a position in anticipation of a rally.

If the 9-day EMA bounces off of the 50-day MA, then the stock is headed even higher. On the other hand, if the 9-day EMA drops below the 50-day MA, then it creates a “bearish crossover.” In that case, traders can then exit their positions for a small loss.

The red circles on the chart show how a similar setup last April-June failed to kick-off an intermediate-term rally.

This time, though, the setup looks good. GDX is a little extended in the short term. The 9-day EMA is a bit too far above the 50-day MA for me to be willing to add more gold stock exposure right here.

But, I would look to buy GDX on a pullback towards its 50-day MA – or if GDX can just chop around for a couple of weeks and give the 50-day MA enough time to rally up towards the current price of the stock.

Best regards and good trading,

Jeff

Crux note: No matter which direction the markets go, Jeff Clark’s Market Minute subscribers are always up to date on the trends taking shape – and the best ways to profit on them – hours before the opening bell rings.

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It’s January. And if you’re like most Americans, you’ve probably launched into some new fad diet to try to shed those extra pounds.

Longtime readers know I hate diets, particularly fad diets that cause more harm than good. They’re too hard to follow and once you drop off, you pack any lost pounds right back on.

But there’s one diet I do support…

The Mediterranean diet.

This year, U.S. News & World Report gave the Mediterranean diet the No. 1 spot on its list of best diets. It earned top marks for being the best for diabetes and the easiest for folks to follow.

We’ve written many times about the benefits of the Mediterranean diet. Thanks to an emphasis on fish, lean protein, fruits, vegetables, and olive oil, it packs in the best nutrients you can get.

Remember, olive oil contains significant amounts of antioxidants and monounsaturated fatty acids (“MUFAs”). MUFAs keep insulin levels in check, making olive oil good for diabetics. They also help with cholesterol levels.

Moreover, due to its chemical structure and function, olive oil also protects your cells from oxidation damage. Thus, olive oil reduces the risk of developing diseases of inflammation. That includes heart disease, arthritis, and high blood pressure.

Fish also contains these MUFAs. Fish has polyunsaturated fats, which include omega fatty acids. These acids reduce inflammation and promote brain health. They also keep your bones healthy and your metabolism on track.

And since fish oil pills may contain higher levels of toxins, I try to eat fish instead. I prefer to eat fish that are lower in mercury… like salmon, light tuna, herring, mackerel, and anchovies.

I always recommend fruits and vegetables for a healthy diet. About 10 servings a day is ideal for lowering your risk of cancer and premature death. Even just two and a half servings provides some benefit, but the more the better.

We’ve also seen how the Mediterranean diet protects against cognitive decline. What’s more, a study in monkeys showed that following the diet improved good gut bacteria. Remember, our guts contain trillions of bacteria that regulate everything from digestion to our immune systems.

And finally, a Greek study published last year also found adherence to the Mediterranean diet reduced the number of cardiac events for 10 years.

Like we said, the Mediterranean is one of the easiest diets to follow. A simple day could include fruit and yogurt for breakfast, a nice salad with nuts and an olive oil dressing for lunch, and beans and fish for dinner. Check out this table to see what to load up on and what to avoid…

There’s plenty of flexibility with this diet. The key, of course, is to avoid inflammation-triggering foods. Inflammation is the root of so many medical problems, including heart disease and diabetes. These foods include artificial sugar, processed foods, and the white killers (white sugar, white bread, and white rice).

Artificial sweeteners trigger inflammation and may contribute to diabetes. The only sugar replacement we like is stevia, which is a natural, plant-based sweetener. But it may interfere with blood pressure, so we don’t recommend using it if you’re on blood-pressure medicine.

We know following diets can be tricky. So even if you fall off your diet this year, making small changes that get you closer to the Mediterranean diet will still help keep you healthy. Above all, cut out the inflammation-causers. You’ll have a better 2019 as a result.

Here’s to our health, wealth, and a great retirement,

David

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Ben Bernanke got a big laugh from economists in Atlanta on Jan. 4. A few minutes after Janet Yellen said, “I don’t think expansions just die of old age,” he replied, “I like to say they get murdered.”

All right, not that funny. But the nerdy repartee between the past two Federal Reserve chairs at the annual meeting of the American Economic Association reveals how central bankers think about recessions—and says something about how likely it is that the U.S. will tip into one over the next year.

The open secret of the economics profession is that its practitioners don’t have a theory for why expansions die. Or rather they have several theories, each of which contradicts the others and none of which is fully supported by the data. Because economists don’t know why recessions start, they can’t predict when one will start.

The likelihood is that the U.S. economic expansion that began in June 2009 will reach its 10th birthday this summer and roll right on, becoming the longest U.S. period of uninterrupted growth since at least 1854. Economists surveyed by Bloomberg see only a 20% probability of recession over the coming 12 months. Their median projection for gross domestic product growth is 2.6% in 2019, slowing to 1.9% in 2020. Nothing on the horizon shouts “recession.”

Then again, without a good theory of the business cycle, no one really knows. What we do know is that economic growth is fueled by the confidence of consumers, businesses, and investors. Lately, that confidence has been sagging. A spike in fear that the expansion will die—either of old age or from murder most foul—could become a self-fulfilling prophecy. “Things can turn quickly because so much of this is animal spirits,” Kristin Forbes, an economist at Massachusetts Institute of Technology’s Sloan School of Management, said at the economics conference in Atlanta.

It seems like a strange time for anyone to worry about a recession. On Jan. 4 the Bureau of Labor Statistics reported that the U.S. economy created 312,000 jobs in December, half again as much as the monthly average over the past five years. Ordinarily such a burst of hiring would drive down the unemployment rate, which has stayed below 4% for the longest period since the Soaring Sixties. The only reason it actually rose a bit—two ticks, to 3.9%—is that the hot pace of hiring drew more people into the labor force. That’s exactly what you want to see: discouraged workers, premature retirees, and people out on disability all giving the job market another try. “This is a much better, more optimistic picture right now,” White House economic adviser Larry Kudlow said in a Bloomberg Television interview…

Continue reading at Bloomberg…

BALTIMORE – A big, new danger appeared in Congress this month: Alexandria Ocasio-Cortez, the newest representative of New York’s 14th district.

At 29, she is the youngest woman ever elected to Congress; she will doubtless be there for decades to come.

Eighteen months ago, she was working as a waitress. Then, even though her opponent outspent her 15-to-1, she won the race to sit in the House of Representatives.

Ms. Ocasio-Cortez has a pleasant look about her. We’d probably like her if we met her. But she is clearly a danger to herself, her constituents, and to the nation.

More about her in a minute… First, we check in on the stock market.

Bottom Is In

Stocks were up again yesterday, for the third day in a row.

“It looks like the bottom is in,” say the Wall Street shills. “Time to buy the dip.”

Readers are reminded that in a bull market, you buy the dip – when you can still buy stocks at a reasonable price. When stocks become expensive and then start to go down, it’s time to change the strategy.

It looks to us like a bear market began in September, 2018. Since then, stocks are down. And since they are still very expensive, and could fall much lower, a better move would be to “sell the bounce.”

As Joe Withrow demonstrated yesterday, stocks tend to rally immediately following a selloff. But the bounce is usually short-lived. Then, the bear truly takes hold.

Still, you never know. U.S. President Donald J. Trump thinks “his” economy is great. Yesterday came this tweet from him:

Economic numbers looking REALLY good. Can you imagine if I had long term ZERO interest rates to play with like the past administration, rather than the rapidly raised normalized rates we have today. That would have been SO EASY! Still, markets up BIG since 2016 Election!

Mr. Trump doesn’t have to worry about the Fed. Its real interest rates are still close to zero. And it has no intention of raising interest rates back to normal… not if it means a selloff in the stock market.

And since a selloff in the stock market is exactly what it means, there will be no normalization of Fed policy.

Tax the Rich

Now, back to today’s dot in need of connecting…

When the mainstream flim-flam financial policies fail, people look for scapegoats and solutions on the edges.

Now, they turn their sore eyes to New York’s 14th district, where Ms. Ocasio-Cortez has been elected to Congress. The product of the Puerto Rican Enlightenment, she believes there is no problem that a government program can’t solve.

Got healthcare issues? She would offer Medicare for All.

Need a job? She proposes a Job Guarantee.

Want to go to college? Get ready for Tuition-free College.

Worried about global warming? How about a large-scale “green infrastructure” program?

Wait a minute… You’re probably wondering, how can we afford all these things?

Well, in a few months, we won’t worry about such problems… not with the economy melting down.

Besides, the new Congresswoman from Queens has a solution: Tax the Rich! Squeeze them until the pips squeak!

Yes, it’s a “Green New Deal,” she calls it. And a cornerstone of it is the idea of raising income taxes on the super-rich to 70%.

It might only apply to people who earn more than $10 million a year, so most people would be for it.

Still, most sober observers dismiss the idea. “It will never pass,” they say. “It’s crazy… It’s absurd… It will harm the economy… “

But crazy plans that hurt the economy have a way of becoming the law of the land. Especially when the laws of the land are already crazy and absurd.

And when the existing laws of the land cause bankruptcy and chaos, people look for crazier, more absurd ones.

That’s how the first New Deal got put into practice. In the panic and despair of the 1932 elections, people were ready for a change. Franklin D. Roosevelt offered to shuffle the deck. And when in office, he pulled a few aces out from his sleeve and put into place a series of costly programs.

Our guess is that the next crisis will be severe and long-lasting, too. Stocks will fall hard. The economy will go into recession.

The Trump Team will pull out all the stops to make it go away (that is, it will spend beaucoup money it doesn’t have). The Fed will push rates into negative territory and buy up stocks as well as bonds.

But come the elections of 2020, the U.S. economy will be deep into stagflation – with rising prices (caused by runaway federal disaster spending) and little, or negative, growth (caused by the huge overhang of debt left over from previous bailouts and stimulus programs).

By 2020, people will be getting pretty tired of it. Donald Trump says it is “his economy” and “his stock market;” so he and his fellow Republicans will take the blame when “his disaster” doesn’t go away.

And the rich – who gained so much from the crackpot fake money system – will be held to blame, too.

Economists will point out that raising marginal rates on the rich to 70% will backfire, producing less income, not more.

But the masses won’t care; they will be eager to punish the rich, not just exploit them.

Radical Democrats

No one will have time to sit through our explanation of what went wrong… and how the Fed mismanaged the economy… and how the fake money system was doomed to fail… and why a boom founded on fake-money credit was bound to explode into a monetary/economic meltdown.

Nope… Instead, they will want simple-minded solutions. And Ms. Ocasio-Cortez and her fellow progressives will have them. Free tuition! Free medical care! Jobs for everyone!

Her programs may seem lame and loopy today, but they’ll be a hit – we predict – in the future. With the Republicans discredited by the financial disaster, radical Democrats will be elected all over the country.

And then, the intellectuals will explain why their programs “make sense.” In fact, they’re already on the case.

Paul Krugman, Nobel Prize winner, says that “far from showing her craziness, [Ms. Ocasio-Cortez’s tax proposal] is in line with serious economic research.”

Celebrity economists Peter Diamond and Emmanuel Saez say the “optimal” rate is more like 73%, while Christina and David Romer put it at 84%!

Besides… it will “help alleviate inequality.” It will “help stimulate the economy.” It will “help avoid social tensions.”

Yes, gentle reader, as goofy and fumbling as federal policies are today… they could get even worse.

As far as we know, Ms. Ocasio-Cortez was a competent server. Which is too bad; the nation lost a decent waitress and gained what it least needed: another delusional, incompetent, and menacing member of Congress.

More to come…

Regards,

Bill

Crux note: As Bill said, when the next financial crisis hits, the government will pull out all the stops. In fact, Bill and his team have uncovered early evidence of a controversial government program that could be put into place when the crash comes.

Bottom line… it would put the money in your wallet and in your bank account squarely under government control. You may not want to believe that. But if you have any savings in the bank or money in the stock market, you need to see the evidence for yourself. Go here.

Donald Trump’s threat to declare a national emergency at the US border with Mexico is being taken so seriously inside Congress that a powerful committee is preparing a bipartisan challenge to the move.

The Democrat-led House Armed Services Committee, which oversees funding and operations of the Defense Department, has been united across party lines in its opposition.

If Trump declares a national emergency, the first step is to see “how he writes it, and how he does it,” said Donald Norcross, a New Jersey Democrat on the committee chaired by Adam Smith of Washington state. “I am very confident there will be a legal challenge” to any declaration, Norcross told Quartz. “There needs to be.”

Mac Thornberry, the committee’s top Republican, said this week that he opposes using an emergency declaration to fund the border wall Trump demands: “We ought to fund border security needs on their own and not be taking it from other accounts… “

Continue reading at Quartz…

From CNBC:

Goldman Sachs has found the safe haven gold more attractive after a volatile December.

The bank on Thursday raised its gold forecasts to $1,325, $1,375 and $1,425 per troy ounce over the next three, six and 12 months, respectively, from $1,250, $1,300 and $1,350 per troy ounce. Based on gold’s current price, that forecast represents a 10.7% increase over the next 12 months.

“Going forward gold will be supported primarily by growing demand for defensive assets. The same is also true of central bank buying, with rising geopolitical tensions incentivizing more central banks to re-enter the gold market,” Goldman’s Jeffrey Currie said in a note to clients on Thursday.

Fears on slowing economic growth and the uncertainties around the Federal Reserve’s monetary policy have stirred the financial markets for a few months. Risk assets took a big hit in 2018, with the stock market suffering the worst December since the Great Depression. But during this volatile time, gold has outperformed the markets, returning more than 4% since the start of December, according to Goldman. The SPDR Gold Shares (GLD) returned about 5% in December.

“The last few weeks have seen a sharp deterioration in risk sentiment following soft macroeconomic data in December and renewed concerns about the future direction of growth, particularly the risk of U.S. growth catching down towards weaker economies,” Currie noted…

Continue reading at CNBC…