Archive for the ‘Equity’ Category

Notes From Underground: Its Was a Great Week for S&Ps

August 20, 2017

The news was extremely positive for the equity markets last week. FOUR key points:

  1. Retail Sales proved to be much stronger than consensus;
  2. The FOMC minutes were very DOVISH as the FED was concerned about the inability of upward inflation to gain traction;
  3. The demise of anti-globalist Steve Bannon was greeted with cheers on the floor of the New York Stock Exchange. News of the removal resulted in a rally in the S&Ps on Friday, but it was short-lived; and
  4. The bobble heads of the access media reported the dismissal as an elevation of the Davos-inspired crowd, represented by the Gary Cohn wing of the Trump administration.

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Notes From Underground: Putting This Week In Perspective

August 10, 2017

Just when the volatility sellers were heading to the beaches to bask in the glow of easy money comes the tweeter-in-chief to crush the complacency. The airwaves were full opiners who warned of a market that is fully valued.Gundlach and Dalio added their two cents for measure, espousing the need to hold GOLD as a hedge against geopolitical uncertainties. Again, it is not political uncertainty but the malfeasance of central banks that should be the concern of global investors. Deflation is the ingredient for central bank panic. As Peter Boockvar reminded his readers today: Gold is a monetary haven.

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Notes From Underground: Month-End, Quarter-End … Oh My

June 29, 2017

In Thursday‘s post I am reissuing part of a post from June 11 in which I cited a very important signal from the Nasdaq 100 futures. The signal suggests the equity markets have been in a much more defensive mode as rallies have failed and new selling has emerged. Well tonight I warn of a possible new development and that is in the DAX FUTURES. The German index has been my favorite long equity position because the fundamentals are most positive for Germany: negative interest rates, current account surplus and a very strong fiscal position. The strong EURO this week seems to be a potential drag for German stocks, but the biggest factor is that the continued use of negative interest rates at the Draghi-led ECB makes the high-yielding German equity market a desirable choice for investors. HOWEVER, IF THE DAX DOES A MONTHLY OUTSIDE REVERSAL THIS WILL SIGNAL A MAJOR WARNING FOR ALL GLOBAL EQUITY MARKETS.

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Notes From Underground: James Gorman Gets Duped, So He Dupes the Nation

June 15, 2017

It seems that Morgan Stanley Chairman/CEO James Gorman was duped by an e-mail hacker. So in measure for measure the Morgan Stanley chief tried to dupe the world with his op-ed in the Financial Times on Wednesday. In an opinion piece titled, “The Last Thing Banks need Is Yet More Rules.” Gorman said in response to the idea of a reinstatement of Glass-Steagall:

“More than  80 years ago, the U.S. enacted the Glass-Steagall legislation that separated traditional commercial banking from investment banking. Over the ensuing seven decades, as global trade and finance expanded,the divide between commercial and investment banking broke down. Recognising that global companies needed full-service banks, the U.S. embraced a system adopted by most other countries, including Germany, Japan, Canada, the U.K. and Australia. Ending Glass-Steagall [the law was repealed in 1999] had nothing to do with the financial crisis, and there is no reason to return to it.”

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Notes From Underground: Wake Up! Wake Up! For Your Light Has Come

June 11, 2017

This line comes from the Jewish liturgy of welcoming the Sabbath. I use it here to make a note to my readers about a possible signal that the NASDAQ 100 sent on Friday. Now I don’t hold myself out as anything but a third-rate TECHNICIAN (reader of chart formations), but having been taught by one of the greatest technical minds (thanks H.G.), I know to watch certain formations for signals in a POSSIBLE change in sentiment. THE CHART THAT CAUSES CONCERN NASDAQ 100 made ALL TIME HIGHS LAST WEEK BUT CLOSED BELOW THE PREVIOUS WEEK’S LOWS. Do I know when the market will reward a short position?

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Notes From Underground: A Guide For The Perplexed? (Maimonides)

June 4, 2017

Friday’s unemployment data showed the addition of 138,000 jobs, weaker than the ADP report. Even though the RATE dropped to 4.3% the all-important average hourly earnings rose by a tepid 0.2% and April’s data was lowered by a tenth of a percentage point. Many readers e-mailed me as to why the S&Ps and NASDAQ continued to rally in the face of weak economic news from the U.S. The BOND rally made sense as investors continued to cover short positions, but what is perplexing is the continued strength in the precious metals and the currencies despite a strong U.S. equity market.

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Notes From Underground: Happy Memorial Day, A New Podcast from FRA

May 29, 2017

I am posting a new FRA podcast that was recorded May 24 with Richard Bonugli. We cover many important topics, including the rise of Bitcoin as an investable product. As I have said often, I need to learn more about crypto-currencies and their impact on the global financial system. Unlike Ben Bernanke, I understand GOLD but am seeking to understand BITCOINS. I am striving to learn the workings of the block chain mechanism and relying on the wisdom of one of favorite readers and supporters American Limey.

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Notes From Underground: Angela Merkel Finally Faces Facts

May 22, 2017

Angie Angie

where will it lead us from here

Oh, Angie don’t you wish

Oh your kisses still taste sweet

I hate that sadness in your eyes, but Angie Angie

Ain’t it time we said goodbye  [Richards and Jagger]
Today, German Chancellor Angela Merkel openly admitted that the German trade surplus was large because the ECB‘s monetary policy rendered the EURO to a bout of severe weakness, which helped make “German products cheaper.” It continually amazes me how forthright politicians become once the political storm clouds have lifted. When President Trump noted a similar view he was criticized for trying to force a break-up of the European Union. What was Angie’s angle in challenging the policies of the ECB and Mario Draghi? As I have written for the last six months, the ECB was going to become an issue in the upcoming German national elections. It appears that the Chancellor is getting ahead of the AfD and other challengers about the negative impact of Draghi’s policies that punish and financially repress German savers.

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Notes From Underground: Nothing New to See, Except the Equity Markets Finally Added Some Risk Premium

May 17, 2017

The market did not selloff today. Risk was merely repriced and greater premiums were being offered in an effort to attract buyers. Everything discussed in this blog during the past six months was brought to light and the most important outcome was that the narrative has changed. The Trump agenda of tax and health care reform, and regulatory rollbacks was seen being delayed by the possible legal issues confronting the White House. Notes From Underground is apolitical and is solely vested in understanding the policy impact of any political outcomes, which is why it is geared toward political economy. Or, as Deng Xiaoping would say: “I don’t care if the cat is white or black as long as it catches mice.” Since Trump’s inauguration, the mainstream  media has been relentless in its effort to cast Trump in a negative light and the Tweeter-in-chief has certainly provided the tinder to keep the fires lit.

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Notes From Underground: Santelli and Harris Down By the Schoolyard

May 9, 2017

This is the most recent CNBC hit with Rick Santelli as we try to educate the world in another three-minute segment. This unrehearsed spot attempts to dig deep into the financial issues confronting traders and investors. The discussion about France is a continuation from the Notes From Underground post I wrote last night. I stress that the period ahead for Emmanuel Macron is going to be difficult, especially if the center-right wins the Parliament and thus the prime minister position. This summer will be fraught with street demonstrations as the Left moves to prevent any installation of German-initiated fiscal austerity and labor market reform. In typical French political fashion, labor and student groups are warning against Macron governing by decree and bypassing Parliament.

(Click on the image to watch me and Rick discuss French elections.)

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