Category: Financial Markets 2021
The analysis published under this category are as follows.
Saturday, September 25, 2021
Markets Deflationary Winds Howling / Stock-Markets / Financial Markets 2021
By: Monica_Kingsley
Without looking back, S&P 500 rallied in what feels as a short squeeze in ongoing risk-off environment. Daily rise in yields was not only unable to propel the dollar, but resulted in a much higher upswing in tech than value stocks – and that‘s a little fishy, especially when the long upper knot in VTV is considered.
The post-Fed relief simply took the bears for a little ride, and the Evergrande yuan bond repayment calmed the nerves. As if though the real estate sector was universally healthy – I think copper prices and the BHP stock price tell a different story. Things will still get interested in spite of PBOC moving in. The current macroeconomic environment will be very hard (economically and politically) to tighten into – have you noticed that the Turkish central bank unexpectedly cut rates?
Tuesday, September 21, 2021
The Fed Is Playing The Biggest Game Of Chicken In History / Stock-Markets / Financial Markets 2021
By: Avi_Gilburt
Yeah, I know everyone is so certain that inflation is what we will be battling for the foreseeable future. The main reason why many of you are so certain we are battling inflation is because you are seeing prices rise on food and other items for which you shop. But, do rising prices really mean we are dealing with the true economic definition of inflation?
To be honest, I really don’t care what you call it. It makes no difference to me since our analysis tells me when to get in and out of the market. You see, I and many others correctly recognize that the stock market leads the economy. So economic definitions have no bearing upon our forward-looking expectations regarding the stock market. And, I have explained why this is the case in past articles:
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Tuesday, September 07, 2021
US Dollar Upswing, S&P 500 and Nasdaq Outlook / Stock-Markets / Financial Markets 2021
By: Monica_Kingsley
S&P 500 didn‘t get hammered on the NFPs miss – stocks did reasonably well, saved by the daily rush into tech. Volatility didn‘t spike throughout the week at all, and credit markets maintain their risk-on posture. Still, the real economy deceleration made itself heard, pushing back Fed taper speculations even further from September. Jerome Powell wanted to see more jobs data, and would want even more so now. I wouldn‘t be really surprised if no taper was announced in November.
Markets are thus far unconcerned about a policy mistake in letting inflation get entrenched even more – Treasury yields moved up, but don‘t expect to see them gallop just yet. Slow and steady, orderly grind higher is the most likely trajectory ahead, and even that won‘t propel the dollar higher, or keep it really afloat. Greenback‘s support is at 91.70, and I‘m looking for it to give in over the nearest weeks, which carries tremendous implications for commodity and precious metals trades. And for risk assets in general.
Precious metals thus far remain tame, and should continue chugging along just fine. Commodities such as copper and oil won‘t be derailed, but might panic temporarily in case of really bad incoming data. Copper‘s continued underperformance of the commodity index highlights the growth woes of the day, and even if the red metal might look to some as ready to roll over, the positive stockpile situation should cushion potential downside. In short, I‘m not looking for a meaningful disturbance to the commodities bull, as the inventory replenishment cycle has far from run its course, and inflation is bound to get hotter this year still.
Monday, September 06, 2021
What‘s Not to Love About Crypto Market Fireworks / Stock-Markets / Financial Markets 2021
By: Monica_Kingsley
Another weak selling attempt in stocks – are these setting up for tomorrow‘s NFPs volatility? It sure appears so, but buy the dip mentality looks likely to emerge victorious. The current period of low VIX will probably give way to a brief spike, which within bull markets is usually resolved with another upswing.
No matter the momentary hesitation in the credit markets, where we‘re moving two steps forward, one step backwards. Or rather two steps backwards, as can be seen this week. Risk off is still with us as key commodities aren‘t surging, leaving yesterday‘s silver upswing a little suspect on a daily basis. Copper and oil are struggling somewhat at the moment as well, taking (a bit too much) time as the dollar is only modestly declining and yields aren‘t rising.
The current trading environment favors still risk off, sectoral rotations are tame, and inflation expectations continue basing before money printing becomes an ever bigger problem for 2022 and the years ahead. Ethereum keeps doing wonders, and Bitcoin is joining in – finally, as expected. Hope you‘re riding open profitable positions too!
Sunday, August 29, 2021
Play the Odds: Avoid Gambling in Rigged Markets / Stock-Markets / Financial Markets 2021
By: MoneyMetals
Is America becoming a nation of gamblers?
The lure of potential cash windfalls is driving rampant speculation in financial markets and record traffic to casinos.
The commercial gaming industry generated a record $13.6 billion in revenues during the second quarter, according to the Las Vegas Review-Journal. Casinos in Las Vegas, Massachusetts, Louisiana, and elsewhere now expect 2021 to be their best year ever.
On the flip side, since all games on a casino floor are rigged in favor of the house, it’s a good bet that gamblers are losing record amounts of money.
Tuesday, August 24, 2021
Surprising Consumer Activity Suggests A Deeper Shift In The Finanical Markets / Stock-Markets / Financial Markets 2021
By: Chris_Vermeulen
This final portion of our research article into the shifting US/global consumer spending/economic activities will help to set up forward expectations related to how assets and the stock market may react over the next 12+ months. In our opinion, the reflation trade/rally is complete, and consumers have already run the course with regards to stimulus spending, hyper-speculation of assets (cryptos, commodities, equities/stocks, and others). What happens next is we shift into the real-world future where post-reflation valuations, consumer activities, and corporate earnings will drive expectations.
There was a time, shortly after the November 2020 elections, that was very opportunistic for traders/speculators. The US Fed was prompting very easy monetary policy while multiple stimulus programs were still taking place. Additionally, the US economy was still early into the post-COVID reflation attempts. This created a real opportunity for traders and speculators to ride a hyper-speculative rally phase in late 2020 and into early 2021 as the Month-over-Month and Year-over-Year economic output data ramped up from the extreme COVID lows.
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Monday, August 23, 2021
Stock Market U-Turn and Quite for Real / Stock-Markets / Financial Markets 2021
By: Monica_Kingsley
What doesn‘t go down, must go up? With a little Kaplan help, sideways S&P 500 trading well above 4,370 – 4,375 area spurted higher as the taper prospects rebalancing worked its magic. As I had been writing thoughout the week and well before, mathematics of growing deficits doesn‘t favor decreasing asset purchases. On top, the economy appears a little slowing down – while no recession this year or next is likely – we‘re midpoint in the expansion cycle as per my credit spread indicators – the slowdown looks inevitable, and the only question is the extent and seriousness of any Fed tapering.
The talking has thus far lifted the dollar, enabling the central bank to take on inflation through the back door. Combined with the decreasing margin debt (first sign that something with the M2 rate of growth is amiss), the reflation and commodity trades have suffered, and all it took was a mere 2.5% from S&P 500 ATHs to make the Fed blink as per the title of my prescient Friday article.
Treasuries though aren‘t yet convinced, having merely wavered – they‘re overestimating the odds of economic growth turning negative. The same trading action describes the dollar, and inflation expectations dipped on the day as well. As a result, expect the turn to risk on beyond stocks, to continue in fits and starts – Friday was but a first swallow revealing that the Fed is ready to step in when things start to look bleak for the „generally accepted metric of economic success“, the stock market.
Saturday, August 21, 2021
Markets Making the Fed Blink / Stock-Markets / Financial Markets 2021
By: Monica_Kingsley
Sea of red in stocks, reversed shortly after the open – is the worst behind? Remembering my Tuesday‘s words bringing up again downside risk (these have been growing for quite a few days before already), I don‘t think so – I consider yesterday‘s volatility as likely not to have yet peaked, and the VIX close above 21 could be overcome perhaps as early as Tuesday.
It‘s that the shift in sentiment to risk off is everywhere to be seen – surging dollar, declining yields, value doing way worse than tech, gold outperforming silver, gold holding up very well, copper and oil striving to bottom, inflation expectations approaching the lower end of its recent range, and quite a few more signs including from select currency pairs – pretty consistent with the takeaways from yesterday‘s extensive analysis. If you hadn‘t read this taper navigation game plan already, have a look, as the feedback was very positive:
(…) This is the time to be picky about where to be exposed to risks, which asset classes are likely to ride the taper and growth storms best. I think it would be copper over oil, and gold over silver. The stock market correction appears in its opening stages indeed, and cryptos still chopping around would be a great result. It‘ll take a while for the dollar to roll over to the downside, but look for it to do so over the medium to longer term, and keep an eye on Treasuries – would be great if they confirmed my midpoint economic cycle hypothesis and didn‘t spike. Finally, I expect the Fed to come to its senses as not enough of what‘s left of the free market, would step up to the plate and finance growing „building back better“ deficits. So far, so good.
Thursday, August 19, 2021
Fed Between a Rock and a Hard Place / Stock-Markets / Financial Markets 2021
By: Monica_Kingsley
No, it‘s not about stocks, however well they hang on to recent gains. ATHs hit again amid recovering corporate credit markets, with both tech and value contributing. Value though was looking more vulnerable going into yesterday‘s session, and just one look at financials or energy confirms that – in the world of question marks over high pace of economic growth, it‘s the Fed that‘s between a rock and hard place.
On one hand, they have stubborn and quickening inflation to deal with (or pretend to deal with through the FOMC, the federal open mouth committee) – getting ahead of the curve means serious tightening (okay, first getting less loose monetarily, which is what taper is about). Given China‘s slowdown and corresponding U.S. figures projected, it would be a tall order to turn off the spigot into a weakening (but still growing) economy – that has potential to trigger quite a correction in stocks and risk-on assets. Note copper and oil paring recent gains, and going largely sideways for weeks – not rolling over, but the light is amber, irrespective of the infrastructure bill.
On the other hand, if the central bank does nothing, inflation would grow even more entrenched, sinking the stock market and economy over time, anyway. Don‘t forget about the massive spending – the Fed turning restrictive isn‘t the math favored outcome here.
Thursday, August 19, 2021
Surprising Consumer Activity May Suggest A Deeper Shift In The Markets / Stock-Markets / Financial Markets 2021
By: Chris_Vermeulen
Recent economic data suggests that US consumers are starting to pull away from the types of buying/spending activities we saw after the COVID virus event that shifted the US economy away from travel/office and towards work-from-home solutions. The deep decline in the US and global economic indicators, as a result of the COVID-19 shutdown, prompted an incredible recovery rally phase in the markets that had everyone chasing the uptrend in stocks, housing prices, and other assets. Now that we are beyond 15+ months after the March 2020 COVID lows, a new dynamic may be setting up in the markets.
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Wednesday, August 18, 2021
The Long Shadow Over Reflation Market Trades / Stock-Markets / Financial Markets 2021
By: Monica_Kingsley
Consumer confidence undershoot didn‘t bring down stocks as the retreat in yields (away from the reflation trades) didn‘t spook value stocks, and only lifted tech. It‘s true that XLK isn‘t firing on all cylinders, and the semiconductors‘ lag is just as concerning as Russell 2000 underperformance – so much for explaining the risks in stocks.
But as I wrote on Friday:
(…) Inflationary pressures building up aren‘t spooking the markets, there is no forcing the Fed‘s hand through rising yields. The bond vigilantes seem a distant memory as yields are trading well below their historical band, stunningly low given the hot inflation data. I‘m not saying red hot because the monthly CPI figure came in line with expectations, providing relief to the transitory camp. But last week‘s ISM services PMI and yesterday‘s PPI paint a very different story (to come).
My call about summer lull in bonds before these slowly but surely make their way higher (the 10-year to 1.80%), is turning out just as well as the inflation expectations‘ continued rebound. The cheap magic of Fed‘s June jawboning is losing its luster. Stocks steady and making marginally higher ATHs practically daily, uneven credit markets, gold holding up well following Monday‘s hit job, oil and copper trading in narrow ranges while the crypto uptrend goes on – fresh profits harvested across the markets yesterday, and growing today.
Regarding the taper noises many Fed speakers made during the week (it isn‘t just about Dallas), some form of taper looks indeed coming, even though they would have a hard time pulling it off against decelerating economy and massive fresh spending. Mission impossible if you will. Still, they make the appearance of wanting to try – wouldn‘t tanking markets and fresh calls to do something be a perfect excuse to expanding balance sheet solidly again? But they must at least internally in the Eccles building understand that a move against inflation is long overdue, and perhaps a repetition of June FOMC wouldn‘t do the trick this time.
Thursday, August 12, 2021
Could a Collapse of Cryptocurrencies Force a Reform of the Global Monetary System? / Stock-Markets / Financial Markets 2021
By: Steve_H_Hanke
For thousands of years, there has been a dominant international currency. Until August 15, 1971, when President Nixon closed the gold window and revoked the right of foreign governments to redeem their dollar assets for gold, all the dominant currencies had either been gold or silver coins, or paper notes or accounts that were redeemable for gold or silver.
Historically, these dominant currencies would come and go, with their demise typically being the result of wars and war finance. The United States dollar supplanted the British pound, which had been the world’s dominant currency in the 19th century, at the onset of the First World War.
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Thursday, July 29, 2021
Showdown: Paper vs. Physical Markets / Stock-Markets / Financial Markets 2021
By: MoneyMetals
The first half of 2021 did not play out as hoped by precious metals investors. Despite the effort to “squeeze” the bullion banks, silver has yet to push through the $30 barrier, and gold remains below the high put in nearly a year ago.
The effort has been valiant. Demand for physical bullion is unprecedented.
However, the paper markets, where price discovery is purportedly done, remain untethered to physical supply and demand.
It will take more than physical demand to break the back of the banking regime which dominates the paper markets.
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Wednesday, July 28, 2021
Fed: Murderer of Markets and the Middle Class / Stock-Markets / Financial Markets 2021
By: Michael_Pento
The Fed’s manipulation of the money supply and its cost has served to obliterate the function of asset price discovery, just as it has also caused the middle and lower classes to reduce their standard of living. Since a greater percentage of their falling real incomes goes to the purchase of food and energy--the things most effected by money printing--the wealth gap, which the fed avows to care about, has become greatly exacerbated.After foolishly and desperately pursuing inflation many years, the dog finally caught the truck. But predictably, the freedom killers at the FOMC are coming to realize inflation is easily tractable on both ends of the spectrum. Its asinine 2% inflation goal was meant to be a ceiling when first proposed; but was underachieved for many years. However, that level has now been transcended by leaps and bounds. The evil inflation genie was released out of the bottle and putting it back in will entail destroying the stock market and economy as a direct consequence. In other words, it took trillions upon trillions of helicopter dollars to get inflation and asset prices where they are today. And unless the Treasury and Fed assent to doing that same thing on a more consistent basis, asset prices and the economy should succumb to a deflationary meltdown next year. A Pyrrhic victory over inflation is the best we can hope for.
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Wednesday, July 21, 2021
Post-Covid Stimulus Payouts & The US Fed Push Global Investors Deeper Into US Value Bubble / Stock-Markets / Financial Markets 2021
By: Chris_Vermeulen
In this second part of our research into how capital is being deployed across the globe and why traders/investors continue to pour capital into the US equities markets, we’ll explore how the US major indexes have reacted to the continued investments by the US and foreign investors compared to foreign market trends.
Using methods like this to determine where capital is being allocated and why traders/investors decide to move capital into and out of various global indexes, suggests one of the most important aspects of swing trading is to stay keenly aware of how capital is moving and deploying across the globe.
In October of 2019, we attempted to highlight how capital is shifting and how trends are setting up in currencies, global major indexes, and other global sectors.
October 17, 2019: CURRENCIES SHOW A SHIFT TO SAFETY AND MATURITY – WHAT DOES IT MEAN?
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Tuesday, July 20, 2021
FREE PASS to Analysis and Trend forecasts of 50+ Global Markets by Elliott Wave International / Stock-Markets / Financial Markets 2021
By: EWI
Hi,
2021 is hallway over. In Q3 and Q4, what in the world should you be watching?
That's not an easy question to answer. There is a lot to look at. In just the past 2-3 months:
- Bitcoin got cut in half
- Crude oil rallied from $62 to $76 - that's 20%
- Gold dropped ~8%, then rebounded
- USD had its sharpest rally in over a year
- Nikkei 225 dropped 1700 points and then rallied 1200
- Nasdaq rose1600 points - over 12%
Markets are MOVING -- and surely, you're wondering what Elliott waves show for Q3/Q4.
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Saturday, July 10, 2021
Escaping The United States May Be Leading To An Extreme Market Bubble Setup / Stock-Markets / Financial Markets 2021
By: Chris_Vermeulen
The past few years have seen housing prices skyrocket as Flippers, Speculators and Traditional Buyers jump into home buying or selling to relocate to different areas throughout the US. One interesting facet of this phenomenon recently hit NBC news over the past few days related to the super hot Boise Idaho and Coeur D’Alene Idaho market. Home prices in the Boise area have skyrocketed higher by over 30% in just 12 months. In Coeur D’Alene, home prices have risen over 85% in the past 12 months.
Is a Supply/Demand Measure Distorted By Recent Buying Activity – And What’s Next?
My concern is that the post-COVID buying/relocating trends have pushed the Supply/Demand pricing factors well past the equilibrium. Simply put, the moratoriums and policies related to home renters and homeowners throughout the COVID-19 crisis have created a supply crisis at a time when many people had the capabilities to sell and relocate into different areas of the US at the same time. Diminishing supply with hyper-active demand pushes price levels upward and to the left, as illustrated on the Supply/Demand chart below.
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Thursday, July 08, 2021
Why U.S. Corporate Bankruptcies Could Skyrocket / Companies / Financial Markets 2021
By: EWI
"U.S. bankruptcies in the first quarter of 2021 and all of 2020 were above the 13-year average"An April 17 article headline on the website of National Public Radio says:
U.S Economy Looking Good As Spending Jumps In March
And, on April 29, The New York Times said:
Americans' spending on durable goods -- cars and furniture and other goods meant to last a long time -- rose at a stunning 41.4 percent annual rate in the first three months of the year.
Considering that the economy is "looking good," economic observers might conclude that a wave of corporate bankruptcies is of little concern.
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Monday, July 05, 2021
Roaring Comeback of Reflation and Commodities / Stock-Markets / Financial Markets 2021
By: Monica_Kingsley
S&P 500 broadening leadership and fresh reflationary ATHs are here – the FOMC „tightening“ hit notwithstanding. Energy, financials and industrials I discussed yesterday and before, were among the leaders, with tech not staying far behind. Crucially, the tech breadth was also improving – such rotations are the stock bull market‘s health. Neither the VIX nor the put/call ratio are arguing. The sentiment going into today‘s non-farm payrolls, remains constructive, and unlikely to result in reconstruction of the Fed tightening bets. Such was my real-time Twitter interpretation.
Credit markets remained constructive, and risk-on this time – that‘s in line with value upswing, accompanied by the Treasury yields‘ inability to retreat further. Near the top of its recent range, the 10-year Treasury yield is trading within the summer bond market calm atmosphere, and so are the beaten down inflation expectations at a time when:
(…) the dollar is catching a strong bid. We‘re still in a reflation, in the reopening trades stage – one where inflation expectations have been (unduly) hammered down while inflation hasn‘t taken a corresponding turn. Notably, commodities haven‘t been derailed in the least, so pay no attention to lumber – the real assets‘ world is much richer and profitable.
Wednesday, June 30, 2021
How Central Banks Murdered the Markets / Stock-Markets / Financial Markets 2021
By: Michael_Pento
The Japanese Government Bond market is nearly $10 trillion in size. It is the 2nd biggest bond market in the world. However, it comes as a shock that this humongous market barely trades any longer.The government of Japan has systematically supplanted and killed the entire private market for its bonds. Meaning, there are almost no private investors who will touch it any more. The Bank of Japan has bought so much debt that it forced interest rates below zero percent back in 2016; and the result is the free market has subsequently died.
Investors are now refusing to buy JGBs, which are guaranteed to lose principal in nominal terms—and deeply negative results after adjusting for inflation. But at the same time, are not in any hurry to sell their existing holdings because they understand the government will be propping up bond prices.
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