In Sep 2016, a hedge fund client asked for my take on Deutsche Bank [DB.] The stock had broken down and fallen 33% in three months. Priced at around 11.23, they were considering shorting it. A few hours later, it became apparent to me that DB was not only not a good short, but was … continue reading →
Once upon a time (1896), there was an index of 30 industrial stocks. It included such household names as the American Cotton Oil Company, the National Lead Company, and the US Rubber Company. Since then, the components have changed 51 times. Today, it contains many non-industrial companies such as Disney, Intel, Goldman Sachs and Apple. … continue reading →
When the Fed says they’re not particularly concerned about inflation… it’s not because they’re not concerned. It’s simply that they know the economy cannot function with higher interest rates — not with the level of debt sitting on personal, corporate and government balance sheets. They recently started slipping in the word “symmetric” to describe their … continue reading →
Sometimes, the narrative gets a little ahead of reality. The latest data out of Japan and the euro area suggest the narrative was on a different planet.It’s been difficult to be patient – waiting for markets to catch down with hard economic data. But, we got our first taste of reality in quite a while … continue reading →
Yesterday’s near-breakout was tempered by a failure of VIX to break down. The indecision carried over to this morning, where VIX remains in a consolidation pattern that promises a significant move — one way or the other. The major indices are essentially in a holding pattern, which typically indicates a sell-off lies ahead. Our yield … continue reading →
While SPX has pushed above its 2.24 Fib extension multiple time over the past two months, and has remained safely above the critical support for the past seven sessions. ES, on the other hand, has really struggled. Following a failed rally on Mar 21, ES didn’t even tag its (2728.79) again until May 11. Since … continue reading →
As the 10-year pushes past 3%, we’re left to wonder whether flows will begin to favor bonds again. In a world of 2.5% inflation, bonds might seem like a sucker’s bet. In a world of 8-10% inflation, even more so.Yet, we often buy instruments with little long-term value but plenty of short- or medium-term appreciation … continue reading →
TNX reached 3.11 this morning, but DXY isn’t buying it. We asked rhetorically, yesterday, whether “investors algos [will] even care about the stagnation which, abetted by inflation-driven higher interest rates, has ensnared the economy in its razor sharp talons? Or, will a tumbling ‘risk indicator’ and copious share buybacks be enough to ward off a … continue reading →
While a higher dollar might help mitigate inflation, higher interest rates are starting to bite. Both mortgage refinancing and housing starts and permits tumbled in April. Futures tumbled about 5 points on the news. But, even that was a problem, as SPX is perched precariously atop the critical support of its 2.24 Fib extension at … continue reading →
In our Mar 8 update [see: RUT – How it Got Here, Where it’s Going] we noted that VIX had been particularly sensitive to VIX’s machinations. In the throws of an analog at the time, we suggested RUT might be nearing a turning point. At some point, probably around Mar 14, VIX will plunge below … continue reading →