Posts Tagged ‘Dow’

Notes From Underground: Synchronicity

February 5, 2018

We have had many false key technical signals over the last 12 months. BUT LAST WEEK there have been THREE KEY REVERSALS. The DOW, S&Ps AND NASDAQ all made all-time highs and closed below the previous week’s low. SYNCHRONICITY indeed. Pay close attention as the world is all aflutter with fears of higher interest weeks forcing a reassessment of equity values. I believe Monday’s massive selloff IS A RESULT OF THE MASSIVE EFFECT OF THE RISK PARITY PARADIGM. I have warned that all the synthetic mimics of DALIO’s risk parity profiles were going to create a small door in which to exit. I am posting a podcast I recorded with Anthony Crudele on January 30, but just released this morning. Learn from actual traders, CHI GIRL and YRA HARRIS.

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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: Cramer Unsavory? I Think Not

January 14, 2016

Jim Bullard? Now There Is An Unsavory Chap

Today was not like the other days for the break in the equity markets came early. As all the global markets were in sell mode St. Louis Fed President James Bullard hit the airwaves with thoughts about being wrong in his inflation projections. It appears that the selloff in crude oil is providing the Fed hawk with concerns that the SUMMARY of ECONOMIC PROJECTIONS may be softer than the December FOMC meeting revealed. Bullard sounded as if he would not be in favor of the Fed raising rates because of the inflation rate turning away from the spurious 2 percent mandate. The unsavoriness of Bullard’s comment is not that he fears a downturn in inflation, and maybe lower growth, but that Bullard seemed to find his DOVISH posture as the U.S. markets were heading toward the August lows. Bullard in unsavory because he called out CNBC’s Jim Cramer for “cheerleading for low rates twenty-four hours a day.”

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Notes From Underground: Weak Unemployment Report Creates A Cacophony of Market Reactions

October 4, 2015

Before we review Friday’s action, I would like to present a quote from Tolstoy sent from a long-time reader and is representative of the 2+2=5 basis of Notes From Underground. While I have respect for the theoretical basis in the continued search for knowledge, I try to write NOTES with a deeper understanding of the fundamentals that drive markets on a short- and long-term time scale.

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Notes From Underground: Bored of the Talk or Is COMPLACENCY IS THE NEW NORMAL?

June 1, 2014

During the last month markets have adopted the approach of “Don’t Worry Be Happy.” No event increases risk awareness as central banks being perceived as the guardian angel of all global investors, so every possible geopolitical event is merely a fresh buying opportunity. This week brings the ECB rate decision and consensus seems to be that President Draghi has secured a vote in favor of cutting interest rates from 0.25% to 0.15%, a drop of 10 basis points, or, as the talking heads and pundits of pabulum will with great fanfare scream, the ECB has cuts interest rates by 40 PERCENT. Ah, the beauty of small numbers in a zero interest rate environment. I DOUBT THE ECB WILL GO NEGATIVE AT THIS TIME. Why? Negative interest rates by a large central bank will be an experiment that the ECB will not wish to embark on, especially as U.S. money market funds have returned to providing short-term financing for European entities. Going negative may result in money market funds shying away from the uncertainty of negative deposit rates paid by the central bank.

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Notes From Underground: Making Sense From the U.S. Dollar Post-Payrolls

May 4, 2014

The U.S. unemployment data released on Friday was extremely positive on two measures: Nonfarm payrolls increased by 288,000 and the unemployment rate dropped from 6.7 to 6.3 percent. The soft side of the numbers was that the average hours worked remained flat and the all-important average hourly earnings also stayed flat, undermining the robustness of the headline figure. The U.S. dollar and U.S. bond markets initially performed as expected as the DOLLAR strengthened and bond yields rose in response to positive news. However, by day’s end the DOLLAR was LOWER and the yields on the long end of the CURVE had also dropped while the SPOOS and DOW failed to hold gains on what was a very strong employment picture. The reason given by analysts was that the Ukraine situation was becoming more volatile and caused investors to be cautious over the weekend.

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Notes From Underground: The Day Is Upon Us … Be Patient and Don’t Act With “Water-Like Impetuosity”

December 17, 2013

Tread lightly into the throes of Fedspeak for first comes the FOMC statement a 1 p.m. CST followed by the last press conference of Chairman Bernanke’s term at 1:30 p.m. The markets are going to be volatile as confusion reigns in all asset classes. Today, the Treasury market was trying to reassert a steepening bias into the 5/30 yield curve as the FIVES were strong and the 30-YEAR YIELDS were rising. However, by day’s end the 5/30 retraced and closed unchanged on the day (if you trade the curve in futures terms the ratio is almost three FIVES to one THIRTY-year bond). Consensus has changed and the bias is for a tapering the question is: HOW LARGE? I have assumed a $20 billion tapering and I will stick with that “bold” conjecture. It is important to listen for any language of forward guidance on the unemployment threshold for if the Fed were to hint at lowering the 6.5% threshold, markets will reverse course, especially the S&Ps and DOW, which have spent the last few days in correction mode.

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Notes From Underground: The Market Remains a Tribute to the Balance Sheet Recession (KOO KOO K’KOO)

December 10, 2013
Janet Yellen as her first meeting as Chairwoman:

I am he as you are he as you are me and we are all together

See how they run like pigs from a gun,see how they fly

I’ m Crying

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Notes From Underground: The Fed’s Zero Rate, Quantitative Easing Policies Are Stock Market Fundamentals

March 10, 2013

The continued parade of stock market analysts who proclaim the equity market is rallying merely on Fed monetary policy instead of market fundamentals have spent far too much time doing case studies and not reading economic history. Interest rates as the variable signaling the cost of money are a very critical element and a key fundamental of the economy and especially the equity markets. U.S. multinational corporations are sitting on record piles of cash and also reporting strong profits. Much of the growth in profits can be attributed to two factors: Very low borrowing costs and continued pressure on wages. The FED has created the low interest rates and has hoped that the profitability resulting from low borrowing costs would bleed into higher wages and thus the need for increased hiring. The problem is many fold on the lack of success in aiding jobs creation. Globalization has kept pressure off wages and the deleveraging of the private balance sheets has meant that downward pressure remains on demand.

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Notes From Underground: Greece–Sometimes Nothing Is A Pretty Good Hand (Cool Hand Luke)

May 9, 2012

The financial markets have been suffering the whiplash that resulted from the uncertainty of the Greek elections. It is no surprise to the readers of this blog that politics would provide a problem for those “WHO ASSUMED A CAN OPENER.” The eurocrats and European financial elite are so vested in the EURO and the politics of the EU project that they assumed all citizens of Europe would fall in line. Every referendum that did not pass was reissued under threat of a curtailment of Euro funds from Brussels. Now that the bill is coming do for all the promises. The angry electorate is saying NEIN to more AUSTERITY through the ballot box and financial markets and Europe’s bankers are quaking.

It seems that the Greek politicians know that the fear of GREECE not “honoring” its previous commitments is a powerful tool to use in negotiations with the powers in Brussels. GREECE HAS NOTHING TO LOSE IS THE OPERATIVE MINDSET OF THE SYRIZA AND ITS  LEADER, ALEXIS TSIPRAS. It is the BANKS, ECB and IMF who are on the hook for a great deal of money. It is the ultimate moment of the PRISONER’S DILEMMA.

Yes, the GREEKS know they owe a great deal of money, but your banks own the paper. Also, if the Greeks were to turn violent at the continued threats from the ECB and the GREEK election results were overturned through the impact of interference from Brussels, there would be fallout from the other European nations searching for relief from austerity. I warn all readers to be leery of the nonsense that continues to be written about the politics of Europe as the SYCOPHANTS WANT TO PAINT A BETTER POLITICAL PICTURE.

A danger to the Greeks leaving the EURO would be that the drachma would be reinstated at a very depreciated level, leading to a massive resurgence in Greek tourism and other service industries, which would come at the expense of the Spanish and French tourism industries. A “liberated” Greece has the potential to create all types of economic turmoil for the other periphery nations. Just threatening the Greeks is not as simple as many optimists want to believe.

Today, Bloomberg ran a piece by a noted Financial Times journalist, Clive Crook, “Hollande Must Betray His Supporters to Save Them.” The writer notes that Mr. Hollande cannot betray the left until after June’s Parliamentary elections but then, “Whether it’s sooner or later, Hollande will be forced to acknowledge reality, and the disillusionment of the French left will be terrible.” Here again, the elite want their wishes to prevail over any sense of  the PUBLIC WILL. Mr. Crook goes on to say, “Wisely, Hollande’s campaign was more about posture than specifics. We know he’s against austerity and for taxing the rich–but he hasn’t drawn up a budget.”

This is the view of the status quo within the EU at all costs camp, but if the Greeks play their HAND OF NOTHING TO GREAT ADVANTAGE THE POLITICS OF EUROPE WILL BECOME VERY VOLATILE. This afternoon it was learned that Greece will receive its next TRANCHE OF BAILOUT MONEY tomorrow. See, NOTHING CAN BE A VERY GOOD HAND.

The problem for the policymakers in Brussels is that all the other debt-stressed nations are watching closely to see if the banks and the EURO GROUP cave in for fear of a CREDIT CRISIS emanating from the Greek’s decision to soften the BAILOUT AGREEMENT. Crook ends his article with this warning: “But Hollande can’t be a good thing without letting his supporters down. That’s a hard truth to contemplate in your first week in office.” This is a major dilemma for the financial and political elite of Europe. Let’s ASSUME A CAN OPENER.

Quick Hitter: The two-year Schatz dropped to a record low 6 BASIS POINTS. Again, the rush to safety added to China’s need to invest its EUROS is playing havoc with the world’s DEBT MARKET. Finnish two-year notes dropped to 18 BASIS POINTS and the Netherlands to 28 BASIS POINTS. The demand for safety and the need for quality collateral is causing massive dysfunction in credit markets. PRICE IS NOT A BAROMETER OF QUALITY POLICY. This is causing many hedge funds to place bets on the short side of the DEBT MARKETS. They are right that the risk/reward is certainly a temptation. It will just depend on your time horizon.

A CAVEAT FOR CHAIRMAN BERNANKE: BEN, you are opening up the Pandora’s box of the FISCAL CLIFF. The world’s financial markets and commodities are starting to be very concerned about the FISCAL CLIFF that Bernanke warned about at his last press conference .This is a problem as he has alerted investors that CONGRESSIONAL and presidential failure to deal with the fiscal problem can result in a 2 1/2% to 5% negative impact on GDP in 2013. Added to this is the possibility of an increased tax on dividends. The S&Ps and DOW are nervous as a major hit to the U.S. economy coupled with the EUROPEAN MORASS can send the GLOBAL ECONOMY into a massive deflationary spiral.

THE PORTFOLIO BALANCE CHANNEL IS BEN’S BABY, SO CHAIRMAN BERNANKE you had better gain control over the FED GOVERNORS AND PRESIDENTS who are pushing for a near-term rate increase. Bernanke and Geithner have been silent on Europe, but the phone lines are burning as U.S. policymakers are pushing Europe into a greater stimulus plan for if Europe implodes America will more than sneeze. Sometimes a walk to the FISCAL CLIFF RESULTS IN A PEEK INTO THE ABYSS.

A final note: The Portuguese 2/10 curve has exploded out to 414 BASIS POINTS. Being that the Portuguese 10-year is still yielding 11%, somebody is aggressively buying the Portuguese two-year note. It could be the use of LTRO money by private banks in an effort to enhance return but it may be the ECB adding to its purchases of sovereign debt. It is important to stay attuned to yield curve moves that indicate some action from authorities or very large investors. Could it be China chasing higher short-term yield to offset the ridiculous rates on the Schatz? Chinese buying of Euros has to be invested somewhere.