In building on the discussions in Tuesday’s POST it is important to note that the debt discussion that has taken place in Notes From Underground is gaining traction as an important piece of the financial narrative. The failure of the SPOOS, NASDAQ, and DOW to gain traction with the robust earning releases is forcing the perplexed to confront the impact and collateral damage from Ben Bernanke’s Portfolio Balance Channel, also known as QE or large-scale asset purchases.
Posts Tagged ‘Dow’
Notes From Underground: Riding High in April
April 25, 2018Notes From Underground: Synchronicity
February 5, 2018We 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.
Notes From Underground: Wake Up! Wake Up! For Your Light Has Come
June 11, 2017This 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?
Notes From Underground: Cramer Unsavory? I Think Not
January 14, 2016Jim 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.”
Notes From Underground: Weak Unemployment Report Creates A Cacophony of Market Reactions
October 4, 2015Before 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.
Notes From Underground: Bored of the Talk or Is COMPLACENCY IS THE NEW NORMAL?
June 1, 2014During 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.
Notes From Underground: Making Sense From the U.S. Dollar Post-Payrolls
May 4, 2014The 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.
Notes From Underground: The Day Is Upon Us … Be Patient and Don’t Act With “Water-Like Impetuosity”
December 17, 2013Tread 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.
Notes From Underground: The Fed’s Zero Rate, Quantitative Easing Policies Are Stock Market Fundamentals
March 10, 2013The 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.