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Hedge Fund CIO: If We Can"t Bounce After Being Down 7 Weeks In A Row, Something Is Seriously Wrong

Hedge Fund CIO: If We Can't Bounce After Being Down 7 Weeks In A Row, Something Is Seriously Wrong By Eric Peters, CIO of One River Asset Management “Biggie’s bearish and annoying, ignored,” bellowed Biggie Too, 3rd person. “That’s how the crowd treats Biggie when these cycles get started, when stocks are still at their highs and Biggie turns bearish,” said the chief global strategist for one of Wall Street’s too-big-to-fail affairs, one of only a few such cats to call this market right. “Biggie’s bearish and they congratulate, kiss Biggie’s ring -- that’s step Number Two,” barked Biggie, slipping into a slow groove, hands in the air holding two fingers up. “Step Number Three -- Biggie stays bearish, and the crowd hates Biggie,” said Too, sharing Biggie’s Three-Step Market Manual. “If we can’t bounce after being down seven weeks in a row, something’s seriously wrong with this market. But you gotta get to Number Three before the big bottom is in. And Biggie’s still stuck somewhere in step Number Two – getting lotta praise, no haters, no hate mail. Not yet.” Overall: “Achieving price stability, restoring price stability, is an unconditional need,” said Jerome Powell. “Something we have to do because really the economy doesn't work for workers or for businesses or for anybody without price stability. It’s the bedrock of the economy really,” added the Fed Chairman. “If that involves moving past broadly understood levels of ‘neutral’ we won't hesitate to do that,” he said, calm, threatening. “We will go until we feel we are at a place where we can say ‘yes, financial conditions are at an appropriate place, we see inflation coming down.’” It’s been decades since a Fed Chairman told investors to sell rallies until inflation cools or something breaks. US equities closed the week lower again, a historic run, but devoid of panic. It’s a market re-price, not a fracture, a break, at least not yet. “It’s in everyone’s interest for both the US and EU to make investments in a coordinated way that deepens the entire ecosystem of the semiconductor supply chain,” said US Commerce Secretary Raimondo, unveiling initiatives in high-tech, AI, industrial standards, and global food security. “It will be good for both industry and national security,” she added, as the US and Europe retreat to a fractured world of trading blocs, security alliances. Echoes of Europe’s disastrous dependency on Russian energy exports are found in the West’s reliance on Taiwanese semiconductors and Chinese technology, rare earths. “We intend to exclude Huawei and ZTE from our 5G networks,” said Canada’s Industry Minister Francois-Philippe Champagne, joining the rest of the Five Eyes intelligence sharing network. “Providers who already have this equipment installed will be required to cease its use and remove it under the plans we’re announcing today.” Beijing banned senior officials from owning overseas assets or stakes in foreign entities, whether directly or through spouses, children. Xi naturally wants to insulate his politicians from Western influence/sanctions in a conflict. The most consequential redrawing of global relations since WWII has begun. So far it has produced a re-price, not a market fracture. At least not yet. Tyler Durden Sun, 05/22/2022 - 18:50.....»»

Category: blogSource: zerohedgeMay 22nd, 2022

November: Is A Bigger Drop In Gold Just Around The Corner?

As expected, after the applauded increase, gold fell. But will it manage to bounce off the bottom or rather slide lower? Q3 2021 hedge fund letters, conferences and more Today’s analysis is going to be all about gold, and for a good reason. Based on yesterday’s and Monday’s sessions, November is now a down month […] As expected, after the applauded increase, gold fell. But will it manage to bounce off the bottom or rather slide lower? if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Series in PDF Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more Today’s analysis is going to be all about gold, and for a good reason. Based on yesterday’s and Monday’s sessions, November is now a down month for gold. Please let that sink in. Gold ended last week above $1,850, with almost everyone in the market cheering and making bets, on how soon gold will move above $1,900 and then rally to new yearly highs. It was after the completion of the inverse head-and-shoulders pattern, after all! Well, I warned you that there were more long-term-based factors in place than the above-mentioned inverse head-and-shoulders pattern, and since longer-term patterns are more important than the shorter-term-based ones, the outlook was bearish, not bullish. In fact, it was the very short-term rally that made the outlook bearish, because of three separate time-based indications for a reversal. And I don’t even mean other bearish indications like gold’s invalidation of the small breakout above the declining red resistance line. Two of the indications that I described previously were the triangle-vertex-based reversals based on the below chart. When resistance and support lines cross, markets tend to reverse their previous course. There’s no good logical explanation for why it should work, but it does. Not in every case, and I’m not promising that it will work in all cases, but I’ve seen it work so many times in the precious metals market so that I can say that ignoring these indications is a very costly endeavor. Another indication came from gold’s long-term chart – its cyclical turning point was pointing to a major reversal, and the preceding move was up. Consequently, gold was likely to top. And that’s exactly what it did. Gold moved lower this week and taking into account the weekly high to yesterday’s closing price, it declined by over $100. Not bad for just two days. But perhaps the most interesting things are now visible on gold’s monthly chart (based on monthly candlesticks). The above chart is loaded with clues. Let’s start with the similarity between now and 2013 that we see from this perspective. The consolidation is similar not only in terms of the shape of the price move but also in terms of the decline in long-term volatility. The upper part of the above chart represents the width of the Bollinger Bands – a tool that is based on the volatility of the market. In short, greater volatility means broader Bands, meaning the above indicator would move higher. So, it’s essentially a proxy for volatility. Since we’re using monthly candlesticks here, it’s a proxy for long-term volatility. Please note that the BB width not only moved from similar levels in 2011 and 2020 to similar levels in late-2012 and now, but it took approximately the same time to get there (if we start both moves with the final monthly high). Like a Decade Ago? The interesting thing about long-term volatility is that periods of low volatility tend to be followed by periods of high volatility – in either way. I marked four previous cases when we saw very low volatility after gold’s several-year-long rally, and it was indeed very close to the start of big moves. One of those cases was the late-2012 case, which appears similar to what we see right now. Consequently, gold is likely to move quite significantly in the following months. If the similarity to 2013 continues, gold would be likely to decline just as the blue dashed line suggests. This implies a move below $1,300. Will gold indeed decline to that low? I doubt it, as there’s very strong support a bit below $1,400. It’s based on the previous highs and the rising support line based on the 2015 and 2018 lows. The decline to those levels would have been enough of a reaction that was likely to follow the failed 2020 breakout above the 2011 highs. Invalidations of breakouts are strong “sell” signals, and invalidation of a breakout that was extremely important (as well as a breakout to a new all-time high), is likely to have very dire consequences. Summing up, gold declined in tune with my long-term-based indications and the medium-term downtrend appears to have resumed. Based on the analogy to 2013 and other factors, a bigger decline in gold appears to be just around the corner (regardless of what happens in the very near term). Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today. Przemyslaw Radomski, CFA Founder, Editor-in-chief Sunshine Profits: Effective Investment through Diligence & Care All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice. Updated on Nov 24, 2021, 10:23 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkNov 24th, 2021

Like The Latest Bond Flick, The US Dollar Has No Time To Die

While the dollar is on a tear, precious metal stocks have gotten away with it lately. But how long will their resistance last? Q3 2021 hedge fund letters, conferences and more The USD Index (USDX) After the USD Index’s negative response to the ECB’s monetary policy meeting on Oct. 28, I warned on Oct. 29 […] While the dollar is on a tear, precious metal stocks have gotten away with it lately. But how long will their resistance last? if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more The USD Index (USDX) After the USD Index’s negative response to the ECB’s monetary policy meeting on Oct. 28, I warned on Oct. 29 that dollar bears were unlikely to celebrate for much longer. I wrote: Based on the rather random comment during the conference, the traders panicked and bought the EUR/USD, which triggered declines in the USD Index (after all, the EUR/USD is the largest component of the USDX). Was the breakout to new 2021 lows invalidated? No. The true breakout was above the late-March highs (the August highs also served as a support level, but the March high is more important here) and it wasn’t invalidated. What was the follow-up action? At the moment of writing these words, the USDX is up and trading at about 93.52, which is just 0.07 below the August high in terms of the closing prices. Consequently, it could easily be the case that the USD Index ends today’s session (and the week) back above this level. You’ve probably heard the saying that time is more important than price. It’s the end of the month, so let’s check what happened in the case of previous turns of the month; that’s where we usually see major price turnarounds. I marked the short-term turnarounds close to the turns of the month with horizontal dashed blue lines, and it appears that, in the recent past, there was practically always some sort of a turnaround close to the end of the month. Consequently, seeing a turnaround (and a bottom) in the USD index now would be perfectly normal. And with the USD Index making quick work of 94, 95, and now 96, the greenback’s rally continues to gain steam. What’s more, the USD Index also surged above its late 2020 resistance and 98 should be the next bullish milestone. Gold, Silver, And Mining Stocks Sense That Something Is Amiss More importantly, however, gold, silver, and mining stocks are sensing that something is amiss. For example, while they largely ignored the USD Index’s recent ascent, their negative correlations resurfaced last week (on a very short-term basis, so far, but still). Moreover, while the precious metals’ recent rallies were likely euro-weakness-driven and not USD Index-strength-driven, the dollar basket’s uprising should elicit more pain for gold, silver, and mining stocks over the medium term. To explain, I wrote on Nov. 17: The euro recently declined and the prices of silver and gold recently rallied shortly after dovish comments from the eurozone. Namely, while the expansionary nature of fiscal and monetary decisions in the U.S. might be after its peak (with the infrastructure bill signed even despite high inflation numbers), the eurozone is far from limiting its expansionary (i.e., inflationary) policies, and it was just made clear recently. That was bearish for the euro and bullish for the gold price – as more money (euros in this case) would be chasing the same amount of physical gold. The point here is that it might have been the decline in the value of the European currency that caused gold to rally, and it had little to do with what happened in the USD Index. Don’t get me wrong, most of the time, the gold-USD link is stable and negative. In some cases, gold shows strength or weakness by refusing to move in tune (and precisely: again) with U.S. dollar’s movement. But in this case, it seems that it’s not about the U.S. dollar at all (or mostly), but rather about what happened in the Eurozone and euro recently. As a result, with the USD Index likely to take the lead in the coming months, the precious metals should suffer along the way. For context, the USD Index is approaching overbought territory and a short-term decline to ~95 isn’t out of the question. However, it’s more of a possibility than a given. Moreover, the greenback’s medium-term outlook remains robust, and any short-term pullback is likely a corrective downswing within a medium-term uptrend. Circling back to the euro, I’ve been warning for months that the Euro Index was materially overvalued and that a sharp re-rating would likely unfold. I wrote previously: The next temporary stop could be ~1.1500 (the March 2020 highs, then likely lower). For context, the EUR/USD accounts for nearly 58% of the movement of the USD Index, and that’s why the euro’s behavior is so important. And after the Euro Index sunk to a new 2021 low last week, the European currency has officially fallen off a cliff. To that point, after breaking below the declining support line of its monthly channel, a drawdown to ~111 is likely next in line (which is signaled by the breakdown below its bearish head & shoulders pattern). The Euro Index is near oversold territory and a short-term bounce may ensue, but the bearish medium-term implications remain intact. Please see below: Adding to our confidence (don’t get me wrong, there are no certainties in any market; it’s just that the bullish narrative for the USDX is even more bullish in my view), the USD Index often sizzles in the summer sun and major USDX rallies often start during the middle of the year. Summertime spikes have been mainstays on the USD Index’s historical record and in 2004, 2005, 2008, 2011, 2014 and 2018 a retest of the lows (or close to them) occurred before the USD Index began its upward flights (which is exactly what’s happened this time around). Furthermore, profound rallies (marked by the red vertical dashed lines below) followed in 2008, 2011 and 2014. With the current situation mirroring the latter, a small consolidation on the long-term chart is exactly what occurred before the USD Index surged in 2014. Likewise, the USD Index recently bottomed near its 50-week moving average; an identical development occurred in 2014. More importantly, though, with bottoms in the precious metals market often occurring when gold trades in unison with the USD Index (after ceasing to respond to the USD’s rallies with declines), we’re still far away from that milestone in terms of both price and duration. Again, the recent move higher in the USD Index doesn’t necessarily apply in the case of the above rule, as it was not the strength of the USD but weakness in the euro that has driven it. Likewise, with the USD Index now approaching its long-term rising support line (which is now resistance), a rally above the upward sloping black line below would invalidate the prior breakdown and support a move back above 100. However, with the dollar basket’s weekly RSI (Relative Strength Index) now above 70, a short-term consolidation may ensue. Conversely, please note that the recent medium-term rally has been calmer than any major upswing witnessed over the last 20 years where the USD Index’s RSI has hit 70. I marked the recent rally in the RSI with an orange rectangle and I did the same with the second-least and third-least volatile of the medium-term upswings. The sharp rallies in 2008 and 2014 were of much larger magnitudes. And in those historical analogies, the USD Index continued its surge for some time without suffering any material corrections. As a result, the short-term outlook is more of a coin flip. However, the medium-term outlook remains profoundly bullish, and gold, silver, and mining stocks may resent the USD Index’s forthcoming uprising. Just as the USD Index took a breather before its massive rally in 2014, it seems that we saw the same recently. This means that predicting higher gold prices (or the ones of silver) here is likely not a good idea. Continuing the theme, the eye in the sky doesn’t lie. And with the USDX’s long-term breakout clearly visible, the wind still remains at the dollar’s back. Please see below: The Bottom Line With my initial 2021 target of 94.5 already hit, the ~98 target is likely to be reached over the medium term, and the USDX will likely exceed 100 at some point over the medium or long term. Keep in mind, though: we’re not bullish on the greenback because of the U.S.’ absolute outperformance. It’s because the region is fundamentally outperforming the Eurozone, the EUR/USD accounts for nearly 58% of the movement of the USD Index, and the relative performance is what really matters. In conclusion, while the USD Index’s 2021 surge caught the consensus by surprise, I’ve been sounding the bullish alarm for many months. And with more strength likely to materialize over the medium term, the ‘death of the dollar’ narrative has been grossly over-exaggerated. Moreover, while gold, silver, and mining stocks recently ignored the greenback’s fervor, history implies that their relative strength won’t last. As a result, more downside will likely confront the precious metals over the next few months. Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today. Przemyslaw Radomski, CFA Founder, Editor-in-chief Sunshine Profits: Effective Investment through Diligence & Care All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice. Updated on Nov 22, 2021, 1:09 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkNov 22nd, 2021

JPMorgan Prime Advises Institutions To Keep Shorting Even As The Bank Hikes Its S&P Price Target

JPMorgan Prime Advises Institutions To Keep Shorting Even As The Bank Hikes Its S&P Price Target One wouldn't know it from reading the "house view" research distributed for broad retail and media consumption, and to a large extent for political motives, but behind the cheerful and bullish facade spun by JPMorgan's equity strategists, the bank is quietly telling a subset of its top clients that they should keep shorting the market. This should come as a surprise - after all just a few weeks ago, with many Wall Street firms scaling back their stock market outlooks for the rest of the year, JPMorgan was adamantly bullish and in a recent note, the bank's chief US equity strategist Dubravko Lakos-Bujas said the bank is confident that strong growth lies ahead despite concerns that the recent downshift in economic and business cycle momentum will weigh on stocks. He also raised his year-end S&P 500 price target to 4,700 from 4,600, representing a 6% gain from current levels, and predicted that the index would hit 5,000 at some time in 2022. So in light of this euphoric optimism, we found it strange that JPM's "positioning intelligence" team, a group which operates under the umbrella of the bank's Prime Brokerage team which in turn directly interfaces with institutional investor clients and provides them with ideas and insights from "top-ranked analysts, to high-touch sales and trading services, to world-class algorithmic and electronic trading capabilities" is far less enthused about the market's near-term perspective. In fact, in its latest note, the team of JPM wonder traders whose views rarely if ever make it to the broader public is advising clients on "5 Reasons Why Shorts Can Continue to Work in the Medium Term." Seems a bit strange to pitch shorts when your chief strategist sees stocks surging over 300 points in under three months? Or perhaps, JPM is playing both sides of the trade: getting its retail clients and less privileged institutions to keep buying, helping a handful of select top accounts to short into a rising tide. Then again, JPMorgan would never do something that duplicitous, would it? Rhetorical questions aside, here is the thesis presented by the JPM prime folks; needless to say this would never make its way into a bullish "house view" research report: During the recent drawdown, one element that’s helped HF performance is that shorts have generally worked. When compared to what we saw early this year, this is a welcome development and potentially a sign that HFs relative returns could appear better if the markets were to continue to correct. However, with the recent declines, the US High Short Interest stocks (JPTASHTE basket) are back to the mid-May lows in absolute terms and are back to relative lows on a YTD basis…  So a key question as we approach year-end could be will these rip higher once again? In general, we think shorts are not set up for a sharp reversal higher (i.e. they can continue to work), unless we see a very strong “risk on” market come back into vogue. Digging deeper into this argument, and before getting into the main reasons for why JPM Prime thinks shorts can continue to perform better relative to the market going forward, it’s worth taking a quick step back to look at what’s happened this year on the short side. First, when we look at short “alpha” (i.e. the performance of shorts relative to the market), it suggests that shorts rallied much faster than the market and faster than longs at the start of this year, particularly among Equity L/S funds (left chart). Everyone remembers the reason: the hedge fund inspired squeeze of "meme stonks" by millions of retail investors, who made hedge fund like Senvest which was long Gamestop well ahead of the short squeeze frenzy and which leaked its GME squeeze thesis to the reddit message boards, the best performing hedge fund of the year. And yet WallStreetBets still thinks it is somehow "socking" it to the billionaire hedge funds, little do they know that they were merely pawns in a far bigger game which made one of said hedge funds, the one that precipitated the squeeze, fabulously wealthy as we explained in "The Curious Case Of The Hedge Fund That Made $700 Million On GameStop." But we digress. Again in late May to early June, we saw another period of fairly strong outperformance (i.e. negative alpha). Both of these periods were tied to greater activity among the retail community, especially among so-called “meme” stocks, with the timing coinciding with Joe Biden's stimmies hitting bank accounts. However, and this did surprise us, JPM notes that since the peaks in Feb/Mar of this year, shorts have been underperforming the broader market and are actually underperforming on a YTD basis. Second, looking at short activity (i.e. short additions vs. covering), we had seen sharp covering in 4Q20 as markets rallied into year-end and this persisted into Jan of this year, but the trend since then has been mostly one of shorts being added back. That said, the short additions on a cumulative basis still lag the long additions by a wide margin on a YTD, 2-year, or 4-year basis. Third, High Short Interest stocks (e.g. the “tip of the spear”) clearly rallied very sharply — both in absolute and relative terms — in both Jan and late May. However, with the recent declines, these stocks are back to the mid-May lows in absolute terms and are back to relative lows on a YTD basis…so a key question according to JPM prime - again, these are the guys that institutions listen to, not the generic tripe distributed by "chief equity strategists" which is just fodder for CNBC talking heads, as we approach year-end is will these rip higher once again? Below we get into some of the multiple reasons why JPM Prime thinks it’s less likely that we experience another Jan or late May “squeeze” - for what it's worth we disagree completely and are confident that accumulating some of the most shorted names will soon pay off in droves, more on that in a subsequent post - however, one key factor (pun intended) that JPM wanted to emphasize up front is that it seems far less likely that “risky” factors will drive shorts higher going forward. Thus, this suggests that the worst for High SI stocks (and the short book more generally) is likely behind us, given the regime backdrop could remain more favorable going forward. Put simply, a rally in “risky” factors drove a lot of the outperformance of High SI stocks from the Covid lows to this past Feb.  Importantly, the magnitude and duration of the factor moves is already in line with what we saw coming out of the low in the early 2000s and the 2009 low. Thus, JPM's crack in house traders believe that "there’s a much lower likelihood that we get a repeat of what we saw from last March to mid-Feb of this year." And again, we believe JPM is dead wrong... again. With that in mind, here is what JPMorgan really thinks: 5 reasons why shorts can continue to work in the medium term: ETFs still make up relatively high % of the short book; thus, there’s room for a continued shift back to single-names Short Leverage is still low; it’s at a 1-year low for the All Strategies composite and only the 24th %-tile since 2017 Lack of evidence that HFs are strongly pressing shorts in High SI stocks; there has been some increase recently, which may lead to some near term risk of a bounce higher due to covering, but this is quite different from the build-up into mid-May Distribution of shorts suggests fewer extreme names; there are still many fewer stocks that have SI/float at elevated levels (e.g. 0 stocks in the Russell 3000 with SI/float > 50% vs. 10 of these at the start of the year), Factors have mattered a lot, but they shouldn’t nearly as much going forward; from a regime perspective, “risky” factors – i.e. high trading activity, high vol, high earnings variability, high leverage – tend to outperform over the 12-18 months from a market low. Given the move we saw from the COVID lows was similar in both magnitude and duration to what we saw post other major market lows, it suggests that the risk of a persistent outperformance on the short side is less likely to occur We drill down into these starting at the top: 1. ETFs as % of Short Book in N. America – Still Elevated Among Equity L/S funds, the % of shorts in ETFs is down from the highs earlier this year (17-18% recently vs. high of 19% at end of Jan 2021). That said, the recent level is still elevated on a longer lookback and well above the ~14% it was pre-COVID and early 2021. Among non-ELS funds, ETF shorts have been trending lower to 10-11% of the book, from a high of 12% in 1Q21. However, the level is still higher than it was in early Jan 2021 or early 2020. 2. Short Leverage – Still Low Among All Strategies, short leverage (i.e. short exposure as a % of equity) remains near ~1yr lows and is only at the 24th %-tile since 2017. Among ELS funds, it has been trending higher lately, but is still well below pre-COVID levels — it’s at the 52nd %-tile. One thing to note is that short leverage changes due to multiple factors including the relative performance of shorts, how it relates to HF performance (i.e. equity changes), and also includes derivative exposures. Thus, some of the decline among All Strategies is likely due to a) shorts performing better, b) performance holding up reasonably well lately, and c) some derivative exposures declining after quadruple witching in Sep. This is why it appears to be at odds with the recent flows that show a continuation of shorts being actively added. 3. High SI Stock Flows vs. Performance – Not pressing High SI Shorts High SI stocks saw material outperformance at the start of 2021 amidst retail squeeze behavior and very large covering. In Mar to mid-May, we saw HFs re-engage and add shorts among these stocks as they underperformed, but ultimately this was reversed again as the names squeezed in 2H May into early June. More recently, JPM has seen relatively less shorting of the High SI stocks despite their relative performance dropping back to mid-May lows. On a related point, JPM notes that since the flows are for the stocks that already have High SI, i.e. these stocks were likely shorted prior to getting into the basket, it’s not too unusual to see a lack of further short adds, but the recent flows also suggest that there’s not a strong pressing into these names. 4. Distribution of shorts suggests fewer extreme names In Jan 2021, the large covering of High Short Interest names caused a material reduction in the # of stocks in the Russell 3000 that had very high SI. In particular, the number of stocks with >50% SI/float went from 10 to 1, and was down from 19 at the end of 2019. However, the “belly” of the distribution has been rising as the number of stocks with 3-10% SI/float has been rising in the past few quarters. Given there are still relatively fewer stocks with 15%+ SI/float, the risk of a short squeeze having much broader market impacts seems relatively low. This is exemplified by the fact that in recent months, retail still seems to occasionally cause squeezes in one-off names, but a) they  often come back down and b) there haven’t been broader impacts as the High SI stocks have generally underperformed the market. 4. Distribution of shorts suggests fewer extreme names According to JPM, in Jan 2021, the large covering of High Short Interest names caused a material reduction in the # of stocks in the Russell 3000 that had very high SI. In particular, the number of stocks with >50% SI/float went from 10 to 1, and was down from 19 at the end of 2019. However, the “belly” of the distribution has been rising as the number of stocks with 3-10% SI/float has been rising in the past few quarters. As such the bank believes Given there are still relatively fewer stocks with 15%+ SI/float, the risk of a short squeeze having much broader market impacts seems relatively low. This is exemplified by the fact that in recent months, retail still seems to occasionally cause squeezes in one-off names, but a) they often come back down and b) there haven’t been broader impacts as the High SI stocks have generally underperformed the market. Again, we disagree with JPM here, and remain confident it's just a matter of time before hedge funds - not retail - orchestrate the next squeeze wave. 5. Factor Matters (or to put it more clearly, Factors HAVE Mattered a lot, but they shouldn’t nearly as much going forward) The performance of High SI stocks broadly correlates with the broader short book JPM Prime sees (although it generally hasn’t performed as well). However, understanding what caused the massive outperformance from the March 2020 lows to mid-Feb 2021 can help understand what’s likely going forward. So what’s the main takeaway? From a factor standpoint, the High SI stocks’ relative returns tend to be very positively correlated to a number of “risky” factors – i.e. stocks with high trading activity, high vol, high earnings variability, high leverage – and negatively correlated to stocks with lower risk – i.e. large caps, highly profitable stocks. Put simply, HFs are often shorting lower quality, highly volatile (and liquid), smaller cap stocks. When JPM takes the average return across these factors, it sees a very strong relationship to the relative returns of the High SI stocks. Looking at the chart since the start of 2020 (right chart below), the average factor driver line has been extremely correlated to the High SI stocks relative returns, except for Jan 2021 and then late May 2021, arguably as large HF covering drove these stocks to diverge from the factor drivers for a period of time. So what is JPM's the view going forward, and why does it differ so much from the "house view"? As the Prime folks explain, the magnitude and duration of the factor moves, which have tended to drive the High SI stocks to outperform post a market low, are already in line with what we saw coming out of the low in the early 2000s and the 2009 low. Thus, the bank believes that there’s a much lower likelihood that we get a repeat of what we saw from last March to mid-Feb of this year. For those curious about more details, the charts below on the left show the relative returns of the High SI stocks since 2014 against the various factors that seem to influence them. The right charts show these various factors vs. the SPX since 2000. Finally, JPM takes a brief look at some other questions on this topic. First, how does retail’s role figure into this? Here the House of Morgan is confident that there is less potential for retail to drive broader risk propagation due to 1) more awareness among HFs of what retail is trading, 2) less concentrated shorts (see prior reasons 3 & 4 in particular), 3) retail trading shifting more towards ETFs lately. Second, how does this look in other regions? Short performance has generally been less extreme in other regions, compared to what we saw in the US in 2H20 to early 2021. While there was some outperformance of top shorts in Europe in 4Q20 to Jan 2021, the volatility of the relative returns has generally been much lower. Additionally, in Japan and China there has not been as strong a move in the last year towards shorts outperforming. Finally, where does JPM see shorts relatively low or high vs. history? On a global basis, it’s mostly Defensive sectors that appear to have relatively low short exposure vs. history (e.g. FBT, Utilities, Food Retail, Telcos, Household & Pers. Products). On the flip side, a number of Cyclicals and Financials generally have higher short exposure vs. history. And while we thank JPM's elite trading forces for this stern defense of institutional shorting, we wonder just how all of this jives with the bank's overarching bullishness which has maintained JPM's equity strategists such as Lakos-Bujas and Kolanovic at or near the top of the highest S&P price targets. As for who will be right in their "medium-term" outlook on the market, whether it is the bullish JPMorgan urging smaller retail investors and less important institutions to buy or the bearish JPMorgan telling its high margin prime brokerage clients to press their shorts here, we eagerly look forward to getting the answer over the next few weeks. Tyler Durden Sun, 10/10/2021 - 07:35.....»»

Category: smallbizSource: nytOct 10th, 2021

Miners: What the HUI Index Says About The Medium-Term

Ignoring cycles, trends, and technical patterns is a potential recipe for disaster. The HUI index can tell us a lot about the near future. Q2 2021 hedge fund letters, conferences and more The HUI Index Plunges After the HUI Index sunk to a new 2021 low last week, the index further validated the breakdown below […] Ignoring cycles, trends, and technical patterns is a potential recipe for disaster. The HUI index can tell us a lot about the near future. .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2021 hedge fund letters, conferences and more The HUI Index Plunges After the HUI Index sunk to a new 2021 low last week, the index further validated the breakdown below the neckline of its bearish head & shoulders pattern. For context, H&S’ breakdowns have coincided with the largest declines in the HUI Index in recent decades. And while gold’s triangle-vertex-based reversal point may stop the bleeding in the very short-term, the HUI Index’s wounds are far from healed. To explain, I’ve been sounding the alarm on the HUI Index since the New Year (the index has declined by more than 29% YTD) and I wrote the following on Sep. 13: The HUI Index plunged by nearly 6% last week, and the reversal of the previous corrective upswing mirrors its behavior from 2013. In addition, with its stochastic oscillator and its RSI (Relative Strength Index) also a spitting image, an ominous re-enactment of 2013 implies significantly lower prices over the medium term. Please see below: Furthermore, while I’ve also been warning about the ominous similarity to 2012-2013, the HUI Index continues to hop into the time machine. To explain, the vertical, dashed lines above demonstrate how the HUI Index is following its 2012-2013 playbook. For example, after a slight buy signal from the stochastic indicator in 2012, the short-term pause was followed by another sharp drawdown. For context, after the HUI Index recorded a short-term buy signal in late 2012 – when the index’s stochastic indicator was already below the 20 level (around 10) and the index was in the process of forming the right shoulder of a huge, medium-term head-and-shoulders pattern – the index moved slightly higher, consolidated, and then fell off a cliff. Thus, the HUI Index is quite likely to decline to its 200-week moving average (or so) before pausing and recording a corrective upswing. That’s close to the 220 level. Thereafter, the index will likely continue its bearish journey and record a final medium-term low some time in December. Furthermore, I warned previously that the miners’ drastic underperformance of gold was an extremely bearish sign. There were several weeks when gold rallied visibly, and the HUI Index actually declined modestly. And now, gold stocks are trading close to their previous 2021 lows, while gold is almost right in the middle between its yearly high and its yearly low. And why is this so important? Well, because the bearish implications of gold stocks’ extreme underperformance still remain intact. Let’s keep in mind that the drastic underperformance of the HUI Index also preceded the bloodbath in 2008 as well as in 2012 and 2013. To explain, right before the huge slide in late September and early October 2008, gold was still moving to new intraday highs; the HUI Index was ignoring that, and then it declined despite gold’s rally. However, it was also the case that the general stock market suffered materially. If stocks didn’t decline so profoundly back then, gold stocks’ underperformance relative to gold would have likely been present but more moderate. Nonetheless, broad head & shoulders patterns have often been precursors to monumental collapses. For example, when the HUI Index retraced a bit more than 61.8% of its downswing in 2008 and in between 50% and 61.8% of its downswing in 2012 before eventually rolling over, in both (2008 and 2012) cases, the final top – the right shoulder – formed close to the price where the left shoulder topped. And in early 2020, the left shoulder topped at 303.02. Thus, three of the biggest declines in the gold mining stocks (I’m using the HUI Index as a proxy here) all started with broad, multi-month head-and-shoulders patterns. And in all three cases, the size of the declines exceeded the size of the head of the pattern. As a reminder, the HUI Index recently completed the same formation. Yes, the HUI Index moved back below the previous lows and the neck level of the formation, which – at face value – means that the formation was invalidated, but we saw a similar “invalidation” in 2000 and in 2013. Afterwards, the decline followed anyway. Consequently, I don’t think that taking the recent move higher at its face value is appropriate. It seems to me that the analogies to the very similar situation from the past are more important. Two Bearish Scenarios As a result, we’re confronted with two bearish scenarios: If things develop as they did in 2000 and 2012-2013, gold stocks are likely to bottom close to their early-2020 low. If things develop like in 2008 (which might be the case, given the extremely high participation of the investment public in the stock market and other markets), gold stocks could re-test (or break slightly below) their 2016 low. In both cases, the forecast for silver, gold, and mining stocks is extremely bearish for the next several months. For even more confirmation, let’s compare the behavior of the GDX ETF and the GDXJ ETF. Regarding the former, the GDX ETF closed at a new 2021 low last week and sunk below $30 for the first time since April 2020. For context, I warned of a forthcoming calamity on Sep. 7: I wrote: Large spikes in daily volume are often bearish, not bullish. To explain, three of the last four volume outliers preceded an immediate top (or near) for the GDX ETF, while the one that preceded the late July rally was soon followed by the GDX ETF’s 2020 peak. Thus, when investors go ‘all in,’ material declines often follow. And with that, spike-high volume during the GDX ETF’s upswings often presents us with great shorting opportunities. Moreover, even after the forecast became reality, the GDX ETF’s medium-term outlook remains quite bearish. For example, while gold bounced late last week and recouped its losses, the GDX ETF’s tepid rise further validated the senior miners’ underperformance. As a result, the relative weakness implies lower lows over the next few months. Please see below: The GDXJ ETF As for the GDXJ ETF, I wrote on Sep. 7 that overzealous investors would likely end the week disappointed: With the current move quite similar to the corrective upswing recorded in mid-May, the springtime bounce was also followed by a sharp drawdown. As a result, the GDXJ ETF could be near its precipice, as its 50-day moving average is right ahead. And with the key level now acting as resistance, investors’ rejection on Sep. 3 could indicate that the top is already here. And while the junior miners followed the roadmap to perfection, the GDXJ ETF still elicits material weakness. As a result, the GDXJ ETF remains poised to reach the ~$35 level over the medium term. Please see below: Finally, while I’ve been warning for months that the GDXJ/GDX ratio was destined for devaluation, the downtrend remains intact. And with the ratio reversing lower after reaching its declining resistance line, the medium-term implications remain unchanged. On top of that, if a stock-market swoon enters the equation, the ratio’s drawdown could be fast and furious (like what happened during the March 2020 crash). To explain, when the ratio’s RSI jumped above 50 three times in 2021, it coincided with short-term peaks in gold. Second, the trend in the ratio this year has been clearly down, and there’s no sign of a reversal, especially when you consider that the ratio broke below its 2019 support (which served as resistance in mid-2020). When the same thing happened in 2020, the ratio then spiked even below 1. The Bottom Line? If the ratio is likely to continue its decline, then on a short-term basis we can expect it to decline to 1.27 or so. If the general stock market plunges, the ratio could move even lower, but let’s assume that stocks decline moderately (just as they did in the last couple of days) or that they do nothing or rally slightly. They’ve done all the above recently, so it’s natural to expect that this will be the case. Consequently, the trend in the GDXJ to GDX ratio would also be likely to continue, and thus expecting a move to about 1.26 - 1.27 seems rational. If the GDX is about to decline to approximately $28 before correcting, then we might expect the GDXJ to decline to about $28 x 1.27 = $35.56 or $28 x 1.26 = $35.28. In other words, ~$28 in the GDX is likely to correspond to about $35 in the GDXJ. Is there any technical support around $35 that would be likely to stop the decline? Yes. It’s provided by the late-Feb. 2020 low ($34.70) and the late-March high ($34.84). There’s also the late-April low at $35.63. Conservatively, I’m going to place the profit-take level just above the latter. Consequently, it seems that expecting the GDXJ to decline to about $35 is justified from the technical point of view as well. Speaking of ratios, there was also a major breakdown in the gold to gold stocks ratio which most likely heralds severe declines in the following weeks/months, and if you’re interested in it, I recorded a video about it here (or search for “Sunshine Profits” on YouTube – it’s the Oct. 2 video). In conclusion, gold, silver, and mining stocks have all broken down technically, and their fundamental outlooks also remain quite treacherous over the next few months. With the USD Index hitting a new 2021 high last week and U.S. Treasury yields also rallying, the pairs’ upward momentum should continue over the medium term. Moreover, with the general stock market also showing signs of stress, a profound decline could add to the precious metals’ ills. As a result, gold, silver, and mining stocks’ weakness should continue before lasting bottoms likely form near the end of the year. Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today. Przemyslaw Radomski, CFA Founder, Editor-in-chief Sunshine Profits: Effective Investment through Diligence & Care All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice. Updated on Oct 4, 2021, 10:55 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkOct 4th, 2021

Sharp Market Turns Not To Miss

S&P 500 steeply declined, yet the credit markets offered a glimmer of hope to suck in the bulls – and thus far, the premarket bounce is sticking. The fact that buying the dip didn‘t work in the 4,350s area, needs some digesting today – the overnight stampede didn‘t develop. The sectoral view though doesn‘t allow […] S&P 500 steeply declined, yet the credit markets offered a glimmer of hope to suck in the bulls – and thus far, the premarket bounce is sticking. The fact that buying the dip didn‘t work in the 4,350s area, needs some digesting today – the overnight stampede didn‘t develop. The sectoral view though doesn‘t allow to declare the bottom to be in just yet. The technical bounce would be probably led by value, with tech lagging behind regardless of the anticipated daily stabilization / retreat in yields. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2021 hedge fund letters, conferences and more Neither the VIX has calmed down considerably yet. The bulls must be perplexed why buying the dip hasn‘t worked this time around (and before). The sizable open short profits can keep growing. As stated yesterday: (…) VIX understandably calmed down [Wednesday], but doesn‘t give impression of yielding too much to the downside – on the contrary, it seems to be on a general uptrend since early Jul. Volatility is returning, and that‘s characteristic of the unfolding correction. How far lower would it reach? The 4,340 followed by 4,300 and lower to mid 4,250 are the key supports. The bulls haven‘t (and face quite many headwinds from related markets, including the dollar) stepped in to close Tuesday‘s gap, which would be a game changer. For now, we‘re in a trading range where the bears have the advantage. The stock market bull hasn‘t topped, we‘re merely in an unpleasant correction, of which the daily upswing in utilities or consumer staples is a testament. The key fundamental events Thursday were Powell acknowledging that pesky inflation and China ordering its state-owned enterprises to secure oil supplies for the coming winter at any cost. The former finally lit the fuse behind precious metals (did you see how profoundly silver recovered from that $8bn futures contract drop representing 40% of worldwide mining output before Powell spoke on Wednesday?), the latter keeps crude oil prices underpinned. That‘s why I wasn‘t spooked by the copper plunge yesterday (really out of tune with the commodities sentiment and CRB Index performance) – the commodities superbull is merely getting started. Bringing up the key inflation thoughts of yesterday: (…) The slowly but surely acknowledged inflation surprise will come back to bite the central bank as inflation expectations are finally surging again, reflecting the cost-push inflation (hello commodities superbull), job market challenges and increasingly strained supply chains characterized by order cuts, delays, shortages and general issues in getting merchandise where it‘s awaited (hello port congestion, docking plus trucking staff shortages and full container ships anchored and awaiting unloading). And I‘m not even talking record drought through the West Coast stretching into Rockies and Midwest, or China electricity rationing. Precious metals seem to be the most undervalued asset class these weeks really. Once we look back at autumn 2021 a few short years down the road, we would all say that precious metals have been outrageously undervalued indeed. And have you seen the great crypto breakout that‘s making bulls such as myself very happy... Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook S&P 500 pause is very clearly over, and the bears keep having the upper hand. Credit Markets Credit markets let the bulls have second thoughts, and the high HYG volume indicates a brief pause in the stock market selling. Gold, Silver and Miners Precious metals sprang to life – first swallow of a turnaround. The bottom looks to be in, and would be confirmed by silver increasing in price faster than gold in order to bring the gold to silver ratio back down from its 80 local top. Reinforcing that move would be copper catching up and outperforming the CRB Index too. Crude Oil Crude oil consolidation continues, and every dip is being bought. Upswing continuation appears a question of time only. Copper Copper downswing could have attracted higher volume but that doesn‘t detract from a vigorous response of the bulls coming most likely next. The pattern of lower highs is likely to be broken to the upside the cryptos way (discussed next), in due time. Bitcoin and Ethereum Bitcoin and Ethereum bulls confirmed they were on the move, and the early Sep highs are next in their sights. The chart is very bullish, and the daily indicators have plenty of room to go before reaching overbought levels. Summary Stocks aren‘t out of the woods yet, but the bears are likely to take a daily pause today. Inflation is coming back into focus, today‘s core PCE price index confirms it isn‘t going away any time soon, and Treasury yield spreads (10-year over 2-year) are coming back from the false breakdown earlier in Sep, which would feed into the hunger for commodities. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals. Thank you, Monica Kingsley Stock Trading Signals Gold Trading Signals Oil Trading Signals Copper Trading Signals Bitcoin Trading Signals www.monicakingsley.co mk@monicakingsley.co All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice. Updated on Oct 1, 2021, 11:32 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkOct 1st, 2021

Powell: Inflation Might Not Be Transitory, After All

At a panel discussion, Fed Chair finally admitted that inflation could be more (!) long-lasting than expected. What does it mean? Hawks. Lots of them. Q2 2021 hedge fund letters, conferences and more Capitulation With Fed Chairman Jerome Powell finally having his ‘come-to-Jesus’ moment on Sep. 29, the central bank chief’s skittish words helped light […] At a panel discussion, Fed Chair finally admitted that inflation could be more (!) long-lasting than expected. What does it mean? Hawks. Lots of them. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2021 hedge fund letters, conferences and more Capitulation With Fed Chairman Jerome Powell finally having his ‘come-to-Jesus’ moment on Sep. 29, the central bank chief’s skittish words helped light a fire under the USD Index. For context, I’ve been warning for months that Powell remains materially behind the inflation curve. And with his indecisive speech upending the Fed’s confidence game, the gambit is showing signs of unraveling. Speaking at an ECB panel discussion on Sep. 29, he said: “The current inflation spike is really a consequence of supply constraints meeting very strong demand. And that is all associated with the reopening of the economy, which is a process that will have a beginning, middle and an end. It’s very difficult to say how big the effects will be in the meantime or how long they last.” For context, first it was “base effects,” then it was “transitory” and now “it’s very difficult to say.” He continued: “It’s also frustrating to see the bottlenecks and supply chain problems not getting better – in fact, at the margins apparently getting a little bit worse. We see that continuing into next year probably, and holding up inflation longer than we had thought.” What’s more, Powell actually admitted that the Fed is facing a conundrum that it hasn’t dealt with “for a very long time.” “Managing through that process over the next couple of years is… going to be very challenging because we have this hypothesis that inflation is going to be transitory. We think that’s right. But we are concerned about underlying inflation expectations remaining stable, as they have so far.” Wow. If that’s not capitulation, I don’t know what is. For context, I wrote on Sep. 24: I’ve warned on several occasions that the only way for the Fed to control inflation is to increase the value of the U.S. dollar and decrease the value of commodities. However, with commodities’ fervor accelerating on Sep. 23 – a day when the USD Index declined – the price action should concern Chairman Jerome Powell. As a result, FOMC participants’ 2022 inflation forecast is likely wishful thinking and they may find that a faster liquidity drain (which is bullish for the U.S. dollar) is their only option to control the pricing pressures. Speaking of which, the S&P Goldman Sachs Commodity Index (S&P GSCI) has rallied by ~5% for the month of September. For context, the S&P GSCI contains 24 commodities from all sectors: six energy products, five industrial metals, eight agricultural products, three livestock products and two precious metals. However, energy accounts for roughly 54% of the index’s movement. Please see below: Source: S&P Global As well, if you analyze the graphic below, you can see the impact that rising energy prices had on the S&P GSCI’s performance in September (MTD returns as of Sep. 27). To that point, with Brent and WTI surging recently and the latter on track for six straight weeks of weekly gains, Goldman Sachs has upped its year-end Brent target to $90 a barrel. Calling it the “revenge” of the old economy, Jeff Currie, Goldman Sachs global head of commodities research, said that “poor returns saw capital redirected away from the old economy to the new economy. It’s not unique to Europe, it’s not unique to energy, it’s a broad-based old-economy problem.” Thus, in his view, commodity prices need to be “much higher to get returns sufficient to start attracting capital. People wanted a quick return, and now you’re paying the price for it.” Please see below: Supporting the thesis, Bank of America commodities strategist Francisco Blanch told Bloomberg on Sep. 28 that Brent could hit $100 a barrel in 2022 and that a “cold winter” could actually pull forward the forecast. He said: “First, there is plenty of pent up mobility demand after an 18 month lockdown. Second, mass transit will lag, boosting private car usage for a prolonged period of time. Third, pre-pandemic studies show more remote work could result in more miles driven, as work-from-home turns into work-from-car. On the supply side, we expect government policy pressure in the U.S. and around the world to curb cap-ex over coming quarters to meet Paris goals. Secondly, investors have become more vocal against energy sector spending for both financial and ESG reasons. Third, judicial pressures are rising to limit carbon dioxide emissions. In short, demand is poised to bounce back and supply may not fully keep up, placing OPEC in control of the oil market in 2022.” Now, the important point isn’t whether or not Currie and Blanch are correct. The important point is that higher oil prices are mutually exclusive to Powell’s 2% inflation goal. For example, the Commodity Producer Price Index (PPI) – which is a reliable indicator of the next month’s Consumer Price Index (CPI) – recorded its highest monthly year-over-year (YoY) percentage increase in August since 1974. What’s more, the sky-high reading occurred with the S&P GSCI declining by ~2% in August (that’s why monitoring surging container rates is so important). However, as mentioned, the S&P GSCI has already risen by ~5% in September and container rates have also made new highs. As a result, Powell’s hawkish shift isn’t nearly hawkish enough to solve his inflationary dilemma. Inflation Isn’t Going Anywhere As further evidence, the Richmond Fed released its Fifth District Survey of Manufacturing Activity on Sep. 28. And while the headline index turned negative as output slumped, pricing pressures remained materially elevated. Please see below: Source: Richmond Fed Likewise, the Dallas Fed released its Texas Manufacturing Outlook Survey on Sep. 27. The report revealed: “Prices and wages continued to increase strongly in September. The price indexes climbed further, with the raw materials prices index at 80.4 and the finished goods prices index at 44.0, an all-time high. The wages and benefits index held steady at a highly elevated reading of 42.7.” For a visual of the overall index, please see below: Furthermore, the Dallas Fed also released its Texas Service Sector Outlook Survey and its Texas Retail Outlook Survey on Sep. 28. And though the U.S. service sector has suffered the brunt of the Delta variant’s wrath, pricing pressures remained. The report revealed: “Wage pressures eased in September, though remained at historically high levels, while price pressures remained highly elevated. The wages and benefits index declined from 32.6 to 26.9. The selling prices index was largely unchanged at 20.2, with nearly a quarter of firms reporting increased prices compared with August, while the input prices index inched up one point to 42.9.” More importantly, though, the Texas Retail Outlook Survey revealed: “Retail price pressures surged once again in September after some signs of moderation in August, while wage pressures held steady. The selling prices index surged nearly 11 points to 50.4 – with 58 percent of retailers increasing prices compared with August – while the input prices index increased from 41.3 to 50.1. The wages and benefits index was flat at 24.6.” For a visual of the overall index, please see below: And as the drama unfolds and Powell’s inflationary conundrum intensifies, his hawkish rhetoric on Sep. 29 helped sink the EUR/USD. For context, the EUR/USD accounts for nearly 58% of the movement of the USD Index. And with the currency pair collapsing below 1.1600 on Sep. 29 and closing below key 2020 support, the European dam could be about to break. Please see below: Reverse Repos Hit Another All-Time High! Also bullish for the U.S. dollar, with Powell’s liquidity circus still on full display, there is too much money floating around with too little use. And upping the ante on what I’ve been highlighting for months, after 80 counterparties drained nearly $1.416 trillion out of the U.S. financial system on Sep. 29, the Fed’s daily reverse repurchase agreements hit another all-time high. Please see below: Source: New York Fed To explain, a reverse repurchase agreement (repo) occurs when an institution offloads cash to the Fed in exchange for a Treasury security (on an overnight or short-term basis). And with U.S. financial institutions currently flooded with excess liquidity, they’re shipping cash to the Fed at an alarming rate. I’ve been warning for months that the activity is the fundamental equivalent of a taper  due to the lower supply of U.S. dollars (which is bullish for the USD Index). Thus, while we await a formal announcement from the Fed, the U.S. dollar’s fundamental foundation remains robust. The bottom line? Powell’s only hope to curb inflation is to strengthen the U.S. dollar and weaken commodity (including gold and silver) prices. For context, major futures contracts are priced in U.S. dollars. And when the dollar rallies, it’s more expensive for foreign buyers (in their currency) to purchase the underlying commodities. As a result, a stronger U.S. dollar often stifles demand. And with the current supply/demand dynamics favoring higher commodity prices, Powell will have to work his magic — strengthen the dollar and reduce demand — if he wants his inflation problem to subside. In conclusion, gold, silver (ouch) and mining stocks sunk like stones on Sep. 29. And with the USD Index cutting through 94 like a knife through butter, new 2021 lows in the EUR/USD were accompanied by new 2021 highs in the USD Index. Moreover, with the momentum poised to continue, the PMs’ medium-term outlooks remain quite somber. As a result, further weakness will likely materialize before brighter days emerge (probably) near the end of the year. Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and silver that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today. Przemyslaw Radomski, CFA Founder, Editor-in-chief Sunshine Profits: Effective Investment through Diligence & Care All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice. Updated on Sep 30, 2021, 10:28 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkSep 30th, 2021

Gold Stocks’ New Short-Term Lows Can Only Mean One Thing

If not for the war, there would’ve probably been a repeat of the 2008 gold market. However, there is something similar: the bearish outlook for miners. Gold stocks are declining similarly to how they did in 2008. History Can Be Rhymed The Russian invasion triggered a rally, which was already more than erased, and if […] If not for the war, there would’ve probably been a repeat of the 2008 gold market. However, there is something similar: the bearish outlook for miners. Gold stocks are declining similarly to how they did in 2008. History Can Be Rhymed The Russian invasion triggered a rally, which was already more than erased, and if it wasn’t for it, the self-similarity would be very clear (note the head-and-shoulders patterns marked with green). Since the latter happened, it’s not as clear, but it seems that it’s still present. At least that’s what the pace of the current decline suggests.  if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more I used a red dashed line to represent the 2008 decline, and I copied it to the current situation. They are very similar. We even saw a corrective upswing from more or less the 200-week moving average (red line), just like what happened in 2008. We saw a breakdown to new short-term lows, which means that the volatile part of the slide is likely already underway. Today’s decline in silver prices to new yearly lows definitely supports the above. All right, let’s zoom in and see how mining stocks declined in 2008. Back then, the GDXJ ETF was not yet trading, so I’m using the GDX ETF as a short-term proxy here. The decline took about 3 months, and it erased about 70% of the miners’ value. The biggest part of the decline happened in the final month, though. However, the really interesting thing about that decline – that might also be very useful this time – is that there were five very short-term declines that took the GDX about 30% lower.  I marked those declines with red rectangles. After that, a corrective upswing started. During those corrective upswings, the GDX rallied by 14.8-41.6%. The biggest corrective upswing (where GDX rallied by 41.6%) was triggered by a huge rally in gold, and since I don’t expect to see anything similar this year, it could be the case that this correction size is an outlier. Not paying attention to the outlier, we get corrections of between 14.8% and 25.1%. The interesting thing was that each corrective upswing was shorter (faster) than the preceding one. The first one took 12 trading days. The second one took seven trading days. The third one took 2 trading days, and the fourth and final one took just 1 trading day. Fast forward to the current situation. Let’s take a look at the GDXJ ETF. The GDXJ ETF declined by 32.4% and then corrected – it rallied by about 20.3%. The corrective upswing took 14 trading days. The above is in perfect tune with the previous patterns seen in the GDX during the 2008 slide. What does it tell us? It indicates that history can be rhymed, and while it will not be identical, we should pay attention to the indicators that worked in 2008. The next corrective upswing (a notable one, that is) might start when the GDXJ ETF declines by about 29-35% from its recent top. To clarify, I don’t claim that the above technique would be able to detect all corrective upswings, or that I aim to trade all of them. For instance, in my view, it was a good idea to enter a long position on May 12 and switch to a short position on May 26, but I wasn’t aiming to catch the intraday moves. GDXJ could also decline a bit more than 29-35%, as let’s keep in mind that previous statistics are based on the GDX ETF and we are discussing the GDXJ here, and the latter is likely to decline even more than GDX as juniors are more correlated with the general stock market (and the latter is likely to slide). So, let’s say that the GDXJ might decline between 29% and 40% from the recent high before triggering another notable corrective upswing (one that could take between 5 and 10 trading days based on how long the last one took and how big those corrections were in 2008). The recent high was formed with the GDXJ ETF at $42.19. Applying the above-mentioned percentages to this price provides us with $24.78-29.32. And yes, the above would be likely to take place along with a big decline in gold prices. Now, is there any meaningful support level in this area that could stop the decline? Yes! Still Bearish The late-March 2020 low is at $26.62, and it provides significant short-term support within the analogy-based target area. Additionally, the above corresponds – more or less – to the size of the decline that would match the size of the April-May decline. It would be only somewhat bigger. Let’s keep in mind that gold stocks don’t necessarily move on their own, but rather move along with gold. So, if gold moves to its strong medium-term support provided by the 2021 lows and then starts a brief rally, the same action would be likely in mining stocks. The head and shoulders pattern confirms that the downside target is well below $30, perhaps even as low as ~$24. There’s also an additional detail present on GDXJ’s very short-term chart. The GDXJ just broke below the declining wedge. While falling wedges are usually a bullish sign, they only become such after a break to the upside. What we witnessed was a relatively uncommon occurrence: a breakdown on the downside. The implications are therefore bearish instead of being bullish, and the profit potential for the current short position remains enormous. Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today. Przemyslaw Radomski, CFA Founder, Editor-in-chief Sunshine Profits: Effective Investment through Diligence & Care All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice. Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. Updated on Jul 1, 2022, 12:06 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJul 1st, 2022

Futures, Yields Slide In Recessionary Start To New Quarter

Futures, Yields Slide In Recessionary Start To New Quarter As DB's Jim Reid puts it "if you want the good news this morning it's that H1 is now finally over. If you want the bad news it's that there's not much good news around as we start H2 and US equity futures are already down around a percent in the first few hours of the new half year. " Indeed, just when you thoughts stocks couldn't possibly slide any more after just concluding the worst first half in 52 years... ... and with investor and consumer sentiment at record lows, you'd be shocked to learn that futures and stocks started the new month and quarter by plumbing fresh lows as fears of soaring inflation and tumbling earnings boosted concerns about an imminent recession, and the resulting risk aversion lifted bonds and havens and sent risk sliding.  The "Big Short" Michael Burry said we may only be about halfway through the market's decline... Adjusted for inflation, 2022 first half S&P 500 down 25-26%, and Nasdaq down 34-35%, Bitcoin down 64-65%. That was multiple compression. Next up, earnings compression. So, maybe halfway there. — Cassandra B.C. (@michaeljburry) June 30, 2022 ... while Goldman was also downbeat, seeing global equities selling off further in the near term. As of 730am, S&P 500 and Nasdaq 100 pointed to declines of 0.3%, having shaved off as much as a 1% drop earlier... ... while 10-year US Treasury yield slid below 3% to the lowest since early June as markets now price in a record 10bps in rate cuts in Q1 2023 with markets confident the Fed will have to pivot to defeat the coming recession. Every Group-of-10 currency fell against the dollar and the yen, traditional havens, while bitcoin reversed a modest attempt at a breakout that briefly pushed it back over $20K. In premarket trading, shares of US chip companies fell after Micron Technology issued a downbeat forecast on weaker demand for phones and computers. Bank stocks are also lower in premarket trading, putting them on track for their fifth straight day of losses amid a broader slump in equity markets. Other notable premarket movers: Kohl’s (KSS US) plunges 15% in US premarket trading after CNBC reported it’s ending sale talks with Vitamin Shoppe owner Franchise Group. Semiconductor companies are falling on Friday after Micron Technology issued a weak forecast for the current quarter due to lower demand for phones and computers. Micron (MU US) -5.5%, Nvidia -1.3% (NVDA US), Qualcomm (QCOM US) -0.7%. Cryptocurrency-exposed stocks could be active again on Friday as Bitcoin dip buyers are triggering a rally for the largest digital token. Riot Blockchain (RIOT US), Marathon Digital (MARA US) edge up 2.4% and 2.6%, respectively, in premarket. XPeng (XPEV US) burning cash in the short-term is unavoidable, Nomura says in a note that downgrades the Chinese EV maker to neutral from buy. Shares down 0.2% premarket. Risk assets continued to be the target of sellers Friday as recession worries overtake concern about runaway inflation. With Federal Reserve policymakers resolute on getting price growth back to their 2% target, investors are assessing the hit to the economy from harsh rate hikes. “Inflation is the key focus of central bankers; investors losing money is way down their list of concerns,” Chris Iggo, chief investment officer at AXA IM Core, wrote in a note to clients. “Interest rate and inflation markets are taking the view that what is priced in terms of monetary tightening will be enough to bring inflation down, but in order for that to happen, there also needs to be a cost to growth.” Meanwhile, both stocks and bonds were rocked by outflows this week, reflecting investor fears about hawkish central bank policy. About $5.8 billion exited global stock funds in the week through June 29, Bank of America said, citing EPFR Global data. Bonds had redemptions of $17 billion. Separately, global companies have pulled more debt sales in the past six months than in all of 2020. More than 70 deals have been postponed or canceled so far in 2022, according to data compiled by Bloomberg. In Europe, markets reversed sharp opening losses with the Stoxx 600 briefly turning green before sliding 0.5% lower with retail and utility names supporting on the recovery. Bund yields rose after data showed euro-area inflation hit a fresh record, surpassing expectations.  Here are some of the biggest European movers today: European airlines rise on Friday, paring some declines from previous sessions, as oil is headed for the third straight weekly drop on concerns that a potential recession will hurt demand. Wizz Air rises as much as +10%, EasyJet +6.2%, British Airways owner IAG +4.4% Airbus shares rise as much as 4% after BofA analysts led by Benjamin Heelan added the aircraft manufacturer to the bank’s ‘3Q Best Ideas list,’ according to a note. SBB shares advance as much as 21.5% Friday, its largest intra-day gain since April 2017, after the company was included in Nasdaq Stockholm’s OMXS30 index. Sodexo shares gain as much as 5.6%, the most since April 8, after the French caterer reported 3Q revenue that beat the average analyst estimate. Morgan Stanley says Friday’s update is a “relief.” Maersk shares rise as much as 3.0% after JPMorgan upgraded the stock to overweight from neutral and placed it and Kuehne Nagel on their “positive Catalyst Watch” for Q2, citing increased confidence in the longevity of current earnings. European semiconductor stocks tumble after US memory- chip maker Micron 4Q outlook fell short of analyst expectations and said the industry demand environment has weakened. Chipmaker Infineon falls as much as 5.0%, ASML drops 4.9% La Francaise des Jeux shares decline as much as 9.0% after Citi cuts the stock to sell from buy, citing concession fee to be paid that is worse than Street expectations. Craneware declines as much as 12% after an offering of ~1.2m shares by holder Abry Partners VII priced at 1,600p, a 13% discount to last close. OVH Groupe shares drop as much as 6.5% after the analysts adjusted their estimates amid a softening demand outlook. Earlier in the session, Asian stocks declined for a third day, as traders assessed recession risks in the global economy after weak US consumer spending and soft factories data from the region. Investors are also keeping an eye on developments from the Chinese President’s Hong Kong visit.  The MSCI Asia Pacific Index slid as much as 1.1%, adding to nearly 2% weekly loss, weighed down by tech and consumer discretionary stocks. Chipmakers including TSMC and Samsung extended their declines, contributing the most to the measure’s loss along with Australian miner BHP and Indian energy giant Reliance.  Taiwan’s benchmark was again the region’s notable underperformer as it is on course for a bear market following more than a 20% fall from its January high, dragged down by technology stocks. Equity benchmarks in Japan and South Korea slipped more than 1%. Stocks in mainland China retreated after meandering between gains and losses while Hong Kong was closed for a holiday as its new chief was sworn in by Chinese President Xi Jinping.  A further slide in June purchasing managers’ indexes in Asian countries except China and the drop in US consumer spending for the first time this year in May highlighted the fragile foundation of the world economy. Those data dimmed global economic outlook and further dented investor sentiment already weakened by ongoing worries about global central banks’ aggressive rate hikes to fight inflation.  “Overall, weakened US consumer spending will lead to a drop in global demand. It will affect export-dominated markets like South Korea in particular,” said Cui Xuehua, a China equity analyst at Meritz Securities in Seoul. “Traders are also looking to see if there will be policies benefiting Hong Kong, such as a re-opening of borders and increased trade” as Xi visits Hong Kong. Asian stocks plunged about 18% during the first half of this year, capping the first six months with the worst annual drop since 2008. Asian equities have struggled to rebound from a low in May as global recession worries and aggressive tightening by central banks triggered heavy outflows of funds from emerging markets. Chinese stocks have remained a bright spot last month as Beijing winds down its stringent virus restrictions and investors expected regulatory and monetary support for key sectors.   In Australia, the S&P/ASX 200 index fell 0.6% for the week, as the risk-sensitive Australian and New Zealand dollars slumped to their lowest levels in two years amid ongoing recession worries that boosted haven assets. After a late sell-off Friday, shares swung to a loss of 0.4% to close at 6,539.90, driven by declines in energy and material stocks, with a group of mining shares hitting the lowest since Nov. 22 following commodity price drops.  In New Zealand, the S&P/NZX 50 index fell 1.1% to 10,753.16 In FX, the Bloomberg Dollar Spot Index rose by around 0.3% as the greenback traded stronger against all of its Group-of-10 peers apart from the yen. Australian and New Zealand dollars plunged to new two-year lows. The euro fluctuated around $1.0450 after the latest data showed that euro-area consumer prices rose 8.6% from a year earlier in June -- up from 8.1% in May. Economists surveyed by Bloomberg saw a gain of 8.5%. The yen rose and the nation’s bonds were steady to higher. One-week options in dollar-yen are once again overpriced as short-term risks make a strong case for long-gamma exposure. Bank of Japan’s quarterly Tankan report of confidence among Japan’s large manufacturers fell to 9 in June from 14 three months ago, the biggest drop since the peak of the pandemic. In rates, the German curve bear-steepened, with long-end yields ~7bps cheaper after a manufacturing PMIs show notable softness in new orders. Cash Treasuries extended Thursday’s bull steepening move, with front-end and belly dropping over 10bp from prior day’s close while richer by ~4bps at the short end. Ten-year yields fell further to below 3%, breaching the 50-day moving average, while eurodollar strip bull flattens as recession risk and Fed rate cuts continue to be priced in for next year.  10-year yields dropped to as low as 2.937%, the lowest since June 6, before edging back above 2.95% in early US session, outperforming bunds by 5.5bps. The belly and front-end outperformance causing a steepening of 5s30s curve by 6bp on the day and 2s10s by 3bps; 5s30s peaks through 20bp and onto widest levels in a month. Two-year yield fell 10bp to 2.85%. The Eurodollar strip continues to bull flatten as rate hike premium is eased out of next year; Dec22/Dec23 spread drops to -63.5bp and fresh cycle lows.  German government benchmark yields rose after data showed euro-area inflation hit a fresh record, surpassing expectations. The Stoxx Europe 600 Index wavered between losses and gains. Gilts are relatively quiet. Most peripheral spreads are modestly wider to core. In commodities, crude futures advance. WTI drifts 1.9% higher to trade near $107.73. Brent rises 2% near $111.23. Most base metals are in the red. LME copper briefly drops below $8,000 a ton for the first time since February 2021. Spot gold falls roughly $12 to trade near $1,795/oz.  Looking to the day ahead, data releases include the flash Euro Area CPI reading for June, as well as June’s global manufacturing PMIs and the ISM manufacturing reading from the US, along with the UK’s mortgage approvals for May. From central banks, we’ll hear from the ECB’s Panetta and De Cos. Market Snapshot S&P 500 futures down 0.4% to 3,774.25 MXAP down 1.0% to 156.37 MXAPJ down 1.0% to 519.11 Nikkei down 1.7% to 25,935.62 Topix down 1.4% to 1,845.04 Hang Seng Index down 0.6% to 21,859.79 Shanghai Composite down 0.3% to 3,387.64 Sensex down 0.6% to 52,688.97 Australia S&P/ASX 200 down 0.4% to 6,539.91 Kospi down 1.2% to 2,305.42 STOXX Europe 600 little changed at 407.16 German 10Y yield little changed at 1.39% Euro down 0.2% to $1.0459 Brent Futures up 0.8% to $109.95/bbl Gold spot down 0.7% to $1,794.17 US Dollar Index up 0.26% to 104.95 Top Overnight News from Bloomberg The Bank of Japan’s decision to pass up an opportunity to ramp up its policy defenses points to a fear of triggering a further weakening of the embattled yen Japan’s state pension fund, the world’s largest, posted its first quarterly loss in two years as declines in global stock and bond markets during the three months through March weighed down the value of its assets After years of subdued price swings caused by central bank intervention, a key gauge of volatility in the 1 quadrillion yen ($7.4 trillion) government bond market has surged in recent weeks to the highest level since 2008. That’s boosting demand for JGB traders, with Nomura Holdings Inc. noting signs of intensifying competition for talent Copper sank below $8,000 a ton, hitting its lowest since early 2021, as deepening fears about a global economic slowdown drive a rout in industrial metals markets Chinese President Xi Jinping urged Hong Kong to shore up its economy after an era of “chaos,” in a landmark visit that offered few clear answers for how to balance Beijing’s demands for limiting perceived foreign threats with its desire to remain an international financial hub A more detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks began the new trading month mostly in the red as the region digested a slew of data releases and amid headwinds from the US where Consumer Spending data disappointed and Atlanta Fed's GDPnow model alluded to a recession.     ASX 200 was just about kept afloat by resilience in nearly all industries aside from the commodity-related sectors. Nikkei 225 fell beneath the 26,000 level after the latest Tankan survey mostly disappointed. Shanghai Comp. traded indecisively despite the stronger than expected Caixin Manufacturing PMI data which rose to its highest since May 2021 as sentiment in the mainland was constrained by falling commodity prices, as well as the absence of Hong Kong participants and Stock Connect flows. Top Asian News Chinese President Xi said "one country, two systems" has been successful for Hong Kong over the past 25 years and said Hong Kong is a window and a bridge connecting the mainland to the world, while he added that Hong Kong has to defend against interference and focus on development, according to Bloomberg and Reuters. Hong Kong's new Chief Executive Lee was sworn in and stated the National Security Law brought stability after chaos, while he added the government will strive to control and manage COVID-19 through scientific methods, according to Reuters. UK PM Johnson said China has been failing to comply with its commitments on Hong Kong and the UK intends to do all it can to hold China to account, according to Reuters. PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.10% for a CNY 50bln net daily drain, according to Reuters. World’s Top Pension GPIF Posts Quarterly Loss on Stock Rout Three Arrows Crypto Fund CEO Wants to Sell Singapore Mansion Kishida Says LNG Supply From Sakhalin Won’t Immediately Stop Japan Mulls LNG From Spot Market to Replace Russian Supply: METI European bourses are back in the red after briefly recovering from opening losses. Sectors are mixed with no clear theme - Tech is the laggard and Utilities the outperformer. Chip stocks are after sources said TSMC has seen its major clients adjust downward their chip orders for the rest of 2022, whilst Micron's guidance was underwhelming. Stateside, US equity futures remain in negative territory but off worst levels as the contracts coat-tail on some of Europe’s upside. Top European News French government spokesperson said a possible cabinet reshuffle could take place Monday or Tuesday, according to Reuters. Euro-Zone Inflation Hits Record in Boost for Big-Hike Calls Food Inflation Gets a Break as Wheat, Corn and Soy Oil Tumble UK House Sales Slow as ‘Intense’ Market Starts to Cool FX Dollar regroups after late month end fade amidst broad gains ahead of US manufacturing ISM and construction spending - DXY retests 105.000+ levels from 104.640 low yesterday. Yen bucks trend, but off recovery peaks as yields firm up and risk aversion wanes - Usd/Jpy around 135.500 vs 134.74 overnight base. Aussie underperforms and hits fresh 2022 trough sub-6800 and Kiwi under 0.6200 after decline in ANZ consumer sentiment. Pound undermined by downward revision to UK manufacturing PMI with Cable below 1.2100 and prone to test of Fib support if 1.2050 breached. Euro back on 1.0400 handle and propped by better than forecast Eurozone manufacturing PMIs and stronger than expected inflation metrics. Rand extends declines alongside Gold as SA power and pay issues rumble on - Usd/Zar above 16.3400, spot bullion below Usd 1800/oz. Fixed Income Debt futures rack up more safe haven gains before recovery in risk sentiment and sharp reversal. Bunds recoil from 149.46 to 148.24, Gilts retreat to 113.79 from 114.52 and 10 year T-note pulls back from 118-29+ to 118-06 as benchmark yield retests 3% briefly. Bonds subsequently bounce off lows awaiting US manufacturing ISM and construction spending ahead of long Independence Day holiday weekend. Commodities WTI and Brent front-month futures retrace some of yesterday’s losses with upside also spurred the recovery across the stock markets Libya's NOC announced a force majeure over Es Sider, Ras Lanuf Ports and the El Feel oilfield, while it noted that oil production decreased as daily exports ranged between 365-408k BPD which is a decline of 865k BPD, according to Reuters. Spot gold is under pressure after the yellow metal breached USD 1,800/oz to the downside – with the next level to the downside at USD 1,786/oz, the May 16th low. Base metals are softer across the board as recession woes grapple with the risk-correlated market. LME 3M copper briefly fell beneath the USD 8,000/t for the first time since January. India raised the basic import tax on gold to 12.5% from 7.5%, according to BQ Prime citing a Gazette notification. US Event Calendar 09:45: June S&P Global US Manufacturing PM, est. 52.4, prior 52.4 10:00: May Construction Spending MoM, est. 0.4%, prior 0.2% 10:00: June ISM Manufacturing, est. 54.5, prior 56.1 DB's Jim Reid concludes the overnight wrap If you want the good news this morning it's that H1 is now finally over. If you want the bad news it's that there's not much good news around as we start H2 and US equity futures are already down around a percent in the first few hours of the new half year. Having said that it's eminently possible that whatever age you are reading this you might ALL have now witnessed the worst first half of a year in your career either looking back or forward. So if you've survived that it might not all be bad news. Younger readers can come back to me after the awful H1 2055 and tell me I'm wrong. Henry will put out some more stats in our usual month-end performance review shortly, which reads like a bit of a horror story, but for what it’s worth the S&P 500 has now seen its worst H1 total return performance in 60 years, and also in total return terms it’s fallen for two consecutive quarters for the first time since the GFC. Meanwhile 10yr Treasuries look set (with a final calculation imminent) to have recorded their worst H1 since 1788, just before George Washington became President. As I mentioned in a previous chart of the day, bad H1’s for equities have tended to be followed by much better H2’s. But with increasing warnings that a recession is round the corner, it isn’t so obvious where things are headed this time round. Indeed, equities saw another significant selloff yesterday as those fears were magnified yet again by another weaker than expected round of data which genuinely puts the US at risk of a technical recession in H1 already. That included the US weekly initial jobless claims for the week through June 25, which although coming in inline at 231k (vs. 230k expected), did send the smoother 4-week moving average up to its highest level so far this year. Our preferred measure, namely containing claims, edged up but is not yet signalling a recession though. Personal spending also came in at just +0.2% in May (vs. +0.4% expected), and the prior month was revised down three-tenths as well, whilst real personal spending (-0.4%) saw its first monthly decline of the year as well. That translated to a 0.3% MoM Core PCE reading, below expectations of 0.4%, while the YoY reading was 6.3%. The prospect of the Fed being forced into hikes to fight stubborn inflation while growth is rolling over appears to be something the markets will have to wrestle with sooner rather than later. Indeed, the Atlanta Fed’s 2Q GDP nowcast estimate was revised down from 0.3% to -1.0% which if proved correct will signal a technical recession as a minimum. Today's ISM will be a big sentiment driver on this front. Against the weak growth backdrop, the S&P 500 (-0.88%) continued its run of having declined every day this week, whilst Europe’s STOXX 600 (-1.50%) saw even sharper losses. Utilities (+1.10%) were the clear outperformer, as investors rotate into defensive sectors. In turn, the NASDAQ underperformed, closing down -1.33%, also finishing in the red every day this week to date. The S&P 500 lost -20.58% in the first half of the year, its worst first half performance since 1970. Meanwhile, the NASDAQ has fared even worse, declining -22.44% this quarter alone and -29.51% in the first half of the year, its worst first half in the data available in Bloomberg. But in some ways the fear was more evident among sovereign bonds, which rallied significantly as investors continued to seek out safe havens and grew more doubtful about whether central banks would be able to persist in taking policy into aggressive territory. Indeed, the rate priced by Fed funds futures for the December 2022 meeting came down -6.5bps to 3.39%, and the rate priced by December 2023 came down an even larger -13.6bps to 2.96%. Those shifting expectations meant that yields on 10yr Treasuries fell back beneath 3% in the session for the first time in nearly 3 weeks, ultimately settling -7.6bps lower on the day at 3.01%. The decline in 10yr yields was split between breakevens and real yields, as both had a volatile session to end the quarter. Breakevens fell -4.7bps to 2.35%, their lowest levels since September. Other recessionary indicators were flashing warning signs of their own, with the near-term Fed spread down another -14.9bps to 142bps, meanwhile the 2s10s curve managed to eek out a marginal steepening, but is still flirting with inversion, closing at just 5.1bps. This morning, 10yr UST yields (-5.92 bps) are lower again, moving back below 3% to 2.95% with the 2s10 curve flattening -1bps at 4.13% as we type. We saw much the same pattern in Europe yesterday, albeit with even larger moves lower in yields that sent those on 10yr bunds (-18.3bps), OATs (-15.2bps) and BTPs (-13.3bps) sharply lower. As in the US, European sovereign yield declines were driven by falling inflation compensation, with the 10yr German breakeven coming down by -12.3bps to 2.03%, which is its lowest closing level since Russia’s invasion of Ukraine began. That was echoed in a declining oil price with Brent crude down -1.60% yesterday at $109.52/bbl, meaning that oil prices saw a monthly decline in June for the first time since November 2021, back when the Omicron variant first emerged and travel restrictions started going back up again. Speaking of energy prices, there were a few interesting headlines on that front yesterday, including a comment from President Biden that he is seeking more production from the Gulf states. Biden is set to travel to the Middle East from July 13-16, so that’s an important event on the geopolitical calendar, and ahead of that, we also saw the OPEC+ group move to ratify yesterday a further supply hike of +648k barrels per day in August. In Europe however there was more bad news on the energy side, with natural gas futures up a further +3.53% to a fresh three-month high of €144.51 per megawatt-hour. My colleague George Saravelos put out a fascinating blog yesterday (link here) that highlighted how worried he’s becoming on the gas supply situation, with year-ahead natural gas prices making fresh record highs and electricity prices skyrocketing. A key event as part of that will be the shutdown of the Nordstream pipeline from July 11-21 for regular annual maintenance, and press reports are suggesting that authorities are attempting to find a solution on sanctions restrictions to move gas turbine components back to Russia. So while we all spend most of our time thinking about the Fed and recessions, what happens to Russian gas over H2 is potentially an even bigger story. Mark July 22nd in your dairies to see whether the gas supply starts getting back to normal or not. Asian equity markets are reversing early morning gains and are mostly down again. The Kospi (-1.04%) is the largest underperformer across the region followed by the Nikkei (-0.88%). Over in mainland China, the Shanghai Composite (-0.30%) and CSI (-0.20%) are down but are trimming losses, as the nation’s private factory activity rose at the fastest pace in 13 months in June (more on this below). Markets in Hong Kong are closed for a holiday marking the 25th anniversary of Chinese rule. Bucking the regional trend is Australia’s S&P/ASX 200 which is trading +0.26% higher at the time of writing. Outside of Asia, stock futures are once again sliding with contracts on the S&P 500 (-0.84%) and NASDAQ 100 (-0.86%) indicating a disappointing start in the US later today. Early morning data showed that China’s Caixin/Markit manufacturing PMI advanced to 51.7 in June, returning to expansion territory for the first time in four months against a previous reading of 48.1 and well above analyst expectations for an uptick to 50.1. The recovery as suggested in the survey was propelled by a strong rebound in output, as the easing Covid restrictions sent factories racing to meet recovering demand. Over in Japan, Tokyo’s June CPI rose +2.3% y/y (v/s +2.5% expected) and against a +2.4% increase in the prior month. Core CPI advanced +2.1% in June from a year earlier, notching the fastest pace of increase in seven years in a sign of broadening inflationary pressure in the world’s third largest economy. Separately, the unemployment rate in Japan surprisingly edged up to +2.6% in May from +2.5% in April. Meanwhile, sentiment at Japan’s large manufacturers deteriorated in the April-to-June period as the headline index worsened to a level of +9, a decline from the previous quarter’s reading of 14. Looking at yesterday’s other data, French CPI came in at +6.5% as expected on the EU-harmonised measure in June, although German unemployment unexpectedly rose +133k in June (vs -5k expected) as Ukrainian refugees are now being included in those looking for work. Looking back to May however, the Euro Area unemployment rate hit its lowest level since the formation of the single currency at 6.6% (vs. 6.8% expected). Finally in the US, the MNI Chicago PMI came in at 56.0 (vs. 58.0 expected). To the day ahead now, and data releases include the flash Euro Area CPI reading for June, as well as June’s global manufacturing PMIs and the ISM manufacturing reading from the US, along with the UK’s mortgage approvals for May. From central banks, we’ll hear from the ECB’s Panetta and De Cos. Tyler Durden Fri, 07/01/2022 - 07:57.....»»

Category: blogSource: zerohedgeJul 1st, 2022

A Textbook Bear Rally

In his Daily Market Notes report to investors, while commenting on a bear rally, Louis Navellier wrote: Textbook Bear Rally The first half goes out with a whimper. Hopes for a relief rally on peak inflation and optimism that earnings will not disappoint have not been realized this week.  We’ve done a round trip to last Thursday’s […] In his Daily Market Notes report to investors, while commenting on a bear rally, Louis Navellier wrote: Textbook Bear Rally The first half goes out with a whimper. Hopes for a relief rally on peak inflation and optimism that earnings will not disappoint have not been realized this week.  We’ve done a round trip to last Thursday’s levels.  The S&P is still 3% off the bottom from 2 weeks ago, but the strong bounce off the bottom is looking like a textbook bear rally this morning.  if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Perhaps what's most disappointing is that an important inflation data point, the Chicago Purchasing Managers Index, the core personal consumption expenditures price index, the Fed's preferred inflation measure, was reported for May this morning as down more than expected. Head Scratcher Investors hoping for a relief rally on such strong evidence that peak inflation appears to have already passed are left scratching their heads. Instead, the S&P is headed towards its 15th 2% drop and the VIX is back above 30. Q2 Earnings to the Rescue? Recession fears are now leading the way with interest rates lower across the yield curve, energy and industrial metals lower, and travel-related names off more than the indexes. We are now left with 2nd quarter earnings to ride to the rescue. Confidence here has been hurt this morning as RH (NYSE:RH) (Restoration Hardware) which is down 10% on the heels of management guiding down its fiscal year outlook followed by a quick slashing of target prices by Wall Street analysts. Buckle up, volatility remains sky-high, as is fear and uncertainty, circumstances which historically have been a very good time to commit capital.   Coffee Beans The war in Ukraine is setting back the global economy. All major international organizations such as the IMF, the World Bank, the OECD, and the UN, have revised their forecasts of global economy growth in 2022 downward by around one percentage point in comparison to their pre-war projections. Source: Statista. See the full story here. Updated on Jun 30, 2022, 1:11 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJun 30th, 2022

Don’t Chase These Bear Market Rallies

In his Daily Market Notes report to investors, while commenting on bear market rallies, Louis Navellier wrote: Fragile Market The fragile nature of the current market was on display yesterday. After being well in the green on the open, stocks corrected strongly yesterday as the day wore on, apparently by the same concerns about inflation […] In his Daily Market Notes report to investors, while commenting on bear market rallies, Louis Navellier wrote: Fragile Market The fragile nature of the current market was on display yesterday. After being well in the green on the open, stocks corrected strongly yesterday as the day wore on, apparently by the same concerns about inflation and recession risk from central bank tightening which brought on the current bear market that began in earnest in April. The S&P saw its 14th +2% drop for the year. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Series in PDF Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Unless things change dramatically in the next two days, both the Dow and S&P will post their worst quarterly performance since 2020, the NASDAQ since 2008. Why aren't people ready to buy the dip yet?  Earnings - they still haven't been cut enough to reflect the slowdown so many "experts" are forecasting. Surging Energy Surprisingly, they are actually higher. At the beginning of the year, the S&P was forecast to have +8% earnings growth in 2022.  Today it is +10%. The explanation is apparently the surging energy names with Exxon (NYSE:XOM) now forecast for over 100% earnings growth in 2022, Occidental (NYSE:OXY) 300%. But energy is only about 5% of the index. Don't Chase These Bear Market Rallies The fear is that in a normal recession earnings drop 20%. That is the source of these bear market rallies: If current earnings estimates largely hold up, the market is oversold and a sustained rally is in the cards. If recession-caliber earnings cuts are coming, there's another big leg down in valuations coming. While picking the right stocks will outperform as always, with so much money now tied up in passive index strategies and ETFs, if the market falls into a full recession sentiment, you'll be able to build positions in better stocks at lower prices. This makes the upcoming earnings season more important than ever. By the time it's over, stock indexes will have likely moved several percentage points in either direction. Better to be cautious and chase the rally than all-in and be wrong. Keep collecting partial positions in quality names on pullbacks and offloading weak earners on rallies in the next couple weeks, but keep plenty of powder dry and be ready to pounce if the earnings relief rally comes. Coffee Beans America’s love of wines from Southern Europe, with France and Italy, especially coming to mind, is a one-sided affair. The U.S. imported almost 6 million hectoliters from France and Italy between August 1, 2020 and July 31, 2021 - worth more than $3.5 billion.  Meanwhile, Europe's four largest wine exporters imported less than 50,000 hectoliters of wine from the U.S. Source: Statista. See the full story here. Updated on Jun 29, 2022, 1:23 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJun 29th, 2022

More Fresh Profits

S&P 500 decisively turned around, and declined powerfully. The short entry was well placed, and open profits are likely to grow still before the bottom is reached. What we‘re likely to experience next, is tech-driven brief reprieve, which would help cushion heavy S&P 500 downside temporarily. The stock market downswing hasn‘t run its course though […] S&P 500 decisively turned around, and declined powerfully. The short entry was well placed, and open profits are likely to grow still before the bottom is reached. What we‘re likely to experience next, is tech-driven brief reprieve, which would help cushion heavy S&P 500 downside temporarily. The stock market downswing hasn‘t run its course though today‘s rising real asset prices would help the bulls temporarily. The dollar of course isn‘t really retreating, and neither the pressure on the Fed to raise, is relenting – yet precious metals keep holding up reasonably well. Is there a quiet money flow underway, one that sees long-dated Treasuries benefiting as well? I think so, and come autumn, this would become obvious. Crude oil apparently hasn‘t peaked either, no matter what those focusing solely on the real economy prospects say – remember, black gold is the one to top last, and I hadn‘t seen a decent spike yet. Time to go, for quite a few weeks more – and let the open profits grow too. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook The caption says it all – S&P 500 is primed to decline some more, but I‘m looking for a little counter trend move first. Odds are the bulls won‘t make it far. Credit Markets Bonds turned risk-off, and soundly so. Especially the HYG move holds great promise. As you can see, the TLT downswing is in its latter innings, and in need of some consolidation (one that would coincide with deteriorating economic data showing so) first. Crude Oil Oil is turning up, the next consolidation to arrive, would happen above the 50-day moving average. I like oil stocks having come to life (against the background of steep stock market decline) particularly. Bitcoin and Ethereum Business as usual in cryptos –  business just as lately. See how far Stochastics has risen while prices are already turning down. The weeks ahead appear one hell of a ride. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals. Thank you, Monica Kingsley Stock Trading Signals Gold Trading Signals Oil Trading Signals Copper Trading Signals Bitcoin Trading Signals www.monicakingsley.co mk@monicakingsley.co All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice. Updated on Jun 29, 2022, 10:28 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJun 29th, 2022

Watching Out

S&P 500 squeeze aka overdue relief rally in the end developed, on sharply improving daily momentum and quite supportive bonds. Would that change the medium-term picture though? It would serve only to suck in bulls, thinking the bottom is in – while the Fed doesn‘t have the stock market‘s back, and the reprieve in market-requested […] S&P 500 squeeze aka overdue relief rally in the end developed, on sharply improving daily momentum and quite supportive bonds. Would that change the medium-term picture though? It would serve only to suck in bulls, thinking the bottom is in – while the Fed doesn‘t have the stock market‘s back, and the reprieve in market-requested tightening, would pass. The recent decline in oil prices coupled with Fed acknowledgement of some real economy difficulties, isn‘t enough for taming inflation. While prices would moderate their pace of increases, the appreciation in essentials would be unstoppable and to a large degree immune to the real economy staring at a very late 2022 / early 2023 recession (if one wouldn‘t be declared soon because of all the tightening). .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Whether Powell goes 50bp or 75bp in July, will be quite indicative – I‘m not excluding hawkish (75bp) September either. The gas and energy measures are of stopgap nature, yet buying a little time for the Fed. Should the central bank not take the opportunity to tighten more, the decision would backfire down the road – just as the transitory talking point did. For now, less tight conditions (driving sentiment) would help stocks make it to the 4,000s probably – but the sell, the ambush is hanging in the air, and would take us to 3,500-3,600 target in my view (the bottom). Both value and tech kicked in on Friday but the dollar isn‘t retreating, money is still sitting on the sidelines. The big picture hasn‘t changed, and it‘s one of decreasing liquidity and the Fed being bound to surprise on the hawkish side down the road. That helps explain precious metals resilience (as always stating lately, that‘s gold and miners) while silver and especially copper bear the brunt of economic challenges. The red metals doesn‘t look to be done on the downside – contrasted with crude oil set to continue rising without much looking back, and natural gas having a very shallow, high priced and interesting summer „off season“ - wonder what‘s in store for the winter prices (up, up). Agrifoods are setting up a nice entry point with corn having turned already, and wheat about to do the same. Cryptos would continue struggling, of course – it‘s quite impossible to be bullish there. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook The upswing can, and will run on – given the pace, I‘m not looking for its overly fast reversal. The rally off the lows is though more than halfway through, and I‘m not looking at it to beat the 50-day moving average. Credit Markets Bonds turned risk-on, and in spite of the HYG intraday pullback, they have higher to run still. I‘m though looking for HYG to gradually stall, and start declining. TLT is for now merely reconciling the hawkish policy expectations with decreasing economic prospects. Crude Oil Oil is turning up, and has quite places to run still. Should it break $125 in the weeks ahead eventually, the road to $150 is open – all before significant demand destruction kicks in. The consumer has been really resilient when faced with $5 gas – the sentiment alone won‘t be able to sink this market just yet. Copper This isn‘t a bottom in my view, not yet – the red metal has further to decline, and is leading the commodity index to the downside, which doesn‘t speak of bright economic prospects. Again, this is a period of relative normalcy – the economic deterioration would take time to develop, and will be aided by the Fed‘s tightening heavily. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals. Thank you, Monica Kingsley Stock Trading Signals Gold Trading Signals Oil Trading Signals Copper Trading Signals Bitcoin Trading Signals www.monicakingsley.co mk@monicakingsley.co All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice. Updated on Jun 28, 2022, 10:31 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJun 28th, 2022

Tchir: The Fed Blinked

Tchir: The Fed Blinked By Peter Tchir of Academy Securities Last weekend, I was extremely worried that we were in the process of Cutting Off Our Nose to Spite the Face! We seemed to be on a path where: The Fed was going to fight inflation at all costs, even if that pushed us into a recession. The Fed was going to fight inflation even in areas where Fed policy wouldn’t be expected to have much of an impact. The inflation fear was so palpable that signs of inflation rolling over (along with the economy) would be missed, or were already being missed. That narrative seemed to shift over the course of the week, which helped propel the S&P 500 to an almost 7% gain and the Nasdaq popped 9%! The 10-year Treasury yield also dropped from 3.23% to 3.13% during the week. Congress Focused on Recession Risk Finally, it seemed like many in D.C. became aware of the fact that while inflation is bad, a recession is worse, especially for those seeking re-election! Biden about to find out what polls worse: recession and bear market or runaway inflation. — zerohedge (@zerohedge) May 20, 2022 Chair Powell spent two days testifying on the Hill and the market (correctly) reached a few conclusions: Recession risk would balance inflation fighting. Sure, inflation fighting is still outweighing the risk of pushing us into a recession, but there was a semblance of balance. Powell couldn’t fully contain his “inner” dove. Whatever message he was trying to convey, there were just enough hints of “dovery” in his answers to give markets comfort. Both his testimony and D.C.’s realization that recessions aren’t good helped markets. A Tough Week for Commodities While Brent held its own, WTI fell 8.5% on the week and is down almost 12% from its peak of $121 on June 14th! (XLE, an energy ETF, is down 22% since June 8th!) Metals performed poorly with copper leading the way (it was down 6.5% on the week, is down 13% since June 7th, and is down a whopping 22% since early March). Nickel actually did worse, but that market seems so devastated by a lack of liquidity that I ignored it. What is particularly interesting in the metals space is the fact that most are now negative year to date! So, unlike energy prices (WTI is up 43% YTD), which have mostly just given up some of their “Russian invasion” premium, the metals have fared far worse! (XME, a metals and mining ETF, is down 19% since June 7th and is down 30% since April 20th!) While corn, soybeans, and wheat are still up nearly 20% on the year, they tumbled anywhere from 5% to 15% last week! The commodity story could be telling us something about supply chains, but I think that the story is much more about how rapidly the slowdown is hitting the economy! “Dr. Copper” is often used as a leading indicator for economic activity and it isn’t sending a good signal! The fact that the metals got hit so hard (and started their swoon much sooner) can likely be attributed to real estate and construction being the first areas hit by higher rates (mortgage rates spiked first). So, the “good” news is that commodities may be rolling over and providing inflation relief, but the bad news is that it seems to be hinting that recessionary fears should be real and worrisome! All Hail the Recession! In the previous section we discussed commodity price declines, some of which are viewed as leading indicators of the economy. If we want to look at more signals on how rapidly the economy may be rolling over, all we have to do is look at data from last week! Almost any data point will do: Existing home sales dropped for the fourth month in a row. Initial jobless claims have moved higher, still small by “traditional” measures, but they are heading in the wrong direction. S&P Global US Manufacturing and Services PMI both declined, missed expectations, and are barely above 50. The University of Michigan’s Consumer Confidence survey largely deteriorated from already low numbers, though the fact that inflation expectations dropped (3.1% for 5-10 year inflation from 3.3%) may give the Fed some latitude as it has been successful in reducing inflation expectations. New home sales did bounce, but that is a volatile series and is the second lowest number since October. For now, the evidence of slowing economic activity is taken to mean: The pressure on prices across the board will ease (which is normal if we have tipped the scales already into a recession). The Fed, seeing the data, will be able to take their foot off the brake, which is also true and a reason we never expected the follow through the market was pricing in. It is interesting that the market is now pricing in rate cuts next year, basically assuming the Fed will make a mistake and push too far (our “cutting off the nose” risk), but maybe the Fed will now try to avoid making a mistake and give existing hikes time to work their way through the system, while likely hoping for some supply side relief from China. The ”bad” news is “good” argument always makes me nervous as I’m concerned about its staying power. Correlations Markets are always driven by correlations. Investors and corporations of all shapes and sizes look for signals from one market to the next. Algos have entrenched many of those correlations, at least for short periods of time. In the coming weeks, it will be important to see how a couple of key correlations play out: Low yields are great for stocks in general and tech in particular. That was a theme that seemed to play out for much of last week. When yields declined (on recession fears), stocks bounced on lower yields. That has been the reaction, off and on, for most of the past year. It is part of the overall narrative and is reinforced by algos, which will trade that correlation until they get proven wrong. I am in the camp that lower yields, because of a potentially rapidly declining economy (one that forces the Fed to hold back on hikes), should not be a catalyst for stocks to soar, even from current valuations. That seems like a “trade” rather than an “investment”. It was encouraging that stocks showed so much strength on Friday even as yields rose! That is the sort of correlation that is very “traditional” and can provide enduring strength to stocks. Lower commodity prices are great for stocks. Yes, inflation has been a huge concern. Yes, inflation has hit consumers, which in turn has hurt some companies as consumers couldn’t buy as much with their hard-earned dollars! Yes, lower commodity prices will reduce the Fed’s zeal for hiking, which should help the economy. All those are good things for markets! But, if commodity prices are dropping because the economy is slowing rapidly (my concern) rather than due to supply chain excesses, we may once again be “cheering” for something that is bad – back to the “Be Careful of What You Wish For” argument. Admittedly, there are a lot of difference between now and 2008. I am not arguing that point and I’ve been nowhere near that bearish on markets or the economy (even when I’ve been “beared” up). However, the conviction (bordering on certainty) that stocks should rally because commodity prices are falling seems too simplistic. Since so much of this year’s stock market weakness can be tied to inflation, both directly (lower consumer purchasing power) and indirectly (the Fed turning hawkish), it is natural to get some relief. But, if we’ve already tipped the scales and “Dr. Copper” is correct, then that correlation could break down. It did seem that last week, especially overnight, the market traded like it was pricing in a recession (lower stocks, lower commodities, lower yields) but the U.S. managed to turn the lower yields into a reason to buy stocks. Positioning and Flows There were some reports (which seemed to buoy the market) that retail had exited stocks at a record setting pace (which I am still not seeing in the more speculative ETFs). There has been a lot of chatter that pension fund rebalancing (especially for those that rebalance quarterly) will create a lot of buying for equities. As of last weekend, the S&P 500 was down 19% on the quarter, but now it is down “only” 13.5%. On a monthly basis, it was down 11% at the end of last week and it is now down “only” 5%. Regarding long-dated bonds, TLT (used for simplicity) is down about 14% on the quarter. So, depending on what duration your bond portfolio is or your mix of Treasuries versus corporate credit (LQD is down only 8% on the quarter), much of the re-balancing may have already taken place or has become unnecessary. Insider buying versus insider selling has apparently turned into a bullish signal (which I’m told by some people who do a very good job tracking this). We have also ended the blackout period which has coincided with speculation that stock buyback programs are in full force! Many of the cash rich companies are able to buy their stock back at the cheapest levels in years in some cases, though some companies may be exploring bond repurchases as so many bonds trade below par and can offer a quick boost to earnings! I’m skeptical of the “re-balancing” flows playing a big role next week, but the corporate buying and month-end buying, etc., all seem helpful. Bottom Line I will start with my highest conviction views and work from there. Lower yields, especially at the long-end (with some risk of a spike to much higher yields). Ongoing pressure in commodities, especially as speculators get taken out. More weak economic data. The ECB seems to be willing to act to curtail rising Spanish and Italian bond yields, which was a force behind higher U.S. yields and the BOJ is not being tested in a meaningful way on its yield curve targeting program. So little liquidity that after the recent squeeze, something could trigger yields to move much higher. This should be covered with option premiums rather than heavily influencing positioning. So, I’ve got lower yields and lower commodity prices. Given the correlations last week, that should be somewhere between good and great for stocks! I am not sure that I can get there, but fighting the correlations, which are ingrained into our collective nature at this point and reinforced by the unemotional/omnipresent algos, doesn’t seem like a smart decision either. Where do we stand on the need to rebalance or cover shorts or has that all been taken care of? I’m kind of balanced on stocks here and in any case, I am moving my view on the economy and markets back to DEFCON 3 from DEFCON 2, which is a wary status, but far from any sort of panic. It ultimately seems to boil down to the following question: Is the data enough to spark recession type trading, or is it just weak enough that it isn’t too bad and is more than offset by easier central banks across the globe? Bitcoin held its own last week, though I think it isn’t out of the woods yet as the ecosystem has allowed some of the risks to be highlighted and I don’t see them as having been adequately addressed. Not sure what news means for markets, but here’s to hoping you all have “good” news that is actually “good” news in your lives because in this instance, it is difficult to spin bad news as good! Tyler Durden Sun, 06/26/2022 - 14:30.....»»

Category: blogSource: zerohedgeJun 26th, 2022

"First Real Buying In 3 Weeks"; Goldman Trader Explains Why Friday"s Surge Is The Start Of The Next Big Move Higher

"First Real Buying In 3 Weeks"; Goldman Trader Explains Why Friday's Surge Is The Start Of The Next Big Move Higher Closing out Friday, a day which we correctly predicted would see a major ramp higher not just because of the market's overdue pricing-in of Fed rate cuts as well as extremely oversold market conditions, but because the market is starting to prepare for the massive month-end pension rebalancing which will see $30BN in stock buying... ... Goldman desk trader John Flood published a must read note (available to all professional subs in the usual place), in which he summarizes Friday's action and reveals why Friday's stock surge may be something more than just your garden variety dead cat bounce. As Flood writes, Goldman's desk was a 7 on 1 – 10 scale in terms of overall activity level, with total executed flow across US equities had +683bp buy skew vs 30d avg of -96bp sell skew.  Meanwhile, hedge funds' 12% buy skew was highest since May 30th and 94th percentile vs 52w avg. More importantly, long-only (i.e. vanilla mutual funds) had a +1% buy skew was their first buy skew in 3 weeks, with Energy +17%, Cons Disc +7% and info tech +6% were most noteworthy sector skews. Why this major buying pulse? Well, as Flood explains echoing what we said yesterday, "the final Michigan sentiment report for June showed notable DOWNWARD revisions to the inflation expectations component. The 1-year expectation ticked lower from +5.4% to +5.3% but more importantly, the 5-10 year expectation dropped from 3.3% to 3.1%." This matters because as a reminder, at last week's FOMC presser Powell specially said the hot CPI and the increased Michigan expectations were the reasons why the Fed went 75bp instead of 50bp. Well, it now turns out that that outlier inflation expectation print never actually happened, after it was revised lower which is why Goldman concludes that the "baseline for July will now move from 75bps to 50bps and the mkt clearly appreciated this." There is another reason why Friday's melt up may be the start of something bigger: as Flood explains, until Friday's S&P’s move higher "this week was primarily a low quality cover bid after HFs shorted the second most notional in the history of our PB data (last week)", as we previewed last weekend. But Friday felt like a potential pivot point with Flood notes that the big finally got healthier "as we finally saw long-onlies come in and passively buy (they have been net sellers on every single trading session since 6/7)." Which means that for the first time in 2022, "FOMO is real at the moment" with mutual funds currently sitting on well over $200b in cash right now and buying will only intensify on moves higher. Finally, the fund community also took advantage (as buyers) of the abundance of liquidity on the closing bell on Friday, with demand mostly concentrated in higher quality cyclicals. In conclusion, Flood writes that Friday was not quite the "all clear" signal, but Flood would "certainly be more patient selling this pop as it was highest quality rally I have seen in over a month." And yes, as we noted yesterday, Goldman currently estimates over $30BN of equities to buy for quarter end pension rebalance, which will only provide further upside to stocks during this early part of the buyback blackout period... Tyler Durden Sat, 06/25/2022 - 14:00.....»»

Category: personnelSource: nytJun 25th, 2022

Junior Miners Fell Hard – And Gold Didn’t Even Lift A Finger

There are numerous indications that junior miners are poised to set new lows on their downward path. Will they pull gold to the bottom as well? Without Gold’s Help The GDXJ, a proxy for junior miners, just closed at the second-lowest level since April 2020 – and that is huge. What does it mean? Well, […] There are numerous indications that junior miners are poised to set new lows on their downward path. Will they pull gold to the bottom as well? Without Gold’s Help The GDXJ, a proxy for junior miners, just closed at the second-lowest level since April 2020 – and that is huge. What does it mean? Well, it means that profits on our short positions in juniors increased once again. However, there’s more to yesterday’s session than just that. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Namely, due to yesterday’s 2%+ decline in the GDXJ ETF, it’s now clear that junior miners practically can’t wait to move to lower levels, as they are declining even without much help from gold. Without even getting into specific calculations, it’s clear that junior miners are now trading very close to their May lows. What is even more interesting, the GDXJ closed below the September 2021 low, and it didn’t immediately rally back up. The fact that junior miners declined below this low yesterday without a significant bearish push from gold and from the general stock market tells us that this time, the breakdown below the September 2021 low is likely to be confirmed. This, in turn, means that juniors appear to be finally ready to head to much lower levels. Here We Go Again When the GDXJ moved below those lows (on May 12), I wrote that they declined too far too fast, and I switched our short positions into long ones. However, this time, it’s not the case that they declined too far too fast. Conversely, junior miners are now at/after a brief pause. This means that they are ready to fall lower. Additionally, please note how perfectly the current situation resembles what we saw at the end of April and in the first days of May. The decline that preceded that previous consolidation was bigger than the recent one, so it’s quite normal that the consolidation that followed this time was also smaller and not as volatile. Other than that, the two moves are alike. Since a big move lower followed the previous consolidation, another move lower appears likely this time as well. Also, as I wrote earlier, please keep in mind that juniors just declined without almost any help from gold. Unlike junior miners, gold is not at its September 2021 lows, and it’s not at its mid-May 2022 lows, either. Miners tend to lead gold, and this time it’s quite clear that they are leading it lower. Once the current consolidation in gold ends, it appears likely that gold will replicate (to a considerable extent) the decline that preceded the consolidation. This would imply a move back to gold’s previous 2021 lows. This, in turn, would be likely to have a devastating impact on junior mining stock prices. You have been warned. Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today. Przemyslaw Radomski, CFA Founder, Editor-in-chief Sunshine Profits: Effective Investment through Diligence & Care All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice. Updated on Jun 23, 2022, 10:42 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJun 23rd, 2022

The Fed’s Hawkish Bite Left Its Mark on the S&P 500 Stocks

By raising interest rates, the Fed poured cold water on the red-hot markets and finally chilled investors’ enthusiasm. What’s next for asset prices? Work in Progress With the Fed’s hawkish hammer pounding the financial markets, the selling pressure coincided with events unseen since 2008. Moreover, with the work in progress to reduce inflation poised to […] By raising interest rates, the Fed poured cold water on the red-hot markets and finally chilled investors’ enthusiasm. What’s next for asset prices? Work in Progress With the Fed’s hawkish hammer pounding the financial markets, the selling pressure coincided with events unseen since 2008. Moreover, with the work in progress to reduce inflation poised to push asset prices even lower, I’ve long warned that we’re likely far from a medium-term bottom. For example, I wrote on May 31: .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more With recession fears decelerating and optimism returning to Wall Street, the bulls are brimming with confidence. Please see below: Source: Investing.com (…) [However], while U.S. stock indices rallied sharply last week, guess what else participated in the festivities? Source: Investing.com To explain, the table above tallies the performance of commodities over various time periods. If you analyze the vertical red rectangle, notice how most commodities rallied alongside equities. As a result, the thesis was on full display.  When economic optimism elicits rallies on Wall Street, that same optimism uplifts commodities. Therefore, if the Fed tries to appease investors and passively attack inflation, it will only spur more inflation.  As such, the idea of a “positive feedback loop” where ‘stocks rally, inflation cools [and] Fed tightening expectations abate” is extremely unrealistic. In fact, it’s the exact opposite. The only bullish outcome is if economically-sensitive commodities collapse on their own. Then, input inflation would subside and eventually cool output inflation, and the Fed could turn dovish. However, the central bank has been awaiting this outcome for two years. Thus, my comments from Apr. 6 remain critical. If investors continue to bid up stock prices, the follow-through from commodities will only intensify the pricing pressures in the coming months. Therefore, investors are flying blind once again. To that point, the S&P 500 reversed sharply over the last several days, and the S&P Goldman Sachs Commodity Index (S&P GSCI) followed suit. For context, the S&P GSCI contains 24 commodities from all sectors: six energy products, five industrial metals, eight agricultural products, three livestock products, and two precious metals. However, energy accounts for roughly 54% of the index’s movement. Please see below: To explain, the green line above tracks the S&P GSCI, while the black line above tracks the S&P 500. As you can see, hawkish rhetoric and a 75 basis point rate hike had their desired effect. Furthermore, I warned on Apr. 6 that higher asset prices are antithetical to the Fed’s 2% inflation goal. In a nutshell: the more the bull gores, the more inflation bites. I wrote: Please remember that the Fed needs to slow the U.S. economy to calm inflation, and rising asset prices are mutually exclusive to this goal. Therefore, officials should keep hammering the financial markets until investors finally get the message. Moreover, with the Fed in inflation-fighting mode and reformed doves warning that the U.S. economy “could teeter” as the drama unfolds, the reality is that there is no easy solution to the Fed’s problem. To calm inflation, it has to kill demand. As that occurs, investors should suffer a severe crisis of confidence. Speaking of which, the fundamental thesis continues to unfold as expected. For example, Fed Chairman Jerome Powell said on Jun. 17: “The Federal Reserve’s strong commitment to our price stability mandate contributes to the widespread confidence in the dollar as a store of value.” Moreover, “The Fed’s commitment to both our dual mandate and financial stability encourages the international community to hold and use dollars.” As a result, while I’ve long warned that unanchored inflation would elicit a hawkish response from the Fed and uplift the USD Index, the man at the top remains focused on the task at hand. Please see below: Source: Reuters Likewise, Fed Governor Christopher Waller said on Jun. 18: “This week, the FOMC took another significant step toward achieving our inflation objective by raising the Federal Funds rate target by 75 basis points. In my view, and I speak only for myself, if the data comes in as I expect I will support a similar-sized move at our July meeting.” Please see below: Source: Bloomberg Thus, while I’ve been warning for months that the Fed isn’t bluffing, investors are suffering the consequences of their short-sighted expectations. For context, I wrote on Dec. 23, 2021: Please note that when the Fed called inflation “transitory,” I wrote for months that officials were misreading the data. As a result, I don’t have a horse in this race. However, now, they likely have it right. Thus, if investors assume that the Fed won’t tighten, their bets will likely go bust in 2022.   Continuing the theme, Atlanta Fed President Raphael Bostic said on Jun. 17: "We're attacking inflation and we're going to do all that we can to get it back down to a more normal level, which for us has got to be 2%. We'll do whatever it takes to make that happen." As a result, the more investors bid up stock and commodity prices, the more "muscular" the Fed's policies become. Please see below: Source: Reuters Thus, while Fed officials continue to press down on the hawkish accelerator, the plight of many financial assets highlights the ferocity of central bankers’ war against inflation. Moreover, with all bouts of unanchored inflation ending in recessions over the last ~70 years, more fireworks should erupt in the months ahead. Short Squeeze 2.0 It’s important to remember that financial assets don’t move in a straight line. Therefore, while the fundamental outlook continues to deteriorate, the algorithms may spot bullish short-term trends that let the scalpers profit in the interim. For example, I noted on Jun. 15 that one-sided positioning could (and eventually did) spark a relief rally. I wrote: The liquidation frenzy (margin calls) that erupted recently coincided with hedge funds going on the largest two-day selling spree on record. If you analyze the chart below, you can see that Goldman Sachs’ prime brokerage data shows the z-score of combined net dollars sold on Jun. 10 and Jun. 13 exceeded the sell-off following the collapse of Lehman Brothers in 2008. Thus, while it’s far from a sure thing, it’s prudent to note how these variables may impact the short-term price action. Source: Goldman Sachs To that point, last week's sell-off has too many market participants on one side of the boat. As a result, don't confuse a short squeeze with bullish price action. Please see below: Source: Goldman Sachs To explain, the blue bars above track the short-selling and short-covering activity of Goldman Sachs' hedge fund clients. If you analyze the red line at the bottom, you can see that the z-score of hedge funds' weekly short sales was the highest since April 2008. In a nutshell: hedge funds shorted more stocks as the S&P 500 declined, leaving them highly exposed to a short squeeze. As a result, if the markets rally, consider the price action within the context of the above data. Likewise, oversold conditions are also present. To explain, the green line above tracks the percentage of S&P 500 stocks above their 50-day moving average. If you analyze the right side of the chart, you can see that only 2% of S&P 500 constituents hold the key level, and the reading is abnormally low. For context, it’s a contrarian indicator, meaning that too much pessimism often elicits a short-term reversion. Moreover, with the dot-com bubble, the global financial crisis (GFC), the 2011 growth scare, the COVID-19 crash, and the 2018 sell-off the only periods with lower readings, it may take a shock-and-awe event to move the metric lower in the short term. Also noteworthy, Bloomberg’s SMART Money Flow Index diverged from the Dow Jones Industrial Average (DJIA) late last week. For context, the indicator gauges the behavior of ‘smart’ investors that trade during the final hour of the day. Please see below: Source: Bloomberg/Zero Hedge To explain, the green line above tracks the DJIA, while the red line above tracks Bloomberg’s SMART Money Flow Index. If you analyze the right side of the chart, you can see that the smart money expects some selling reprieve. Finally, Bank of America’s Bull & Bear Indicator is at its lowest possible level. Again, this uses contrarian methodology, emphasizing how bearish over-positioning can spark sentiment shifts. Source: Bank of America The Bottom Line There have been several fits and starts along the GDXJ ETF’s path to lower prices, and the medium-term fundamentals remain profoundly bearish. However, rallies can increase investors’ anxiety if they’re unsure of why the optimism has manifested. As a result, while the contrarian bullish stock data may uplift the PMs in the short term, a potential sentiment reversion doesn’t impact their medium-term outlooks. Moreover, with the Fed hawked up and the developments bullish for the USD Index and U.S. real yields, the S&P 500 and the PMs should confront lower lows in the months ahead. In conclusion, the PMs declined on Jun. 17, as volatility has asset prices gyrating sharply by the day. However, the frantic buying/selling activity is bearish and highlights the fragility of the financial markets. Therefore, more bouts of panic should erupt in the coming months, even if the selling pressure subsides in the near term. Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today. Przemyslaw Radomski, CFA Founder, Editor-in-chief Sunshine Profits: Effective Investment through Diligence & Care All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice. Updated on Jun 21, 2022, 3:00 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJun 22nd, 2022

This Still Isn’t A Buyable Bottom For Stocks

There’s Hope In The Market But The Technical Outlook Is Gloomy Equities began the week with a strong bounce and the S&P 500 (NYMARKET:SPY) gained more than 2.6% by midday. As strong as the bounce looks, however, we still don’t think this is the buyable bottom. While there is some indication that a bottom may […] There’s Hope In The Market But The Technical Outlook Is Gloomy Equities began the week with a strong bounce and the S&P 500 (NYMARKET:SPY) gained more than 2.6% by midday. As strong as the bounce looks, however, we still don’t think this is the buyable bottom. While there is some indication that a bottom may form during the Q2 reporting season that season is still a few weeks away and there is great risk in the outlook. The consensus estimates for Q2, Q3, and Q4 earnings have ticked higher over the last two weeks the updraft is tepid and almost 100% due to the energy sector. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Series in PDF Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more If we’ve said it once, we’ve said a dozen times that higher oil prices in the face of rising demand are driving windfall profits in the energy sector that should be sustained into calendar 2023 at least. The fundamental picture in the energy sector is dwindling capacity and supply and that can only lead to higher prices. The takeaway is the energy sector should do well this year and the better they do the worse it is for every other sector. The S&P 500 Broke Out Of A Downward Sloping Channel We’ve been tracking several technical conditions in the S&P 500 that suggest a downward bias in price action if not a continuation of the downtrend that began earlier this year. The major pattern that is dominating the price action is a Head & Shoulders Reversal that should take the S&P 500 down to the 3480 level and it is still well above there. The most recent pattern we’ve been tracking is a downward sloping channel that demarcates the downtrend that began at the end of 2021/beginning of 2022. That channel should take the price down to our 3,480 price target on its own but the price action broke out of this channel to the downside. In this scenario, we see the S&P 500 decline accelerating, not reversing, and moving quickly down to the 3,480 level if not surpassing it. The risk for the market lies in the Q2 earnings and there is a large amount of risk. There is a chance the season will come in better than expected (which is the most likely scenario based on historical evidence) and that should put a bottom in the market. The question that will need to be answered then is what kind of bottom is it? If the outlook for the second half of the year brightens, even a little, it may be a permanent bottom that leads to higher prices for the S&P 500. If, however, inflation remains a problem, the FOMC stays uber-aggressive, and the outlook for earnings ex-energy sector darkens the downtrend will continue. The Analysts And The Gurus Aren’t Sanguine About The Market A look at the Marketbeat.com daily analysts' coverage is telling. While some companies, particularly in the consumer staples sectors, not to mention the energy companies, are getting upgrades and price target increases the bulk of analyst activity is negative. The takeaway is the analysts still see an upward bias for the market but their sentiment is slipping and that is a weak foundation for the market. There are other influential names giving gloomy forecasts as well. So far, we’ve seen Wharton professor Jeremy Seigel, JPMorgan Chase CEO Jamie Dimon, bond-guru Mohamed El-Erian, and even Jim Cramer give dire forecasts for stocks and the economy. The takeaway here is that fear of a major recession is growing and it’s time to be frugal with cash. As for the minor recession? It’s already here. Article by Thomas Hughes, MarketBeat Updated on Jun 21, 2022, 4:33 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJun 22nd, 2022

Data Shows Slowing Growth And Not A Collapse

Blockchain of Broken Dreams, Stocks bounce back, Data shows slowing growth and not a collapse, Oil rebounds, Gold struggles – OANDA Blockchain of Broken Dreams Crypto traders have been walking a lonely road that no one knows how low it will go. ​ Wall Street has been closely checking the vital signs of the cryptoverse and […] Blockchain of Broken Dreams, Stocks bounce back, Data shows slowing growth and not a collapse, Oil rebounds, Gold struggles – OANDA Blockchain of Broken Dreams Crypto traders have been walking a lonely road that no one knows how low it will go. ​ Wall Street has been closely checking the vital signs of the cryptoverse and the good news is that it is still alive. Bitcoin’s shadow is not the only thing rallying today as US stocks bounce back after a disastrous trading week sent it to bear market territory. .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more For the longest time, it seems Bitcoin hodlers were walking on the boulevard of broken dreams. ​ The last part of this historic crypto plunge was not just a de-risking Wall Street moment as many traders start to have a super bad feeling about the economy, but large parts of the crypto markets are seeing stress, including blockchain investments. Surging borrowing costs, margin calls, and excessive leveraged speculation helped accelerate the selling pressure over the past two weeks. ​ The entire cryptocurrency market is seeing some buyers emerge as the selling pressure may have been overdone. Crypto is not going away and some investors are starting to believe further downside might be limited. Stocks Following a long weekend and the worst trading week in almost two years, US stocks bounced back as investors anticipate the Fed will hesitate into tightening policy more aggressively, which is alleviating imminent recession calls. Wall Street is hearing a chorus of central banks (RBA, ECB, and Fed) say they will deliver more rate hikes to fight inflation but hopes remain they will hesitate from sending their respective economies into an immediate recession. Another round of economic data confirmed the slowdown that is happening throughout the economy, but a complete collapse of activity is clearly not happening. ​ US existing home sales for May shows the housing market is cooling quickly as surging borrowing costs and a weaker consumer weigh on demand. ​ These supersized rate hikes will cause trouble for the housing market and that might help lead some to believe the Fed won’t continue to aggressively tighten policy later this year. The Chicago Fed National Activity index for May showed a rapid deterioration with economic activity. ​ Sales and employment components remained positive but not necessarily provided optimism that weaker trends for growth will change anytime soon. ​ Sales turned positive after three consecutive negative readings, so many were not surprised by the slight rebound. Oil Oil prices are rallying as last week’s selloff was overdone given how the short-term crude demand outlook remains for the US and China. ​ The oil market remains too tight over the short-term and rising expectations over tougher sanctions with Russian crude should keep demand especially strong here. Energy traders saw oil prices slide almost 15% in just a week, despite a very tight market. ​ The paid for crude prices wasn’t justified and more of a reflection of the risk aversion mood that sank global equities. WTI crude should easily be supported above the $100 level throughout the summer, which means any dips will be bought into. Gold Gold prices are anchored as investors await to see how aggressive central banks will be with their tightening cycles and if the bond market will sway them into larger-than-expected hikes. ​ Gold is struggling today as Wall Street buys up beaten down stocks and cryptos. ​ Demand for safe-havens is not the vibe on Wall Street and that could have bullion remaining vulnerable here to the lower boundaries of its new $1800 to $1880 trading range. ​ Article By Edward Moya, OANDA Updated on Jun 21, 2022, 5:29 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJun 22nd, 2022

Understanding Cybersecurity Threats To Secure The Hybrid Workplace

More businesses now offer a hybrid workplace to cope with the changes led by the global pandemic. As more offices shifted to work-from-home settings, it has been challenging for many employees to return to the office as things bounce back to normal. According to a Pew Research Center survey, 76 percent of respondents are still working […] More businesses now offer a hybrid workplace to cope with the changes led by the global pandemic. As more offices shifted to work-from-home settings, it has been challenging for many employees to return to the office as things bounce back to normal. According to a Pew Research Center survey, 76 percent of respondents are still working from home due to personal preferences. A hybrid workplace is a flexible model that combines in-office and remote work. It allows employees to perform their tasks at home while occasionally joining the office. Although this working structure is convenient, it poses cybersecurity risks, mainly if you use two different computers and networks while working at the two locations. The first step businesses need to take to reduce the risk of cybersecurity threats is to learn more about them while educating every team member. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Series in PDF Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Listen to Cybersecurity Podcasts Some people absorb materials better when they listen to them. A cybersecurity podcast is a perfect tool that allows listeners to catch up on the latest news about cybersecurity threats or gain insight from experts in the field. Cybersecurity podcasts are a convenient method of educating yourself or your employees as it requires minimal effort and can be done when performing other tasks requiring little concentration. You can listen to them during your drive or bus ride to work or when you’re taking a lunch break at home. A cybersecurity podcast can also be a valuable asset for specific professions, such as journalism. Sometimes, digital traces left behind can threaten the safety and security of journalists and their sources. Lack of knowledge about cybersecurity threats can lead to costly expenses for journalists that can harm their credibility. Understanding the threats makes it easier to prevent data breaches and protect confidential information. Listening to a podcast from a reputable source allows you to learn about a significant cybersecurity story and gives you a head start to train your employees if it happens at your workplace. It is vital to stay updated about new vulnerabilities to protect your company as hackers continuously look for more ways to invade your privacy and perform data breaches. Offer Material Outlining Threats As you educate yourself about the potential threats that could harm your company, offer materials to your employees. All team members need to be aware of the threats to identify them if they occur. Understanding the different types of cybersecurity threats, such as malware, ransomware, and phishing, is the best way to learn how to tackle each of them. You could subscribe to magazines or other outlets that offer updated information or create a comprehensive guide outlining all the threats and ways to deal with them. Although there are many resources available online to allow people to educate themselves, many of your staff members might not have the motivation to search for the right source. They are more likely to view materials if you provide them, especially if you make it mandatory. You could take quizzes at the end of every material to encourage participation and ensure that all your employees are prepared to tackle any cybersecurity threat. Conduct Training Sessions Frequent cybersecurity training sessions are a great way to educate yourself and your employees about cybersecurity threats your company may face, as they can prevent costly mistakes in the long run. Introducing more cybersecurity programs will reduce the risk of data breaches as they will be more knowledgeable in the field and possess the ability to identify the red flags. Cybersecurity training should be mandatory for employees in all departments, even if they don’t frequently use applications that pose security risks. You can further reduce the risk by holding refresher training sessions every few months to ensure that your employees are always aware of emerging threats. Use Vulnerability Testing Tools Some companies offer to crowdsource security services to find your company’s vulnerabilities and report them to your security team. Professional teams use an advanced computer security testing method by mimicking attack paths that hackers may use. This allows them to identify potential threats and inform you before they occur for extra safety. Some types of tools include web application scanners, protocol scanners, and network scanners. Each tool addresses a different location to test vulnerabilities in various areas. It is crucial that you consult an experienced team for this work to achieve realistic answers and prepare your workplace accordingly. Hiring the wrong company can increase your risk of cybersecurity threats and make you more vulnerable in the eyes of hackers. Encourage Awareness with Incentives Whether your employees are working in the office or remotely, it can be helpful to encourage them to be cautious of cybersecurity threats. You can increase their attention span and draw light on the security matter by offering incentives. Positive encouragement is a great way to ensure employees focus on security matters. The incentives can include rewarding them when they complete a training course or if they accurately handle a potential data breach. According to an Incentive Research Foundation study, incentive programs with awards in the form of money or tangible awards can increase performance by an average of 22 percent. You can also offer interactive training sessions that allow employees to engage and enjoy the process. If they have fun during the learning process, they’re more likely to concentrate on the materials. The Importance of Cybersecurity Education Employing different tools and methods to educate your team about cybersecurity threats is vital to keeping your company safe. Encourage your team to actively participate and be ready to tackle any cybersecurity threats as they occur. Offering reliable resources and pointing your team in the right direction will ensure that your company is free of data breaches. Use all the sources and techniques available to secure your hybrid workplace. Updated on Jun 20, 2022, 5:03 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJun 21st, 2022

Big stock drop off

Stock market investors are in no mood for monkey business today even as NFT NYC kicks off. This and more, in today's Opening Bell newsletter. Welcome back, readers. Phil Rosen here, I'm on my way to Times Square, where NFT.NYC is about to kick off — keep an eye out for dispatches from the conference this week. Ahead of the summit, I sat down with the founder of the "Coachella of NFTs" and asked him what's to come.But stock market investors are in no mood for monkey business today. Top analysts see another dramatic drop-off looming after last week's Fed rate hike.Let's break it down. If this was forwarded to you, sign up here. Download Insider's app here.Traders work on the floor of the New York Stock Exchange (NYSE)Spencer Platt/Getty Images1. A nightmare scenario for the stock market could be brewing, and the Fed's rate hikes have increased the likelihood of a prolonged recession, according to Axonic Capital's top hedge fund strategist. "The 1970s' drawdown scenario of almost 50% for the S&P 500 is becoming all the more likely," the strategist said. Cutting the index's January high in half would send it to 2,400, about 30% lower than the current levels. Richard Sapertein, chief investment officer at a $9 billion money manager, agreed that there's plenty of room left to fall for stocks. The massive uncertainty and volatility mean we haven't seen the bottom yet, and the Fed's quantitative tightening could drag shares even lower. In his view, investors shouldn't be rushing into stocks right now. As if those forecasts weren't enough, JPMorgan analysts said the stock market is currently pricing in an 85% chance of a recession. Gloomy talk of economic turmoil can have its own influence on market moves. "Whether one looks at web searches or market pricing there appears to be heightened concern about the prospect of a US recession which by itself has the potential to become self-fulfilling," JPMorgan said.Throughout the past couple of decades, there have been periods where there has been a Goldilocks economy, sometimes after there has been a recession or during a period of economic recovery.Ozgur Donmaz/Getty2. Stocks jumped Tuesday, with S&P 500 futures climbing 500 points in early trading and reversing from last week's broad sell-off. Analysts say the major indexes are set for a "sympathy bounce" after the market holiday. Check out your morning wrap.3. On the docket: Progressive, La-Z Boy, and Icanic Brands, all reporting. Plus, as I mentioned, the world's biggest NFT conference begins today in New York. 4. A CIO with $98 billion in assets under management explained why he's getting back into equities now. He's also successfully sidestepped a 14% correction this year — and now he's eyeing these five stocks he thinks are set to surge.5. I sat down with Shark Tank star Kevin O'Leary to learn about his crypto investing strategy during the bear market. The veteran investor explained that he's been snapping up more bitcoin and ether as prices have slumped — and said the collapse of risky tokens is actually good for cryptocurrencies in the long run. 6. These European countries paid Russia $40 billion for fuel in the first three months of the Ukraine war. And those transactions happened despite impending bans and sanctions on imports. Here's what you want to know.7. Oil markets are heading for an insanely difficult summer. Analysts told Insider that Russian output is about to tumble, and the drop-off is going to leave global supplies even worse off than they already are today. To some, a central-bank-induced recession might be the only thing that can lower demand.  8. This psychologist who earns $1 million a year coaching wealthy clients explained why she never uses the word "saving." The idea goes with the concept of "wealth language," Dr. Tracy Thomas said. She believes that reframing the concept of budgeting can help individuals build wealth more effectively.9. Northwestern Mutual's chief investment officer shared three out-of-favor areas of the stock market that look appealing now. Investors must contend with Fed rate hikes, but Brent Schutte still sees opportunities in the current landscape. See what he's recommending to buy right now.Madison Hoff/Insider10. Real estate sales are starting to take longer. Earlier this year, less than half of pending sales lasted more than two weeks on the market. Slowly but surely, that number is ticking up — here's what that means for the housing sector. Keep up with the latest markets news throughout your day by checking out The Refresh from Insider, a dynamic audio news brief from the Insider newsroom. Listen here.Curated by Phil Rosen in New York. (Feedback or tips? Email prosen@insider.com or tweet @philrosenn.) Edited by Jason Ma in Los Angeles and Lisa Ryan in New York.Read the original article on Business Insider.....»»

Category: worldSource: nytJun 21st, 2022