Oh, So Now There Are No Green Shoots? [View article]
Great thoughts in this article.
Apparently nobody told the Green Shoot brigade that the Trough part of the global business cycle takes a while to get out of, and while the sentiment may be changing the fundamental releases take a long time to make up the lag factor between optimism and reality aligning.
How can ever-increasing weekly jobless numbers, and increasing national unemployment rates hitting 10%, lead to the private sector being expected not to post similar numbers to the previous months bloodbath in job losses (rhetorical).
There is little wonder that the market cannot get global interest to move prices in any market, in any direction, when the future outlook is as blurry as the analyst and forecasters are making it. Fair value is as elusive right now on any given market than it has ever been.
Forget year-end targets and talk of the recession ending in Q3 or Q4 because, the reality is most analysts would stand as much chance of pinning the tail on the donkey as they would getting the Thursday close number on the S&P; let alone calling for the bottom of the most savage of global financial melt-downs that has ever been seen.
This is a traders market right now, one that is built for reactive, contrarian thinkers who are prepared to take a shot at the links that drive forex values actually holding for more than 30 minutes; because in reality that is all that is being offered right now.
Short, sharp bursts of order flows that break up a choppy market, and then reverse as quickly as they hit. Not good to look at, frustrating to look back on, but there for those who are opinion free, and ready to work with what is right in front of them, rather than trying to deal with what they want things to be.
Oh, So Now There Are No Green Shoots? [View article]
Agree 100% on the forign stocks, the XLF is screaming that is struggling to hold fair value.
The banking sector in the U.S. does not compare in any way to the ‘safety’ of overseas banks in regard to long term bank deposit and foreign exchange currency ratings, from Standard & Poors, Fitch, and Moody’s. The top 50 globally rated banks from the GFMag yearly 'Safe Bank' survey show some statistics that Stress Test followers, and Green Shooter's, may find surprising.
There are thirteen newcomers to the list; a 20% replacement ratio rate from 12 months ago. The highest ranking bank is Germany’s KFW, Singapore and Finland added major players to the list, with two of Singapore’s entrants matching Deutsche Bank and Bank of Montreal’s credit ratings.
Spain and Canada moved into the top ten with Banco Santander and Bank of Canada. Some casualties to the list include Citi, Bank of America, Barclays, and Royal Bank of Scotland.
The U.S. has no banks in the top 20, and just five banks in the top 50 list.
4 of the top 7 are German
9 of the top 10 are European
14 of the top 20 are European
5 of the top 20 are Australian or New Zealand
2 of the top 20 are Canadian
33 of the top 50 are European
France has as many top 50 banks as the U.S. and a far higher overall ranking with 3 of the top French banks within the top 20, and one, CDC, in at number 2 on the list. European and Australian banks dominate the overall rankings.
The five U.S. banks in the top 50 are Wells Fargo (21), US Bancorp (26), Bank of New York Mellon (34), JP Morgan Chase (45), and tied for 50th with three overseas banks is BB&T.
Hmmmmm, the flight to safety, on a bed of green shoots. Looks as though the flight to safety may have to be re-written in the post-credit crisis environment.
Is It Time to Buy? What History Shows [View article]
Show me a sustainable rally while earnings are decreasing. You can't because one doesn't exist.
Earnings are going down a lot further than estimated and the employment situation has much further to worsen. Consumers are deleveraging and they won't use credit (if it's even available) for quite some time.
Why on earth would anyone expect consumers will spend when their assets (home and 401k) have been devastated.
Mohamed El-Erian of PIMCO has it exactly right. We are not returning to business as usual. Rather, we are facing "the more nasty reality of a volatile journey to a different destination."
Is It Time to Buy? What History Shows [View article]
I really don't know why you and everyone else who writes about this stuff doesn't see this:
Put EPS on an S&P chart. You will see that the sustained 2003-2007 rally didn't begin until long after earnings had crashed and AFTER they begun to rise once again.
And if you look at the EPS during the rally, you'll see it goes up.
Of course there will be intermediate ups and downs-we're in a 18% upswing on the S&P right now from the Nov. 21 low. But these are moves for traders, not investors.
Stocks are probably more likely to move up and down like this without a sustained rally for several years because earnings still have further to fall.
The ones who saw price declines coming and bought debt are way ahead of the game. Why? Because in the three months to October, headline CPI fell at a 4.4% annualized rate which means during that time they were earning maybe 8% annualized. And they got to sleep at night.
Long Dollars, Long Fed - This Could Get Ugly [View article]
Thank you Berated, As Crude points out, the equity market may hold on, (may) so long as there is enough paper and cotton hanging around to support a market through until mid-term elections in November the bullets may be saved for bigger targets, but as the Swiss National Bank and The Bank of Japan have seen, the global market has teeth.
The last bullet for the Fed? There may be a few in the chamber so long as Primary Dealers can pull up to the discount window lending rates from the Fed at 0.25%, and then drive round to the auction window and churn the 0.25% loan into a 0.70% note yield by lending the money back to the Fed, netting profit for doing nothing.
There is no inter-bank risk, in that the Fed is empowering bad behavior in that all of the excess printing of notes to stimulate are being lent back to the Fed at higher rates.
It is like the tourist who drives into a dusty Texas town, puts $100 deposit on top of the hotel lobby counter and asks to inspect a room before booking. The Manager takes the note and runs down to pay his bar tab. The barman takes the note and runs down to pay the butcher his unpaid meat bill. The Butcher runs down to pay the local lady of the night who has been doing tricks on credit. The lady of the night runs into the hotel to clear her room bill. The tourist comes down the stairs, picks up his $100 note and says he will not be staying. Without anything being spent the town cleared some unpaid bills and thought that things were picking up economically….
The Fed, the algorithms, the TBTF banks, the massive redemptions, the high cost of inter-bank trade, it all adds up to the Fed needing a Panza Tank if they are going to stop this shell game, one bullet will not do it, three or four may hurt because they will just not be enough to drop the monster that they have created.
Fortunately memories are short, and attention spans are down to 160 words of twitter, therefore all will be OK in the world so long as the Federal Reserve Bank of New York can hold equity selling back, and at least get to mid-term elections with the algorithms hold S/P support.
However, with the wall of economics that hit on the week of 3rd October, none of which seem capable of offering too many upward surprises outside of the Non-farm Circus manipulation, the Fed may be running the printing press on overtime.
Ready for Apple, Microsoft and S&P to Drop? [View article]
The article above states that there has been a change in outlook towards AAPL, and provides the hedge fund data that shows how holdings have been re-allocated.
There is no call to action on AAPL in the article, just a highlight of changing dynamics that some may not have been aware of, that need to be monitored. When a signal does confirm, we will send it out.
There is a call to action on Microsoft and S&P 500. TheLFB bio above explains the company, and history at Seeking Alpha.
Long Dollars, Long Fed - This Could Get Ugly [View article]
We hear you there Crude, but the PPT really do have their work cut out to shore this up, and once Mutual Fund year-end in four weeks is gone, it really could become a wild-west ride into November.
As we all know very well, these are inter-connected global markets now, with a pull on one side of the globe creating a push in an inversely correlated market elsewhere. Low-participation algorithms have done well to track stocks higher following the Fed mandate of lending cheaply, only to have the money coming back from Too Big To Fail institutions who are sucking up Treasuries and banking the interest rate differential from the Fed, while also having a back-stop on risk in stocks.
This is going to be a mess, and with futures trade accounting for more of the percentage move in stocks than the cash market it would be good advice to bank early and often, and stand near the door with Blackberry in hand, just in case the TBTF bail on the Fed ahead of the mid-term circus.
Trade the trend, do not try to time the top nor jump on the short moves with guns blazing, instead get to grips with the fact that most price action is in the futures market, leaving scraps to fight over when cash trade gets underway. Watch 02:00 ET for the German Dax futures market moves if you trade forex or equity futures, then monitor the 07:00 ET London price fixing on oil and gold that Chicago reacts to, and trade out or distribute at 11:00 ET book balancing as European futures quiet down.
Longs may need to take a bit off the table, and at worst look to tighten stops because these market mechanics are signaling price action is about to break. Whether it turns out to be long or short risk, interest rates, or the dollar, small slices taken each day may be the way to handle it.
There is a currency pair to hedge all global markets, and running 24 hours a day with huge liquidity and easy access. Cash may sometimes be King, but forex must run it close for those who want to hedge a dropping portfolio and also then trade in-line on the days that risk is being bought.
The mid-terms may not be as important to the global trading community as anything that hits regarding QE2. Looking back at history, there are only very weak links that have Usd/Forex moves of note that seemed to be instigated by the U.S. half-way mark elections, if at all. However, it is hard not to find one month that has not had a pivotal impact from either FOMC policy announcements or the week of Non-farm Payroll economic releases.
The comments are trader-based, not politically-based, and focus on what is quantifiable and repeatable in regard to potential tradable reactions. It would probably be a struggle to find many non-U.S. residents who knew that there was a Sanate and a Congress, and even fewer that would know the roles of either. Therefore the tradable or global market-wide reactions to the results of either will be a lot harder to trade that the response to NFP or QE2.
Fed Debt Goes Two Miles High and One Mile Wide [View article]
Well, the slow and steady climb higher is underway, it will not be parabolic, there will be pull-backs, but the dollar index mid-term low looks to be solid support at 76.50. Wonder if the train is like the helicopter, with Mr. B at in the drivers seat, chucking bucket-loads of notes all over the place.....
U.S. Household Sector Not as Bad Off as Commonly Believed [View article]
The consumer is devastated. Their most important assets-home and 401k, have been severely compromised at the same time their balance sheets were levered the most in history.
Just look today's oil inventory numbers-demand for finished products fell 6.1% from last year even with all the price declines.
The next ten years are highly likely to be very rewarding? If your grandchildren live to be 100 years old, they won't see DOW 14,000.
The debate about whether or not these policies are going into effect is moot-because they are.
What if mortgage rates are brought down, but loans are then made to credit worthy borrowers who have a down payment?
I think we run the risk here of going from on extreme to the other-credit was far too easy too obtain before and the risk now is that it will become far to difficult to obtain.
Whatever happened to proper underwriting standards?
We need to get housing going again, but not to where it was in the bubble. Increasing the affordability, combined with rational lending standards, is the approach which should be taken now.
Dollar's Fate Is in the Hands of the S&P 500 (Again) [View article]
History will tell what actually follows what. In 30 years of institutional trade (15 years within a central bank) we have seen enough ebbs and flows to understand that sometimes the Usd follows, but rarely does it lead. Watch the interest rate market; that is what sets the tone, then futures, then the dollar.
The Usd-environment may lead the pack, but calling for the dollar to be the market leader may not actually be correct. Mind you, in the HFT, POMO, and Flash Trade environment, who is actually quick enough to know what leads what. In reality, does it matter?
The markets are broken, and the real danger is that there are very few areas of the global market to now hedge risk; the scales are balanced with the Usd on one side, and every other financial instrument on the other.
With virtual 100% daily inverse correlation in the global market anything can be traded in reaction to the Usd moves. If the dollar gets sold, buy Euros, Oil, Stocks, and if the dollar gets bought, sell all of the above. Does it matter what leads by a millisecond?
Apple Crushes the Number, Forex Swallows a Pip [View article]
The reason for the abbreviation is so that the word AAPL can be tracked and clicked on by anybody who may not know the symbol. We rarely post about stocks, they are not what float our boat, but in future we will post the full name of anything we reference. Sorry if it caused an issue. Thank you for the feed-back.
Oh, So Now There Are No Green Shoots? [View article]
Apparently nobody told the Green Shoot brigade that the Trough part of the global business cycle takes a while to get out of, and while the sentiment may be changing the fundamental releases take a long time to make up the lag factor between optimism and reality aligning.
How can ever-increasing weekly jobless numbers, and increasing national unemployment rates hitting 10%, lead to the private sector being expected not to post similar numbers to the previous months bloodbath in job losses (rhetorical).
There is little wonder that the market cannot get global interest to move prices in any market, in any direction, when the future outlook is as blurry as the analyst and forecasters are making it. Fair value is as elusive right now on any given market than it has ever been.
Forget year-end targets and talk of the recession ending in Q3 or Q4 because, the reality is most analysts would stand as much chance of pinning the tail on the donkey as they would getting the Thursday close number on the S&P; let alone calling for the bottom of the most savage of global financial melt-downs that has ever been seen.
This is a traders market right now, one that is built for reactive, contrarian thinkers who are prepared to take a shot at the links that drive forex values actually holding for more than 30 minutes; because in reality that is all that is being offered right now.
Short, sharp bursts of order flows that break up a choppy market, and then reverse as quickly as they hit. Not good to look at, frustrating to look back on, but there for those who are opinion free, and ready to work with what is right in front of them, rather than trying to deal with what they want things to be.
Good read, good thoughts, thank you.
Oh, So Now There Are No Green Shoots? [View article]
The banking sector in the U.S. does not compare in any way to the ‘safety’ of overseas banks in regard to long term bank deposit and foreign exchange currency ratings, from Standard & Poors, Fitch, and Moody’s. The top 50 globally rated banks from the GFMag yearly 'Safe Bank' survey show some statistics that Stress Test followers, and Green Shooter's, may find surprising.
There are thirteen newcomers to the list; a 20% replacement ratio rate from 12 months ago. The highest ranking bank is Germany’s KFW, Singapore and Finland added major players to the list, with two of Singapore’s entrants matching Deutsche Bank and Bank of Montreal’s credit ratings.
Spain and Canada moved into the top ten with Banco Santander and Bank of Canada. Some casualties to the list include Citi, Bank of America, Barclays, and Royal Bank of Scotland.
The U.S. has no banks in the top 20, and just five banks in the top 50 list.
4 of the top 7 are German
9 of the top 10 are European
14 of the top 20 are European
5 of the top 20 are Australian or New Zealand
2 of the top 20 are Canadian
33 of the top 50 are European
France has as many top 50 banks as the U.S. and a far higher overall ranking with 3 of the top French banks within the top 20, and one, CDC, in at number 2 on the list. European and Australian banks dominate the overall rankings.
The five U.S. banks in the top 50 are Wells Fargo (21), US Bancorp (26), Bank of New York Mellon (34), JP Morgan Chase (45), and tied for 50th with three overseas banks is BB&T.
Hmmmmm, the flight to safety, on a bed of green shoots. Looks as though the flight to safety may have to be re-written in the post-credit crisis environment.
Is It Time to Buy? What History Shows [View article]
Earnings are going down a lot further than estimated and the employment situation has much further to worsen. Consumers are deleveraging and they won't use credit (if it's even available) for quite some time.
Why on earth would anyone expect consumers will spend when their assets (home and 401k) have been devastated.
Mohamed El-Erian of PIMCO has it exactly right. We are not returning to business as usual. Rather, we are facing "the more nasty reality of a volatile journey to a different destination."
Is It Time to Buy? What History Shows [View article]
Put EPS on an S&P chart. You will see that the sustained 2003-2007 rally didn't begin until long after earnings had crashed and AFTER they begun to rise once again.
And if you look at the EPS during the rally, you'll see it goes up.
Of course there will be intermediate ups and downs-we're in a 18% upswing on the S&P right now from the Nov. 21 low. But these are moves for traders, not investors.
Stocks are probably more likely to move up and down like this without a sustained rally for several years because earnings still have further to fall.
The ones who saw price declines coming and bought debt are way ahead of the game. Why? Because in the three months to October, headline CPI fell at a 4.4% annualized rate which means during that time they were earning maybe 8% annualized. And they got to sleep at night.
Long Dollars, Long Fed - This Could Get Ugly [View article]
As Crude points out, the equity market may hold on, (may) so long as there is enough paper and cotton hanging around to support a market through until mid-term elections in November the bullets may be saved for bigger targets, but as the Swiss National Bank and The Bank of Japan have seen, the global market has teeth.
The last bullet for the Fed? There may be a few in the chamber so long as Primary Dealers can pull up to the discount window lending rates from the Fed at 0.25%, and then drive round to the auction window and churn the 0.25% loan into a 0.70% note yield by lending the money back to the Fed, netting profit for doing nothing.
There is no inter-bank risk, in that the Fed is empowering bad behavior in that all of the excess printing of notes to stimulate are being lent back to the Fed at higher rates.
It is like the tourist who drives into a dusty Texas town, puts $100 deposit on top of the hotel lobby counter and asks to inspect a room before booking. The Manager takes the note and runs down to pay his bar tab. The barman takes the note and runs down to pay the butcher his unpaid meat bill. The Butcher runs down to pay the local lady of the night who has been doing tricks on credit. The lady of the night runs into the hotel to clear her room bill. The tourist comes down the stairs, picks up his $100 note and says he will not be staying. Without anything being spent the town cleared some unpaid bills and thought that things were picking up economically….
The Fed, the algorithms, the TBTF banks, the massive redemptions, the high cost of inter-bank trade, it all adds up to the Fed needing a Panza Tank if they are going to stop this shell game, one bullet will not do it, three or four may hurt because they will just not be enough to drop the monster that they have created.
Fortunately memories are short, and attention spans are down to 160 words of twitter, therefore all will be OK in the world so long as the Federal Reserve Bank of New York can hold equity selling back, and at least get to mid-term elections with the algorithms hold S/P support.
However, with the wall of economics that hit on the week of 3rd October, none of which seem capable of offering too many upward surprises outside of the Non-farm Circus manipulation, the Fed may be running the printing press on overtime.
Ready for Apple, Microsoft and S&P to Drop? [View article]
There is no call to action on AAPL in the article, just a highlight of changing dynamics that some may not have been aware of, that need to be monitored. When a signal does confirm, we will send it out.
There is a call to action on Microsoft and S&P 500. TheLFB bio above explains the company, and history at Seeking Alpha.
Long Dollars, Long Fed - This Could Get Ugly [View article]
As we all know very well, these are inter-connected global markets now, with a pull on one side of the globe creating a push in an inversely correlated market elsewhere. Low-participation algorithms have done well to track stocks higher following the Fed mandate of lending cheaply, only to have the money coming back from Too Big To Fail institutions who are sucking up Treasuries and banking the interest rate differential from the Fed, while also having a back-stop on risk in stocks.
This is going to be a mess, and with futures trade accounting for more of the percentage move in stocks than the cash market it would be good advice to bank early and often, and stand near the door with Blackberry in hand, just in case the TBTF bail on the Fed ahead of the mid-term circus.
Thank you for the feed-back.
Ready For Another Flash Crash? [View article]
Longs may need to take a bit off the table, and at worst look to tighten stops because these market mechanics are signaling price action is about to break. Whether it turns out to be long or short risk, interest rates, or the dollar, small slices taken each day may be the way to handle it.
There is a currency pair to hedge all global markets, and running 24 hours a day with huge liquidity and easy access. Cash may sometimes be King, but forex must run it close for those who want to hedge a dropping portfolio and also then trade in-line on the days that risk is being bought.
Forex Weathers Global Storms [View article]
The mid-terms may not be as important to the global trading community as anything that hits regarding QE2. Looking back at history, there are only very weak links that have Usd/Forex moves of note that seemed to be instigated by the U.S. half-way mark elections, if at all. However, it is hard not to find one month that has not had a pivotal impact from either FOMC policy announcements or the week of Non-farm Payroll economic releases.
The comments are trader-based, not politically-based, and focus on what is quantifiable and repeatable in regard to potential tradable reactions. It would probably be a struggle to find many non-U.S. residents who knew that there was a Sanate and a Congress, and even fewer that would know the roles of either. Therefore the tradable or global market-wide reactions to the results of either will be a lot harder to trade that the response to NFP or QE2.
Fed Debt Goes Two Miles High and One Mile Wide [View article]
Lockdown Ahead of the Fed [View article]
U.S. Household Sector Not as Bad Off as Commonly Believed [View article]
Just look today's oil inventory numbers-demand for finished products fell 6.1% from last year even with all the price declines.
The next ten years are highly likely to be very rewarding? If your grandchildren live to be 100 years old, they won't see DOW 14,000.
Low Rates, Big Problems [View article]
What if mortgage rates are brought down, but loans are then made to credit worthy borrowers who have a down payment?
I think we run the risk here of going from on extreme to the other-credit was far too easy too obtain before and the risk now is that it will become far to difficult to obtain.
Whatever happened to proper underwriting standards?
We need to get housing going again, but not to where it was in the bubble. Increasing the affordability, combined with rational lending standards, is the approach which should be taken now.
Dollar's Fate Is in the Hands of the S&P 500 (Again) [View article]
The Usd-environment may lead the pack, but calling for the dollar to be the market leader may not actually be correct. Mind you, in the HFT, POMO, and Flash Trade environment, who is actually quick enough to know what leads what. In reality, does it matter?
The markets are broken, and the real danger is that there are very few areas of the global market to now hedge risk; the scales are balanced with the Usd on one side, and every other financial instrument on the other.
With virtual 100% daily inverse correlation in the global market anything can be traded in reaction to the Usd moves. If the dollar gets sold, buy Euros, Oil, Stocks, and if the dollar gets bought, sell all of the above. Does it matter what leads by a millisecond?
Apple Crushes the Number, Forex Swallows a Pip [View article]