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Kevin Davitt
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Kevin brings his unique experience in derivatives to RCM Asset Management. Following graduation (Marquette University – Evans Scholar 1999) Kevin started working for LETCO Trading on the CBOE floor. Between 2000 and 2007 Kevin traded a variety of Equity and Index options products as a market... More
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  • Taper Expectations Tapered 0 comments
    Oct 22, 2013 12:05 PM

     

     

     

     
     

     

    As the US Government comes back online we will begin to get a backlog of economic data. Tomorrow morning we'll get a look at the Non Farm Payroll number the markets expected on 10/4. The forecast calls for +180k, but given the insanity in the weekly jobless claims numbers lately.....this release might as well be come from the Bureau of Labor Statistics in crayon.

    In any event, the only thing that matters is TAPER IS OFF.

    http://www.bloomberg.com/news/2013-10-18/fed-qe-taper-seen-delayed-to-march-as-shutdown-bites.html

    Blame it on non existent Fiscal policy.

    Blame it on Nancy Pelosi or Ted Cruz or Chuck Schumer or Mitch McConnell.

    Blame it on Obama or Bush or the ghost of John Maynard Keynes.

    In my opinion, economic data makes for wonderful conversation at a dinner party or at a coffee shop, but it DOESN'T MATTER anymore. It hasn't mattered for quite some time.

    It will matter greatly when the Monetary Methamphetamine drip does slow, but that's down the line. Outta sight, outta mind.

    Here is a look at the Federal Reserve's Balance sheet.

    The Fed's Balance sheet is up 285% since Fall of 2008.

    The Russell 2000 is up 225%.

    The Fed's Balance sheet is up 31% in 2013.

    The Russell 2000 is up 31% in 2013.

    A guy I respect in the business told me "Don't confuse a Bull market for brains".

    To that I would add, "don't delude yourself into believing in fundamental/organic growth". This is about limitlessly supportive monetary policy.

    I haven't seen an updated QE Chart in a few months, but this one certainly gives you the flavor (into early June of this year, just after the threat of Taper on May 22nd derailed the risk on ramp).

    In case you do have a dinner party or coffee meeting, here is this week's economic calendar in the US.

    If your friends/colleague are more cosmopolitan, you might want to consider mentioning:

    • The Eurozone's Debt to GDP release today (90.6%).
    • Bank of England Minutes on Weds AM along with Bank of Canada meeting.
    • China Manufacturing PMI + Japanese CPI - Thursday
    • British GDP Friday

    Other "interesting" things in markets that are not necessarily 1:1 correlated with the FOMC balance sheet

    • Crude oil broke $100 for the first time since early August. The Term Structure in WTI continues to flatten and the spread between WTI and Brent moved back out to $9.50 wide.

    Brent v. WTI spread - @ highs from Feb and April. Crossroads?

    Kevin Davitt

    Global Execution and Futures/Options Broker

    621 S. Plymouth Ct. Floor 1

    Chicago, IL 60605

    Direct: 312-870-1520

    Cell: 773-732-5197

    Fax: 312-275-8123

    AIM: kpdavitt13

    kdavitt@rcmam.com

    rcmassetmanagement.com

    Risk Disclaimer: This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities and/ or financial products herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed to be accurate. You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions ("Forex") before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results. This report contains research as defined in applicable CFTC regulations. Both RCM Asset Management and the research analyst may have positions in the financial products discussed.

    Themes: Energies, Metals
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