# Trading the Trend



## ducati916

So the market still trading strong. The MA crossover still hasn't occurred yet, but it (obviously) will at some point next week now.
















The emphasis on this thread therefore is to catch as much of the trend as possible. That is to include:

(a) major pullbacks; 
(b) which if successful in (a) should have us out if the trend ends.

So this thread does not purport any particular time frame (but it will not be frenetic) rather trying to avoid major pullbacks. Major pullbacks would be the more obvious ones (below).






jog on
duc


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## ducati916

Bullish factors underpinning the trend:






_This morning's jobs report shocked the financial world -- most notably the economists whose job it is to provide estimates.  The consensus estimate among economists for May nonfarm payrolls was projecting a loss of more than 7 million jobs.  The actual number that was reported did not just show a smaller than expected job loss, but it actually showed a gain in jobs of more than 2.5 million.

We're seeing a similar situation play out in the equity analyst community.  With the S&P 500 now up 40%+ since its low less than three months ago, the average stock in the index is now trading above its consensus analyst price target that looks 12 months out.  Analysts have simply not been able to catch up to the rapid rise we've seen for equity prices.

It's extremely rare to see share prices move above consensus analyst price targets.  We don't have the historical daily data on this, but anecdotally we can't remember a time when the spread has been this wide.  As shown below, at the end of 2019 when the S&P finished a massive rally, equity prices were 5.5% below the consensus price target.  That was seen as a very tight spread prior to what we're seeing now.  At the lows in March, the average share price had dropped all the way to $92.50 compared to an average consensus price target of $143.20.  That projected a gain of 54.9% at the time!

Since March 23rd, the average share price has risen from $92.50 up to $138.40, while the average analyst price target has fallen from $143.20 to $136.  Current price targets no longer project a gain for the average S&P 500 stock, but rather a 1.7% drop. _

And






There would (seem) to be a rotation out of Bonds (risk off) into Equities (risk on) occurring. Obviously this is something that we need to keep an eye on going forward.

jog on
duc


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## qldfrog

Another great day for DFEN, FAS and Mr Le Duc will celebrate [ with French champagne i hope. ;-) ]
Just wanted to add a note regarding using ETF vs majors..I fully embrace the risk minimization etc but  I do not own ERX as the volatility during the recent oil crash scared me 
I bought Exxon instead;currently at $53 USD




or in the last 3 months:




vs
ERX last 3 months:




In a nutshell:ERX behaving very well and indeed 
from end May XOM went from 37 to 53: 43%
whereas ERX from 10 to 22-> 220 %
Maybe my choice was not that good.....


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## ducati916

So trading the 'Trend' is quite a different proposition from trading a market bottom and any resultant bounce(s) from that bottoming process.

Trading the trend for me concerns sectors of the market and the overall market. It is not individual stocks. Individual stocks will respond to their own individual issues. Sectors of the market and the market generally are subject to broader macro-forces.

1. The Presidential Cycle: sounds like a lot of mumbo-jumbo. However, it seems to exist quite strongly in the US markets. Market bottoms tend to cluster in year 2. In year 4, where a sitting President seeks re-election, typically all stops are pulled out to ensure that re-election. The same cycle is still present even in second terms as the governing party will still seek support for their new candidate.

2. Business Cycles: the business cycle is a sub-set of the Presidential cycle. Most will be familiar with this chart:











Above is the current situation (relative to the SPY) of a number of sectors. It can provide a guestimate of where we sit in the cycle (bearing in mind we are now entering the hype of an election) and how it may develop moving forward.

jog on
duc


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## ducati916

Historically the Presidential Cycle has a pretty good history: you are looking for weakness in the first 2 years and greater strength in the 4'th year.
























I'll add the more recent ones in a separate post. The point is: this is not a guarantee, there are obvious failures (Bush's second term is a glaring example above), simply that this is a further variable that can be assessed when looking at other macro-factors and the various sectors that can be held.

jog on
duc


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## ducati916

Skipping Obama for the moment, we jump straight to Mr Trump:






Mr Trump was up until COVID-19 a text book example of the Presidential Cycle. Of course COVID put a nasty dent in his re-election plans. As a sitting President he however wields significant influence in (if nothing else) talking the market higher. The market is certainly responding.

The actual election however is more dependent on the actual economy. On that basis, is he at risk in the election? Of course.

We are now sitting in June 2020. The next President, whoever that may be, will not be sworn into Office until January 2021. The next 6 months will see Mr Trump pull out all stops on the economy. An improving economy (assuming it does improve) will further fuel the market. Bad news or a weak economy will not however necessarily impede the market. Hence, the market is 'relatively' safe until the end of the year +/-. Of course s*** can happen. Which is why we look at other variables. This is simply a (very) big picture view that incorporates some of the political realities of the US markets.

jog on
duc


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## ducati916

Clearly the current market has exceeded peoples expectations to the upside. This is simply another way of saying that the market is: overvalued, overbought, overextended technically, etc. That it is due to correct.

There is a further sub-set of people who still consider the (trend) a bounce and that the correction will take the market to new lows.

So we have two different camps: #1 camp expecting a correction in a new bull trend (market ahead of itself) and #2 camp expecting that the correction is a new bear market low. I am in camp #1.

Mr Gartley has posted some Elliot Wave/Gann projections:









I believe Mr Gartley is also in camp #1, using a very different methodology. So we are both waiting for a signal that a correction is imminent.

I have also charted the SPY against a hypothetical Elliot Wave count (as I have no idea about EW).






Now I have no idea whether this is useful. It doesn't help me much I have to say.

Currently I have no signal for a pullback in the trend. However, all the signs are that this current price is extended and will likely correct at some point. I am expecting a pullback to circa the 20EMA. The 20EMA is above its 1STD. It could simply be a pullback to that 1STD or to the 20EMA (which will continue to move higher) intersecting at circa 305-310.






jog on
duc


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## ducati916

So some further charts to consider:

With regard to the Presidential Cycle and a sitting President: we would expect the trend to continue quite strongly.






Strategies that are playing well currently:






We are in a 'growth' market. Value is out of fashion currently.

A new metric:






Confirms the deflationary environment. Not a bullish sign for Gold/Silver currently.






And the only chart that suggests a pullback is imminent.


Just add a valuation chart








A pullback, not a new low. That is the overall message of the varied charts.

jog on
duc


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## qldfrog

In cases like that @ducati916 Mr Duc, do you just follow your indicators?
..my current position..i  still bull until told otherwise by my systems
Or do you start mitigating your risks
Taking options short calls etc even getting out
Or even moving 180 and playing a fall only?
What does your experience tell you?
Only if you have the time and willingness to expand
Obviously last option is do nothing as you believe we are still in an overall bull trend so will just ride the pullback


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## ducati916

qldfrog said:


> In cases like that @ducati916 Mr Duc, do you just follow your indicators?
> ..my current position..i  still bull until told otherwise by my systems
> Or do you start mitigating your risks
> Taking options short calls etc even getting out
> Or even moving 180 and playing a fall only?
> What does your experience tell you?
> Only if you have the time and willingness to expand
> Obviously last option is do nothing as you believe we are still in an overall bull trend so will just ride the pullback




Mr Frog,

As this thread develops we will see pullbacks distinguished between pullbacks that are a normal fluctuation and pullbacks that are a significant decline: say 10%+.

I'm not really interested in pullbacks that are simply normal fluctuations. By the time you see the signal, act on it, close your position, it is all over and the market is moving higher. You have churned your position (probably lost it) and is (unless day-trading) a waste of time, money and effort.

I am however very interested in a pullback that has some meat to it. Trading these correctly will add to your bottom line and of course, every-now-and-then, will save your bacon when a cyclical trend within a secular trend, turns really nasty.

The key for me is keeping an eye on the macro-fundamentals that when combining with market technicals signal something (more) serious is on the horizon. The other takeaway is that I work with sectors, not individual stocks. Individual stocks follow their own individual story lines. Sectors move as a group (possibly the odd outlier) and are easier to get a read on.

ATM I have been focussing on the broad market. I will be drilling down to sectors. Mr Rederob distracted me over the w/e so I am behind schedule currently.

jog on
duc


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## qldfrog

Thanks for sharing


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## gartley

The following charts are Nominal 5, 10 and 20 week cycles for the SP500. As can be seen the 5W target was met and the market then went into consolidation for a few weeks thereafter. The 10 and 20 W cycles considerably higher targets which have not been reached but that is not to say they will be reached and can be invalidated. It should be noted the 10 and 20W target ranges overlap and this range is 3382 to 3769.
Other methods such as prime EW counts suggest a completion is close at hand and as duc said yet various other methods suggest we are overbought  at extremes.
For me however as mentioned before, is the absence of confimation that this trend has ended.. What I look for within my cycles routines is an alignment of 8h and daily dynamic cycles. I have tried just 8h but quite often it's only leads to a shallow move. So like recently on gold where we got both an 8h and daily confirmation which led to a substantial move down I am waiting likewise for the same in the stock indices but at the moment there is nothing there and it may not even generate. There is  some price detrend analysis which I hopse to post later which suggests this trend has still further to run.
In the case that the market does keep trending and reach the 10W/20W target range  there are no higher targets at this point in time.


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## ducati916

Personal incomes make a big jump: (see attached document): courtesy of the Fed.






jog on
duc


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## ducati916

Laggards on the move. BA a constituent of DFEN:






_In recent weeks, we have highlighted how there has been rotation away from the best performing stocks in the first leg of the rally off of the 3/23 low while the stocks that had been the laggards have become the new market must-haves.  Boeing (BA) is a prime example of this trend.  Heavily connected to the decimated airline industry, BA only rose 15.04% in the first part of the rally from 3/23 to the recent 5/13 low. While not the worst stock in the index during that time, it lagged the Dow Jones Industrial Average which rose over 25%. But along with others in the industrial sector like the airlines, recent performance has been much more impressive with BA up 69.08% from 5/13 through Friday's close. Today alone the stock is up another 11% after rallying 11.47% on Friday and 12.95% last Wednesday! That leaves it at its highest level since early March._

_With such large gains in a little less than a month for a stock with one of the higher stock prices in the index, BA has added roughly 575 points to the price weighted Dow. That has by far been the largest contributor to the Dow since 5/13 accounting for roughly 14.9% of the overall move and nearly double the next biggest contributor, Goldman Sachs (GS), which added 316.32 points to the Dow, or roughly 8.19% of the overall move since 5/13. Other major contributors from the Financials sector like Travelers (TRV), American Express (AXP), and JPMorgan Chase (JPM) are some more examples of the recent rotation into stocks that lagged in the immediate wake of the bear market. _

In the financials (FAS) the laggards are also helping its move higher. Part of the advantage of trading ETFs is that you will often have a laggard like BA in the portfolio. Would you want to buy BA as an individual stock? The amount of work (assuming you are capable of advanced financial analysis) would be staggering and even then you are probably going to miss by a mile. Far easier to just have it as 1/50+.






_Amazingly, the average stock in the S&P 500 is now up 54.7% since the March 23rd COVID-Crash closing low for the index.  From the high on February 19th through the low on March 23rd, the average stock in the S&P fell 39.13%.  On a year-to-date basis, the average stock is down just 5.13%, while the average stock is down 9.06% since the February 19th all-time closing high in the index.

Here are two other stats that are pretty mind-blowing.  First, there is only one stock (COTY) in the entire S&P 500 that's down since March 23rd, and it's down less than 2%.  Second, there are only eight stocks that aren't up more than 10% since March 23rd, and these include names like Walmart (WMT), Costco (COST), and Kroger (KR).

Looking at the eleven S&P 500 sectors, the average Energy sector stock is up more than 107.05% since March 23rd.  Note, however, that these Energy stocks are still down nearly 30% year-to-date because they fell 60% from February 19th through March 23rd.  Consumer Discretionary, Financials, Industrials, and Materials all have average gains of more than 50% since March 23rd as well.

The average Tech and Health Care stock is now up year-to-date, while most other sectors have average declines of 3-6% at this point._

_



_

The above is more about buying the bottom. Those returns are available to those that are willing to step into a blood bath.

I'm posting the above for a more practical reason however. A couple of days back I posted this chart:






We have the pre-COVID market, the crash and now the recovery. What phase are we in? Correctly identifying the phase is an important part of the macro-analysis. Through examining the sectors and their current returns and position relative to others, we can start to work out where we are. Thus we start to drill down into sectors and sector rotations. As always, moving forward, we look for divergence from the expected path.

jog on
duc


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## ducati916

So we have the macro-cycle. Now we need to drill down into sectors:






The above was from a post in 2008. That is it in a nutshell. That is the roadmap.

The question is where do we start? Do we start from (early) March 2020 pre-crash or post crash? There are arguments for both: I'm going with post crash. The crash will have re-set the various components, not least the consumer. Therefore plug in the values for the current position and just monitor going forward.

jog on
duc


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## qldfrog

Based on the phases graph, i am a bit puzzled as i see us sitting now in stage 3 already, whereas the crash was just yesterday.iron ore is high, oil back to its 40usd a barrel mid term target, 
We can not have a whole business cycle within a year?
So could we still be in a desorganized end of last bull...which would potentially mean a real crash again to reset the clock...
I would prefer your view of a new bull trend.so far so good and great results last night
.but the market does not care what i prefer..
Tricky


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## ducati916

qldfrog said:


> Based on the phases graph, i am a bit puzzled as i see us sitting now in stage 3 already, whereas the crash was just yesterday.iron ore is high, oil back to its 40usd a barrel mid term target,
> We can not have a whole business cycle within a year?
> So could we still be in a desorganized end of last bull...which would potentially mean a real crash again to reset the clock...
> I would prefer your view of a new bull trend.so far so good and great results last night
> .but the market does not care what i prefer..
> Tricky





Stage 3 looks about right. Going back to the earlier chart, we can see in the last column:






Currently the market is a little out of sync. There will be sector rotations going forward. Eventually we'll see (more or less) where we are. We can also drill down further into the various sectors, which might provide greater clarity.

However for 'timing' the broad market, inter-market relationships are paramount.






Above we have the 20yr Bond v SPY. I'll only go into detail of the last signal Dec.2019/Jan 2020.

The signal (above) was triggered in late Jan.2020, but the initial warning came in Dec. 2019. In Dec. 2019 the 20yr was trading at a yield of 2.25%. In Jan. 2020 that yield was 1.83%. That is a *42 Basis point move.* That is significant. You can see the effect on the break of the trendline in late Jan. 2020. Below is greater detail:






By Feb. 18 2020, no doubt remained: the market was going to correct. This wasn't going to be just a pullback to the 20EMA type of correction, but more akin to Dec. 2018 (see above chart for that time period). Of course I wasn't expecting the crash that ensued, but by that time I was already light and hedged, so it made no difference. By April 2020, we could see a perfect H&S in the ratio, which along with everything else provided confidence moving forward into the bounce and holding positions.

I haven't drawn the horizontal support: but we can see, where we are currently lines up with the March period. Combine that with the current over-extension on any number of indicators and we are probably due a correction: probably to the 20EMA. 






The above chart is just looking at the 2018/2019 drop. In May 2018 the 20yr yielded 2.19%. By October the yield was 3.30%. A 17 Basis pt. move. The Fed. was hiking and it was well publicised. Go back to the ratio chart for that time period: look at Oct. 2018. Clear trendline break, combined with bad Fed. language and a 17 Basis pt. move. The market was going to correct.

This macro perspective (usually) gives ample warning. Combine it with additional analysis and you have plenty of warning of troubled waters ahead.

jog on
duc


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## ducati916

The $VIX:

You'll have to excuse a couple of my lines (could have been more precise). I have also omitted the horizontal lines (resistance/support) entirely because this particular chart is just a short history. You would want a longer time frame to plot the horizontals on.

I use the VIX in combination with other indicators (probably about 4 in all). Mine are obviously not coded (big disadvantage, far more time consuming having to look at stuff) but you can still get there (even if you can't code) and have a pretty good idea what is going on.

Obviously (or maybe not so obvious) you can use the VIX in both directions (as Mr Skate is doing). There is a significant amount of information contained in this (seemingly) simple indicator. Clearly from the posted backtests, the advantage is clear.

So a practical application currently: look to far right of the chart. You will see that the steepness of the blue line is unlikely to be maintained. Any fluctuation now will create a 'break' in the trend line. This will in the current market trigger the 'pullback' that a number of posters have been talking about for the last week. Note also, had horizontal lines been added, the falling VIX would be at +/- the support point and would likely rally, which means falling prices in stocks.

Today, we have a bit of a pullback. Is it a pullback or failing (bounce) trend? It is simply a pull back because the other indicators do not confirm a trend (significant) failure.

But that identifies an important point (that Mr Skate has solved via code): how do you differentiate a 'signal' from noise? This takes some effort and is tricky in isolation. I use other confirmations, but you will have to find something that gells with your style of trading.






Clearly some of what I use appears on this thread, 'Trading the Bounce' and 'Market Bottoms'.

Currently we have this situation:









The 50/200 is still rising. What is pulling back is the 20EMA which was extended. Now of course that could develop and by then you are already caught. Hence the starting point are the macro indicators.



jog on
duc


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## qldfrog

Fwiw, my indicators moving to bear.
Asx daily switching to a bearish .


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## Joules MM1

qldfrog said:


> Fwiw, my indicators moving to bear.
> Asx daily switching to a bearish .



so not actually in bear mode, more a transition, more an interpretation that leans to bear ?


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## qldfrog

Joules MM1 said:


> so not actually in bear mode, more a transition, more an interpretation that leans to bear ?



not much interpretation in my systems: based on backtest of previous periods
more statistically right than interpretation.
If I want to have an edge, it is turning bearish today, may turn opposite tomorrow, it is not triggering yet a GTFO (get the **** ou) signal; but I notice one sell, no buy in my daily..usually that sell would have been matched by one buy.
Still mostly invested nevertheless today


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## ducati916

So now the 20EMA has crossed the 200EMA (touching) and we will have a correction. The correction started today. Now that correction can be in time or price. If it is time, then price will just go nowhere while the EMA catches up. If by price, we'll get a price pullback. I would expect a price pullback, but this market has simply been so strong I would not rule out a time correction as that would likely frustrate the most participants.

Looking at another view:









If correcting by price: then as price and the rising EMA meet (again) would be our correction. I would not expect price to fall to the lower B. Band. If by time, price will fluctuate sideways until it takes off higher again.

jog on
duc


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## qldfrog

ducati916 said:


> View attachment 104570
> 
> 
> So now the 20EMA has crossed the 200EMA (touching) and we will have a correction. The correction started today. Now that correction can be in time or price. If it is time, then price will just go nowhere while the EMA catches up. If by price, we'll get a price pullback. I would expect a price pullback, but this market has simply been so strong I would not rule out a time correction as that would likely frustrate the most participants.
> 
> Looking at another view:
> 
> View attachment 104572
> View attachment 104571
> 
> 
> If correcting by price: then as price and the rising EMA meet (again) would be our correction. I would not expect price to fall to the lower B. Band. If by time, price will fluctuate sideways until it takes off higher again.
> 
> jog on
> duc



So @ducati916  Mr le Duc, if you are ready to share this only, do you rotate you rinvestment mix or as you expect just a pull back, ride the fall?


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## ducati916

qldfrog said:


> So @ducati916  Mr le Duc, if you are ready to share this only, do you rotate you rinvestment mix or as you expect just a pull back, ride the fall?




If I'm going to 'act' (hedge/exit/rotate/etc) I want the market to be falling at least 10% or more. For daily fluctuations, losing the position or being simply wrong (market just keeps moving higher) simply isn't worth the effort.

However once we talk about 10% +/- in the broad market, the x3 leveraged ETFs are going to move a lot. This makes it very profitable to take action. Generally I am going to rebalance. That is sell down a % of the position and re-buy at the bottom of the move. Essentially my position is growing over time.

The key is to differentiate between a macro based move and fluctuations. It is my opinion that the current correction is simply a technical correction. We were very over-bought leading into today.

What will be interesting to monitor over the next couple of days will be the Bear Media. Will they call this the long sought after 'correction': ie. moving to new lows? How many will be scared out of their positions? Just reading some of the threads on ASF you can see the paranoia is high. It was the same in 2009. Look at what happened there. 10 yrs of a 1-way market with a couple of bumps along the way.

I 'think' the Market Makers are well aware of the level of paranoia in the market and for that reason alone may drop the market precipitously, leading to a mass of new shorts, scared longs selling out etc, only to turn it around (typically with a gap higher) trapping those new shorts. It is a pattern in the US that never grows old.

There is nothing macro, currently, suggestive of a reversal of the Trend. This will be (possibly a scary) technical correction. I'm in this for the 50 baggers, not the crumbs.

jog on
duc


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## qldfrog

much appreciated


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## ducati916

So here is part (i) of the correction: we have the fall to the 20EMA which has just sneaked across the 200EMA.






With 1 trading day left in the week it will be interesting how the market trades into today's close and then tomorrow's close. In the past, the market would linger, indecisively over the w/e giving both camps the jitters. Monday, it gaps higher trapping the new shorts that enter today and tomorrow (just my opinion). The Market Makers want volume of transactions.






I added to my DFEN position.

jog on
duc


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## ducati916

Let's start with the Bad News Bears:












The opinion piece is from one of my favourite chaps, Mr Flippe-Floppe-Flye.

Unless you have been living in a cave, pretty much everyone is aware of all the negatives. They are myriad. They always are. The difficulty is culling the emotional from the factual. Often the factual is denied because of an emotional reaction to that fact.

Now let's look at non-opinion based information:












The issue of inflation is a non-issue currently. The market conditions are (still) deflationary. All of the above goods and services relate to consumer side inflation (which is rampant) and irrelevant. The market only cares about producer price inflation. Why?






Because it plays havoc with the profitability of the business. That is what concerns the market: business profits. Given that there is PPP deflation and CP inflation, nominal profits and real profits are set to move higher. As the market is forward looking, that means higher prices for stocks.

Now let's look at market internals:






In 2 days of trading, the number of individual stocks declining is already at the lows. This is in part a game that MMs play in the US, in part day-traders, in part new longs sucked late into the rally, new shorts, etc. An important group however are the big Pension Funds, Insurance Funds, Sovereign Wealth Funds, etc who for whatever reason missed the lows and have been waiting for a pullback.

Now these chaps do not just sit back and wait for a pullback, they are on the phone to the Market Makers (GS, etc) screaming for a pullback so they can enter. Here we have the classic pullback, across the board, to allow huge money entry into the market. As hundreds of billions of dollars are potentially trying to find entry, a little time has to be allowed to allow inventory to be found. Inventory from sellers. Thus it is (often) necessary, with huge orders to be filled, to scare the s*** out of retail. Big drops (quickly) usually do it.

Well Mr duc, that all sounds very interesting, but it's a load of bollocks. 

So if this were a return to the lows or to create new lows, based on the fundamentals, we would expect to see a change in the fundamentals or at least some distortion of those fundamentals.

So looking back at the information re. inflation. If it were truly inflationary, then Bonds would be trading lower. Higher inflation has a very negative impact on Bond duration, particularly at the long end of the curve (20yr/30yr). What are they doing?






They are rising in price. That is not inflation: that is deflation. So we know that inflation as a thesis is simply incorrect. We are dealing with a deflationary environment. Stocks (can) do very well in deflationary environments, particularly when there is Central Bank stimulus. We have that in spades.

Treasury paper is also the risk off, run to safety trade.






Bonds were oversold. We have the classic overbought (Stocks) and oversold (Bonds) which makes it an ideal time to rebalance the 2 markets. The same Market Makers operate in both markets. They are the big US Investment banks (notoriously Goldman Sachs).

As always, we'll see how it plays out over the w/e and into early next week.

jog on
duc


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## over9k

New guy here but long time trader:

There was always going to be a 2nd wave, but all the riots have brought what was going to be the 2nd wave scare/data forward by weeks, i.e it wasn't supposed to be this early. My position's been KO'd because of it and until the riots etc stop, cases are going to continue to spike. Ironically, the spike in cases might actually be what ends up stopping the rioting.

I was planning on selling in 2-3 weeks as that's when the "organic" spike in cases was due to hit (increase as a result of reopening etc) but BA's just done -15% in a single day. The volatility of the market at the moment is beyond belief but everyone should already know that. I'm nuking most of my positions (with the exceptions of the stay at home/distance work stuff like zoom, autodesk, amazon, paypal etc) until the riots stop. BA was a long position that I bought at $125 that was a star performer... until it wasn't.

The yanks are also due for a 2nd round of stimulus but when they do that is another question - it was planned for later but all this 2nd wave stuff may cause them to bring it forward. Predicting when they announce the 2nd round would be a very handy thing to know and nobody's going to know that except the people in the white house. They might even bring it forward and then announce a third package. Printing press go brrrr!

Economic/jobs data is up for now but it's not going to last. The other major announcement will be the employment data on the 3rd of july. I'd expect that to be fairly positive as employment etc will overall be up for may/june (though june's data not being nearly as positive as may's) before we see another crash in july (on account of 2nd wave/everyone being too scared to do much) and thus the next data on the 7th of august being disastrous.

The other thing is that the new mask factories aren't going to come online until at least august because the private sector didn't even start building them until they knew the virus wasn't going to be contained and you can't exactly build an N95/N99 mask factory overnight - they take months to construct. Colossal failure of government to start building a few early on just as a contingency, but different discussion.

Once the supply of masks is high enough that everyone can wear them like regular clothing, we'll be able to return to somewhat regular (masked) lives, though with non essential air travel and hospitality still being near non-existent. Kind of hard to eat with a mask over your face. Think back to the fundamentals of superior vs inferior goods.

This whole thing reeks of the GFC all over again - every time anyone can confidently say XYZ is going to happen, some kind of massive intervention occurs and the whole thing goes out the window.

Or you get black swanned by something like the george floyd riots.


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## lindsayf

Interesting stuff Mr Duc.
Thanks for this thread, learning a lot.


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## ducati916

So with a fair interest in all things $VIX driven by Mr Skate's treatment of the VIX, where are we?






There was a massive spike in volatility to go along with the significant fall in stocks across the board. Something to worry about?

Well yes and no.






Clearly it was going to break a trendline (see previous chart below and was in of itself a signal that a correction was on the way and potentially to lighten positions if you were simply day/swing trading) so we need to look at it from a different perspective, ie. if you are looking to hold long term.






So holding long term does not mean simply hanging on through the ups/downs. What it means to me is: do you want to rebalance or hedge your positions? This I will do when a correction is signalled through a change in the macro environment: which to date, there hasn't been. Therefore, I will not rebalance positions through selling/repurchasing (although with the drop today, in hindsight, that would have been quite possible). Due to the size of the drop I did add to positions, however, it would actually have been better to do this via rebalancing.

There has been no macro-signal to date. Therefore I am simply sitting tight. The $VIX signal for me is purely a technical signal. I require a macro signal + technical signal to rebalance.

jog on
duc


----------



## over9k

There was always going to be a correction - the hard part in this business is timing.

The yanks never contained the virus in the first place but the correction armageddon wasn't due until at least the july data, if not august. The riots have brought all of that forward and so a lot of people are now taking it in the proverbial.

See my previous post about how every time some huge intervention/event happens it rocks the market massively. We're not talking just run of the mill have-existed-forever employment data releases here. A SINGLE protester with the virus in melbourne did things for what, 5%? yesterday. 

IIRC this is the most volatile the market has *ever* been.




ducati916 said:


> The key is to differentiate between a macro based move and fluctuations. It is my opinion that the current correction is simply a technical correction.
> duc




This would imply you don't see a 2nd wave coming despite the yanks never containing the virus and then all the spread that will have inevitably occurred because of the riots. You really think that?


----------



## qldfrog

over9k said:


> There was always going to be a correction - the hard part in this business is timing.
> 
> The yanks never contained the virus in the first place but the correction armageddon wasn't due until at least the july data, if not august. The riots have brought all of that forward and so a lot of people are now taking it in the proverbial.
> 
> See my previous post about how every time some huge intervention/event happens it rocks the market massively. We're not talking just run of the mill have-existed-forever employment data releases here. A SINGLE protester with the virus in melbourne did things for what, 5%? yesterday.
> 
> IIRC this is the most volatile the market has *ever* been.
> 
> 
> 
> 
> This would imply you don't see a 2nd wave coming despite the yanks never containing the virus and then all the spread that will have inevitably occurred because of the riots. You really think that?



The way i see it share market wise, 2nd wave of what?
Virus is still rampant in europe france etc, just slowed down by summer but economy have to restart
Another second locldown would be just a communist dream, state economy a la CCP.
The curve has been smoothed, now let it go and have ad hoc policies
We have had 1000s of cases here yet most deaths came from the cruise ship.
With proper and now relatively effective treatment,. You reecover.
It is bloody serious but not a death sentence
So aged care in isolation of yypu want but restart the economy
We are all playing the china game so well...self destruction from changing our history to sinking our business and democracy


----------



## gartley

The SPX futures have confirmed a downside projection of between 2828-2907 this morning.  This projection range is in the span of the previous 4th wave of one  less degree and the expected support area before the market attempts another leg up. SPX gapped down yesterday and has multiple unfilled gaps above now.

The 10W cycle has a target that still stands at 3396 to 3455 range and this can only be invalidated by price crossing below both offset lines ranging from 2759-2922, once again the a similar area to the previous 4th wave of one less degree. The 20W cycle has a target range of 3463 to 3769 which still stands. Price would have to fall a lot to invalidate that probably to the 2500-2600 level. As it stands don't think that will happen although anything possible....
Weekly dynamic cycles still pointed up but need to get next weeks bar to start to get a better idea.


----------



## ducati916

over9k said:


> This would imply you don't see a 2nd wave coming despite the yanks never containing the virus and then all the spread that will have inevitably occurred because of the riots. You really think that?




I have no strong opinion on whether there will be a second wave or not. Historically, the markets don't care.






jog on
duc


----------



## over9k

You mentioned some kind of macro indicator - a 2nd coronavirus wave would be a massive macro indicator no?


----------



## qldfrog

over9k said:


> You mentioned some kind of macro indicator - a 2nd coronavirus wave would be a massive macro indicator no?



Can i be Devil's advocate?
A second wave coming, no lockdown anymore as neither people nor the economy would accept it
Net result: gdp boost, sale of new specific heath related items and services to households and business, generational wealth transfer via earlier death of seniors..
On going recovery spending for healed ones, few of economically productive generation affected
Better than death tax....
An economic feast


----------



## over9k

Think about the cost to business of every 2nd employee having to take a month off work once they inevitably get coronavirus and then how people are going to actually behave when they're genuinely afraid of getting sick/realise this is not just some overblown sensationalism. They'll start voluntarily avoiding things vs the disregard of all advice that they're doing now on account of not thinking that this is actually a big deal - it soon will be.

It'll be the same economy wide as it currently is with the hospitals - you know how pharmaceuticals are in the toilet now on account of people only going to the hospital if they *absolutely* have to? Take and apply for the whole broader economy at large.

The american public just aren't taking the virus seriously even now - that will change when there's another few million cases (which there will be) and you can bet the media will fan the fear fire like no tomorrow as well, even if just to try & get trump blamed for it. Just the mention of 2nd wave has KO'd things by what, 4% in one day?

Until the new mask factories come online in august, you can expect further meltdown stateside. I've moved about 40% of my portfolio just into zoom alone and the rest is in stay at home stuff like ebay, paypal, amazon etc. 

All of this was going to happen but later on and gradually as there was the occasional slow reopening here & there. The george floyd riots have meant vast numbers of cases have spread within literally a few hours and so the correction has happened all at once and all weeks earlier. It's just a fall off a cliff vs the slow melt it would have been. I'd planned to sell off over the next few weeks before the june and then july data hit but the spike in cases from the riots and market meltdown that's followed has smashed my position completely. The only wildcard remaining is the june employment data due on the 3rd of july - we'll see a nice bump if that's better than expected but contrast that with big increases in coronavirus cases and I'm seeing the august market being lower than right now.


----------



## over9k

Oh and whilst I see your point RE: markets not caring about a 2nd wave, just the mention of it in the media has obliterated US markets in a matter of hours. To my mind, that implies the market does actually care (in fact, cares a lot) this time around?


----------



## ducati916

The market holds at the 20EMA/200EMA/300 level.






It's the weekend. The Bears could gain no traction on the follow through. By Monday they will be paranoid. Monday the market could well gap higher and continue running to close the gap. Even if it doesn't and we churn sideways for a couple more days, the Bear's chance is gone.

jog on
duc


----------



## ducati916

over9k said:


> Oh and whilst I see your point RE: markets not caring about a 2nd wave, just the mention of it in the media has obliterated US markets in a matter of hours. To my mind, that implies the market does actually care (in fact, cares a lot) this time around?





Forget the media. If you traded to the media you would go broke very quickly. One example:






There are hundreds of examples. 

People love a narrative. They want to know causation, even if causation is impossible to discern. The media provide that narrative. It has little if anything to do with what moves markets.

jog on
duc


----------



## ducati916

over9k said:


> You mentioned some kind of macro indicator - a 2nd coronavirus wave would be a massive macro indicator no?





No.

jog on
duc


----------



## ducati916

All things $VIX:







If you look at the earlier chart, you will see that horizontal resistance held and we are now moving back to trend.

What you wouldn't want to see is still an elevated VIX with a rising market or some other weird divergence. ATM everything looks 'normal'.

jog on
duc


----------



## ducati916

Historically:









If you notice, all the red spreading across the page are days/weeks/etc from 2008. This was a true bear market. The rest are green.

The question is: does the virus = derivative based losses? The answer is crystal clear to me. 

jog on
duc


----------



## qldfrog

FWIW, was surprised yesterday night to see a bullish buy for the market based on asx end of day data, before US open.i liked that and last night is agreeing
I am really going to refine these indicators
They are telling me, all good stay in

I nevertheless had my worst day on asx yesterday: paper loss


----------



## over9k

I bought all the travel/airlines/airports at about 11am yesterday - timed it perfectly almost to the minute. I was up 4% within a couple of hours after the national cabinet meeting and talk of reopening the borders in july. I'm expecting more news like that to result in strong rallies for the travel/airline related stuff. Combine that with the U.S rally I sold off at last night and it's been a really good couple of days for me. 

I'm now sitting on mining, energy, and travel equities in aus that I've bought at 20% off the recent peak. Boeing rallied about 10% yesterday so sold that at way above what I expected to as well. 

Now need to time a buy back in with boeing before the 737 max certification flight and what will be fairly solid jobs data on the 3rd of july. Will probably sell the following week. Time to buy is probably when the next batch of bad coronavirus data is released. Might trim my long zoom position a bit to do it.


----------



## over9k

ducati916 said:


> Forget the media. If you traded to the media you would go broke very quickly. One example:
> 
> View attachment 104698
> 
> 
> There are hundreds of examples.
> 
> People love a narrative. They want to know causation, even if causation is impossible to discern. The media provide that narrative. It has little if anything to do with what moves markets.
> 
> jog on
> duc




Sure but it wasn't the media that torched things, it was the data itself - the media was reporting on virus data, not a response to what the market did. Your examples show media reporting on the stock market, not virus data. Different thing.


----------



## qldfrog

over9k said:


> Sure but it wasn't the media that torched things, it was the data itself - the media was reporting on virus data, not a response to what the market did. Your examples show media reporting on the stock market, not virus data. Different thing.



Do not give the virus too much economic weight now that is is less of an unknown, the damages are done by the reactions, not the virus


----------



## ducati916

over9k said:


> 1. Sure but it wasn't the media that torched things, it was the data itself -
> 
> 2. the media was reporting on virus data, not a response to what the market did. Your examples show media reporting on the stock market, not virus data. Different thing.




1. If the market cared about the virus, do you think the market would have moved in a V to that data? The market could care less.

2. It was you who raised media as a causation:






If you wish to assign causation, be my guest. As far as I am concerned, the virus is a non-issue as far as the market is concerned.

jog on
duc


----------



## over9k

Even if everyone ignore it (which they're not going to do in perpetuity), there's still going to be huge economic costs associated with the actual virus itself - people off work for weeks while they recover for example, and that's just junior staff members with a high likelihood of survival. Think about if someone more senior like an executive or board member gets KO'd by it, or even worse, seeing as the death rate increases exponentially with age, killed. 

These are both HUGE costs for business even if we assume the general public are going to just go about their daily lives and continue getting themselves sick - which they aren't going to continue doing.  

I just don't see how you can say that the market doesn't care about the virus when one spike in cases torched it 4% literally overnight. No changes in lockdowns or change in restrictions, JUST a spike in cases and the market nosedived.


----------



## ducati916

over9k said:


> I just don't see how you can say that the market doesn't care about the virus when one spike in cases torched it 4% literally overnight. No changes in lockdowns or change in restrictions, JUST a spike in cases and the market nosedived.




The pullback, correction was flagged on this thread days before it actually took place, based on objective measures. To assign causation to a 'spike' in infections is simply naive.

However you are entitled to your opinion.

jog on
duc


----------



## ducati916

over9k said:


> Even if everyone ignore it (which they're not going to do in perpetuity), there's still going to be huge economic costs associated with the actual virus itself - people off work for weeks while they recover for example, and that's just junior staff members with a high likelihood of survival. Think about if someone more senior like an executive or board member gets KO'd by it, or even worse, seeing as the death rate increases exponentially with age, killed.




So let us assume the above is correct.






That is some pretty hefty stimulus already added to the economy.






The Fed. as always, has the Market's back.






Re. Virus v Derivatives: what do you estimate the value of the lost consumers will total? Then compare the value of Derivatives and the impact when they blow-up as they did in 2008.










Now tell me why the market 'cares' about the virus in the same way as it cared about derivatives in 2008.

And just why I hold DFEN






jog on
duc


----------



## gartley

ducati916 said:


> The market holds at the 20EMA/200EMA/300 level.
> 
> View attachment 104697
> 
> 
> It's the weekend. The Bears could gain no traction on the follow through. By Monday they will be paranoid. Monday the market could well gap higher and continue running to close the gap. Even if it doesn't and we churn sideways for a couple more days, the Bear's chance is gone.
> 
> jog on
> duc[/QUOIt wa




Was a huge move down on Thursday on big vol. Bears expect much follow through in the short term, just completed tail end of an impulse,
I doubt correction is over yet but as you say market may try to test gap or just meander for a few sessions


----------



## gartley

Some EW ideas here in the short term. The first one suggesting we have completed an impulse down and the second suggesting we are still in a 4th wave of an impulse OR a larger B wave . I note that the last 2 legs on the hr chart have unfolded as 3 wave moves so it could be the latter. There are at least 2 other wave count variants but they don't suggest much else different at this stage especially as 20 day cycle has lower projections that have not been invalidated yet


----------



## over9k

ducati916 said:


> The pullback, correction was flagged on this thread days before it actually took place, based on objective measures. To assign causation to a 'spike' in infections is simply naive.
> 
> However you are entitled to your opinion.
> 
> jog on
> duc



Nobody said it's going to tank at the time and speed that it did. I'm not disputing that there was always going to be a correction - I said as much in a previous post that it would have been a slow(er) melt as cases (relatively) slowly increased but the case spread of memorial weekend plus the george floyd riots caused several weeks' of virus spread in a couple of days and thus we saw several weeks' of case increases reported within just a couple of days.

We then saw several weeks' of market gains wiped out in just a couple of days, and you're trying to argue that this is a coincidence.

The market tanked in response to coronavirus data, not unemployment rates or mortgage defaults or in fact ANYTHING else, and it did so commensurate to the spike in the data. Big spike = big tank.

Again, are we really going to sit here and say "nope, coincidence"?


ducati916 said:


> So let us assume the above is correct.
> 
> View attachment 104715
> 
> 
> That is some pretty hefty stimulus already added to the economy.
> 
> View attachment 104710
> 
> 
> The Fed. as always, has the Market's back.
> 
> View attachment 104713
> 
> 
> Re. Virus v Derivatives: what do you estimate the value of the lost consumers will total? Then compare the value of Derivatives and the impact when they blow-up as they did in 2008.
> 
> View attachment 104711
> 
> View attachment 104712
> 
> 
> Now tell me why the market 'cares' about the virus in the same way as it cared about derivatives in 2008.
> 
> And just why I hold DFEN
> 
> View attachment 104714
> 
> 
> jog on
> duc




I've never said there won't be more stimulus/intervention. One of my first posts was mentioning the parallels between the GFC and now RE: saying XYZ should happen but then some intervention flips the table. Same goes as to a nice bump we'll see on the 3rd of july release of the june employment data in the same way we did with the release on the 5th of june for may's data.

If your positions are entirely long then I'm not actually in disagreeance with you - what I'm saying is that there's going to be another hell of an organic drop in response to the spike in infections spreading, before the next quarter. THAT'S when you should be getting into your proper long positions.

On the ASX, I did exactly that just yesterday morning around 11am - all of my travel/aviation related trades were bought almost 20% off their recent peak and were up 4% just by yesterday afternoon, and I won't be selling them. If we get any more carryon about more infections spreading from the protests or whatever then that'll just be another dip to buy into.


----------



## over9k

Just FYI - I'm loving this perspective from you guys. I came to trading from a macro analysis & geopolitics background whereas you have clearly come from a mathematics/actuarial one. 

I ALWAYS want to hear what the numbers guys have to say as both perspectives can always tell something the other can't.


----------



## ducati916

gartley said:


> Was a huge move down on Thursday on big vol. Bears expect much follow through in the short term, just completed tail end of an impulse,
> I doubt correction is over yet but as you say market may try to test gap or just meander for a few sessions




If the Bears were going to get follow through, they needed it Friday. Over the w/e they will lose that impetus.

jog on
duc


----------



## over9k

Don't know if you've been watching the news but several U.S state governors have called their reopenings off in response to the spike in cases during the week, exactly as was expected. We'll see if there's any more to come over the next couple of days. IIRC it takes about 2-3 weeks for the data to reflect the actual physical virus spread, so we can expect chaos 2-3 weeks after the riots started. The last one only a couple of days ago was the memorial day spread.


It might also prove useful if we state what time horizon we're talking about before we say whatever we're going to, too.


----------



## ducati916

Nobody said it's going to tank at the time and speed that it did. I'm not disputing that there was always going to be a correction - I said as much in a previous post that it would have been a slow(er) melt as cases (relatively) slowly increased but the case spread of memorial weekend plus the george floyd riots caused several weeks' of virus spread in a couple of days and thus we saw several weeks' of case increases reported within just a couple of days.

So with regard to the above:









We then saw several weeks' of market gains wiped out in just a couple of days, and you're trying to argue that this is a coincidence.

Far from coincidence, quite the opposite, this was totally transparent.

The market tanked in response to coronavirus data, not unemployment rates or mortgage defaults or in fact ANYTHING else, and it did so commensurate to the spike in the data. Big spike = big tank.

Virus, irrelevant.

Again, are we really going to sit here and say "nope, coincidence"?

See above.


I've never said there won't be more stimulus/intervention. One of my first posts was mentioning the parallels between the GFC and now RE: saying XYZ should happen but then some intervention flips the table. Same goes as to a nice bump we'll see on the 3rd of july release of the june employment data in the same way we did with the release on the 5th of june for may's data.

Employment data will only be relevant if it is good news.

If your positions are entirely long then I'm not actually in disagreeance with you - what I'm saying is that there's going to be another hell of an organic drop in response to the spike in infections spreading, before the next quarter. THAT'S when you should be getting into your proper long positions.

Maybe yes, maybe no. It will however have little to nothing to do with infection rates or death rates. The election however will increasingly be an issue.

On the ASX, I did exactly that just yesterday morning around 11am - all of my travel/aviation related trades were bought almost 20% off their recent peak and were up 4% just by yesterday afternoon, and I won't be selling them. If we get any more carryon about more infections spreading from the protests or whatever then that'll just be another dip to buy into.

I don't really follow the ASX.

jog on
duc


----------



## ducati916

over9k said:


> Just FYI - I'm loving this perspective from you guys. I came to trading from a macro analysis & geopolitics background whereas you have clearly come from a mathematics/actuarial one.
> 
> I ALWAYS want to hear what the numbers guys have to say as both perspectives can always tell something the other can't.





Why are you arguing a medical perspective then?

jog on
duc


----------



## ducati916

over9k said:


> Don't know if you've been watching the news but several U.S state governors have called their reopenings off in response to the spike in cases during the week, exactly as was expected. We'll see if there's any more to come over the next couple of days.





And what if there are? What will happen re. the market?

jog on
duc


----------



## over9k

ducati916 said:


> Why are you arguing a medical perspective then?
> 
> jog on
> duc




You think case numbers aren't a macro metric to consider. I'd agree with you over the past couple of months (though not before them) but not now, now things are different. There's a massively higher probability of infection personally, there WILL be a massive spread of infection, and we know how deadly the virus actually is/that it isn't just a headcold.

What I'm saying is that we're going to see both the reintroduction of restrictions (or refusal to lift them at all) as well as voluntary isolation etc that we didn't see previously. America is NOT going to return to what will be the new normal that the rest of the first world has as america did NOT contain the virus like, say, AU/NZ have. 



ducati916 said:


> And what if there are? What will happen re. the market?
> 
> jog on
> duc




Well it won't go to the point otherwise expected, will it?

I'm not talking a time horizon of a couple of days here though, which you appear to be. I don't doubt we'll see a bump on monday, but I've never been talking about monday. As I said, iirc it takes about three weeks for data to reflect infection spread, so three weeks after the riots, the data is armageddon and thus so is the market.

Again, it'd be worth clarifying what time(s) you're talking whenever you post something.


----------



## ducati916

over9k said:


> 1. You think case numbers aren't a macro metric to consider. I'd agree with you over the past couple of months (though not before them) but not now, now things are different. There's a massively higher probability of infection personally, there WILL be a massive spread of infection, and we know how deadly the virus actually is/that it isn't just a headcold.
> 
> 2. What I'm saying is that we're going to see both the reintroduction of restrictions (or refusal to lift them at all) as well as voluntary isolation etc that we didn't see previously. America is NOT going to return to what will be the new normal that the rest of the first world has as america did NOT contain the virus like, say, AU/NZ have.
> 
> 
> 
> 3. Well it won't go to the point otherwise expected, will it?
> 
> 4. I'm not talking a time horizon of a couple of days here though, which you appear to be. I don't doubt we'll see a bump on monday, but I've never been talking about monday. As I said, iirc it takes about three weeks for data to reflect infection spread, so three weeks after the riots, the data is armageddon and thus so is the market.
> 
> 5. Again, it'd be worth clarifying what time(s) you're talking whenever you post something.




1. Why are things 'different'? To answer you question: no the virus numbers are not a macro-metric that I would consider. Why? You demonstrate to me an objective measure that tells me when the numbers are important and (potentially) market moving and when they are not. Until that point it is all subjective hyperbole and markets do not discount hyperbole.

2. You know that for a fact? Of course not that is just your view. But let's say you are correct: what happens in the market?

3. That tells me nothing.

4. My holding time will be measured in years. However, rebalancing will happen when it happens. That might be tomorrow or next year. Generally I try and give a couple days notice of when I think something relevant is going to happen (as in previous post). Sometimes, it is so clear, it could be a couple of weeks.

jog on
duc


----------



## over9k

ducati916 said:


> 1. Why are things 'different'? To answer you question: no the virus numbers are not a macro-metric that I would consider. Why? You demonstrate to me an objective measure that tells me when the numbers are important and (potentially) market moving and when they are not. Until that point it is all subjective hyperbole and markets do not discount hyperbole.




So the answer is twofold. First the cost of cases themselves and then how people react to them. But you're looking for an objective metric when there isn't one. 

Here's a simple example: How are you going to go out for a meal at a pub when you need to wear a mask the whole time? That's not an objective metric, but people are not going to head out to bars etc when every 2nd person is likely to kill them with an infection unless they have a mask on. 

I can't be objective about the cost to business of every infection - an employee being off work for a month, a director being off work for a month, an employee dying, a director dying, so on and so forth, and yet I guarantee you these things will happen and will cost everyone a boatload. Same as with zoom meetings etc being such an effective alternative, people simply aren't going to travel for business or really do much at all (even go to the hospital) unless they ABSOLUTELY have to. This isn't modelling, this is behavioural economics - not objective by its very nature. 

Sure things will pick up for the next couple of weeks, but the moment serious infection numbers hit the news (which they are going to) is the moment EVERYTHING changes. We know this because they already did the second the last ones did. You're essentially claiming this pattern of response to the virus data is not going to be repeated. 

I also can't give you an objective metric of X number of cases where states and municipal areas reclose or just flatly never reopen particular areas, but I bet you it still happens, same as I bet you people aren't going to go elbow to elbow in bars when the infection rate is 500x what it was in feb. People weren't taking the virus seriously before not least of all because of the low statistical probability of actually getting it. That's going to change, and change dramatically. 

People are now very wisely avoiding (only) the hospitals because they're infection hotspots. What happens when the whole country becomes a hotspot, which it will? 

Again, this is what numbers *can't* show, but it doesn't mean they aren't true and/or won't happen. 





> 2. You know that for a fact? Of course not that is just your view. But let's say you are correct: what happens in the market?




We see a drop in whatever economic activity has just been restricted and a commensurate drop in the market in response. Exactly like what has already happened? 

Seems like a bit of a silly question to ask what'll happen to the market if economic activity is re-restricted? 



> 3. That tells me nothing.



Sure it does - it means you won't see the bump as high as you were anticipating. If enough don't reopen or some more bad virus data is released, you mightn't see a bump at all. Either way, the outcome (in the short term) is not as positive as it would have been. 



> 4. My holding time will be measured in years. However, rebalancing will happen when it happens. That might be tomorrow or next year. Generally I try and give a couple days notice of when I think something relevant is going to happen (as in previous post). Sometimes, it is so clear, it could be a couple of weeks.
> 
> jog on
> duc




Sure, and I'm doing the same thing - you're just trying to use modelling to do it whereas I'm doing the complete opposite. You seem to think there's nothing that your models can't tell you though?


----------



## qldfrog

over9k said:


> So the answer is twofold. First the cost of cases themselves and then how people react to them. But you're looking for an objective metric when there isn't one.
> 
> Here's a simple example: How are you going to go out for a meal at a pub when you need to wear a mask the whole time? That's not an objective metric, but people are not going to head out to bars etc when every 2nd person is likely to kill them with an infection unless they have a mask on.
> 
> I can't be objective about the cost to business of every infection - an employee being off work for a month, a director being off work for a month, an employee dying, a director dying, so on and so forth, and yet I guarantee you these things will happen and will cost everyone a boatload. Same as with zoom meetings etc being such an effective alternative, people simply aren't going to travel for business or really do much at all (even go to the hospital) unless they ABSOLUTELY have to. This isn't modelling, this is behavioural economics - not objective by its very nature.
> 
> Sure things will pick up for the next couple of weeks, but the moment serious infection numbers hit the news (which they are going to) is the moment EVERYTHING changes. We know this because they already did the second the last ones did. You're essentially claiming this pattern of response to the virus data is not going to be repeated.
> 
> I also can't give you an objective metric of X number of cases where states and municipal areas reclose or just flatly never reopen particular areas, but I bet you it still happens, same as I bet you people aren't going to go elbow to elbow in bars when the infection rate is 500x what it was in feb. People weren't taking the virus seriously before not least of all because of the low statistical probability of actually getting it. That's going to change, and change dramatically.
> 
> People are now very wisely avoiding (only) the hospitals because they're infection hotspots. What happens when the whole country becomes a hotspot, which it will?
> 
> Again, this is what numbers *can't* show, but it doesn't mean they aren't true and/or won't happen.
> 
> 
> 
> 
> We see a drop in whatever economic activity has just been restricted and a commensurate drop in the market in response. Exactly like what has already happened?
> 
> Seems like a bit of a silly question to ask what'll happen to the market if economic activity is re-restricted?
> 
> 
> Sure it does - it means you won't see the bump as high as you were anticipating. If enough don't reopen or some more bad virus data is released, you mightn't see a bump at all. Either way, the outcome (in the short term) is not as positive as it would have been.
> 
> 
> 
> Sure, and I'm doing the same thing - you're just trying to use modelling to do it whereas I'm doing the complete opposite. You seem to think there's nothing that your models can't tell you though?



What about we settle that in 2 months even go wide end august?
So you genuinely believe that in end 08 2020, the disease in itself will paralyse our day to day life?
not talking market  which can go High Low irrespective of virus...
What may happen is in august qantas shareholders might discover they own a company with 3 months of no income..surprised???

Well i do not look at media news just facts
France was my birth country, has massive number of underclass and poverty and a strained hospital system as a standard.
It got seriously hit with the first wave, around 30k deaths or so..you know vs our 110 ?.
There are still daily infections etc but lockdown is now eased and economy restarted.basic masks and preventions are taken i do not forecast disaster ahead .10pc of population infected in Paris
As elsewhere not something to brush aside but weather factor and age were defining the deaths areas
Economically the virus is out of the equation, but not the measures taken under its name.the world is ok now.
 Will we have to live with the virus and improve treatments i think so
I am a pessimistic person...but you have way too dark a view..can we still say that?


----------



## ducati916

over9k said:


> 1. So the answer is twofold. First the cost of cases themselves and then how people react to them. But you're looking for an objective metric when there isn't one.
> 
> 
> 
> 2. Sure, and I'm doing the same thing - you're just trying to use modelling to do it whereas I'm doing the complete opposite. You seem to think there's nothing that your models can't tell you though?




1. But there are objective metrics of how the markets react to the data/news. That objective measure are the markets themselves. 

2. You are attempting to place your subjective view onto the market. I on the other hand simply look at what the market is telling me.

jog on
duc


----------



## ducati916

And next:












Which is exactly the opposite of what happened. The markets tanked between Feb. 20/22 and bottomed March 23. From March 23 through today, markets have gone (pretty much) in one direction. Was the news from 23 March all good news? No, far from it. It was bad. The markets rose.

Your thesis (to date) is simply incorrect.

Far from being a silly question, on a forum that is dedicated to trading the financial markets: it is the only question. Do we position long or short. When do we need to do that.

jog on
duc


----------



## ducati916

So let us look at a couple more charts:









So Chart #1. Dollar/TLT: At the end of December 2019 and start of Jan 2020, we can see the beginning of 'something'. We don't really know whether or not this is serious. By early Feb. we know what is happening and we know that it is potentially serious.

What is happening: Bonds are rising in value (falling yields). We know Bonds are a risk off asset. You could also look at Gold and check out what is happening. Do we know the 'causation'? No. Do we need to know? No. It is enough to know that something bad this way comes.

Chart #2: same story, risk off is occurring. 

The circle was a false negative. It happens. However it corrected to the true message in ample time, that being late Dec.2019 early Jan. 2020.

Why? Did the media know? No. Did the media pick up on the fact? No. One of the few professionals banging the drum was Mr Gundlach. But for those looking, the message was clear: something was not right.

That is a MACRO indicator. When that flashes, I'm lightening up/hedging. Do I know why? Sometimes, usually not. Do I care? Not in the slightest.

The COVID news, implications, whatever, are already in the price or being incorporated into the price. I could care less what some half-wit journalist has to say or whether the numbers are real or imagined. I am onside with the market.

I have an opinion. Lots of them. But I no longer make the mistake of trading my opinion. NO-ONE CARES what I think.

jog on
duc


----------



## over9k

qldfrog said:


> What about we settle that in 2 months even go wide end august?
> So you genuinely believe that in end 08 2020, the disease in itself will paralyse our day to day life?
> not talking market  which can go High Low irrespective of virus...
> What may happen is in august qantas shareholders might discover they own a company with 3 months of no income..surprised???
> 
> Well i do not look at media news just facts
> France was my birth country, has massive number of underclass and poverty and a strained hospital system as a standard.
> It got seriously hit with the first wave, around 30k deaths or so..you know vs our 110 ?.
> There are still daily infections etc but lockdown is now eased and economy restarted.basic masks and preventions are taken i do not forecast disaster ahead .10pc of population infected in Paris
> As elsewhere not something to brush aside but weather factor and age were defining the deaths areas
> Economically the virus is out of the equation, but not the measures taken under its name.the world is ok now.
> Will we have to live with the virus and improve treatments i think so
> I am a pessimistic person...but you have way too dark a view..can we still say that?




America did not contain the virus. Like almost at all. Combine that with memorial day weekend plus all the riots and you have massive, massive infection spread in a tiny period of time.  

You're going to get voluntary shutdowns again by state governors etc and people voluntarily staying indoors as well. Combine that with the actual costs of infection (people off work, people dying, so on) and you have a recipe for disaster. 

AU/NZ will largely be reopened and functioning on account of actually containing the virus. USA did not do this, which is what people are forgetting - they are the ONLY major economy not to contain it and they are now the global epicentre as a result. 

You need only understand how exponentials work to see how this thing plays out now. 



ducati916 said:


> And next:
> 
> View attachment 104741
> 
> 
> View attachment 104742
> 
> 
> Which is exactly the opposite of what happened. The markets tanked between Feb. 20/22 and bottomed March 23. From March 23 through today, markets have gone (pretty much) in one direction. Was the news from 23 March all good news? No, far from it. It was bad. The markets rose.
> 
> Your thesis (to date) is simply incorrect.
> 
> Far from being a silly question, on a forum that is dedicated to trading the financial markets: it is the only question. Do we position long or short. When do we need to do that.
> 
> jog on
> duc




Not disputing this. But you're falling for the classic causation & correlation trap. There was a massive stimulus in march and a lot of medical advice was ignored on account of the infection probability being relatively low and people not thinking the virus was a big deal anyways. 

How do you think they're going to behave when they do know it's deadly and the infection probability is 500x what it was in feb or whenever? 

Even if behaviour does not change at all, the actual costs of the virus will be enormous. 

But again, people wisely avoided (and still are avoiding) the hospitals because of how infectious the environment there is. Take that behaviour and apply it to an entire country that's massively infectious, and you have your answer.


----------



## over9k

I'll repost what I said in another thread: 

America is now the global epicentre. We know from case studies around the country and around the world that from the point in time of mass spreading events, we can expect to see significant surges in caseloads in three to five weeks. Memorial Day was May 25. The protests have occupied the first two weeks of June. We should expect to detect mass outbreaks across the country in _both _Red and Blue states in late-June and especially in July.

As to size, consider the case of Austin, Texas. Just two weeks after Memorial Day, Austin has already seen caseloads _double_. That’s before the protests have had a chance to add their own fuel to the fire.

America’s quarantine efforts were insufficient to root out coronavirus, likely making it endemic to the population. That was _before_ the Memorial Day parties and protest movements. Purging the virus is now not only an impossibility, the United States is now on track to experience _the_ worst documented infection rates in the world (many countries have worse testing regimes, so labeling the US #1 without a caveat is a bit disingenuous). About the only silver lining is that vaccine development efforts continue to outperform. We are highly likely to have a functional vaccine _this year_. That still leaves questions of mass manufacturing and distribution, but even in the worst-case scenario, that process will likely require under a year.

I highly recommend following peter zeihan - his macro intel is second to none IMO.


----------



## ducati916

over9k said:


> I highly recommend following peter zeihan - his macro intel is second to none IMO.















Note the date: 21 April 2020. He almost picked the low.

jog on
duc


----------



## over9k

I don't trade oil so you'll have to fill in some blanks for me here.


----------



## ducati916

over9k said:


> I don't trade oil so you'll have to fill in some blanks for me here.




Well essentially he implies further issues with oil and therefore lower prices. Oil has simply risen from that time. So while his analysis within his own domain may well be compelling, it is of no practical use in trading the financial markets.

jog on
duc


----------



## Smurf1976

ducati916 said:


> People love a narrative. They want to know causation, even if causation is impossible to discern. The media provide that narrative. It has little if anything to do with what moves markets.




The thing about news is not to take it literally but it can still be of some use, usually by inverting it.

When the media tells you there's about to be a crash, it's quite likely a buying opportunity.

When the media tells you there's nothing to worry about, that's the time to be worried.


----------



## sptrawler

Smurf1976 said:


> The thing about news is not to take it literally but it can still be of some use, usually by inverting it.
> 
> When the media tells you there's about to be a crash, it's quite likely a buying opportunity.
> 
> When the media tells you there's nothing to worry about, that's the time to be worried.



That is so true, they don't sell good news, they like chaos IMO.
If everything is trundling along peacefully, there is no news.


----------



## ducati916

Smurf1976 said:


> The thing about news is not to take it literally but it can still be of some use, usually by inverting it.
> 
> When the media tells you there's about to be a crash, it's quite likely a buying opportunity.
> 
> When the media tells you there's nothing to worry about, that's the time to be worried.




There is certainly plenty of evidence for such a strategy: all charts taken from the 'Market Bottom' thread where they were previously discussed.

In the list below: on the left Market Bottoms, on the right Market Tops.
























jog on
duc


----------



## over9k

That's the media reporting on what's already happened in the market though - you know, the past. 

This is quite a different thing to media reporting on something that's going to/will effect the markets. A massive spike in coronavirus cases over the weekend = armageddon on monday for example. Same with employment data or anything else that markets respond to. 

There's big talk of a second wave in china over the weekend. Lots of ASX red as a result. Will be interesting to see how U.S is effected now as everyone were expecting a massive bounce tonight and that's now looking uncertain.


----------



## ducati916

over9k said:


> 1. That's the media reporting on what's already happened in the market though - you know, the past.
> 
> 2. This is quite a different thing to media reporting on something that's going to/will effect the markets. A massive spike in coronavirus cases over the weekend = armageddon on monday for example. Same with employment data or anything else that markets respond to.
> 
> 3. There's big talk of a second wave in china over the weekend. Lots of ASX red as a result. Will be interesting to see how U.S is effected now as everyone were expecting a massive bounce tonight and that's now looking uncertain.




1. Correct, all of those examples are historical examples.

2. At the time of the reports, they were current. This is often how it is: markets are trading at X, the media report that the markets will do X higher/lower. The markets do the opposite of what the media predict or expect. Those examples are simply some examples of the more egregious media pronouncements through the years.

3. To China I say: so what? 

Remember the ASX tends to follow the US (not exactly, but close enough when there are big events). Friday in the US is Saturday in ASX. Today is the response to Friday's market in the US.

Re. bounce: who is 'everyone'? I haven't seen reports of a massive bounce being expected. I could have missed them I suppose (unlikely). I have said that I expect a bounce. But who cares what opinion I express. Whereas these chaps have a bit more clout:https://www.wsj.com/articles/frustrated-stock-market-skeptics-stick-with-cautious-bets-11592127000

Currently the futures are red:






jog on
duc


----------



## ducati916

So from the close on Friday last, here is how the Option Market closed:






The level we are interested in is that 300 level (again).

Open Interest is finely balanced: 119K v 113K. The interesting metric is the volume from Friday 28K v 88K. A very heavy influx of new PUT positions.

What is a market truism: the market moves to cause the maximum amount of pain (which drives transaction volumes). Well the pain trade in this instance is higher. That new volume, has no profits (worth speaking of) currently. The older positions will be in profit. Nothing a profitable position hates more, losing open profit. It will only take a nudge and those PUTS will be closing.

So why not the other way? Why would the CALLS not be faster to fold? Three primary reasons:

(a) The trend to date has been higher; and
(b) The fall has been fast, but without follow through: IV is still high (adding to profits) but if it starts to fade, that will also reduce profits comparative to price; and
(c) It is just plain harder to make money short than long. Short sellers are a very nervous breed.






The lows from Friday have been tested. They seem to be holding currently. Volume is thin in the overnight session, the real test will come on tomorrow's open.

jog on
duc


----------



## ducati916

If you are looking for where the risk is hiding...as always it is hidden within the Banks.












This is why the Fed. pulled out all the stops from day 1. They are aware of the problem. Hence they buy all debt. Period.

Citi just made $100M flipping CLOs. That is the problem: they are just too lucrative until they are not. Then you blow-up the bank.

In 2007/08 the Fed. simply were not aware of the issue and its extent. Hence they let Bear Stearns and then Lehman fail. They will not be repeating that error. Whether this issue comes home to roost, we'll have to wait and see. Currently, the issues remain hidden.

jog on
duc


----------



## over9k

I'm still in stay-at-home stocks for the next fortnight, might trim the position just in time for the 3rd of july data.

There's also the 737 max certification flight which should bump BA nicely, but I can't see anything but a very choppy decline for a while. I was just reading that the last batch of employment data was miscalculated and so with that being fixed, the next lot will look significantly worse. This is worth a read here: https://www.bloomberg.com/news/arti...n-more-confusing-than-may-s?srnd=economics-vp 

If the fixed data ends up being significantly lower than predicted (as a result of fixing it) then expect a bloodbath. 

ASX basically slaughtered today in reaction to the chinese virus data over the weekend. Also one melb protester testing positive but that didn't seem to be a big deal.

It won't last - good dip to buy into.


----------



## ducati916

Had a bit of a sleep in this morning so I missed all the drama:










Missed the news and headlines of the day. I'll now go have a look and see what I missed.

Well for the Bears:

*Harry* Callahan: "_I know what you're thinking. 'Did he fire six shots or only five'? Well to tell you the truth, in all this excitement, I kind of lost track myself._"    Dec 24, 1971.

jog on
duc


----------



## ducati916

The only news worthy of reading if you are trading markets:

_NEW YORK (Reuters) - A gauge of global equities rebounded on Monday after the Federal Reserve widened its program of buying corporate debt, while crude oil rebounded too on signs fuel demand is recovering and as investors grapple with how to assess the economic reopening._

_https://www.reuters.com/article/us-global-markets/stocks-rebound-on-fed-debt-program-oil-recovers-idUSKBN23M020?feedType=RSS&feedName=businessNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+reuters/businessNews+(Business+News)_

https://www.bloomberg.com/news/arti...s-china-virus-outbreak-monitored-markets-wrap

So now we know: Harry only fired 5.

jog on
duc


----------



## qldfrog

Well, did not "the market" answered clearly the questions of many today?
Sure we may have a fall tomorrow or in 2 months and some may say: i told you so but as far as i know, we did not stop riots overnight or found a 2c virus vaccine yesterday.trying to find causality between the virus figures and current market jitters is tarot reading.
I will even go further and advocate that the depth of march fall is probably uncorrelated to the virus.
As would say a famous by now poster, jog on


----------



## ducati916

Now this chart made me smile. If you ignore the actual data it is reporting: viz. COVID-19, it is actually a perfect proxy for market belief/expectations.

The top chart is the expectation that there was to be a bounce from the March lows and then a second low or even lower low. Many didn't even believe in a bounce.

The second chart is what happened in the market (and for the moment continues to happen).









jog on
duc


----------



## ducati916

All things VIX update:









The resistance in the VIX held and is headed lower. We'll need to check in again as it reaches that support point (not highlighted) and have a think about what may happen at that point.

jog on
duc


----------



## over9k

Zoom up 9% overnight and another 1% after hours. Paypal 1.5%, ebay & cisco basically flat.

Looks like I was right to dump my BA position. I now await more virus data.


----------



## ducati916

qldfrog said:


> Well, did not "the market" answered clearly the questions of many today?
> Sure we may have a fall tomorrow or in 2 months and some may say: i told you so but as far as i know, we did not stop riots overnight or found a 2c virus vaccine yesterday.trying to find causality between the virus figures and current market jitters is tarot reading.
> I will even go further and advocate that the depth of march fall is probably uncorrelated to the virus.
> As would say a famous by now poster, jog on




Indeed it did.

Rules of the Market:

1. Don't fight the Fed;
2. See Rule 1 (but know when to break it);
3. Market Makers work for the Big Banks (who get bailed out by the Fed).

The Fed. knows where the risk lies: they will not let market values fall low enough to threaten the financial system, unlike in 2007/08.






They simply will not allow a financial meltdown. The loans that do fail or look like failing will simply be transferred to the Fed. Balance Sheet.

jog on
duc


----------



## ducati916

Part of the difficulty in trading the current market is the expanded and extended volatility. Historically only the Great Depression has exceeded the current environment. Even 2008 was less volatile. This environment is really an object lesson. However, if you can stomach this, you will be in good shape going forward.





















The thing to remember in an expanded volatility environment is that the size of the move up or down contains no increased weight of importance, informational wise, than does a move in a lower volatility environment.

Observations like, 'wow, stocks tanked' etc. carry no relevance other that how they tie into a technical signal. All that it means is, instead of taking 3/4 days to trade down or up to a technical point, we do it in a day. There is however no increased weight in the message.

Imagine 4 years of this.

jog on
duc


----------



## IFocus

Duc isn't the current daily range  a bear market.......this one is rising? 

I don't hold opinions of why the markets rise or fall other than uncertainty (falls)

BTW you have been on fire this year thanks for the flow of material your picking of the bottom using the VIX was a standout IMHO.


----------



## ducati916

IFocus said:


> 1. Duc isn't the current daily range  a bear market.......this one is rising?
> 
> 2. I don't hold opinions of why the markets rise or fall other than uncertainty (falls)
> 
> 3. BTW you have been on fire this year thanks for the flow of material your picking of the bottom using the VIX was a standout IMHO.




1. So a simplistic approach to Bull/Bear is above/below the 200EMA. Currently we have retested the 200EMA and we are still above. Therefore by this simple definition, we are in a Bull market.

However the $VIX is still elevated:






It is still x3 the level we were cruising along at prior to the current situation. Therefore when 'news' (let's go with that one for the moment) happens, the move will be x3 whatever it would have been at the lower levels. What it doesn't mean is that the news is x3 more important. All it means is that the move will be amplified. At the level that the $VIX was prior to the move (call it) x2.5'ish, that initial move had a feedforward element that expanded it in time (it reduced the time element) which took us to x4. This usually happens in selloffs more often than melt-ups.

This expansion in range and simultaneous compression in time usually occurs when there is a 'surprise'. Given that the pullback was one of the most flagged pullbacks in recent memory, ie. no surprise at all, it was a bit of a surprise that we went to -7% on the day. Possibly it was more of a surprise (pullback) to others than I thought.

I also alluded to this on the 'Dump It' thread: volatility has a number of interesting properties that traders should acquaint themselves with. One of which will give you a pretty good approximation of market direction and movement in price (distance).

2. Then you are miles ahead of the game. However there are fundamental macro factors that are worth becoming acquainted with as they time-after-time signal major market moves. They are nothing to do with 'news'.

3. Glad it was useful.

jog on
duc


----------



## over9k

Yep this is what we've been debating all along - what constitutes relevant news. The pullback was straight after a release of a spike in virus data and I still haven't had a clear answer on whether this is believed to be a coincidence or not. Do you think it a coincidence or not?  

The other curveball is predicting fed action, which is much more difficult - no schedule for stimulus unlike data releases for example.


----------



## qldfrog

over9k said:


> Yep this is what we've been debating all along - what constitutes relevant news. The pullback was straight after a release of a spike in virus data and I still haven't had a clear answer on whether this is believed to be a coincidence or not. Do you think it a coincidence or not?
> 
> The other curveball is predicting fed action, which is much more difficult - no schedule for stimulus unlike data releases for example.



give you an hint as for the schedule for stimulus:
as soon as required!


----------



## over9k

Ah but define required...


----------



## qldfrog

over9k said:


> Ah but define required...



after a fall and the time it takes for the Fed intern to type the right number of 0 on the magical account balance creation button..sadly, I do not share the code for that one..;-)


----------



## over9k

Hence the problem.


----------



## Dark1975

ducati916 said:


> Indeed it did.
> 
> Rules of the Market:
> 
> 1. Don't fight the Fed;
> 2. See Rule 1 (but know when to break it);
> 3. Market Makers work for the Big Banks (who get bailed out by the Fed).
> 
> The Fed. knows where the risk lies: they will not let market values fall low enough to threaten the financial system, unlike in 2007/08.
> 
> View attachment 104840
> 
> 
> They simply will not allow a financial meltdown. The loans that do fail or look like failing will simply be transferred to the Fed. Balance Sheet.
> 
> jog on
> duc



Well watch your threads, thanks btw for all the info over time, and 1 think that your 100% right your cant fight the trend ( bulls ) regardless of information comes out I charted  the moving averages seems like it's under the last few days


----------



## ducati916

over9k said:


> 1. Yep this is what we've been debating all along - what constitutes relevant news.
> 
> 2. The pullback was straight after a release of a spike in virus data and I still haven't had a clear answer on whether this is believed to be a coincidence or not.
> 
> 3. Do you think it a coincidence or not?
> 
> 4. The other curveball is predicting fed action, which is much more difficult - no schedule for stimulus unlike data releases for example.




1. Relevant news is news that has a categorical outcome for the markets. Non-relevant news is news that invites a speculation on what may or may not happen, what the news actually means, etc.

2. I don't remember you making any mention of 'coincidence'. So I went back and checked. No mention of coincidence.

3. Irrelevant.

4. Predicting the Fed. is not foolproof I agree. It takes some work to be able to do successfully. That is exactly what this thread will attempt to do.

jog on
duc


----------



## ducati916

Dark1975 said:


> Well watch your threads, thanks btw for all the info over time, and 1 think that your 100% right your cant fight the trend ( bulls ) regardless of information comes out
> 
> 1. I charted  the moving averages seems like it's under the last few days




1. Moving averages, Bollinger Bands, whatever are targets (price). They are where I expect price to move to prior to a re-evaluation of variables. I don't use the same targets consistently as the market evolves, changes back, etc. Sometimes the target are the Fibonacci levels and other times pivot points etc. It is worth developing a bag of indicators that you have confidence in and test them all at any given price. Take the best fit. However, think about why is it the best fit? Just luck, or is there something about the character of the current conditions that make it a good or logical fit. Of course all of the above helps if you have picked the correct timing for a turning point. If you have, that will give you some clues to your correct target.

In this particular case: 300 was a level that we knew was (previously) important and there was a confluence of 20EMA/200EMA and rising 50EMA all concentrated in that single spot. This was the easiest target to pick. The indicators made sense in the market environment that we had from last week into Monday just gone. I don't know if this style works so well for the mechanical chaps as they have everything pre-programmed. More of a discretionary approach.

Once you have your target, you need to start figuring out whether it will hold or fail, which is everything else. This is where, if you are a news hound and you follow 'news',  you need to differentiate _*noise from signal*_. Historically there has always been relevant (signal) news contained within irrelevant (noise) news. Again, historically, the media tend to miss the news containing the signal and emphasise the noise, which just adds to the noise.

jog on
duc


----------



## ducati916

So in the US we approach another earnings period:

Retail:











Only one sector, but it will be an important sector as it is a gauge of the consumer.

The actual numbers (generally) are (particularly if they are bad) slightly less important than guidance. Why anyone pays attention to guidance I have no idea, but they do.

I would 'expect' guidance to be (increasingly) positive (by comparison) and it it is, we have additional fuel to feed to the trend, assuming that we are still trending higher at that point. Certainly I would expect the trend to continue into earnings season, at least until we see which way the wind is blowing.









Note the divergence of guidance to the market leading into the COVID collapse.

jog on
duc


----------



## ducati916

A further variable to consider: Seasonality.






Going into:






It will be as always, a challenging period for markets.

jog on
duc


----------



## over9k

duc - do you think the pullback last thursday was a coincidence or not? 

it's not irrelevant.


----------



## qldfrog

As I am on a roadtrip for a week, i though it safer to offload position..a week is a long time lately.
The US market was kind to me and sell on open were great.touching base in a week.much could happen but looking forward to share some more of these billions QE at the end of the month


----------



## ducati916

over9k said:


> duc - do you think the pullback last thursday was a coincidence or not?
> 
> it's not irrelevant.





The 'pullback' was always going to happen. The 'news' or spike was never going to change that either way, therefore 'irrelevant'. If you are asking: did the Market Makers use the news to further create fear and loathing and thereby exacerbate the selloff?

Of course. Never let a good crisis go to waste. 

jog on
duc


----------



## over9k

Not what I asked you.

You've said that the pullback was always going to happen - not that it was going to happen when it did, and not that it was going to be as sharp as it was.

I've never disputed that *some* kind of pullback was due at *some* point.


----------



## ducati916

over9k said:


> Not what I asked you.
> 
> 1. You've said that the pullback was always going to happen -
> 
> 2. not that it was going to happen when it did,
> 
> 3. and not that it was going to be as sharp as it was.
> 
> I've never disputed that *some* kind of pullback was due at *some* point.




It is easiest to simply re-post the original posts (from this thread): Starting 8 June 2020:


























And the current situation today:






Clearly you believe that your opinion and analysis are a superior way to engage with the market. That is excellent, I always admire bravado, particularly when it is backed by action.

So now I expect to see (whether on this thread or another) your analysis put into actionable action. I look forward to it tremendously.

jog on
duc


----------



## ducati916

_The Citi Economic Surprise indices, which track how economic data is coming in relative to forecasts, have been a prime example of the moves in economic data.  Back at the end of April, the index for the US had fallen to a record low of -144.6, but that has since turned around.  Even before the addition of today's blockbuster US retail sales report, the Citi Economic Surprise index had reached a new all-time high yesterday.  With a further boost from today's releases, the all-time high is now even higher.  That means that economic data in the United States has been coming in far stronger than economists have had penciled in._

_



_

So with earnings season just around the corner, should we be expecting slightly better results than might otherwise be expected?

Difficult to say, but: analysts will be more forgiving of misses (due to whatever reason proffered) at this time, than they will be down the road, assuming the economy continues to open up. Therefore (big bath theory) CEOs will be happy to dump whatever negatives they may be hiding into the earnings call, looking to show improvement next time round.

jog on
duc


----------



## over9k

Don't go putting words into my mouth - I never said I'm superior, I'm arguing that you might have at least one flaw with your method. Not the same thing. Long, I'm a complete bull myself. What I'm talking about is picking the dips (that can be picked) in the meantime.

I dumped my BA position into zoom (after buying BA at $125 and selling at $190) and am up 10% in a couple of days with zoom. I already had zoom from a few weeks ago and just added to the position. My other U.S positions are in ebay, paypal, and cisco, and I'm going to buy some skyworks, nvidia, amazon, & microsoft in that order. All tech/etail: Things which can function with people keeping their distance. Maybe some tesla & nikola but they'd only be small. I'm still undecided about walmart.

I'm also waiting for a dip to buy into thor & winnebago. I've bet on a big spike in virus cases/second wave playing merry hell with the markets soon, just like it did last week. Same goes with all the pharmaceuticals, boeing, and oil as long (really long) positions. I'm expecting this to occur sometime next month, maybe beginning at the end of this one.

I am still up significantly in the meantime.


----------



## Chronos-Plutus

It will be interesting to see how the market reacts to the unemployment data that will be released at 11:30am today.


----------



## Chronos-Plutus

over9k said:


> Don't go putting words into my mouth - I never said I'm superior, I'm arguing that you might have at least one flaw with your method. Not the same thing.
> 
> I dumped my BA position into zoom (after buying BA at $125 and selling at $190) and am up 10% in a couple of days with zoom. I already had zoom from a few weeks ago and just added to the position. My other U.S positions are in ebay, paypal, and cisco, and I'm going to buy some skyworks, nvidia, amazon, & microsoft in that order. Maybe some tesla & nikola but they'd only be small.
> 
> I'm also waiting for a dip to buy into thor & winnebago. I've bet on a big spike in virus cases/second wave playing merry hell with the markets soon. Same goes with all the pharmaceuticals, boeing, and oil as long (really long) positions. I'm expecting this to occur sometime next month.
> 
> I am still up significantly in the meantime.




Looks like Victoria is struggling with the virus at the moment. Surely we can't open our domestic borders with Victoria at the moment.


----------



## over9k

And the ASX is a bloodbath as a result, just like the nasdaq was last thursday after a big spike in cases over there.

These are NOT coincidences, which duc's modelling would have you believe. In fact I suspect this will give the market enough jitters to see a decent selloff tomorrow as I bet there'll be another spike in cases over the weekend as the protest virus spread data starts to come in more & more. You can expect a double bloodbath on monday if the same thing happens in the U.S over the weekend, which is more than possible.


----------



## Chronos-Plutus

over9k said:


> And the ASX is a bloodbath as a result, just like the nasdaq was last thursday after a big spike in cases over there.
> 
> These are NOT coincidences, which duc's modelling would have you believe.




Red across all indices, just about:




Obviously our market may tank today, if the unemployment figures are worse than forecast.


----------



## ducati916

over9k said:


> Don't go putting words into my mouth -




I never put words in people's mouths. You did that all by yourself.






jog on
duc


----------



## over9k

Chronus - I can't see a huge difference unless they're wildly better than expected.

Things are already in the toilet and despite the chop (volatility), AU has been pretty flat over the past few weeks. Everyone have the jitters for a reason.

I'm expecting tomorrow & monday to be even worse - as soon as any virus data is released, it's red red red.


----------



## over9k

ducati916 said:


> I never put words in people's mouths. You did that all by yourself.
> 
> View attachment 104915
> 
> 
> jog on
> duc



Rubbish. The only time I can ever get a straight answer out of you is when you either deny or attack something, despite how much you might infer other things. You've stated that a correction was due, and I've never disputed that. We are talking about why it (and there's been more) occurred when it did and why it was as dramatic as it was. 

I'll ask this for a 500th time seeing as you keep inferring the answer and then getting mealy-mouthed when it's asked directly:

Do you think the pullback in the U.S last thursday, which occurred straight after a spike in U.S virus data, the pullback on the ASX this monday straight after a spike in chinese virus data despite an overwhelmingly postitive day in the U.S on the friday preceding it, and the pullback on the ASX today straight after a spike in australian virus data, were coincidences?

This is a yes or no question. It might be a qualified yes or no, but it is a yes or no question nonetheless.


----------



## Chronos-Plutus

over9k said:


> Chronus - I can't see a huge difference unless they're wildly better than expected.
> 
> Things are already in the toilet and despite the chop (volatility), AU has been pretty flat over the past few weeks. Everyone have the jitters for a reason.
> 
> I'm expecting tomorrow & monday to be even worse - as soon as any virus data is released, it's red red red.




The unemployment figures will be much worse than published because the JobKeeper initiative is masking the extent of the metric.


----------



## over9k

True - but the markets know this already. This is all about anticipated vs actual. 

I've trimmed a couple of positions awaiting a rebuy on monday.


----------



## Chronos-Plutus

over9k said:


> True - but the markets know this already. This is all about anticipated vs actual.
> 
> I've trimmed a couple of positions awaiting a rebuy on monday.




Beijing have just cancelled 1000 flights and have pretty much gone into lockdown.


----------



## over9k

Rate of 7.1% vs 7% expected. 0.4% market drop on the news.


----------



## Chronos-Plutus

over9k said:


> Rate of 7.1% vs 7% expected. 0.4% market drop on the news.




Also a fair bit of data being released tonight in the UK and USA:


----------



## Movendi

What data platform is that Chronus?


----------



## IFocus

over9k said:


> I'll ask this for a 500th time seeing as you keep inferring the answer and then getting mealy-mouthed when it's asked directly:




Can we drop the agro it has no place here, the market will give everyone enough angst, Duc supply's more than enough information for us to digest, note that to do so is an enormous amount of time and effort its very good / free.

Opinions which are always welcome just beware the answers may mess up a few feathers as will the market just relax.


----------



## Chronos-Plutus

Movendi said:


> What data platform is that Chronus?




Investing.com:
https://www.investing.com/economic-calendar/
You can also get it from DailyFx:
https://www.dailyfx.com/economic-calendar

I like investing.com better because you can also get company earnings calendar


----------



## over9k

IFocus said:


> Can we drop the agro



The agro was in response to false accusations and snark. 

Like I said, the only time I ever get a straight answer is with accusations and focus-shifting. Does he think the three instances of significant market drops were all just coincidences, yes or no.


----------



## Smurf1976

IFocus said:


> Can we drop the agro it has no place here



I was about to post the same comment until I read your post.

The more differing opinions the better and if someone has an opposing view and explains it politely with a constructive argument then that's a good thing not a bad thing.

There are no actual guarantees in the markets. If there were then pretty much everyone would be a millionaire.


----------



## ducati916

over9k said:


> 1. The agro was in response to false accusations and snark.
> 
> 2. Like I said, the only time I ever get a straight answer is with accusations and focus-shifting. Does he think the three instances of significant market drops were all just coincidences, yes or no.




1. There are no false accusations. However feel free to post the evidence.

2.  You had an answer. You simply don't like the answer. I don't see any:

(a) accusations; or
(b) focus shifting.

Therefore your complaint is without merit and irrelevant.









jog on
duc


----------



## IFocus

over9k said:


> The agro was in response to false accusations and snark.
> 
> Like I said, the only time I ever get a straight answer is with accusations and focus-shifting. Does he think the three instances of significant market drops were all just coincidences, yes or no.




Just like in the market what we do / project / engage should never be driven by our emotions, hard to do but necessary. 

Successful engagement on forums is a skill (not one I am overly endowed with if you see me over on general chat). 

When seeking information or answers overt politeness is surely the order of the day, if some thing comes back that upsets you the answer is always to be polite to get into a bun fight makes no sense.
1. You just let some one else set your standards
2. You wont get the information you want   
3. Why would you give some one you have never met control over how you feel, that's your choice   surely?

Now for me to follow my own advice


----------



## over9k

ducati916 said:


> 1. There are no false accusations. However feel free to post the evidence.
> 
> 2.  You had an answer. You simply don't like the answer. I don't see any:
> 
> (a) accusations; or
> (b) focus shifting.
> 
> Therefore your complaint is without merit and irrelevant.
> 
> 
> 
> View attachment 104938
> 
> 
> jog on
> duc



Ok I'll ask it another way:

Why do you think the pullback in the U.S last thursday, which occurred straight after a spike in U.S virus data, the pullback on the ASX this monday straight after a spike in chinese virus data despite an overwhelmingly postitive day in the U.S on the friday preceding it, and the pullback on the ASX today straight after a spike in australian virus data, ALL occurred straight after a release of a spike in virus data?


----------



## willoneau

How are the big boys going to clean up ?
Knowing how the general public will react to anything about the virus. So spike the market down on any news taking out the weak stock holders. I think once we stop seeing these spikes then the big boys are ready to start a bull run, just my thinking anyway.


----------



## Smurf1976

willoneau said:


> How are the big boys going to clean up ?



I do have a definite concern that, according to various reports at least, there's a lot of extremely inexperienced traders in the market right now.

Inexperienced as in people who 4 months ago had never directly owned shares in anything or even had a brokerage account and at most had made very passive investments into superannuation, managed funds etc.

How they react going forward may influence market volatility and overall it reminds me of 1999 - early 2000 somewhat.


----------



## ducati916

Lots to look at today. First off an overview of some of the sectors of the market.









This is important going forward as you want underlying support from lagging sectors (catching up) to provide support to the overall market as leading sectors cool off. If they don't cool off, well so much the better for the overall market.

Real Estate:






Improving. As for what has driven that surge in purchase applications, interest rates have played a major role.  Although they are off the lows after rising a few basis points over the past few days, last Thursday the national average for a 30 year fixed rate mortgage fell to 3.38% which was the lowest level since October 3rd of 2016.

Consumer Cyclicals









Improving.

US Valuations






Valuations are (always) calculated with regard to growth. Apart from China, the US is (pretty) well placed for continued capital inflows for equity based investment based on its valuation and growth prospects relative to those below it in the rankings.

On that basis (macro-fundamentals) as the market approaches the closing of the gap and an assault on the 'all time high', valuations as a market are not outrageous. Business is picking up in sectors that still lag the market, which can provide support for the market trading at higher prices moving forward.

jog on
duc


----------



## ducati916

Drilling down into the sectors:






In consumer cyclicals, we have automobiles. Important due to their (usually) being purchased on credit. Credit which is provided by the financial sector, which we are interested in via providing support to the overall market moving forward.






Consumer finance, not looking so great atm. Bounced off of the lows, hit some resistance, and trickling lower. Definitely something to keep an eye on.






From the previous post, mortgage applications picking up. This sector looks far healthier, consolidating near the lows. If those applications keep coming, this sector will likely break higher, which will be good for the overall market.






And the Banks generally: sitting near the lows, consolidating. We know the Fed. will backstop NPLs. Lending activity picking up, with a steep curve (which the banks need) although margins are razor thin. I would say these chaps are poised to move higher. This is vitally important to the overall market. If the Banks move higher, the strength of the market will significantly improve. We will go through the all time highs. If they don't, well we may well have problems ahead.

jog on
duc


----------



## ducati916

Technical issues:






Once upon a time, Options expiry (Witching hour, Triple Witching was real serious business) was a (real) big deal. Then it sort of faded away and no longer seemed to have an impact. This one, obviously due to the sheer volume, is being flagged as a possible market moving event.

I always keep an eye on the Options market (for a variety of reasons) due to the hedging with stock/futures/etc of large positions or really significant OI.

The takeaway (from past experience) is that there may well be increased volatility, which (usually) means a move lower (but not always) and which lasts only a day or two. The expiry is always on a Friday, which if it creates volatility, means that you potentially have a false move, but the w/e to think about it.

Goldman Sachs think no change.
Nomuara think lower.

jog on
duc


----------



## ducati916

Psychological issues:









Some psychological issues to consider when engaging with the market. Pretty much self-explanatory.

jog on
duc


----------



## ducati916

Just in relation to the above post: https://www.linkedin.com/pulse/my-thoughts-new-bull-market-ken-fisher/?published=t

_A new bull market was born March 23rd.

First, consider, a quick recap of 2020’s wild stock market, which I discussed at length in previous LinkedIn columns. The stock market was at all-time record highs in late February, then suddenly experienced its fastest drop ever into bear market territory (defined as a stock index dropping at least 20% from its peak). That took just 16 trading days. The total S&P 500 bear market was a decline of 34% from February 19 to March 23—fastest ever.

Why so fast? The best forecaster the world has ever known, the stock market, had to pre-price the reality of the grim economic impact of global governmental-imposed lockdowns aimed to slow the spread of coronavirus.

But after that, the S&P 500 recovered over 75% of its losses and isn’t far from new record highs. The Nasdaq reached new record highs in June. History displays lots of bear and bull markets. The longest good, accurate history is from America. Of all bear markets, there has never been a plunge into full scale bear market territory that recovered this much of the drop, 75% or more, that didn’t go on to new all-time highs. People talk about retesting the prior lows but once we’ve recovered this much from bear market territory that has never happened. That it never happened before doesn’t make it impossible. But it does make it very unlikely. Never happened before is a big thing to ask for.

But again, as for 2020’s bear market drop, what happened stock-wise in a month…in normal bear markets takes one or two years, not weeks. The beginning of historical normal bear markets actually roll over gently with the bulk of the declines coming much later. On average about two thirds of all bear markets’ percentage decline has occurred in its last third of duration. Over 55% of the drop has typically happened in its last three months. That’s what happens on average.

It wasn’t that way this time. The normal late stage plunging prices came all at once over a matter of just weeks. 

“The Pessimism of Disbelief”

What happens after a bear market? A bull market! But they come in sneaky ways.

Steep stock declines scare people. They obsess over negative news and spin any and all potential positives back into negatives.

It’s happening now. The Federal Reserve announced trillions of dollars in stimulus measures in recent months in response to COVID-19. While that might be seen as a positive, plenty of investors instead fret this will spark inflation and future problems. Forget your views about it. Doesn’t matter! The sentiment is negative and negative sentiment is what bull markets are built on. Disbelieving positive developments or spinning positives into negatives is called what I’ve long written about as “The Pessimism of Disbelief.” This concept derives from what behavioral psychologists call, “confirmation bias.” It is, basically, the tendency to see what we want to see or think what we think we should see and reconfirm our prior views.

With every tick higher, stocks send a strong message to those who didn’t see the new bull market forming in March: “You’re wrong, you’re wrong, you’re wrong!”

It is human nature to want to avoid signs that show we’re wrong or contradict prior views – confirmation bias also and for the same reasons leads us to see evidence that confirms we were right and to revolt against or be blind to evidence confirming we are wrong. It is technically the tendency to “accumulate pride” and “shun regret” to motivate us to be more confident and keep trying….which worked great for our far distant ancestors hunting gazelle for the high payoff protein justifying many failures. But it hurts us in markets going up against The Great Humiliator, of which I’ve written so often.

Confirmation bias causes you to find reasons why, “I’m not wrong, I’m not wrong, I’m not wrong!” Said otherwise it is things like, “I sold that one; it went down—see how smart I am?” Or, “I sold that one; it went up; I wouldn’t have done it if my spouse hadn’t groused at me all last night and I got such a bad night’s sleep.” Or, “I bought it; it went up; I can do that again!” Or, “I bought it; it went down. The stockbroker misled me when he said blah, blah, blah.” All of this reinforces self confidence in the face of success or failure.

This drives “The Pessimism of Disbelief,” which keeps sentiment low as stocks rise against a myriad of negatives as they always do in every new bull market. It keeps the wall of worry going that every new bull market must climb. It sets low expectations and keeps lowering them. With low expectations, almost any subsequent realities lift stocks—subject, of course, to short-term volatility.

The stock market pre-prices widely known information

One bleak outcome many fret is the possibility of a second coronavirus wave.

Remember, the stock market pre-prices all widely known information between three and 30 months out into the future. I’ve written about this often. That is what the stock market does for a living. The worry about a second wave of coronavirus is priced into the stock market because it’s a very, very widely discussed and known risk. It’s being debated and discussed in the public forum right now. It has been for months. The only ones not fearing it now are in those rare parts of the world feeling their first wave. 

Consider what happened in March. To pre-price a shock (the coronavirus-driven economic lockdowns), the market moved on the shorter end of that three to 30 month time horizon because the lockdowns were sudden and imminent and economic free-fall would be clear soon.

But when it moves to pre-price the very short end of its pre-pricing time horizon it soon moves to pre-price out toward the far end. It does this every bear market as it ends. Always has. It is now pre-pricing for a far better future—maybe in 2021. What happens before then is of less consequence to it. How far is it pre-pricing out in the future toward its 30 month-long range? No one knows or can know. There is no way to know that with any precision. But pretty far—maybe 20 months or 30 months. But it isn’t concerned with what will happen to the economy in August or October.

The new bull market

This new bull market began March 23. When a bull market starts, you tend to get a fairly long run, driven by “The Pessimism of Disbelief,” which is driven by confirmation bias.

I don’t know how long it will last. There could be new big, bad things that come along that none of us anticipate like we didn’t the coronavirus or lockdowns last December--and haven’t been pre-priced at all. Major, unexpected events that aren’t being contemplated or talked about - or euphoria - are the typical factors that can end a bull market. That’s how the stock market works.

Ken Fisher is founder and executive chairman of __Fisher Investments__. Follow him on Twitter __@KennethLFisher__.
_
jog on
duc


----------



## ducati916

So I had a check back in time: 2012, 2011 and 2010. Options expiry, very dull. Nothing happening.






jog on
duc


----------



## ducati916

Banking issues:

_While much of the analyst community largely expects that bank payouts are safe—despite lower expected earnings—policy makers are increasingly urging that dividends be halted so that banks can conserve capital to serve customers.

The latest salvo came from the Federal Deposit Insurance Corp., which noted earlier this week that first-quarter dividends were nearly twice as high as first-quarter profits. Smaller, more interest-rate-sensitive banks were said to be on the FDIC’s radar.

Larger banks, with more-diverse revenue sources, are generally thought to have safer payouts based on forecast earnings. Part of the reason for this is many of the larger banks halted share repurchases in March, which have been more of a drag on banks’ capital. Still, the banks have faced pressure to halt their dividends as well, pressure that already accelerated after European regulators were successful in pushing banks there to do so.




Revolving credit lines are getting paid back, but that might not be fantastic news for banks.

As the coronavirus pandemic hit, companies quickly tapped their lines of credit to shore up liquidity as much business activity ground to a halt. Most of that borrowing occurred in March, and evidence from J.P. Morgan analysts suggests many of the drawdowns have been “repaid much faster than expected.”

This poses somewhat of a good news, bad news scenario for banks. The sector has been weighed down over the past few months because investors fear that banks will face hefty loan losses due to the coronavirus. Earlier this month, several banks hinted that they would increase their loan-loss reserves this quarter by as much as—or more than—they did in the first quarter. Any sign of companies paying back their loans should be viewed as a positive.

However, while few companies are now drawing on revolving credit lines—and some have used funds raised through bond issuances to repay their revolvers—there has been an increase in lower-yielding Paycheck Protection Program loans. The new mix of PPP loans and long-term bonds means that the big banks will see their net interest margins squeezed, explained Vivek Juneja, analyst at J.P. Morgan, in a note Tuesday.
_
jog on
duc
_

_


----------



## qldfrog

ducati916 said:


> Just in relation to the above post: https://www.linkedin.com/pulse/my-thoughts-new-bull-market-ken-fisher/?published=t
> 
> _A new bull market was born March 23rd._
> 
> _First, consider, a quick recap of 2020’s wild stock market, which I discussed at length in previous LinkedIn columns. The stock market was at all-time record highs in late February, then suddenly experienced its fastest drop ever into bear market territory (defined as a stock index dropping at least 20% from its peak). That took just 16 trading days. The total S&P 500 bear market was a decline of 34% from February 19 to March 23—fastest ever._
> 
> _Why so fast? The best forecaster the world has ever known, the stock market, had to pre-price the reality of the grim economic impact of global governmental-imposed lockdowns aimed to slow the spread of coronavirus._
> 
> _But after that, the S&P 500 recovered over 75% of its losses and isn’t far from new record highs. The Nasdaq reached new record highs in June. History displays lots of bear and bull markets. The longest good, accurate history is from America. Of all bear markets, there has never been a plunge into full scale bear market territory that recovered this much of the drop, 75% or more, that didn’t go on to new all-time highs. People talk about retesting the prior lows but once we’ve recovered this much from bear market territory that has never happened. That it never happened before doesn’t make it impossible. But it does make it very unlikely. Never happened before is a big thing to ask for._
> 
> _But again, as for 2020’s bear market drop, what happened stock-wise in a month…in normal bear markets takes one or two years, not weeks. The beginning of historical normal bear markets actually roll over gently with the bulk of the declines coming much later. On average about two thirds of all bear markets’ percentage decline has occurred in its last third of duration. Over 55% of the drop has typically happened in its last three months. That’s what happens on average._
> 
> _It wasn’t that way this time. The normal late stage plunging prices came all at once over a matter of just weeks. _
> 
> _“The Pessimism of Disbelief”_
> 
> _What happens after a bear market? A bull market! But they come in sneaky ways._
> 
> _Steep stock declines scare people. They obsess over negative news and spin any and all potential positives back into negatives._
> 
> _It’s happening now. The Federal Reserve announced trillions of dollars in stimulus measures in recent months in response to COVID-19. While that might be seen as a positive, plenty of investors instead fret this will spark inflation and future problems. Forget your views about it. Doesn’t matter! The sentiment is negative and negative sentiment is what bull markets are built on. Disbelieving positive developments or spinning positives into negatives is called what I’ve long written about as “The Pessimism of Disbelief.” This concept derives from what behavioral psychologists call, “confirmation bias.” It is, basically, the tendency to see what we want to see or think what we think we should see and reconfirm our prior views._
> 
> _With every tick higher, stocks send a strong message to those who didn’t see the new bull market forming in March: “You’re wrong, you’re wrong, you’re wrong!”_
> 
> _It is human nature to want to avoid signs that show we’re wrong or contradict prior views – confirmation bias also and for the same reasons leads us to see evidence that confirms we were right and to revolt against or be blind to evidence confirming we are wrong. It is technically the tendency to “accumulate pride” and “shun regret” to motivate us to be more confident and keep trying….which worked great for our far distant ancestors hunting gazelle for the high payoff protein justifying many failures. But it hurts us in markets going up against The Great Humiliator, of which I’ve written so often._
> 
> _Confirmation bias causes you to find reasons why, “I’m not wrong, I’m not wrong, I’m not wrong!” Said otherwise it is things like, “I sold that one; it went down—see how smart I am?” Or, “I sold that one; it went up; I wouldn’t have done it if my spouse hadn’t groused at me all last night and I got such a bad night’s sleep.” Or, “I bought it; it went up; I can do that again!” Or, “I bought it; it went down. The stockbroker misled me when he said blah, blah, blah.” All of this reinforces self confidence in the face of success or failure._
> 
> _This drives “The Pessimism of Disbelief,” which keeps sentiment low as stocks rise against a myriad of negatives as they always do in every new bull market. It keeps the wall of worry going that every new bull market must climb. It sets low expectations and keeps lowering them. With low expectations, almost any subsequent realities lift stocks—subject, of course, to short-term volatility._
> 
> _The stock market pre-prices widely known information_
> 
> _One bleak outcome many fret is the possibility of a second coronavirus wave._
> 
> _Remember, the stock market pre-prices all widely known information between three and 30 months out into the future. I’ve written about this often. That is what the stock market does for a living. The worry about a second wave of coronavirus is priced into the stock market because it’s a very, very widely discussed and known risk. It’s being debated and discussed in the public forum right now. It has been for months. The only ones not fearing it now are in those rare parts of the world feeling their first wave. _
> 
> _Consider what happened in March. To pre-price a shock (the coronavirus-driven economic lockdowns), the market moved on the shorter end of that three to 30 month time horizon because the lockdowns were sudden and imminent and economic free-fall would be clear soon._
> 
> _But when it moves to pre-price the very short end of its pre-pricing time horizon it soon moves to pre-price out toward the far end. It does this every bear market as it ends. Always has. It is now pre-pricing for a far better future—maybe in 2021. What happens before then is of less consequence to it. How far is it pre-pricing out in the future toward its 30 month-long range? No one knows or can know. There is no way to know that with any precision. But pretty far—maybe 20 months or 30 months. But it isn’t concerned with what will happen to the economy in August or October._
> 
> _The new bull market_
> 
> _This new bull market began March 23. When a bull market starts, you tend to get a fairly long run, driven by “The Pessimism of Disbelief,” which is driven by confirmation bias._
> 
> _I don’t know how long it will last. There could be new big, bad things that come along that none of us anticipate like we didn’t the coronavirus or lockdowns last December--and haven’t been pre-priced at all. Major, unexpected events that aren’t being contemplated or talked about - or euphoria - are the typical factors that can end a bull market. That’s how the stock market works._
> 
> _Ken Fisher is founder and executive chairman of __Fisher Investments__. Follow him on Twitter __@KennethLFisher__._
> 
> jog on
> duc



I like the


ducati916 said:


> Steep stock declines scare people. They obsess over negative news and spin any and all potential positives back into negatives.



Does this ring a bell anyone?


----------



## qldfrog

ducati916 said:


> So I had a check back in time: 2012, 2011 and 2010. Options expiry, very dull. Nothing happening.
> 
> View attachment 104970
> 
> 
> jog on
> duc



Hopefully this will carry on..
PS can i get invited to your party ,like the last one picture ;-)


----------



## ducati916

So you missed the bottom. You missed the bounce. You are not happy. All is not lost. The 'small' banks have not really joined the main show. They will at some point. I'll be opening a position in the AM.











DPST is the x3 leverage of the small banking sector (KRE). It pays an 8% dividend (hence my interest in bank dividends) which may or may not be 'safe'.






The train has not left the station. Last whistle sounding.

jog on
duc


----------



## Smurf1976

ducati916 said:


> Some psychological issues to consider when engaging with the market. Pretty much self-explanatory.



Agreed although the notion that something is in decline can be true at times since there are indeed things which are in long term decline.


----------



## ducati916

Why would I want to buy the Banks? (Which I opened today via DPST).

Credit Spreads.







We had the same issues in 2008/09. Well if you look at the chart, the spreads blew out even more. As they came back into alignment, so the stockmarket started its inexorable rise.

The COVID crisis had not really impacted actual NPLs to progress to blow-ups on the scale that occurred in 2008. This is because the Fed. jumped in from Day 1.

One area or sector of the market where credit issues are extremely important are the Banks. Not so much the big chaps, they have always been recipients of bailouts, but the little chaps. No bull market will proceed without an intact and functioning financial system, which means the banking system.

Now banking is the most opaque set of financials you will ever have the misfortune to read through, if you bother reading the financials. Even then, 9/10 you still won't have the true picture. Trying to read your way through hundreds of banking financials is simply not possible for anyone other than an analyst working full time on nothing but the banking sector. Even then, hardly worth the effort as there are no superstars like TSLA in there. Banking is a low margin business.

As a group however, they can offer solid returns + dividends. If you have ever read 'One up on Wall St.' by Peter Lynch and his second book, you'll know he loved the banking sector. He bought them wholesale. So the ETF KRE holds:






Notice the tiny %. The largest is 4%+/-. Nothing in this is in a blowup going to hurt you. You get hurt if the whole sector blowsup. Now that the Fed. is backstopping them also, we know that that is not going to happen.

As stated, banks are not a TSLA. They are not going to excite you overmuch. So we have DPST. The x3 ETF of KRE. Now a second advantage of DPST is that we also have the inverse which is WDRW. Now, if we so choose, when we rebalance into a drawdown, we can choose to add some juice and go short.

So last week we ended with a plunge in the market. We had a few doom and gloomers make prognostications that COVID was back, blah, blah. The week opened and we moved higher and have had some red days, some wobbles and the market would seem to the casual observer to be uncertain. There is lots of news: AAPL closing (re-closing) stores, take your pick, there are negative news stories everywhere.

We had yesterday news around 'Witching day Options Expiry'. If you are looking for bad news to confirm your belief that the market is going to crash, you will find it. You can argue that what I post is also 'news': which of course it is. The test is: what news is noise, what news is signal for markets.

Looking at the internals:






The market is solid. There are some rotations. There are sectors that are red hot (Tech) and are just taking a breather and there are sectors that are lagging behind, but are now potentially ready to make a move in support of the overall market. This is not news. This is fact. Can it change? In a heartbeat. When it changes is when we bail out.

There are going to be a couple of technical hurdles: (a) the previous high and (b) the all time high (for SPY, the QQQ are already through just their new all time high). To break through is a function of all sectors contributing to the move. Most are ready to move. Energy is a notable exception, but they will likely join later in the year as the issues work themselves out.

jog on
duc


----------



## qldfrog

Just a note about equaling long term decline and share trading even investing:
In recent years American tobacco companies make a killing..pun intended...well above general index growths..yet not exactly a booming sector is it?
So we just need to be careful, if negative interest rates and yield search are so important,  between a solid profit making industry or a Zoom like pie in the sky but increasing losses company.. not always that obvious a choice.
And then there is Tesla


----------



## ducati916

qldfrog said:


> Just a note about equaling long term decline and share trading even investing:
> In recent years American tobacco companies make a killing..pun intended...well above general index growths..yet not exactly a booming sector is it?
> So we just need to be careful, if negative interest rates and yield search are so important,  between a solid profit making industry or a Zoom like pie in the sky but increasing losses company.. not always that obvious a choice.
> And then there is Tesla





Mr Frog,

An excellent point.

Negative nominal rates are an exit signal for Banks. Negative nominal rates kill the already thin margins.

jog on
duc


----------



## ducati916

Europe moving to shore up their banking system.

_A total of 742 banks across the Old Continent borrowed €1.31 trillion ($1.46 trillion) from the European Central Bank at interest rates as low as minus 1%, the ECB announced yesterday.  The debt sale marks the debut of the so-called dual-rate system, in which banks enjoy favorable borrowing costs compared to the administered overnight repo rate, currently set at minus 50 basis points. 

Lenders eagerly availed themselves of the ECB’s generosity. Total loan size from the refinancing facility was more than double the prior high-water mark of €530 billion, set in March 2012 as the eurozone sovereign-debt crisis raged.  

The banks will use those funds to repay maturing loans, as well as to increase their holdings of government debt. “Increased sovereign exposure by banks has typically been seen as a negative in recent years,” analysts at Jefferies wrote in a recent report. “However, the policy stance is shifting and with government debt levels set to rise, it may make sense for banks to channel excess liquidity in this direction.” 

One thing is for sure:  There will be plenty of new supply to soak up that extra cash.  In its biannual financial stability review issued May 26, the ECB estimates that government borrowings across the eurozone will jump above 100% of GDP in 2020 from last year’s 86%, as budget deficits will average a projected 8% of GDP, with output declines ranging from 5% to 12%.  At the same time, some European banks are heavily exposed to their own country’s fiscal fortunes, with Italian financial institutions holding some €425 billion in Italian debt, more than 10% of the outstanding total. 

Then, too, E.U. member states face some imminent heavy lifting in terms of rolling over existing obligations, with more than 10% of total debt of France, Spain, Belgium, Finland and Portugal each coming due in the next year, while upwards of 15% of Italy’s borrowings will need to be refinanced by mid-2021. 

If the current slump persists, the ECB warns, “overvalued asset prices, low bank profitability, high sovereign indebtedness and increased liquidity and credit risks in the non-bank sector . . . [risk creating]  negative feedback loops arising from sovereign or bank rating downgrades.” 
_
Good news for the banking sector generally and specifically for Europe.

jog on
duc


----------



## ducati916

So a bit of a weekly summary and a look ahead to next week:






The market did:






Commercials are still supportive of the market






Also Bonds










No inflation in sight. Deflation still the issue. Underlined further by Gold.






Given that we are in an election year, any relevance?






Unemployment numbers broken down:






What is their contribution to the economy and/or earnings of S&P 500 companies?

So the 'news' was essentially some good, some bad. So far, nothing material enough to derail the trend. Will stocks fluctuate? Of course. Are there any indications yet of a major reversal? No. Could it present in the future? Of course. Are we paying attention to try and catch it if/when it appears? Yes.

jog on
duc


----------



## ducati916

Now on the thread 'Economic Implications', I haven't seen an awful lot on what to buy as a consequence of COVID. Tech has outperformed and the usual names never really got that cheap and when they bounced, simply ran away. Now I am not really a tech chap so my vision is pretty limited in this space.

Ecommerce would seem (in America/Europe/China) to be a solid choice going forward:

_For years, investors bid up tech stocks on the idea that digital transformation was inevitable. The Covid-19 crisis has proved them right. “We have seen two years’ worth of digital transformation in two months,” Microsoft CEO Satya Nadella recently told investors.

“I’ve been following tech for 41 years, and this is the second most expensive tech market I’ve ever seen”—second only to the internet bubble 20 years ago, says Fred Hickey, editor of the High Tech Strategist, a monthly newsletter. Hickey has long been skeptical of tech valuations, but this time the fundamentals are on his side. The Nasdaq Composite currently trades at 3.4 times forward sales, well above a 10-year average of 2.3, according to FactSet.

Ted Mortonson, technology strategist at Baird, the Milwaukee-based investment firm, says there are good reasons for elevated valuations. He says that we’re in “the most powerful integrated technology growth cycle since the late 1990s,” pointing to the acceleration of cloud computing, e-commerce, and telehealth, and the arrival of fifth-generation, or 5G, wireless and new chips. It all adds up to big growth potential at a time when there’s limited growth in other industries. Growth investors have bought tech stocks, he says, because they’ve had few other choices.
_
The following were identified as 'Cheap Tech':






Doesn't really appeal to me, basically because I don't want to buy 10 names and monitor them all and second, they are not (to me anyway) seemingly direct Ecommerce based stocks like AMZN, BABA, etc.

Here however is an interesting ETF.






Which holds:






Now most of those names are a complete mystery. They are located all over the world. So certainly diversified.

Unfortunately I missed this at the really opportune time, mostly because there are so many ETFs now that actually keeping track of them all is almost a job in itself.

Currently I am undecided whether just to buy and close my eyes (working out well for tech/a and TSLA) or wait for some sort of pullback. 

This is clearly one one of those psychological issues that are being discussed on the 'Dump It' thread. The internal dialogue would go something like this:

If I buy it now, it will drop 50% because s*** like that always happens to me. If I don't buy it now, it won't pullback and it will run 300% and I'll have to pay or stay out.

Now I hate, HATE chasing stocks. I refused to chase AMZN, GOOG, and I liked those stocks at IPO because I use them all of the time. I never did buy them. Look where they are now.

So clearly that strategy failed. I need a strategy that will allow the purchase. Therefore if I buy today (Monday) I need to prepare for a pullback to whatever. On that pullback, I increase my position. I can average down with the best of them, red ink just doesn't bother me in the short term. I won't do it with individual stocks, because they may go down and never return. With an ETF that is still possible, but less likely. Therefore I can live with it (the risk).

The general thesis is (in case you missed it) that Ecommerce (post COVID, but not because of COVID) this space will grow worldwide, catching up the leaders (AMZN) in their own markets.

So I will add on Monday.

jog on
duc


----------



## qldfrog

ducati916 said:


> Now on the thread 'Economic Implications', I haven't seen an awful lot on what to buy as a consequence of COVID. Tech has outperformed and the usual names never really got that cheap and when they bounced, simply ran away. Now I am not really a tech chap so my vision is pretty limited in this space.
> 
> Ecommerce would seem (in America/Europe/China) to be a solid choice going forward:
> 
> _For years, investors bid up tech stocks on the idea that digital transformation was inevitable. The Covid-19 crisis has proved them right. “We have seen two years’ worth of digital transformation in two months,” Microsoft CEO Satya Nadella recently told investors._
> 
> _“I’ve been following tech for 41 years, and this is the second most expensive tech market I’ve ever seen”—second only to the internet bubble 20 years ago, says Fred Hickey, editor of the High Tech Strategist, a monthly newsletter. Hickey has long been skeptical of tech valuations, but this time the fundamentals are on his side. The Nasdaq Composite currently trades at 3.4 times forward sales, well above a 10-year average of 2.3, according to FactSet._
> 
> _Ted Mortonson, technology strategist at Baird, the Milwaukee-based investment firm, says there are good reasons for elevated valuations. He says that we’re in “the most powerful integrated technology growth cycle since the late 1990s,” pointing to the acceleration of cloud computing, e-commerce, and telehealth, and the arrival of fifth-generation, or 5G, wireless and new chips. It all adds up to big growth potential at a time when there’s limited growth in other industries. Growth investors have bought tech stocks, he says, because they’ve had few other choices._
> 
> The following were identified as 'Cheap Tech':
> 
> View attachment 105065
> 
> 
> Doesn't really appeal to me, basically because I don't want to buy 10 names and monitor them all and second, they are not (to me anyway) seemingly direct Ecommerce based stocks like AMZN, BABA, etc.
> 
> Here however is an interesting ETF.
> 
> View attachment 105067
> 
> 
> Which holds:
> 
> View attachment 105066
> 
> 
> Now most of those names are a complete mystery. They are located all over the world. So certainly diversified.
> 
> Unfortunately I missed this at the really opportune time, mostly because there are so many ETFs now that actually keeping track of them all is almost a job in itself.
> 
> Currently I am undecided whether just to buy and close my eyes (working out well for tech/a and TSLA) or wait for some sort of pullback.
> 
> This is clearly one one of those psychological issues that are being discussed on the 'Dump It' thread. The internal dialogue would go something like this:
> 
> If I buy it now, it will drop 50% because s*** like that always happens to me. If I don't buy it now, it won't pullback and it will run 300% and I'll have to pay or stay out.
> 
> Now I hate, HATE chasing stocks. I refused to chase AMZN, GOOG, and I liked those stocks at IPO because I use them all of the time. I never did buy them. Look where they are now.
> 
> So clearly that strategy failed. I need a strategy that will allow the purchase. Therefore if I buy today (Monday) I need to prepare for a pullback to whatever. On that pullback, I increase my position. I can average down with the best of them, red ink just doesn't bother me in the short term. I won't do it with individual stocks, because they may go down and never return. With an ETF that is still possible, but less likely. Therefore I can live with it (the risk).
> 
> The general thesis is (in case you missed it) that Ecommerce (post COVID, but not because of COVID) this space will grow worldwide, catching up the leaders (AMZN) in their own markets.
> 
> So I will add on Monday.
> 
> jog on
> duc



If this helps on EMQQ stocks, i recognised most of these from China.try to get a geographical breakdown but i suspect it is heavily China weighted..
Do not mean it is a good or bad thing, just many names i recognise from there but not common in the west...yet


----------



## ducati916

qldfrog said:


> If this helps on EMQQ stocks, i recognised most of these from China.try to get a geographical breakdown but i suspect it is heavily China weighted..
> Do not mean it is a good or bad thing, just many names i recognise from there but not common in the west...yet





I would tend to agree. The list:

Nasper: South Africa;
3690: Hong Kong;
PDD: China/India;
MELI: Argentina;
PRX: Netherlands;
035420: S. Korea;
JD: China/India;
SE: ?;
YNDX: Russia;
DHER: Germany.

The rest BABA, obviously China.

The thing with Ecommerce is that it transcends borders. You still get that globalisation meme which in the current environment (medically, politically) is absent/reducing. It is also (pretty clearly) a growth industry. You can argue that China will censor their markets etc. True. But the internal Chinese market is significant in any case. BABA already deals directly with AMZN and this will only continue to expand.

On this ETF, I'm willing to pay up. Of course I wish I had seen it at $25. Life.

jog on
duc


----------



## ducati916

So it trades in lockstep with the QQQ. Hardly a surprise.






jog on
duc


----------



## ducati916

This chap is obviously frustrated with the market. In the following post he raises all the reasons why he believes that this market is simply a castle in the sky. We have listed as reasons:

(a) Unemployment;
(b) Bankruptcies;
(c) Falling Fed. Balance Sheet;
(d) Daytraders;
(e) Extended rally;
(f) Credit markets moving from frozen to red hot.

None of these variables are new. They have been on the news desk for weeks. The market has already ignored them all.

_I hate shorting. The risk-reward relationship is out of whack. It feels crappy. I lost a ton of money shorting the worst highfliers a little too early in late 1999. It’s just nuts to short this market that is even crazier than in late 1999. But Friday morning, I shared in a comment in our illustrious comment section that I’d just shorted the SPDR S&P 500 ETF (NYSEARCA:SPY). My time frame is several months.

I’m sharing this trade so that everyone gets to ridicule me and hail me as a moron and have fun at my expense in the comments for weeks and months every time the market goes up. And I do not recommend shorting this market; it’s nuts. But here’s why I did.

The stock market had just gone through what was termed the “greatest 50-day rally in history.” The S&P 500 index had skyrocketed 47% from the intraday low on March 23 (2,192) to the close on June 8 (3,232). It was a blistering phenomenal rally. Since June 8, the market has gotten off track but not by much. It’s still a phenomenal rally. And it came during the worst economy in my lifetime.

There are now 29.2 million people on state and federal unemployment insurance. There are many more who’ve lost their work who are either ineligible for unemployment insurance or whose state hasn’t processed the claim yet, and when they’re all added up, they amount to over 20% of the labor force. This is horrible.

But stocks just kept surging even as millions of people lost their jobs each week. The more gut-wrenching the unemployment-insurance data, the more stocks soared.


Then there is the desperate plight many companies find themselves in, and not just the airlines – Delta (NYSE:DAL) warned of a host of existential issues including that revenues collapsed by 90% in the second quarter – or cruise lines – Carnival (NYSE:CCL) just reported a revenue collapse of 85% in Q2, generating a $4.4 billion loss, and it is selling some of its ships to shed the expense of keeping them.

These companies are in sheer survival mode, and they’re raising enormous amounts of money by selling junk bonds and shares so that they have enough cash to burn to get through this crisis.

This crisis hit manufacturers whose plants were shut down. It hit retailers and sent a number of them into bankruptcy court. It crushed clinics and hospitals that specialize in elective procedures. It shut down dental offices. It sent two rental car companies into bankruptcy court – Hertz (NYSE:HTZ) and Advantage. It has wreaked untold havoc among hotels and restaurants, from large chains to small operations. And yet, stocks kept surging.

The situation has gotten so silly in the stock market that the shares of bankrupt Hertz – which will likely become worthless in the restructuring as creditors will end up getting the company – were skyrocketing from something like $0.40 a share on May 26 to $6.28 intraday on June 8, which may well go down in history as the craziest moment of the crazy rally.

There were stories of a new generation of stuck-at-home day-traders driving up the shares looking for their instant get-rich-quick scheme. And those that could get out at the top made a bundle (but HTZ closed at $1.73 Friday).

The smart folks at Hertz and their underwriters, Jefferies LLC, saw all these sitting ducks ripe for the taking, and they came up with a heroic plan to sell up to $1 billion in new shares into this crazy market, while informing investors that those new shares would likely become worthless in the bankruptcy proceedings.

The bankruptcy judge – likely shaking head in despair – approved it. As HTZ began plunging, the size of the offering was reduced to $500 million. This would have been like a donation to the company’s creditors, who now run the show.


Hertz would have likely been able to pull off this stunt in this crazy market, but then someone at the SEC woke up and asked some questions, which put the whole escapade on hold. But you can’t blame Hertz. They need money badly, and they’re just going where the easy money is.

Even during the crazy dotcom bubble in late 1999 and early 2000, the day-trader frenzy hadn’t reached these levels. But back in 1999, the economy was strong. Now this is the worst economy of my lifetime.

This kind of frenzy has been everywhere in recent weeks. They bid up nearly everything unless it filed for bankruptcy – and even then, they bid it up, as Hertz has shown. This would have been an inexplicable rally in normal times. But these are not normal times.

These are the times of record Federal Reserve money printing. Between March 11 and June 17, the Fed printed $2.8 trillion and threw them at the markets – frontloading the whole thing by printing $2.3 trillion in the first month.

And in this manner, the otherwise inexplicable frenzy became explicable: The Fed did it. And everyone was going along for the ride. Don’t fight the Fed. Spreading $2.3 trillion around in one month and $2.8 trillion in three months – in addition to whatever other central banks globally were spreading around – was an unprecedented event. And the fireworks probably surprised even the Fed.

Credit markets that had been freezing up for junk-rated companies suddenly turned red-hot, and speculators started chasing everything, including junk bonds sold by cruise lines and airlines though their revenues had plunged 80% or 90% and though they were burning cash at a stunning rate. The Fed’s newly created money went to work, driving up stock prices.

But over the past six weeks something new was developing: While the Fed was talking about all the asset purchase programs it would establish via its new alphabet-soup of SPVs, it actually curtailed the overall level of its purchases.

Then in the week ended June 10, the Fed’s total assets of $7.1 trillion increased by less than $4 billion. And in the week ended June 17, its total assets actually fell by $74 billion (you can read my analysis of the Fed’s balance sheet here). This chart of the week-over-week change in total assets shows how the Fed frontloaded its QE in March and April, and how it then systematically backed off:






And there is another big shift in how the Fed is now approaching the crisis. It’s shifting its lending and asset purchases away from propping up financial markets toward propping up consumption by states and businesses, and ultimately spending by workers/consumers via its municipal lending facility, its PPP loan facility, and its main-street lending facility. These funds are finally flowing into consumption and not asset prices.

So the superpower that created $2.8 trillion and threw it at this market, and that everyone was riding along with, has stopped propping up asset prices.

And now the market, immensely bloated and overweight after its greatest 50-day rally ever, has to stand on its own feet, during the worst economy in my lifetime, amid some of the worst corporate earnings approaching the light of the day, while over 30 million people lost their jobs. It’s a terrible gut-wrenching scenario all around.

And so I stuck my neck out, and I’m sharing this trade for your future entertainment when it goes awry, and you get to have fun at my expense and hail me as the obliterating moron that infamously shorted the greatest stock market rally of all times as it was floating weightlessly ever higher above the worst economic and corporate crisis imaginable.
_
Why, when the market has clearly ignored all of the above, does he think that a second collapse is imminent? This is an example of psychology gone awry. You hate the market. You are not going to buy it. Emotional. Irrational. But understandable. What is not understandable is that there is a material difference in refusing to be sucked into what you hate and shorting the market out of spite because you hate it. That is emotional trading of the 1'st order. There doesn't even seem to be an exit plan contemplated: in a couple of months is the plan. Possibly that works, but, not a great starting point if it doesn't. Last, this chap doesn't short very often. He doesn't like it. Shorting is very different to being long. It feels very different (never mind your losses are potentially uncapped). I doubt he'll last a couple of months if the trade doesn't go his way almost immediately.

We'll just have to wait and see how it works out.

jog on
duc


----------



## frugal.rock

G'day Duc,
Was wondering about this chart.




Can you, or someone else, please explain it to me in simpletons form? 
It's all way out of my league.
If the dark blue is swaps USD with AUD, what's the big drop about on the last bar?
What relevance, if any, does this have for AU markets?
Not sure what the BOE represents either.
Cheers.

F.Rock
Edit, is BOE the Bank of England ?


----------



## Chronos-Plutus

ducati916 said:


> So you missed the bottom. You missed the bounce. You are not happy. All is not lost. The 'small' banks have not really joined the main show. They will at some point. I'll be opening a position in the AM.
> 
> View attachment 105001
> 
> 
> View attachment 105000
> 
> 
> DPST is the x3 leverage of the small banking sector (KRE). It pays an 8% dividend (hence my interest in bank dividends) which may or may not be 'safe'.
> 
> View attachment 105003
> 
> 
> The train has not left the station. Last whistle sounding.
> 
> jog on
> duc




I appreciate your effort on the market analysis; however I am sitting this out. Not buying into this rally.


----------



## ducati916

frugal.rock said:


> G'day Duc,
> Was wondering about this chart.
> 
> 
> 
> 
> Can you, or someone else, please explain it to me in simpletons form?
> It's all way out of my league.
> If the dark blue is swaps USD with AUD, what's the big drop about on the last bar?
> What relevance, if any, does this have for AU markets?
> Not sure what the BOE represents either.
> Cheers.
> 
> F.Rock
> Edit, is BOE the Bank of England ?





1. A liquidity swap is a swap of US dollars for Aus$ or whatever. It is to provide liquidity in US dollars to that (Australia's CB) bank. Usually because there are US dollar denominated loans and payment is difficult impossible because of dollar shortage. This is what happened in 1997 with the Asian crisis: lack of US dollars but dollar denominated loans.

2. The drop simply means that US dollar swaps have reduced. The important question is why have they reduced? Off the top of my head I don't know why.

3. BOE = Bank of England located in Threadneedle St.

jog on
duc


----------



## ducati916

Chronos-Plutus said:


> I appreciate your effort on the market analysis; however I am sitting this out. Not buying into this rally.




Which of course is totally rational if it does not gell with your trading style.

jog on
duc


----------



## ducati916

So we had the usual w/e dramas.






Futures reflected the news. Remember these chaps are largely retail and foreign traders. 

Currently:






We've had a nice pullback from the lows.  Nothing really suggestive that the market will not trade higher come Monday morning. I'll keep an eye on them through the day.

jog on
duc


----------



## dyna

ducati916 said:


> Why would I want to buy the Banks? (Which I opened today via DPST).
> 
> Credit Spreads.
> 
> View attachment 105010
> 
> 
> We had the same issues in 2008/09. Well if you look at the chart, the spreads blew out even more. As they came back into alignment, so the stockmarket started its inexorable rise.
> 
> The COVID crisis had not really impacted actual NPLs to progress to blow-ups on the scale that occurred in 2008. This is because the Fed. jumped in from Day 1.
> 
> One area or sector of the market where credit issues are extremely important are the Banks. Not so much the big chaps, they have always been recipients of bailouts, but the little chaps. No bull market will proceed without an intact and functioning financial system, which means the banking system.
> 
> Now banking is the most opaque set of financials you will ever have the misfortune to read through, if you bother reading the financials. Even then, 9/10 you still won't have the true picture. Trying to read your way through hundreds of banking financials is simply not possible for anyone other than an analyst working full time on nothing but the banking sector. Even then, hardly worth the effort as there are no superstars like TSLA in there. Banking is a low margin business.
> 
> As a group however, they can offer solid returns + dividends. If you have ever read 'One up on Wall St.' by Peter Lynch and his second book, you'll know he loved the banking sector. He bought them wholesale. So the ETF KRE holds:
> 
> View attachment 105012
> 
> 
> Notice the tiny %. The largest is 4%+/-. Nothing in this is in a blowup going to hurt you. You get hurt if the whole sector blowsup. Now that the Fed. is backstopping them also, we know that that is not going to happen.
> 
> As stated, banks are not a TSLA. They are not going to excite you overmuch. So we have DPST. The x3 ETF of KRE. Now a second advantage of DPST is that we also have the inverse which is WDRW. Now, if we so choose, when we rebalance into a drawdown, we can choose to add some juice and go short.
> 
> So last week we ended with a plunge in the market. We had a few doom and gloomers make prognostications that COVID was back, blah, blah. The week opened and we moved higher and have had some red days, some wobbles and the market would seem to the casual observer to be uncertain. There is lots of news: AAPL closing (re-closing) stores, take your pick, there are negative news stories everywhere.
> 
> We had yesterday news around 'Witching day Options Expiry'. If you are looking for bad news to confirm your belief that the market is going to crash, you will find it. You can argue that what I post is also 'news': which of course it is. The test is: what news is noise, what news is signal for markets.
> 
> Looking at the internals:
> 
> View attachment 105011
> 
> 
> The market is solid. There are some rotations. There are sectors that are red hot (Tech) and are just taking a breather and there are sectors that are lagging behind, but are now potentially ready to make a move in support of the overall market. This is not news. This is fact. Can it change? In a heartbeat. When it changes is when we bail out.
> 
> There are going to be a couple of technical hurdles: (a) the previous high and (b) the all time high (for SPY, the QQQ are already through just their new all time high). To break through is a function of all sectors contributing to the move. Most are ready to move. Energy is a notable exception, but they will likely join later in the year as the issues work themselves out.
> 
> jog on
> duc



Bit off-topic,here.That Peter Lynch book was  first sold in Oz,way back in the Bank Card era.He had a lot to say about the way banks ripped off their clients with credit cards  and I remember thinking,well that'll never catch on here.We aussies are way too smart to fall for that bank rip-off.How time change.....


----------



## ducati916

Still moving higher.

Wall St. not watching what you think they might be watching:






jog on
duc


----------



## over9k

Huge jump in my stay-at-home positions today, and mortgage delinquencies just hit their highest level since 2011.

If anything's going to spook the fed into more QE, mortgage defaults would surely be it.

When do your models say we're going to see another bounce duc?


----------



## over9k

I ask because we haven't seen the bounce that you predicted today and we've seen a flat nasdaq and declining djia & sp500 for just over a fortnight now, exactly as I predicted:














I'm going to see if I can find some data tracking virus numbers to mortgage delinquencies. If I can't then I'll throw it together myself then post it in here.


----------



## Chronos-Plutus

over9k said:


> I ask because we haven't seen the bounce that you predicted today and we've seen a flat nasdaq and declining djia & sp500 for just over a fortnight now, exactly as I predicted:
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> I'm going to see if I can find some data tracking virus numbers to mortgage delinquencies. If I can't then I'll throw it together myself then post it in here.




Bad home sale data just released from the USA:





Then we got heaps of data being released today from USA, UK and EU:


----------



## over9k

Yes I'm just wondering what point we'll need to get to for an admission that virus data is now the leading/precursor metric to all the others.

Not being prickly - at what point do you go "ok it's now time to pay attention to virus data, not all the traditional indicators"?

Global markets are also in the toilet


----------



## Chronos-Plutus

over9k said:


> Yes I'm just wondering what point we'll need to get to for an admission that virus data is now the leading/precursor metric to all the others.
> 
> Not being prickly - at what point do you go "ok it's now time to pay attention to virus data, not all the traditional indicators"?
> 
> Global markets are also in the toilet




I think we have to wait for company earnings reporting before the market awakes from its inflated FED induced zombification. Even bad economic data isn't really moving the market much.


----------



## over9k

Lol there's even been a U.S market bounce since I made that last post XD 

We'll see what it closes at.


----------



## Chronos-Plutus

over9k said:


> Lol there's even been a U.S market bounce since I made that last post XD
> 
> We'll see what it closes at.




The retail Robin Hooders buying the dips apparently. The large investment banks, like UBS, are cautioning their clients about buying into the inflated equity market.


----------



## over9k

Yeah the whole eurozone closed negative so we'll see. I'm up 3% for the night and climbing so I'm happy.


----------



## Chronos-Plutus

over9k said:


> Yeah the whole eurozone closed negative so we'll see. I'm up 3% for the night and climbing so I'm happy.



The DOW has been whipsawing between ~25000 and ~26000. The large companies start reporting in July, so it will be interesting to see how the market reacts.


----------



## over9k

I've mentioned a few times that virus data takes 2-3 weeks to show up from date of infection. 

There's also the employment numbers on the 3rd of july which will apparently be far lower than the last batch due to a collection error last time around - not sure how true that is though as I haven't looked into it at all aside from reading it on bloomberg.


----------



## Chronos-Plutus

over9k said:


> I've mentioned a few times that virus data takes 2-3 weeks to show up from date of infection.
> 
> There's also the employment numbers on the 3rd of july which will apparently be far lower than the last batch due to a collection error last time around - not sure how true that is though as I haven't looked into it at all aside from reading it on bloomberg.




So it looks like we are heading for a perfect storm around early to mid July. Terrible company earnings combined with the latent effect of the terrible virus data.


----------



## ducati916

So Monday morning and we have the market trading higher:






The Tech sector is obviously on fire (observe QQQ) however the Tech sector is growing in S&P500






We have some laggards.  We also have this headline:






Which if accurate is a healthy development for the market overall (it is correct, this is something I follow closely).

From last week:






The trend is still on-track.

Earnings will add some volatility to the mix, but I dealt with this topic last week also: forward guidance. Everyone and their granny knows earnings are going to be disappointing. What counts (and has counted for quite some time) is forward guidance. Those that can in the future, will receive the love today.

There are some major macro-trends shaking out going forward, which I am paying attention to. Nothing that is around the corner so to speak, but trends that could drive the next 5yrs or so going forward.

COVID headlines






Remain irrelevant.

The initial target (obviously) will be the previous high of last week. The Bears will (probably) try and draw a line-in-the-stand at this level. We'll look at it later.

jog on
duc


----------



## over9k

Duc - at what point would you go "ok, time to pay attention to the virus data, not the traditional indicators"?


----------



## Chronos-Plutus

over9k said:


> Duc - at what point would you go "ok, time to pay attention to the virus data, not the traditional indicators"?



Peter Navarro has just announced that there isn't going to be a trade deal with China now:
*Peter Navarro declares trade deal between Trump, China is 'over' (https://www.foxnews.com/media/peter-navarro-trump-china-trade-deal-over)*


----------



## over9k

A lot of the ASX also tanked yesterday in response to the bump in virus cases in victoria. I appreciate that this thread is about USA, but it's food for thought nonetheless.

Also worth nothing that the stay-at-home stocks in the U.S are still gaining WAY above the market overall. Zoom was ~3.5% last night alone.


----------



## ducati916

So just a little update.






First up this is simply my fluctuation gauge. You can see easily enough, the top band means the market is running hot and will probably have a pullback. Nothing to worry about. A healthy market. So how to differentiate a serious pullback to just a garden variety. Chart #2






Chart #2 looks for divergences. Note the major divergence before we plunged. Note the divergence right at the far right of the chart in late July 2019 and note the lack of divergence in the last correction that we had.

Therefore chart #1 indicates we are running hot. Chart #2 tells me just how much of an issue it might be. Chart #2 has a further 'fundamental' filter, which I update on a daily basis. When this chart flashes sell, you will always find confirmation on chart #2, sometimes a few days or a week or two later. I will always sell/lighten/hedge on the fundamental signal.

Currently the market is running red hot. There will be a fair bit of chop in the continuing trend, which will keep many out of the market or singing songs of doom. It could potentially be smoothed out somewhat by lagging sectors catching up to the red hot Tech sector. So for the moment: sit tight, trade the trend and do not be scared out of positions as getting back in can be tough when you have to buy back in higher than when you sold out.

jog on
duc


----------



## ducati916

Some news (analysis):

_Consider two sentiment polls this past week. Bank of America’s June Fund Manager Survey indicated a majority believe we’re still in a bear-market rally (even if the bear market has technically been erased). A weekly survey from the American Association of Individual Investors, meanwhile, showed expectations for stock prices to fall over the next six months outpacing expectations for stock prices to rise by about 2-to-1.

It makes sense that investors would be skeptical about how quickly the market has run from March lows, given that more than 20 million Americans remain unemployed, corporate earnings are collapsing, and coronavirus cases are back on the rise. But upside economic surprises over the past two weeks—mortgage applications hit the highest level since 2008, retail sales rose at the fastest pace ever, and U.S. businesses added 2.5 million jobs in May instead of cutting an anticipated eight million, to name a few—are even better than they look and offer at least some proof that the stock-market rebound was driven by expectations for improving fundamentals.

The point isn’t that economic data are improving; of course they are as the economy reopens. It’s about the magnitude of the surprises versus Wall Street’s expectations. Citi’s U.S. Economic Surprise Index, calculated daily to reflect data relative to expectations, is at about 75, the highest since the beginning of 2018 and up from minus-140 at the start of May.

While he acknowledges it’s possible that any forthcoming rise in profit estimates is already baked in, he says a revival in Wall Street earnings expectations would broaden confidence that the U.S. economy has started a new expansion and that the recent stock-market rally is the beginning of a new bull run. This, Paulsen says, should alleviate what he calls a central fear that the stock market is highly overvalued.

To that point, Paulsen went back over the past three decades to find that the current price/earnings multiple for the S&P 500 (using a blended P/E based on an average of the past 12 months’ earnings and the forecast future 12 months’ earnings) isn’t all that much higher than where it was at the start of each of the last three economic recoveries in 1992-93, 2002, and late 2009 into early 2010. “Despite P/E ratios being very high in each of those occurrences, they turned out to be excellent buying opportunities,” he says, likening the current market to a cyclical stock for which, during recessions, earnings crumble and valuations appear too rich. Few have made money waiting to buy a cyclical stock at a low P/E, he adds.
_
jog on
duc


----------



## over9k

Duc - I think it worth noting the distinction between tech and stay-at-home tech. There's some huge differences between the two. It's the stay-at-home stuff that's really red hot, the rest of it is pretty meh.


----------



## over9k

over9k said:


> A lot of the ASX also tanked yesterday in response to the bump in virus cases in victoria. I appreciate that this thread is about USA, but it's food for thought nonetheless.
> 
> Also worth nothing that the stay-at-home stocks in the U.S are still gaining WAY above the market overall. Zoom was ~3.5% last night alone.



Ugh. Noting. Worth *noting*.


----------



## Iggy_Pop

over9k said:


> Duc - at what point would you go "ok, time to pay attention to the virus data, not the traditional indicators"?



From my perspective, the virus data is not considered as big a threat as at the start of the pandemic. There are a number of reasons for this and this also leads to some of the complacency seen is different parts of the world. 

The impact of covid 19 is better understood
There are many companies working on a possible vaccine
Even without a vaccine, many drugs have been tested on patients with covid19 with some success with reduction in fatalities
I remember at the start, one of the biggest issues was hospitals being overwhelmed, but hospitals have been built in a few weeks, manufacturers started making ventilators, finding health staff in retirement etc.
We are all adjusting to doing things different, washing hands, social distancing, avoiding large crowds, wearing masks and gloves etc. Even the demonstrations recently in Australia, while not a smart thing to attend, do not seem to have had any real impact.
While some countries are struggling with the virus cases increase, the death rate compared to case numbers seems to be getting lower for what ever reason. 
The world has seen countries like Italy go through extreme challenges and then get on top of things. The deaths in these countries has been tragic, but life is starting to return to normal. 
We will see spikes and possible second waves but we are in a better position to manage these than a few months ago.
Fundamentally, investors are seeing through the end of the pandemic and a new world which will be a bit different than what it was, but things will return to some sort of normal, even with a few spikes and second waves in some regions. 
Iggy


----------



## over9k

Stay-at-home tech being the overwhelming contributor to the overall market improvement(s) we're now seeing: 






With the megatech having such a weighting in the index, it's little wonder we see an overall bump. Take the stay-at-home tech out of things and it's a very different picture. Just on open there's a 1% bump in the sp500 but the equal weight index is just 0.16%. 6x the difference. Remove tech, and it's actually a slump. 

Like I said/did, put your money into say-at-home tech - remember, the rest of tech's gone nowhere (e.g intel & AMD). Hell, if you want to put things on total autopilot, dump it into a tech index fund. 

Virtually ALL the gains are coming from stay at home tech.


----------



## Chronos-Plutus

over9k said:


> Stay-at-home tech being the overwhelming contributor to the overall market improvement(s) we're now seeing:
> 
> 
> 
> 
> 
> 
> With the megatech having such a weighting in the index, it's little wonder we see an overall bump. Take the stay-at-home tech out of things and it's a very different picture. Just on open there's a 1% bump in the sp500 but the equal weight index is just 0.16%. 6x the difference. Remove tech, and it's actually a slump.
> 
> Like I said/did, put your money into say-at-home tech - remember, the rest of tech's gone nowhere (e.g intel & AMD). Hell, if you want to put things on total autopilot, dump it into a tech index fund.
> 
> Virtually ALL the gains are coming from stay at home tech.




I thought about our discussion the other day with global investment and trade:

We need the Australian FIRB to provide exemptions for UK private investors, with the exception of a proxy.


----------



## over9k

Wanna remake that post in the other thread and we'll chat there? Don't want to derail this one


----------



## Chronos-Plutus

over9k said:


> Wanna remake that post in the other thread and we'll chat there? Don't want to derail this one




I can have a coffee, and stay up for the next few hours; however I have made my comments.

Wall Street is pumping now; that is the main thing to keep people happy.

Speak tonight, Australian time.


----------



## Chronos-Plutus

Chronos-Plutus said:


> I can have a coffee, and stay up for the next few hours; however I have made my comments.
> 
> Wall Street is pumping now; that is the main thing to keep people happy.
> 
> Speak tonight, Australian time.



Don't get upset if the market tanks though.


----------



## ducati916

A follow up article:

_Legendary 19th century financier JP Morgan said, “A man generally has two good reasons for doing a thing—one that sounds good, and a real one.” Pundits cite loads of seemingly smart reasons you should dismiss global stocks’ rally since March. But their real reason? Admitting the upturn is real also admits they were wrong. Tough for most of us! So instead, they grasp for anything supporting their prior negativity. Behavioral psychologists see this as a subset of “confirmation bias.” It drives the “Pessimism of Disbelief”—the foundation of every new bull market, as I highlighted in May. Those falling prey it to suffer a costly but simple behavioral error.

After late-stage bear markets’ steep, panicky plunges, battered investors get myopic. They fixate on bad news, spinning any positives into negatives—like now. That’s the Pessimism of Disbelief. It sets expectations so low almost any eventuality lifts stocks, force feeding a new bull market in the process. It persists for a long time. But why … cycle in, cycle out, always? Why does it persist as stocks rise?

Simple: Confirmation bias—the ubiquitous tendency to see what we want to see or believe we should see—while not seeing contradictory evidence. When most buy a stock that rises they think they were smart and accumulate pride. But if it drops, they’ll blame distractions, illness, their spouse—anything other than themselves. It’s called accumulating pride and shunning regret. Humans have done it forever. It motivates us to keep trying, which was essential in Stone Age days and helps in lots of things now. But it hurts us all in stock markets.

Today, it causes most experts and investors to deny they were wrong since late March. The rally is fake they say—all “stimulus” optimism which boosted valuations unjustifiably high, teeing up another drop. They hype any resurgent volatility, like mid-June’s, as vindication. Or they argue euphoric investors ignore a potential second COVID wave. Or the rally is all Millennials day-trading on Robinhood. Or surging US debt will doom the dollar and zap markets. Or, or, or! It surely isn’t a sustainable new bull market, they grumble. The higher stocks climb, the more vehement the dismissals grow.

This happens in every new bull market, without fail. Consider the last one to see confirmation bias run wild. In 2009, stocks soared off March lows while bears shrieking “sucker’s rally!” grasped at bogeymen. Deflation. Consumers unable or unwilling to spend. A “New Normal” of lower returns for decades. Confirmation bias built well into 2010. Remember all those double-dip recession fears? Massive inflation’s inevitability? The looming municipal default deluge? To disbelievers, these weren’t reasons a new bull market would end. They were reasons it should never have started. In doubling down, they got it doubly wrong.

Confirmation bias makes disbelievers overlook a simple, basic truth: Markets never dwell on today—they look forward, somewhere from 3 to 30 months ahead. Exactly how far shifts unpredictably, but once economic contraction hits and negativity dominates news—like now—stocks are usually pre-pricing a far brighter future. They shift focus further out into that 3 – to- 30 month range. All the negatives pessimists tout are already factored into prices—rendering them incapable of triggering another big down leg. That would take new, big, bad problems no one has contemplated yet. With pessimists touting risks widely, I can’t see anything new stocks haven’t pre-priced to some degree.

Absent that new problem, this rally looks picture-perfect like every early bull market to me. Expect short-term volatility. Recoveries are always jagged, testing investors’ faith and shaking out the weak. But a retesting of March’s low? It would be historically unique. Consider: from February 19 through March 23’s low, the S&P 500 plunged -34%. Before mid-June’s volatility, it had recaptured over 75%of that decline. Since 1928, only two bear market or mid-correction rallies clawed back 75% of their drop and then headed down to retest lows—1957 and 2000. But they were different.

Both those rallies started before the declines even hit the -20% bear market threshold. Hence, they were absolutely much smaller than this year’s. In 1957, stocks fell -14.8%, recaptured 90% of that, and then headed lower—into bear market territory. In 2000, they fell -11.2%, regained nearly all that and continued their long, slow slog to 2002’s low. Neither was like now. At all! Those who call this upturn a head-fake project something unprecedented. That doesn’t mean impossible. It means unlikely.

This bear market began without warning. Nothing is certain, but dollar to a donut it ended the same way March 23rd. If you missed the rally so far, don’t compound your mistake. Look to that brighter 2022 and 2023 far-future—just like stocks do._

jog on
duc


----------



## ducati916

Approaching the gap and then the previous high. The QQQ have already blasted through and are now trading at all time highs. Clearly in a bull market.

Could 320 pose an issue? It might. Once the market closes we'll see where we sit, which will make any analysis a little clearer.

As regards 340, a lot of eyes will be on that level. There will be endless media discussions on whether it will hold or fail and all the pet theories will be on full display. I suspect that 320 will fall and that come Friday this week we will be close to the 340 level, where the week will end. The market will have the w/e to debate whether the 340 level holds or fails.

jog on
duc


----------



## ducati916

Probably not a great idea:

_President Donald Trump is picking another fight with the technology sector.

On Monday, the president took another swipe at the tech giants, suspending the issuance of H-1B visas through the end of the year. H-1B visas allow foreign workers with specific skills to work in the United States under the sponsorship of their employers. 

The ongoing debate about the H-1B visa program is whether tech companies really can’t find the talent they need at home—or whether they are using them to hire skilled but less expensive tech experts from outside the U.S. Tech industry leaders, venture capitalists and entrepreneurs take the view that restrictions on H-1B visas primarily have the effect of hurting the competitive position of U.S. companies, rather than protecting jobs for U.S. workers





_
jog on
duc


----------



## qldfrog

Iggy_Pop said:


> From my perspective, the virus data is not considered as big a threat as at the start of the pandemic. There are a number of reasons for this and this also leads to some of the complacency seen is different parts of the world.
> 
> The impact of covid 19 is better understood
> There are many companies working on a possible vaccine
> Even without a vaccine, many drugs have been tested on patients with covid19 with some success with reduction in fatalities
> I remember at the start, one of the biggest issues was hospitals being overwhelmed, but hospitals have been built in a few weeks, manufacturers started making ventilators, finding health staff in retirement etc.
> We are all adjusting to doing things different, washing hands, social distancing, avoiding large crowds, wearing masks and gloves etc. Even the demonstrations recently in Australia, while not a smart thing to attend, do not seem to have had any real impact.
> While some countries are struggling with the virus cases increase, the death rate compared to case numbers seems to be getting lower for what ever reason.
> The world has seen countries like Italy go through extreme challenges and then get on top of things. The deaths in these countries has been tragic, but life is starting to return to normal.
> We will see spikes and possible second waves but we are in a better position to manage these than a few months ago.
> Fundamentally, investors are seeing through the end of the pandemic and a new world which will be a bit different than what it was, but things will return to some sort of normal, even with a few spikes and second waves in some regions.
> Iggy



Better expressed and exactly my thoughts
 as usual, Australia will be a bit behind to catchup, not helped by its media feed..
.


----------



## qldfrog

Quick question Duc
You are a New Zelander, interested mostly in the us market. We can notice very early posting Australia/NZ time
Are you physically based in the US or do you have an early wake up time /work by night to follow the US market.if so, must not be easy 
And thanks for taking the extra time for sharing.


----------



## ducati916

qldfrog said:


> Quick question Duc
> You are a New Zelander, interested mostly in the us market. We can notice very early posting Australia/NZ time
> Are you physically based in the US or do you have an early wake up time /work by night to follow the US market.if so, must not be easy
> And thanks for taking the extra time for sharing.





I'm your cousin from across the English Channel, living in Auckland. I'm just an early bird.

jog on
duc


----------



## ducati916

Just having my first coffee of the morning in a sea of red. Who is nervous? Currently it is simply the market rebalancing.






Notice the 50SMA rising from below.






We have most sectors (pretty much everything excluding Tech) settling from red hot to something more sustainable. The move has brought the Utilities sector back below its 50-day moving average. At the moment, it is the only sector below its 50-DMA. 

Technology and Communication Services stocks have continued to press higher up 2.35% and 1.05% in the past week respectively.  Now the Tech sector is over 10% above its 50-DMA and is easily the most overbought sector. Alongside Tech, Communication Services and Consumer Discretionary are the only other sectors that are currently overbought. Most of the other sectors were overbought within the past week but recent declines have left them in neutral territory.

Before declines in the past few weeks, some of these had even traded at over 2 standard deviations above their 50-DMAs. With most having since returned to neutral territory, they broadly remain off their highs, though, Consumer Discretionary and Technology are trading around fresh 52 week highs.













Since the low on 23 March, Technology has been overbought more than 50% of trading days and both Communication Services and Consumer Discretionary have been overbought for 47.06% of days. Given these three sectors account for just under half of the weight of the whole S&P 500, the broader index has not been far behind trading overbought for 38% of days since 3/23. Looking at the other end of the spectrum, Consumer Staples has been overbought the least at only 7.35% of days.  Other groups that were stronger during the bear market but have since seen performance wane like Health Care and Utilities also have been overbought far less frequently.






We are once again contesting the 300 level +/-. Previously I stated that we could get a correction in price or time. 






We are getting both. The correction is simply allowing the market to catch its breath. The bounce, into the trend, has been a sprint.

So we are now sitting at Tuesday. The previous high and all time high sit only a few % points away. To go through the all-time-high, the market will need (to be healthy) more than just one or two sectors. It will need the majority.






Nowhere near the spike of last time. The actual drop 7% +/- last time to 2% (at time of writing) this time round. Calm the farm.

jog on
duc


----------



## ducati916

And saying the same thing in a far more lighthearted manner, my man, flippe-floppe-flye:






jog on
duc


----------



## over9k

I don't want to burst anyone's bubble, but I feel like tomorrow's going to be a classic friday selloff. Today has undoubtedly given a lot of people a lot of jitters.


----------



## qldfrog

ducati916 said:


> I'm your cousin from across the English Channel, living in Auckland. I'm just an early bird.
> 
> jog on
> duc



a late night owl!!!! ;-)
All good, now i check your input before looking at the NYSE when I wake up ...
Have a great day
early bird myself by some standarts


----------



## over9k

I, meanwhile, have been up all night. 

0.25% in the red for the night. I'll take it.


----------



## qldfrog

over9k said:


> I, meanwhile, have been up all night.
> 
> 0.25% in the red for the night. I'll take it.



0% for the night and even a great sleep.i assume Zoom has been up the sky?how can you be in the red
Ok i am stirring sxxt...;-)


----------



## qldfrog

ducati916 said:


> And saying the same thing in a far more lighthearted manner, my man, flippe-floppe-flye:
> 
> View attachment 105200
> 
> 
> jog on
> duc



The only question:
Is flippe-floppe-flye your "nom de plume" / pen-name Duc?


----------



## ducati916

qldfrog said:


> The only question:
> Is flippe-floppe-flye your "nom de plume" / pen-name Duc?




No, he's a US based Fund manager.

jog on
duc


----------



## makteb

Time is our friend, it does not stir nor does it choose.  It does however tricks us to think now is important.
We creatures with emotions chose from the choices time allows.
Choose wisely, deja vu has taught us all, if only i spent time in the market and not timing the market.  
Very few has the skills to time the market.
When equities, indices, derivatives or any asset class resets... it is nothing more than an opportunity to plan your trade and then trade your plan.

Everyday is a beautiful day...some are better than others.


----------



## over9k

qldfrog said:


> 0% for the night and even a great sleep.i assume Zoom has been up the sky?how can you be in the red
> Ok i am stirring sxxt...;-)



Yep zoom's my standout. 

Also just doublechecked my numbers from last night - I'm actually up 0.13%


----------



## over9k

Lots of green in the U.S tonight (though we're only an hour into the session). Looks like an overcorrection correction like we saw on the 12th, which was also a friday. But we'll see what it closes at.


----------



## ducati916

With stocks fluctuating, news stories everywhere trying to account for causation, what is actually going on in the market?

For that we need to look at this chart:






So here we have the US$ pitted against Commodities with the Stock Market in the background. This is the 'macro' picture. It is (far) slower moving, although, even this has 'speeded-up' currently.

We have record low yields in the US. The Stock Market loves low yields and all that liquidity. It hates (as we saw in the end of 2018 start 2019) the 'Taper Tantrum' and the removal of low yields.

What can threaten low yields? Inflation. Inflation is not the CPI. Central bankers could care less about consumers. It is the PPI inflation that they worry about. You can see on the far left of our chart, the US$ weakening against commodities: specifically Oil.






Now the POO had been in a long term decline based on all that new supply from the US via fracking etc. The POO would have been (reasonably) contained somewhere in the $40-$65 range. With the Saudi's launching an all-out assault on the POO, that new supply that was holding (disinflationary) price into that range, has been (probably) largely obliterated for the foreseeable future. This has resulted in POO rising back rapidly to the $40 range.

The question is: does it stop circa that $40/$60 range?

If not, the ultra-low rates become risky in that they will encourage inflation, which in this case is a falling US$ as against commodities or POO. What to do? Raise rates? The Stock Market will not love that.

So the macro story that is playing out slowly, sub rosa, is this developing inflationary risk. This won't be a quick developing story. It will take time. The second big macro force that is (obviously) going to influence inflation is the current de-globalisation. It was present prior to COVID in the Tariff war that the US was engaged in (primarily) with China. That rhetoric continues unabated from the White House. Then of course we had COVID which accelerated this force of de-globalisation even further, but paradoxically increased the disinflationary forces that will keep the forces of inflation far more muted than they may have been. The Oil war would have occurred with or without COVID, that was just coincidental. There are currently no signals from the macro side that are flashing an exit. However, as the chart indicates, it is something that the market will keep an eye on.

Stocks remain the place to be for the time being. Currently we are engaged in a 'time' correction coupled with the fast paced price correction of last week. Stocks are just catching up with themselves. Of course all of the various headlines compete with traders/investors attention as being causative and predictive.

Thinking more macro-strategy, you would want your portfolio to have allocations to: (a) commodities (I hold Oil Producers) which could be Oil/Gold/Silver (probably not agriculture as this is more weather dependent); (b) stocks that could benefit from a new cold war between the US and China (I hold DFEN); (c) more defensive based stocks with good steady yield. Clearly what you don't want to hold going forward if inflation develops are Bonds and other debt based investments.

As already stated, this is not a next week type of trade. Inflation may never present for years to come as the current disinflationary forces are very strong currently, even given the de-globalisationary forces currently present. If it does occur there will be ample warning.

jog on
duc


----------



## martyjames

Great insights Duc, thanks. Do you see the upcoming US election with a possible (probable?) Biden win as a potential stumbling block for the stock market?


----------



## ducati916

martyjames said:


> Great insights Duc, thanks. Do you see the upcoming US election with a possible (probable?) Biden win as a potential stumbling block for the stock market?





A Biden victory would probably be ok'ish.  Mr Bernie Saunders was the issue. Market would have tanked.

jog on
duc


----------



## ducati916

So finished work early and just checking through the news, because you just know that tomorrows price will be today's news....

Anyway: https://www.barchart.com/story/news...ns-for-stocks-on-wall-street-in-jumpy-trading

_Banks surged after the Fed and four regulatory agencies announced they’re going to change a rule that has limited banks’ ability to make investments in such areas as hedge funds. The rule change could free up billions of dollars in capital in the banking industry._

So as far as the market trend is concerned, this is good news as the market needs (requires) the financials to be on board. No financials, dodgy market.

Of course, that comes with the caveat: don't invest in Hedge Funds that blow-themselves the f***-up. There have been a couple of spectacular blow-ups recently in the Quant Vol strategy space. Think LTCM all over again, just not as big (this time although the leverage was getting up there again).

jog on
duc

*Even more banking news: https://www.barchart.com/story/news...g-banks-from-buying-back-stock-caps-dividends


----------



## Chronos-Plutus

ducati916 said:


> View attachment 105253
> 
> 
> So finished work early and just checking through the news, because you just know that tomorrows price will be today's news....
> 
> Anyway: https://www.barchart.com/story/news...ns-for-stocks-on-wall-street-in-jumpy-trading
> 
> _Banks surged after the Fed and four regulatory agencies announced they’re going to change a rule that has limited banks’ ability to make investments in such areas as hedge funds. The rule change could free up billions of dollars in capital in the banking industry._
> 
> So as far as the market trend is concerned, this is good news as the market needs (requires) the financials to be on board. No financials, dodgy market.
> 
> Of course, that comes with the caveat: don't invest in Hedge Funds that blow-themselves the f***-up. There have been a couple of spectacular blow-ups recently in the Quant Vol strategy space. Think LTCM all over again, just not as big (this time although the leverage was getting up there again).
> 
> jog on
> duc
> 
> *Even more banking news: https://www.barchart.com/story/news...g-banks-from-buying-back-stock-caps-dividends




There were quite a few positive press releases by the FED:

1. That the FED conducted a stress test for the banks and found that they are quite resilient: "The banking system has been a source of strength during this crisis," Vice Chair Randal K. Quarles said, "and the results of our sensitivity analyses show that our banks can remain strong in the face of even the harshest shocks."(https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200625c.htm)
Let's hope the FED have got it right here, but of course the FED have got the bank's back no matter what happens.

2. There will be no requirement for banks to hold an initial margin for swaps within/between their banking group/organization: "Under the final rule, entities that are part of the same banking organization generally will no longer be required to hold a specific amount of initial margin for uncleared swaps with each other, known as inter-affiliate swaps." (https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200625b.htm)

3. Prohibition for banking entities investing in hedge/private funds has been modified in these areas: "

Streamlining the covered funds portion of rule;
Addressing the extraterritorial treatment of certain foreign funds; and
Permitting banking entities to offer financial services and engage in other activities that do not raise concerns that the Volcker rule was intended to address." (https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200625a.htm)


----------



## ducati916

Chronos-Plutus said:


> There were quite a few positive press releases by the FED:
> 
> 1. That the FED conducted a stress test for the banks and found that they are quite resilient: "The banking system has been a source of strength during this crisis," Vice Chair Randal K. Quarles said, "and the results of our sensitivity analyses show that our banks can remain strong in the face of even the harshest shocks."(https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200625c.htm)
> Let's hope the FED have got it right here, but of course the FED have got the bank's back no matter what happens.
> 
> 2. There will be no requirement for banks to hold an initial margin for swaps within/between their banking group/organization: "Under the final rule, entities that are part of the same banking organization generally will no longer be required to hold a specific amount of initial margin for uncleared swaps with each other, known as inter-affiliate swaps." (https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200625b.htm)
> 
> 3. Prohibition for banking entities investing in hedge/private funds has been modified in these areas: "
> 
> Streamlining the covered funds portion of rule;
> Addressing the extraterritorial treatment of certain foreign funds; and
> Permitting banking entities to offer financial services and engage in other activities that do not raise concerns that the Volcker rule was intended to address." (https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200625a.htm)





It will be interesting to see how the market reacts to and assimilates the news. This is sector specific and is news that was signalled well in advance of the actual outcome (news).

Clearly there are both positives and negatives. The initial run today was ahead of the unreleased news (ceiling on dividends etc) and may create some volatility tomorrow. 

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> It will be interesting to see how the market reacts to and assimilates the news. This is sector specific and is news that was signalled well in advance of the actual outcome (news).
> 
> Clearly there are both positives and negatives. The initial run today was ahead of the unreleased news (ceiling on dividends etc) and may create some volatility tomorrow.
> 
> jog on
> duc




I think we are in for a bit of choppy market movements over the coming weeks with company data being released. I was shocked with the Wirecard collapse, Fintech is much riskier than many believe. I had a good reflection today on my portfolio asset allocation and I really need to construct a trade in the coming weeks. I think I will look at taking a few contracts in the 2nd or 3rd week of July.


----------



## ducati916

Some sector comparisons:






The out-perfomer: Tech. And the laggards.

Healthcare:






Medical Devices lagging.

Countries:






Mexico, seriously lagging.

jog on
duc


----------



## ducati916

Chronos-Plutus said:


> I think we are in for a bit of choppy market movements over the coming weeks with company data being released. I was shocked with the Wirecard collapse, Fintech is much riskier than many believe. I had a good reflection today on my portfolio asset allocation and I really need to construct a trade in the coming weeks. I think I will look at taking a few contracts in the 2nd or 3rd week of July.




You'll have volatility in individual names in response to earnings. Nothing new there. The volatility in a sector would require that the majority (major players) all report or provide poor guidance. Having a look at some of the sectors above, bad news will not really hurt the laggards. Positive guidance could however see them humming. Paradoxically, the risk is higher in the hot sectors and stocks, as expectations will be far higher and poor results or guidance could see price drops that could cause consternation.

Given that there are only a handful of hot sectors, I don't see earnings this time round creating volatility in the overall market, just due to the preponderance of under-performance of other sectors to Tech. etc. Therefore I would expect the trend to continue as the macro-fundamental picture remains unchanged for the moment and Energy will take some time to fix the issues that it has.

So overall I am sanguine.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> Some sector comparisons:
> 
> View attachment 105261
> 
> 
> The out-perfomer: Tech. And the laggards.
> 
> Healthcare:
> 
> View attachment 105262
> 
> 
> Medical Devices lagging.
> 
> Countries:
> 
> View attachment 105263
> 
> 
> Mexico, seriously lagging.
> 
> jog on
> duc




Interesting how discretionary is up and staples are down.


----------



## ducati916

Chronos-Plutus said:


> Interesting how discretionary is up and staples are down.





Why?

The idiots who purchased 100 toilet rolls and 50 packets of flour have calmed the f*** down. Now everybody wants to buy items that they were precluded from purchasing due to lock-downs etc.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> You'll have volatility in individual names in response to earnings. Nothing new there. The volatility in a sector would require that the majority (major players) all report or provide poor guidance. Having a look at some of the sectors above, bad news will not really hurt the laggards. Positive guidance could however see them humming. Paradoxically, the risk is higher in the hot sectors and stocks, as expectations will be far higher and poor results or guidance could see price drops that could cause consternation.
> 
> Given that there are only a handful of hot sectors, I don't see earnings this time round creating volatility in the overall market, just due to the preponderance of under-performance of other sectors to Tech. etc. Therefore I would expect the trend to continue as the macro-fundamental picture remains unchanged for the moment and Energy will take some time to fix the issues that it has.
> 
> So overall I am sanguine.
> 
> jog on
> duc




That is where I will look at taking a few contracts (CFDs) on individual equities. I think there will be a few opportunities on both long and short positions when the reports come in. I have a couple of weeks to select my stocks and construct my trades.


----------



## Chronos-Plutus

ducati916 said:


> Why?
> 
> The idiots who purchased 100 toilet rolls and 50 packets of flour have calmed the f*** down. Now everybody wants to buy items that they were precluded from purchasing due to lock-downs etc.
> 
> jog on
> duc




Herd mentality; once the herd is startled, that's it. The markets reflect it well. I suppose people will buy when big sales are on, when it comes to discretionary spending.


----------



## ducati916

Chronos-Plutus said:


> That is where I will look at taking a few contracts (CFDs) on individual equities. I think there will be a few opportunities on both long and short positions when the reports come in. I have a couple of weeks to select my stocks and construct my trades.




I'm sure there will be (literally) hundreds of opportunities. Not a game I really play anymore. However, if I were to I would start with looking at the sector. 

In the beaten down sectors I would be looking for longs only. There is no mileage in a beaten down stock getting even more beaten down and you also run into the value chaps. You can however (with some research) find beaten down that are ready to pop higher on just a sliver of good news and catch a potential short squeeze into the bargain.

Your shorts would be those that disappoint in the hot sectors. Given that you are already dealing with irrational, even bad results are viewed as a buying opportunity, so beware.

I might see what I can find, hypothetically speaking.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> I'm sure there will be (literally) hundreds of opportunities. Not a game I really play anymore. However, if I were to I would start with looking at the sector.
> 
> In the beaten down sectors I would be looking for longs only. There is no mileage in a beaten down stock getting even more beaten down and you also run into the value chaps. You can however (with some research) find beaten down that are ready to pop higher on just a sliver of good news and catch a potential short squeeze into the bargain.
> 
> Your shorts would be those that disappoint in the hot sectors. Given that you are already dealing with irrational, even bad results are viewed as a buying opportunity, so beware.
> 
> I might see what I can find, hypothetically speaking.
> 
> jog on
> duc




I won't be taking a huge position; as I want to keep my capital ready for better possible opportunities towards the end of the year. But I will post what I am considering to long/short in the coming weeks.

Anyway buddy I got to get ready to go out. Good chat


----------



## ducati916

Chronos-Plutus said:


> I won't be taking a huge position; as I want to keep my capital ready for better possible opportunities towards the end of the year. But I will post what I am considering to long/short in the coming weeks.
> 
> Anyway buddy I got to get ready to go out. Good chat





So hypothetically, if you were wanting to find potential candidates:

(a) Go here to find out who is reporting and when: https://finance.yahoo.com/calendar/earnings?from=2020-06-28&to=2020-07-04&day=2020-07-01

(b) Go here looking for unusual activity: https://www.barchart.com/options/unusual-activity/stocks

(c) Match the two different searches looking for: a reporting date a couple of days out, where the stock hasn't yet moved and has unusual options activity to either the upside or downside, depending on your view or preference.

(d) See if the match makes for a compelling trade. If looking long, also check the short interest volume. If the stock is really heavily shorted, you may (if it pops enough) catch onto a short squeeze as a bonus.

jog on
duc


----------



## makteb

Chronos-Plutus said:


> I think we are in for a bit of choppy market movements over the coming weeks with company data being released. I was shocked with the Wirecard collapse, Fintech is much riskier than many believe. I had a good reflection today on my portfolio asset allocation and I really need to construct a trade in the coming weeks. I think I will look at taking a few contracts in the 2nd or 3rd week of July.




Count BNPL companies in this risk.


----------



## over9k

Chronus - the U.S jobs data is out on the third. Have your trigger(s) cocked. It could be as simple as some lowball "good till cancelled" orders already in place. I also like to layer them - some at -3%, some at -4%, and so on.


----------



## over9k

Cross-post:

Here we go, we've had a record spike in virus cases and futures are in the toilet with the tech heavy nasdaq once again having an overwhelmingly better time of things:






and with all the banks deep in the red:






wall street is starting to now actively call for the already planned 2nd stimulus package to be brought forward:






I reckon the jobs data out next friday will be the big decider. If that's bad (and everything I've read says it's going to be) then more stimulus is a virtual certainty. That'll be the straw (or log) that breaks the camel's back. I'm now thinking about some put options.

Despite all of this, all of the european indexes are actually up significantly at the moment (which could just be a follow-on from yesterday's U.S bounce), but europe doesn't have anything near the virus problem that the united states does. We'll see what it closes at however.


----------



## over9k

Another cross-post 

The one screencap which really says everything at the moment: 






I know I keep saying this but tech and stay-at-home tech have had very different results and it's the stay-at-home tech that's driving the gains in tech overall.


----------



## over9k

Credit spreads are also way up, and I know that's a metric ducati would be thinking about.


----------



## ducati916

So the market down 2%+.







The VIX:






The Headlines:












You could include in there the Bank's headlines which came after the market close, but that is more sector specific, so as far as the market goes, probably irrelevant.

The 2 big ones are above.

We also have the 'experts', the Economists:









Then we have the market internals. These are intra-day, the other market internals are updated after the close.












The intra-day internals are telling a very different story to the (a) market and (b) the news headlines.

We have an intra-day divergence. Usually (but never 100%) divergences are very reliable trading signals. I will always trade a divergence, simply because the probability is so high for success.

I will (obviously) update the other internal charts once the close is in and see whether the intra-day divergence is confirmed at the close. 

Assuming for the moment that it is: its Friday, we have a two (potentially) market moving news stories and general sentiment in the country (and many professional money managers/commentators) is generally bearish, possibly increasing again because of the two featured news stories. As a Market Maker, what direction will give you increased transactions (thinking not just today, but continuing into early next week)? Time and time again, false moves (either higher or lower) only to reverse them later.

We are once again, sitting on that '300' level through the w/e.

jog on
duc


----------



## over9k

Europe ended up closing a combination of flat or down after being up significantly earlier on (for them).That's gotta sting.

duc - you don't care about credit spreads?


----------



## ducati916

over9k said:


> Europe ended up closing a combination of flat or down after being up significantly earlier on (for them).That's gotta sting.
> 
> duc - you don't care about credit spreads?





Yes I do.






Nothing worth worrying about currently.

jog on
duc


----------



## over9k

At what point do you consider it a concern?


----------



## ducati916

over9k said:


> At what point do you consider it a concern?




When the Fed. will no longer guarantee picking up the tab.

jog on
duc


----------



## ducati916

If you fancied following the Hedge Funds, here are their change in position:









jog on
duc


----------



## ducati916

So the EOD internals:











Both sitting on support. It can of course be argued that support will fail and stocks will continue their decline.






Market price also sitting on multiple technical support.






New Highs increased over yesterday. A divergence. Always worth noting.






Bit of a messy chart: simply an oscillator. At support also.






And simply that the QQQ with the Tech. heavy emphasis, had simply run to far to fast.

The point:

The macro-fundamentals driving the market are unchanged, primarily the Fed. Absent any fundamental changes, does the news have any impact other than on short term sentiment? The answer (should) be no: if it were to then the underpinning fundamentals would also be expected to change: for example credit spreads (highlighted earlier in the thread). This is not (currently) the case.

Therefore we are left with technical based reasons. Given the absence of fundamental drivers, I would expect the technical support areas to hold. 

jog on
duc


----------



## ducati916

Media thinking on COVID:

_Bulls point to several factors in their favor: The Fed is highly supportive; Congress looks ready to add more stimulus; and treatments are slowly starting to lead to better health outcomes. But the uncertainty about those outcomes is causing volatility to spike, with the Cboe Volatility Index, or VIX, rising to the mid-30s on Friday, above its long-term average of 19._

_Are statewide lockdowns coming back? Most analysts say no. Governors are highly reticent to issue broad stay-in-place orders now that they have better capabilities to test people widely and pinpoint hot spots. But it doesn’t take government-imposed shutdowns to affect the economy. When the disease is spreading, some people get scared and stay home._

_Amid the uncertainty, investors have piled into popular stocks. The five largest names— Alphabet (GOOGL), Amazon.com (AMZN), Apple (AAPL), Facebook (FB), and Microsoft (MSFT)—now make up just under a quarter of the S&P 500. The valuation gap between growth and value and momentum and value is now wider than it has been since the financial crisis, and perhaps the widest ever._

_Lerner thinks that tech will remain strong, because investors will look for companies that can grow organically at a time when economic growth remains threatened.

DeBusschere, however, sees a rotation coming. Value stocks can outperform under two scenarios, he argued. Either scared investors move to more defensive stocks, or Congress passes a fiscal stimulus package that spurs economically sensitive stocks to rise.





_
VIX also sitting on resistance.

jog on
duc


----------



## ducati916

Sectors





Just the broad sectors (again). Only Tech. really overbought. Plenty of room to run broadly speaking.






In Healthcare, Biotechnology the real out-performer. Everything else, room to run.






Food and Beverages the big under-performer, surprising?





No real surprises there.





Food based commodities all still in the doldrums, except, chocolate!





Bonds, particularly the long end, great place to have been.







The miners out-performing the physical product. 

The various indices:






Big Tech. in the QQQ.

If you had gone for the x2 leverage

jog on
duc


----------



## over9k

U.S is over the hill of summer now too so expect plenty of seasonality (i.e usual winter contractions) to kick everything in the nuts even more. Though I think you already made a post on seasonality.


----------



## ducati916

Bad economy, valuations and the Fed. are some of the issues facing the current market. 

Valuations:

_Barron’s recently talked with Damodaran, who is unafraid to challenge assumptions about controversial stocks. His voice is as important as any other when it comes to determining what a stock is worth. An edited version of the conversation follows:_

_This is going to be a terrible year. We all agree with that. Now, we can debate whether earnings are going to be down 30% or 40%, but they’re going to be down a ton. The real debate should be about what will happen over the next three, four, five years. How much of this damage is permanent? And how much is transitory? That’s a healthy discussion to have. And when you have the discussion, what happens is, you discover that there are some businesses where the damage is permanent. The cruise-line business. It’s never going to go back to a pre-crisis valuation for good reason. But I’ll make it broader. I think infrastructure businesses [airlines and telecommunications], especially ones with a lot of debt, are going to be permanently marked down after this crisis because people have learned that these companies are very fragile. They are not designed to live through a crisis like this one._

On Valuations:














It remains to be seen what the 'current' earnings will be and the resultant PE. Look at 2008/09.  PE went sky high due to the collapse in earnings. There will be a fall in current earnings. It is future earnings that matter going forward. Ultimately, whether the virus abates or not, economies will re-open simply because they cannot do otherwise.

Just how bad might the loss of earnings be, allowing for the posited loss of GDP? Earlier I posted this back of the envelope calculation:






The profit picture going forward is not an issue. The market's valuation will improve.

The Virus.

This seems to be the issue for most people afraid of the market. The Spanish Flu, which was of a far higher virulence than COVID, eventually burned itself out (as all infections do eventually) without there ever being a vaccine developed. The death rate was off the charts, 50M-100M dead and this was after the carnage in manpower of WWI. The market just rolled forward.






The closing of an economy is more damaging to people than the virus spreading freely. You simply cannot close an economy indefinitely. In a free market, people will choose how to manage the risk of infection. In a shutdown economy, your options are vastly reduced. The US will muddle through with partial measures.

The Fed.






Look at the 1940-1946 area.

In the first half of the 1940s the Federal Open Market Committee (FOMC) sought to manage the level and shape of the Treasury Yield Curve. 

During World War II the FOMC sought to maintain a fixed, positively sloped curve. The policy left long-term bonds with the risk characteristics of short-term debt but a yield more than 200 basis points higher. At the same time, the Treasury pursued a policy of issuing across the curve, from 13-week bills to 25-year bonds. Faced with investor preferences for the higher yielding, but hardly riskier, bonds, the Open Market Account had to absorb a substantial quantity of bills. What can be learned from the FOMC’s efforts of seventy-five years ago?

Looking at the above chart: the market from 1942-1946 went in one direction: straight up. The Market didn't worry about: (a) increasing debt levels, (b) the war and that there was no guarantee of victory, (c) all of the killing, (d) that the economy was constricted due to closing down of import/export markets, (e) rising inflation and (f) anything else.

We don't today have quite the managed YC, but it is pretty damn close. We have had the same (although lesser intervention) from the 2009 crisis. For financial markets, this works. There are lots of arguments why it shouldn't be used, but in the political world, there is nothing more damaging to political aspirations (and we are in an election year) than people knowing that something could be done (tried) that may have helped, but for moral reasons, it wasn't. In this election, with Trump going for re-election, no amount of stimulus will be deemed 'to high'.

Inflation

See earlier post.

Seasonality & Elections






Summary

Although the market has reached a valuation that could be called 'rich', there are plenty of sectors in the market that are undervalued, which can be seen from looking at the sector summaries in an earlier post. The current correction is a technical correction and was always going to happen. Markets contain within their secular trend, cyclical trends. The real key to investing or trading, is not to mistake one for t'other. Prior to COVID, there were excesses building in the debt markets due to big money chasing yield. A correction (serious correction) was on the cards due to the (once again) lax credit controls on this BBB (junk) debt. That has not been purged from the system, but it has been given a new lease of life with the current Fed posture.

jog on
duc


----------



## over9k

https://www.bloomberg.com/news/arti...e-monthly-sales-record-in-party-like-no-other 

Junk bonds are at a record high in fact. But few companies are going to be able to borrow at high ratings at the moment, so hardly surprising.


----------



## ducati916

Dr. Copper:






jog on
duc


----------



## ducati916

Commercials standing below:






The Commercials seem well in tune with this market. Definitely not fighting the Fed.

jog on
duc


----------



## Smurf1976

ducati916 said:


> In a free market, people will choose how to manage the risk of infection.



I'm not necessarily disagreeing with the point but I'd argue that we don't have a free market in the relevant areas and haven't had one for a very long time such that, in practice, the option doesn't exist.


----------



## ducati916

Smurf1976 said:


> I'm not necessarily disagreeing with the point but I'd argue that we don't have a free market in the relevant areas and haven't had one for a very long time such that, in practice, the option doesn't exist.





The free market is long gone. Agreed.

In other news: https://www.reuters.com/article/us-...and-buffett-join-feds-portfolio-idUSKBN23Z0M8

jog on
duc


----------



## ducati916

Good start to the short week. See how it develops. Lots of news (as always) out, some good, some bad. Following the news on a daily basis is (pretty much impossible) and bad for your trading results.

If you are determined to incorporate the news into your trading, then you need to follow the news on a cumulative basis and the sum of that news needs to refute/confirm the bigger macro-picture. This will not be accomplished with any single story.

The 'Virus' is the big Bear story. For the story to have merit, which means that you need to exit or short the market, the news needs to align with the macro-picture. That is to say, if virus = bad, then the economic/political/financial/medical data also need to be bad and getting worse.

It could be argued that because so many sectors are lagging, that is actually evidence that the market is deluded and only advancing on Tech. and nothing else, ergo, the Bears are the only rational chaps out there. I have been waiting for someone to make that argument, but I'll make it myself.

Which is why I am interested in sectors. I'll follow the news/fundamentals in sectors looking for that confirmation or rebuttal of the financial/economic data to that sector. An example: the Banks. The financials are critical to a sustained market recovery. The Banks passed their stress tests last week. The headlines were re. dividends & buybacks. The critical 'news' was of course that their Balance Sheets (were reasonably) healthy and they were not at the point of collapse. 

The Housing sector. An enormously important part of the US economy. The 'news' has been ok and improving. Both of these sectors (Banking) have been laggards and of course they are inter-related. 

The point being: if you are going to assess the news, you need to assess the news over a period of time and the news must provide confirmatory evidence that your hypothesis is playing out. Markets on a daily basis go up and down. The daily volatility is almost always for technical reasons. The trend however is usually driven by the fundamentals, which, can at times get way out of line and ahead of themselves, but will require pretty conclusive evidence of that fact before discounting that fact.

With regard to the virus story: even if the world (US) went to 100% infection rate, can economies be closed indefinitely? The answer is clearly no. Closing economies indefinitely is something that simply cannot happen. If it cannot happen, it won't happen. Therefore the market will hunt through for the winners, the losers may well go under, but that is just the reality.






jog on
duc


----------



## qldfrog

ducati916 said:


> It could be argued that because so many sectors are lagging, that is actually evidence that the market is deluded and only advancing on Tech. and nothing else, ergo, the Bears are the only rational chaps out there. I have been waiting for someone to make that argument, but I'll make it myself.



Duc, isn't it the argument we have heard from a pister over and over again,9000 times actually?
But you are right it is the key debate.


----------



## over9k

Yes and I've been saying for quite a while that the virus can/will drive the fundamentals. Duc disagrees. He responds to the fundamentals only, which have lagged the virus data.

I've been calling a 2nd wave to hit the data/financial armageddon at roughly the end of this month for weeks now, and things have been *exactly* as I predicted. The trend since ~8 june is pretty obvious.

Australia also has the opposite of seasonality to the U.S and contained the virus which the U.S didn't, so AU travel stuff like qantas is going to pick up significantly once this outbreak in victoria is sorted out. All that's done is delay things another month, but we can still have travel "bubbles" (excluding vic) in the meantime.

I'm still roughly 50% cash, I've hardly bet the farm on qantas or something. AU travel is like 8% of my portfolio. What I HAVE done is get into the most resilient of stocks (stay at home tech) and am now awaiting the employment numbers on the 3rd - if they're good, I get a bounce, and if they're not, I'm going to buy, as stimulus will be a virtual certainty to follow.

You also forget that the virus even now still hasn't properly scared people. That'll change (and is juuuuust starting to now). The mask factories also come online in august and so we'll see a massive drop in virus spread then too. In the meantime, things are going to be ugly, exactly as I already predicted.


----------



## ducati916

over9k said:


> Yes and I've been saying for quite a while that the virus can/will drive the fundamentals. Duc disagrees. He responds to the fundamentals only, which have lagged the virus data.
> 
> .




The issue for me, re. your analysis is this: it is superficial and does not provide an analysis of the macro-fundamentals at all.

Medically, there was always the potential for a 2'nd wave, everyone and their granny knew that. This superficial type of analysis takes you nowhere.

jog on
duc


----------



## over9k

You really don't think that a virus wave will drive/dictate the fundamentals? There's an awful lot of coincidences to explain if not.


----------



## IFocus

over9k said:


> You really don't think that a virus wave will drive/dictate the fundamentals? There's an awful lot of coincidences to explain if not.




The dramatic sell off due to the 1st wave of virus was by and large due to uncertainty no one knew where it would go, markets hate uncertainty.

There is very little uncertainty around the virus currently and the 2nd wave is largely understood.


----------



## ducati916

over9k said:


> You really don't think that a virus wave will drive/dictate the fundamentals? There's an awful lot of coincidences to explain if not.





Ok so let's explore this a little bit.

(i) We can assume that there could well be a second wave because (a) it is infectious.
(ii) We know that the initial response was lockdown, which didn't work particularly well in US.
(iii) We know that it did damage to the economy.

What was that damage?

In no particular order:

(i) unemployment;
(ii) loss of revenues across wide swathe of businesses;
(iii) rising NPLs;
(iv) Etc.

What was the response?

(i) Unprecedented supply of liquidity;
(ii) Other government based support, loans, etc.

Did all Sectors suffer equally?

Clearly the answer is no. Some sectors (industries) suffered far greater disruption than others. Look at the sector charts for various examples. That would likely continue into a second wave. 

Let's take a more specific example: Financials. We know that financials are exposed to rising NPLs, which could threaten their liquidity and hence their survival. (a) We know that the Fed. has provided unlimited liquidity to the financial sector, based on the disaster incurred both in 1930 and 2008 with Bank failures. (b) The Banks have also been stress tested. They passed. No confidence in (b)? Well you still have (a). Therefore there will be no collapse of the financials. Fact. Irrespective of how many are infected/die.

Repeat this exercise for any (or all) sectors. Some you might legitimately have doubts on: Cruise ships, passenger aircraft, etc.

What you will find is that irrespective of the viral load, business goes on. It has to. There are no alternatives. Therefore apart from technical volatility, all the bad news is already in the price (to the downside) and all the potential (for good news) is unrealised. 

So stay away from industries that people in a free market would naturally avoid and stay with those that will carry on carrying on. Now this is simplified simply because I have no inclination to draft a post so long as to send everyone to sleep.

jog on
duc


----------



## ducati916

IFocus said:


> The dramatic sell off due to the 1st wave of virus was by and large due to uncertainty no one knew where it would go, markets hate uncertainty.
> 
> There is very little uncertainty around the virus currently and the 2nd wave is largely understood.





Amen.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> The issue for me, re. your analysis is this: it is superficial and does not provide an analysis of the macro-fundamentals at all.
> 
> Medically, there was always the potential for a 2'nd wave, everyone and their granny knew that. This superficial type of analysis takes you nowhere.
> 
> jog on
> duc




A fair bit of data being released tonight:


----------



## ducati916

So updating the charts:












Every chart support held.

We knew the probabilities were high because the macro-fundamentals are supportive of a higher trending market. When the fundamentals change, so will I. While the fundamentals remain in place, so greater weight can be accorded to the technical picture.

Dr Copper does not lie.






jog on
duc


----------



## Smurf1976

ducati916 said:


> With regard to the virus story: even if the world (US) went to 100% infection rate, can economies be closed indefinitely? The answer is clearly no. Closing economies indefinitely is something that simply cannot happen. If it cannot happen, it won't happen.




Agreed that the economy as such cannot be closed.

That said, disasters of any kind have a habit of being "unthinkable" for a very long time until they actually happen. Eg if anyone had discussed the idea of closing state borders or even just closing cinemas then they'd have been given a very firm "no" not too long ago. Then all of a sudden we ended up with not only cinemas being shut but the entire aviation industry all but grounded and people fighting over toilet paper. Etc. 

With that in mind I pose the question that whilst "the economy" won't be shut, I see nothing preventing parts of it from being shut again or even permanently.

As just one example - when does anyone expect to see a major multi-stage music festival up and running in Australia with international acts and traveling to at least the 3 east coast cities and perhaps SA and WA as well, with attendance of 20,000+ in each city?

Or when do we see cruise ships calling into Australian ports at the rate of several a week and their passengers freely disembarking without restriction?

Those are just two examples but it seems entirely plausible to me that they won't be happening at all for quite some time and nor will many things. The economy won't be shut but a portion of it may well be - you need to pick your stocks carefully there I think.


----------



## waterbottle

ducati916 said:


> So updating the charts:
> 
> View attachment 105377
> View attachment 105378
> View attachment 105379
> 
> 
> Every chart support held.
> 
> We knew the probabilities were high because the macro-fundamentals are supportive of a higher trending market. When the fundamentals change, so will I. While the fundamentals remain in place, so greater weight can be accorded to the technical picture.
> 
> Dr Copper does not lie.
> 
> View attachment 105381
> 
> 
> jog on
> duc



@ducati916 

What is your reasoning behind using copper prices as opposed to other financial instruments/commodities or oil for that matter?


----------



## waterbottle

@Smurf1976 completely agree. The nature of the economy may change but it'll still be here.

Reality is deposits have grown but spending hasn't - people are saving a relatively large amount of cash. Meanwhile government is being pressured to provide ever increasing amounts of social welfare.
Consumers will consume.


Smurf1976 said:


> Agreed that the economy as such cannot be closed.
> 
> That said, disasters of any kind have a habit of being "unthinkable" for a very long time until they actually happen. Eg if anyone had discussed the idea of closing state borders or even just closing cinemas then they'd have been given a very firm "no" not too long ago. Then all of a sudden we ended up with not only cinemas being shut but the entire aviation industry all but grounded and people fighting over toilet paper. Etc.
> 
> With that in mind I pose the question that whilst "the economy" won't be shut, I see nothing preventing parts of it from being shut again or even permanently.
> 
> As just one example - when does anyone expect to see a major multi-stage music festival up and running in Australia with international acts and traveling to at least the 3 east coast cities and perhaps SA and WA as well, with attendance of 20,000+ in each city?
> 
> Or when do we see cruise ships calling into Australian ports at the rate of several a week and their passengers freely disembarking without restriction?
> 
> Those are just two examples but it seems entirely plausible to me that they won't be happening at all for quite some time and nor will many things. The economy won't be shut but a portion of it may well be - you need to pick your stocks carefully there I think.


----------



## qldfrog

waterbottle said:


> @ducati916
> 
> What is your reasoning behind using copper prices as opposed to other financial instruments/commodities or oil for that matter?



Copper is a great indicator of economic activity: it is used from housing,infrastructure to industry or even throw away gadget: any wiring or electric motor uses it.
So its use as an economic health indicator


----------



## peter2

The price of copper is going up mainly due to the number of South American copper producers that have had to go to care/maintenance because of COVID-19. Copper production in Sth America is down.


----------



## over9k

Same with iron ore - brazil's just toast. The wildcard(s) are on the demand side. We saw a big dip just a few days ago with that outbreak in beijing. The thing is that china still makes steel and just dumps it in their storage yards even if there isn't any demand for it. And then when the storage yards were filled, they started filling up their now empty sports stadiums. 

No, I'm not joking.


----------



## Chronos-Plutus

over9k said:


> Same with iron ore - brazil's just toast. The wildcard(s) are on the demand side. We saw a big dip just a few days ago with that outbreak in beijing. The thing is that china still makes steel and just dumps it in their storage yards even if there isn't any demand for it. And then when the storage yards were filled, they started filling up their now empty sports stadiums.
> 
> No, I'm not joking.



Brazil export map:




https://oec.world/en/profile/country/bra


----------



## over9k

I don't know what percentage of world supplies that is but I know brazil is roughly 25% of the world's iron ore.


----------



## Chronos-Plutus

"New York Adds Travelers From 8 States To 'Mandatory Quarantine' List: Live Updates"
https://www.zerohedge.com/geopoliti...month-lockdown-covid-19-infections-spike-live


over9k said:


> I don't know what percentage of world supplies that is but I know brazil is roughly 25% of the world's iron ore.




It is a percentage of Brazil's export value, about ~$20 billion.

I was just listening to Powell and Mnuchin in the US hearing live; I switched it off after I heard Mnuchin say that China are maintaining their agricultural commitments to buy US produce:


----------



## ducati916

Metals prices:



















































The downward sloping are Steel (China & US) and Tin.

jog on
duc


----------



## ducati916

So now looking at sectors (and their stocks) on a technical basis:






Energy in particular had run hard, but so too had other sectors that in a lockdown type of environment you could expect to again: Communication, Staples.






Tech. remains the place to be.






A correction (technical) was inevitable.

Most sectors are now within a few percentage points of their 50-DMAs, and that is a much more moderate reading than some observed in the past few months.










As for the individual stocks within each sector, there has also been significant mean reversion.  In the first couple of weeks of June, well over 90% of S&P 500 stocks were above their 50-DMAs. With equities broadly lower since the early month highs, only around 60% of stocks are now above their 50-DMAs. On a sector basis, Industrials have the highest share (80.8%) above while Utilities has the lowest share at only 21.43%.












Now the industrials will correlate (reasonably well) to the metals prices.

In addition (which is the next stage of analysis for the Financials in earlier post) we have the RE sector picking up (which means mortgage business for the Banks):






The 'news' contains both noise and signal. 

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> Metals prices:
> 
> View attachment 105403
> View attachment 105404
> View attachment 105405
> View attachment 105406
> View attachment 105407
> View attachment 105408
> View attachment 105409
> View attachment 105410
> View attachment 105411
> View attachment 105412
> View attachment 105403
> View attachment 105404
> View attachment 105405
> View attachment 105406
> View attachment 105411
> View attachment 105412
> 
> 
> The downward sloping are Steel (China & US) and Tin.
> 
> jog on
> duc




You might like this table Duc:


----------



## ducati916

Smurf1976 said:


> Agreed that the economy as such cannot be closed.
> 
> That said, disasters of any kind have a habit of being "unthinkable" for a very long time until they actually happen. Eg if anyone had discussed the idea of closing state borders or even just closing cinemas then they'd have been given a very firm "no" not too long ago. Then all of a sudden we ended up with not only cinemas being shut but the entire aviation industry all but grounded and people fighting over toilet paper. Etc.
> 
> With that in mind I pose the question that whilst "the economy" won't be shut, I see nothing preventing parts of it from being shut again or even permanently.
> 
> As just one example - when does anyone expect to see a major multi-stage music festival up and running in Australia with international acts and traveling to at least the 3 east coast cities and perhaps SA and WA as well, with attendance of 20,000+ in each city?
> 
> Or when do we see cruise ships calling into Australian ports at the rate of several a week and their passengers freely disembarking without restriction?
> 
> Those are just two examples but it seems entirely plausible to me that they won't be happening at all for quite some time and nor will many things. The economy won't be shut but a portion of it may well be - you need to pick your stocks carefully there I think.





Now I suspect that this is (firmly) tongue-in-cheek, but it demonstrates the (necessary) adaptability of the workforce:






jog on
duc


----------



## ducati916

Chronos-Plutus said:


> You might like this table Duc:
> View attachment 105423





Provides additional context. Nice.

jog on
duc


----------



## ducati916

And my main chap - flippe-floppe-flye!







jog on
duc


----------



## ducati916

The election will increasingly take centre stage. Stocks generally point to the outcome:






Now if Biden is to win, we will want to avoid that post August swoon and take profits to reset for buying the dip. We have potentially 2 mths where stocks could trade higher. We will just need to be alert as to either a potential technical and/or fundamental signal. The buzz is that if Biden were to win, Corporate taxes would rise. The market will not like that at all.


jog on
duc


----------



## qldfrog

ducati916 said:


> Metals prices:
> 
> View attachment 105403
> View attachment 105404
> View attachment 105405
> View attachment 105406
> View attachment 105407
> View attachment 105408
> View attachment 105409
> View attachment 105410
> View attachment 105411
> View attachment 105412
> View attachment 105403
> View attachment 105404
> View attachment 105405
> View attachment 105406
> View attachment 105411
> View attachment 105412
> 
> 
> The downward sloping are Steel (China & US) and Tin.
> 
> jog on
> duc



Was it a test? Are they following?
The lme closing price curves do not reference the respective commodities..at least nothing i can see on the phone..
At least one is following Mr Duc
But got the idea


----------



## qldfrog

Chronos-Plutus said:


> You might like this table Duc:
> View attachment 105423



I would have expected copper somewhere there?


----------



## Chronos-Plutus

qldfrog said:


> I would have expected copper somewhere there?




Yeah, I agree. It's a good visual representation to compare the metals, would be better with some percentages. I found that table researching Thomson Resources (https://www.thomsonresources.com.au/)


----------



## frugal.rock

ducati916 said:


> And my main chap - flippe-floppe-flye!
> 
> View attachment 105425
> 
> 
> jog on
> duc



Did you read what you re posted?

Why bring denigratiion of Autistic people to this forum?

Edited.


----------



## Chronos-Plutus

frugal.rock said:


> Did you read what you re posted?
> 
> Why bring denigratiion of Autistic people to this forum?
> It's against the forum policy.
> @Joe Blow please remove.
> 
> Right, carry on leading the lemmings.




Don't think people are lemmings; we all make our own investing and trading decisions. Nobody forces you to push the buy or sell button. This is finance based discussion, not financial advice.


----------



## qldfrog

frugal.rock said:


> Did you read what you re posted?
> 
> Why bring denigratiion of Autistic people to this forum?
> It's against the forum policy.
> @Joe Blow please remove.
> 
> Right, carry on leading the lemmings.



Seriously?, this is the type of comment expected on other threads or FB.This flippe floppe guy's style is outrageous and provocative per se
Very disappointing unless it was irony but i doubt. Would miss his views: aseptised news and comments are  lemmings fodder indeed, let's not join them.
Let's not push away people like Duc who can bring knowledgeable input for proper decision making.
otherwise we can all run around saying how justified we are to collapse our economy for 100 deaths how doomed the US are and wonderfull we are in Australia with our closed borders
My view only


----------



## frugal.rock

I edited out the lemmings bit because it was supposed to be referenced to the moral decay in society. Having been bullied at an early age, then turning into a bully, then realising the error of my ways (by the age of 10) I can't stand denigration of those who *appear* to be less fortunate in this world.
Truth be known, there have been many Autistic spectrum geniuses through history, a little understood fact.


qldfrog said:


> Let's not push away people like Duc who can bring knowledgeable input for proper decision making.




This wasn't my intention and the Macro/ Micro picture that Duc paints is worth more than a thousand words.
Thank you Duc.


----------



## ducati916

frugal.rock said:


> Did you read what you re posted?
> 
> Why bring denigratiion of Autistic people to this forum?
> 
> Edited.





Mr Flippe-floppe-flye is a US based Fund manager. We go back decades. He get's his name from the speed in which he repositions millions of dollars.

jog on
duc


----------



## ducati916

The market had a second strong close. Observe the daily internals:






Advancing issues, New Highs, Above 50SMA.

The only ? is against 200SMA. There is an argument that many stocks are still in a Bear market. I would accept this, but would spin it as potential to move higher, rather than a pessimistic view of: this is still a Bear market/Bounce/etc.

jog on
duc


----------



## ducati916

Just in case you were in any doubt just how far the Fed. will go to support this market:

_Supermarket sweep, 2020 edition.  From May 19 to June 16, the Federal Reserve bought $5.1 billion in corporate credit ETFs under its Secondary Market Corporate Credit Facility according to Bank of America. That shopping spree was enough to push the central bank towards the top of the holders list in a number of the biggest such ETF products, including the third largest in the $54 billion iShares iBoxx USD Investment Grade Corporate Bond ETF (ticker: LQD), as well as the second- and fifth-largest holders in the $29 billion Vanguard Short-Term Corporate Bond ETF (ticker: VCSH) and the $36 billion Vanguard Intermediate-Term Corporate Bond ETF (ticker: VCIT), respectively._

_There is plenty of in-house appetite for more. Fed chair Jerome Powell declared yesterday that: “The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus. . . [recovery] will also depend on the policy actions taken at all levels of government to provide relief and to support the recovery for as long as needed.” _

_Mr. Market anticipated that message, as junk bond issuance in the first half of the year came to a record $180 billion, according to Dealogic. Investment-grade corporate bond issuance for the first six months footed to a monster $840 billion, nearly double the previous half-year issuance record set in 2016.  Kevin Foley, head of global debt capital markets at J.P. Morgan, summed up the prevailing mentality to The Wall Street Journal: “It’s been ‘take the money and run.’” _

jog on
duc


----------



## ducati916

The result of all that Fed. intervention?






jog on
duc


----------



## over9k

Yeah but it's concentrated duc, not broad across all sectors. Plenty are still damn near moribund.


----------



## over9k

Futures down significantly tonight as everyone are getting the jitters about what the jobs data will be on friday. Looks like a red day in store. Nasdaq down the least as usual though.


----------



## Chronos-Plutus

ducati916 said:


> The election will increasingly take centre stage. Stocks generally point to the outcome:
> 
> View attachment 105426
> 
> 
> Now if Biden is to win, we will want to avoid that post August swoon and take profits to reset for buying the dip. We have potentially 2 mths where stocks could trade higher. We will just need to be alert as to either a potential technical and/or fundamental signal. The buzz is that if Biden were to win, Corporate taxes would rise. The market will not like that at all.
> 
> 
> jog on
> duc




I will post my electoral map within a few days; and then again 2 weeks before the election.


----------



## qldfrog

over9k said:


> Yeah but it's concentrated duc, not broad across all sectors. Plenty are still damn near moribund.



being the devil's advocate:
so you mean plenty of growth opportunities and undervalued stocks..what's not to like?


----------



## over9k

Oh I've never disputed that there's money to be made or that the market will recover - only when/where/how.

It's my opinion that a lot of the moribund stocks (sectors) that were basically flat whilst tech shot up over the past couple of months are now going to drop even further in a 2nd virus wave. Some which bounced a bit are now going to drop back down to their previous levels too. Tech will again be the most resilient.

A lot hinges on the employment data out in the past couple of days. We saw a massive bounce when may's was better than expected, so we'll see. If it's bad, stimulus becomes a virtual certainty. I have cash ready & waiting to buy if it's bad.

Take tech out of the sp500 and it's the same disaster it was months ago.


----------



## Chronos-Plutus

over9k said:


> Oh I've never disputed that there's money to be made or that the market will recover - only when/where/how.
> 
> It's my opinion that a lot of the moribund stocks (sectors) that were basically flat whilst tech shot up over the past couple of months are now going to drop even further in a 2nd virus wave. Some which bounced a bit are now going to drop back down to their previous levels too. Tech will again be the most resilient.
> 
> A lot hinges on the employment data out in the past couple of days. We saw a massive bounce when may's was better than expected, so we'll see. If it's bad, stimulus becomes a virtual certainty. I have cash ready & waiting to buy if it's bad.
> 
> Take tech out of the sp500 and it's the same disaster it was months ago.




We can flip the penny. My name is Chris. S; and I live in Sydney, Australia. I am not scared or afraid of my calls.

I will post my US electoral map soon.


----------



## ducati916

over9k said:


> Yeah but it's concentrated duc, not broad across all sectors. Plenty are still damn near moribund.





Correct.

Which is why you need to be selective.

jog on
duc


----------



## ducati916

Chronos-Plutus said:


> I will post my electoral map within a few days; and then again 2 weeks before the election.




Ok. Who are you thinking?

jog on
duc


----------



## ducati916

There was a question yesterday; why is Dr Copper important?

_Last month, ISM's headline manufacturing number saw a slight rebound rising from the April low of 41.5 to 43.1.  That indicated that activity was still worsening in May albeit at a slower pace than April.  Fast forward to June's reading released this morning and ISM's manufacturing report showed a huge rebound in activity with the headline index rising 9.5 percentage points to 52.6. That is the headline index's highest reading since March of last year and was also the first back to back increases since June 2018. A reading above 50 also indicates the first expansionary reading in the manufacturing sector since February.  Lastly, perhaps most notable about today's report was that the 9.5 point m/m increase was also the third-largest on record behind a 10.5 point increase in August of 1980 and a 12.1 point jump all the way back in August of 1952._







_Respondent commentary reinforced the rebound with most making some mention of demand or production improving in June.  Important to note, while they point to improved conditions from the past few months, that is not to say activity has necessarily returned to pre-COVID levels. In fact, one comment out of the Chemical Products industry reported that it ha been a "slow recovery" and the Petroleum & Coal Products industry mentioned that things are still "below normal volumes". Regardless, as the commentary from a Plastics & Rubber Products respondent put it, things are still "trending toward normal". In other words, things are back on the right track, but activity has not fully recovered._









_Taking a look across the various sub-indices of the report, the headline number was not alone in terms of historic monthly rebounds. Outside of the inventories index, every indices' MoM rise was in the upper 90th percentiles of all readings.  Now 6 of the 11 indices are showing expansionary readings compared to just two last month._






_Production has been ramping back up with the index rising to 57.3, its highest level since November of 2018. The only larger one month jump in production was in August of 1952 when the index rose 46.8 percentage points. Meanwhile, New Orders saw its largest one month increase on record. Granted that only leaves it in the dead middle of its historic range while backlog of orders are still in contraction for a fourth consecutive month.  One interesting point of the data recently has been the index for Supplier Deliveries. Recent months have seen very elevated readings indicating longer delivery times meaning supply chains have appeared to have been disrupted. While this month's reading of 56.9 still indicates longer delivery times, it is a much healthier reading pointing to at least some stabilization. The MoM decline of 11.1 percentage points was also the largest decline since May of 1979._






Commodities in short supply:






That is why you should watch Dr. Copper.

jog on
duc


----------



## ducati916

Seasonality:






jog on
duc


----------



## ducati916

Just the way it is.

jog on
duc


----------



## qldfrog

And for a bullish local view, if you go to Kmart, customers are here but shelves are empty, a clear sign IMHO.


----------



## Chronos-Plutus

ducati916 said:


> Ok. Who are you thinking?
> 
> jog on
> duc




At this stage it is Biden who has more states locked in; and Trump has heaps of work to do in claiming the other states. I will post the electoral map with some brief thoughts tonight.


----------



## Chronos-Plutus

This is where I am at:





I got Biden holding 232 and Trump trailing with 199; with 107 unconfirmed. Trump will need to campaign hard to hold onto the unconfirmed states, with a particular focus on the Rust Belt and East Coast states from now and until the election.

2 weeks before the election; I will allocate each state to either Trump or Biden, no states will be unconfirmed.


----------



## ducati916

So late finish at work tonight, no energy to update. 

Therefore I'll leave Mr 9K to call tomorrow in the US. His rather cryptic post on pg13 suggested down, but that may have changed.

jog on
duc


----------



## waterbottle

ducati916 said:


> Mr Flippe-floppe-flye is a US based Fund manager. We go back decades. He get's his name from the speed in which he repositions millions of dollars.
> 
> jog on
> duc




TremblingHand?


----------



## Chronos-Plutus

Corn Futures exploded higher: 

"Corn futures climb to highest levels since March after USDA forecast on planted acres" (https://www.marketwatch.com/story/c...ted-acres-2020-06-30?link=MW_home_latest_news)

"USDA Crop Report Shocker Sends Corn Futures Surging"
(https://www.zerohedge.com/markets/usda-crop-report-shocker-sends-corn-futures-surging)

I knew I should have taken those long positions last week


----------



## Garpal Gumnut

Chronos-Plutus said:


> This is where I am at:
> View attachment 105474
> 
> 
> I got Biden holding 232 and Trump trailing with 199; with 107 unconfirmed. Trump will need to campaign hard to hold onto the unconfirmed states, with a particular focus on the Rust Belt and East Coast states from now and until the election.
> 
> 2 weeks before the election; I will allocate each state to either Trump or Biden, no states will be unconfirmed.



Never underestimate a psychopath such as Trump if it *doesn't *bother him whether he wins or loses. 
If he decides he *does *want to win he is cactus.
gg


----------



## Chronos-Plutus

Garpal Gumnut said:


> Never underestimate a psychopath such as Trump if it *doesn't *bother him whether he wins or loses.
> If he decides he *does *want to win he is cactus.
> gg




Well; if he wins or loses, the civil unrest aspect will be quite concerning.


----------



## qldfrog

Chronos-Plutus said:


> Well; if he wins or loses, the civil unrest aspect will be quite concerning.



my view is that in term of civil unrest, Trump is a sign, not a cause:
when for now some generations and  since the GFC at least, in the west, here and there, you give without return be it companies or people, this leads to entitlement, so if I do not have that pair of shoes, I just break the windows and get it.
"Why can I not afford it?, this is not fair, my right as purple green or blue, loving sex with fairies , etc"
the shop owners knows pretty well, this will not be punished and policing [when police is not dissolved] will not happen, if moreover owner is is white male and above 30, he is the bad guy whatever the circumstances, even being black and defending property is "BAD" and worse a death sentence it seems based on recent news during BLM racist riots
so he takes his gun and shoots.
Roughly 50% of population who has worked hard to get their goods be it houses and cars will fight the 50% who do not have it yet and want it now... just because they are; 
A destruction of values which when you think about it is just the culmination of an ideology and a normal consequence
So Trump or Biden, not sure it will change anything, just light a fuse whatever the winner...
Is there any scenario for stability but maybe for an illness killing either of the 2 candidates before election day?I will be cash and conservative before the election month, gold probably
This is where I see the bounce/trend end/stop! so November 2020..we have 3 months


----------



## Chronos-Plutus

qldfrog said:


> my view is that in term of civil unrest, Trump is a sign, not a cause:
> when for now some generations and  since the GFC at least, in the west, here and there, you give without return be it companies or people, this leads to entitlement, so if I do not have that pair of shoes, I just break the windows and get it.
> "Why can I not afford it?, this is not fair, my right as purple green or blue, loving sex with fairies , etc"
> the shop owners knows pretty well, this will not be punished and policing [when police is not dissolved] will not happen, if moreover owner is is white male and above 30, he is the bad guy whatever the circumstances, even being black and defending property is "BAD" and worse a death sentence it seems based on recent news during BLM racist riots
> so he takes his gun and shoots.
> Roughly 50% of population who has worked hard to get their goods be it houses and cars will fight the 50% who do not have it yet and want it now... just because they are;
> A destruction of values which when you think about it is just the culmination of an ideology and a normal consequence
> So Trump or Biden, not sure it will change anything, just light a fuse whatever the winner...
> Is there any scenario for stability but maybe for an illness killing either of the 2 candidates before election day?I will be cash and conservative before the election month, gold probably
> This is where I see the bounce/trend end/stop! so November 2020..we have 3 months




Yeah I tend to agree; I am trying to stay out of the political discussions. I only made a prediction for the election because it will certainly impact markets.

The last US election, I went to an event a Sydney University that was hosted by the US Studies Centre. They had an expert panel to discuss the Trump-Clinton election, and every expert said that Trump will not win, basically he had no chance. I remember after the event, thinking to myself, on the way home; that surely Trump has at least some chance. So I did my own research and I ended up picking Trump's path to the White House with the exception of a couple of states. Maybe it was a fluke, we will see how I go this time.


----------



## over9k

Cross-post:






So the jobs report was good! Futures way up, expecting a huge bounce on open. Virus data not changing though, so next buy will be next virus-data-driven carryon. That could be monday, could be later than it.

Next stimulus was apparently due later this month, trump is due to talk about it this morning coincidentally (or not) at market open in 20ish minutes time, will update with info then.


----------



## over9k

Lol. Virus data was released like 30 mins after market open. Things were up over 1% on open and all the stuff like industrials that really bounced has just nosedived since, meanwhile stay-at-home tech has continued to rise.











Will be interesting to see what close is. I feel like today's just going to be the whole market/weeks/months in microcosm: Bounce on economic news and then crash on virus news.


----------



## over9k

Republican senator grassley (finance committee chairman) on bloomberg now saying that the politicians are targeting 1st of august for the next stimulus package. At the moment they're basically just bickering about what will be in it. Good to know now, should give us a baseline to work from while we try & get some more concrete info/date certainty.

4th of july weekend coming tomorrow so we can expect a ton of virus spread from it in 2-3 weeks time now too. Might be a good target to try & buy at.


----------



## ducati916

So this is how the markets are sitting as I turn my attention to them:






We had Employment news and we had Virus news.

So did the through the night updates, watching the Futures/News help?

I saved yesterday's chart, which could have saved a lot of sleep and avoided watching the news etc through the night.






The little downturn was on a pretty strong day in the market. This is a divergence. Second, we are only at mid-point in our channel between support & resistance.

(a) Divergence: this is the tricky one. Let me leave that for the moment.
(b) Mid-point: this suggests higher tomorrow (which is now today). That is a tick.

So back to (a). We need further context:






Now you'll need to squint a little here: I have horizontal resistance, which it hit and also a trendline, which it didn't hit, but came pretty close. And:






The $VIX (which updates live). The VIX indicated all clear yesterday and confirms that today. But if we had looked at it yesterday, how would we have interpreted it?

Well with $TRIN (which also updates live).






The 'outliers' are buy/sell signals when you get them. However, day-to-day, markets tend to stay in range. So we can see it would/could be pretty random: we could open high, sell-off (as we have) or open low and move higher. Either way we are in that range.

Which means that we can interpret the other two charts as pretty safe, nothing major going on: hold positions.

The key factor however that allows us to say that is: no change in the macro-picture. The news is irrelevant, jobs/virus/Trump/Election, whatever, nothing new here move on. It is noise. Zero signal.

When there is a signal, everything jumps pretty quick. You would be hard pressed to miss it if you are looking.

* You figure out what is noise or signal






jog on
duc


----------



## ducati916

Nice broad base to the market heading into long w/e. Essentially this is what you want to see. Tech. has been to date very strong. We will want to see all sectors improving and adding weight to the trend. The (below) daily change doesn't really tell you overmuch, I'll update the sectors that I'm involved with later today or over the w/e.






jog on
duc


----------



## over9k

Yeah but we didn't know if the jobs data was going to be good or not - if it was bad and that was combined with virus data, it would have been a bloodbath.

I don't know what you're holding but there's a killing to be made off the volatility at the moment. I've been having a pretty similar chat in skate's "dump it here" thread.

Here's how I look compared to the 1% an index investment would have made today:






I'm going to be opening up more positions over the next couple of weeks. Still kicking myself I didn't buy some tesla when I was thinking about it last week. I'm kind of amazed at its run tbh.

Stay-at-home tech is still where it's at though.


----------



## ducati916

over9k said:


> 1. Yeah but we didn't know if the jobs data was going to be good or not -
> 
> 2. if it was bad and that was combined with virus data, it would have been a bloodbath.




1. No we didn't. But if you had been following the economic data, you could have inferred that it would be (a) not a disaster and (b) not brilliant, which leaves (c) so-so. On (c) the market goes up. On (a) the market goes up. Even on (b) the market goes up.

2. Virus data becomes more irrelevant every single day that passes. Evidence: you said we had bad virus data: every sector of the market is moving higher.

jog on
duc


----------



## over9k

Sure but they're not moving in equal measure are they? You also discount the employment numbers. What would the market have been if the virus data wasn't bad? Significantly higher that's what. This is just the one day where they've both coincided - every other time we've seen bad virus data, we've seen negative results. The employment numbers just counteracted it to such an extent that there was a net positive today.

Remember last time there was better than expected employment data? The market shot up a hell of a lot more than 1% didn't it?


Stay at home tech is head & shoulders above everything else for a reason.


----------



## ducati916

over9k said:


> Sure but they're not moving in equal measure are they?
> 
> Stay-at-home tech is miles above everything else and it's miles above everything else because of the virus data.




True. But will that remain true?

That could well be true and is probably true. So what?

jog on
duc


----------



## over9k

Post edited.

I'm pretty firm on the divergence remaining until we see a vaccine.


----------



## ducati916

over9k said:


> Post edited.
> 
> I'm pretty firm on the divergence remaining until we see a vaccine.




Well I disagree. But I'll go into greater detail over the w/e. You can provide your arguments/evidence for your case over the w/e, unless that is your case.

However if a vaccine were to be found (one that actually works) markets would explode higher.

Anyway, it looks as if we will close at the previous high, prior to the pullback. Tell me what happens Monday. You have a long w/e to think about it and marshal your evidence/arguments.

jog on
duc


----------



## over9k

My argument is very simple: Just looking at the market as a whole does not tell the whole story. There's a massive divergence between sectors and we should therefore be betting on the right sectors (and then the right companies within those sectors), not the entire sp500, if we want to make the most money. To do that, we need to understand the reason for the divergence, and what's going to happen RE: that reason. 

Put simply, the more virus we get, the more divergence we get. And there's plenty more virus coming. 

I'm interested to hear why you don't think the divergence will remain - even now we're seeing the reimposition of lockdowns in hotspots and that is not going to go away. If anything, it's going to get worse as the virus spreads more.


----------



## qldfrog

over9k said:


> My argument is very simple: Just looking at the market as a whole does not tell the whole story. There's a massive divergence between sectors and we should therefore be betting on the right sectors (and then the right companies within those sectors), not the entire sp500, if we want to make the most money. To do that, we need to understand the reason for the divergence, and what's going to happen RE: that reason.
> 
> Put simply, the more virus we get, the more divergence we get. And there's plenty more virus coming.
> 
> I'm interested to hear why you don't think the divergence will remain - even now we're seeing the reimposition of lockdowns in hotspots and that is not going to go away. If anything, it's going to get worse as the virus spreads more.



Do not let a local lockdown reimposed hide the whole economies being restarted...ohh dear, a city in the UK is licked again..well what is the economic size of a city or even Victoria vs whole countries restarting.
Balance required.


----------



## makteb

over9k said:


> My argument is very simple: Just looking at the market as a whole does not tell the whole story. There's a massive divergence between sectors and we should therefore be betting on the right sectors (and then the right companies within those sectors), not the entire sp500, if we want to make the most money. To do that, we need to understand the reason for the divergence, and what's going to happen RE: that reason.




The market does what it does and every indicator is nothing more than an indicator.  There may be a story behind the indicator and there maybe a blank page.  There is no right or wrong, there is just...how much of the pie do you want to take today...or how much of the pie are you giving back?

We will miss the rise (or the fall) if we take our eyes of the ball, the trend is your friend until it ends.


----------



## ducati916

over9k said:


> My argument is very simple: Just looking at the market as a whole does not tell the whole story. There's a massive divergence between sectors and we should therefore be betting on the right sectors (and then the right companies within those sectors), not the entire sp500, if we want to make the most money. To do that, we need to understand the reason for the divergence, and what's going to happen RE: that reason.
> 
> Put simply, the more virus we get, the more divergence we get. And there's plenty more virus coming.
> 
> I'm interested to hear why you don't think the divergence will remain - even now we're seeing the reimposition of lockdowns in hotspots and that is not going to go away. If anything, it's going to get worse as the virus spreads more.




So what's your call for next week?

jog on
duc


----------



## over9k

I'm holding my stay-at-home tech. I'm expecting more bad virus data & localised lockdowns to come. I've just moved some cash today and am waiting for another dip to pull the trigger on a few buys with. I'm gunning for all of these: 





	

		
			
		

		
	
 Boeing's the real wildcard - I initially bought at 125 & sold at 190, now looking at taking another swing at it. I'm also considering holding some pfizer long as they apparently have a contract to produce/distribute the vaccine whenever we discover it, but I need to look into that further. 

As I know you've mentioned previously we're over the hill of summer too so we have seasonality to consider as well.

Aside from the talk (political bickering) about the next stimulus package I think things are going to be pretty boring for a while now - just virus outbreak, lockdown, lift of lockdown, repeat. Once the mask factories come online we'll see virus data drop off. Even the asx was mixed/choppy today despite following a green night on wall st. 

This is the new normal.


----------



## qldfrog

Nearly tought about sending  this as Pm
There is  a difference between conviction and facts:
Please ask anyone with a bit of background in virology and the sentence:


over9k said:


> they apparently have a contract to produce/distribute the vaccine whenever we discover it



 is akin to i invest in Tesla as they  have a licence to distribute time travel machines.
Not kidding, that is what i. mentioned in a lot of other threads about the effect of propaganda and the myth of a vaccine, it is so widespread that gov will need to release one even if it is 0pc efficient.

I took the pain to cut and paste an example of surgical 3 ply masks you can order and get delivered in less than a week.there is no mask penury in July 2020.you pay, you get them.probably actually an overproduction

The rest of the post, fair, your opinion and we can agree or not but please  do not spread knowingly false or twisted information.there is enough real data to make you point: seasonality...as we can see now in Melbourne plays a role etc etc


----------



## IFocus

Talking to a mate today who is on a drug trial for an autoimmune disease, the same clinic is running Covid vaccine trials as well.

Apparently so far they are on track with the results being very good (phase 2 I think).


----------



## over9k

qldfrog said:


> Nearly tought about sending  this as Pm
> There is  a difference between conviction and facts:
> Please ask anyone with a bit of background in virology and the sentence:
> is akin to i invest in Tesla as they  have a licence to distribute time travel machines.
> Not kidding, that is what i. mentioned in a lot of other threads about the effect of propaganda and the myth of a vaccine, it is so widespread that gov will need to release one even if it is 0pc efficient.
> 
> I took the pain to cut and paste an example of surgical 3 ply masks you can order and get delivered in less than a week.there is no mask penury in July 2020.you pay, you get them.probably actually an overproduction
> 
> The rest of the post, fair, your opinion and we can agree or not but please  do not spread knowingly false or twisted information.there is enough real data to make you point: seasonality...as we can see now in Melbourne plays a role etc etc



I made very sure to qualify my statement by saying "apparently" and that I haven't looked into it frog. I was by no means stating the pfizer stuff with any kind of certainty and made very sure to state that I wasn't. I literally just saw it in passing somewhere and that's it. Don't be prickly.


----------



## ducati916

over9k said:


> 1. My argument is very simple: Just looking at the market as a whole does not tell the whole story.
> 
> 2. There's a massive divergence between sectors and we should therefore be betting on the right sectors (and then the right companies within those sectors), not the entire sp500, if we want to make the most money.
> 
> 3. To do that, we need to understand the reason for the divergence, and what's going to happen RE: that reason.
> 
> 4. Put simply, the more virus we get, the more divergence we get. And there's plenty more virus coming.
> 
> 5. I'm interested to hear why you don't think the divergence will remain -
> 
> 6. even now we're seeing the reimposition of lockdowns in hotspots and that is not going to go away. If anything, it's going to get worse as the virus spreads more.




1. Agreed.

2. There are significant divergences between the over-all market and sectors. We do need to try and understand why. In part (a) it is the way the indices are constructed. The Dow is based upon the dollar price of the stock, therefore high priced stocks exert greater influence. The S&P500 on market capitalisations. The NASDAQ is very tech. heavy. Therefore when a sector (or importantly single stock) is outperforming (for any reason) the index that it is contained in can be influenced disproportionally by that sector/stock. Currently then we have QQQ on fire because of the heavy concentration of tech.

However the QQQs contain very speculative tech. I remember day-trading TASR when it was one of the hot stocks. Does it even exist anymore? The same will happen with a number of the current crop. ZM leaps immediately to mind. Now when that correction comes (as it always does) will you know the party is over?

3. Which takes us to (b) the current laggards: one of my holdings XLF (held via FAS). Currently held:






I'm a bit annoyed as they let go 'V'. But this is one of the quirks of holding ETFs, sometimes stuff you like gets sold. Anyway, the point being: you have an amalgamation of TBTF. This is a pretty safe ETF. Want spice, just add FAS for x3 movement.

This sector is lagging:




View attachment 105546







Here it is with FAS.

Will it always lag the broader market?

Starting to look very bullish:






Just your bog standard chart.






Indicating that we could expect fortunes to turn.






P&F which seems to have lost popularity lately.






Seasonality.

Fundamentals: the Banks in this ETF are very closely aligned with the Fed. and the health of the Regional Banks, whose fundamentals are picking up: Real Estate:















The largest driver of Bank earnings is picking up. Banks have already passed their solvency tests. All is set for some catching up to the over-all market performance. Corporate finance is also on fire (although probably not for the best reasons).

4. The US is not going to go lockdown. They will go as Sweden did: every-man for himself. There are a number of reasons for this (in no particular order);

(i) Shutting the economy the size of the US is massively damaging: because they 'cannot, they will not';
(ii) It is an election year (shuttering is unpopular);
(iii) There are Constitutional issues. This hasn't been overly discussed, but Yanks are highly litigatious;
(iv) Much of the (highly profitable) business can operate with 'social distancing', work from home, etc;
(v) There is a Cold War developing with China, which means outsourced supply chains could be repatriated;
(vi) Hopes of a vaccine;
(vii) Other.

So whether the virus increases or not, the US is not going to shut-down in the same way as NZ did. Some industries will suffer, cease to exist even, but those are the ones you avoid.

5. Divergences never remain in aggregates. They may persist in individual names for a while, even a long while, but capitalism is competitive (although precisely in XLF we have crony-capitalism at play) and profitability ebbs and rises, driving capital allocation to those on the rise. Banking is a low margin business, leveraged by massive leverage (hence the requirement for cyclical bailouts). We have just passed through an event that would (and would have, save for another bailout, sunk many banks) clear away the most egregious excesses, ready for them to be piled on again (the major money banks can trade again) which for the next cycle will massively boost profits, which will in due course, turn into massive losses.






6. Nobody cares.

jog on
duc


----------



## over9k

ducati916 said:


> 1. Agreed.
> 
> 2. There are significant divergences between the over-all market and sectors. We do need to try and understand why. In part (a) it is the way the indices are constructed. The Dow is based upon the dollar price of the stock, therefore high priced stocks exert greater influence. The S&P500 on market capitalisations. The NASDAQ is very tech. heavy. Therefore when a sector (or importantly single stock) is outperforming (for any reason) the index that it is contained in can be influenced disproportionally by that sector/stock. Currently then we have QQQ on fire because of the heavy concentration of tech.
> 
> 4. The US is not going to go lockdown. They will go as Sweden did: every-man for himself. There are a number of reasons for this (in no particular order);
> 
> (i) Shutting the economy the size of the US is massively damaging: because they 'cannot, they will not';
> (ii) It is an election year (shuttering is unpopular);
> (iii) There are Constitutional issues. This hasn't been overly discussed, but Yanks are highly litigatious;
> (iv) Much of the (highly profitable) business can operate with 'social distancing', work from home, etc;
> (v) There is a Cold War developing with China, which means outsourced supply chains could be repatriated;
> (vi) Hopes of a vaccine;
> (vii) Other.
> 
> So whether the virus increases or not, the US is not going to shut-down in the same way as NZ did. Some industries will suffer, cease to exist even, but those are the ones you avoid.
> 
> 6. Nobody cares.




2 - This is what I've been saying the whole time? Take tech out, and to be more specific, what I'm calling stay-at-home tech, and you see a wildly different picture.

4 - No, but we're seeing significant lockdown(s) in a lot of places and lockdowns based on industry/sector as well. Just look at Australia for example: K.O'ing victoria alone is what, 25% of the population? This is not insignificant. And the U.S has virus basically everywhere.

6 - Absolutely false. If nobody cared about the virus, nobody's behaviour would have changed. People are avoiding things like the doctor etc for a reason. They are shopping on amazon or ebay or whatever and not going into bricks & mortar stores for a reason. Companies are telling employees not to come in to the office unless they have to for a reason. I.e anyTHING which can be done from a distance, is. Lifting the lockdowns is not changing this behaviour - it's only allowing the people that couldn't work from home to *maybe* go back to work. Offices are empty and remaining so. However, I'll humour your assertion that nobody cares to make a bigger point:

Let's for a moment assume that all lockdowns are lifted and everyone everywhere are just idiots with their health and *everybody* gets coronavirus. You think that millions of people either dying and/or being off work sick for weeks is not going to be a HUGE cost all on its own?

This is the reason why companies which can allow/enable their employees to work from home are doing so: Employees off sick costs money. In this case, a LOT of money.

Either the costs will come from lockdowns/people avoiding human contact, or the costs will come from the sickness that comes as a result of not having the lockdowns/avoiding human contact and thus contracting the virus. There is a cost to be paid one way or another. What I am saying is that it CANNOT be avoided.

As a result, what we see is capital diverting into all the various things which enable people to keep their distance. 

It's no more complex than that.


----------



## ducati916

over9k said:


> 2 - This is what I've been saying the whole time? Take tech out, and to be more specific, what I'm calling stay-at-home tech, and you see a wildly different picture.
> 
> 4 - No, but we're seeing significant lockdown(s) in a lot of places and lockdowns based on industry/sector as well. Just look at Australia for example: K.O'ing victoria alone is what, 25% of the population? This is not insignificant. And the U.S has virus basically everywhere.
> 
> 6 - Absolutely false. If nobody cared about the virus, nobody's behaviour would have changed. People are avoiding things like the doctor etc for a reason. They are shopping on amazon or ebay or whatever and not going into bricks & mortar stores for a reason. Companies are telling employees not to come in to the office unless they have to for a reason. I.e anyTHING which can be done from a distance, is. Lifting the lockdowns is not changing this behaviour - it's only allowing the people that couldn't work from home to *maybe* go back to work. Offices are empty and remaining so. However, I'll humour your assertion that nobody cares to make a bigger point:
> 
> 7. Let's for a moment assume that all lockdowns are lifted and everyone everywhere are just idiots with their health and *everybody* gets coronavirus. You think that millions of people either dying and/or being off work sick for weeks is not going to be a HUGE cost all on its own?
> 
> 8. This is the reason why companies which can allow/enable their employees to work from home are doing so: Employees off sick costs money. In this case, a LOT of money.
> 
> 9. Either the costs will come from lockdowns/people avoiding human contact, or the costs will come from the sickness that comes as a result of not having the lockdowns/avoiding human contact and thus contracting the virus. There is a cost to be paid one way or another. What I am saying is that it CANNOT be avoided.
> 
> 10. As a result, what we see is capital diverting into all the various things which enable people to keep their distance.
> 
> It's no more complex than that.




2. When I say Tech. I'm more referring to MSFT, AAPL, AMZN. These are huge companies that can (and do) move the needle in the indices.

4. I don't look at Australia. The US is different.

6. I'm not referring to Joe Bloggs in the street. I'm referring to the financial markets. The markets just don't care. 

7. The markets are not looking at today or tomorrow: they are looking at 2021/2022 earnings.

8. Where they work is largely immaterial. Productivity is the issue.

9. The market just doesn't care.

10. To date, there is an element of truth to that. Going forward, unlikely.

jog on
duc


----------



## ducati916

So it doesn't look as if there is an analysis of what is going to happen early in the week, that being Monday and which could set the tone for the week.

The Fed. and the creation of liquidity:






Lots of liquidity. Zero inflation (as measured by the Central Banks). Therefore, there will be zero inhibition to creating more liquidity and buying all and anything that even resembles a financial instrument.

So the classes competing for this liquidity: (a) Bonds (Treasury & Corporate), (b) Stocks, (c) Commodities (Gold/Silver) and (d) Currencies.






The Commercials are supportive of the US$. This will have more impact on commodities (Oil) than Bonds or Stocks. Given the latest oil news re. gradual increase in supply coming back online from the Arabs/Russia/US/etc, dollar strength just adds to POO weakness.











Which is supported by the ratio of Bondsollar. We may well see some weakness in Bonds. It will not be major. Any major increase in yield will be bought by the Fed. The macro picture remains strong/neutral for stocks. Therefore it will be a straight out technical fight at resistance in the market.






Gold is the strange one. There is no hint of inflation. Silver is doing nothing, confirming that Gold is not moving on inflation fears. Is Gold currently operating as a stock? I'm starting to think so. Is it competing for investor funds?






The Commercials are still leaning against.






Gold could also be weakening against its natural competitor, Bonds. The thing is this: you could buy gold, it is going up (gradually) but I have yet to hear an explanation why (other than my 4 hour chart says so). Technically the 'why' isn't critical as long as you have an exit plan. It could be that China and India combined (buying the physical) amount to such high value, that it is actually pushing the paper higher. If this is the explanation (if you have a better one feel free to jump in) then gold could go down a lot, very quickly. If that is the case, then gold is not really competing with stocks for liquidity. Again, that has ominous overtones if the purchasers of the physical slow down or reach their fill.

Stocks:

The QQQs have been on fire. The S&P500 lagging (by comparison).










The Commercials are leaning against the QQQs and supporting the S&P500, which is consistent with various sectors other than Tech. starting to wake up as the economic data improves. Therefore I would expect a bit of mean reversion in the markets with Tech. cooling off a tad and other sectors starting to move. The overall result being bullish for stock markets. The S&P500 still needs to (a) move back above recent high and then (b) move above all-time high.






The fight will occur at the 310 price. Pretty much equal OI, but a big surge of new PUTS at 310 on Thursday (+29K). These new positions will be interesting to watch to see how they react to prices when we reopen Monday. The reason for that is the CALLS were placed (probably) when the market was lower. Now potentially, we have a situation where the CALLS go ITM. If the market is strong, they hold those positions to increase profit. The new positions in the PUTS are now OTM and losing fast (Options being highly leveraged) so these new positions close (loss limit). The result is a short term boost to the longs as MMs buy the PUTS and hedge (buy long stock). It is the equivalent of a (small) short squeeze. Of course if a larger quantity of the 165K PUTS do the same, then it amplifies that effect.

Technically, the market is in good shape short term (1-3 days) to move higher. Therefore I would expect to move higher Monday, Tuesday, possibly re-evaluate Wednesday/Thursday, which really depends on how much of a move occurs Monday. If high energy is required Monday, to shift through that short term resistance, then we'll need to re-evaluate on Wednesday.

jog on
duc


----------



## ducati916

Just an old chart:






We are at bottom right. We may move to bottom left. Either way, stocks (for the moment) are the place to be. If we make the move to the left, then add commodities to the portfolio.

jog on
duc


----------



## over9k

ducati916 said:


> 2. When I say Tech. I'm more referring to MSFT, AAPL, AMZN. These are huge companies that can (and do) move the needle in the indices.
> 
> 4. I don't look at Australia. The US is different.
> 
> 6. I'm not referring to Joe Bloggs in the street. I'm referring to the financial markets. The markets just don't care.
> 
> 7. The markets are not looking at today or tomorrow: they are looking at 2021/2022 earnings.
> 
> 8. Where they work is largely immaterial. Productivity is the issue.
> 
> 9. The market just doesn't care.
> 
> 10. To date, there is an element of truth to that. Going forward, unlikely.
> 
> jog on
> duc




2. Agreed. But again, tech and stay-at-home tech are different things. 

4. I know, I was just using it as an example. What do you think happens when all of california gets locked down for example? But let's assume that doesn't happen: Getting sick costs money. LOTS of money. You really want to claim that millions of people off work sick (or dead) is not going to effect markets? 

6. You think that joe bloggs' behaviour doesn't (to at least some extent) dictate markets? Seriously? You think that, oh I don't know, the fact that doctors' surgeries are now ghost towns doesn't have anything to do with why pharmaceuticals are in the toilet? 

7. The markets are looking at all time horizons. Why do you think we have the volatility we do? 

8. Rubbish. Where you work DICTATES your productivity because if you work in close contact with people, you get the virus. You get the virus, you can't work. 

9. Further rubbish. You're saying that the market doesn't care about lockdowns or millions of people off work sick (or dead). That's essentially your entire thesis. It's nuts. 

10. There is a lot more than an element of truth to it and you know it. Do I really need to start posting graphs of zoom, docusign, ebay, amazon, microsoft etc over the past couple of months and then compare them to, well, almost everything else? You're not stupid, you know the divergence is there and you know it's massive and you know why it's there and you know why it's massive: The markets DO care about the virus and its very simple but very significant consequences. 

If you want to talk about why things are going to change from here on out, I'm all ears. I'm actually very interested to hear your thoughts. But you've been absolutely, categorically, disprovably wrong up until this point. 


My thesis for the week going forward is the same as it has been: More virus dictated mess, more buying/holding of stay-at-home tech and virtually nothing else. I'll be opening up more positions soon now that the jobs data is out of the way (friday's employment data delayed the slump we would have otherwise seen) and the only news from here on out aside from the political bickering about the next stimulus package is going to be more virus data and more lockdowns. 

The only difference is that we're now over the hill of summer so we're going to start to see the seasonality changes we always see on top of the change we've seen from the virus as well. 

The only thing that can/will reverse this trajectory is some kind of vaccine news. This IS the new normal.


----------



## ducati916

over9k said:


> 2. Agreed. But again, tech and stay-at-home tech are different things.
> 
> 4. I know, I was just using it as an example. What do you think happens when all of california gets locked down for example? But let's assume that doesn't happen: Getting sick costs money. LOTS of money. You really want to claim that millions of people off work sick (or dead) is not going to effect markets?
> 
> 6. You think that joe bloggs' behaviour doesn't (to at least some extent) dictate markets? Seriously? You think that, oh I don't know, the fact that doctors' surgeries are now ghost towns doesn't have anything to do with why pharmaceuticals are in the toilet?
> 
> 7. The markets are looking at all time horizons. Why do you think we have the volatility we do?
> 
> 8. Rubbish. Where you work DICTATES your productivity because if you work in close contact with people, you get the virus. You get the virus, you can't work.
> 
> 9. Further rubbish. You're saying that the market doesn't care about lockdowns or millions of people off work sick (or dead). That's essentially your entire thesis. It's nuts.
> 
> 10. There is a lot more than an element of truth to it and you know it. Do I really need to start posting graphs of zoom, docusign, ebay, amazon, microsoft etc over the past couple of months and then compare them to, well, almost everything else? You're not stupid, you know the divergence is there and you know it's massive and you know why it's there and you know why it's massive: The markets DO care about the virus and its very simple but very significant consequences.
> 
> 11. If you want to talk about why things are going to change from here on out, I'm all ears. I'm actually very interested to hear your thoughts. But you've been absolutely, categorically, disprovably wrong up until this point.
> 
> 
> 12. My thesis for the week going forward is the same as it has been: More virus dictated mess, more buying/holding of stay-at-home tech and virtually nothing else. I'll be opening up more positions soon now that the jobs data is out of the way (friday's employment data delayed the slump we would have otherwise seen) and the only news from here on out aside from the political bickering about the next stimulus package is going to be more virus data and more lockdowns.
> 
> 13. The only difference is that we're now over the hill of summer so we're going to start to see the seasonality changes we always see on top of the change we've seen from the virus as well.
> 
> 14. The only thing that can/will reverse this trajectory is some kind of vaccine news. This IS the new normal.




4. Correct.

6. Joe Bloggs is irrelevant. As to medical sector:






7. Volatility is falling.






8. Not what I said:






9. Correct. Market could care less.

10. If it were simply ZM and any other micro-caps, the market as a whole would not be rising. Because it is MSFT, AMZN, AAPL, GOOG: these are mega-caps that will move the market and the QQQs, which are very Tech heavy reflect this outperformance to date as against SPY/DIA.

11. To date you have not provided any evidence. All you provide is your opinion. Therefore you have proven nothing.

12. Which means what? Market moves lower?

13. Posted.

14. What trajectory is that? So far markets have been 1-way. 

jog on
duc


----------



## over9k

ducati916 said:


> 4. Correct.
> 
> 6. Joe Bloggs is irrelevant. As to medical sector:
> 
> View attachment 105628
> 
> 
> 7. Volatility is falling.
> 
> View attachment 105629
> 
> 
> 8. Not what I said:
> 
> View attachment 105630
> 
> 
> 9. Correct. Market could care less.
> 
> 10. If it were simply ZM and any other micro-caps, the market as a whole would not be rising. Because it is MSFT, AMZN, AAPL, GOOG: these are mega-caps that will move the market and the QQQs, which are very Tech heavy reflect this outperformance to date as against SPY/DIA.
> 
> 11. To date you have not provided any evidence. All you provide is your opinion. Therefore you have proven nothing.
> 
> 12. Which means what? Market moves lower?
> 
> 13. Posted.
> 
> 14. What trajectory is that? So far markets have been 1-way.
> 
> jog on
> duc




4. Ok, people off work sick for weeks and/or dead isn't going to effect markets. Right. 

6. No, mass human behaviour will change the market. Pharmaceutical sector has gone absolutely nowhere compared to tech. XPH is down just over 5% year to date. https://etfdb.com/etf/XPH/#etf-ticker-profile Compare etf's by sector. They're on different planets. 

7. and? I've never argued about volatility with you. No disagreements here.

8. Yeah and what enables that productivity to continue? You know, people to work without getting sick? Stay at home tech.

9. Rubbish. Explain the market reactions to the virus news then.

10. The market has on average risen because tech has risen so much. Take tech out of things and take a look at how any of the major indexes look 

11. Are you denying the divergence now? Because I keep asking you to explain it and you still haven't done so.

12. No, the market as a whole will rise, but that'll only be because of tech. We'll see sweet all elsewhere and probably even more drop in the really bad stuff. But even if everything rises, I bet stay-at-home tech's still head & shoulders above the rest. This assumes no vaccine or stimulus news though.

13. We agree on this.

14. Sure, but are we just dumping our money into an index fund or spy or are we trying to be at least a little bit more sophisticated than that? Because the trends are a hell of a lot different if you at least break things down by *sector*, let alone subsectors. I've never argued that the entire market won't increase - but that there are other trends to be aware of and to trade those instead.

I will be opening up more positions in stay-at-home tech this coming week. Here's everything I'm gunning for/what I'm going to fill my entire portfolio with (and I already own some of it):


----------



## Chronos-Plutus

Buffett is buying into energy, surprising:
https://www.cnbc.com/2020/07/05/war...gy-natural-gas-assets-in-10-billion-deal.html


----------



## over9k

Yeah shale oil has allowed the U.S to change nearly its entire petrochemical-derived-product base input to natural gas:






They previously had to use oil because gas is just too difficult/expensive to transport, but not so when you can build the factories on top of the oil (or gas) fields. 

Buffett ain't stupid.


----------



## Chronos-Plutus

over9k said:


> Yeah shale oil has allowed the U.S to change nearly its entire petrochemical-derived-product base input to natural gas:
> 
> 
> 
> 
> 
> 
> They previously had to use oil because gas is just too difficult/expensive to transport, but not so when you can build the factories on top of the oil (or gas) fields.
> 
> Buffett ain't stupid.




True; just curious as to why he likes gas right now, and why Dominion Energy assets. We don't hear much about Buffett buying into hydrogen or renewables.


----------



## over9k

I'm sure he's done his DD and we won't be privy to it lol


----------



## qldfrog

Chronos-Plutus said:


> . We don't hear much about Buffett buying into hydrogen or renewables.



Buffet is not into guessing future winner so no hydrogen, and there is heaps to be done with fossil fuels in the next decades at a bargain price right now.
Interesting news thanks


----------



## makteb

Thanks duc and 9k.

 It doesn't matter who is right or wrong, I've read views from both sides and can only better my trading than not knowing.


----------



## ducati916

Futures trading higher currently:






See how it develops through the night for tomorrow's open.

jog on
duc


----------



## ducati916

News: Cold war heating up.

As the U.S.-China relationship deteriorates and bipartisan support for a tougher stance against the world’s second large economy grows in Congress, U.S.-listed Chinese companies could be among those to see blowback this year.

Transparency into Chinese companies has been a longstanding issue, with China barring the U.S. Public Company Accounting Oversight Board, or PCAOB, from seeing corporate audits—describing that as a national security risk. Myriad Chinese companies have listed on U.S. exchanges for years, including heavyweights like Alibaba Group Holding (ticker: BABA) and JD.com (JD). But as momentum to take a tougher stance on China and reassess the U.S. relationship with the country grows, Congress has been moving toward delisting companies that don’t comply.

Many Chinese companies have in recent months sought secondary listings in Hong Kong, including Alibaba, NetEase (NTES) and JD.com, while China’s largest chip maker, Semiconductor Manufacturing International Corp oration, delisted last year.

The proposal to delist companies has passed the Senate and is awaiting a vote by the House. In a video briefing with clients, Gavekal Research’s Arthur Kroeber said there is “a pretty good chance” that legislation requiring Chinese companies to fully meet U.S. accounting oversight standards will pass the House, and if it does, it is almost certain that most Chinese firms will need to delist from the U.S. For the most part, Kroeber expects most companies to relist in Hong Kong rather than Shanghai to keep tapping global liquidity.

In EMQQ:






Hmmmm.

jog on
duc


----------



## over9k

Futures up today as all the market makers are banging on about "fully expecting" another stimulus package soon/that whatever is proposed is going to pass congress soon. Bloomberg reporter saying a "republican lawmaker" has told him it's now only a question of when, not if, as they're all certain a 2nd wave and subsequent lockdowns are coming "sometime in the fall" but timing it is obviously the hard part. Apparently there's a lot of pushback against ending the income supplements/boosted welfare payments. 

Obviously handy to know people in washington.


----------



## over9k

FWIW I wouldn't be surprised if we saw the stimulus a bit after when the 4th of july infections start showing in the data, so that'd be 3ish weeks from now. There's talk of before the august congressional/senate recess. 

Tech-heavy nasdaq up the most this morning as usual.


----------



## ducati916

Services sector improving:













And China equities moving higher






In the US equities also moving higher:






Should clear that resistance of the 'previous high' and then move to the resistance point of the 'all time high'. I would expect (as indicated over the w/e) that we progress to the ATH resistance point this week. Whether we clear it this week will become clearer as we see where the market sits Wed/Thurs.

jog on
duc


----------



## over9k

The megatech is heading stratospheric (amazon up 5% today and cracking the 3000 mark) so I'd expect the major indices to hit highs pretty soon. 

Tesla's run more than 30% over the past 5 days too, which is absolutely ridiculous.


----------



## ducati916

over9k said:


> The megatech is heading stratospheric (amazon up 5% today and cracking the 3000 mark) so I'd expect the major indices to hit highs pretty soon.
> 
> Tesla's run more than 30% over the past 5 days too, which is absolutely ridiculous.





The purpose of this thread is primarily to (within human constraints) predict where the market is going tomorrow and over the next few days. Even longer if possible. This is so that traders/investors can choose to add/lighten/hedge their positions in a timely manner.

Any half-wit can tell me what has just happened.

You were offered the opportunity to use the thread at the w/e to do exactly that. You did not take that opportunity. I see elsewhere that you were thinking of opening your own thread 'Trading the Chop'. Excellent idea.

Now I don't really bother with individual stocks. If you really want to add value to this thread, take your favourite ones and comment on what is going to happen. Not on what has already transpired and is no longer available.

jog on
duc


----------



## ducati916

So just looking at the QQQs as individual stocks for a moment.












I haven't looked at any of their charts. Probably 90% of them, I have never heard of. To trade them, you would need either some form of mechanical trading system, or manage them individually on a discretionary basis. Either way, they are jumping around.

The question for me would be: does the direction of the Index (QQQ) determine the trend in these names? Volatility I can live with, if, and only if, they conform (ultimately) to the underlying trend of the overall market. Now I have no idea of the answer. If I have time, I might check. 

Going way back when I traded stocks individually, it wasn't really the case. Individual stocks followed their own individual stories. Possibly times are a changing!

jog on
duc


----------



## over9k

ducati916 said:


> The purpose of this thread is primarily to (within human constraints) predict where the market is going tomorrow and over the next few days. Even longer if possible. This is so that traders/investors can choose to add/lighten/hedge their positions in a timely manner.
> 
> Any half-wit can tell me what has just happened.
> 
> You were offered the opportunity to use the thread at the w/e to do exactly that. You did not take that opportunity. I see elsewhere that you were thinking of opening your own thread 'Trading the Chop'. Excellent idea.
> 
> Now I don't really bother with individual stocks. If you really want to add value to this thread, take your favourite ones and comment on what is going to happen. Not on what has already transpired and is no longer available.
> 
> jog on
> duc




You know what's worse than a patronising speech?

One that's wrong.



over9k said:


> My thesis for the week going forward is the same as it has been: More virus dictated mess, more buying/holding of stay-at-home tech and virtually nothing else. I'll be opening up more positions soon now that the jobs data is out of the way (friday's employment data delayed the slump we would have otherwise seen) and the only news from here on out aside from the political bickering about the next stimulus package is going to be more virus data and more lockdowns.
> 
> The only difference is that we're now over the hill of summer so we're going to start to see the seasonality changes we always see on top of the change we've seen from the virus as well.
> 
> The only thing that can/will reverse this trajectory is some kind of vaccine news. This IS the new normal.






over9k said:


> the market as a whole will rise, but that'll only be because of tech. We'll see sweet all elsewhere and probably even more drop in the really bad stuff. But even if everything rises, I bet stay-at-home tech's still head & shoulders above the rest. This assumes no vaccine or stimulus news though.




And well golly gosh jeepers, just look at the results of today:






A mile above the sp500, and two miles above basically all of the other sectors, just like every other day.

I think you have a bit of an ego problem duc. There's a very obvious trend here that you've failed to identify, and you need to admit it.


----------



## over9k

So the sp500 closed up 1.6% and the tech heavy nasdaq closed up 2.2%. I've closed up over 3%.

So it was exactly as I predicted and we've seen absolutely no deviation from what I've been saying for weeks now, and until the virus is gone, we're not going to.

As long as there's virus, anything which can be done via distance, is. Anything which can't be, results in people either getting sick or dying, which means big costs for whatever that business is. It's a double-edged sword of increases in business & cost savings for stay-at-home stuff and decreases in business and additional costs for personal-contact stuff.

Until the virus is gone, this is the new normal.


----------



## ducati916

Let me examine the claim:






So essentially the claim is that Tech. specifically 'Take Home Tech' is the only sector in the market moving the market: everything else is custard.

The evidence:







While Tech. is doing well, the rest of the market is doing just fine.

Therefore your assertion is incorrect.

Re. the 'Virus'. I have heard little else other than virus this, virus that. The sum total of effect that the virus has had is difficult to fully quantify because had the virus disappeared/cured/vaccine/etc, the the market could well have been much higher.

However, your assertion has been that the virus will create a break of the Trend/Bounce/whatever. This is incorrect. There has been any number of virus based headlines calling for a break in trend, new lows, collapsing economy, you name it, it has probably been written about. All incorrect.

Take Home Tech. What a joke. What we have are the largest, most popular stocks: AMZN, MSFT, NFLX, etc. which are moving the markets. I guarantee to you the effect of ZM and a handful of other micro-caps will have negligible to zero impact on moving the indices higher or lower.

You claim 'predictive powers' due to your assimilation and understanding of the virus et al. You were offered free rein of the thread just prior to the w/e to call this week. What did you actually do? Nothing.

I find zero value in hindsight traders/investors/whatever. Anyone can claim the trading prowess of the gods, very few actually deliver in real time. To date all I have seen from you is after the fact. Deliver in real time and you will gain respect. At the moment all you are doing is cluttering up my thread with nonsense and making me scroll miles down the page to get to empty space.

jog on
duc


----------



## Spaniel14

Long-time lurker, first time poster.

Felt I had to register and post so that I can say thanks to duc for the awesome analysis they give. This thread (and trading the bounce) were awesome threads that helped me navigate the pandemic and downturn. I’m certainly no expert and I have learnt a lot about the market as a result. 

I am starting to find it very tiring with half of every page filled with petulant bickering, and claims of making xyz%. So much so that I am starting to browse other forums because it is tiring. Arrogance isn’t a favourable trait, nobody here is Warren Buffett, and nobody here is that one in a million trader that calls everything to perfection. If you were, you wouldn’t be here. Telling us how well you performed yesterday is of no use to predicting what’s going to happen tomorrow.

One question I have for the owners of so-called “stay at home tech”. It’s well known (and dead obvious) that stocks like Zoom are incredibly overbought. Surely these stocks have a huge correction on the horizon? It might not be tomorrow or this year even, but once life returns to normal, the EPS of these companies is going to drop dramatically. While some companies are moving to more flexible working arrangements with staff working from home, many (like the one I work for - sits very high up the S&P500) are going to return to normal office life when conditions allow.


----------



## willoneau

Spaniel14 said:


> One question I have for the owners of so-called “stay at home tech”. It’s well known (and dead obvious) that stocks like Zoom are incredibly overbought. Surely these stocks have a huge correction on the horizon? It might not be tomorrow or this year even, but once life returns to normal, the EPS of these companies is going to drop dramatically. While some companies are moving to more flexible working arrangements with staff working from home, many (like the one I work for - sits very high up the S&P500) are going to return to normal office life when conditions allow.




Then the question I have how do we determine it happening before it does?


----------



## Beaches

I would also like to acknowledge the time Duc has put into this thread and the preceding thread of Trading the Bounce. It is rare in this day and age to find someone with real knowledge of the markets that is willing to share it for no reward or remuneration other than to help others. 

As your trading experience and time in the market increases, it becomes increasingly rare that you discover real and useful insights into the workings of the market. There are many opinions and claims around forums and amongst traders, with most being a complete waste of time. However, I would have to say that Duc has provided greater insight into the US market than I have come across for many a year and it has been a refreshing pleasure to follow his posts. 

Thanks Duc and I hope you continue to post.

Finally, I would like to endorse this suggestion



ducati916 said:


> I see elsewhere that you were thinking of opening your own thread 'Trading the Chop'. Excellent idea.


----------



## qldfrog

Spaniel14 said:


> Long-time lurker, first time poster.
> 
> Felt I had to register and post so that I can say thanks to duc for the awesome analysis they give. This thread (and trading the bounce) were awesome threads that helped me navigate the pandemic and downturn. I’m certainly no expert and I have learnt a lot about the market as a result.
> 
> I am starting to find it very tiring with half of every page filled with petulant bickering, and claims of making xyz%. So much so that I am starting to browse other forums because it is tiring. Arrogance isn’t a favourable trait, nobody here is Warren Buffett, and nobody here is that one in a million trader that calls everything to perfection. If you were, you wouldn’t be here. Telling us how well you performed yesterday is of no use to predicting what’s going to happen tomorrow.
> 
> One question I have for the owners of so-called “stay at home tech”. It’s well known (and dead obvious) that stocks like Zoom are incredibly overbought. Surely these stocks have a huge correction on the horizon? It might not be tomorrow or this year even, but once life returns to normal, the EPS of these companies is going to drop dramatically. While some companies are moving to more flexible working arrangements with staff working from home, many (like the one I work for - sits very high up the S&P500) are going to return to normal office life when conditions allow.



Use the ignore function on the people you can not bear anymore.
Stay with us


----------



## qldfrog

A big thank you as well Mr Duc
Great argumented views on the us market, i was there purely for a few stocks and investment in area i can not find here, now it is a much more informed view and a welcome view to sky is falling readings.
Learnt do much in so short a time merci beaucoup


----------



## Chronos-Plutus

> Arrogance isn’t a favourable trait, nobody here is Warren Buffett, and nobody here is that one in a million trader that calls everything to perfection. If you were, you wouldn’t be here.




There is no trader that gets it right 100% of the time. I like Warren Buffett, I think he is an outstanding investor, however even he has made some disastrous investments. In fact Buffett nearly went bankrupt with his textile factory when first starting out.


----------



## Spaniel14

Chronos-Plutus said:


> There is no trader that gets it right 100% of the time. I like Warren Buffett, I think he is an outstanding investor, however even he has made some disastrous investments. In fact Buffett nearly went bankrupt with his textile factory when first starting out.




That is true, and there is a humility in admitting when a trade or investment goes wrong. Admitting you made a mistake is the first, and most important, step towards avoiding repeating that mistake. But I digress.

We’re into earnings season. Analysts will naturally have their predicted EPS, it’s just a question of how accurate they were. I feel that this season, we will see a higher level of surprise between expected and actual EPS. We’ve never been through market conditions like this in recent history, so I’m expecting analysts to be reasonably wrong across some of the more volatile sectors. 

I have a feeling analysts will have underestimated the reduction in EPS within the travel sector, particularly airlines. There are a lot more moving parts than normal in the last quarter. We’ve had the severe drop in the revenue stream (passenger numbers, loyalty revenue etc.), but we have also had wild changes to OPEX (aircraft into various degrees of storage all costs significant money upfront, and a (smaller) continual cost to maintain, staffing redundancies), plus a hit to CAPEX (cancelled/delayed orders, route expansion delays, new product rollout delays etc.). There’s going to be significant non-cash impacts too, many airlines have accelerated retirement of their various fleets (Delta retiring the 777 for example) which will result in significant asset write-downs. In short, pretty darn difficult to solve a multi-variate problem as big as this.

On the flip side, as I eluded to earlier, there is tech. My feeling here is that certain stocks within tech are going to miss their predicted EPS by some margin. Zoom for example, they are a one-trick pony with a single product. Your typical John Doe uses a free version of Zoom (no revenue), so they are relying on corporations to sign on to Zoom. Many (like my own) have jumped on the bandwagon at short notice, as it is an easy to use interface, so companies can roll it out to staff without much pain. However, there are more attractive offerings - take Microsoft Teams. It does the job of Zoom and more, but it is fully integrated with Office 365. It makes no sense for companies to be paying for both products, so those that have jumped on the Zoom bandwagon for now, will revert to old faithful MSFT - less cost, less compatibility and integration issues as you have 1 product suite designed to work together, not 2 different softwares trying to work together (and let’s face it, MSFT have no reason to lend ZM a helping hand with integration, it’s against their own agenda). What does this mean? EPS may be looking good for ZM this quarter, but future quarters are not going to be as rosy. There’s also the question of how much has momentum trading inflated the share price of certain tech stocks (cough Tesla), and will this round of earnings announcements be enough to awaken many investors and send them on a reversal. Crystal ball anyone?


----------



## over9k

Right so I was going to break everything up and address all the drivel point by point but I'll make one large post that should hopefully cover it all:

This thread is called "trading the trend". Let's go back to before coronavirus for a moment.

Before coronavirus hit, there was already a long and consistent trend of business and work moving away from face to face/bricks and mortar and to distance/online based on purely economic reasons. The ability to order items direct from the manufacturer online, the ability for even a middle-man to sell items from a massive warehouse with rent a tenth of the price per square foot and massive economies of scale to boot, the ability for a business to reduce its necessary office space and therefore rent and fitout costs by 20% if its employees were to stay home/work from home just one day a week (let alone all of them), the ability to talk to someone halfway across the world in seconds virtually for free on a zoom call vs having to fly what could be teams of people for a day straight, pay for all their flights, food, accommodation, lost work, time away from home and so on and so forth were all major competitive advantages and resulted in half the bloody economy undergoing a structural readjustment based on nothing other than economic/cost reduction grounds.

This is the very trend I have been talking about ad nausea since my first comments in this thread.

What coronavirus has done is put that trend on steroids. We haven't seen 5% more people working/ordering stuff from home in the last 6 months, we've seen 10x it. Or whatever. Exact numbers don't really matter - it's a massive increase and that's all we need to worry about.

So from there, we ask ourselves, why? The answer is twofold, but both answers share the same source. Firstly, there's the lockdowns. Government imposed lockdowns literally required that many people work and buy from home. Secondly, human behaviour. Many both workers and businesses have voluntarily decided to keep everyone working from home because A: people themselves don't want to get the virus and B: getting the virus stops you from working. Even if you didn't actually care about your employees, keeping them uninfected makes sense from a purely business point of view. What is key with these two realities is understanding that even if all government imposed lockdowns were lifted, employees and businesses are VOLUNTARILY avoiding human contact. This means that government imposed lockdowns or not, the end result is still very similiar: Avoidance of human contact, i.e working & ordering from home if at all possible.

And you can prove this to yourself quite easily - if it was only about the lockdowns, why hasn't stay-at-home tech fallen off a cliff once the lockdowns have been lifted? Why hasn't everything else taken off like a gunshot? Why haven't we seen an inversion of what we saw previously?

There is a reason why what I have dubbed "stay at home tech" has outperformed all the major indices massively. There is a reason why basically all markets except stay-at-home-tech have tanked every single time bad virus headlines/data has hit the news and stay-at-home-tech has often actually increased on those days and that reason is that it is the VIRUS which is dictating human & business behaviour and therefore markets.

But the deeper point that people like duc are failing to recognise is that the coronavirus has not diverted a previous trend or created a new one - it has simply accelerated something which was ALREADY OCCURRING ORGANICALLY.

There is a reason why all the airline execs are saying that business travel will never return to previous levels. There is a reason why the airbnb ceo is saying his business will never return to previous levels. There is a reason why so many companies are mothballing entire floors of offices or buildings. There is a reason why office rents are down 25% and outright purchase prices are down 40%. There is a reason why jets are being retired and scrapped en masse. There is a reason why chief exec's of office furniture companies are saying their business will never return and they're attempting to pivot to home office fitouts. There is a reason why sales on ebay & amazon are absolutely stratospheric even when their bricks & mortar competitors have been allowed to reopen, and the reason is exactly the same for all of these things:

THIS WAS ALL GOING TO HAPPEN ANYWAY.

This is NOT a divergence from a previous trend, this IS the previous trend. It's just been put into overdrive and 5 years of change has occurred in about 5 months.

This is not to say that this is going to continue in perpetuity. I have never claimed that things will. Once the virus, and therefore the reason for the ACCELERATION of this phenomenon is gone, plenty of people will return to the office and plenty of money will go back to consumables like food rather than tv streaming services or what have you. But as long as the virus remains, so will this acceleration of this ALREADY OCCURRING trend.

But once a vaccine is found, things are NOT going to return to their pre-virus levels because those levels WERE GOING TO CHANGE ANYWAY.

I'll bet you any sum of money you like, absolutely anything, that zoom, amazon, ebay et al will NOT return to their pre-virus levels. Any sum you like.

Anyone who thinks that this is some kind of aberration and/or will simply be reversed once a vaccine is found, or that a single day of bounce in the rest of the market in response to, say, better-than-expected employment data disproves my assertion, is utterly, utterly clueless.

Consumer discretionary, flat for a month:






Consumer staples, flat for almost three months, down 6% in the last month:





Energy, flat for 2.5 months and down 15% over the past month:





Healthcare, flat for almost 3 months:





Industrials, done SFA since the end of april and down 10% over the last month:





Materials, flat for just over a month:





Utilities, flat for three months and down 10% over the last month:





Real estate, flat for three months and down 7% in the last month:





Even communications is flat for the last month after its run up until start of june:





Meanwhile, tech has done almost nothing but climb since the march slump and is up over 50% in that time, 20% in the last three months, with 8% of it being just in the last month:





And my "stay at home tech" like zoom:





Ebay:





Amazon:





Are up 100-150% since their march lows and 20% over just the last month.


I said a month ago when I joined that the U.S would see a 2nd wave/2nd slump. Since then, consumer discretionary is flat, consumer staples is down 5%, energy is down 15%, healthcare is flat, industrials is down 10%, materials is flat, utilities is down 12%, real estate is down 7%, and communications is flat.

Meanwhile, tech is up 3% and my stay-at-home tech is up 20%.

And wouldn't you know it, it was basically bang on a month ago that the run we saw (in some sectors) up until the 8th of june reversed at the exact same time that the virus cases started spiking:






So are you still going to sit here & claim I'm wrong and that this is all just one giant coincidence? That the virus data has nothing to do with anything when *nothing* except tech has gained since the reopenings, and most of the indices have actually fallen? All of which flipped trajectory at the exact same moment (like, to the day) that the virus case trajectory also flipped?

You still want to sit here & claim it's all a giant coincidence and that there's no trend here?


----------



## Spaniel14

qldfrog said:


> Use the ignore function on the people you can not bear anymore.
> Stay with us




That is an excellent function, I have just put it to good use. Thanks for the tip frog.


----------



## ducati916

_The combined market cap of Apple and Microsoft is now 54% greater than the ENTIRE Russell 2000."  Adding to that stat, below is a look at the 40 largest stocks in the S&P 500 as of mid-day (7/6/20).  Notably, four stocks are now worth more than $1 trillion in market cap, and three of them are actually more than $1.5 trillion in market cap.  Apple (AAPL) leads the way at $1.62 trillion, followed by Microsoft (MSFT) at $1.59 trillion and Amazon.com (AMZN) at $1.5 trillion.  Alphabet (GOOGL) rounds out the list of four "trillion dollar stocks" with a market cap of only $1.02 trillion.

The four largest S&P 500 companies have a combined market cap of more than $5.7 trillion.  That's roughly the same amount as the combined market cap of the remaining 20 companies with market caps above $200 billion.  Along with Netflix (NFLX), three other stocks that continue to move up the list are NVIDIA (NVDA), Adobe (ADBE), and PayPal (PYPL).   NVDA is now right on the heels of Intel (INTC) as the largest semiconductor company in the US.  As of today, NVDA is less than $9 billion away from Intel's $250 billion market cap.  PayPal (PYPL) -- which owns Venmo -- is now the 21st largest stock in the S&P 500, which puts it ahead of blue chips like Disney (DIS), Bank of America (BAC), Cisco (CSCO), Coca-Cola (KO), and Exxon Mobil (XOM). _

_






_

Interesting to note that AMZN, GOOG, FB, BRK/A/B are not actually listed as Tech. although of course they (excluding BRK) use tech. to deliver their services.

Whenever there is a crisis, there is a run to safety. In the 1970's it was the Nifty Fifty etc. The run to safety always includes US Treasuries. It usually includes Gold.

The Big 5 (apart from MSFT which came back to life once they changed CEO from Ballmer) have been the stocks since circa 2003 to be in. They have been the subject of their own little club: FAANG etc. They never (even in this bust became cheap). AAPL in (I think 2002 was a $12 dollar stock and saved by Bill Gates financing Steve Jobs back into the CEO slot) AMZN dropped to low levels etc. If I had even suspected that it would do what it has done...would I have bought it? Of course.

What is the lesson? It is twofold:

(a) In any bust, there will be stocks that given some time will start slowly and gradually outperform for a long period; and
(b) They will often be hard to recognise.

Now one way is to operate some form of mechanical system that buys and sells stocks on set criteria (Mr Skate and all the other mechanical traders). This way you are part of the winners, catch a big chunk of the trend, jump out miss any slow patches, jump back on when the good times resume.

The key is to have a reliable, profitable methodology.

A second way is to do the above on a discretionary basis. Far harder. Why? Time spent researching, psychological issues and we could go on.

A third way is to own them via ETFs. You don't capture the outright outperformance of the individual stocks as they are part of an ETF. But you do gain benefits over simply trying a discretionary based system. A good mechanical should outperform simply buying ETFs.

jog on
duc


----------



## ducati916

So the market? I finished late last night and after addressing other issues (a) was tired and (b) left a final opportunity for Mr 9K to lead the way.

Had I updated last night this is what we would have seen:






On the faster track, still space to move higher. No issues yet, but, potentially building to one later in the week.

On the 50 (slightly slower) track, some issues:






Technically, the market ran into some resistance (excess) which needs to be worked out. This is most likely to be over time as the 20 (atm) still has room to run. This will need to be monitored over the next day or two.

Now we move live to intra-day:






We can see that the big surge from the w/e took us up to the resistance level. Going forward we can have more confidence that these levels will hold because overall volatility is lower, thus the spikes through the levels becomes far less probable. If volatility moves higher, we need to update to the more extreme levels.

So we can see that we are already indicating that stocks have pretty much reached their level of correction for today and will likely reverse tomorrow. We will confirm this after the market close today when we re-examine the two previous charts. I would also check TRIN levels after the close.

Up to yesterday, on a macro-basis: business as usual. No change. The economic data is gradually improving.

jog on
duc


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## ducati916

A sector to keep an eye on are the Semi's:

_Semis started the month on a negative note last Wednesday, underperforming the S&P 500 by over a percentage point.  In the last two trading days, though, the index has turned things around and is only marginally underperforming the S&P 500 MTD.  While the index may be underperforming, the vast majority of the index's 30 components are still in positive territory with just five stocks in the index in the red on a MTD basis.  Leading the way to the downside, Micron (MU), ON Semiconductor (ON), and Intel (INTC) are the only three stocks down more than 1%.  To the upside, Taiwan Semi (TSM), ASML, and Teradyne (TER) are all up over 4%.

Even with the index's recent underperformance, since both the February market highs and the March lows, semis are trouncing the broader market.  While the S&P 500 is down 6.41% since its peak on 2/19, the SOX is up close to 3% while Marvell (MRVL), Teradyne (TER), Monolithic Power (MPWR), CREE, NVIDIA (NVDA), and ASML are all up over 20%.  Not surprisingly, returns since the March lows have been jaw-dropping.  While no stocks in the SOX have seen triple-digit percentage gains, four stocks are up by more than 80%, no stocks are down, and the 'average' stock in the index is up over 51%.

For a group to be considered such a good leading indicator for the broader economy, the fact that semis continue to outperform the broader market is a positive trend._






Just note how far above the sector is from its 50DMA. This will be true of all the leading sectors and the QQQ, which correlates with the 50 chart (previous post). Part of the issue for this market is simply the speed with which it has run. The market has been on a sprint. Markets are marathons. When they sprint, they also pause for breath. The pauses do not indicate a reversal is imminent. Simply a pause is a pause.

jog on
duc


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## Smurf1976

ducati916 said:


> So the market? I finished late last night and after addressing other issues (a) was tired and (b) left a final opportunity for Mr 9K to lead the way.




I've nothing useful to add but I'll just say that your posts are extremely informative and useful and are precisely the sort of thing which ASF needs.


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## ducati916

So from the data re. S&P500 we can see that the big chaps are dragging the market higher and the smaller chaps are holding it back. That will change (whether the virus remains or not) and positioning yourself now (especially if you have held off entering the market to date) does not expose you to the risk of chasing stocks that have already taken off. 

As an example (an ETF that I hold via DFEN) XAR: Military (Industrials) has (as a sector) its earnings guaranteed *by law *into 2021. In 2021 with a new Cold War, the military budget under either President/Senate/Congress will increase or at worst stay the same. So currently, its not as flashy as the big Tech. but it allows rational entry points and over time, it will resume its trend higher. There are plenty of other examples.

Here is an article on the devastation of retail:

https://www.axios.com/retail-apocal...ing-77b8adf0-2cd1-499c-9375-fb3e05af0730.html

What is the takeaway?

Retail is adapting. Schumpeter's creative destruction. Part is the risk of holding individual stocks as opposed to an ETF due to unforeseen events and part is due to the evolutionary forces of capitalism when it is allowed to take place. There are plenty of crony-capitalism based sectors (Banking, Defence) that will prevent too much change too quickly. Once again, if investing/trading individual stocks, you need a methodology.

jog on
duc


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## ducati916

Smurf1976 said:


> I've nothing useful to add but I'll just say that your posts are extremely informative and useful and are precisely the sort of thing which ASF needs.




Thank-you Mr Smurf, much appreciated.

jog on
duc


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## ducati916

Spaniel14 said:


> Long-time lurker, first time poster.
> 
> Felt I had to register and post so that I can say thanks to duc for the awesome analysis they give. This thread (and trading the bounce) were awesome threads that helped me navigate the pandemic and downturn. I’m certainly no expert and I have learnt a lot about the market as a result.
> 
> I am starting to find it very tiring with half of every page filled with petulant bickering, and claims of making xyz%. So much so that I am starting to browse other forums because it is tiring. Arrogance isn’t a favourable trait, nobody here is Warren Buffett, and nobody here is that one in a million trader that calls everything to perfection. If you were, you wouldn’t be here. Telling us how well you performed yesterday is of no use to predicting what’s going to happen tomorrow.
> 
> One question I have for the owners of so-called “stay at home tech”. It’s well known (and dead obvious) that stocks like Zoom are incredibly overbought. Surely these stocks have a huge correction on the horizon? It might not be tomorrow or this year even, but once life returns to normal, the EPS of these companies is going to drop dramatically. While some companies are moving to more flexible working arrangements with staff working from home, many (like the one I work for - sits very high up the S&P500) are going to return to normal office life when conditions allow.





Thank-you Mr Spaniel, much appreciated.

jog on
duc


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## over9k

Here's a method: Understand why particular things are/aren't occurring, and act on/with that knowledge.

Mind-blowing concept I know.


----------



## ducati916

willoneau said:


> Then the question I have how do we determine it happening before it does?




This goes to the heart of the matter. As already alluded to, recognition in real time, before the move is really hard almost impossible. The answer is:

(a) Run a really good mechanical system or (far harder) discretionary system that picks up outperformance quickly;
(b) Buy sectors via ETFs;
(c) Buy the market.

(a) Will give you the highest returns. Go visit Mr Skate, Peter, Mr Frog et al for mechanical.
(b) Is relatively easy and (relatively) safe, but the returns will not match (a).
(c) Is the easiest of all, but will give the lowest return.

To pick stocks or sectors on the news, can be done, but it is harder.

However the real purpose of this thread is a continuation of Market Bottoms and Trading the Bounce. That is, has the market bottomed, if so jump back in to trade the bounce and hang on to the reversal or if no reversal hold on for the trend until the trend (potentially) ends due to XYZ. It was never really specific advice on buy XYZ as this is whatever. I have indicated what I have bought, but I buy those sectors because I have wanted to own them and didn't. This was my opportunity to grab them cheap. I have been in the market since 2001. Over time I have accumulated sectors that I like at basement prices in various crashes etc. A crash is the time you buy what you always wanted, but could never pull the trigger on when markets were flying.

Of course, psychologically, buying at the bottom or near the bottom is exactly what the majority will struggle with. Who wants to buy in a sea of red?

The purpose of the 3 threads is: you can buy with (relative) confidence because you have tools to track the overall market and therefore to an extent sectors and reduce your paranoia. Individual stocks are a crap shoot without some really robust methodology.

Now I will continue with this thread certainly to the next bust. Whenever that is. Might be years, decades or next month. One thing is 100% certain: the media and headlines will not be the first to tell you about it.

jog on
duc


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## qldfrog

I hope this will not corrupt your thread , it actually goes your way in term of choosing etf vs stock picking:

As noted the tech giants are going higher and higher.
I saw mentioned Amazon Microsoft Abobe Google Facebook..
It is actually surprising to see them treated as a whole and the way it is.
As an IT guy, i work with these products
If trying to have a discretionary input, we can look at the basis

Apple: fair got both pc and phones, ultra expensive and brand...but losing China.
Microsoft...got .. windows 10... and skype
For the tech. .NET...and?
Big company, no real growth ahead..why going on?
 crazy PE.but  Microsoft is the IBM of the 2000...one boat too late
Adobe? WTF?? Seriously?  Ah ok,  saw the name when loading  pdf viewer....for free
Google renamed alphabet..oops
50pc of the retail traders lost...
One of the most innovative omnipresent company in it from pc to mobile to ai.. doing relatively worse than Microsoft ...
Amazon? Yes as it is both the shop you know and the behind the scenes AWS..technically top and omnipresent with edge tech
Facebook, Netflix...really?
even a lambda user should realise the issues

So? Pretty clear the Market trends  of the fangs is foremost a brand name popularity contest over any technical or financial analysis.
you will be loser, relatively, if you try a fundamental stock picking.
As for minors like Zoom
2 video conferences with US/oz this week: used  Google Meet not zoom...their choice, a first for me
Well as a user, Meet over Zoom..so simple

 Duc ETF way over stock picking/gambling..

..


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## over9k

It's not gambling frog, I've been a bit more sophisticated than just eyeballing them. I do not hold apple, facebook, google, or slack for example, though I'm now thinking about facebook.

Here's everything:






Iirc I've had one red day in the last month. One. Even today was green whilst the djia dropped 1.5%.

I've been more than open about what I hold/buy & why - if people want to ignore me then that's fine, but as far as I know, my returns have been miles above everyone else's.

Considering that, I would have thought people would WANT to hear what I have to say, but apparently not.


----------



## qldfrog

over9k said:


> It's not gambling frog, I've been a bit more sophisticated than just eyeballing them. I do not hold apple, facebook, or slack for example, though I'm now thinking about facebook.
> 
> Here's everything:
> 
> 
> 
> 
> 
> 
> Iirc I've had one red day in the last month. One. Even today was green whilst the djia dropped 1.5%.
> 
> I've been more than open about what I hold/buy & why - if people want to ignore me then that's fine, but as far as I know, my returns have been miles above everyone else's.
> 
> Considering that, I would have thought people would WANT to hear what I have to say, but apparently not.



Probably not here on this thread.i think you should create you own as you suggested once and people will follow your progress.
You follow the lemmings and i agree it is the way to go...trend following is that too.just need to jump before the cliff.so how do you detect the cliff?
That is the key interest for your post
I do not have systems on the US market otherwise I would be in zoom surely.


----------



## over9k

Well apparently all the lemming retail robinhood traders have bought into retail stocks lately and have been absolutely slaughtered for it, so the lemmings might have already run themselves off the cliff.

But what I've been saying this whole time is that this stay-at-home tech stuff has a big, BIG fundamental driving it, and that fundamental is only getting worse by the day.

I'll probably start a thread called "trading the virus" or something like that to consolidate all my thoughts, analysis, trades etc soon.


----------



## ducati916

Updating after the market close:







We had a jump in volatility. Always a possibility as it moves away from that trendline, to snap back towards that trendline. You could also argue some support (not shown) but the lots of little squiggles.






This is the weekly TRIN. We have (technical) space to move a bit lower. We are however in the vicinity of support.






This was (is) the problem area of the market: the 50SMA for a number of sectors. Again, space (technically) for further downward pressure, but, could go up.






The 20SMA is in a much better place. It will however be governed by the 50SMA I believe in this instance.






We have 67% above the 50SMA. That it is pretty healthy. We have 90% New Highs. Very healthy. Still 60% below 200SMA, definitely not what we want to see.






We have over the last 5 trading days moved sharply higher. We may have some time based consolidation, but I don't think we have a sharp re-trace. We'll see.

The important takeaway however is that the 'Trend' is intact. This is a pause, retrace, ready for the next move higher. The macro picture remains solid and intact, which is always the primary starting point. Day-to-day fluctuations are the bailiwick of the day trading brigade and do not concern us overmuch.

The sectors today:






Tech. not leading the pack today. Consumer Staples: WMT, KO, PG.

jog on
duc


----------



## ducati916

FWIW:

_Out of nowhere. The stock market was by no means having a good day, but it wasn’t a bad day either. Then the last hour of trading started—and it got ugly fast.

The Dow Jones Industrial Average dropped 396.85, or 1.5% while the S&P 500 fell 1.1%, and the Nasdaq Composite, which had been positive around 2:15 p.m., declined dropped 0.9%. The Dow gave back all but 62.82 points of Monday’s 459.67-point gain. The S&P 500 and the Nasdaq snapped five-day winning streaks.

It’s hard to pinpoint exactly what caused the day to go from consolidation after a big gain to giving back nearly all of Monday’s gains. There was no economic data released, nothing that came out about the coronavirus, nothing that should have caused the selling to accelerate.

Was it a sudden realization that coronavirus continues to spread in places like Florida and Texas, and is showing no signs of slowing down? Unlikely, since that could be said just about any day.

Was it headlines from Fed Vice Chair Richard Clarida, who said that the path of the U.S. economy will depend on the coronavirus, that the Fed can do more with its balance sheet and that a double-dip recession is not the base case? None of that was exactly new, or should have been market moving.

Was it reports suggesting that the Trump administration is seeking a $1 trillion stimulus package to be passed by August? That should have been good news, though maybe dollar amount was a disappointment considering Democrats have passed a $3 trillion plan in the House.

Was it the fact that the S&P 500 had been on a five-day winning streak, and winning streaks have to end sometime? Not even Amazon.com (AMZN) and the other FAAMNGs can go up every day.

“There was no particular news to account for the selling on Tuesday,” writes Stephen Todd of Todd Market Forecast. “It looked like profit taking and a sense that perhaps stocks had come too far in a short amount of time.”_

jog on
duc


----------



## ducati916

Random:






Restaurant. Who would have figured. Jump on the right individual stock and it takes off...

jog on
duc


----------



## ducati916

Nice balanced article.

_The U.S. economy added a more-than-expected 4.8 million jobs in June. Yet nearly 20 million Americans remain out of work.

The June jobs report brings to a close the first half of 2020 with the same dissonant note that has been so familiar during this extraordinary year. The coronavirus pandemic, which has sickened 2.6 million Americans and killed over 128,000, brought swaths of the U.S. economy to a virtual halt and threw it into recession, knocking the S&P 500 down 34% into a bear market. The stock market then called the recovery before the economic data started to corroborate it, with the S&P 500 re-entering a bull market and now within striking distance of pre-virus prices.

Still, the economy is far from normal and will take a long time to absorb the millions of unemployed workers who will hold down consumer spending, threaten corporate profits, and weigh on strained state and local budgets. What’s more, the viral threat remains, casting a cloud over the economy and markets.

The conversation over recent months, at least as far as economics and markets go, has been dominated by a debate over the shape of the recovery. There is the V-camp, the U-camp, and the W-camp. Some have gotten more creative, calling for something resembling a Nike swoosh or a reverse square root sign (√, in reverse).

We began the second half of 2020 with hope building that the recovery will resemble a V, as lockdowns in many parts of the country were relaxed sooner than predicted and consumers have shown a willingness to return to normalcy despite the pandemic.

But these improvements have come at a cost. Covid-19 cases are surging, prompting companies and states to reverse or delay reopenings and giving consumers a renewed sense of caution. The pandemic’s course and the responses to it will determine what happens to the U.S. economy over the back half of the year and beyond.

While hiring in May and June showed momentum in a recovery from the worst of the pandemic lockdown, says David Kelly, chief global strategist at J.P. Morgan Asset Management, “investors should recognize that we are still very far from a healthy job market and that a recent resurgence in the pandemic will make further progress slower.”

To try to piece together a second-half outlook for the U.S. economy and stock market, Barron’s looked to a half-dozen strategists. Here’s what they say.

Against a backdrop of slower progress, it’s easy to get bearish. While economic data over the past month have mostly surprised to the upside, suggesting the recovery began earlier and has been more robust than anticipated, data are lagging. Already even the June jobs data are stale given the resurgence in coronavirus cases and reopening rollbacks. Over the past week, Arizona, California, Georgia, and Texas all reported a record number of daily Covid-19 infections. California is closing bars and indoor dining again in many of its counties, and New York City said it would delay its reopening of indoor dining.

On top of the uncertainty around the virus—the continuation of the first wave, the magnitude of a second that many believe will come this fall, and the timing and efficacy of a vaccine—is a laundry list of other interconnected unknowns. Will schools and day-care centers open in the fall, or will working parents continue to lack child care? Will Congress extend the enhanced unemployment benefits, set to expire July 31, that have helped plug the hole in household income and spending? Will state and local governments receive adequate aid to fill budget gaps given the loss of tax revenue? And of course there is the presidential election in November.

“My outlook isn’t disastrous, but I’m not terribly optimistic, either. ”

— Brian Singer, head of dynamic allocation strategies at William Blair
The unusual degree of uncertainty confronting consumers and investors may constrain economic activity for the rest of the year and keep a lid on the stock market, says Brian Singer, head of dynamic allocation strategies at William Blair.

“My outlook isn’t disastrous, but I’m not terribly optimistic, either,” Singer says, adding that we’ve probably seen stock-market highs for the year. He says much of the trouble in the economy isn’t so obvious, given that small businesses hit hardest by the pandemic aren’t publicly traded, meaning much of what’s driving the economy isn’t driving the market.

Strategists say a bear case would feature a delay in a widely available Covid-19 vaccine until 2022 and strict, coordinated lockdowns to stem coronavirus cases that pick up this fall. A much deeper economic contraction and potentially another stock market correction would follow.

Under its bear-case scenario, Morgan Stanley has minus 10.2% penciled in for its 2020 gross-domestic-product forecast. Oxford Economics has minus 17.2% for its bearish projection. Meanwhile, Michael Kantrowitz, chief investment strategist at Cornerstone Macro, predicts a 20% decline from current levels in the S&P 500 in his bear case. That would translate to roughly 2500 and make stocks in the defense, utilities, and consumer-staples sectors more attractive while consumer discretionary and industrial stocks would become unattractive, he says. Katerina Simonetti, a senior portfolio manager at UBS private wealth management, estimates 2800 for the S&P 500 by year-end should everything go wrong.
_
*Base Case*
_We’re not inclined to get too pessimistic just yet. The strategists Barron’s interviewed aren’t counting on a bear-case scenario, either. Kantrowitz, for example, puts 50% odds on his base case and splits the rest between his bull and bear cases.

Base-case scenarios across Wall Street share a few assumptions. First, the coronavirus is something Americans will have to live with for an extended period. Second, the Federal Reserve will continue to do whatever it takes to support the economy and financial markets. And third, Congress will pass additional aid to households and businesses to the tune of at least $1 trillion.

“We’re still in irrational exuberance territory for equities. ”

— Michael Kantrowitz, chief investment strategist at Cornerstone Macro
Under her baseline scenario, Simonetti sees a gradual lifting of lockdown restrictions coupled with the existence of a vaccine or therapy by fall, and the mass production of a treatment by mid-2021. Together, that would lead to a sustainable economic recovery by the third quarter of this year and a return to normal activity by the end of the first half of next year. She in turn expects S&P 500 earnings to improve by the end of 2020, adding up to a target for the index of 3300.

The most likely picture includes a stock market that chops sideways from here as social distancing remains strict and reopenings stop and start, Kantrowitz says. Unemployment will remain in the double digits through December, and economic data will look less impressive as the virus lingers and bursts in activity from April’s bottoms fade.

“We’re still in irrational exuberance territory for equities,” he says, adding that the S&P 500 trading at such an expensive multiple against this backdrop makes stock-picking more important after a long boom in passive index investing. The forward price/earnings ratio for the S&P 500 is at 22.1, not far off its peak in 2000.


He’s not alone. Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, predicts the S&P 500 trades between 2900 and 3200 for the rest of the year and is telling clients the index is expensive, crowded, and increasingly concentrated in a small handful of tech names.

“We’re just not interested in owning the S&P 500,” Shalett says. That’s despite Morgan Stanley’s conviction in a deep V-shaped recovery over the next four to six quarters. The market anticipated a lot of the good news we’ve gotten, and now corporate earnings need to catch up, she says, encouraging stock-picking in areas leveraged to the economy.

Instead of owning the S&P 500, Shalett favors financial, materials and energy stocks because they’re cheaper than the broader market while leveraged to the economic recovery and correlated with rising inflation. (Strategists agree inflation will remain at bay over at least the next two quarters—some say much longer—before beginning to bubble.)

Kantrowitz, meanwhile, prefers industrial and consumer discretionary stocks under his baseline scenario for the second half and is betting growth will continue to outperform value, while Simonetti likes mid-caps across telecom, health care, and food.
_
*Bull Case*
_While we’re not overly pessimistic, it might be a good time for bulls to rein in their optimism. Their case for the economy and stock market assumes the worst is behind us. Rising Covid-19 case numbers in states that reopened early and subsequent reopening rethinks are casting doubt that a bull scenario can be achieved. To get there, strategists say it would take a vaccine that is widely available before the end of 2020—as opposed to mid-2021—coupled with a second wave of infections in the fall that is much smaller than the first.

Simonetti says her bullish scenario, which she considers unlikely, includes an S&P 500 target of 3500. “In our upside scenario, everything is going right,” she says, leading to a return to “absolutely normal” activity by the fourth quarter of this year. Even then, she expects unemployment to remain above 10%, despite ongoing stimulus efforts and improving corporate earnings that would be part of such a scenario.

Data from Apple show mobility across the country has improved significantly since April, the only full month of nationwide lockdowns, mostly thanks to increased driving that is offsetting declines in walking and the use of public transportation. Strategists at Morgan Stanley say their bull case includes faster reopenings and greater mobility, which would lead to a normalization of economic activity. If all that were to happen, they say U.S. GDP would be down 2.1% for 2020.

“We’re going to get through this, but how many jobs will come back, how many businesses will reopen, how long before we get back to [pre-virus] GDP and earnings per share ”

— Peter Boockvar, chief investment officer at Bleakley Advisory Group
The Catch-22 is that achieving such a scenario relies on a robust recovery that itself risks more infections and renewed shutdowns. On this front, Cornerstone’s Kantrowitz says two numbers he’s watching are raising red flags. The rising positivity rate, or the percentage of people testing positive, is leading to higher hospital occupancy rates that could trigger more shutdowns, he says. Given how much of the increasingly tenuous recovery the market has priced in since March lows, Kantrowitz doesn’t see the S&P 500 above 3400 even under his best-case scenario.

There is more to the idea that there’s a bearish lining in a bullish scenario. Peter Boockvar, chief investment officer at Bleakley Advisory Group, says that if there’s a vaccine by October, the stock market will love it. But the bond market won’t, potentially triggering a rise in global interest rates that would make relatively high stock market valuations harder to justify and ballooning corporate, household, and government debt balances more problematic. A vaccine that arrives sooner than later will help bring back demand, but it would also bring forward inflation pressures, he says, effectively transforming a bullish outcome into a bearish one.

“We’re going to get through this, but how many jobs will come back, how many businesses will reopen, how long before we get back to [pre-virus] GDP and earnings per share?” Boockvar asks. “The market has had a hall pass, looking past bad data and focusing on the reopening.” He added that investors have to consider changes in consumer behavior and the possibility that companies will try to do more with less.

Whether the U.S. economy takes off from here or stumbles through the end of the year, there is one thing strategists agree on: The S&P 500 is likely to trade in a pretty tight range for the rest of 2020. It’s from there that things will get more interesting, as the unknowns piling up reveal themselves._

jog on
duc


----------



## ducati916

Gold approaching its moment of truth:









jog on
duc


----------



## over9k

So in news that is no surprise to me at all, even on a green day tech still leads the pack. 






It's the same on both red and green days - tech's the best place to be. Highest gains, lowest losses. It's the best place to be in BOTH scenario's. 

My stay-at-home tech hasn't even dropped on red days. I've had one red day in the last month. 

But nah, no trend here at all. I've identified absolutely NOTHING.


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## Spaniel14

*Insert meme of a child stomping their foot*


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## over9k

Sorry, can't hear you over the sound of me being right and you being wrong.


----------



## ducati916

So we have internal divergences within the various sectors. This is always worth paying attention to. Usually the information comes with a slight lag which allows for timely action.

In the past few days, the S&P 500 has made a lower high, unable to reclaim its early June highs. While price has not made a push higher, the index's cumulative A/D line has.  The S&P 500's cumulative A/D line reached its highest level since February 21st on Monday before yesterday's weak breadth led to a slight drop. As for the individual sectors, Consumer Staples, Financials, Health Care, and Materials are all experiencing the same dynamic in which the cumulative A/D line has made a new high while price has not done the same.

On the other hand, Consumer Discretionary has seen the opposite occur in which price has made a new high, but the cumulative A/D line has not confirmed the move as it sits firmly below its prior highs from early June. As for the other sectors like Technology, Real Estate, and Utilities, these have seen price and breadth moving hand in hand with one another.  For Tech, those trends have been upwards while the more defensive Real Estate and Utilities sectors have been trending sideways at best in recent months.












I track these daily on a market basis. Occasionally on the sector basis, because it is less usual to see such divergences in sectors.

If we look at Consumer Staples. We know included within Consumer Staples are all of these various sub-sectors:






It is a bit of a mission to go through all of the stocks and see what is where re. performance. Easier to simply buy the ETF. Given the signalled under-performance, you'll get a fair bang for your buck this way as the sector generally is underpriced as compared to some individual stocks. For example WMT and KO are in this sector. They have both been fairly neutral (boring) in their price for the last 6wks or so. They are very large cap. stocks. I suspect that their underperformance has held the sector back in the same way that AMZN, GOOG, et al have powered their respective sectors higher (and the overall market).

So when we have the more common scenario: ie. rising price falling A/D, we know that that is an early warning of lower prices. Here we have the much less common lower price higher A/D line. What we should see are higher prices with a bit of a lag. How long a lag? That is the $ question. Usually we measure in weeks. 

Plenty of areas in the market to look at that still offer potential that you don't need to chase. There will be rotations. There always are. It is a jog, not a sprint.

jog on
duc


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## ducati916

What is not driving the market higher (currently) are share buybacks:









Which means, this will (again) pick up later this year or possibly 2021.

Share buybacks are largely used to offset Option grant based dilution. Unless you believe that CEOs have become less greedy moving forward, expect the return. This will again, add a buying pressure under stocks.

jog on
duc


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## ducati916

Essentially why the MSFT, AMZN, GOOG, et al will crush the ZM et al.

https://stratechery.com/2020/the-slack-social-network/

jog on
duc


----------



## ducati916

From my main man, flippe-floppe-flye:






jog on
duc


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## ducati916

And: 
_Though COVID-19 still dominates headlines, it seems some are now seeking new worries. So far, they seem to have found two: swine flu and, um, the Bubonic Plague. The former has circulated through Chinese hog farms for over a decade, occasionally infecting people. The latter turned up in a shepherd in Inner Mongolia. Don’t be shocked if either stays in the headlines for a while—or if other diseases hit the headlines with the words “pandemic potential,” which have accompanied most of the swine flu coverage. One regular feature of new bull markets is the near-universal tendency to fight the last war. Heightened awareness of every illness percolating in a corner of the world doesn’t mean a new disease is set to truncate this recovery.

For now, there is no evidence this strain of swine flu is circulating broadly among humans. As Bloomberg highlighted, research suggests it has infected “dozens” of people since 2016, and it is getting headlines now solely because of a research report noting that it has characteristics making it a pandemic “candidate.”https://www.fisherinvestments.com/e...r-a-pandemic-repeat-is-already-starting#_edn1 That doesn’t mean it is likely to cause a pandemic, much less one on the scale that would inspire a mass global lockdown. The last swine flu pandemic, in 2009, didn’t. As for the plague, it is actually fairly normal for a handful of cases to turn up in rural areas each year, typically arising from human contact with infected wildlife. As The New York Times pointed out, even the US averages seven cases annually.[ii] Additionally, while society’s view of the plague is shaped by history books’ depictions of the Black Death in the middle ages, in this day and age it is a highly treatable bacterial infection.

But we aren’t here to play armchair epidemiologist. Rather, we thought it worth highlighting how utterly typical this behavior among investors—seeking a repeat of the last bear market’s cause—is in early bull markets. As a general rule, investors spend much of a bull market on the lookout for a repeat of whatever caused the last bear market—a phenomenon called fighting the last war. In the bull market that ran from 2009 to 2020, investors were on perpetual alert for “the next Lehman Brothers” or “the next 2008.” Early on, many feared Alt-A mortgages were the second shoe set to send stocks far lower and kill off any recovery. Later, it led to mini freakouts and a litany of think pieces on distressed auto loans, student loans, collateralized loan obligations, leveraged loans, junk bonds, Energy sector bonds and Italian banks. None caused the next bear market. But all received heaps of scrutiny. In the 2002 – 2007 bull market, all eyeballs were on Technology stocks for any renewed signs of froth. That even lingered into the most recent bull market, with people parsing every uptick in IPO activity for hints of Dot-Com Bubble Version 2.0. But Tech euphoria didn’t cause the next bear market, either.

When the investment world gets laser focused on a certain issue, that issue generally loses its power. Surprises move markets, and as investors fight the last war, they drain its surprise potential. We see that happening now with diseases. It wasn’t the simple existence of the novel coronavirus that caused this year’s bear market—it was society’s response. It was the choice to shut down basically the entire developed world economy for several weeks, which forced markets to price in the sharpest economic contraction on record. No one expected that in February because it had never happened before. But now, with the memory still fresh—and the reality of lockdowns still being lived in several cities—it seems almost everyone expects it. We won’t go so far as to say a second mass global lockdown wouldn’t be a problem. It could be. But it would have to be something hugely major (repetition intended) to be worse than what people expect and pack a severe punch.

We are big history fans, and in our study of past bear markets, we have found that two bear markets rarely have the same cause. When everyone stays busy fighting the last war in a bull market, it creates an opening for some other negative to squeak through unnoticed. So while vigilance is always a good trait, being hyper vigilant for the next bearish pandemic probably won’t be the ticket for long-term investing success. Taking some time to look where others don’t—for opportunities as well as risks—will likely prove a more fruitful endeavor.

jog on
duc

_


----------



## ducati916

So intra-day on a weekly basis TRIN:






We have the potential for continued weakness, but the probabilities are shifting towards higher prices and stocks shaking off this current selling. Combine that with the divergence in the A/D line through various sectors and we have the makings of a nice move through previous highs, to challenge the all-time high in SPY.

jog on
duc


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## over9k

ducati916 said:


> Essentially why the MSFT, AMZN, GOOG, et al will crush the ZM et al.
> 
> https://stratechery.com/2020/the-slack-social-network/
> 
> jog on
> duc




You should probably be more specific here as I don't own slack and never did for precisely many of the reason(s) in the article.

Slack is like dropbox - nothing that really differentiates it from what microsoft can (and did) offer. 5 seconds of google will show you what happened to dropbox and slack once microsoft announced its competition vs what happened with zoom.

There's a lot of ease-of-use advantages that zoom has over ms teams, as well as actual functionality itself. There's also the whole existing player vs new entrant thing with a networked good. Zoom can also have 5x as many people on a call vs microsoft teams even now, and then there's the public broadcast cross platform etc etc stuff. It's a bit of an ak-47 of video conferencing.

You'll also notice that amazon has not laid waste to ebay either, despite it being dozens of times the size.

Just in case you missed it, here's what I own:






You'll notice that there's a few big names missing (facebook, google, apple just off the top of my head). I haven't just gone & broad swathe bought everything without actually looking into things like it seems you think I have. It has taken me weeks and weeks and weeks to get to this point. You'll notice I don't have a great deal of overlap in competitors and of those I do, they're typically the biggest players in the market that have weathered a lot of storms and yet are still here. You know - resilient. 

I've been trading since sitting in lecture theatres on my laptop during the gfc. I am not new to this. I can recognise that there are plenty of things you can do/tell/determine that I can't and vice-versa, and I really wish that you'd do the same.


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## ducati916

So updating the charts after the close:















In summary:

We move higher. All charts are indicating that there is space to run to the upside.

jog on
duc


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## IFocus

over9k said:


> Sorry, can't hear you over the sound of me being right and you being wrong.




There is a lot of information around trading psychology and how it works with some basic rules you need to follow so you continue  to function making good decisions.

 Investing of course has similar but some different psychology issues.

One particular destructive behaviour that applies to both is the need to be right. It is the death of any investor / trader longer term.

The need for feed back to validate our selves is common but has no place in the markets particularly when discussing positions or methods.

The market is your competitor not other participants on this forum, the point of discussions is in fact to hear the other side (remember markets have buyers and sellers they all exist here on this forum) so that a handle can be kept on our market bias.

The only time aggression is required on market threads is when a spruker turns up other than that be nice, its fun, we all want to hear your reasoning, not interested in what you are making or losing its of no interest (unless humour is involved).

I think you have some thing to offer hope you can adjust longer term it will help in life as well.


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## Smurf1976

IFocus said:


> One particular destructive behaviour that applies to both is the need to be right. It is the death of any investor / trader longer term.



I'll broaden that to say it's death in most contexts.

Business, personal relationships, any form of work from professional to manual labour, etc.

It's always better to get to the truth regardless of whose idea it was. That the views expressed by ducati916 are sometimes at odds with my own thinking are precisely why this is such a valuable thread.


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## over9k

IFocus said:


> There is a lot of information around trading psychology and how it works with some basic rules you need to follow so you continue  to function making good decisions.
> 
> Investing of course has similar but some different psychology issues.
> 
> One particular destructive behaviour that applies to both is the need to be right. It is the death of any investor / trader longer term.
> 
> The need for feed back to validate our selves is common but has no place in the markets particularly when discussing positions or methods.
> 
> The market is your competitor not other participants on this forum, the point of discussions is in fact to hear the other side (remember markets have buyers and sellers they all exist here on this forum) so that a handle can be kept on our market bias.
> 
> The only time aggression is required on market threads is when a spruker turns up other than that be nice, its fun, we all want to hear your reasoning, not interested in what you are making or losing its of no interest (unless humour is involved).
> 
> I think you have some thing to offer hope you can adjust longer term it will help in life as well.



You're aware that my posts have been entirely responsive, right? Do I really need to go back and find all the various snarky quotes, digs, and everything else that have been thrown my way? 

I've never started a fight (physically or verbally) in my entire life, but to pick a fight and then claim I'm the problem when you get a response you're not used to is classic crybullying.


----------



## ducati916

Bank Foreclosure data:

_Black Knight's Mortgage Monitor, is painting a weaker picture of the US housing market as 4.3 million of all loans are late or in foreclosure.  In their release of May data on Monday, the company reported 7.76% of all mortgage loans are now delinquent.  That is up from 6.45% in April and the second-largest monthly increase on record behind the 3.1 percentage point increase from March to April of this year. The delinquency rate is now at its highest level since December of 2011._






_Of the 4.3 million loans that are delinquent, 200K have moved into foreclosure.  As shown below, that leaves both the foreclosure rate and the number of new foreclosures at record lows. While that would normally be a sign of strength, as we have highlighted in the past, foreclosures are low because there has been a moratorium on them.  That trend is likely to continue at least for the next couple of months as the FHFA recently extended foreclosure and eviction moratoriums through the end of August from the end of June._






_Breaking down non-current loans based on the severity of their delinquency offers some interesting insights.  In May, 40.7% (1.75 million) of all non-current loans were delinquent by 30 days. That was down significantly from  69.5% (2.5 million) of all non-current loans the prior month.  But the share of non-current loans that are more seriously delinquent (by 60 or 90+ days) rose meaning many delinquent loans remain late on a payment.  The number of loans delinquent by 60+ days roughly quadrupled from 427K in April to 1.734 million in May.  In total, more than 40% of non-current loans are delinquent by at least 60 days.  Loans even more seriously delinquent (90 days) also rose in May to 631K, which works out to 14.6% of all non-current loans and up from 12.8% in April.

Overall, while the number of non-current loans is up, newly delinquent loans as a percentage of total delinquencies declined due to the fact that many borrowers who had previously failed to make payments continued to be delinquent on their loans.  Additionally, although there was not a major uptick in new delinquencies in May, that could change in the next few months as forbearances come to an end.  In the report, Black Knight noted the schedule for forbearances, and holding constant any extensions, nearly half of all forbearances were set to expire in June with another quarter ending in July._

For the banks, obviously this needs to be monitored.

jog on
duc


----------



## ducati916

Intra-day:







Yesterday we sat at 0.91. Today at 0.83. This reflects the continued selling pressure, which is being absorbed. Excepting a surprise and a massive jump in volatility, we are ready to move higher.

We had a bit of a jump but it was quashed pretty fast.






jog on
duc


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## ducati916

And the last word from Mr Flippe-floppe-flye:






jog on
duc


----------



## ducati916

Some perspective:

On a weekly basis (still have 1 more trading day this week).






On a monthly basis:






June/July has not been great for anyone other than Tech.

On a Quarterly basis:






Financials are noticeably lagging. Part of this are fears from GFC where financials were the epicentre of the collapse and part is from legitimate concerns about NPLs and Bank Balance sheets (despite stress testing and the Fed on standbye). For a healthy market, we will need the financials.

jog on
duc


----------



## ducati916

So 2 of the sectors I am currently interested in:






Which represents that the Financials generally sit in a range with the market. They will occasionally get ahead and occasionally fall behind.

Currently, they are what might be described as undervalued.






Defence. Generally they run ahead of the market (overvalued). Mostly because their earnings are guaranteed pursuant to law and those earnings are and have been consistently growing. Currently, again, undervalued.






And Tech. Somewhat overvalued? As has already been mentioned, tech has enjoyed a very good run from 2013. Will it keep running? Maybe. The thing with Tech. is this: while Tech. may well continue to run, will all of the same names? Where network effects are important (everywhere in Tech) then the big boys will likely maintain that advantage: AMZN, GOOG, FB (hate FB) et al. The little chaps, blow hot and cold and potentially disappear.

So are there issues in the market? Of course. Will they resolve? Yes. Because essentially they have to. Therefore the lagging sectors will catch-up and hot sectors will likely cool. To chase now, unless you are a daytrader or have pretty fast turnover of stocks, runs the risk of having to reset pretty sharpish if a reversion to mean takes effect.


jog on
duc


----------



## makteb

ducati916 said:


> And the last word from Mr Flippe-floppe-flye:
> 
> View attachment 105777
> 
> 
> jog on
> duc



Can someone explain to me Mr Fly's last paragraph, I want to make sure i understand the message.


----------



## qldfrog

makteb said:


> Can someone explain to me Mr Fly's last paragraph, I want to make sure i understand the message.



Not that clear indeed, you go on your own crazily inexperienced and get slammed at the next winter/crash
Or just embed with the starched collars aka more experienced brokerage community and eat your pie /profit without saying anything
- quietly use your advantage and make money wo waves

As a non english as native language, i can sometimes miss a lot or even go fully 100pc wrong, especially with that style
Interested in others interpretation.
It is always a very abrupt style..to day the least and as some more pc correct member already pointed out
But numbers and graph tables need no traduction


----------



## ducati916

Two of the Big 4















Bit crooked, but you get the gist. These are the 2 models that I like.

AMZN:









jog on
duc


----------



## qldfrog

Session not over but as i type, US market up and interestingly the Dow and even Russell 2000 are well aboveell the nasdaq.not looked yet in detail but could it be seen as a start of the catch up of the non tech?
Tide rising lifting the remaining stuck boat: looking forward to the expert eyes of Duc today


----------



## qldfrog

ducati916 said:


> Two of the Big 4
> 
> View attachment 105786
> View attachment 105787
> View attachment 105788
> View attachment 105789
> 
> 
> Bit crooked, but you get the gist. These are the 2 models that I like.
> 
> AMZN:
> 
> View attachment 105790
> View attachment 105791
> 
> 
> jog on
> duc



Something people infatuated with the fangs need to realise is that most of these revenues ultimately derived from selling stuff
Booking a holiday flat, buying a pair of sneakers,etc. So while the advertiser has a share of most purchases, there is still some profit elsewhere.
Fangs act a bit as a gst on the economy, but there is a limit as to how much they can grow vs actual underlying economy.that should be reflected in stock valuation.
More exactly should put a cap on the respective differential.
Hope my point is clear enough
In a nutshell:
So either laggards rise or techs fall


----------



## ducati916

From the posts last night on AMZN, GOOG, some context (and this applies to all the FAANG stable). This trend is not new. It has been in place for some time now.






Traders were questioned re. Bounce/Trend:






The 'Bubble' vote received 30%. Any validity?






Currently QQQ enjoying an epic run. It is (slightly) higher, which would suggest a slight cooling off period as the other indices close the gap.

The FAANGs run from 2015 is in part (or largely) due to their global presence:






The thing about high profit margins is that they attract competition. With Tech. the network effect is real and can be difficult to overcome. It can however be overcome in a regulated market. AMZN has given up in China. Alibaba is the dominant force there. India looks dodgy, the Nationalist government of Narendra Modi is making life hard. In Latin America MercodoLibre is #1 by a long way. AMZN international is losing money. This is offset by AWS which makes money everywhere, currently 77% of revenues. Advertising holds 7% of all advertising world-wide. AWS is (scuttlebutt) the subject of a spinoff, which if it occurs, pretty much returns AMZN to a loss making entity (again).

In the US there are a number of issues:

(a) Poor labour practices;
(b) Poor culture, alienating top management (Mr Jassy head of AWS);
(c) AMZN using 3'rd party data to steal ideas (Congressional anti-trust investigation + GOOG, FB & AAPL);
(d) European Commission (anti-trust);
(e) Big institutional investors concerned.

The big retailers (smaller than AMZN) WMT et al are waking up to online. They will challenge in the US. Whether they make inroads is hard to say.

These are all forces which over time may have an impact on outperformance. Could you have grabbed them at the bottom in March? Of course. The valuations were still extremely rich, AMZN is a PE of 118, that does not allow for any missteps.

jog on
duc


----------



## qldfrog

ducati916 said:


> With Tech. the network effect is real and can be difficult to overcome.



Indeed
This is why in my opinion, they are not all equal and i would value Alphabet far morei than Netflix in term  of strength I see Netflix heading to s slow death
Amazon retail marketplace itself not a fan on the long term but AWS...yes
Etc..


----------



## ducati916

Fundamental case for defence:












Earnings and production on a steady trend. With US elections approaching, it would probably be better for defence to keep Trump in the WH rather than Biden, but even if we get a bit of a Democratic slowing, valuations are low enough after COVID to offset any reductions. Biden would be stuck with the 2021 Budget (to be decided) in any case prior to his possible election.

jog on
duc


----------



## ducati916

Heading into a nice close for the Bulls over the w/e:









I'll update the after market close charts over the w/e.

jog on
duc


----------



## ducati916

When chasing stocks, caution needs to be exercised: NVDA:






On a run:

Mr 9K






While the insiders






jog on
duc


----------



## over9k

I appreciate what you're saying, but I think there's a bit more to it than that duc. I don't know how old you are or if you're a computer nerd but I am and nvidia's next generation chips, a market they have the overwhelming lion's share of, are just around the corner at a time when everyone are stuck indoors. Combine that with their near stranglehold of the enterprise simulation/modelling market, an incredibly profitable market currently going nuts in an attempt to find coronavirus treatments and vaccines, and I'm expecting them to fly off the shelves at a serious premium too.  

Unrelated: Here's a graph I know you'd be interested in: 





Washington is talking about trying to get the next batch of stimulus out before the august recess, they're just bickering about how it'll look.


----------



## ducati916

over9k said:


> I appreciate what you're saying, but I think there's a bit more to it than that duc.
> 
> I don't know how old you are or if you're a computer nerd but I am and nvidia's next generation chips, a market they have the overwhelming lion's share of, are just around the corner at a time when everyone are stuck indoors.
> 
> Combine that with their near stranglehold of the enterprise simulation/modelling market, an incredibly profitable market currently going nuts in an attempt to find coronavirus treatments and vaccines, and I'm expecting them to fly off the shelves at a serious premium too.




So my first issue is obviously that an insider, the CEO, is selling huge chunks. This is almost always a Red Flag in individual names. Up to this point, companies have been able to buyback stock from Options dilution (cheap debt). From an earlier post:









That game is (for the moment at least) over.

NVDA has been buying back stock in this manner:






In 2019, $1.6 Billion. To date this year: $0.00. That is going to start weighing on the market at some point.

Second point: the fundamentals are seriously in decline, not from 2020, which you would expect due to COVID, although you seem to be saying the opposite, that they will improve, but over the last 3 years. I'll go into them in greater detail later.

Needless to say, this is an accident waiting to happen.

jog on
duc


----------



## over9k

Before I respond: Do you know anything else about the company? How it gets its chips manufactured, its supply lines, the market it's in, what the most profitable stuff it targets is, how things look for the chip market as a whole, its comparison to AMD, Intel, skyworks etc etc?

I ask because nvidia has very successfully moved an awful lot of what was previously CPU driven jack-of-all-trades type modelling and computing into massively parallel processing. GPU's are now being used for all kinds of things (which are admittedly far more specialised types of computing) that were unthinkable a decade ago and this trend is not changing. Under the right circumstances/with the right instruction set(s), gpu's can perform functions dozens of times faster that cpu's due to the very nature/architecture of gpu's themselves and nvidia has excelled at getting this type of stuff happening.

In other words, I'm talking about a structural shift. Hence why the market cap of nvidia, a gpu manufacturer, is now larger than intel, the biggest cpu manufacturer. IIRC, a decade ago nvidia was 1/6th the size of intel. 

I'm not saying that what you're saying doesn't have merit, but there's more to this.


----------



## ducati916

I haven't downloaded any of the financials because that takes a lot of time and I'm really not that interested anyway. However:





















These are some of the quickly (easily) spotted issues.

jog on
duc


----------



## over9k

Yeah I thought as much (don't mean that as a dig at you). You're looking at the first things anyone looking at a new stock would look at.

GPU manufacturing is cyclical - it takes years per generation like with cars. The next generation are out late this year. As you can imagine, like with cars, sales will always slump when the next model is just around the corner. Classic osborne effect.

So the new models come out, they fly off the shelves, and then sales gradually reduce until the next model/generation comes out, and the cycle repeats itself. Right now, we're only a few months away from the next generation coming out (teasers are already being "leaked") so few people are buying anything while they wait.

The market is obviously pricing in its anticipation of the next gen's sales as I agree with you that there's no current fundamental for the gain(s) we've seen lately aside from the structural shifts I've mentioned previously obviously, and they aren't nearly enough to explain this much of a rally.


----------



## Chronos-Plutus

Some food for thought from Ray Dalio:

My take away is that a great deal of smart money will move into precious metals as a long term storage of wealth, in effect the diversification of assets within portfolios, as investors seek some wealth protection and security.


----------



## Skate

Chronos-Plutus said:


> Some food for thought from Ray Dalio:My take away is that a great deal of smart money will move into precious metals as a long term storage of wealth, in effect the diversification of assets within portfolios, as investors seek some wealth protection and security.





@Chronos-Plutus great video, it was a real eye-opener for me, explained so well. Diversification of assets is what he hammered home. Who would have thought money in the bank would be a "risky" asset class.

Hitting the [Like button] once isn't enough sometimes.

*So...*






Skate.


----------



## qldfrog

Chronos-Plutus said:


> Some food for thought from Ray Dalio:
> 
> My take away is that a great deal of smart money will move into precious metals as a long term storage of wealth, in effect the diversification of assets within portfolios, as investors seek some wealth protection and security.




Mr @Skate  is staring in the video at 6:46.what a gem


----------



## Smurf1976

qldfrog said:


> Mr @Skate is staring in the video at 6:46.what a gem



Quite a remarkable likeness there. 

As for the video, well it certainly aligns with my basic thinking that we see inflation, the only question being the details of when and where it shows up.


----------



## Chronos-Plutus

Earnings Season kicking off: 

"The earnings season fires off next week in a big way with a slew of major banks joining Abbott Labs (NYSE:ABT), PepsiCo (NASDAQ:PEP), Domino's Pizza (NYSE:DPZ) and Netflix (NASDAQ:NFLX) in the initial crossfire. Analysts expect Q2 profit for S&P 500 companies to be down 44% before improving to -25% in Q3 and -14% in Q4."

"PepsiCo (PEP) on July 13; Citigroup (NYSE:C), Delta Air Lines (NYSE:DAL), JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC) on July 14; Goldman Sachs (NYSE:GS), PNC Bank (NYSE:PNC), U.S. Bancorp (NYSE:USB) and Alcoa (NYSE:AA) on July 15; Abbott Labs (ABT), Domino's Pizza (DPZ), Johnson & Johnson (NYSE:JNJ), Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS) and Netflix (NFLX) on July 16; Autoliv (NYSE:ALV), Ally Financial (NYSE:ALLY) and BlackRock (NYSE:BLK) on July 17."

https://seekingalpha.com/article/4357924-stocks-to-watch-bank-earnings-and-spac-deals-blaze-in


----------



## ducati916

over9k said:


> Yeah I thought as much (don't mean that as a dig at you). You're looking at the first things anyone looking at a new stock would look at.
> 
> GPU manufacturing is cyclical - it takes years per generation like with cars. The next generation are out late this year. As you can imagine, like with cars, sales will always slump when the next model is just around the corner. Classic osborne effect.
> 
> So the new models come out, they fly off the shelves, and then sales gradually reduce until the next model/generation comes out, and the cycle repeats itself. Right now, we're only a few months away from the next generation coming out (teasers are already being "leaked") so few people are buying anything while they wait.
> 
> The market is obviously pricing in its anticipation of the next gen's sales as I agree with you that there's no current fundamental for the gain(s) we've seen lately aside from the structural shifts I've mentioned previously obviously, and they aren't nearly enough to explain this much of a rally.




Ok, fair enough.

jog on
duc


----------



## over9k

Thanks duc. Let's try to listen to/work with each other more from now on hey?


----------



## ducati916

Chronos-Plutus said:


> Some food for thought from Ray Dalio:
> 
> My take away is that a great deal of smart money will move into precious metals as a long term storage of wealth, in effect the diversification of assets within portfolios, as investors seek some wealth protection and security.





Looks as if I will be the stick-in-the-mud. This video was dross. Why?

1. FDR did not sever the link with gold, he defaulted. He raised the price to exchange from $20.67oz to $35oz and later limited the exchange to Central Banks only. Agreed that that was inflationary.

2. Wars are inflationary and inhibit stock prices: stocks are not a great inflation hedge.

3. The 1970's were inflationary for a number of reasons:

(a) Nixon closed the gold window and US dollar weakened;
(b) 2 Oil shocks 1 in 1973 and 2'nd in 1979;
(c) During 1972 & 1973 there were food price shocks and a further one in 1979;
(d) Legal issues: (i) COLA (Cost of living adjustments) were part of Employment Contracts via Employment Act 1946, in 1977 the Humphrey-Hawkins Full Employment Act was passed by President Carter.






Volcker crushed inflation (ironic as it was he who advised Nixon to shut the Gold Window) via interest rates. That is the point, inflation, if and when it returns (unlikely in near future) is easily controlled via monetary policy.

The important 'fact' re. inflation is: (i) The Fed does not care about CPI inflation, it only cares about (ii) PPI. Low PPI essentially means that profit margins on corporate profits move higher. Therefore stocks are the place to be.

Disinflationary needs to be distinguished from deflationary. There is a difference. 2008 was deflationary. Globalisation is disinflationary. Now with the rise of Nationalism worldwide (the Smoot-Hawley Tariff Act 1930 converted a stock market bust into a full fledged depression) it can be argued that the disinflationary pressures are reducing (Trump's tariffs against China etc) so there could be an increase in inflation. Dalio did not discuss this. However, while we have extreme Fiscal and Monetary policies, those inflationary forces (paradoxically) are blunted. Why? Because Zombie companies are kept alive which keeps supply higher than it should be, thereby keeping prices lower. The clearest example is in the oil patch. The Arabs sought to wipe out shale and thereby reduce supply. Once again, control of supply, in a constant or growing demand, means higher prices. Shale, while wounded, is still hanging in there. So some supply has been destroyed, but not all. Prices rebounded very quickly from (-$32) to +$40. Therefore currently (but watching) we will not have PPI inflationary pressures via oil.






You can see government debt peaks after wars and gradually reduces as wartime production converts back to peace-time.






Unprecedented increase in money supply: still little inflation via PPI. 






This is for the gold bugs. Gold tends to bust above 4.5. Obviously miles away.






Not clearly shown, but far right of chart is US dollar trending down after Nixon defaulted.

jog on
duc


----------



## qldfrog

Smurf1976 said:


> Quite a remarkable likeness there.
> 
> As for the video, well it certainly aligns with my basic thinking that we see inflation, the only question being the details of when and where it shows up.



I think inflation is there with the market rising, gold rising and RE not crashing..just a different behaviour that 1974 inflation where wages rised and prices of consumer good followed..or was it the other way round?
This is all in my opinion good for the subject of that thread:
Inflation or currency/USD loss of intrasic value is an underlying support for the bounce/trend.


----------



## Chronos-Plutus

ducati916 said:


> Looks as if I will be the stick-in-the-mud. This video was dross. Why?
> 
> 1. FDR did not sever the link with gold, he defaulted. He raised the price to exchange from $20.67oz to $35oz and later limited the exchange to Central Banks only. Agreed that that was inflationary.
> 
> 2. Wars are inflationary and inhibit stock prices: stocks are not a great inflation hedge.
> 
> 3. The 1970's were inflationary for a number of reasons:
> 
> (a) Nixon closed the gold window and US dollar weakened;
> (b) 2 Oil shocks 1 in 1973 and 2'nd in 1979;
> (c) During 1972 & 1973 there were food price shocks and a further one in 1979;
> (d) Legal issues: (i) COLA (Cost of living adjustments) were part of Employment Contracts via Employment Act 1946, in 1977 the Humphrey-Hawkins Full Employment Act was passed by President Carter.
> 
> View attachment 105859
> 
> 
> Volcker crushed inflation (ironic as it was he who advised Nixon to shut the Gold Window) via interest rates. That is the point, inflation, if and when it returns (unlikely in near future) is easily controlled via monetary policy.
> 
> The important 'fact' re. inflation is: (i) The Fed does not care about CPI inflation, it only cares about (ii) PPI. Low PPI essentially means that profit margins on corporate profits move higher. Therefore stocks are the place to be.
> 
> Disinflationary needs to be distinguished from deflationary. There is a difference. 2008 was deflationary. Globalisation is disinflationary. Now with the rise of Nationalism worldwide (the Smoot-Hawley Tariff Act 1930 converted a stock market bust into a full fledged depression) it can be argued that the disinflationary pressures are reducing (Trump's tariffs against China etc) so there could be an increase in inflation. Dalio did not discuss this. However, while we have extreme Fiscal and Monetary policies, those inflationary forces (paradoxically) are blunted. Why? Because Zombie companies are kept alive which keeps supply higher than it should be, thereby keeping prices lower. The clearest example is in the oil patch. The Arabs sought to wipe out shale and thereby reduce supply. Once again, control of supply, in a constant or growing demand, means higher prices. Shale, while wounded, is still hanging in there. So some supply has been destroyed, but not all. Prices rebounded very quickly from (-$32) to +$40. Therefore currently (but watching) we will not have PPI inflationary pressures via oil.
> 
> View attachment 105860
> 
> 
> You can see government debt peaks after wars and gradually reduces as wartime production converts back to peace-time.
> 
> View attachment 105861
> 
> 
> Unprecedented increase in money supply: still little inflation via PPI.
> 
> View attachment 105862
> 
> 
> This is for the gold bugs. Gold tends to bust above 4.5. Obviously miles away.
> 
> View attachment 105863
> 
> 
> Not clearly shown, but far right of chart is US dollar trending down after Nixon defaulted.
> 
> jog on
> duc




The primary objective of Central Banks is to manage inflation. The inflation metric (CPI) that Central Banks use are clearly erroneous when looking at the basic cost of living expenses.

Where Ray Dalio is correct is that these markets right now are clearly disconnected from fundamentals and it is the Central Bank easing of monetary policy that services the debt during times of economic and financial crisis.

Where Ray Dalio is also correct, is that Central Banks have eased monetary policy to the point that we now have trillions an trillions of dollars of negative yielding debt with interest rates to remain at zero/negative in perpetuity, until there is a global monetary reset. This means that holding cash is in effect, destroying your wealth, not mention the global trend of bank bail-ins that you need to worry about.

Will the FED be able to service the next impending and inevitable tsunami of debt that will crash the economy, without destroying the USD?

Another point that Ray Dalio made was that a portfolio of assets that is spread across multiple countries and multiple currencies is prudent. Gold and silver are the ultimate universal storage of wealth. I can put a few 1 ounce gold/silver coins in my pocket, get on flight to anywhere in the world, and sell my asset with no problems at all. Can you do that with any other asset? NO. Furthermore I can open up precious metal accounts all over the world.


----------



## Lucky777

This is an amazing thread! I’m about on page 4 right now, give a shout-out for duc for starting this thread pretty amazing insights. Will give my thoughts when I’m done if there is any, seems to be quite covered. 

So far I’m riding the trend of tech stocks til it’s perceived death which doesn’t seem to be anytime soon, maybe a month or two till earnings and stimulus are what changes it. Then switch to a few health stocks. I’m mainly riding the individual assets(stocks) atm. Good luck everyone


----------



## over9k

Lucky777 said:


> This is an amazing thread! I’m about on page 4 right now, give a shout-out for duc for starting this thread pretty amazing insights. Will give my thoughts when I’m done if there is any, seems to be quite covered.
> 
> So far I’m riding the trend of tech stocks til it’s perceived death which doesn’t seem to be anytime soon, maybe a month or two till earnings and stimulus are what changes it. Then switch to a few health stocks. I’m mainly riding the individual assets(stocks) atm. Good luck everyone








Stimulus won't reverse anything - in fact, tech was the only sector that grew when there wasn't any stimulus. The only thing stimulus will do is maybe bounce the other sectors as well - in parallel with tech. But if you saw my other post, you'll see that many sectors have been flat for 2 or even 3 months despite all the stimulus at those time(s).

Think about seasonality for the northern hemisphere too, a time when people traditionally spend more time indoors anyway, along with the cold making the populace even more susceptible to infection and thus even more afraid to go out ergo christmas spending inevitably _all_ being online.

I have no plans to sell any of my positions.

edit: here's my post i was referring to https://www.aussiestockforums.com/t...onavirus-outbreak.35169/page-257#post-1081215


----------



## ducati916

Chronos-Plutus said:


> 1. The primary objective of Central Banks is to manage inflation. The inflation metric (CPI) that Central Banks use are clearly erroneous when looking at the basic cost of living expenses.
> 
> 2. Where Ray Dalio is correct is that these markets right now are clearly disconnected from fundamentals and it is the Central Bank easing of monetary policy that services the debt during times of economic and financial crisis.
> 
> 3. Where Ray Dalio is also correct, is that Central Banks have eased monetary policy to the point that we now have trillions an trillions of dollars of negative yielding debt with interest rates to remain at zero/negative in perpetuity, until there is a global monetary reset. This means that holding cash is in effect, destroying your wealth, not mention the global trend of bank bail-ins that you need to worry about.
> 
> 4. Will the FED be able to service the next impending and inevitable tsunami of debt that will crash the economy, without destroying the USD?
> 
> 5. Another point that Ray Dalio made was that a portfolio of assets that is spread across multiple countries and multiple currencies is prudent. Gold and silver are the ultimate universal storage of wealth. I can put a few 1 ounce gold/silver coins in my pocket, get on flight to anywhere in the world, and sell my asset with no problems at all. Can you do that with any other asset? NO. Furthermore I can open up precious metal accounts all over the world.




1. The Fed. is mandated with: (i) Full employment, (ii) Production Growth, (iii) Price Stability, (iv) Balanced Trade/Budget accounts

2. But he goes further and states that the outcome will be inflation.

3. Via inflation.

4. We'll see.

5. No argument there, but hardly prescient.

Summary: dross.

jog on
duc


----------



## ducati916

So some w/e charts.

First up, the Commercials:






Looking to support/buy the dollar.






Still leaning against Gold. These two charts are consistent in that a stronger dollar (could) result in weaker gold.









Which is the reversion to mean trade. 

Mr Skate raised a question re. timing for (stock) markets:






This is a macro-indicator that I follow. See how (the red line) often pre-empts markets moving lower? Not infallible (what is) but when combined with market (specific) data, provides a pretty good heads up.










Market internals solid moving forward into next week for challenging the all-time highs in SPY.

We have interest in QQQ or Tech. So I will now include QQQ






You can see how significantly different the QQQ are from SPY. SPY has no divergence. The QQQ has that divergence, which means that the index is inherently unstable, or more likely to mean revert.

TRIN shows lots of potential upside:






Volatility

No issues.
	

		
			
		

		
	






jog on
duc


----------



## ducati916

Banks:

*What Bank Stocks Bode*
_The Relative Report
Brogan Group Equity Research of Wellington Shields
July 9: Everywhere I turn, the talking heads are talking about the banks, how bad they look, and how much they have underperformed. This, to me, is a very binary call. You either step in today and buy the banks with the expectation that they are at a triple bottom, or you sell them with the expectation that they go to new lows. We do not have a horse in this race because our Money Flow Model has told us since Dec. 20 to step aside, as the [downside] risk for the overall equity market and the banks is too high.

The last time we saw a similar relative performance triple bottom was on July 6, 2016, when we were very bullish on the stock market because the money flows to the banks were very positive (88%). Today, we are at what looks to be another relative performance triple bottom, but we are not bullish because the bank money flows are extremely negative.

There is a very good chance that we are going to see lower prices in the banks, which will probably pull down the whole stock market. We continue to own defensive non-cyclical assets, with the expectation of high market volatility over the next several months.





_
Already at a pretty extreme level. Obviously we'll have to wait and see.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> 1. The Fed. is mandated with: (i) Full employment, (ii) Production Growth, (iii) Price Stability, (iv) Balanced Trade/Budget accounts
> 
> 2. But he goes further and states that the outcome will be inflation.
> 
> 3. Via inflation.
> 
> 4. We'll see.
> 
> 5. No argument there, but hardly prescient.
> 
> Summary: dross.
> 
> jog on
> duc




Well that is what the FED have on their website. Let's judge:

(i) Full employment
FAIL
(ii) Production growth
FAIL
(iii) Price stability
FAIL
(iv) Balanced trade
FAIL

The only dross I can see is on the FED website


----------



## Chronos-Plutus

Central Banks are supposed to manage inflation to tick all the boxes of these well and wonderful ideals.


----------



## ducati916

Chronos-Plutus said:


> Well that is what the FED have on their website. Let's judge:
> 
> (i) Full employment
> FAIL
> (ii) Production growth
> FAIL
> (iii) Price stability
> FAIL
> (iv) Balanced trade
> FAIL
> 
> The only dross I can see is on the FED website




But on inflation, starting with Volcker who gave them the model:






They are rocket scientists!

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> But on inflation, starting with Volcker who gave them the model:
> 
> View attachment 105883
> 
> 
> They are rocket scientists!
> 
> jog on
> duc




I would rather look at the average price of a Big Mac, over the last couple of decades, than use their CPI metric 

The FED cash rate will never rise, over a sustained period, from here on. In fact it will be never-ending stimulus now, or the markets crash.


----------



## over9k

Dunno about perpetuity chronos, but certainly until the pandemic is over. 

They've planned two rounds - I betcha there's more


----------



## qldfrog

ducati916 said:


> Banks:
> 
> *What Bank Stocks Bode*
> _The Relative Report_
> _Brogan Group Equity Research of Wellington Shields_
> _July 9: Everywhere I turn, the talking heads are talking about the banks, how bad they look, and how much they have underperformed. This, to me, is a very binary call. You either step in today and buy the banks with the expectation that they are at a triple bottom, or you sell them with the expectation that they go to new lows. We do not have a horse in this race because our Money Flow Model has told us since Dec. 20 to step aside, as the [downside] risk for the overall equity market and the banks is too high._
> 
> _The last time we saw a similar relative performance triple bottom was on July 6, 2016, when we were very bullish on the stock market because the money flows to the banks were very positive (88%). Today, we are at what looks to be another relative performance triple bottom, but we are not bullish because the bank money flows are extremely negative._
> 
> _There is a very good chance that we are going to see lower prices in the banks, which will probably pull down the whole stock market. We continue to own defensive non-cyclical assets, with the expectation of high market volatility over the next several months._
> 
> _
> View attachment 105882
> _
> 
> Already at a pretty extreme level. Obviously we'll have to wait and see.
> 
> jog on
> duc



Hum Mr Duc, that does not fit well with the ETF of US regional banks...
In cases like that, do you lower your bets, take a conservative approach?
Appreciate your different view cf "inflation"


----------



## ducati916

Chronos-Plutus said:


> I would rather look at the average price of a Big Mac, over the last couple of decades, than use their CPI metric
> 
> The FED cash rate will never rise, over a sustained period, from here on. In fact it will be never-ending stimulus now, or the markets crash.




CPI as already indicated, is irrelevant to the Fed and also irrelevant to the market. The only people who look at the CPI are us and we are irrelevant also.

If you look at the chart, it does rise.

jog on
duc


----------



## qldfrog

About PM and why i created the RESET thread.
We have to think about unthinkable happening
Look at this comment:


Chronos-Plutus said:


> Gold and silver are the ultimate universal storage of wealth. I can put a few 1 ounce gold/silver coins in my pocket, get on flight to anywhere in the world, and sell my asset with no problems at all.



Can not be truer..or is it?
Look at me: dual citizenship in western world, reasonably wealthy and well travelled yet
Can i actually even take a plane out of here, where to?
Thanks to covid19..or its pretences, not much freedom left
Plenty of regulations,preventing me to actually take that gold wo having it seized at the border.
We are in different times.WWI or WWII was really different but I believe  2020 onward will be different from anything lived since the 1950.
A lot to unlearn...


----------



## qldfrog

My apology Mr Duc for this early morning post i did while you were replying, mixed up the thread a bit.just realised


----------



## ducati916

qldfrog said:


> Hum Mr Duc, that does not fit well with the ETF of US regional banks...
> In cases like that, do you lower your bets, take a conservative approach?
> Appreciate your different view cf "inflation"




Mr Frog,

It is simply an opinion. It is contrary to my viewpoint, which is why I posted it.

jog on
duc


----------



## Chronos-Plutus

over9k said:


> Dunno about perpetuity chronos, but certainly until the pandemic is over.
> 
> They've planned two rounds - I betcha there's more




100% there is more stimulus coming from the FED, they have no choice.


----------



## ducati916

Chronos-Plutus said:


> Central Banks are supposed to manage inflation to tick all the boxes of these well and wonderful ideals.




To be fair to the Fed. they did not create to virus nor the initial response to it. The resulting jump in unemployment cannot be laid at their door. Unemployment data is also improving. It is not 'good' by any stretch, but it is trending in the right direction. We'll have to wait and see if that trend continues given the increasing numbers in Florida/California/Texas.

jog on
duc


----------



## ducati916

Chronos-Plutus said:


> 100% there is more stimulus coming from the FED, they have no choice.





The question is: is it inflationary?

The answer is clearly no and Dalio (for all his history gazing) has this issue incredibly wrong.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> To be fair to the Fed. they did not create to virus nor the initial response to it. The resulting jump in unemployment cannot be laid at their door. Unemployment data is also improving. It is not 'good' by any stretch, but it is trending in the right direction. We'll have to wait and see if that trend continues given the increasing numbers in Florida/California/Texas.
> 
> jog on
> duc




I agree: that I have been a bit nasty with my comments towards the FED; it is a difficult task, and these are unprecedented times.


----------



## Chronos-Plutus

ducati916 said:


> The question is: is it inflationary?
> 
> The answer is clearly no and Dalio (for all his history gazing) has this issue incredibly wrong.
> 
> jog on
> duc




We would need to do our own research, build our own metric, to truly know what inflation has been running at over the past couples of decades.

No doubt that there is a significant inflation asymmetry between large cities vs rural/regional areas.


----------



## over9k

Inflation running rampant wouldn't actually be all bad as it would ease the debt burden. It's only if it started slamming interest rates that they'd have real problems. 

But the USD being the world's trading/reserve currency means they can abuse it no end and vanishingly little actually happens. 

The USD is unique in this aspect.


----------



## qldfrog

Chronos-Plutus said:


> We would need to do our own research, build our own metric, to truly know what inflation has been running at over the past couples of decades.
> 
> No doubt that there is a significant inflation asymmetry between large cities vs rural/regional areas.



I believe Mr Duc point is there is the split between inflation for peons like us and company corporations:
For corporation, input costs are lower, wages costs are lower, taxation lower,credit cheap this is not inflationary whereas for Mr Frenchman in Australia, while the microwave price has not increased, BC fees have increased, land tax has increased, rates and water price up, medical and education costs up
 while income is at best stagnant...
Whatever cpi is, the 99pc has inflation but not the companies, and they are the only ones feds care about


----------



## Chronos-Plutus

over9k said:


> Inflation running rampant wouldn't actually be all bad as it would ease the debt burden. It's only if it started slamming interest rates that they'd have real problems.
> 
> But the USD being the world's trading/reserve currency means they can abuse it no end and vanishingly little actually happens.
> 
> The USD is unique in this aspect.




True; basically the USA can block nations/banks from SWIFT and using the USD. I have heard a few whispers recently that Chinese banks could be targeted if China don't trade in good faith.


----------



## over9k

Even if there is inflation, just park your capital somewhere that won't get devalued by it. You guys are overthinking this.

Or are you more bickering about whether we'll actually see inflation or not? Because we all know what governments do every time a particular metric starts to look bad: Change the way they calculate the metric. This is true of inflation, unemployment, anything. There ARE private intel companies out there which measure the metrics privately/the old way(s) just FYI. And yes, the numbers are always very different 

I already posted my thoughts reference just how hard it is to devalue the USD though. The normal rules simply don't apply for the americans. The bounce in gold price is a measure of fear, not actual dollar debasement.


----------



## ducati916

over9k said:


> Inflation running rampant wouldn't actually be all bad as it would ease the debt burden. It's only if it started slamming interest rates that they'd have real problems.
> 
> But the USD being the world's trading/reserve currency means they can abuse it no end and vanishingly little actually happens.
> 
> The USD is unique in this aspect.





Correct.

jog on
duc


----------



## ducati916

qldfrog said:


> I believe Mr Duc point is there is the split between inflation for peons like us and company corporations:
> For corporation, input costs are lower, wages costs are lower, taxation lower,credit cheap this is not inflationary whereas for Mr Frenchman in Australia, while the microwave price has not increased, BC fees have increased, land tax has increased, rates and water price up, medical and education costs up
> while income is at best stagnant...
> Whatever cpi is, the 99pc has inflation but not the companies, and they are the only ones feds care about




Correct.

jog on
duc


----------



## ducati916

Chronos-Plutus said:


> True; basically the USA can block nations/banks from SWIFT and using the USD. I have heard a few whispers recently that Chinese banks could be targeted if China don't trade in good faith.




That would be an incredible error if that were the case. The massive advantage of being the 'Reserve' currency could be lost through trying to limit its use. 

The US dollar only gained its status through initially being redeemable in gold. Gold was the reserve currency. Of course when Nixon defaulted, somehow the US retained that status.

There is nothing unique about the dollar, any fiat currency theoretically could suffice.

jog on
duc


----------



## ducati916

over9k said:


> Even if there is inflation, just park your capital somewhere that won't get devalued by it. You guys are overthinking this.
> 
> Or are you more bickering about whether we'll actually see inflation or not? Because we all know what governments do every time a particular metric starts to look bad: Change the way they calculate the metric. This is true of inflation, unemployment, anything. There ARE private intel companies out there which measure the metrics privately/the old way(s) just FYI. And yes, the numbers are always very different
> 
> I already posted my thoughts reference just how hard it is to devalue the USD though. The normal rules simply don't apply for the americans. The bounce in gold price is a measure of fear, not actual dollar debasement.




You have missed the point of the discussion. The discussion is re. Dalio's video that Mr CP posted.

jog on
duc


----------



## over9k

ducati916 said:


> That would be an incredible error if that were the case. The massive advantage of being the 'Reserve' currency could be lost through trying to limit its use.
> 
> The US dollar only gained its status through initially being redeemable in gold. Gold was the reserve currency. Of course when Nixon defaulted, somehow the US retained that status.
> 
> There is nothing unique about the dollar, any fiat currency theoretically could suffice.
> 
> jog on
> duc




Not just anyone can float a global currency. 

The volume of currency must be massive - large enough not just to lubricate trillions of dollars of economic activity that takes place on the other side of the world, but so large that ordinary transactions and business fluctuations do not effect the currency's day-to-day value. Otherwise, instability would scare users away from using it. 

The provider's external trade must be so small relative to the size of its home economy that day-to-day changes in the currency's value don't dramatically upset the domestic economy. 

As an extension of that, the provider must be so unconcerned about the currency's value that it doesn't (unless there's a really big disruption) intervene in currency markets to push its value up or down. Again, if people are concerned that the currency is going to be manipulated once they start using it (and therefore are reliant on its use), they aren't going to adopt it in the first place. I.e your first paragraph is correct. 

The provider must be willing to let the money flow at the whim of everyone else - if they can't get their hands on it when they need it, they're not going to use it. 

And last but not least: The provider must be able to secure the very global trade for which the currency is used. 


Some 70% of global currency (by volume) is in some way linked to the USD. The USD is used for over 90% of global trade and of that tiny 10% left over, iirc, 90% of it done with the euro in the eurozone. 

This is NOT going to change. The whole planet uses the one currency for the same reason everyone within a country uses its currency: Everyone use it, because everyone use it. 

I can't remember the exact numbers off the top of my head, but there's several times as much USD in circulation as the U.S actually needs domestically. I'm exaggerating to make my point here but if we were to assume it was 20x as much (i.e that the yanks only had/used 5% of what's out there) then they could print twice what they actually have and only debase the currency by 1/20th. 

Hence why they can "quantitatively ease" eye watering amounts of "stimulus" into the system and have absolutely SFA consequence for doing so. Hell, last I checked, the last batch of stimulus was overwhelmingly not even printed - it was mostly borrowed by the U.S government at rock bottom interest rates as everyone were trying to get their money out of the rest of the world anyway and so loaned it to them for peanuts. They don't even need to print most of their (massive) stimulus even now. 

That is the degree of penetration & confidence the USD has and it is absolutely unique to it for a reason.


----------



## ducati916

Bank earnings are front and centre next week. The health of the Banks is critical to the S&P500 moving higher (over time) and will be under scrutiny for NPLs/Reserves. Actual earnings will be less of an issue atm.













Banks are just (top chart) signalling a trendline break. It is so minor that it cannot at this point be judged as anything other than a blip. The Fed. has the backs of the Banks. There will be no Bear Stearns/Lehman's moments. The Balance Sheet and Reserve impairment inspections passed the Banks, however, there is still a ? mark re. NPLs. If they pass the test, that blip will accelerate and the Banks will head higher. If the Banks head higher the SPY heads higher.

If the Banks and SPY start to move higher on positive economic news, that MAY trigger a rotation out of Tech and back into other sectors (not least the Banks).












jog on
duc


----------



## over9k

ducati916 said:


> If the Banks and SPY start to move higher on positive economic news, that MAY trigger a rotation out of Tech and back into other sectors (not least the Banks).
> 
> jog on
> duc




Every other time it's happened it's literally only been that one single day (or even morning) and the virus data has then snuffed it out. The last rally on data release on friday the 3rd lasted quite literally an hour until a new batch of virus data was released.

My work-from-home stocks like zoom have dropped on said positive economic news but etailers have bounced because whatever extra cash is being/can be splashed is all being spent ordering stuff online, not face-to-face. I actually gained on the days of positive economic data but no virus data thanks to a bounce in ebay & amazon more than counteracting the drops I saw in zoom etc.

With the virus data only getting worse by the day, I don't see this changing. We hit yet more U.S and global increase records this weekend.


----------



## ducati916

over9k said:


> 1. Not just anyone can float a global currency.
> 
> 2. The volume of currency must be massive - large enough not just to lubricate trillions of dollars of economic activity that takes place on the other side of the world, but so large that ordinary transactions and business fluctuations do not effect the currency's day-to-day value. Otherwise, instability would scare users away from using it.
> 
> 3. The provider's external trade must be so small relative to the size of its home economy that day-to-day changes in the currency's value don't dramatically upset the domestic economy.
> 
> 4. As an extension of that, the provider must be so unconcerned about the currency's value that it doesn't (unless there's a really big disruption) intervene in currency markets to push its value up or down. Again, if people are concerned that the currency is going to be manipulated once they start using it (and therefore are reliant on its use), they aren't going to adopt it in the first place. I.e your first paragraph is correct.
> 
> 5. The provider must be willing to let the money flow at the whim of everyone else - if they can't get their hands on it when they need it, they're not going to use it.
> 
> 6. And last but not least: The provider must be able to secure the very global trade for which the currency is used.
> 
> 
> 7. Some 70% of global currency (by volume) is in some way linked to the USD. The USD is used for over 90% of global trade and of that tiny 10% left over, iirc, 90% of it done with the euro in the eurozone.
> 
> 8. This is NOT going to change. The whole planet uses the one currency for the same reason everyone within a country uses its currency: Everyone use it, because everyone use it.
> 
> 9. I can't remember the exact numbers off the top of my head, but there's several times as much USD in circulation as the U.S actually needs domestically. I'm exaggerating to make my point here but if we were to assume it was 20x as much (i.e that the yanks only had/used 5% of what's out there) then they could print twice what they actually have and only debase the currency by 1/20th.
> 
> 10. Hence why they can "quantitatively ease" eye watering amounts of "stimulus" into the system and have absolutely SFA consequence for doing so. Hell, last I checked, the last batch of stimulus was overwhelmingly not even printed - it was mostly borrowed by the U.S government at rock bottom interest rates as everyone were trying to get their money out of the rest of the world anyway and so loaned it to them for peanuts. They don't even need to print most of their (massive) stimulus even now.
> 
> 11. That is the degree of penetration & confidence the USD has and it is absolutely unique to it for a reason.




1. In theory, any fiat currency will suffice. In practice, no not anyone has an economy large enough and stable enough.

2. The volume of any fiat currency has no physical constraints. It certainly would require 'confidence'.

3. What does that even mean?

4. Governments that have held the reserve currency status are always intervening: from Greece through to the US.

5. Banks build up reserves. Generally the higher the reserves held, the greater the use.
	

		
			
		

		
	







6. Again, what do you actually mean?

7. Well reserves certainly approach 70%. The Fed. provides huge Swap lines and Eurodollars to any requiring US dollars (debtors).

8. It changes all of the time (albeit not that anyone other than historians really pay overmuch attention). International currencies in the past have included the Greek drachma, coined in the fifth century B.C., the Roman denari, the Byzantine solidus and Arab dinar of the middle-ages, the Venetian *ducato *and the Florentine florin of the Renaissance, the 17th century Dutch guilder and the French franc.

9. The 'money' (M2) in circulation is the tip of the ice-burg.

10. This misses the point entirely. 

11. Hardly as history has demonstrated.

jog on
duc


----------



## ducati916

over9k said:


> 1. Every other time it's happened it's literally only been that one single day (or even morning) and the virus data has then snuffed it out. The last rally on data release on friday the 3rd lasted quite literally an hour until a new batch of virus data was released.
> 
> 2. My work-from-home stocks like zoom have dropped on said positive economic news but etailers have bounced because whatever extra cash is being/can be splashed is all being spent ordering stuff online, not face-to-face. I actually gained on the days of positive economic data but no virus data thanks to a bounce in ebay & amazon more than counteracting the drops I saw in zoom etc.
> 
> 3. With the virus data only getting worse by the day, I don't see this changing. We hit yet more U.S and global increase records this weekend.




1. The banking data has been improving. Not out of the woods yet I agree. However the Fed. will not allow another Lehman moment. Any banks reporting this quarter that wobble will receive a bailout. The banks are building for a breakout if their reporting is only a non-disaster. That is a pretty low hurdle.

2. The issue moving forwards is (a) valuations and (b) continuation of current trends. Well (a) requires a continuation of current trends. Here in NZ where we have been essentially virus free, we have returned to normal. As if it never happened. I would expect that to be repeated around the world. Thus the current trends will not maintain their hyper-acceleration in the tech. names that have benefitted. AMZN, GOOG, FB, AAPL, MSFT were all outperforming from years back. Nothing new there. They are on a totally separate vector.

3. Picking your sectors is of course important. Going forward I expect a rotation.

jog on
duc


----------



## ducati916

Lumber and housing data:

_Lumber prices made a big comeback in the second quarter, with a nearly 60% jump for the period more than making up for a loss in the first three months of the year, as home builders rebounded from the initial effects of the pandemic._

_When Covid-19 entered the picture, the “ensuing economic calamity” shut down all sectors, including residential construction, and the “uncertainty significantly disrupted the perception of future demand and the consumption of lumber,” Kuta says. The “production side witnessed a complete collapse of takeaway and, in turn, was forced to make the hard decision of curtailing production in an attempt to match the immediate collapse in demand.”_

_U.S. construction of new houses climbed by 4.3% in May to an annual rate of 974,000, up from a five-year low of 934,000 in April, according to government data. New-home sales, meanwhile, rose nearly 17% to a seasonally adjusted annual rate of 676,000 in May._

_“The housing metrics coming out of the first wave of the virus show an insatiable need for housing and have exposed the major issues that existed pre-Covid that still exist today—a shortage of existing-home inventory, a finite housing labor pool to actually build new homes, and a shortage of entry-level homes to satisfy the entry-level home buyer,” says Kuta. Historically low mortgage rates also help to boost housing demand, he says._

This is positive data for the banks, which will not be lost on the market.

jog on
duc


----------



## Chronos-Plutus

44% drop in EPS expected for S&P500 in Q2; Goldman Strategist expecting 60% drop.





https://www.zerohedge.com/markets/goldman-expects-60-drop-q2-eps-much-worse-consensus
Exciting week ahead.


----------



## over9k

ducati916 said:


> 1. The banking data has been improving. Not out of the woods yet I agree. However the Fed. will not allow another Lehman moment. Any banks reporting this quarter that wobble will receive a bailout. The banks are building for a breakout if their reporting is only a non-disaster. That is a pretty low hurdle.
> 
> 2. The issue moving forwards is (a) valuations and (b) continuation of current trends. Well (a) requires a continuation of current trends. Here in NZ where we have been essentially virus free, we have returned to normal. As if it never happened. I would expect that to be repeated around the world. Thus the current trends will not maintain their hyper-acceleration in the tech. names that have benefitted. AMZN, GOOG, FB, AAPL, MSFT were all outperforming from years back. Nothing new there. They are on a totally separate vector.
> 
> 3. Picking your sectors is of course important. Going forward I expect a rotation.
> 
> jog on
> duc



I'll only be trimming my positions once virus numbers start dwindling - even then I'll be keeping a very close eye on why/how they're dropping. 

I'll get to your other response later


----------



## Chronos-Plutus

Couple of interesting graphs here:


----------



## ducati916

So stocks reach resistance of previous high:






Pretty standard stuff, except we are in earnings, which adds a layer of complexity to any analysis (guesswork).






Just a nice pictorial, we already know most of the names.

And a summary from my main man flippe-floppe-flye:








The internals look somewhat weak currently, but I'll have a full summary later in the day. There are the first hints of macro-issues. This _could_ be in anticipation of the banks reporting.

The Banks however are trading up in anticipation of some of the big money centre banks reporting tomorrow. So we have a dichotomy between the stock market (below) and the credit markets. It is only a twitch in the credit markets, but those twitches I take very seriously.












Earnings will be (pretty) irrelevant. NPL/Reserves will be the big number looked for. The stress tests were run and passed, but, who really believes the stress tests. The NPL number will be very important. The Fed. will bail out any failures, but the market will really hate (after being told they passed) any failures.

In a way you would expect the big money centre banks to be lower risk than the smaller regional banks. Usually it is the other way around. The big money centre banks (GS, MS, BAC, C, WFC) are the gunslingers and take on way more risk through derivatives (which sit off Balance Sheet) and have the greater chance of a blow-up, as to be honest, their risk management really sucks. Tomorrow morning a few of them report. We'll see.

jog on
duc


----------



## over9k

All the talking heads on the news today were banging on about taking profits before earnings season, so today looks like a classic case of selloff-causing jitters. Aka paper hands. Everything's down.Even tesla looks like it's about to close in the red.

Combine that with your analysis RE: the credit market, banks, and their earnings due literally tomorrow and today's bloodbath is completely understandable.

I bet it's an overreaction.


----------



## ducati916

over9k said:


> All the talking heads on the news today were banging on about taking profits before earnings season, so today looks like a classic case of selloff-causing jitters. Aka paper hands. Everything's down.Even tesla looks like it's about to close in the red.
> 
> Combine that with your analysis RE: the banks and their earnings due tomorrow and today's bloodbath is completely understandable.





Well it still has some trading time to go:












There are (as always) some up, some down.

jog on
duc


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## over9k

Sorry, I meant the major indices. But the dow bounced a tiny bit before close and ended up 0.04% (which is essentially flat). 

Lots of chop ahead IMO.


----------



## qldfrog

over9k said:


> Sorry, I meant the major indices. But the dow bounced a tiny bit before close and ended up 0.04% (which is essentially flat).
> 
> Lots of chop ahead IMO.



While the tech got hammered, XOM ended up, banks up,etc
No bloodbath for me in the US this morning and with USD up, i expect a flat or slightly up US resilt for my Australian centric view.
Volatility is up so far
Will see what my systems tell me today


----------



## qldfrog

Zoom -5.6%
Ebay -1.6
Amazon  at -3%
Time not to stay at home...
;-)
Now understand your use of bloodbath @over9k 
Teasing aside, it is edgy time


----------



## over9k

Nah they've even bounced 1.5% in after hours. Futures are all up as well. NDX futures are 0.5% up already. Unless there's some kind of horror news, tomorrow will be green again.

Like I said, it was just people getting the jitters and running for the exits. A big one obviously, but they were even on the news saying they were going to do it plus what duc mentioned about bank credit etc spooking everyone.

I've seen single days that bounced up more than this - the volatility at the moment is just absolutely nuts. 

It's tomorrow that'll be telling - bad bank day etc will undoubtedly spook the market into a selloff and the fed into action, so if it's bad tomorrow, there'll be a beautiful drop to buy into before the stimulus


----------



## ducati916

Market close update:

First up VIX. Spiked to our trendline. To date, that trendline has held. No reason to expect otherwise. Unless...the banks (significantly) disappoint.






Next up QQQ 50EMA. Still have that divergence. Currently at support. I would expect support to hold. The caveat is the divergence.






This is the credit issue. Corporate 10yr paper. Twitched. At our trendline. Much will depend on the bank reporting tomorrow re. credit spreads. Watch this space. 






Then we have SPY and QQQ internals. Note the divergence. SPY likely to move higher. QQQ could go either way, but I suspect lower. Therefore there could be weakness in the QQQ, which might, if it is bad, bleed over into SPY, unless the banks have a good result. If the banks are strong, we see a rotation.









Banks closed pretty strong. I think the banks have the NPL issue covered. I don't expect great earnings, but nobody does, so it will be really hard to disappoint. If there is an upside surprise for any reason, banks move and drive a rotation.












Technically, we have a x2 bottom and a break of the trendline. That is pretty significant. It will take some serious losses via NPLs that threaten balance sheets to crumble the banks currently. The bar is set pretty damn low.

jog on
duc


----------



## over9k

Yep pretty standard stuff - expectations have been priced in, if actual data is above/below then we get movement in whichever direction. A lot of people obviously got the jitters & bailed out early yesterday (i.e didn't want to take the risk). Looking at the after-hours trading and futures it would appear it was a bit of an overreaction.

The only difference is that the volatility is huge at the moment so the swing either way is going to be LARGE. But it's been like that with every other data release lately so, same-same.

All the other stuff except virus data has been above expectations though and we know the fed has everything on a hair-trigger now, so even in the unlikely event we see a slump it'll be pounced on pretty quickly.


----------



## over9k

I should emphasise I meant a slump in my stay-at-home stuff. There's plenty of other sectors in for a world of hurt yet.


----------



## over9k

JPM's profit 10% higher than expected. EPS 1.38 vs 1.01 estimated. Credit losses were 10.47b vs estimated 9.15b. So they lost more than expected, but also made more than expected. Was already up ~0.4% premarket, bounced to over 4% on the news. Futures of all major indices up, republican stimulus package being revealed/pitched next week. Small business confidence higher than expected.

Should be plenty of green from here on out. Now to pick which will be the greenest. The fundamentals haven't changed.


----------



## Chronos-Plutus

over9k said:


> JPM's profit 10% higher than expected. EPS 1.38 vs 1.01 estimated. Credit losses were 10.47b vs estimated 9.15b. So they lost more than expected, but also made more than expected. Was already up ~0.4% premarket, bounced to over 4% on the news. Futures of all major indices up, republican stimulus package being revealed/pitched next week. Small business confidence higher than expected.
> 
> Should be plenty of green from here on out. Now to pick which will be the greenest. The fundamentals haven't changed.




Are bank trading profits compensating for non-performing loans. The FED will keep pushing the market higher, so the banks don't fail; maybe


----------



## over9k

Basically, yes. Those increased losses might explain the credit tightening mentioned earlier. On balance the market's reacted overwhelmingly positively though. 

But this is just banking - I suspect several of the other laggard sectors will remain so. Yesterday saw a big pivot (so to speak) to industrials iirc. This week's a bit of a wait & see moment.


----------



## Chronos-Plutus

over9k said:


> Basically, yes. Those increased losses might explain the credit tightening mentioned earlier. On balance the market's reacted overwhelmingly positively though.
> 
> But this is just banking - I suspect several of the other laggard sectors will remain so. Yesterday saw a big pivot (so to speak) to industrials iirc. This week's a bit of a wait & see moment.




I actually want the market to have a massive melt-up, over the next year.


----------



## Spaniel14

Pre-COVID JPM had one of the strongest balance sheets (of the sector) and their primary value indicators were stronger than their competition, so it doesn’t surprise me that they have beaten expectations on earnings.

Delta have posted worse than expected losses.


----------



## over9k

They're not providing any forward guidance or earnings estimates or anything - even the talking heads on the news are admitting that nobody really has a clue what's in store next. Buybacks are postponed until Q4 though. 

Spaniel - Yeah I just saw delta's revision. 

I'm planning on nothing but holding for this week, seeing how each sector does over the 5 days of the week, then working out if I might pull a couple of triggers after that. 

All my positions are green in pre-market and all the major indices futures are green so yesterday's bloodbath is looking unlikely to repeat.


----------



## over9k

Wells fargo is in. Dividend was estimated to be 20c, they're paying half that. First quarterly loss since 2008. Down 3% in premarket. Citi's up 1.5% so banks are mixed. Global virus cases crack the 13 million mark. U.S cracks 64,000 in a single day. Tech-heavy nasdaq futures now highest. All my positions are still climbing pre-market. Tech seems to be the port in the uncertain storm just like it has been. Feeling positive.


----------



## Spaniel14

Pre-market gains pretty much wiped on the open as far as I can see, fairly big sell off to start the day. Nasdaq down, s&p500 almost even. Boeing propping up the S&P with the announcement of the billion dollar Air Force contract, along with JPM on back of earnings surprise.


----------



## ducati916

So the Banks: 

The headlines:







Earnings down as majors set aside loan loss reserves. Nothing particularly shocking there.

The banking sector, which includes the smaller regional banks, obviously yet to report:












Down, but on a technical basis, definitely not out. As the dust settles, they look as if they could go higher. Early days yet. See how they go next week.

Sectors:






Everything (for a supposedly bad report) holding up well. XLF slightly down. So far, so good.

jog on
duc

* Credit spreads have tightened back, QQQ intra-day is a buy on the internals


----------



## ducati916

My main man flippe-floppe-flye:






jog on
duc


----------



## over9k

Agreed about the whole clown world thing. 

Remember back at the start of june when everything went nuts moving into energy & industrials thinking we were returning to return to normal after the overwhelmingly positive economic data (unemployment rate etc) and then just as quickly nosedived after everyone realised that they might have jumped the "we've turned the corner and are returning to normal" gun a bit? 

Here's where the indexes closed: 






I'm getting a bit of deja-vu.


----------



## ducati916

All the charts are bullish. Let's just go with a single metric as I got home very late:






VIX resistance trendline held and VIX heading lower. Bears lose again.

jog on
duc


----------



## over9k

Big vaccine news out of moderna. 16% rally on the news. Which means a big curveball for the market(s). All the indices are trading the same level & ratio's of futures as yesterday, which might mean a similiar result to yesterday. If so, we might be starting to see the pivot duc mentioned. 

I'll check in later as I need my beauty sleep.


----------



## ducati916

I find myself up very early.

News from ZM:














I don't really bother with individual stocks nowadays. However this seems to be a poster child for the current tech. boom (excluding the FAANGMA) stocks. As I saw the headline, why not have a look. The bulls do not want a break below that blue trend line.

jog on
duc


----------



## ducati916

My main man flippe-floppe-flye dealing with adversity from yesterday.







Just thought I would leave you with that inspiring message as I head back to bed.


jog on
duc


----------



## ducati916

Last one:

_While there has been a great focus on the run-up of the largest American equities, the biggest European stocks have also been on the rise in recent weeks.  The STOXX 50 (FEZ) is made up of some of the largest companies by market capitalization in the broader Euro STOXX index.  In May and the first week of June, FEZ ripped higher before stalling out around 8.5% away from the January 1st 52-week high at $37.24.  After sitting below that June high for the rest of June and first half of July, FEZ is finally looking to make a new high today.  It is trading up over 2% pre-market which would send it over 1.5% above that June 8th high._

_



_

jog on 
duc


----------



## ducati916

Earnings data.

Assuming that you are not day trading, then earnings reporting season can break a promising trend in individual stocks. Less of an issue if you are trading a sector, even less of an issue if you are trading a market (SPY, QQQ, etc). What to watch out for.

Below is a list of the 35 largest stocks set to report over the next month.  For each stock, we include its current consensus analyst EPS and sales estimate along with its historical EPS beat rate and its average one-day share price change on its earnings reaction day (on an absolute basis).  This lets you see how volatile a stock typically is in reaction to its earnings report.

Of the 35 largest stocks set to report, Apple (AAPL), Facebook (FB), Johnson & Johnson (JNJ), Mastercard (MA), Cisco (CSCO), and AbbVie (ABBV) have topped analyst EPS estimates the most often at 89% of the time or more.  In terms of share price volatility, stocks like Netflix (NFLX), Tesla (TSLA), and Amazon (AMZN) typically experience a one-day move of more than 8% (in either direction) on their earnings reaction days.  On the flip side, stocks like JNJ, Verizon (VZ), Exxon Mobil (XOM), and Chevron (CVX) typically see a one-day change of less than 2% on their earnings reaction days.

On an average basis, the 35 largest stocks set to report over the next month are much less volatile on their earnings reaction days than all stocks set to report.  Whereas all stocks set to report over the next month have historically seen their share prices average a one-day move of +/-5.57%, the average one-day move of the 35 largest stocks in reaction to earnings is just +/-3.84%.  In terms of beat rates, the largest stocks typically exceed EPS estimates at a much higher rate than average as well (75% vs. 61.5%).









Moving on, below is our list of the 35 stocks set to report over the next month that typically see the biggest moves in reaction to earnings.  To make the list, the stock must have at least five years worth of quarterly earnings reports.  Each of the stocks listed below typically moves at least 11% up or down on its earnings reaction day (the first trading day following its earnings report).  The Container Store (TCS) is the most volatile stock on earnings with an average one-day change of +/-16.8% after it reports.  TCS is scheduled to report after the close on Tuesday, July 28th.

The next most volatile stocks in reaction to earnings which all average one-day moves of more than 15% are Enphase Energy (ENPH), Groupon (GRPN), and Infinera (INFN).  While GRPN and INFN are both down 20%+ YTD, ENPH is up 113.9% on the year, which means expectations for its upcoming report on 7/30 will be sky-high.

Other notables on the list of most volatile stocks in reaction to earnings include Wayfair (W), Yelp (YELP), LendingTree (TREE), Chegg (CHGG), Twitter (TWTR), Netflix (NFLX), Etsy (ETSY), and Grubhub (GRUB).

As shown in the table, Netflix (NFLX) is by far the largest stock on the list with a market cap of $230 billion.  The next largest stock on the list -- Twitter -- has a market cap that's just a tenth of NFLX.  Even though it's now an established blue-chip S&P 500 company, NFLX still typically sees huge moves when it reports its quarterly numbers.  We'll get to see how the stock reacts to its Q2 2020 report soon as NFLX is set to report Thursday after the close.  Earnings definitely do not usually give shareholders a chance to "Netflix and chill." 









The reasons for the above are myriad. One of them is that the large mega-caps tend to have real (stable) earnings. The new up and comers may have no earnings but are being gauged on new signups etc. A growth story can be derailed in a heartbeat, whereas real earnings, even if down, tend to greater stickability.

jog on
duc


----------



## ducati916

Revisiting a post from 'Market Bottoms':






The important point is point #1. Data that signals improvement. We have had a fair bit:
(i) improving employment;
(ii) improving housing data;
(iii) good bank data (re. Balance Sheets) and confirmed yesterday;
(iv) improving sentiment (I don't weight that too heavily);
(v) improving prices in markets;
(vi) Dr Copper moving steadily higher;
(vii) and

The New York Federal Reserve released its July reading on the manufacturing sector this morning and for the first time since February, the headline index indicated that activity rose month-over-month in the region.  Not only was it the first expansionary reading (those above 0), but at +17.2, it was also the highest level of the index since November 2018 when it stood at +21.1.  This month also marked a third consecutive monthly increase.

Although the index for present conditions is showing some of the strongest levels of the past couple of years with another uptick in July, optimism for the next six months pulled back.  The index for general business conditions six months in the future fell to 38.4 from a multi-year high of 56.5 in June.  That 18.1 point decline was the largest since March's 21.7 point decline and the ninth-largest decline of all months.






While the pickup in activity was not as large as last month, for multiple individual categories the gains were still in the 90th percentile or better of all periods.  Conversely, the declines in the indices for expectations for General Business Conditions, New Orders, and Shipments were all in the bottom decile of all readings.  This month's report also marked a turn for a few components as they changed from contractionary to expansionary. This was the case for the indices for General Business Conditions, New Orders, and Number of Employees. Now more than half are expansionary.






The two indices that rose the most this month were those for New Orders and Shipments.  For the index for New Orders, it was the first non-contractionary reading since February, and for Shipments, it marked back to back readings above 0.









One major positive of this month's report was the reading on employment.  After four straight months of a greater share of manufacturers reporting decreases in employment, July marked an equal share of companies reporting an increase in employment as a decrease (21.9%). Additionally, the reading for future expectations rose to its highest level since August of last year indicating companies are at least expecting to increase hiring in the near future. Although employment was stabilized, average workweek did continue to fall, albeit, not by as much as previous months.

Jumping to Reason #3. The US economy cannot close down. It may operate in a different way. It may be less efficient for a time. But it will operate. Therefore economic data will improve. Stocks will move higher, at least until the next crisis. All the talk about the virus, while interesting, has a gossip component and is essentially wasted breath and pixels.

If you really want to understand what makes a market fall, study the onset of the various bear markets. There is a significant amount of history out there. The current conditions (virus) do not fit that pattern or patterns.

jog on
duc


----------



## ducati916

While my main man, flippe-floppe-flye is of the opposite opinion:






But tomorrow, you never know.

jog on
duc


----------



## ducati916

Breaking down the Manufacturing data:

U.S. manufacturing production fell 20% between February and April and has since recovered almost half of that loss in just two months. But the story looks a lot different when focusing on particular sectors. Motor-vehicle output in June was 4.5 times what it was in April, but in many other categories, there has been much less of a recovery.

The easiest way to see this is to compare total industrial production excluding energy extraction, refining and distribution (a good proxy for what most people think of as manufacturing, although it still includes categories such as packaged foods) against the same index excluding semiconductors and motor vehicles and parts.

Not Back YetThe U.S. manufacturing sector has recovered almost half of its losses since February,but the picture looks different excluding the automotive sector






Both indexes are down around 11% compared to pre-virus levels, but the swings in the broader non-energy segment are both more dramatic and more symmetrical. Excluding motor vehicles and semiconductors reveals a slightly shallower drawdown (15% versus 20%) and a much more modest recovery (5% versus 11%).

Another way to see this is to focus on the two sectors that bore such a large responsibility for the total decline: motor vehicles and aircraft. (Together they account for almost 14% of total manufacturing production.) Data from the Census Bureau show that these segments of the transportation industry accounted for much of the decline and subsequent rebound in manufacturing orders and shipments.


The new Federal Reserve industrial production data show they also experienced much more volatile changes in production, with motor-vehicle output crashing 83% from February to April and aircraft production down 32% (although it had been falling earlier for other reasons). Both sectors have recovered sharply, although both remain well below pre-virus levels. The manufacturing downturn and the subsequent rebound were both concentrated in the transportation sector

Driving the Rebound 
	

		
			
		

		
	







On the other side are sectors such as metals, machinery, and electrical equipment, which together account for about 22% of total manufacturing production and almost half of durable goods production. They fared comparatively better than motor vehicles and aerospace during the downturn but have also had much weaker recoveries. On a weighted-average basis, production in these sectors fell 19% during the downturn were still down 15% in June.

Missing the ReboundManufacturing production of primary metals, fabricated metal products, electrical equipment, and machinery has barely recovered from the trough.






The big question is whether the weakness in production is the natural response to weak demand or whether supply constraints are preventing manufacturers from making as much as their customers want. We’ll get more insight into that soon with data on retail sales and trade.

jog on
duc


----------



## qldfrog

When Russell is up nearly 4pc and nasdaq at .7, i think we are seeing a reversion with tech losing against the rest, yet in a still bullish market.
I sold my tech etf (vanguard) and bought silver miners etf instead
Silver will go up if economy grows and if we have a crash.
Kind of levelled bet.
time will tell but still bullish.
ASX wise might be different as we are still a war behind and will soon be hit by the first wave.
good thing is we are much better at treating people but i still expect an end of the world narrative with clear effect on psyche and local investment.
ASX maybe not the place to be in next 6 months, nor AUD


----------



## over9k

We had thinking like this at the start of june though frog, and remember what happened then?

If the trend continues to the end of NEXT week, then it's time to start pulling triggers.


----------



## ducati916

At the close:






So we are pretty much sitting at resistance. I'll update later and we'll have a look at the probability moving forward to the all time high and beyond.

jog on
duc


----------



## over9k

Friday will be key. Profit taking friday always exposes peoples' real confidence.

If monday/next week keeps heading in this direction, then it's time to switch.


----------



## ducati916

So just a bit of a teaser as I don't currently have time to download and comment on the charts atm, tomorrow looks like the bears will come out and play (successfully) again tomorrow.

jog on
duc


----------



## ducati916

So here are the charts:
















So we see that the SPY is at resistance on both 20/50EMA. Whereas the QQQ still has a little further to rise due to current weakness relative to DIA/SPY.

We also know that the VIX has a tendency to bounce back to resistance at or about these levels. SPY is at resistance on the price chart.

So I'm suggesting weakness in SPY/DIA and relative strength in QQQ with a big jump in volatility, which, should not cross/breach resistance (for any appreciable time) and potentially, SPY takes a shot at resistance (again) towards the end of the week.

In addition, we have credit issues bubbling in the background. This is far more concerning than the purely technical issues already discussed. It is a twitch, but it is the second twitch this week. This is not yet a signal. It may become one. Watch this space.

jog on
duc


----------



## over9k

We also have the curveballs of the vaccine info out just last night plus stimulus due very soon.


----------



## ducati916

over9k said:


> We also have the curveballs of the vaccine info out just last night plus stimulus due very soon.




Well re. vaccine, I think you know my position.

However re. the stimulus. That is a far more pertinent point. I'm expecting amongst other things, the Fed. to potentially lower the Fed Funds Rate, potentially below ZIRP. I am not a fan of this at all.

jog on
duc


----------



## over9k

They're already effectively negative if they're below inflation. 

Just read that all this vaccine carryon is just the ability to move to the next trial - which won't complete until march 2021. 

So a storm in a teacup until then really.


----------



## ducati916

over9k said:


> They're already effectively negative if they're below inflation.
> 
> Just read that all this vaccine carryon is just the ability to move to the next trial - which won't complete until march 2021.
> 
> So a storm in a teacup until then really.




Real rates are negative. Nominal rates are not. I suspect the Fed (post JPM earnings and Mr Dimon's comments) will lower the Fed Funds Rate to negative. This will (of course) help banks which operate on the spread, and increase their earnings going forward. Long term however it is not a great idea.

I'm totally indifferent to the vaccine argument. I have followed it on ASF and you can see where that has led.

jog on
duc


----------



## ducati916

Mr Dimon's comments:

Big banks are economic bellwethers. Investors should be concerned about what JPMorgan Chase had to say in its second-quarter earnings report.

The largest U.S. bank by assets on Tuesday signaled that the worst of the recession sparked by the coronavirus pandemic still lies ahead. That’s evident through ballooning loan-loss reserves, or the additional $8.85 billion JPMorgan put aside during the quarter to cover potential losses on loans to borrowers hurt by the pandemic. From the first quarter, which ended as efforts to contain the virus in the U.S. were just beginning, the bank’s loan-loss provision is up 38%; from a year earlier, it’s up 143%.

The increased loan-loss reserves are a reflection of JPMorgan’s more bearish view of the U.S. economy. In its second-quarter report, the company made significant negative revisions to its unemployment forecasts through the end of 2021 and in turn sharply reduced its expectations for gross domestic product over the same time period.

Economists at the bank now peg their base-case scenario for unemployment at the end of 2020 at 10.9%, up from a prediction of 6.6% when it reported first-quarter earnings. That dimmed outlook comes as earlier-than-expected rehiring during May and June still left 20 million out of work, and as business reopenings are being rolled back in some regions.

For gross domestic product, JPMorgan now sees a contraction of 6.2% in the fourth quarter of this year versus last, worse than the 5.4% decline it previously anticipated.

More interesting is where JPMorgan sees the U.S. economy at the end of 2021. Unemployment will still hover around 8%, the bank says, and GDP will still contract—a call that contrasts with many other Wall Street firms expecting a return to growth next year.

JPMorgan economists now expect a contraction of 3% in 2021. Until Tuesday, JPMorgan itself saw GDP growth of 0.3% by the end of 2021 from the pre-pandemic rate of 2.3% at the end of 2019.

On the bank’s call with investors and analysts Tuesday, CFO Jennifer Piepszak said delinquencies so far have been limited because of the amount of fiscal and monetary stimulus meant to support the broader economy. But “the visibility of what we’re dealing with is very, very low because we’re not seeing right now what you would typically expect to see given a recession,” she said.

Referring to CEO Jamie Dimon, Piepszak added: “Jamie has said this many times: May and June will prove to be the easy months in terms of this recovery, and now we’re really hitting the moment of truth I think in the months ahead.”

Given increased uncertainty around the macroeconomic outlook and the future of government stimulus measures as they affect clients’ ability to pay loans, Piepszak says JPMorgan is putting “more meaningful weight” on downside scenarios.

Dimon also spoke Tuesday about the bank’s preparation for a deteriorating economy. “We could bear another $20 billion of loan-loss reserves,” he said. “That $20 billion brings us to an extreme adverse [scenario] which roughly may equate to the U or W the Fed [references in discussing the recovery’s shape].” The bank is “going to do a lot more analysis on that because, obviously, we need to be prepared for that,” Dimon added.

Some across Wall Street, meanwhile, are holding on to hope of a V-shaped recovery, but rising Covid-19 cases are undermining those calls as governments and companies rethink reopenings. The latest setback came Monday, when California Gov. Gavin Newsom issued a statewide executive order closing indoor operations at restaurants, bars, movie theaters, family entertainment, zoos and museums. Gyms, hair salons, malls, and churches are also being forced to close anew in 30 California counties.

jog on
duc

https://eb2.3lift.com/pass?tl_click...90&bcud=4683&sid=66552&ts=1594859590&cb=74486


----------



## ducati916

I would also expect (at some point soonish) a rally in $US.












*Implications for Gold?

jog on
duc


----------



## over9k

Yeah that's the really funny part - my drops from the U.S have been offset by my ASX gains the past few days. I'll be pulling the trigger on FMG & RIO next week if this trend continues. 

I've noticed that my stay-at-home stuff has basically followed gold's trend but with much greater volatility. When the market gets spooked and runs to safe havens, gold's bumped a bit whereas I've gained a LOT and then the same thing's occurred on good news/belief of some kind of return to normality. 

None of which is surprising in the slightest.


----------



## ducati916

Just keeping an eye on things:












You never know.

jog on
duc


----------



## over9k

They're all solid long positions IMO.

But if there's a dip coming, I want to bail out before it and then buy back in. I did well buying boeing at 125 & selling at 190 and then buying back in at 170 so it'd be great to be able to do the same.

If they get their next gen chips out by xmas/winter then they're going to absolutely fly off the shelves.


----------



## over9k

Futures are in the toilet. Absolute bloodbath expected for the whole market. All the futures indices are down. Another night where I have to sleep early. Expecting to wake to horrors.


----------



## Spaniel14

over9k said:


> Futures are in the toilet. Absolute bloodbath expected for the whole market. All the futures indices are down. Another night where I have to sleep early. Expecting to wake to horrors.




Probably a reversal of yesterday’s gains, think the market got ahead of itself and everyone is trying to jump with the gains.


----------



## qldfrog

over9k said:


> Futures are in the toilet. Absolute bloodbath expected for the whole market. All the futures indices are down. Another night where I have to sleep early. Expecting to wake to horrors.



You are watching too many sensation channel 
Dow s&o -0 .6% and Nasdaq -1.4%
Not what i call bloodbath.
Will see how it goes but surprised it is not worse.we could end up flat..at least for my investment.let's sleep on it
But agree not a great week overall so far for my systems


----------



## Warr87

qldfrog said:


> Dow s&o -0 .6% and Nasdaq -1.4%
> Not what i call bloodbath.


----------



## Chronos-Plutus

Jamie Dyson is an interesting character.

Does he have listed stock?

I heard some people send him ideas that work, but they just don't look like working, so they get a response.


----------



## qldfrog

Interesting
Down day..for stocks. Widely and relatively evenly
For gold silver oil btc
USD up a bit and VIX...down ..go figure on that one


----------



## ducati916

So markets a little weak today. The VIX looks as if it has already fallen back. I'll include a look at the $VIX in the close.
There has however been positive economic data:

































Pretty much self-explanatory. This sort of positive data underlines the fact that the economy is coming back online. Earnings during this reporting period will continue to be poor, but they will be looked past into 2021.






TSLA and ZM. Bubble or sustainable? There is a fierce debate raging in 'Electric Cars' re. TSLA. ZM I just consider a passing fad, too easily replicated. Their best bet would to be bought up by one of the giants if they had something worthwhile. When I say worthwhile something that held a patent and had value.

The World to date:






Lots of opportunity out there.

And my main man, flippe-floppe-flye:






Winning as always.

jog on
duc


----------



## ducati916

qldfrog said:


> Interesting
> Down day..for stocks. Widely and relatively evenly
> For gold silver oil btc
> USD up a bit and VIX...down ..go figure on that one





$VIX started high and has already faded.






jog on
duc


----------



## qldfrog

Noted bonds were falling too.
In a day like that, not many places to hide 
Probably a different thread but would be interesting to know your feelings about diversification Mr Duc
After GFC and quite a few day crashes observations, my initial textbook feelings about diversification for risk management between asset classes has been shaken.
On a day like today, for a us investor, everything but cash..real cash, not bonds was a  nearly 1% loss....
Not that small in the scale of things


----------



## ducati916

qldfrog said:


> Noted bonds were falling too.
> In a day like that, not many places to hide
> Probably a different thread but would be interesting to know your feelings about diversification Mr Duc
> After GFC and quite a few day crashes observations, my initial textbook feelings about diversification for risk management between asset classes has been shaken.
> On a day like today, for a us investor, everything but cash..real cash, not bonds was a  nearly 1% loss....
> Not that small in the scale of things




Diversification:

(i) Job/Career;
(ii) Business (commonly known as a side hustle, usually internet based);
(iii) Financial instruments (Bonds/Stocks/Commodities);
(iv) Land (Rentals & Farmland)
(v) Physical Gold/Silver;
(vi) Collectibles (Art/Cars/Wine/whatever).

That is my allocation, not in any particular order.

jog on
duc


----------



## qldfrog

But let's not derail, i see today's results as actually quite positive trend wise
 will be interesting to see what my own crystal ball systems tell me.


----------



## ducati916

qldfrog said:


> But let's not derail, i see today's results as actually quite positive trend wise
> will be interesting to see what my own crystal ball systems tell me.




Today is a zero event. As JP Morgan said: stocks fluctuate. Risk is this:







jog on
duc


----------



## ducati916

Market as an overview:


















XLU nicely stabilised. I added. Now this is simply for a growing dividend over time. No expectations of astronomical growth or capital appreciation. Purely cash-flow.

jog on
duc


----------



## over9k

So I ended up mixed!

Net it was negative, but ebay actually gained. It's actually been the one that's kept me in the green on all the other days that I saw red everywhere else too.

I'm actually thinking about pivoting more into it for this reason. Not a net change of skin in the game, just a reallocation. But plenty of other work to do today.


unrelated - duc, what platform do you use?


----------



## ducati916

over9k said:


> I'll get to your other response later




While I'm not holding my breath, the reserve currency issue is actually an important one and I'm waiting to see what you have.

W/E is fine.

jog on
duc


----------



## over9k

Well I can give you a quick & simple response here: Why is the USD used and not something else? Why hasn't the euro or yuan or in fact anything else replaced it? 

There are certain things a currency *needs* to be in order to be what the USD is at the moment and no other currency can do it or is even on the way to looking like it could do it.


----------



## over9k

ducati916 said:


> TSLA and ZM. Bubble or sustainable? There is a fierce debate raging in 'Electric Cars' re. TSLA. ZM I just consider a passing fad, too easily replicated. Their best bet would to be bought up by one of the giants if they had something worthwhile. When I say worthwhile something that held a patent and had value.



Another quick one: Zoom's a networked good like facebook. Everyone use it, because everyone use it. A bit like back in the myspace vs facebook days, the war's now well & truly underway. Its only real competitor is MS teams, and that's obviously unusable on a mac, hence zoom's cross-platform advantage.

I do own microsoft as well for precisely that reason though but MS have been very late to the party - zoom now has incumbent advantage and MS need to dislodge it. Even then, the cross-platform advantage of zoom is significant. Think about the ability to even use it on your phone's camera at the airport or something if need be and you start to understand its ubiquity.

Tesla will correct, but as to what to is another question. Could be anything. The rally lately was insane so logic is well & truly out the window with that one.


----------



## over9k

Also, it's not often I agree with the loons on CNBC but I think this little snippet's actually accurate:  

Everyone's bailing because there's no announcement of anything to keep the market propped up between the job support payments etc ending and the next batch of stimulus, so they're just getting out until there's some certainty. 

But as if there's not going to be another massive stimulus package though, especially with the election coming up.


----------



## Lucky777

My own opinion disclaimer(short sighted).

Teams & Slack to be main usage for B2B moving forward. Zoom will lose value soon.

I’ve moved from tech and looking into discretionary & communications atm, will let you know my positions.

I’ve read the whole thread, pretty interesting perspectives. Imo, macro perspective is huge now, individuals stocks there is to be made short term, but long run I would start value investing.


----------



## over9k

Interesting, slack's the one I have the least confidence in/had so little confidence I never bought it.





I was eyeballing it in may and it missed earnings estimates by 25% at the start of june, fell off a cliff as a result, and hasn't recovered. One of those ones I'm glad I never bought.


Unrelated: Futures up today, tech-heavy nasdaq the highest. My portfolio usually moves about twice what the nasdaq does (in either direction).

If that happens, this week has been hilarious.

Also, duc, RE: nvidia:






https://techreport.com/news/3470476/nvidia-tsmc-5nm-7nm-ampere-hopper/

https://www.tweaktown.com/news/7203...city-at-tsmc-for-next-gen-gpu-cpus/index.html

https://www.techpowerup.com/266656/tsmc-secures-orders-from-nvidia-for-7nm-and-5nm-chips

TSMC is miles ahead of much of its competition and thus does the manufacturing for many of the chip designers like nvidia. As you can see, between them & AMD, all of TSMC's manufacturing capacity has been bought up in anticipation of a bonkers Q4 when their next gen stuff hits the shelves in time for the already bonkers xmas season.

Therefore little surprise that TSMC's earnings have skyrocketed.


----------



## qldfrog

For anyone interested, i personnally use google meet.no need for ms account, and while i can not fake a sea background as in zoom, much simpler better videoconferencing..and free of course
Slack is crap imho but probably generational


----------



## ducati916

So what does tomorrow bring?






So the $VIX has actually passed under our support line and it (potentially) will act as resistance. The trend line continues inexorably lower. I believe that vol. will remain contracted tomorrow.









QQQ massively oversold. I would expect a bounce tomorrow.









Both % of 20EMA and 50EMA are high. They can (and have) go higher for short periods. The question is will they tomorrow?









The 'tie-breaker'. Given low vol, given the o/s nature of QQQ, and given the above, my best guess is that we trade higher through the resistance line of 20/50EMAs.

We have had a number of w/e where the Bears have held the whip-hand, time for the Bulls to hold the whip-hand going into the w/e. 

Financials and RE are sitting on their 50s. I think they move higher. The fundamentals are positive and improving, nothing really to hold them back currently. The credit issues are resolved (for the moment) and will probably fluctuate a little going forward, but nothing major atm. I think we move into next week ready to challenge the all-time-highs in SPY.

jog on
duc


----------



## ducati916

over9k said:


> Well I can give you a quick & simple response here: Why is the USD used and not something else? Why hasn't the euro or yuan or in fact anything else replaced it?
> 
> There are certain things a currency *needs* to be in order to be what the USD is at the moment and no other currency can do it or is even on the way to looking like it could do it.





Well I know, I'm really just wondering whether you do since you semi-raised the issue.

jog on
duc


----------



## ducati916

Lucky777 said:


> My own opinion disclaimer(short sighted).
> 
> Teams & Slack to be main usage for B2B moving forward. Zoom will lose value soon.
> 
> I’ve moved from tech and looking into discretionary & communications atm, will let you know my positions.
> 
> I’ve read the whole thread, pretty interesting perspectives. Imo, macro perspective is huge now, individuals stocks there is to be made short term, but long run I would start value investing.




Welcome to the thread. Look forward to your contributions.

jog on
duc


----------



## ducati916

Credit issuance:

_The worst is over for corporate credit? Evidence of healing continues apace in the bond market, as investment grade and high-yield spreads have retraced most of their March widening.  Primary markets remain wide open as issuance continues to blow past that of a year ago, with the $1.2 trillion in fresh investment grade supply year-to-date already topping 2019’s full-year figure while junk issuance is up 42% from this time last year, according to CreditSights. 

More than a few investors are looking askance at that issuance spree, as 62% of respondents in the July BAML fund manager survey indicated they want CEOs to prioritize balance sheet improvements, while 27% preferred increased capital expenditures and only 9% asked for shareholder-centric maneuvers like increased dividends and stock buybacks.  Even prior to the pandemic, there was plenty of room for improvement. According to data from CreditSights, corporate liabilities stood near a record-high 135% of GDP as the calendar turned to 2020, compared to 105% in 2007. 

Edward Altman, professor emeritus of finance at the NYU Stern School of Business expressed confusion to Bloomberg yesterday over the issuance deluge: “I thought the market would gain some much needed deleveraging with the Covid-19 crisis. [Instead], it seems like companies again are exploiting what seems to be a crazy rebound.”  Altman predicts that more than 60 U.S. companies with liabilities above $1 billion will file for bankruptcy by year-end. 

Recent fundamental developments suggest that those concerns are well founded.  In a report today, Moody’s Investors Service relays that its so-called B3N list (meaning those rated single-B-minus with a negative outlook and below) rose to 414 companies at the end of June, double that of a year ago. That means that 27.5% of the high-yield universe is now concentrated within that vulnerable ratings category, topping the financial crisis-era peak of 26.1%.  The rating agency’s default forecast for that B3N cohort now stands at 34%, down from a recent peak of 43% but up from 22% last year. 
_
Credit issuance (no doubt backed by the Fed programmes to buy) is once again, far higher than it should be. There will be another crisis at some point almost certainly. Just not today.

The Fed meanwhile, show a fifth straight decline left Reserve Bank credit (the sum total of interest-bearing assets) at $6.88 trillion, down $34 billion from last week and the lowest reading since May 13.  The three-month annualized growth rate has now slowed to 124% from 217% last week and 684% on June 18. 

Speculation is (clearly) rife:

Trading platform Charles Schwab reports today that new retail brokerage accounts skyrocketed to 1.65 million in the second quarter, far above the consensus 1.08 million and more than four times last year’s 386,000 figure.  CEO Walt Bettinger noted that overall daily trading activity in the second quarter rose a cool 126% from a year ago. 

In addition, Matthew Klein of _Barron’s_ posted the following screenshot from the Schwab website on Twitter this afternoon:






jog on
duc


----------



## ducati916

For the Banks:






NPLs could (drop) and surprise to the upside. Financials were pretty strong today. All the fundamental data coming through atm is indicating that the Financials are ready to move.

jog on
duc


----------



## over9k

ducati916 said:


> Well I know, I'm really just wondering whether you do since you semi-raised the issue.
> 
> jog on
> duc



Well I was basically saying that whilst I agree that in theory, any fiat currency could do it, there are more conditions (significant ones) which must be met other than being a fiat currency, and no other currency even comes close, hence why the USD isn't going anywhere.

Related to thread: U.S jobs improvement now at its slowest in 3 months, suggesting a peak soon.


----------



## ducati916

First week of earnings culminating:

78% of companies that reported this week beat consensus analyst EPS estimates, while 72% topped consensus sales estimates.  Those are both strong numbers.  In terms of future projections, 16% of companies raised guidance, and not one company lowered guidance.  That's rare even with the very low number of reports so far.

The important takeaway is that not 1 lowered guidance. I don't (obviously) know whether that will play out going forward (very small sample) but if it does, that is bullish information. Certainly the economic data coming through atm is indicative of that being the case for most. There will obviously be sectors where forward guidance could be very bad.









jog on
duc


----------



## ducati916

TSLA involved in dodgy accounting? Pretty long read.

https://insideevs.com/news/433383/tesla-warranty-repairs-goodwill-lemon-laundering/

jog on
duc


----------



## frugal.rock

I get a statistical "sense" that the companies with decent results tend to report earlier.
Is this just my biased thinking as it's not a formal analysis?
No doubt that some figures will be fudged, hoping to kick the can, again.


----------



## ducati916

And from my main man, flippe-floppe-flye










jog on
duc


----------



## ducati916

over9k said:


> Well I was basically saying that whilst I agree that in theory, any fiat currency could do it, there are more conditions (significant ones) which must be met other than being a fiat currency, and no other currency even comes close, hence why the USD isn't going anywhere.




Which are?






jog on
duc


----------



## over9k

ducati916 said:


> Which are?
> 
> View attachment 106125
> 
> 
> jog on
> duc




This one: 



over9k said:


> Not just anyone can float a global currency.
> 
> The volume of currency must be massive - large enough not just to lubricate trillions of dollars of economic activity that takes place on the other side of the world, but so large that ordinary transactions and business fluctuations do not effect the currency's day-to-day value. Otherwise, instability would scare users away from using it.
> 
> The provider's external trade must be so small relative to the size of its home economy that day-to-day changes in the currency's value don't dramatically upset the domestic economy.
> 
> As an extension of that, the provider must be so unconcerned about the currency's value that it doesn't (unless there's a really big disruption) intervene in currency markets to push its value up or down. Again, if people are concerned that the currency is going to be manipulated once they start using it (and therefore are reliant on its use), they aren't going to adopt it in the first place. I.e your first paragraph is correct.
> 
> The provider must be willing to let the money flow at the whim of everyone else - if they can't get their hands on it when they need it, they're not going to use it.
> 
> And last but not least: The provider must be able to secure the very global trade for which the currency is used.
> 
> 
> Some 70% of global currency (by volume) is in some way linked to the USD. The USD is used for over 90% of global trade and of that tiny 10% left over, iirc, 90% of it done with the euro in the eurozone.
> 
> This is NOT going to change. The whole planet uses the one currency for the same reason everyone within a country uses its currency: Everyone use it, because everyone use it.
> 
> I can't remember the exact numbers off the top of my head, but there's several times as much USD in circulation as the U.S actually needs domestically. I'm exaggerating to make my point here but if we were to assume it was 20x as much (i.e that the yanks only had/used 5% of what's out there) then they could print twice what they actually have and only debase the currency by 1/20th.
> 
> Hence why they can "quantitatively ease" eye watering amounts of "stimulus" into the system and have absolutely SFA consequence for doing so. Hell, last I checked, the last batch of stimulus was overwhelmingly not even printed - it was mostly borrowed by the U.S government at rock bottom interest rates as everyone were trying to get their money out of the rest of the world anyway and so loaned it to them for peanuts. They don't even need to print most of their (massive) stimulus even now.
> 
> That is the degree of penetration & confidence the USD has and it is absolutely unique to it for a reason.




Which you replied to here: 



ducati916 said:


> 1. In theory, any fiat currency will suffice. In practice, no not anyone has an economy large enough and stable enough.
> 
> 2. The volume of any fiat currency has no physical constraints. It certainly would require 'confidence'.
> 
> 3. What does that even mean?
> 
> 4. Governments that have held the reserve currency status are always intervening: from Greece through to the US.
> 
> 5. Banks build up reserves. Generally the higher the reserves held, the greater the use.
> 
> 
> 
> 
> 
> 
> 
> 
> 
> View attachment 105906
> 
> 
> 6. Again, what do you actually mean?
> 
> 7. Well reserves certainly approach 70%. The Fed. provides huge Swap lines and Eurodollars to any requiring US dollars (debtors).
> 
> 8. It changes all of the time (albeit not that anyone other than historians really pay overmuch attention). International currencies in the past have included the Greek drachma, coined in the fifth century B.C., the Roman denari, the Byzantine solidus and Arab dinar of the middle-ages, the Venetian *ducato *and the Florentine florin of the Renaissance, the 17th century Dutch guilder and the French franc.
> 
> 9. The 'money' (M2) in circulation is the tip of the ice-burg.
> 
> 10. This misses the point entirely.
> 
> 11. Hardly as history has demonstrated.
> 
> jog on
> duc




1. yep we're in agreeance 

2. Yes, but volume because of desire, not just printing the shite out of it. Hence why gold's used as wealth storage vs platinum: Much harder to get your hands on platinum. 

3. It means that fluctuations in the currency don't play havok with your economy by playing havok with your imports/exports. i.e that your economy is not very sensitive to exchange rate fluctuations. 

4. Yes but they don't do it unless it's a biiiig deal like what was going on with japan in I think it was the 80's? People aren't going to use a currency that is *constantly* being f***ed with. 

5. Yep, because they've been able to. Their ability to do that was my point. 

6. Countries use the USD to trade. If they aren't trading with each other, they don't need USD. Trade requires security of shipping lanes etc etc. 

7. yep 

8. Sure, but the USD is GLOBAL currency now. Kind of like how the U.S military is orders of magnitude more powerful than what's come before it, the currency penetration is the same. This is actually only going to get worse from here on out as the U.S increasingly becomes the only consumer market left due to simple demographics. Additionally, currencies like this do not just collapse overnight. Even now, with the U.S being the global epicentre of the virus, money's still rushing INTO america. Confidence in the dollar is not going anywhere for a long time yet. 

9. yep another point we're in agreeance on 

10. How so? The very fact that the USD is what it is is precisely why they can abuse it the way they do. 

11. hardly what?


----------



## over9k

Related to thread:

Some of the markets are acting as if things are getting back to normal (maybe on news of the moderna trial moving into the next phase) and they, well, aren't. The virus case numbers are just hitting new highs day after day, the reduction in jobless claims is slowing dramatically (suggesting an end to the improvement in the unemployment rate), and we're heading into winter, a time which already results in lower economic activity/more people out of work (outside of retail).

Combine that with the fact that these reopenings are going to spread the virus further and california's just enforced school-from-home again, the american equivalent of jobkeeper ending soon and the next stimulus not being finalised yet and we're in one of those "the market can stay irrational longer than you can stay solvent" kind of moments.

This winter is going to be absolutely brutal. Stimulus is the only thing that'll get them through it.


----------



## ducati916

over9k said:


> Related to thread:
> 
> Some of the markets are acting as if things are getting back to normal (maybe on news of the moderna trial moving into the next phase) and they, well, aren't. The virus case numbers are just hitting new highs day after day, the reduction in jobless claims is slowing dramatically (suggesting an end to the improvement in the unemployment rate), and we're heading into winter, a time which already results in lower economic activity/more people out of work (outside of retail).
> 
> Combine that with the fact that these reopenings are going to spread the virus further and california's just enforced school-from-home again, the american equivalent of jobkeeper ending soon and the next stimulus not being finalised yet and we're in one of those "the market can stay irrational longer than you can stay solvent" kind of moments.
> 
> This winter is going to be absolutely brutal. Stimulus is the only thing that'll get them through it.










jog on
duc


----------



## ducati916

Lessons from history:









jog on
duc


----------



## Dark1975

Just a general question to forum? 

With out a stimulas package in america, we will likely to see a volatile market as the jobkeeper in america ends in July.
Does anyone think the stimulus we be likely to come in August?
Further note I noticed Congress are in recess till the 20th of July and have 15 days to approve a stimulas as Congress go back in recess @ the 10th of august till September!


----------



## ducati916

Dark1975 said:


> Just a general question to forum?
> 
> With out a stimulas package in america, we will likely to see a volatile market as the jobkeeper in america ends in July.
> Does anyone think the stimulus we be likely to come in August?
> Further note I noticed Congress are in recess till the 20th of July and have 15 days to approve a stimulas as Congress go back in recess @ the 10th of august till September!





A few articles on it have appeared:

https://www.nytimes.com/2020/07/16/opinion/coronavirus-economy-unemployment.html
https://slate.com/business/2020/07/600-dollar-benefits-going-away.html

jog on
duc


----------



## Dark1975

Thank you for you information duc ,


----------



## over9k

Dark1975 said:


> Just a general question to forum?
> 
> With out a stimulas package in america, we will likely to see a volatile market as the jobkeeper in america ends in July.
> Does anyone think the stimulus we be likely to come in August?
> Further note I noticed Congress are in recess till the 20th of July and have 15 days to approve a stimulas as Congress go back in recess @ the 10th of august till September!



The politicians are all on record stating they want it done before the august recess.


----------



## Smurf1976

Dark1975 said:


> With out a stimulas package in america, we will likely to see a volatile market as the jobkeeper in america ends in July.



They're on record saying they want it done as over9k notes.

That said, well given that issue, plus similar issues in other countries, plus whatever's going to happen with the virus, plus the upcoming US election, plus the seasonal "October" factor and so on - I think there's a reasonable chance we do see considerable volatility at some point over the next few months


----------



## ducati916

Smurf1976 said:


> That said, well given that issue, plus similar issues in other countries, plus whatever's going to happen with the virus, plus the upcoming US election, plus the seasonal "October" factor and so on - I think there's a reasonable chance we do see considerable volatility at some point over the next few months




Volatility. I'm not going to explain the theory, I'll leave that to personal research as it would be time consuming to go into it in the detail required. Some facts:

(i) Volatility mean reverts;
(ii) The mean is stable over time;
(iii) Calculating or estimating volatility is time frame dependant and input values dependant;
(iv) Volatility exhibits serial correlation;
(v) This is (theoretically) calculated via ARCH & GARCH;
(vi) Weighting of historical volatility and implied volatility in the calculation.









Two charts. The first, shorter term (obviously) and the second longer term. The above characteristics can easily be seen. Using the above information (assuming for the moment there are no significant changes) one can calculate a volatility expectation moving forward, which, would suggest, market direction.

jog on
duc


----------



## ducati916

ducati916 said:


> Lessons from history:
> 
> View attachment 106131
> View attachment 106132
> 
> 
> jog on
> duc





Shame that no-one really paid any attention to this chart. In it resides important information that frames where the markets potentially could go in a number of scenarios. It also ties in with the question of reserve currencies and their importance (critical) on again, which way markets (could) move in a number of possible scenarios. This is the 'macro'.

jog on
duc


----------



## over9k

To be fair duc, you can have massive volatility and a trend as well, they're not mutual exclusives.


Related to the thread: All the financial news is banging on about how everyone (the institutions) have serious jitters about the job support payments ending & when the next stimulus package begins (i.e if there's a gap and what will happen in it) and so are bailing/taking profits until there's some certainty. 

Which makes a lot of sense.


----------



## ducati916

over9k said:


> 1. To be fair duc, you can have massive volatility and a trend as well, they're not mutual exclusives.
> 
> 
> 2. Related to the thread: All the financial news is banging on about how everyone (the institutions) have serious jitters about the job support payments ending & when the next stimulus package begins (i.e if there's a gap and what will happen in it) and so are bailing/taking profits until there's some certainty.
> 
> Which makes a lot of sense.




1. Well isn't that exactly what we have currently? 

My post on volatility was something else altogether, nothing to do with [1] directly only tangentially.

2. Who cares what the media are going on about.

jog on
duc


----------



## over9k

Volatility: You said volatility means reverts. I'd assumed you meant away from where it was going (its trend) previously? 

Media: I was more pointing out that this is one of those occasional times when I think they're on the, well, money.


----------



## ducati916

over9k said:


> 1. Volatility: You said volatility means reverts. I'd assumed you meant away from where it was going (its trend) previously?
> 
> 2. Media: I was more pointing out that this is one of those occasional times when I think they're on the, well, money.




1. So you read (i) and ignored (ii)-(vi).

2. OMG.

jog on
duc


----------



## ducati916

Article:

_*“We are in the foothills of a Cold War.” *_Those were the words of Henry Kissinger when I interviewed him at the Bloomberg New Economy Forum in Beijing last November. 

The observation in itself was not wholly startling. It had seemed obvious to me since early last year that a new Cold War — between the U.S. and China — had begun. This insight wasn’t just based on interviews with elder statesmen. *Counterintuitive as it may seem, I had picked up the idea from binge-reading Chinese science fiction.*

_*First, the history.*_

What had started out in early 2018 as a trade war over tariffs and intellectual property theft had by the end of the year metamorphosed into a technology war over the global dominance of the Chinese company Huawei Technologies Co. in 5G network telecommunications; an ideological confrontation in response to Beijing’s treatment of the Uighur minority in China’s Xinjiang region and the pro-democracy protesters in Hong Kong; and an escalation of old frictions over Taiwan and the South China Sea.

*Nevertheless, for Kissinger, of all people, to acknowledge that we were in the opening phase of Cold War II was remarkable.*

Since his first secret visit to Beijing in 1971, Kissinger has been the master-builder of that policy of U.S.-Chinese engagement which, for 45 years, was a leitmotif of U.S. foreign policy. It fundamentally altered the balance of power at the mid-point of the Cold War, to the disadvantage of the Soviet Union. It created the geopolitical conditions for China’s industrial revolution, the biggest and fastest in history. And it led, after China’s accession to the World Trade Organization, to that extraordinary financial symbiosis which Moritz Schularick and I christened “Chimerica” in 2007.

*How did relations between Beijing and Washington sour so quickly that even Kissinger now speaks of Cold War? *

The conventional answer to that question is that President Donald Trump has swung like a wrecking ball into the “liberal international order” and that Cold War II is only one of the adverse consequences of his “America First” strategy.

Yet *that view attaches too much importance to the change in U.S. foreign policy since 2016*, and not enough to the change in Chinese foreign policy that came four years earlier, when Xi Jinping became general secretary of the Chinese Communist Party. Future historians will discern that the decline and fall of Chimerica began in the wake of the global financial crisis, as a new Chinese leader drew the conclusion that there was no longer any need to hide the light of China’s ambition under the bushel that Deng Xiaoping had famously recommended.

*When Middle America voted for Trump four years ago, it was partly a backlash against the asymmetric payoffs of engagement and its economic corollary, globalization.* Not only had the economic benefits of Chimerica gone disproportionately to China, not only had its costs been borne disproportionately by working-class Americans, but now those same Americans saw that their elected leaders in Washington had acted as midwives at the birth of a new strategic superpower — a challenger for global predominance even more formidable, because economically stronger, than the Soviet Union.

It is not only Kissinger who recognizes that the relationship with Beijing has soured. Orville Schell, another long-time believer in engagement, recently conceded that the approach had foundered “because of the CCP’s deep ambivalence about the way engaging in a truly meaningful way might lead to demands for more reform and change and its ultimate demise.”

Conservative critics of engagement, meanwhile, are eager to dance on its grave, urging that the People’s Republic be economically “quarantined,” its role in global supply chains drastically reduced. There is a spring in the step of the more Sinophobic members of the Trump administration, notably Secretary of State Mike Pompeo, deputy National Security Adviser Matt Pottinger and trade adviser Peter Navarro. For the past three and a half years they have been arguing that the single most important thing about Trump's presidency was that he had changed the course of U.S. policy towards China, a shift from engagement to competition spelled out in the 2017 National Security Strategy. The events of 2020 would seem to have vindicated them.

The Covid-19 pandemic has *done more than intensify Cold War II.* It has *revealed its existence *to those who last year doubted it. *The Chinese Communist Party caused this disaster* — first by covering up how dangerous the new virus SARS-CoV-2 was, then by delaying the measures that might have prevented its worldwide spread.

*Yet now China wants to claim the credit for saving the world from the crisis it caused.* Liberally exporting cheap and not wholly reliable ventilators, testing kits and face masks, the Chinese government has sought to snatch victory from the jaws of a defeat it inflicted. The deputy director of the Chinese Foreign Ministry’s information department has gone so far as to endorse a conspiracy theory that the coronavirus originated in the U.S. and retweet an article claiming that an American team had brought the virus with them when they participated in the World Military Games in Wuhan last October.

Just as implausible are Chinese claims that the U.S. is somehow behind the recurrent waves of pro-democracy protest in Hong Kong. The current confrontation over the former British colony’s status is unambiguously Made in China. As Pompeo has said, the new National Security Law Beijing imposed on Hong Kong last Tuesday effectively “destroys” the territory’s semi-autonomy and tears up the 1984 Sino-British joint declaration, which guaranteed that Hong Kong would retain its own legal system for 50 years after its handover to People’s Republic in 1997.

In this context, *it is not really surprising that American public sentiment towards China has become markedly more hawkish since 2017, especially among older voters. *China is one of few subjects these days about which there is a genuine bipartisan consensus. It is a sign of the times that Democratic presidential candidate Joe Biden’s campaign clearly intends to portray their man as more hawkish on China than Trump. (Former National Security Adviser John Bolton’s new memoir is grist to their mill.) On Hong Kong, Nancy Pelosi, the Democratic speaker of the House, is every bit as indignant as Pompeo.

*I have argued that this new Cold War is both inevitable and desirable, not least because it has jolted the U.S. out of complacency *and into an earnest effort not to be surpassed by China in artificial intelligence, quantum computing and other strategically crucial technologies. Yet there remains, in academia especially, significant resistance to my view that we should stop worrying and learn to love Cold War II.

At a forum last week on World Order after Covid-19, organized by the Kissinger Center for Global Affairs at Johns Hopkins University, a clear majority of speakers warned of the perils of a new Cold War.


_*Eric Schmidt, the former chairman of Google, argued instead for a “rivalry-partnership” model of “coop-etition,”* in which the two nations would at once compete and cooperate in the way that Samsung and Apple have done for years._


_Harvard’s Graham Allison, the author of the bestselling "Destined for War: Can America and China Escape Thucydides's Trap?", agreed, giving as another example the 11th-century “frenmity” between the Song Emperor of China and the Liao kingdom on China’s northern border. *The pandemic, Allison argued, has made “incandescent the impossibility of identifying China clearly as either foe or friend. Rivalry-partnership may sound complicated, but life is complicated.”*_


_“The establishment of a productive and predictable US/China relationship,” wrote John Lipsky, formerly of the International Monetary Fund, *“is a sine qua non for strengthening the institutions of global governance.”* The last Cold War had cast a “shadow of a global holocaust for decades,” observed James Steinberg, a former deputy secretary of state. “What can be done to create a context to limit the rivalry and create space for cooperation?”_


_Elizabeth Economy, my colleague at the Hoover Institution, had an answer: *“The United States and China could … partner to address a global challenge,” namely climate change*. Tom Wright of the Brookings Institution took a similar line: “Focusing only on great power competition while ignoring the need for cooperation will not actually give the United States an enduring strategic advantage over China.”_

_*All this sounds eminently reasonable, apart from one thing. The Chinese Communist Party isn’t Samsung, much less the Liao kingdom.*_

Rather — as was true in Cold War I, when (especially after 1968) academics tended to be doves rather than hawks — today’s proponents of “rivalry-partnership” are overlooking the possibility that the Chinese aren’t interested in being frenemies. They know full well this is a Cold War, because they started it.

To be sure, *there are also Chinese scholars who lament the passing of engagement.* The economist Yu Yongding recently joined Kevin Gallagher of Boston University to argue for reconciliation between Washington and Beijing. Yet that is no longer the official view in Beijing. When I first began talking publicly about Cold War II at conferences last year, I was surprised that no Chinese delegates contradicted me. In September, I asked one of them — the Chinese head of a major international institution — why that was. “Because I agree with you!” he replied with a smile.

*As a visiting professor at Tsinghua University in Beijing, I have seen for myself the ideological turning of the tide under Xi. *Academics who study taboo subjects such as the Cultural Revolution find themselves subject to investigations or worse. Those who take a more combative stance toward the West get promoted.

Yan Xuetong, dean of the Institute of International Relations at Tsinghua, recently argued that Cold War II, unlike Cold War I, will be a purely technological competition, without proxy wars and nuclear brinkmanship. Yao Yang, dean of the National School of Development at Peking University, was equally candid in an interview with the Beijing Cultural Review, published on April 28.

“To a certain degree we already find ourselves in the situation of a New Cold War," he said. “There are two basic reasons for this. The first is the need for Western politicians to play the blame game” about the origins of the pandemic.

“The next thing," he added, "is that now Westerners want to make this into a ‘systems’ question, saying that the reason that China could carry out such drastic control measures [in Hubei province] is because China is not a democratic society, and this is where the power and capacity to do this came from.”

*This, however, is weak beer compared with the hard stuff regularly served up on Twitter by the pack leader of the “wolf warrior” diplomats, Zhao Lijian.* “The Hong Kong Autonomy Act passed by the US Senate is nothing but a piece of scrap paper,” he tweeted on Monday, in response to the congressional retaliation against China’s  new Hong Kong security law. By his standards, this was understatement.

*The tone of the official Chinese communiqué* released after Pompeo’s June 17 meeting in Hawaii with Yang Jiechi, the director of the Communist Party’s Office of Foreign Affairs, *was vintage Cold War. *On the persecution of the Uighurs, for example, it called on "the US side to respect China's counter-terrorism and de-radicalization efforts, stop applying double standards on counter-terrorism issues, and stop using Xinjiang-related issues as a pretext to interfere in China's internal affairs."

And this old shrillness, so reminiscent of the Mao Zedong era, is not reserved for the U.S. alone. The Chinese government lashes out at any country that has the temerity to criticize it, from Australia — "gum stuck to the bottom of China's shoe" according to the editor of the Party-controlled Global Times — to India to the U.K. 

Those who hope to revive engagement, or at least establish frenmity with Beijing, underestimate the influence of Wang Huning, a member since 2017 of the Standing Committee of the Politburo, the most powerful body in China, and Xi’s most influential adviser. Back in August 1988, Wang spent six months in the U.S. as a visiting scholar, traveling to more than 30 cities and nearly 20 universities. His account of that trip, "America against America," (published in 1991) is a critique — in places scathing — of American democracy, capitalism and culture (racial division features prominently in the third chapter).

Yet the book that has done the most to educate me about how China views America and the world today is, as I said, not a political text, but a work of science fiction.* "The Dark Forest" was Liu Cixin’s 2008 sequel to the hugely successful "Three-Body Problem." It would be hard to overstate Liu’s influence in contemporary China:* He is revered by the Shenzhen and Hangzhou tech companies, and was officially endorsed as one of the faces of 21st-century Chinese creativity by none other than … Wang Huning.

"The Dark Forest," which continues the story of the invasion of Earth by the ruthless and technologically superior Trisolarans, introduces Liu’s three axioms of “cosmic sociology.”

First, “Survival is the primary need of civilization.” Second, “Civilization continuously grows and expands, but the total matter in the universe remains constant.” Third, “chains of suspicion” and the risk of a “technological explosion” in another civilization mean that in space there can only be the law of the jungle. In the words of the book’s hero, Luo Ji:

*The universe is a dark forest. Every civilization is an armed hunter stalking through the trees like a ghost* … trying to tread without sound … The hunter has to be careful, because everywhere in the forest are stealthy hunters like him. If he finds other life — another hunter, an angel or a demon, a delicate infant or a tottering old man, a fairy or a demigod — there’s only one thing he can do: open fire and eliminate them. *In this forest, hell is other people … any life that exposes its own existence will be swiftly wiped out.*

Kissinger is often thought of (in my view, wrongly) as the supreme American exponent of Realpolitik. But this is something much harsher than realism. _*This is intergalactic Darwinism.*_

Of course, you may say, it’s just sci-fi. Yes, but "The Dark Forest" gives us an insight into something we think too little about: how Xi’s China thinks. *It’s not up to us whether or not we have a Cold War with China, if China has already declared Cold War on us. *

Not only are we already in the foothills of that new Cold War; *those foothills are also impenetrably covered in a dark forest of China’s devising.

jog on
duc*


----------



## over9k

Lol no. China imports the overwhelming majority of its energy and exports the overwhelming majority of its products, both of which depend on american securance. It doesn't even have an internal consumer market. 

Not sure what you mean by ignoring 2-6 when your post only had two points?


----------



## qldfrog

ducati916 said:


> Article:
> 
> _*“We are in the foothills of a Cold War.” *_Those were the words of Henry Kissinger when I interviewed him at the Bloomberg New Economy Forum in Beijing last November.
> 
> The observation in itself was not wholly startling. It had seemed obvious to me since early last year that a new Cold War — between the U.S. and China — had begun. This insight wasn’t just based on interviews with elder statesmen. *Counterintuitive as it may seem, I had picked up the idea from binge-reading Chinese science fiction.*
> 
> _*First, the history.*_
> 
> What had started out in early 2018 as a trade war over tariffs and intellectual property theft had by the end of the year metamorphosed into a technology war over the global dominance of the Chinese company Huawei Technologies Co. in 5G network telecommunications; an ideological confrontation in response to Beijing’s treatment of the Uighur minority in China’s Xinjiang region and the pro-democracy protesters in Hong Kong; and an escalation of old frictions over Taiwan and the South China Sea.
> 
> *Nevertheless, for Kissinger, of all people, to acknowledge that we were in the opening phase of Cold War II was remarkable.*
> 
> Since his first secret visit to Beijing in 1971, Kissinger has been the master-builder of that policy of U.S.-Chinese engagement which, for 45 years, was a leitmotif of U.S. foreign policy. It fundamentally altered the balance of power at the mid-point of the Cold War, to the disadvantage of the Soviet Union. It created the geopolitical conditions for China’s industrial revolution, the biggest and fastest in history. And it led, after China’s accession to the World Trade Organization, to that extraordinary financial symbiosis which Moritz Schularick and I christened “Chimerica” in 2007.
> 
> *How did relations between Beijing and Washington sour so quickly that even Kissinger now speaks of Cold War? *
> 
> The conventional answer to that question is that President Donald Trump has swung like a wrecking ball into the “liberal international order” and that Cold War II is only one of the adverse consequences of his “America First” strategy.
> 
> Yet *that view attaches too much importance to the change in U.S. foreign policy since 2016*, and not enough to the change in Chinese foreign policy that came four years earlier, when Xi Jinping became general secretary of the Chinese Communist Party. Future historians will discern that the decline and fall of Chimerica began in the wake of the global financial crisis, as a new Chinese leader drew the conclusion that there was no longer any need to hide the light of China’s ambition under the bushel that Deng Xiaoping had famously recommended.
> 
> *When Middle America voted for Trump four years ago, it was partly a backlash against the asymmetric payoffs of engagement and its economic corollary, globalization.* Not only had the economic benefits of Chimerica gone disproportionately to China, not only had its costs been borne disproportionately by working-class Americans, but now those same Americans saw that their elected leaders in Washington had acted as midwives at the birth of a new strategic superpower — a challenger for global predominance even more formidable, because economically stronger, than the Soviet Union.
> 
> It is not only Kissinger who recognizes that the relationship with Beijing has soured. Orville Schell, another long-time believer in engagement, recently conceded that the approach had foundered “because of the CCP’s deep ambivalence about the way engaging in a truly meaningful way might lead to demands for more reform and change and its ultimate demise.”
> 
> Conservative critics of engagement, meanwhile, are eager to dance on its grave, urging that the People’s Republic be economically “quarantined,” its role in global supply chains drastically reduced. There is a spring in the step of the more Sinophobic members of the Trump administration, notably Secretary of State Mike Pompeo, deputy National Security Adviser Matt Pottinger and trade adviser Peter Navarro. For the past three and a half years they have been arguing that the single most important thing about Trump's presidency was that he had changed the course of U.S. policy towards China, a shift from engagement to competition spelled out in the 2017 National Security Strategy. The events of 2020 would seem to have vindicated them.
> 
> The Covid-19 pandemic has *done more than intensify Cold War II.* It has *revealed its existence *to those who last year doubted it. *The Chinese Communist Party caused this disaster* — first by covering up how dangerous the new virus SARS-CoV-2 was, then by delaying the measures that might have prevented its worldwide spread.
> 
> *Yet now China wants to claim the credit for saving the world from the crisis it caused.* Liberally exporting cheap and not wholly reliable ventilators, testing kits and face masks, the Chinese government has sought to snatch victory from the jaws of a defeat it inflicted. The deputy director of the Chinese Foreign Ministry’s information department has gone so far as to endorse a conspiracy theory that the coronavirus originated in the U.S. and retweet an article claiming that an American team had brought the virus with them when they participated in the World Military Games in Wuhan last October.
> 
> Just as implausible are Chinese claims that the U.S. is somehow behind the recurrent waves of pro-democracy protest in Hong Kong. The current confrontation over the former British colony’s status is unambiguously Made in China. As Pompeo has said, the new National Security Law Beijing imposed on Hong Kong last Tuesday effectively “destroys” the territory’s semi-autonomy and tears up the 1984 Sino-British joint declaration, which guaranteed that Hong Kong would retain its own legal system for 50 years after its handover to People’s Republic in 1997.
> 
> In this context, *it is not really surprising that American public sentiment towards China has become markedly more hawkish since 2017, especially among older voters. *China is one of few subjects these days about which there is a genuine bipartisan consensus. It is a sign of the times that Democratic presidential candidate Joe Biden’s campaign clearly intends to portray their man as more hawkish on China than Trump. (Former National Security Adviser John Bolton’s new memoir is grist to their mill.) On Hong Kong, Nancy Pelosi, the Democratic speaker of the House, is every bit as indignant as Pompeo.
> 
> *I have argued that this new Cold War is both inevitable and desirable, not least because it has jolted the U.S. out of complacency *and into an earnest effort not to be surpassed by China in artificial intelligence, quantum computing and other strategically crucial technologies. Yet there remains, in academia especially, significant resistance to my view that we should stop worrying and learn to love Cold War II.
> 
> At a forum last week on World Order after Covid-19, organized by the Kissinger Center for Global Affairs at Johns Hopkins University, a clear majority of speakers warned of the perils of a new Cold War.
> 
> 
> 
> 
> 
> 
> _*Eric Schmidt, the former chairman of Google, argued instead for a “rivalry-partnership” model of “coop-etition,”* in which the two nations would at once compete and cooperate in the way that Samsung and Apple have done for years._
> 
> _Harvard’s Graham Allison, the author of the bestselling "Destined for War: Can America and China Escape Thucydides's Trap?", agreed, giving as another example the 11th-century “frenmity” between the Song Emperor of China and the Liao kingdom on China’s northern border. *The pandemic, Allison argued, has made “incandescent the impossibility of identifying China clearly as either foe or friend. Rivalry-partnership may sound complicated, but life is complicated.”*_
> 
> _“The establishment of a productive and predictable US/China relationship,” wrote John Lipsky, formerly of the International Monetary Fund, *“is a sine qua non for strengthening the institutions of global governance.”* The last Cold War had cast a “shadow of a global holocaust for decades,” observed James Steinberg, a former deputy secretary of state. “What can be done to create a context to limit the rivalry and create space for cooperation?”_
> 
> _Elizabeth Economy, my colleague at the Hoover Institution, had an answer: *“The United States and China could … partner to address a global challenge,” namely climate change*. Tom Wright of the Brookings Institution took a similar line: “Focusing only on great power competition while ignoring the need for cooperation will not actually give the United States an enduring strategic advantage over China.”_
> 
> _*All this sounds eminently reasonable, apart from one thing. The Chinese Communist Party isn’t Samsung, much less the Liao kingdom.*_
> 
> Rather — as was true in Cold War I, when (especially after 1968) academics tended to be doves rather than hawks — today’s proponents of “rivalry-partnership” are overlooking the possibility that the Chinese aren’t interested in being frenemies. They know full well this is a Cold War, because they started it.
> 
> To be sure, *there are also Chinese scholars who lament the passing of engagement.* The economist Yu Yongding recently joined Kevin Gallagher of Boston University to argue for reconciliation between Washington and Beijing. Yet that is no longer the official view in Beijing. When I first began talking publicly about Cold War II at conferences last year, I was surprised that no Chinese delegates contradicted me. In September, I asked one of them — the Chinese head of a major international institution — why that was. “Because I agree with you!” he replied with a smile.
> 
> *As a visiting professor at Tsinghua University in Beijing, I have seen for myself the ideological turning of the tide under Xi. *Academics who study taboo subjects such as the Cultural Revolution find themselves subject to investigations or worse. Those who take a more combative stance toward the West get promoted.
> 
> Yan Xuetong, dean of the Institute of International Relations at Tsinghua, recently argued that Cold War II, unlike Cold War I, will be a purely technological competition, without proxy wars and nuclear brinkmanship. Yao Yang, dean of the National School of Development at Peking University, was equally candid in an interview with the Beijing Cultural Review, published on April 28.
> 
> “To a certain degree we already find ourselves in the situation of a New Cold War," he said. “There are two basic reasons for this. The first is the need for Western politicians to play the blame game” about the origins of the pandemic.
> 
> “The next thing," he added, "is that now Westerners want to make this into a ‘systems’ question, saying that the reason that China could carry out such drastic control measures [in Hubei province] is because China is not a democratic society, and this is where the power and capacity to do this came from.”
> 
> *This, however, is weak beer compared with the hard stuff regularly served up on Twitter by the pack leader of the “wolf warrior” diplomats, Zhao Lijian.* “The Hong Kong Autonomy Act passed by the US Senate is nothing but a piece of scrap paper,” he tweeted on Monday, in response to the congressional retaliation against China’s  new Hong Kong security law. By his standards, this was understatement.
> 
> *The tone of the official Chinese communiqué* released after Pompeo’s June 17 meeting in Hawaii with Yang Jiechi, the director of the Communist Party’s Office of Foreign Affairs, *was vintage Cold War. *On the persecution of the Uighurs, for example, it called on "the US side to respect China's counter-terrorism and de-radicalization efforts, stop applying double standards on counter-terrorism issues, and stop using Xinjiang-related issues as a pretext to interfere in China's internal affairs."
> 
> And this old shrillness, so reminiscent of the Mao Zedong era, is not reserved for the U.S. alone. The Chinese government lashes out at any country that has the temerity to criticize it, from Australia — "gum stuck to the bottom of China's shoe" according to the editor of the Party-controlled Global Times — to India to the U.K.
> 
> Those who hope to revive engagement, or at least establish frenmity with Beijing, underestimate the influence of Wang Huning, a member since 2017 of the Standing Committee of the Politburo, the most powerful body in China, and Xi’s most influential adviser. Back in August 1988, Wang spent six months in the U.S. as a visiting scholar, traveling to more than 30 cities and nearly 20 universities. His account of that trip, "America against America," (published in 1991) is a critique — in places scathing — of American democracy, capitalism and culture (racial division features prominently in the third chapter).
> 
> Yet the book that has done the most to educate me about how China views America and the world today is, as I said, not a political text, but a work of science fiction.* "The Dark Forest" was Liu Cixin’s 2008 sequel to the hugely successful "Three-Body Problem." It would be hard to overstate Liu’s influence in contemporary China:* He is revered by the Shenzhen and Hangzhou tech companies, and was officially endorsed as one of the faces of 21st-century Chinese creativity by none other than … Wang Huning.
> 
> "The Dark Forest," which continues the story of the invasion of Earth by the ruthless and technologically superior Trisolarans, introduces Liu’s three axioms of “cosmic sociology.”
> 
> First, “Survival is the primary need of civilization.” Second, “Civilization continuously grows and expands, but the total matter in the universe remains constant.” Third, “chains of suspicion” and the risk of a “technological explosion” in another civilization mean that in space there can only be the law of the jungle. In the words of the book’s hero, Luo Ji:
> 
> *The universe is a dark forest. Every civilization is an armed hunter stalking through the trees like a ghost* … trying to tread without sound … The hunter has to be careful, because everywhere in the forest are stealthy hunters like him. If he finds other life — another hunter, an angel or a demon, a delicate infant or a tottering old man, a fairy or a demigod — there’s only one thing he can do: open fire and eliminate them. *In this forest, hell is other people … any life that exposes its own existence will be swiftly wiped out.*
> 
> Kissinger is often thought of (in my view, wrongly) as the supreme American exponent of Realpolitik. But this is something much harsher than realism. _*This is intergalactic Darwinism.*_
> 
> Of course, you may say, it’s just sci-fi. Yes, but "The Dark Forest" gives us an insight into something we think too little about: how Xi’s China thinks. *It’s not up to us whether or not we have a Cold War with China, if China has already declared Cold War on us. *
> 
> Not only are we already in the foothills of that new Cold War; *those foothills are also impenetrably covered in a dark forest of China’s devising.*
> 
> *jog on*
> *duc*



interestingly, I was introduced and read *"Three-Body Problem."*within my stay in Shenzhen..typical start up nerds literature, and I can share the views exposed.
There was only one surprising item: a surprisingly honest and frank description of cultural revolution within the depicting of one of the character youth.
Did you know that there were actual tank battles in Beijing during that time between different factions, army and youth ?
Anyway, watch movies in China now and we have the Hollywood style, but saved by the red army instead of the marines, with muscle, strong invincible warriors and most often near future scenario.
SCi Fi but in 2030 or so...
China population is primed to go past the cold war if need be.


----------



## over9k

Anton Kreil's just released a video related to trend trading, one of the very few guys worth listening to/watching IMO:


----------



## frugal.rock

The current CCP checklist.

Hong Kong. Tick.
Taiwan. In progress.
South seas. Tick.
New Zealand. In progress.
Australia. Stalled.

Sorry, wrong thread. Meh.


----------



## frugal.rock

ducati916 said:


> Lessons from history:
> 
> View attachment 106131
> View attachment 106132
> 
> 
> jog on
> duc





ducati916 said:


> Shame that no-one really paid any attention to this chart. In it resides important information that frames where the markets potentially could go in a number of scenarios. It also ties in with the question of reserve currencies and their importance (critical) on again, which way markets (could) move in a number of possible scenarios. This is the 'macro'.
> 
> jog on
> duc



On y semblait au contraire plutôt hostile.
I see the chart is mirror imaging from the 1914 period....is basic TA indicating war Duc?
As we know, history repeats, and logic states that this v rally is illogical. More situation based. 
Please explain to a Nimrod...aka me.


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## ducati916

There will probably need to be several posts simply to keep the subject to a manageable length in each post.







The 1914-1945 era is the one that I shall start with. Today we have a pandemic, protectionism and nationalism. None of them are as serious as the historical ones. As to war, we have (potentially) a Cold War II.






Falling industrial production was a function of the Smoot-Hawley Tariff legislation. The US today is less exposed to purely industrial production than it was then.






That falling production impacted the market to a greater degree, due to a far higher component of industrial based stocks.






The Fed. raised interest rates, which was calamitous. This was driven by the exodus of gold. Gold at that time was the Reserve Currency of the world.






Unemployment, obviously largely driven by industrial production, was decimated.






As a result of world wide tariffs, exports/imports around the world collapsed. We are seeing currently, due to tariffs falling trade. We may see due to COVID a further reduction in international trade due to supply chain issues, just-in-time and production in total brought back onshore to home nations. In other words a severe contraction in globalisation.






We do currently have low (disinflationary) commodity prices. This is due more to increased supply (and during COVID falling demand) rather than deflationary due to tariffs.






The British pound was the Reserve Currency (being directly exchangeable with gold) and Britain had to default (much as Nixon did in 1971) as we could not redeem. That ended the pound as the primary reserve currency of the world and pretty much Britain as a world power. It saw the rise of the US to pre-eminence. Is China seeking similar?






The gold drain in the US is the driver of the Fed. raising the discount rate. The US is no longer tied to gold and can therefore via the Fed. manipulate monetary policy as it wishes (clearly the Fed. has already stepped outside of the law and its 1913 Charter with some of the current programmes). This is a good thing in the short term. Longer term is it?






Because bank failures on an epic scale would (as they did then) cripple the economy.

The takeaway is this (and this is why I queried Mr 9K): while we have some of the issues of the Great Depression present, some we have only in a mild form. Will those symptoms develop into a fully fledged disease? If they did, how would the following questions be answered? Consequences?

(i) Is the loss of industrial pre-eminence an issue for the US in retaining the primary reserve status?;
(ii) In a Cold War with China, would the same tactic as employed against the USSR work again?
(iii) How and why did the US take reserve currency status from the UK?
(iv) Trump or Biden? Which has the intellectual capability to take on China?;
(v) Would negative answers drive a serious bear market?

jog on
duc


----------



## ducati916

Looking at the WWII years. 
	

		
			
		

		
	









The unemployment and loss of industrial production (the two went hand-in-hand) remains an issue right through the 1930's.






Not until America enters the war are the employment and production issues solved. The US being the factory of the West.






Stockmarket rips higher.






Germany's collapses. If there were charts of Japan, they would show similar. Western Europe (France, UK, Holland, Belgium etc) were all depressed from wartime damage. The Russians exported vast swathes of German industry East along with as many scientists etc that they could lay their hands on (the US also went on a brain grab).

The US moving into the 1950's was the productive centre of the world. It became the creditor nation of the world, hence, the US dollar was tied to gold and was the de facto 'Reserve Currency'.

With the ending of the war, there was again 'globalisation' as trading took place on an expanded basis. This was restricted somewhat by the Iron Curtain and the Cold War I as Stalin shut off the East.

jog on
duc


----------



## ducati916

Into the 1950's






We have another 'hot' war in Korea. What should be clear by now is that conventional 'war' is not a driver of Bear markets. What we are starting to see is the emergence of consumer based technology. This has largely (in part) been driven by wartime based technology. In this case Cold War technology via the Space Race with the USSR. Cold Wars are not drivers of Bear markets.

Currently China and the US are engaged in a Tech. war. This has echoes of the US/Soviet tech. war that ran for 40 years.

Also important to the trends are: (i) who is President and (ii) policy decisions made. At this point, the US is still a creditor nation.

jog on
duc


----------



## qldfrog

A bit macro time wise for the thread but applying these lessons of history, do you see China now as the Germany of late 1930..talking economy not ideology.irrelevant to the subject
The current industrial and i include high tech power of China is mind-blowing, as were the advances of Germany industry just before WWII.
One does not need to be a genius to believe that in absence of markets to sell phones and junk goods, China might redirect this production toward both domestic production:.happy people...
AND defence..hum..industry: proud Han people.
I sée some DFEN good outcome there but doubt the US can win that one.It has a demographic advantage but is loosing currently its social integrity and its attractions.this can be reverted but the timing is wrong.
Rotten from the inside
Before Reagan,the US was in a bad state socially and economically yet it managed its rebirth.
Trump tried the same imho but he faced an internal enemy which wasn't there for Reagan.
Reagan ultimately put USSR to its knees, Trump has low chance to do the same with China and the democrats will not even try..
In the spirit of the historical graph but a bit long .feel free to move to other thread


----------



## ducati916

qldfrog said:


> A bit macro time wise for the thread but applying these lessons of history, do you see China now as the Germany of late 1930..talking economy not ideology.irrelevant to the subject
> The current industrial and i include high tech power of China is mind-blowing, as were the advances of Germany industry just before WWII.
> One does not need to be a genius to believe that in absence of markets to sell phones and junk goods, China might redirect this production toward both domestic production:.happy people...
> AND defence..hum..industry: proud Han people.
> I sée some DFEN good outcome there but doubt the US can win that one.It has a demographic advantage but is loosing currently its social integrity and its attractions.this can be reverted but the timing is wrong.
> Rotten from the inside
> Before Reagan,the US was in a bad state socially and economically yet it managed its rebirth.
> Trump tried the same imho but he faced an internal enemy which wasn't there for Reagan.
> Reagan ultimately put USSR to its knees, Trump has low chance to do the same with China and the democrats will not even try..
> In the spirit of the historical graph but a bit long .feel free to move to other thread





I'll come to conclusions eventually, just outlining the history currently.

jog on
duc


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## over9k

There is not going to be a cold war 2.0. China imports the overwhelming majority of its energy and exports the overwhelming majority of its goods. It also has the worst demographics of any country in the world other than japan, and is the most overcredited nation in human history. It's also completely surrounded geographically, with terrible relations with basically all of its neighbours.   

All the U.S needs to do is pull the rug out & it's all over.


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## qldfrog

over9k said:


> There is not going to be a cold war 2.0. China imports the overwhelming majority of its energy and exports the overwhelming majority of its goods. It also has the worst demographics of any country in the world other than japan, and is the most overcredited nation in human history. It's also completely surrounded geographically, with terrible relations with basically all of its neighbours.
> 
> All the U.S needs to do is pull the rug out & it's all over.



I highly recommend for the experts to have a nice little travel in both countries: China/US, once obviously the planes fly again and if we are ever allowed to put a foot back in Chinese soil.
It might change your views, or do you ever change your view?


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## over9k

You'll have to elaborate for me frog


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## ducati916

So the 1960's











Interest rates low and relatively stable. The hot war in Vietnam was however inflationary. Added to that was the 'oil' issue for the US: Add to that the social unrest (similar to current times) of black activisim, which resulted in President Johnson signing into law Kennedy's civil rights bills.






The US had reached 'Peak Oil' (at that time it was limited by technology) and this was followed by the first oil shock.






Which was further compounded by Nixon defaulting in August 1971, causing the US dollar to crumble






During the late 1960s, persistent US balance-of-payments deficits steadily reduced US gold reserves as some Central Banks exchanged dollars for gold (French). By 1971, the world held x3 dollars:gold. Nixon defaulted.

Add to that strong Trade Unions with legal protections via COLAs in their employment contract, the US suffered stagflation.






jog on
duc


----------



## ducati916

_SHANGHAI, July 20 (Reuters) - The yuan traded lower at_
_midday after swinging in a tight range around the critical 7 per_
_dollar level on Monday morning, as ongoing Sino-U.S. tensions_
_pressured sentiment but investors were yet to gauge any_
_substantive actions._

_   China's embassy in Myanmar on Sunday accused the United_
_States of "outrageously smearing" the country and driving a_
_wedge with its Southeast Asian neighbors over the contested_
_South China Sea and Hong Kong, reflecting the increasingly_
_fraught relations between the superpowers._

_   Yuan traders said recent news headlines suggested that_
_tensions between the world's two largest economies were_
_escalating, but impact on the currency remained limited as_
_neither side mentioned they would break the Phase 1 trade deal._

_   "The trend of a weaker dollar has not yet changed_
_significantly, as long as the Sino-U.S. trade agreement is not_
_substantially disrupted, market's optimistic expectations for_
_the yuan will sustain," analysts at China Construction Bank_
_(Asia) said in a note._

jog on
duc


----------



## ducati916

In the 1980's things started to change into the structure that we (more or less) see today.






Inflation is no more and interest rates start their great bull market. The stock market also starts its epic run into 2000. Here we see the Tech embryo launch. MSFT and CSCO were penny stocks in the 1980's. 

The US trade balances shifted.









This also marked the rise of China.

The US stock market continued into the entire 1990's:






The break-up of the Soviet block increased the forces of globalisation and drove the offshoring of US manufacturing and supply chains to China. China would grow to the major exporter to the US.

Did the dollar suffer? No not really. The same buying that propelled the stock market was present in the bond markets,






Essentially what happened is: the US imported cheaper low end goods from China et al. The rest of the world bought US stocks/debt. Net net, the Balance of Payments balanced.






Which brings us pretty much up to date. The US dollar is the Reserve Currency primarily for 2 reasons:

(i) The US buys (debtor) more goods and services than pretty much the rest of the world combined; and
(ii) The US can continue to do this because they are the Tech leaders of the world and the rest of the world buys US Tech in such a quantity, that the Balance of Payments balances when;
(iii) As the most stable destination (flight to safety) US debt is held in preference to any other.






Above you see the US dollar as against just Tech. Combine that with the flight to safety and because exporting economies to the US do not not want their currency to appreciate against the US dollar thereby making their goods expensive by comparison, the US can create dollars without any fear of inflation.

The Cold War with China is over Tech. China wants control of it, the US is resisting. If China wins, the US overconsumption and debt loads become an issue as the continued creation of US dollars will have the inflationary effect of the 1970's and stagflation of the economy. No foreign funds will flow to US dollars as the safe haven if China wins this war.

Oil prices are a weak point for China.






The POO follows China. The US pretty much broke their dependency on the Arabs, until of course just recently. It will be important for the US strategically to regain oil independence and work at pushing the POO as high as possible, putting strain on China's economy, which is still oil dependent, although in the other thread there was a hint that China will build nuclear power stations.

I'm sure China would just love Aus for the mineral wealth and NZ as a giant farm to grow food on having devastated their own arable land through pollution. Of course China is as nearly Imperialistic as the US, with footholds worldwide, particularly Africa and food could well be an issue down the road.

Trump also limited visas for US Tech. companies (primarily from India) which enraged the US Tech. industry. That policy needs to be reversed quickly. It is in effect a form of tariff and history demonstrates just how damaging tariffs can be.

Anyway the combatants are squaring up.






jog on
duc


----------



## over9k

All of which is completely irrelevant when china is completely dependent on U.S security of its energy and materials imports and trade exports, is the most overcredited nation in human history, is the fastest ageing nation in history, is completely surrounded by hostile neighbours that control its seafaring supply lines, and even imports its food. 

The U.S is one of the least trading economies in the world. Trade to/from the U.S is vanishingly unimportant. The only thing it imported was oil, and it's now oil independent. The world can burn and it can just sit back & watch.

China's tech is years and years and years behind the rest of the world. It can't even secure a deep water trade route from the persian gulf. Japan could defeat its current navy and do so easily.

Food:






Trade:






And that's 2015 numbers, before the yanks went completely oil independent.

Finance:
















(That's scared chinese money realising they had to get their money out before it's too late)

Supply lines:
















It takes an aircraft carrier battle group to keep the persian gulf open. The saudi's & iranians have wanted to wipe each other out for decades. The rest of the world has been piggybacking off the U.S security of it every day since the bretton-woods agreement made to fight the cold war, and doubly so once the soviet union collapsed and a massive international alliance to fight the soviets hasn't even been needed.

Demographics:












China, even if the Americans continue to secure their supply of basically everything, is f***ed. Once the yanks just pack their bags & go home, they'll find themselves unable to secure the supply of basically everything they need to produce anything, or indeed even exist (including food and oil), bankrupt, with an extremely expensive population of geriatrics, no internal consumer market to sell their stuff to, and no way to get it to a foreign market either. 

America doesn't even need to pull the rug out for china to be f***ed, but it'll be 10x as bad if they do, and they're already in the process of doing so. It would have already started properly if not for coronavirus - remember this one little attack that took 5% of the world's oil supply offline quite literally overnight:

https://en.wikipedia.org/wiki/2019_Abqaiq–Khurais_attack

That was just the beginning. Coronavirus has just put everything on hold.


----------



## over9k

Here's the 5 minute youtube version:



The past four years has seen over 7 trillion dollars in capital flight to the united states for precisely the reason(s) I explained above:

If you can't secure your trade, you need to build where you sell, and you also need to be sure you can actually build there, i.e secure your inputs. You need both sales and supply security. China has neither. Simple example: Toyota's two largest manufacturing plants are now in kentucky & texas.

This is the real reason for the economic rebound the U.S has seen lately - not trump. This was all going to happen anyway, trump just kicked it into high gear. Hence the huge capital flight in 2016/2017 in the graph I posted previously: Everyone thought the end was going to be nigh far sooner than if clinton won.

They were right.


----------



## Chronos-Plutus

over9k said:


> All of which is completely irrelevant when china is completely dependent on U.S security of its energy and materials imports and trade exports, is the most overcredited nation in human history, is the fastest ageing nation in history, is completely surrounded by hostile neighbours that control its seafaring supply lines, and even imports its food.
> 
> The U.S is one of the least trading economies in the world. Trade to/from the U.S is vanishingly unimportant. The only thing it imported was oil, and it's now oil independent. The world can burn and it can just sit back & watch.
> 
> China's tech is years and years and years behind the rest of the world. It can't even secure a deep water trade route from the persian gulf. Japan could defeat its current navy and do so easily.
> 
> Food:
> 
> 
> 
> 
> 
> 
> Trade:
> 
> 
> 
> 
> 
> 
> And that's 2015 numbers, before the yanks went completely oil independent.
> 
> Finance:
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> (That's scared chinese money realising they had to get their money out before it's too late)
> 
> Supply lines:
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> It takes an aircraft carrier battle group to keep the persian gulf open. The saudi's & iranians have wanted to wipe each other out for decades. The rest of the world has been piggybacking off the U.S security of it every day since the bretton-woods agreement made to fight the cold war, and doubly so once the soviet union collapsed and a massive international alliance to fight the soviets hasn't even been needed.
> 
> Demographics:
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> China, even if the Americans continue to secure their supply of basically everything, is f***ed. Once the yanks just pack their bags & go home, they'll find themselves unable to secure the supply of basically everything they need to produce anything, or indeed even exist (including food and oil), bankrupt, with an extremely expensive population of geriatrics, no internal consumer market to sell their stuff to, and no way to get it to a foreign market either.
> 
> America doesn't even need to pull the rug out for china to be f***ed, but it'll be 10x as bad if they do, and they're already in the process of doing so. It would have already started properly if not for coronavirus - remember this one little attack that took 5% of the world's oil supply offline quite literally overnight:
> 
> https://en.wikipedia.org/wiki/2019_Abqaiq–Khurais_attack
> 
> That was just the beginning. Coronavirus has just put everything on hold.




This is way off-topic.

However, China will be securing their maritime trade routes in the coming years/decades with naval ports along its maritime trade routes. This is known as the *string-of-pearls* theory. China will also push into the Central Asian plateau nations where there is an enormous amount of natural resources that can be exploited within close proximity to their nation.

China are forecast to be the largest economy by 2024, according to World Bank and IMF projections:






Guess your bet with me isn't looking too good


----------



## over9k

Chronos-Plutus said:


> This is way off-topic.
> 
> However, China will be securing their maritime trade routes in the coming years/decades with naval ports along its maritime trade routes. This is known as the *string-of-pearls* theory. China will also push into the Central Asian plateau nations where there is an enormous amount of natural resources that can be exploited within close proximity to their nation.
> 
> China are forecast to be the largest economy by 2024, according to World Bank and IMF projections:
> 
> View attachment 106250
> 
> 
> Guess your bet with me isn't looking too good




Rofl china doesn't even have a decade left. Why do you think they're cracking down on hong kong in the way they are?

Let's say the yanks stop securing their (and everyone else's) oil supply from the persian gulf, what happens then? They can't secure it themselves, their navy can barely fight its way out of a bathtub and it has to make it past 12,000km of hostile coastline through major choke points.

Why do you think japan's built out the navy that it has? And india? And europe for that matter?

Where is the financing going to come from? Who are they going to sell their goods to? Where is their food going to come from? Where are their raw inputs like energy going to come from?

America provides the entire global structure/system which makes china possible, and it's stopping doing so. China has never in history managed to economically integrate with anything beyond the island chain(s) that surround them, except right now, because the yanks have enabled it. The past 30 years has been, historically speaking, a total aberration.

Their finance(s) & demographics alone have bankrupted them even ignoring all of this. It's the most overcredited country in history and the fastest ageing nation in history too iirc (certainly the fastest ageing now).

Why do you think all that money bailed when trump was elected? It realised it didn't have nearly as much time to GTFO as it thought it did. It was right.

None of this is actually unique to china - plenty of other countries import/export all kinds of stuff (read: needs) like oil, food etc. We're just focused on china here because it's the biggest. Plenty of other countries like south korea are just as f***ed for almost identical reasons.

Want to double the bet?


----------



## Chronos-Plutus

over9k said:


> Rofl china doesn't even have a decade left. Why do you think they're cracking down on hong kong in the way they are?
> 
> Let's say the yanks stop securing their (and everyone else's) oil supply from the persian gulf, what happens then? They can't secure it themselves, their navy can barely fight its way out of a bathtub and it has to make it past 12,000km of hostile coastline through major choke points.
> 
> Why do you think japan's built out the navy that it has? And india? And europe for that matter?
> 
> Where is the financing going to come from? Who are they going to sell their goods to? Where is their food going to come from? Where are their raw inputs like energy going to come from?
> 
> America provides the entire global structure/system which makes china possible, and it's stopping doing so. China has never in history managed to economically integrate with anything beyond the island chain(s) that surround them, except right now, because the yanks have enabled it. The past 30 years has been, historically speaking, a total aberration.
> 
> Their finance(s) & demographics alone have bankrupted them even ignoring all of this. It's the most overcredited country in history and the fastest ageing nation in history too iirc (certainly the fastest ageing now).
> 
> Why do you think all that money bailed when trump was elected? It realised it didn't have nearly as much time to GTFO as it thought it did. It was right.
> 
> None of this is actually unique to china - plenty of other countries import/export all kinds of stuff (read: needs) like oil, food etc. We're just focused on china here because it's the biggest. Plenty of other countries like south korea are just as f***ed for almost identical reasons.
> 
> Want to double the bet?




Have a read of the Chinese treasure ships under Admiral Zheng during the 15th century Ming dynasty; China were a superpower then.

I see China's major pivot will be in expanding their regional influence westward into the Central Asian Plateau states to get their energy and food. This will be coordinated with their string-of-pearls, essentially building military naval ports along the old maritime trade routes to Europe for trade.

Also, China are the largest producers of most of the world's industrial commodities, while still being a massive importer of them. I suspect China are hoarding commodities.

Not interested in doubling the bet, the bet is based on tokenism.


----------



## Chronos-Plutus

over9k said:


> Rofl china doesn't even have a decade left. Why do you think they're cracking down on hong kong in the way they are?
> 
> Let's say the yanks stop securing their (and everyone else's) oil supply from the persian gulf, what happens then? They can't secure it themselves, their navy can barely fight its way out of a bathtub and it has to make it past 12,000km of hostile coastline through major choke points.
> 
> Why do you think japan's built out the navy that it has? And india? And europe for that matter?
> 
> Where is the financing going to come from? Who are they going to sell their goods to? Where is their food going to come from? Where are their raw inputs like energy going to come from?
> 
> America provides the entire global structure/system which makes china possible, and it's stopping doing so. China has never in history managed to economically integrate with anything beyond the island chain(s) that surround them, except right now, because the yanks have enabled it. The past 30 years has been, historically speaking, a total aberration.
> 
> Their finance(s) & demographics alone have bankrupted them even ignoring all of this. It's the most overcredited country in history and the fastest ageing nation in history too iirc (certainly the fastest ageing now).
> 
> Why do you think all that money bailed when trump was elected? It realised it didn't have nearly as much time to GTFO as it thought it did. It was right.
> 
> None of this is actually unique to china - plenty of other countries import/export all kinds of stuff (read: needs) like oil, food etc. We're just focused on china here because it's the biggest. Plenty of other countries like south korea are just as f***ed for almost identical reasons.
> 
> Want to double the bet?





I don't want to derail Duc's thread so I will not post anymore on this theme after this post.

Your belief that China has never been a superpower is incorrect.

Here is a 1 minute video clip of the Chinese treasure ships from the Ming dynasty, perhaps the ships weren't as big as claimed, but they were significant and many:


----------



## over9k

Looks like tech's back on the menu boys!


I told you to wait until this week frog


----------



## Chronos-Plutus

https://www.zerohedge.com/markets/key-events-coming-week-earnings-claims-and-pmis


----------



## Chronos-Plutus

https://www.visualcapitalist.com/mortgage-delinquencies/


----------



## ducati916

Summary:






The issue is: will globalisation recede to such a point as to impede the TREND.

Currently we have:

(i) Pandemic;
(ii) Protectionism;
(iii) Nationalism;
(iv) Disinflation (but not deflation), financial panic;
(v) Advances in technology;
(vi) War

The conclusion is that (i) - (iv) and (vi) are currently of a mild type. They are not sufficient currently to derail the trend higher and ignite a true Bear Market. Are there issues? Of course.

jog on
duc


----------



## ducati916

Re. Tech.

From my man, flippe-floppe-flye:









From Sept. 1999.

Of course it can be argued, early days. I suppose it depends where you measure from: 2003, 2009 or 2020.

jog on
duc


----------



## ducati916

For the overall market:






There is always rotation within sectors. Hot becomes cooler, cold warms up. Individual names will always follow their own narratives, but they are also always caught up eventually in their sectors. Possibly they re-invent. If not, their sector's fundamentals catch up over time.

jog on
duc


----------



## over9k

duc: globalisation is coming to an end. the bretton-woods system is being dismantled. we are in the great transition. 

Also, here's how the market closed last night:


----------



## ducati916

over9k said:


> duc:
> 1. globalisation is coming to an end.
> 2. the bretton-woods system is being dismantled.
> 3. we are in the great transition.




1. And you have evidenced this how?
2. Well that ended August 1971, so not exactly burning news.
3. Transition from what to where?

jog on
duc


----------



## ducati916

Defence wins championships: 






jog on
duc


----------



## ducati916

Banks...

Major banks kicked off second-quarter earnings season last week. Results, with the exception of Wells Fargo, were far better than expected. The result of big positive earnings surprises? Investors sold bank stocks, extending year-to-date losses.

Confused Wall Street denizens should blame the accountants. New rules are making it difficult for investors to understand how good bank earnings have been in pandemic-affected 2020.

Last past week, JPMorgan Chase (ticker: JPM), Bank of America (BAC) and Citigroup (C) beat consensus quarterly earnings estimates by almost 50%. It was a good quarter versus expectations. JPMorgan shares gained 0.6% in response. Bank of America and Citigroup shares fell 2.7% and 3.9%, respectively. What’s more, those three stocks are down 2.3% on average over the past week.

Wells Fargo (WFC) missed second-quarter earnings estimates. Its stock fell the most in response to earnings, dropping 4.6%. Wells Fargo shares are down 3.3% over the past week.

The Dow Jones Industrial Average and S&P 500, for comparison are up 2% and 2.6%, respectively, over the past week.

It seems as if investors punished bank stocks unfairly, but the big four banks earned just $5 billion in second-quarter pretax income, compared with roughly $34 billion in the second quarter of 2019. That’s a huge negative swing.

Earnings appear to have cratered, but that is only part of the story. Loan-loss provisions totaled $33 billion for the big-four in the second quarter of 2020. The provision for potentially faulty loans in the second quarter of 2019 was less than $5 billion.






The weak economy isn’t responsible for the $28 billion swing. New accounting rules mandate banks estimate, and recognize as an expense, all the losses they expect from loans the day loans are made. In the past, loan-loss recognition was far less aggressive.

The new rule is called “current expected credit losses methodology,” or CECL. It is pronounced like the name Cecil.

If accounting rules hadn’t changed, the big-four banks would have made roughly $28 billion in second-quarter pretax income—still lower than $34 billion earned in 2019. Would it have made a difference to the stocks? That, of course, is the million-dollar question. The big-four back stocks are down about 39% year to date, on average, worse than comparable returns of the S&P and Dow.

The economy, the pandemic and low interest rates are all reasons investors have avoided the sector. It is hard to pin everything on CECL. Investors may have to wait to see what the reaction is to bank loan-loss provisions in an improving economy to see how much the accounting change affected bank stocks in 2020.

When things are looking better and loans are repaid at a better clip than originally estimated, it is possible banks will have negative expenses—which is just like income—to make all the accounting math work. If stocks rise when that happens, the accounting regulators really are to blame for 2020 weakness.

jog on
duc

“[Accounting] reserves are reduced in two cases, most notably when the loans are actually charged off,” accounting expert Robert Willens said. When loans actually go bad, they don’t hit the income statement twice. The reconciliation happens on the balance sheet after the provision is made. “Beyond that, if the reserves prove to be too high, it is entirely possible that they could be undone.” Undoing reserves is, essentially, adding income earned in prior periods.

The goal of the new accounting rule, of course, is increased conservatism, which is usually a good thing for investors. But, apparently, it will take some getting used to.


----------



## ducati916

Just looking at TSLA Options.






With 4 days to expiry and earnings on Wednesday (so 2 day remaining after earnings) and an IV of 180. Wow. Time to sell some Calls into earnings.






So these are 'kinda' in reach if there were blow-out earnings.

These however:






$2,100 for $20/contract.......really?






So TSLA would need to rise $500 by Friday. Even then the IV crush is going to be brutal. I could probably close out the next day and pocket close to 50% of the profit. TSLA will need some pretty out there guidance going forward to move to $2,100 on just earnings.

There is however this risk:






Really that should make no difference at all. However, with all the new crop of daytraders out of Robinhood etc, who don't actually know that it makes no difference, do they bid it up thinking that it will make a difference? 

Normally I would offset by also selling PUTS. However, a bad miss, poor guidance and this stock could easily fall $500. The MMs would really take the opportunity to punish the stock to get it as low as possible for institutions wanting in at lower prices.

If I sell 100, I'll pocket just below 1/4M. for essentially 3 days holding.

I'll sleep on it and see what tomorrow brings.

jog on
duc


----------



## fiftyeight

ducati916 said:


> TSLA will need some pretty out there guidance going forward to move to $2,100 on just earnings.




Lucky guidance has more than enough wriggle room for Elon to tell what ever story he wants


----------



## over9k

There's about 20 billion in shorts against tesla at the moment duc, it's an all time record.

I don't know the composition, but still...


I suspect some (anticipated) pretty epic earnings are priced in. And yes, I was talking about it becoming an index stock soon if it keeps running the way it is.

At asking price you need to crack what, 1810 before expiry to be in the green? And it's already at 1643 with earnings out in a couple of days? With the fact that everything else except virus data has been far better than expected for months, so tbh, I don't see why tesla isn't going to be as well.

The question is how much of that is priced in already. Unlike all my other tech, tesla didn't nosedive as everyone took profits last week & the couple of days preceding it. It just kept running.

edit: oh you want to sell some calls. derp.


----------



## ducati916

fiftyeight said:


> Lucky guidance has more than enough wriggle room for Elon to tell what ever story he wants




And that is a real risk. Mr Musk can weave a good yarn.

jog on
duc


----------



## ducati916

The chart:









And last earnings 29 April (traded 30 April) the 1-day range was +/- $100. So $500 on a 3 day timeframe is possible, but it's still a bit of a stretch.

Still thinking.

jog on
duc


----------



## over9k

You'd be betting against 20 billion in shorts if you expect it to rally. Even though everything's reported better than anticipated lately (like, absolutely everything, earnings data, employment, everything except virus numbers), it kept running over the last 6-7 days when even my stay at home tech nosedived as everyone took profits into earnings season.

And you're absolutely right about the robinhooders etc. I suspect all the money in shorts is coming from institutions expecting to absolutely give it to them once it flips to the downside, but I'm only guessing.

Logic and sense have long since departed here.


----------



## ducati916

over9k said:


> You'd be betting against 20 billion in shorts if you expect it to rally. Even though everything's reported better than anticipated lately (like, absolutely everything, earnings data, employment, everything except virus numbers), it kept running over the last 6-7 days when even my stay at home tech nosedived as everyone took profits into earnings season.
> 
> And you're absolutely right about the robinhooders etc. I suspect all the money in shorts is coming from institutions expecting to absolutely give it to them once it flips to the downside, but I'm only guessing.
> 
> Logic and sense have long since departed here.





If I'm selling CALLS, I want the price to either (a) decline or (b) not reach $1,200 by Friday.

jog on
duc


----------



## over9k

Er, yes?

We were talking about expectations, not desires.

Like I said, it kept running even last week when everything went south. So either it's in defiance of all the other activity, or it's in for a hell of a correction. 

It probably IS due for a correction, but as for when is another question. I would have thought it had had it already, but nope.


----------



## over9k

This is what I was talking about RE: stay-at-home-tech duc: 





Though I'd replace small & large with online vs in person.


----------



## ducati916

Yesterday we had this:







Today:






Much healthier.

Heading towards all time high:






jog on
duc


----------



## ducati916

So TSLA











With TSLA falling today, the IV went even higher. I went with selling the $2,050 CALLS.

jog on
duc


----------



## ducati916

$VIX






Now this is intra-day, so still could change.

We are sitting on support from June. In earnings. This is an opportune time for $VIX to jump higher, which by now we all kinda assume that it means lower for stocks. We can see from the previous post that the intra-index (sectors) can separate. So we could have a situation where rotation takes place: the mega-tech correct lower, the laggards move higher, but the index moves lower. I'll have some charts later that demonstrate this behaviour.

Now along with TSLA reporting tomorrow we have MSFT. Expectations will be far higher for MSFT than for TSLA. Further TSLA is not in the S&P500, whereas MSFT is. I don't know what sort of number makes MSFT go up or down, but if they miss, it could further drive the disconnected type of sector movement we are seeing currently and it could influence the other FAANGs that have yet to report.

jog on
duc


----------



## ducati916

Further, such is the speculative power currently of Tech. it is correlating with the US$






A number of commentators have drawn parallels to the dot.com era and the froth. I think there is still plenty of upside, but I also think tech will unhinge from the general market volatility and operate under its own rules re. volatility.






jog on
duc


----------



## ducati916

This chap has been (and is) the Bull analyst for TSLA. When he downgrades, hmmm. Could be responsible for the weakness today. Reminds me of the chap in 1998-2000 who pumped AMZN (he was right, but it cost him his job in the end. Name escapes me atm).

_Tesla bull and JMP Securities analyst Joseph Osha downgraded Tesla stock to Hold Tuesday. Tesla’s stock price run, for this bull, has gone far enough._

_Osha deserves some credit, however, for keeping up with Tesla stock’s (ticker: TSLA) epic run. He was an early $1,000-plus price target setter for Tesla shares—going to four digits in March when Tesla shares were below $800. In July, he raised his price target to $1,500 a share when Tesla stock was below $1,400. Instead of raising the price target again ahead of Tesla second-quarter earnings—due Wednesday after the market closes for trading—he downgraded the stock._

_“We continue to believe that [Tesla] can become a $100 billion [in sales] car company by 2025, but we cannot arrive at a reasonable basis for arguing that the stock should be valued above current levels, even considering our fundamental outlook,” wrote Osha in a Tuesday research report._










Add them to the list.

jog on
duc


----------



## qldfrog

I like these current indexes:




with 
	

		
			
		

		
	





	

		
			
		

		
	
 and 
	

		
			
		

		
	





ETPMAG on ASX and SLVP in the US are 2 of my parcels which should profit handsomely
Thanks Mr LeDuc for letting me look at silver vs gold a few weeks ago;
Sold my tech for these and happy so far
Please note oil:
	

		
			
		

		
	





Which is now well above the 40USD which I consider its target/normal price...[and well above what could be just a follow up of the USD relative fall].
Bull oil?


----------



## qldfrog

about oil:




so basically 2 years of TD returns in the space of a night for what is not exactly a penny stock..., no surprise people are ready to play/gamble in the market


----------



## ducati916

qldfrog said:


> I like these current indexes:
> View attachment 106303
> 
> with
> 
> 
> 
> 
> 
> 
> 
> 
> 
> View attachment 106302
> 
> 
> 
> 
> 
> 
> 
> 
> 
> and
> 
> 
> 
> 
> 
> 
> 
> 
> 
> View attachment 106304
> 
> ETPMAG on ASX and SLVP in the US are 2 of my parcels which should profit handsomely
> Thanks Mr LeDuc for letting me look at silver vs gold a few weeks ago;
> Sold my tech for these and happy so far
> Please note oil:
> 
> 
> 
> 
> 
> 
> 
> 
> 
> View attachment 106305
> 
> Which is now well above the 40USD which I consider its target/normal price...[and well above what could be just a follow up of the USD relative fall].
> Bull oil?




Yes, silver badly lagged gold and was a buy simply on the degree of lag. It may well catch up now.











Mr Rederob was right but early on gold. Silver will provide more downside protection and give more bang for the buck on upside, if, it is a new PM bull market. I'm not totally convinced, but anyway, it is what it is.

jog on
duc


----------



## ducati916

So the market (as sectors) looked like this:






We have a bit of a rotation going on.

TSLA meanwhile:









Yesterday would have been the day to put the position on. Always in hindsight can you get the perfect entry.

jog on
duc


----------



## ducati916

So we had a twitch of vol. to the close. I'm expecting an uptick.






We still can have an up day tomorrow, but then we will hit that resistance point.






The 50 is diverging, which can indicate the rotation. However it can also be a warning of weakness ahead. Given the proximity of the 20 to resistance, I'm thinking weakness tomorrow or a mixed sector response which might make for a no change market overall.






QQQ's are a real mixed message. Sectors other than the big FAANGs are moving higher, the big guys are having a bit of a rotation.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> So the market (as sectors) looked like this:
> 
> View attachment 106312
> 
> 
> We have a bit of a rotation going on.
> 
> TSLA meanwhile:
> 
> View attachment 106314
> View attachment 106313
> 
> 
> Yesterday would have been the day to put the position on. Always in hindsight can you get the perfect entry.
> 
> jog on
> duc




Financially Tesla isn't investment worthy; yet there are so many emotional  and sticky investors that are willing to buy and hold the stock.

I think that it is likely, over the long term that Tesla will be


ducati916 said:


> Yes, silver badly lagged gold and was a buy simply on the degree of lag. It may well catch up now.
> 
> View attachment 106307
> 
> 
> View attachment 106308
> 
> 
> Mr Rederob was right but early on gold. Silver will provide more downside protection and give more bang for the buck on upside, if, it is a new PM bull market. I'm not totally convinced, but anyway, it is what it is.
> 
> jog on
> duc





Apparently there is a national coin shortage in the USA now. People are hoarding coins for the metal content, rather than taking the coins into the bank.


----------



## over9k

Yeah whenever the market thinks things are returning to normal/rotates out of tech, it's energy that really bounces.


----------



## ducati916

Chronos-Plutus said:


> Financially Tesla isn't investment worthy; yet there are so many emotional  and sticky investors that are willing to buy and hold the stock.
> 
> I think that it is likely, over the long term that Tesla will be
> 
> 
> 
> Apparently there is a national coin shortage in the USA now. People are hoarding coins for the metal content, rather than taking the coins into the bank.





I'm indifferent to TSLA. Simply a trade for me. If it is held in 1 of my ETFs, so be it.

Re. coins: I'm not a buyer of gold at this level. Silver was more interesting, but I have enough (I hope).

jog on
duc


----------



## ducati916

over9k said:


> Yeah whenever the market thinks things are returning to normal/rotates out of tech, it's energy that really bounces.




I like energy. No way is 'green' even close to sufficient currently.

jog on
duc


----------



## ducati916

TSLA:









jog on
duc


----------



## ducati916

Rotation out today. Will see if it continues, or simply a short term thing.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> I'm indifferent to TSLA. Simply a trade for me. If it is held in 1 of my ETFs, so be it.
> 
> Re. coins: I'm not a buyer of gold at this level. Silver was more interesting, but I have enough (I hope).
> 
> jog on
> duc




I am trying not to comment on Tesla; my personal view is that Tesla has an enormous challenge in fighting to keep their market share, particularly in Europe and China.

On precious metals; I bought a few more kilos a couple of weeks ago; and will continue to accumulate in physical and ETFs. I also have exposure to silver in some junior miners where silver makes up around 30% of their forecast/expected revenue. I personally believe that silver is going to run well above the 2011 levels.


----------



## ducati916

Chronos-Plutus said:


> I am trying not to comment on Tesla; my personal view is that Tesla has an enormous challenge in fighting to keep their market share, particularly in Europe and China.
> 
> On precious metals; I bought a few more kilos a couple of weeks ago; and will continue to accumulate in physical and ETFs. I also have exposure to silver in some junior miners where silver makes up around 30% of their forecast/expected revenue. I personally believe that silver is going to run well above the 2011 levels.




Of course there will be competition:

_*EV investor craze continues.*_ *Tesla (NASDAQ: TSLA)* saw its market cap surge past $300 billion and investors are piling into other EV makers. Tesla’s shares have more than tripled this year. The market value of *Nikola Corp. (NASDAQ: NKLA)*, an electric truck startup, past *Ford (NYSE: F)* last month, although the company’s stock has since retreated. The trend shows that investors increasingly believe that EV era will arrive faster than previously thought. Carmakers are rushing to capture a slice of the future, with *GM (NYSE: GM)* recently announcing that it will develop 20 new EV models by 2023. Including hybrids, the global auto industry will add 350 new models in the next few years. 

jog on
duc


----------



## over9k

Yes this is something I've been spending a lot of time on lately: The next tesla. 

By that I mean that if we assume electric vehicles are the next big thing, are the legacy automakers the ones to buy, is another new EV maker like nikola the place to go for, or what. As an extension of that, how long before we get an electric vehicle ETF. 

Energy is the only other sector I'm focusing on other than my tech portfolio as the two seem to be almost perfectly opposed, which makes total sense with just 5 seconds of thought about it. One is about movement, the other is about stopping its necessity.


----------



## Chronos-Plutus

ducati916 said:


> Of course there will be competition:
> 
> _*EV investor craze continues.*_ *Tesla (NASDAQ: TSLA)* saw its market cap surge past $300 billion and investors are piling into other EV makers. Tesla’s shares have more than tripled this year. The market value of *Nikola Corp. (NASDAQ: NKLA)*, an electric truck startup, past *Ford (NYSE: F)* last month, although the company’s stock has since retreated. The trend shows that investors increasingly believe that EV era will arrive faster than previously thought. Carmakers are rushing to capture a slice of the future, with *GM (NYSE: GM)* recently announcing that it will develop 20 new EV models by 2023. Including hybrids, the global auto industry will add 350 new models in the next few years.
> 
> jog on
> duc



A pure EV play that I will go for is 2 wheeler scooter makers; because I see the rapid rise in China and the European PIGS.

If I had to make a prediction: Tesla market share will get eaten up by the European juggernauts; also Europeans tend to like European made cars.


----------



## Lucky777

I’m a holder of TSLA. Prediction to be end of year $3000+


----------



## ducati916

TSLA:

Electric-vehicle manufacturer Tesla reports earnings after the close of trading Wednesday. The report, and the subsequent stock-price reaction, should be wild. This is Tesla, after all.

Here’s what to pay attention to, along with some recent history.


Wall Street expects the company to lose 14 cents a share on $5.1 billion in sales. But both numbers look stale.
Tesla (ticker: TSLA) delivered more vehicles than expected in the second quarter—as well as more vehicles than in the profitable first quarter—but Wall Street has been slow to catch up. Earnings estimates for the pandemic-affected second quarter, when auto production was halted across the U.S., fell below $2 a share before rapidly recovering in July, after vehicle-delivery numbers were released. Second-quarter sales estimates fell below $5 billion and are edging higher.
Wall Street “whisper numbers”—which are, essentially, the most up-to-date estimates being talked about on the Street, but not reflected in published research—are roughly 50 to 75 cents in per-share earnings. Better than that will likely drive a positive stock-price reaction.
No matter what is reported, the size of the reaction, positive or negative is tough to call. Options markets are pricing in a post earnings move, up or down, of 15% to 20%. That is a huge move, implying a $300 price swing and up to $60 billion of market value.
The stock’s inclusion in the S&P 500 is one reason for the big potential swing. If Tesla posts a profit conforming to generally accepted accounting principles, or GAAP, it will most likely be added to the index.
Index addition creates new stock demand from funds tracking the S&P 500 as they rebalance portfolios to adjust for the change. It could amount to millions of Tesla shares being bought. More buying than selling drives up stock prices, but the size of the indexation benefit for the stock is debated.
After all, Tesla stock is up almost 290% year to date and 526% over the past year, crushing comparable returns of the S&P and Dow Jones Industrial Average over the same span. The gains have made Tesla the world’s most valuable car company measured by stock market capitalization.
Based on Wall Street research reports, indexation is now taken as a given. That means a GAAP loss looks like the biggest risk for Tesla stock in the quarterly report.
Beyond index inclusion, investors should look for news on China. “China a linchpin to the Tesla growth story in [the second half] and 2021,” Wedbush analyst Dan Ives wrote in a Monday research report. He thinks electric-vehicle demand is accelerating in China, a positive for all EV makers including Tesla. Ives rates Tesla stock the equivalent of Hold and has a $1,250 price target for shares.
Regulator credits are always a big issue for Tesla bulls and bears. The company is able to sell zero-emission vehicle credits to other auto makers needing to meet California emission standards. The amount of credits sold can affect reported earnings from quarter to quarter.
Overall, analysts are a little more cautious than they were heading into the earnings report. Tesla bull Joseph Osha, for instance, downgraded the stock to Hold on Tuesday, saying most good news was fairly reflected in the share price. Osha was the first analyst to crack the $1,000 target price barrier in March.
What’s more, Credit Suisse analyst Dan Levy warned in a July 16 report that a hiccup could lead to a stock price correction. Levy rates share the equivalent of Hold and has a $1,400 price target. CFRA analyst Garrett Nelson lowered his rating from Hold to Sell, while maintaining his $1,100 price target on July 17. Baird analyst Ben Kallo wrote on July 17 that risk/reward skewed negatively into earnings. He recommended investors take profits. Kallo rates shares Hold and has a $984 price target.
Most of the recent analyst comments are mainly about valuation. Most of them, while worrying about value, also point out that recent results and business execution have been better than expected.

Whatever happens to the stock Wednesday evening, it qualifies as must-see for all market denizens.

jog on
duc


----------



## over9k

ducati916 said:


> I also think tech will unhinge from the general market volatility and operate under its own rules re. volatility.




You're on the money duc - my portfolio used to pretty reliably move a couple of percentage points above whatever the nasdaq did (so the nasdaq would drop 1% and I'd still be 1% in the green) but it hasn't really done so for a week or two now. 

It's generally moving in the opposite direction to energy - there's a pretty strong inverse correlation. I'm thinking of trimming a couple of positions and buying XLE as a hedge.


----------



## Warr87

Strongly disagree


----------



## over9k

I said my portfolio, not the dow.


----------



## over9k

Here you go duc, almost a perfect inversion: 











My portfolio's very nearly 2% positive at the moment when XLE is 2.2% negative so that'd give you (at this moment at least) a correlation of -0.9 just based on this morning. 

I suspect if I was to go back over the data day by day I'd find a pretty solid inverse correlation between my portfolio and the energy sector, so if you're looking for something to track stay-at-home tech's volatility I suspect it'll be a close inversion of XLE. 

The reason(s) why I should think would be obvious.


----------



## over9k

Related:

Remember when we were talking about what I own & why and I mentioned that I don't own slack?

https://www.cnbc.com/2020/07/22/sla...nticompetitive-practices-in-eu-complaint.html

IMO, long term, slack will go the way of dropbox once microsoft got onedrive working properly:






They can scream & yell & stomp their feet all they like, even if microsoft get slapped with tons of fines and even if they or other simple civil suit settlements go to slack, it won't matter, they'll just be speed bumps on the way to the inevitable. The very fact that the founder hasn't simply sold out to microsoft/microsoft buy it just to shut it down shows just what a moron he actually is. 

Zoom, however, has some inherent advantages over MS teams that slack does not. That one's going to be a proper fight.

I own both.


----------



## ducati916

Took profits and rolled









Rolled to $2,150

jog on
duc


----------



## ducati916

Sectors from Monday:












jog on
duc


----------



## ducati916

Odds & Sods:

Positive news for the Banks, RE and the economy:






Market Cap. is an important issue re. indices currently:






Some TSLA news before earnings:






And from flippe-floppe-flye






jog on
duc


----------



## ducati916

over9k said:


> Related:
> 
> Remember when we were talking about what I own & why and I mentioned that I don't own slack?
> 
> https://www.cnbc.com/2020/07/22/sla...nticompetitive-practices-in-eu-complaint.html
> 
> IMO, long term, slack will go the way of dropbox once microsoft got onedrive working properly:
> 
> View attachment 106334
> 
> 
> They can scream & yell & stomp their feet all they like, even if microsoft get slapped with tons of fines and even if they or other simple civil suit settlements go to slack, it won't matter, they'll just be speed bumps on the way to the inevitable. The very fact that the founder hasn't simply sold out to microsoft/microsoft buy it just to shut it down shows just what a moron he actually is.
> 
> Zoom, however, has some inherent advantages over MS teams that slack does not. That one's going to be a proper fight.
> 
> I own both.




It must be a generational thing. I would rather stick a sharpened pencil in my eye than own that sort of stock. If it sneaks into an ETF that I own, oh well, I'll live with it.

jog on
duc


----------



## ducati916

NKLA. After following the EV thread:















And the chart:












Now I missed TSLA way back when and unlike tech/a I could never buy at the point he did, although now he is making out like a bandit.

Comments? Not really my area (and I really don't hold individual stocks) but who knows. There may well already be an ETF that holds a bunch of this stuff. I'll have a look.

Here it is: https://etfdb.com/disruptive-technology-channel/getting-hyrdrogen-help-for-this-clean-energy-etf/

jog on
duc


----------



## ducati916

MSFT






Something like that for TSLA would suit me just fine.

jog on
duc


----------



## ducati916

TSLA earnings out






By how much is now the question? I have a $600+/- cushion.

jog on
duc


----------



## ducati916

So TSLA jumped to +7% at the high point (+$101/share) but has calmed down atm:






My position is probably safe.

Although Mr Musk will hold a conference call at 1730hrs. Now, he may be able to talk the shares even higher...so it ain't over yet, the fat lady is still to sing!

jog on
duc


----------



## over9k

I bet all those shorts are absolutely packing it at the moment.


----------



## qldfrog

Following yesterday 6% rise, silver is up another 8%.
@explod and other silver bugs will be as happy as i am.
 just wished i had bought a bit more on the asx
usd overall slide continues so a good time to move AUD into the US, not so good for already invested amounts there
I like the last comment from slip slop sly about forgetting about trying to make sense of it all
 be it Tesla or Zoom.....at least Tesla has no free competitors accessible with less effort  actually widely used and integrated such as MS Teams/Google Meet.


----------



## qldfrog

@ducati916  a bit surprised you actually played Tesla, not really in the usual mindset of individual stock risk diversification via etf


----------



## ducati916

qldfrog said:


> @ducati916  a bit surprised you actually played Tesla, not really in the usual mindset of individual stock risk diversification via etf




Correct. Back to my gunslinger days. However the IV was so ridiculous and all the way out to $800/away from market price, it was almost like free money.

jog on
duc


----------



## ducati916

Re. Cold War II tensions:






jog on
duc


----------



## over9k

Early gains followed by an utter bloodbath after more deadlock news from the ******** politicians bickering about stimulus. Wiped out all my gains from yesterday & the day before. 

Standard politicians really.


----------



## ducati916

I'll just let them expire worthless. 










jog on
duc


----------



## over9k

I suspect we have at least another week or so of utter BS duc - stimulus won't be agreed on until the 11th hour before the august recess and the next batch of jobs data is out on the 7th.

I'm thinking about pulling the trigger on AAAU & PEZ.


----------



## ducati916

over9k said:


> I suspect we have at least another week or so of utter BS duc - stimulus won't be agreed on until the 11th hour before the august recess and the next batch of jobs data is out on the 7th.
> 
> I'm thinking about pulling the trigger on AAAU & PEZ.





So PEZ

*Analyst Report*


This ETF offers targeted exposure toward the U.S. consumer discretionary sector, making it a potentially useful tool for those employing a sector rotation strategy or for investors looking to tilt their portfolio towards a high beta sector that can perform well in bull markets. PEZ is one of the "Dynamic" ETFs offered by PowerShares, meaning that the underlying index utilizes a quant based analytical framework to select holdings. In exchange for this attempt to generate alpha, investors can expect to pay a bit more; PEZ is more expensive than FCL and XLY. For those who believe the Intellidex methodology has the ability to add value, PEZ might be an interesting play. But considering the less-than-impressive track record and expense differential, there are probably better ETF options for exposure to this sector.














Not my cup-of-tea. I like AMZN but hold it elsewhere.

jog on
duc


----------



## ducati916

Bit of a rotation thing going on:






jog on
duc


----------



## over9k

Yeah gold is up too. Everyone are starting to **** themselves thinking the stimulus they'd priced in isn't going to happen. 

It feels like early march.


----------



## over9k

Also, I've never asked - what does your portfolio actually consist of duc?


----------



## ducati916

Can't capture currently the rest of the market as everytime there is a price change, it jumps back to the top and I'm not quick enough to capture the page. I'll update later after market closes:










Got most of them!

jog on
duc


----------



## ducati916

over9k said:


> Also, I've never asked - what does your portfolio actually consist of duc?










That is it.

jog on
duc


----------



## ducati916

over9k said:


> Yeah gold is up too. Everyone are starting to **** themselves thinking the stimulus they'd priced in isn't going to happen.
> 
> It feels like early march.




It is an election year. Of course it will happen.

jog on
duc


----------



## over9k

Morgan stanley head on bloomberg now talking about how he reckons tesla should be about $750/share, so overweight by over 100%. 

Why do I get the feeling that they're short tesla?


----------



## ducati916

News on the vaccine front:






jog on
duc


----------



## ducati916

TSLA: accounting issues















As the analysts weigh in, TSLA seems to be playing with aggressive accounting standards, which the analysts hate. The Bears also hate it. Trouble is, it takes a bit of time for dodgy accounting to catch up with popular stocks. What it does indicate though is that as other competitors enter the EV space, TSLA's advantages will come under threat. That in-of-itself should negate the enormous premium being accorded currently.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> TSLA: accounting issues
> 
> View attachment 106382
> View attachment 106383
> View attachment 106384
> View attachment 106385
> 
> 
> As the analysts weigh in, TSLA seems to be playing with aggressive accounting standards, which the analysts hate. The Bears also hate it. Trouble is, it takes a bit of time for dodgy accounting to catch up with popular stocks. What it does indicate though is that as other competitors enter the EV space, TSLA's advantages will come under threat. That in-of-itself should negate the enormous premium being accorded currently.
> 
> jog on
> duc




A few analysts have suggested that Tesla is a potential Enron of the auto industry.


----------



## Chronos-Plutus

over9k said:


> Early gains followed by an utter bloodbath after more deadlock news from the ******** politicians bickering about stimulus. Wiped out all my gains from yesterday & the day before.
> 
> Standard politicians really.




Another couple of trillion or so on the way in August.


----------



## qldfrog

looking at indexes I was expected a bloodbath but my US holding was just down 300USD or less than 0.3% ..*financials went well *and my losses were very moderate at worst
Coupled with USD rise and I am in profit AUD wise
Hope it will be the same on the ASX today as it has been a great week so far


----------



## ducati916

So market close update:






Bit of a rotation going on.

Drilling down further into the sectors:









Banks & Utilities.

For tomorrow, what can we expect?






So the $VIX has found some support and we will likely have some more vol. tomorrow heading into the w/e. So a down day for stocks generally.

This is confirmed by:









The weekly TRIN and daily TRIN, which are both closer to resistance than to support.

And flippe-floppe-flye:






jog on
duc


----------



## ducati916

Oil












jog on
duc


----------



## ducati916

Here is why if (and looks increasingly that it will) TSLA will fall rather than rise on inclusion to the S&P500:






When stocks are included, they increase the shares to dampen vol. The newbies bidding up TSLA thinking that there would be a price spike, not so much.






jog on
duc


----------



## qldfrog

ducati916 said:


> Here is why if (and looks increasingly that it will) TSLA will fall rather than rise on inclusion to the S&P500:
> 
> View attachment 106403
> 
> 
> When stocks are included, they increase the shares to dampen vol. The newbies bidding up TSLA thinking that there would be a price spike, not so much.
> 
> View attachment 106404
> 
> 
> jog on
> duc



Is it time to short or are the big boys already on, ready to slaughter the novices?


----------



## ducati916

qldfrog said:


> Is it time to short or are the big boys already on, ready to slaughter the novices?





Hell no, you don't want to be short this stick of dynamite. The earnings trade let me 'short' it with a $600 cushion and the knowledge that after earnings, IV would contract (IV crush). To short At The Money (ATM) is inviting sleepless nights.







Hence (in part) why IV was 200+.

jog on
duc


----------



## over9k

It's down another 5% pre-market today as well. 

In fact, basically everything looks like it's in for another bloodbath today. 

Except gold of course.


----------



## ducati916

Banks could show some relative strength:









Would be consistent with the rotation that has been taking place this week.

jog on
duc


----------



## over9k

Basically everything's in the red. Everyone are starting to **** themselves. Like I said, it feels like early march again. 

Gold's up.


----------



## Chronos-Plutus

Market wants the US Gov and FED to print more $$$$$$$$$$$$$$$$$$$$$$:





https://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/08/08/20170808_QE.jpg


----------



## over9k

Yeah, and the politicians are bickering like politicians do. 

Their target was "before the august recess". I suspect an agreement will be made at the 11th hour, so we're going to have another week of this if that's correct.


----------



## Chronos-Plutus

over9k said:


> Basically everything's in the red. Everyone are starting to **** themselves. Like I said, it feels like early march again.
> 
> Gold's up.





Powell or Mnuchin are due for an immediate press release to tell us that everything is going to be fine.


----------



## Chronos-Plutus

Data to be released soon in (GMT +10), in the next 12 hours:


----------



## over9k

Futures are all in the toilet, premarket are all in the toilet even more, it's going to be a bloodbath.


----------



## Chronos-Plutus

over9k said:


> Futures are all in the toilet, premarket are all in the toilet even more, it's going to be a bloodbath.




Market has run out of steam, retail Robin Hooders have maxed out their leverage and are ripe for the slaughter house. Market correction is possible leading into August, signaling to US Congress that more stimulus is needed, and signaling to the Fed to keep the printing press running hot.

Exciting day for commodities with commitment data being released.


----------



## over9k

There'll be a bounce once there's stimulus, no doubt. The question is when we get stimulus.


----------



## Chronos-Plutus

over9k said:


> There'll be a bounce once there's stimulus, no doubt. The question is when we get stimulus.




The stimulus should be approved by Congress within weeks, which should be somewhere between $1 trillion and $3 trillion. Until then I think we may get a significant correction. Once the stimulus is announced; the second leg of the rally comes, which will smash through record market highs, with the support of perpetual Fed monetary and quantitative easing.

I could be wrong though.


----------



## qldfrog

ducati916 said:


> Banks could show some relative strength:
> 
> View attachment 106419
> View attachment 106420
> 
> 
> Would be consistent with the rotation that has been taking place this week.
> 
> jog on
> duc



Banks yesterday compensated all other losses even my silver pull back
Could be a sign repeating itself in coming weeks


----------



## qldfrog

over9k said:


> Futures are all in the toilet, premarket are all in the toilet even more, it's going to be a bloodbath.



Best week ever so far, bring more bloodbath like that


----------



## over9k

Chronos-Plutus said:


> The stimulus should be approved by Congress within weeks, which should be somewhere between $1 trillion and $3 trillion. Until then I think we may get a significant correction. Once the stimulus is announced; the second leg of the rally comes, which will smash through record market highs, with the support of perpetual Fed monetary and quantitative easing.
> 
> I could be wrong though.




My thoughts exactly. Hence a move into gold today.


----------



## Chronos-Plutus

over9k said:


> My thoughts exactly. Hence a move into gold today.




We will see the trader commitments in around ~7 hours for precious metals to get an idea of sentiment. We may see a huge surge in gold and silver within the coming weeks.

I just had a quick read of Jim Mellon's brief take on the markets, published a few weeks ago though: https://masterinvestor.co.uk/economics/jim-mellon-a-crash-is-coming-in-the-us/


----------



## over9k

Gold looks like cracking 1900 today.


----------



## Chronos-Plutus

over9k said:


> Gold looks like cracking 1900 today.




Spot price already cracked 1900:





https://www.metalsdaily.com/

Futures COMEX Aug 20 cracked 1900:




https://www.cnbc.com/quotes/?symbol=@GC.1


----------



## over9k

Yep. I'm now about 30% gold. I bet the politicians take another fortnight to get anywhere.


----------



## Chronos-Plutus

over9k said:


> Yep. I'm now about 30% gold. I bet the politicians take another fortnight to get anywhere.




I am ~49% precious metal equities, ~34% cash, ~17% physical precious metals. Precious metals being mainly silver.

Congress will have to pass the stimulus. There will be blood on the streets if they don't, if there isn't already.


----------



## over9k

They're bickering about what it contains.

Which they will continue to do for **** knows how long, playing the political blame game etc etc. The house sits until next friday but the senate still sits until the 7th.


----------



## ducati916

So just having my first coffee of the morning:







So $VIX jumped a bit (at overall lower levels) and the market is down about 0.5%+/-. Nothing more than a routine fluctuation. Banks are holding up pretty well (relative) to the previously hot areas of the market. Bit of a snooze-fest to the end of the week.

jog on
duc


----------



## ducati916

Gold & Silver:















Silver simply isn't confirming the trend in gold. Historically, it always has. Why not this time? Or is the move in silver just getting underway? Feel free to educate me.

jog on
duc


----------



## ducati916

Sectors currently:






Banks holding up pretty well.

jog on
duc


----------



## ducati916

Lots of Oil news:

*Friday, July 24th, 2020*

Oil fell back to around $40 for WTI and $43 for Brent – familiar territory for the market over the past few weeks. The EIA’s data for this week was more downbeat, dashing hopes of positive momentum. Still, crude remains stable and steady at around $40, trapped between coronavirus fears on the downside, and improving fundamentals on the upside. 

_*Goldman: More M&A to come.*_ The *Chevron (NYSE: CVX)* purchase of *Noble Energy (NASDAQ: NBL)* may spark more M&A activity. Goldman Sachs said more M&A could be positive for the macro outlook for oil because consolidation will translate into slower production growth. “We believe strip prices are too low and are likely to move higher in 2021, a catalyst not only for fundamental upside to E&P stocks but also for potential M&A values,” Goldman Sachs said in a note. 

_*NY seeking bids for 4GW of renewables. *_New York is seeking bids for 2.5 GW of offshore wind and 1.5 GW of onshore renewables. The state will also invest $400 million in port upgrades to support offshore wind.

_*Saudi Arabia explores asset sales.*_ Saudi Arabia is accelerating plans to sell off state assets and is considering an income tax in order to shore up its budget.  

_*Equinor posts surprise profit.*_ *Equinor (NYSE: EQNR)* said that it earned $646 million in the second quarter, down by half from a year ago, but much better than analysts had anticipated. Notably, however, Equinor did not touch its long-term oil price forecasts, so it did not report any write downs. 

_*Schlumberger cuts 21,000 jobs.*_ *Schlumberger (NYSE: SLB)*, the largest oilfield services company in the world, said it would eliminate 21,000 jobs. The company posted a loss of $3.4 billion in the second quarter, including a $3.7 billion dollar impairment. Schlumberger’s CEO Olivier Le Peuch said the company is preparing “for a market of smaller scale and lower growth outlook, but with higher returns.”

_*ConocoPhillips buys Montney shale assets. *_*ConocoPhillips (NYSE: COP)* said it would spend $375 million to acquire 140,000 net acres in the liquids-rich Inga-Fireweed asset of the Montney shale in British Columbia. The acquisition adds over 1 billion barrels of oil equivalent to reserves, with an all-in cost of supply in the mid-$30s.

_*Tesla announces gigafactory in Texas. *_*Tesla (NASDAQ: TSLA) *confirmed rumors that it plans on building a gigafactory in Austin, Texas. The factory will be used to build the Cybertruck, Tesla’s electric pickup. 

_*Congestion at China’s oil ports.*_ Congestion at China’s east coast oil ports are adding costs for shippers and importers, a bottleneck that could stretch into August. China has purchased a record amount of oil in recent months. 

_*U.S. oil production increase likely fleeting. *_The rise in weekly production to 11.1 mb/d in the latest EIA data will likely be temporary, according to analysts. The steep declines in shale wells are expected to overwhelm the return of shut-in production by the end of the summer, dragging overall output back down.

_*Russia considers oil hedge. *_Pemex routinely secures massive oil hedges, but Russia appears ready to follow suit. President Vladimir Putin gave his government the go ahead to consider hedging Russia’s massive oil and gas export revenues to protect the country from drops in prices, according to Bloomberg.

_*Chevron turns to solar…to produce oil.*_ *Chevron (NYSE: CVX)* is using solar in California to cut the cost of oil production.

_*Political strife in Guyana threatens oil future.*_ Months of deadlock over a disputed presidential election has ratcheted up tensions in Guyana. President David Granger is widely interpreted as having lost the election, but has refused to concede. *ExxonMobil (NYSE: XOM)* admitted in an earnings call that the political conflict has slowed key permitting decisions. Exxon pushed back its oil production goals by six to 12 months. 

_*Malfunctioning flares in Permian leads to high methane emissions.*_ One in every 10 flares in the Permian basin in June was unlit, venting unburned methane into the atmosphere, according to a new report. 

_*Baker Hughes sees long road to recovery.*_ *Baker Hughes (NYSE: BKR) *reported a net loss of $201 million in the second quarter and does not see a swift rebound ahead. “Although the majority of lockdowns have been easing globally and economic activity likely troughed during the second quarter, visibility on the economic outlook remains extremely limited,” said Lorenzo Simonelli, CEO of Baker Hughes.

_*Slight uptick in LNG prices offer glimmers of hope.*_ LNG spot prices in Asia (JKM) rose to $2.40/MMBtu on improving demand, compared to the record low of $1.85/MMBtu in May. Demand in Asia is rising steadily. 

_*Shale lending contracts.*_ Banks have already cut their reserve-based lending amounts, but the tightfisted approach is showing no signs of loosening. Lack of capital puts a lot of shale drilling in danger. “As long as oil prices stay at $40 or less and gas stays at $2 or less, I think banks are going to continue to be very cautious and continue to pull back,” said Spencer Cutter, an analyst at Bloomberg Intelligence. “It’ll be the end of shale if oil stays below $40.”


jog on
duc


----------



## qldfrog

ducati916 said:


> Gold & Silver:
> 
> View attachment 106433
> View attachment 106434
> View attachment 106435
> View attachment 106436
> 
> 
> Silver simply isn't confirming the trend in gold. Historically, it always has. Why not this time? Or is the move in silver just getting underway? Feel free to educate me.
> 
> jog on
> duc



Wish silver is just having a pause and will actually upstage gold going forward.
gold will probably fall on announcement of stimulus and silver jump higher so i suppose people are taking profit and moving to gold until stimulus
Silver rise was pretty abrupt so a pause is expected
In short: i have no clue


----------



## qldfrog

Vix down below 26...no worries it says..
Have all a great week end


----------



## Chronos-Plutus

ducati916 said:


> Gold & Silver:
> 
> View attachment 106433
> View attachment 106434
> View attachment 106435
> View attachment 106436
> 
> 
> Silver simply isn't confirming the trend in gold. Historically, it always has. Why not this time? Or is the move in silver just getting underway? Feel free to educate me.
> 
> jog on
> duc




Managed money clearly moving into long future silver positions, taking delivery :






https://www.cmegroup.com/tools-information/quikstrike/commitment-of-traders-agricultural.html


----------



## ducati916

Chronos-Plutus said:


> Managed money clearly moving into long future silver positions, taking delivery :
> 
> View attachment 106447
> 
> 
> https://www.cmegroup.com/tools-information/quikstrike/commitment-of-traders-agricultural.html




Last week's COT:






Commercials leaning against. Not that heavily mind.

Gold on the other hand:







Why has gold so outperformed silver?

jog on
duc


----------



## Austwide

Fairly new to watching metal prices,  more so looking to learn based on comments in these threads.
The past 9 years or so the ratio has been steadily rising and had a sharp increase and fall this year.






Gold has risen about 27% since its low in march and silver has almost doubled over that time.






To me on this time frame Silver is the big performer


----------



## makteb

ducati916 said:


> Gold & Silver:
> 
> View attachment 106433
> View attachment 106434
> View attachment 106435
> View attachment 106436
> 
> 
> Silver simply isn't confirming the trend in gold. Historically, it always has. Why not this time? Or is the move in silver just getting underway? Feel free to educate me.
> 
> jog on
> duc




The market does what it does.  It is our duty to take a piece.  If you are after an explanation, I do not have one, but there may be one in hindsight.  Of importance is the movement of hedging/asset class change with precious metals as seen from history.
And some here have done just that.


----------



## Chronos-Plutus

ducati916 said:


> Last week's COT:
> 
> View attachment 106448
> 
> 
> Commercials leaning against. Not that heavily mind.
> 
> Gold on the other hand:
> 
> View attachment 106449
> 
> 
> 
> Why has gold so outperformed silver?
> 
> jog on
> duc




The silver market is a thin market compared to gold. All it takes is the managed money to take delivery on the long futures and silver should move higher.


----------



## ducati916

Gold and silver are normally proxies for inflation. Silver (to date) has simply not confirmed the move in gold. A further indicator of inflation are Treasury Inflation Protected Securities or TIPS. They and gold are highly correlated. 







So certainly 'inflation' is in issue. There was this link placed on another thread: https://themarket.ch/interview/russell-napier-central-banks-have-become-irrelevant-ld.2323






Only partly true. The inflation of the 1970s was caused by:

(a) Nixon defaulting in August 1971;
(b) Two oil shocks;
(c) COLAs within Employment contracts and strong Unions;
(d) Food based commodity shock;
(e) Hot war in Vietnam.

The 'unemployment' was not a cause, it was a consequence of strong labour Unions reducing volume of employment through overpricing the cost of employment. Therefore the current unemployment rate is more likely to lead to disinflationary pressures than inflationary ones, certainly in the US.





This is the question (which has historical precedent and is addressed in the article).






This is different (this time). The Fed has gone outside of its mandate, 1913 Act, and loaned directly to businesses, rather than being simply the 'lender of last resort' to the Banking system. Therefore, while in the GFC, the QE programmes never ignited the inflation torch, possibly, lending directly into the non-financial world, the effects could be different.

Disinflation was created by China and improving and increasing technology in the production process, much like the Industrial Revolution was disinflationary. In addition we had the end of the Cold War (Soviets) that was also disinflationary.

So inflationary pressures:

(a) Cold War II (if it escalates will be inflationary) as the forces of globalisation will be stunted;
(b) The news from the oil patch is not great. While it may/may not represent an oil shock to the upside yet, it may;
(c) Significant money creation world-wide. The US creates more because it is the primary Reserve Currency, which paradoxically can be disinflationary as it keeps zombie companies alive adding to supply;
(d) Employment costs is a non-issue, Trade Unions are (pretty) powerless currently;
(e) What will the Fed do?






Actually the Fed. has been pretty hot on inflation (Bernanke and Powell, Yellen slower) raising the discount rate. It is however a risk that inflation gets away for a period of time until it is recognised.

In part the other thread was pondering what could be done to protect the portfolio from rising/rampant inflation. The general theory was gold/silver. Which is fine for silver, it is nowhere near its previous highs, but gold has already moved to its all time highs.

The question and the big risk is: what happens if the Fed. finds another Volcker? Gold and silver will be absolutely crushed. They perform really woefully in a rising interest rate environment. We also know (highly likely) that in a similar way to the gradual exit from the GFC, rates rose, so again, will rates rise. Bonds and PMs will fall. Due to duration, long dated bonds have greater volatility. Going short 20yr Treasury will pay if rates rise.






This is TTT the x3 inverse of TLT. There will be some bang for the buck as rates normalise (over time). If there is inflation and rates move like they did in the late 1970s, well, this will explode. Further, this is pretty much the bottom. Powell has signalled very strongly that the US will not go negative. If so, welcome to the bottom.






Dr Copper is signalling that world trade is on the mend. Which means that oil consumption will rise. POO is largely driven by China or was previously, due to the US shale production. That looks crippled for the near term. As economies re-open there is the possibility of an oil shock (higher) due to the reduction in supply. There could also be a war in Libya for control of its oil. Depending on what the US dollar does, that could be inflationary to the US. Rising rates attracts foreign capital flows: stronger dollar, but weaker Bond prices at the long end.















Commercials positions from last week.

jog on
duc


----------



## ducati916

Chronos-Plutus said:


> The silver market is a thin market compared to gold. All it takes is the managed money to take delivery on the long futures and silver should move higher.





There has been a disconnect 'twixt physical and paper for quite some time though. Has something changed?

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> Gold and silver are normally proxies for inflation. Silver (to date) has simply not confirmed the move in gold. A further indicator of inflation are Treasury Inflation Protected Securities or TIPS. They and gold are highly correlated.
> 
> 
> View attachment 106470
> 
> 
> So certainly 'inflation' is in issue. There was this link placed on another thread: https://themarket.ch/interview/russell-napier-central-banks-have-become-irrelevant-ld.2323
> 
> View attachment 106464
> 
> 
> Only partly true. The inflation of the 1970s was caused by:
> 
> (a) Nixon defaulting in August 1971;
> (b) Two oil shocks;
> (c) COLAs within Employment contracts and strong Unions;
> (d) Food based commodity shock;
> (e) Hot war in Vietnam.
> 
> The 'unemployment' was not a cause, it was a consequence of strong labour Unions reducing volume of employment through overpricing the cost of employment. Therefore the current unemployment rate is more likely to lead to disinflationary pressures than inflationary ones, certainly in the US.
> 
> View attachment 106465
> 
> This is the question (which has historical precedent and is addressed in the article).
> 
> View attachment 106475
> 
> 
> This is different (this time). The Fed has gone outside of its mandate, 1913 Act, and loaned directly to businesses, rather than being simply the 'lender of last resort' to the Banking system. Therefore, while in the GFC, the QE programmes never ignited the inflation torch, possibly, lending directly into the non-financial world, the effects could be different.
> 
> Disinflation was created by China and improving and increasing technology in the production process, much like the Industrial Revolution was disinflationary. In addition we had the end of the Cold War (Soviets) that was also disinflationary.
> 
> So inflationary pressures:
> 
> (a) Cold War II (if it escalates will be inflationary) as the forces of globalisation will be stunted;
> (b) The news from the oil patch is not great. While it may/may not represent an oil shock to the upside yet, it may;
> (c) Significant money creation world-wide. The US creates more because it is the primary Reserve Currency, which paradoxically can be disinflationary as it keeps zombie companies alive adding to supply;
> (d) Employment costs is a non-issue, Trade Unions are (pretty) powerless currently;
> (e) What will the Fed do?
> 
> View attachment 106476
> 
> 
> Actually the Fed. has been pretty hot on inflation (Bernanke and Powell, Yellen slower) raising the discount rate. It is however a risk that inflation gets away for a period of time until it is recognised.
> 
> In part the other thread was pondering what could be done to protect the portfolio from rising/rampant inflation. The general theory was gold/silver. Which is fine for silver, it is nowhere near its previous highs, but gold has already moved to its all time highs.
> 
> The question and the big risk is: what happens if the Fed. finds another Volcker? Gold and silver will be absolutely crushed. They perform really woefully in a rising interest rate environment. We also know (highly likely) that in a similar way to the gradual exit from the GFC, rates rose, so again, will rates rise. Bonds and PMs will fall. Due to duration, long dated bonds have greater volatility. Going short 20yr Treasury will pay if rates rise.
> 
> View attachment 106466
> 
> 
> This is TTT the x3 inverse of TLT. There will be some bang for the buck as rates normalise (over time). If there is inflation and rates move like they did in the late 1970s, well, this will explode. Further, this is pretty much the bottom. Powell has signalled very strongly that the US will not go negative. If so, welcome to the bottom.
> 
> View attachment 106469
> 
> 
> Dr Copper is signalling that world trade is on the mend. Which means that oil consumption will rise. POO is largely driven by China or was previously, due to the US shale production. That looks crippled for the near term. As economies re-open there is the possibility of an oil shock (higher) due to the reduction in supply. There could also be a war in Libya for control of its oil. Depending on what the US dollar does, that could be inflationary to the US. Rising rates attracts foreign capital flows: stronger dollar, but weaker Bond prices at the long end.
> 
> View attachment 106471
> View attachment 106472
> View attachment 106473
> View attachment 106474
> 
> 
> Commercials positions from last week.
> 
> jog on
> duc





"The Fed has gone outside of its mandate" I laughed when I read that. That is an understatement.
The Fed are going Bank Of Japan style; they will eventually directly buy on market.

You don't seem convinced with silver Mr Duc. I think we need to keep in mind that we are comparing a trillion dollar market, which is gold; to a hundred billion dollar market, which is silver.

As sure as the sun rises in the morning, silver will have its time to shine.


----------



## Chronos-Plutus

ducati916 said:


> There has been a disconnect 'twixt physical and paper for quite some time though. Has something changed?
> 
> jog on
> duc




I think what has changed recently is the managed money taking long future positions and increasing over the month or so. You can see it on the green bars that I posted above. This is a very good sign for silver, in my opinion.


----------



## ducati916

Chronos-Plutus said:


> "The Fed has gone outside of its mandate" I laughed when I read that. That is an understatement.
> The Fed are going Bank Of Japan style; they will eventually directly buy on market.
> 
> You don't seem convinced with silver Mr Duc. I think we need to keep in mind that we are comparing a trillion dollar market, which is gold; to a hundred billion dollar market, which is silver.
> 
> As sure as the sun rises in the morning, silver will have its time to shine.





Which surely means that silver should be through the roof, if only a fraction of the money is required to create a rise in price.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> Which surely means that silver should be through the roof, if only a fraction of the money is required to create a rise in price.
> 
> jog on
> duc




Well the forces that attempt to keep the gold and silver price suppressed have been relentless over the last decade. This order has been weakened recently and is disintegrating; as such bullion banks have been withdrawing from the market because of the insurmountable losses they have occurred over the last year.


----------



## Chronos-Plutus

ducati916 said:


> Which surely means that silver should be through the roof, if only a fraction of the money is required to create a rise in price.
> 
> jog on
> duc




Are the bullion banks ready to fight the Green Army that want to electrify the world with electric vehicles and solar panels? Silver is the ultimate industrial metal for electrification with the greatest electrical conductivity and thermal conductivity. Silver is also the preferred monetary metal over millennia.

I will buy silver, get my popcorn out, and put my feet up to watch the slaughter of the bullion banks over the next few decades


----------



## ducati916

Chronos-Plutus said:


> Are the bullion banks ready to fight the Green Army that want to electrify the world with electric vehicles and solar panels? Silver is the ultimate industrial metal for electrification with the greatest electrical conductivity and thermal conductivity. Silver is also the preferred monetary metal over millennia.
> 
> I will buy silver, get my popcorn out, and put my feet up to watch the slaughter of the bullion banks over the next few decades





All of the various conspiracy theories (whether true or false) have been around forever. Nothing new there. What is new is gold going (went) off on its own. It has been pointed out that one can lag, but we are only talking a couple of weeks. We are now 4 months into this and silver has only just woken up.

Why?

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> All of the various conspiracy theories (whether true or false) have been around forever. Nothing new there. What is new is gold going (went) off on its own. It has been pointed out that one can lag, but we are only talking a couple of weeks. We are now 4 months into this and silver has only just woken up.
> 
> Why?
> 
> jog on
> duc




I am not really into conspiracy theories. It is no secret that bullion banks and to a certain extent industry have wanted to suppress the price of precious metals.

It is scientific fact that silver is the ultimate industrial metal for electrification. You try to stop China building 100s of nuclear reactors to transition to the electrification of their transportation network. You try to tell the European Union to stop the transition to the electrification of their transportation network also.

In Australia, the roll out of electric vehicles will be much slower, however in China; it will be a rapid transition as they are building the power capacity to support electric vehicles AS WE SPEAK.


----------



## Chronos-Plutus

COMEX Gold delivery record: "
*"A Record 170 Tons Of Physical Gold Were Just Delivered On The COMEX: Here's Why" (https://www.zerohedge.com/markets/record-170-tons-physical-gold-were-just-delivered-comex-heres-why)*


That is a good sign for silver, if we take the assumption that smart money will be taking delivery of silver also, in due course.


----------



## ducati916

Chronos-Plutus said:


> I am not really into conspiracy theories. It is no secret that bullion banks and to a certain extent industry have wanted to suppress the price of precious metals.
> 
> It is scientific fact that silver is the ultimate industrial metal for electrification. You try to stop China building 100s of nuclear reactors to transition to the electrification of their transportation network. You try to tell the European Union to stop the transition to the electrification of their transportation network also.
> 
> In Australia, the roll out of electric vehicles will be much slower, however in China; it will be a rapid transition as they are building the power capacity to support electric vehicles AS WE SPEAK.





My point is that there are always reasons why (conspiracy theories) exist, to suppress or raise prices of 'X'. That is no explanation at all.







Blue is silver. Green/red gold. The spike to the left, was an actual conspiracy, re. the Hunt brothers. Now (on the right) silver has caught up (since this chart) but it is still a ways off.

Here is the current chart:






Improving, but still way off.

On a daily chart it looks very different:






There is no 'suppression' occurring. Simply that silver is not performing as expected viz. outperforming, given the smaller market. Silver is still a country mile from its previous all time high. Why?

jog on
duc


----------



## ducati916

Chronos-Plutus said:


> COMEX Gold delivery record: "
> *"A Record 170 Tons Of Physical Gold Were Just Delivered On The COMEX: Here's Why" (https://www.zerohedge.com/markets/record-170-tons-physical-gold-were-just-delivered-comex-heres-why)*
> 
> 
> That is a good sign for silver, if we take the assumption that smart money will be taking delivery of silver also, in due course.





That is simply Arbs doing what they do. It simply closes the spread. That provides no explanation at all for why the price is rising.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> My point is that there are always reasons why (conspiracy theories) exist, to suppress or raise prices of 'X'. That is no explanation at all.
> 
> View attachment 106478
> 
> 
> Blue is silver. Green/red gold. The spike to the left, was an actual conspiracy, re. the Hunt brothers. Now (on the right) silver has caught up (since this chart) but it is still a ways off.
> 
> Here is the current chart:
> 
> View attachment 106479
> 
> 
> Improving, but still way off.
> 
> On a daily chart it looks very different:
> 
> View attachment 106480
> 
> 
> There is no 'suppression' occurring. Simply that silver is not performing as expected viz. outperforming, given the smaller market. Silver is still a country mile from its previous all time high. Why?
> 
> jog on
> duc




I agree with your views that silver is lagging, as it always does. Yes, the Hunt Brothers did try to corner the silver market and they failed; however the electrification of global transportation networks will corner the silver market for me. I can wait decades, I am in no rush; gives me plenty of time to read my philosophy, haha.


----------



## Chronos-Plutus

ducati916 said:


> That is simply Arbs doing what they do. It simply closes the spread. That provides no explanation at all for why the price is rising.
> 
> jog on
> duc




The price of precious metals are rising because of the 10s of trillions of dollars of currency debasement and the tsunami of negative yielding debt that obviously can't be serviced without printing more trillions and trillions of dollars of currency.

Gold and silver are monetary metals, safe haven assets; why would you want to keep all your cash in the bank, to get negative returns and risk your cash if a bank fails; when you can allocate a portion of your wealth into millennia money like gold and silver; that will hold its value in perpetuity.


----------



## qldfrog

A potential explanation:
If both silver and gold are used as safe haven, physical, by people: you and i, not the funds or banks, then i suspect gold will be preferred.
I personally bought both but volume and preferences mean i am kind of 80 20 toward gold.
Now where is the new wealth nowadays?
Not in Europe or Americas.
Wealth in the west is owned by the older generation..which already bought their gold and silver, sitting in the safes, and will not get more.
But Asia/china new wealth are still building their own PM stocks and silver is not a Chinese desired PM, wrong colour nor is it with Indians?
For India, i might be wrong...
So could it be just a cultural difference shift in the retail market?
Both jewellery and coins/ bullions?
I tried...


----------



## Chronos-Plutus

qldfrog said:


> A potential explanation:
> If both silver and gold are used as safe haven, physical, by people: you and i, not the funds or banks, then i i suspe gold will be preferred.
> I personally bought both but volume and preferences means i am kind of 80 20 toward gold.
> Now where is the new wealth nowadays?
> Not in Europe or Americas.
> Wealth in the west is own by the older generation..who already bought their gold and silver, sitting in the safes, and will not get more.
> But Asia/china new wealth are still building their own PM stock and silver is not a Chinese desired PM, wrong colour nor is it with Indians?
> For India, i might be wrong...
> So could it be just a cultural difference shift in the retail market?
> Both jewellery and coins bullions?
> I tried...




I wouldn't underestimate China's thirst for silver as a monetary metal. Isn't that why the Opium Wars occurred?

Also China will need astronomical amounts of silver to electrify their vehicles and make solar panels over the coming years/decades.

The Indians also love silver; just about every Indian that I speak to has silver.

I posted a few weeks ago; the investment demand of silver has been increasing significantly over the last year; looking at the Silver Institute Reports.

At the end of day; we are here to make money; I don't really care about the emotions that are attached to the metals.


----------



## qldfrog

Between Mr Le Duc input and others, i i ha the feeling it is time to get out of bonds.i am slowly moving out from us bonds..via ETF s.. to other stock market entries
So pushing the trend
But still a bit worried getting out of Aussie bonds.


----------



## ducati916

Chronos-Plutus said:


> I agree with your views that silver is lagging, as it always does. Yes, the Hunt Brothers did try to corner the silver market and they failed; however the electrification of global transportation networks will corner the silver market for me. I can wait decades, I am in no rush; gives me plenty of time to read my philosophy, haha.





Chronos-Plutus said:


> The price of precious metals are rising because of the 10s of trillions of dollars of currency debasement and the tsunami of negative yielding debt that obviously can't be serviced without printing more trillions and trillions of dollars of currency.
> 
> Gold and silver are monetary metals, safe haven assets; why would you want to keep all your cash in the bank, to get negative returns and risk your cash if a bank fails; when you can allocate a portion of your wealth into millennia money like gold and silver; that will hold its value in perpetuity.




Which simply returns to the original question: if it simply 'inflation' why is silver not playing?

jog on
duc


----------



## ducati916

qldfrog said:


> Between Mr Le Duc input and others, i i ha the feeling it is time to get out of bonds.i am slowly moving out from us bonds..via ETF s.. to other stock market entries
> So pushing the trend
> But still a bit worried getting out of Aussie bonds.




I'm seriously thinking about going short TLT.

jog on
duc


----------



## ducati916

Chronos-Plutus said:


> I wouldn't underestimate China's thirst for silver as a monetary metal. Isn't that why the Opium Wars occurred?
> 
> Also China will need astronomical amounts of silver to electrify their vehicles and make solar panels over the coming years/decades.
> 
> The Indians also love silver; just about every Indian that I speak to has silver.
> 
> I posted a few weeks ago; the investment demand of silver has been increasing significantly over the last year; looking at the Silver Institute Reports.
> 
> At the end of day; we are here to make money; I don't really care about the emotions that are attached to the metals.




And you think you will make money in gold/silver if there is true inflation and yields jump? Think again. Gold holds its value...yes but what timeframe are you thinking. PMs can fluctuate with the best of them.

jog on
duc


----------



## Garpal Gumnut

Chronos-Plutus said:


> Also China will need astronomical amounts of silver to electrify their vehicles and make solar panels over the coming years/decades.



This reminds me of the Hunt Brothers. They tried to corner the market for silver. Many had the expectation that the people of China would become middle class and want to take pictures of each other with Kodak cameras using kodachrome silver impregnated film.

Alas digital technology, cameras, iphones came along.

Perhaps someone will have a brainfart and invent something to supercede EVs and solar energy.

https://en.wikipedia.org/wiki/Silver_Thursday

gg


----------



## qldfrog

Chronos-Plutus said:


> At the end of day; we are here to make money; I don't really care about the emotions that are attached to the metals.



But emotions are still the prime movers of market and we need to include them to make money.


----------



## Chronos-Plutus

ducati916 said:


> Which simply returns to the original question: if it simply 'inflation' why is silver not playing?
> 
> jog on
> duc




Silver is playing; surely you can see the rise in the charts. The managed money moving in from the CTFC charts, and the increase in investment in the Silver Institute reports for supply and demand.


----------



## Chronos-Plutus

qldfrog said:


> But emotions are still the prime movers of market and we need to include them to make money.




Yes; what I am trying to say is that I am not emotionally attached; I am in the silver game to make money.


----------



## Chronos-Plutus

Garpal Gumnut said:


> This reminds me of the Hunt Brothers. They tried to corner the market for silver. Many had the expectation that the people of China would become middle class and want to take pictures of each other with Kodak cameras using kodachrome silver impregnated film.
> 
> Alas digital technology, cameras, iphones came along.
> 
> Perhaps someone will have a brainfart and invent something to supercede EVs and solar energy.
> 
> https://en.wikipedia.org/wiki/Silver_Thursday
> 
> gg





It more reminds me of Warren Buffett  He bought silver due to the forecast industrial demand. As I said, I don't need to attempt to corner the market when the advancement in technology, particularly the electrification of transportation, and the solar energy transition will do it for me. Then there is the Central Banks printing trillions and buying gold, which also helps silver.


----------



## ducati916

Chronos-Plutus said:


> Silver is playing; surely you can see the rise in the charts. The managed money moving in from the CTFC charts, and the increase in investment in the Silver Institute reports for supply and demand.





Yes I'm sure everyone can see that it is moving. 

The issue is: it is not moving consistently with an explanation rooted in inflation. If it massively accelerates, then it will be consistent with its historical relationship with inflation. Currently it is not.

Therefore, putting aside inflation for a moment (which was totally wrong in 2009-2020), why is it moving?

jog on
duc


----------



## ducati916

Chronos-Plutus said:


> It more reminds me of Warren Buffett  He bought silver due to the forecast industrial demand. As I said, I don't need to attempt to corner the market when the advancement in technology, particularly the electrification of transportation, and the solar energy transition will do it for me. Then there is the Central Banks printing trillions and buying gold, which also helps silver.




So this is your reason...EVs?
Why is gold moving?

jog on
duc


----------



## Dark1975

This related post from duc, is a good post and with all the other posts on this related topic to trend looks positive,
I have been personally in and out of the market lately chopping the volitality , tho this week for me personally I will be moving 80% of my cash reserves in to long term position on banks, typically anz and wbc and boc , typically 40% down down from pre covid,
My reasoning y, I think banks have been punished hard, yet the Australian banks are the pillars of our market with strong dividends and alot of room to.move forward,
I'm thinking I will gauge this week and get in just before the 2nd stimulas announced by the u.s,

Personally I think once the u.s announces the 2nd stimulas, we are going to see a strong movement up till the u.s elections mid September ,
The Only volitality I see is the cold war with china and november if Biden gets in, otherwise I see a strong move upwards


----------



## Knobby22

Dark1975 said:


> Personally I think once the u.s announces the 2nd stimulas, we are going to see a strong movement up till the u.s elections mid September ,




I am bearish. The unemployment insurance runs out next week for millions and they will have nothing. The Republicans want to do something but so far Trump is against it.

The country will be in Depression.
I think it will get really bad and then a month or two before the election Trump will drop a heap of helicopter money. This won't save the stock market unless the government  directly buy shares which is likely I suppose.


----------



## Dark1975

Knobby22 said:


> I am bearish. The unemployment insurance runs out next week for millions and they will have nothing. The Republicans want to do something but so far Trump is against it.
> 
> The country will be in Depression.
> I think it will get really bad and then a month or two before the election Trump will drop a heap of helicopter money. This won't save the stock market unless the government  directly buy shares which is likely I suppose.




Yes i agree if the stimulas package isn't approve we will see the market tank, but i have been following the progression of talks closely, Senator mc connell will get his way, trump backdowned on payroll tax on Cares, Also watching trump doing backflips on wearing a mask now and stoping on going his political rallies, looks like he has seen the polls with biden leading and will do anything to play ball.
with regards to Fed, you have seen them picking up the Tab, You cant beat the Fed, they are just printing more money as they need ( looks like hyperinflation germany 1929) but's that a whole different topic


----------



## Chronos-Plutus

ducati916 said:


> So this is your reason...EVs?
> Why is gold moving?
> 
> jog on
> duc




My investment case for silver isn't purely based on EVs in China and the EU.

Gold and silver have had structural supply problems all year with COVID shutting down mines, refineries and nations; combined with the strong investment demand for the precious metals.

Gold has been moving over the last few years largely due to the tsunami of negative yielding debt. Silver tends to lag gold. Also Central Banks around the world have been buying gold over the last few years.


----------



## Chronos-Plutus

ducati916 said:


> And you think you will make money in gold/silver if there is true inflation and yields jump? Think again. Gold holds its value...yes but what timeframe are you thinking. PMs can fluctuate with the best of them.
> 
> jog on
> duc




I just heard the Fed are going to abandon their inflation mandate.

This recent interview with Eric Sprott may answer some of your questions on gold and silver:


----------



## Dark1975

Just something off the topic ? What's do most ppl here hold in silver stock asx listed ? SVL /S32 , PMY, 
or a better question what would be the best of the asx listed stocks in silver ?


----------



## ducati916

Chronos-Plutus said:


> I just heard the Fed are going to abandon their inflation mandate.
> 
> This recent interview with Eric Sprott may answer some of your questions on gold and silver:






The Fed. have had the 'catch-up' inflation mandate since Yellen. These guys are way behind the curve. 

But ok, the reason is inflation (that these chaps are propounding). That answers my question.

jog on
duc


----------



## ducati916

Here is the problem with that scenario:










Gold followed Bonds. Silver did not. Silver may have time to catch-up. It may not. If there is true inflation, the type of inflation the Fed. worries about, Powell will raise rates and both PMs will be crushed.

If it is CPI inflation, well the Fed. will do nothing as they don't care about CPI inflation. But with CPI inflation only, the market will continue to rise as CPI improves earnings. Given the two, where would you put your money?






To date.

We know Powell (the Fed) will raise rates, albeit slowly:






Those rates rose to 2.3% on the 1yr (from about 0%) between 2016-2019. Look at what happened to gold/silver. Look at what happened to stocks. 

So what we have is this type of choice:

(a) CPI inflation, Fed. only very slowly raises rates, Stocks outperform, PMs continue higher, but at a lesser rate than the market.

(b) PPI inflation jumps significantly: Fed raises rates. PMs crushed. Bonds crushed. Stocks ok up to a point +/-5%.

Now I'm perfectly ok with: its a trade and I exit whenever XYZ happens. These guys Sprott/Schiff, are promoting gold as if hyperinflation was the scenario.









This is not the case currently.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> Here is the problem with that scenario:
> 
> View attachment 106484
> View attachment 106485
> 
> 
> Gold followed Bonds. Silver did not. Silver may have time to catch-up. It may not. If there is true inflation, the type of inflation the Fed. worries about, Powell will raise rates and both PMs will be crushed.
> 
> If it is CPI inflation, well the Fed. will do nothing as they don't care about CPI inflation. But with CPI inflation only, the market will continue to rise as CPI improves earnings. Given the two, where would you put your money?
> 
> View attachment 106487
> 
> 
> To date.
> 
> We know Powell (the Fed) will raise rates, albeit slowly:
> 
> View attachment 106488
> 
> 
> Those rates rose to 2.3% on the 1yr (from about 0%) between 2016-2019. Look at what happened to gold/silver. Look at what happened to stocks.
> 
> So what we have is this type of choice:
> 
> (a) CPI inflation, Fed. only very slowly raises rates, Stocks outperform, PMs continue higher, but at a lesser rate than the market.
> 
> (b) PPI inflation jumps significantly: Fed raises rates. PMs crushed. Bonds crushed. Stocks ok up to a point +/-5%.
> 
> Now I'm perfectly ok with: its a trade and I exit whenever XYZ happens. These guys Sprott/Schiff, are promoting gold as if hyperinflation was the scenario.
> 
> View attachment 106491
> View attachment 106492
> 
> 
> This is not the case currently.
> 
> jog on
> duc




I don't think the Fed will be raising rates for the foreseeable future. It will cause mass scale default; thus inducing another global financial crisis. Every time the Fed has tried to raise rates in the last decade; the markets reacted negatively.

Jay Powell and the Fed are now backed into a corner. 

I also think that the Fed will go Bank Of Japan style and buy stock on market.


----------



## ducati916

Chronos-Plutus said:


> I don't think the Fed will be raising rates for the foreseeable future. It will cause mass scale default; thus inducing another global financial crisis. Every time the Fed has tried to raise rates in the last decade; the markets reacted negatively.
> 
> Jay Powell and the Fed are now backed into a corner.
> 
> I also think that the Fed will go Bank Of Japan style and buy stock on market.





Not for CPI based inflation. He (Powell) has already stated they will stay low for some time. If it is however PPI inflation, that is different.

The point is: in CPI inflation, stocks will match or outperform PMs. If rates rise, PMs will be crushed.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> Not for CPI based inflation. He (Powell) has already stated they will stay low for some time. If it is however PPI inflation, that is different.
> 
> The point is: in CPI inflation, stocks will match or outperform PMs. If rates rise, PMs will be crushed.
> 
> jog on
> duc




I reckon rates will stay at zero/negative for decades.

The Fed are abandoning their inflation mandate because they know that they won't be able to contain it.

Stagflation is coming whether we like it or not.

We are in the end game now Duc. We move to MMT, if it fails, there will be a global monetary reset.


----------



## qldfrog

Shorting 20y us bond via etf:
I found TBF and TMV(x3)
If anyone interested..
Might check these and buy next week


----------



## Chronos-Plutus

ducati916 said:


> Not for CPI based inflation. He (Powell) has already stated they will stay low for some time. If it is however PPI inflation, that is different.
> 
> The point is: in CPI inflation, stocks will match or outperform PMs. If rates rise, PMs will be crushed.
> 
> jog on
> duc




So basically the reason why we will get an inflationary recession is due to high unemployment combined with massive fiscal stimulus/welfare. This keeps demand going but does not increase supply, as such it is inflationary.

You might be interested in watching this interview with Greg Jensen (Co-CIO of Bridgewater). He analyses monetary and fiscal policy over the decades with a focus on inflation, deflation and stagflation; and applies it to the current crisis that we are in.


----------



## over9k

Considering silver bulls have been banging on about it since during the gfc (I know because I was there hearing it every 5 minutes), this is one of those "broken clock" moments.


----------



## Chronos-Plutus

over9k said:


> Considering silver bulls have been banging on about it since during the gfc (I know because I was there hearing it every 5 minutes), this is one of those "broken clock" moments.




Perhaps; however cost-push inflation and monetary inflation is coming. I have only been bullish on silver for the last few years. If you watch the interview with Greg Jensen above you will get a better understanding.


----------



## ducati916

Chronos-Plutus said:


> 1. I reckon rates will stay at zero/negative for decades.
> 
> 2. The Fed are abandoning their inflation mandate because they know that they won't be able to contain it.
> 
> 3. Stagflation is coming whether we like it or not.
> 
> 4. We are in the end game now Duc. We move to MMT, if it fails, there will be a global monetary reset.




1. If there is PPI inflation of any significance, rates will rise immediately.

2. They are abandoning it to INCREASE it. Simply because inflation is almost negative.

3. Dream on.

4. Not even close.

jog on
duc


----------



## ducati916

Chronos-Plutus said:


> 1. So basically the reason why we will get an inflationary recession is due to high unemployment combined with massive fiscal stimulus/welfare. This keeps demand going but does not increase supply, as such it is inflationary.
> 
> 2. You might be interested in watching this interview with Greg Jensen (Co-CIO of Bridgewater). He analyses monetary and fiscal policy over the decades with a focus on inflation, deflation and stagflation; and applies it to the current crisis that we are in.





1. Incorrect. Already covered.
2. I'll watch it.

jog on
duc


----------



## ducati916

Chronos-Plutus said:


> Perhaps; however cost-push inflation and monetary inflation is coming. I have only been bullish on silver for the last few years. If you watch the interview with Greg Jensen above you will get a better understanding.





Cost push inflation and the Phillips curve cannot operate in (a) non-unionised environment or (b) high unemployment.

If he states otherwise (video) I might be wasting my time watching it.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> Cost push inflation and the Phillips curve cannot operate in (a) non-unionised environment or (b) high unemployment.
> 
> If he states otherwise (video) I might be wasting my time watching it.
> 
> jog on
> duc




Well if you think you know more than him, or if you aren't interested in hearing other people's opinions; don't watch it.


----------



## Chronos-Plutus

ducati916 said:


> 1. If there is PPI inflation of any significance, rates will rise immediately.
> 
> 2. They are abandoning it to INCREASE it. Simply because inflation is almost negative.
> 
> 3. Dream on.
> 
> 4. Not even close.
> 
> jog on
> duc




You trade on what you believe will happen and I will trade on what I believe will happen.


----------



## Chronos-Plutus

ducati916 said:


> 1. Incorrect. Already covered.
> 2. I'll watch it.
> 
> jog on
> duc




You asked the questions; I gave you the answers and found others who are informed that support my view/opinion.


----------



## ducati916

Chronos-Plutus said:


> Well if you think you know more than him, or if you aren't interested in hearing other people's opinions; don't watch it.





Since you have watched it, you could provide me with an an accurate summary. I don't have time to watch endless videos.

jog on
duc


----------



## ducati916

Chronos-Plutus said:


> You trade on what you believe will happen and I will trade on what I believe will happen.





I'm indifferent to what you trade.

I'm interested whether you thought gold (primarily) and now silver were advancing on the thesis of inflation or something else. I have my answer.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> I'm indifferent to what you trade.
> 
> I'm interested whether you thought gold (primarily) and now silver were advancing on the thesis of inflation or something else. I have my answer.
> 
> jog on
> duc




Short answer is most definitely yes. The market is pricing in severe inflationary pressure; which is why we are seeing rise in precious metals.


----------



## ducati916

Chronos-Plutus said:


> You asked the questions; I gave you the answers and found others who are informed that support my view/opinion.





Yes you did. But the reasons and analysis that you are putting forward are not evidenced by the facts.

jog on
duc


----------



## ducati916

Chronos-Plutus said:


> Short answer is most definitely yes. The market is pricing in severe inflationary pressure; which is why we are seeing rise in precious metals.





Then the market could well be wrong, which is why silver still has not confirmed the thesis.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> Since you have watched it, you could provide me with an an accurate summary. I don't have time to watch endless videos.
> 
> jog on
> duc




If you don't have the time, that is fair enough. You asked questions and I gave you the information for those questions to be answered. Disregard it if you wish.

I am not going to provide you with a transcript of the interview.


----------



## Chronos-Plutus

ducati916 said:


> Then the market could well be wrong, which is why silver still has not confirmed the thesis.
> 
> jog on
> duc




The thesis is confirmed in my view; I have posted the information to support the thesis:

1. Significant investment in silver ETPs/ETFs as highlighted in the Silver Institute demand/supply reports.

2. Significant rise in managed money moving into long future positions as highlighted in the COT from the CME.


----------



## over9k

Isn't gold the best electrical conductor?

The USD isn't going to collapse chronos. In fact, it's going to be even more of a safe haven in 2030 than it already has been. It's just getting a bit of a kick in the nuts at the moment thanks to the virus. This will pass.


----------



## Chronos-Plutus

over9k said:


> Isn't gold the best electrical conductor?
> 
> The USD isn't going to collapse chronos. In fact, it's going to be even more of a safe haven in 2030 than it already has been. It's just getting a bit of a kick in the nuts at the moment thanks to the virus. This will pass.




I didn't say that the USA is going to collapse; Mr Duc's friend Mr Fly said that.

I think USA will have to deal with serious inflationary issues though.

Here is the metal table that you are after, silver is the GOD METAL for electricity:


----------



## Beaches

Chronos-Plutus said:


> Here is the metal table that you are after, silver is the GOD METAL for electricity:






_The most electrically conductive element is silver, followed by copper and gold. Although it is the best conductor, copper and gold are used more often in electrical applications because copper is less expensive and gold has a much higher corrosion resistance. Because silver tarnishes, it is less desirable for high frequencies because the exterior surface becomes less conductive._​
_Because of cost, the use of silver in electrical and electronic components is restricted to specialty components; the use of silver wire as a conductor is rare. You can find silver in some high-quality types of electronic solder, as it makes a better electrical connection than more common tin-lead or bismuth alloys. Silver-based inks are used to print antennas on circuit boards. Although gold’s conductivity is not as high as silver’s, it does not form oxide or sulfide tarnishes that interfere with a good electrical connection; for this reason, many electrical connectors use a microscopically thin layer of gold to ensure that electrical contacts stay clean and reliable over long periods of time.

_​


----------



## over9k

Yeah I was going to ask why I'd seen gold connectors for stuff and not silver. Corrosion. Makes sense.


----------



## Chronos-Plutus

Beaches said:


> _The most electrically conductive element is silver, followed by copper and gold. Although it is the best conductor, copper and gold are used more often in electrical applications because copper is less expensive and gold has a much higher corrosion resistance. Because silver tarnishes, it is less desirable for high frequencies because the exterior surface becomes less conductive._​
> _Because of cost, the use of silver in electrical and electronic components is restricted to specialty components; the use of silver wire as a conductor is rare. You can find silver in some high-quality types of electronic solder, as it makes a better electrical connection than more common tin-lead or bismuth alloys. Silver-based inks are used to print antennas on circuit boards. Although gold’s conductivity is not as high as silver’s, it does not form oxide or sulfide tarnishes that interfere with a good electrical connection; for this reason, many electrical connectors use a microscopically thin layer of gold to ensure that electrical contacts stay clean and reliable over long periods of time.
> 
> _​




Silver is not only the most electrically conductive it has the highest thermal conductivity. Sure it tarnishes when in contact with sulfur in the air, a quick polish is all that's needed; however it is still far superior to copper, copper actually corrodes .

You are correct with gold; that is why gold is used in aircraft cockpit window heating elements for anti-icing .

Gold is not completely impervious to chemical solutions; squirt a combination of hydrochloric acid and nitric acid on the gold; and you will find out. Aqua Regia.


----------



## Chronos-Plutus

over9k said:


> Yeah I was going to ask why I'd seen gold connectors for stuff and not silver. Corrosion. Makes sense.




Err; silver doesn't corrode. That is why it is called a noble metal


----------



## Beaches

Chronos-Plutus said:


> Err; silver doesn't corrode. That is why it is called a noble metal




_All metals, apart from pure gold, will corrode naturally when exposed to certain chemicals which can be present in air. High relative humidity, moisture, and air pollutants are common causes of corrosion in metals, including silver. Silver is known in the chemistry world as a noble metal which means it is resistant to corrosion, but not completely. Whether silver plating or pure silver, the composite of the metal will tarnish when exposed to air and sulfur. Because silver tarnishes, it is less desirable for high frequencies because the exterior surface becomes less conductive_​


----------



## Chronos-Plutus

Beaches said:


> _All metals, apart from pure gold, will corrode naturally when exposed to certain chemicals which can be present in air. High relative humidity, moisture, and air pollutants are common causes of corrosion in metals, including silver. Silver is known in the chemistry world as a noble metal which means it is resistant to corrosion, but not completely. Whether silver plating or pure silver, the composite of the metal will tarnish when exposed to air and sulfur._​




OK, if you want to get technical. The noble metals are noble, due to their resistance to corrosion.

There is a major difference between surface tarnish and corrosion in general speak. Copper is not a noble metal and is not in the same class.

I can make all noble metals react with various chemical solutions.


----------



## Garpal Gumnut

I'm lost. What are duc and C-P arguing about?

gg


----------



## Chronos-Plutus

Beaches said:


> _All metals, apart from pure gold, will corrode naturally when exposed to certain chemicals which can be present in air. High relative humidity, moisture, and air pollutants are common causes of corrosion in metals, including silver. Silver is known in the chemistry world as a noble metal which means it is resistant to corrosion, but not completely. Whether silver plating or pure silver, the composite of the metal will tarnish when exposed to air and sulfur. Because silver tarnishes, it is less desirable for high frequencies because the exterior surface becomes less conductive_​




Gold tarnishes also:

Perspiration (everyone's body chemistry is different, hence this is why some are more susceptible than others); for women, the time of the month can influence their body chemistry.
Perfume, hair or deodorant sprays,
Tarnishing during storage (storage boxes may contain organic sulfur compounds),
Leaching of acid/ cleaning solutions from surface microporosity from cast jewelry; this causes corrosion locally (such porosity may even trap perspiration during wear, causing local corrosion)
Preparation of vegetables such as onions and spices (many foodstuffs contain sulfur compounds and others are also acidic).

. Anyway; nice attempt at trying to declass silver as a noble metal.


----------



## Beaches

Around 36 million ounces of silver are currently used in ICE cars each year. The uses include, multiple circuit boards, window demisters, some connections etc. The use of silver in cars will not change significantly for electric vehicles. Silver will never replace copper for the main wiring simply due to cost issues. Any increase in conductivity is not worth the additional cost of using silver for wiring.

Apologies to Duc for hijacking the thread and getting way off topic. Happy to discuss elsewhere but will not comment again here.


----------



## Chronos-Plutus

Garpal Gumnut said:


> I'm lost. What are duc and C-P arguing about?
> 
> gg




Not an argument at all. Mr Duc asked me some questions; I gave him my answers with some information. Mr Duc wanted me to write a summary for him, I declined the job offer and requested that he watch the interview to get the information that he was seeking.


----------



## Chronos-Plutus

Beaches said:


> Around 36 million ounces of silver are currently used in ICE cars each year. The uses include, multiple circuit boards, window demisters, some connections etc. The use of silver in cars will not change significantly for electric vehicles. Silver will never replace copper for the main wiring simply due to cost issues. Any increase in conductivity is not worth the additional cost of using silver for wiring.
> 
> Apologies to Duc for hijacking the thread and getting way off topic. Happy to discuss elsewhere but will not comment again here.




OK; we can move this discussion over to the Silver thread.


----------



## qldfrog

I will just add from memory that silver is used in solar panels for the connections to the silicon slices and so labelled as a green energy metal
So in short green economy stimulus in Europe means more panels means more silver and so silver price jumps
Gold is not a green metal..


----------



## qldfrog

qldfrog said:


> I will just add from memory that silver is used in solar panels for the connections to the silicon slices and so labelled as a green energy metal
> So in short green economy stimulus in Europe means more panels means more silver and so silver price jumps
> Gold is not a green metal..



The above to explain silver price recent jump


----------



## Chronos-Plutus

qldfrog said:


> I will just add from memory that silver is used in solar panels for the connections to the silicon slices and so labelled as a green energy metal
> So in short green economy stimulus in Europe means more panels means more silver and so silver price jumps
> Gold is not a green metal..




Well EVs will also impact silver demand according to this chart:






http://www.lbma.org.uk/assets/Alchemist/Alchemist_90/Alch90OConnell.pdf
Anyway; I will move my discussions to the silver thread.


----------



## Chronos-Plutus

qldfrog said:


> The above to explain silver price recent jump




I think people are starting to wake up to the fact that silver will be in massive demand for the green revolution.


----------



## Chronos-Plutus

over9k said:


> Yeah I was going to ask why I'd seen gold connectors for stuff and not silver. Corrosion. Makes sense.




So technically the tarnishing is a form of corrosion, however the underlying metal isn't compromised and doesn't corrode. Copper, in my limited chemical engineering knowledge, has a much more aggressive form of surface corrosion, and copper will corrode when placed next to noble and precious class of metals.

 Silver is considered a noble and precious metal. To see why; this galvanic chart is a great visual for you:





Anyway; this is derailing Duc's thread; so we have moved the silver discussion to the silver thread.


----------



## ducati916

Garpal Gumnut said:


> I'm lost. What are duc and C-P arguing about?
> 
> gg




I suspect a sarcastic question, however, the question is actually relevant.

The argument is about whether there is currently or more importantly, inflation coming. The reason that it is important is that inflation past a certain point, will be (very) bad for the stock market. Essentially it will end the trend. It will create a Bear market that could look something like the 1970s market.

So I wasted 30 mins of my life listening to that interview.

Summary:

(a) The current situation COVID, is an income shock; 
(b) COVID caused forced selling in the markets;
(c) QE causes markets to diverge from real economy;
(d) Fiscal deficits aid real economy more than does QE;
(e) How long can fiscal expansion/QE continue for? Until inflationary pressures force cessation;
(f) The trade off occurs between inflation and unemployment;
(g) Globalisation (forces) are contracting, therefore increasing inflationary pressures;
(h) Election could have important ramifications;
(i) GFC was a deleveraging crisis;
(j) What do you do to protect yourself? Diversification. Gold was mentioned, positive nominal Bonds, Commodities, global financial assets.

You can read that in 30 seconds and save 29mins+ of your life.

Considering that it was from Bridgewater, very disappointing. A number of inaccuracies, some very superficial analysis and either they have no idea, or are not telling, solutions to the issues.

Read the Charles Napier link. Far superior.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> I suspect a sarcastic question, however, the question is actually relevant.
> 
> The argument is about whether there is currently or more importantly, inflation coming. The reason that it is important is that inflation past a certain point, will be (very) bad for the stock market. Essentially it will end the trend. It will create a Bear market that could look something like the 1970s market.
> 
> So I wasted 30 mins of my life listening to that interview.
> 
> Summary:
> 
> (a) The current situation COVID, is an income shock;
> (b) COVID caused forced selling in the markets;
> (c) QE causes markets to diverge from real economy;
> (d) Fiscal deficits aid real economy more than does QE;
> (e) How long can fiscal expansion/QE continue for? Until inflationary pressures force cessation;
> (f) The trade off occurs between inflation and unemployment;
> (g) Globalisation (forces) are contracting, therefore increasing inflationary pressures;
> (h) Election could have important ramifications;
> (i) GFC was a deleveraging crisis;
> (j) What do you do to protect yourself? Diversification. Gold was mentioned, positive nominal Bonds, Commodities, global financial assets.
> 
> You can read that in 30 seconds and save 29mins+ of your life.
> 
> Considering that it was from Bridgewater, very disappointing. A number of inaccuracies, some very superficial analysis and either they have no idea, or are not telling, solutions to the issues.
> 
> Read the Charles Napier link. Far superior.
> 
> jog on
> duc




Come on; it wasn't that bad.

The key points that I took away was that:

1. This virus crisis is clearly different from the last global financial crisis. Juxtaposition being that this crisis is an income shock whereas the last GFC was a credit shock. This crisis presents very real inflationary risks as income is being replaced with massive fiscal welfare which is inflationary from the aspect that demand is maintained while supply is disrupted, creating a cost-push inflation in a recession environment.

2. Over the last few decades we have had deflationary pressures due to globalisation and technology.

3. The Fed will not be able to just raise interest rates to address the cost-push inflation and monetary inflation debasement; because that would create a credit crisis leading to another GFC. The Fed knows that this inflation coming will not be from an overheated economy; as such, increasing rates would just cause more problems.


----------



## ducati916

So many of the issues have already been discussed on this thread already. But I'll go through the summary:






Starting with (a):

Was COVID simply an 'income' shock? This is incorrect. It was initially a credit shock, similar (just faster occurring) to the GFC. Simply look at the chart:











Markets recovered so quickly because the Fed. stepped in immediately, in a massive way, and prevented the effects from taking to deep a hold. There was at the time some $14T in BBB rated corporate debt (essentially junk) which is the top chart. Look at the spread blow-out. That is exactly what happened in 2008.

The second issue was the spike in unemployment, both in 2008 and due to COVID. Last time, there was no real fiscal policy aimed at the unemployed. This time is different, which probably accounts for the retail numbers.

QE as previously evidenced does not cause PPI inflation. Fiscal will not either, because it cannot. Both can cause CPI inflation and have done and will continue to do so. CPI inflation creates growth in nominal GDP. Growth in nominal GDP helps offset debt burdens (slow form of defaulting on debt).

Both interviewer and interviewee incorrectly differentiated between deflation and disinflation. More annoying than substantive, as they really had no idea anyway.

So in the above scenario, the Fed. prevented wholesale DEFLATION (credit destruction) which is what occurred in the 1930s and turned a financial credit panic into the Great Depression.

Disinflation v Inflation is the discussion that needed to occur, but didn't, which is why this was such a waste of time.

jog on
duc


----------



## Garpal Gumnut

@ducati916 and @Chronos-Plutus .

Duc and C-P. Thank you both.

Please carry on.

gg


----------



## over9k

Asian tech's done really well lately too. Might be nice to find an NYSE listed ETF that tracks it.


----------



## ducati916

How it looks for Monday:






$VIX is ambiguous, could move higher, could move lower.






%50 is also ambiguous. Could go either way.






%20 same as above.






TRIN, probably indicating greater weakness than strength on daily.






Same again on weekly.

So on a charting basis, very news dependent. Good news, and we'll likely move higher. Bad news and it will be lower. On occasion we do get these blah days where there is a technical no-mans land. Tomorrow is shaping up to one of them.






We also get those types of days when a rotation is underway. The leaders fall a little and the laggards gain a little. Overall the market doesn't do a great deal, but it does start to rebalance which is the trigger for the next leg higher. Both financials and RE have had positive fundamentals in the last couple of weeks. Tech has been a bit of a disappointment through earnings so far. Could change.

My expectation is for a bit of a choppy day where the indices don't do a great deal, but the various sectors continue their rebalancing.

I haven't included Gold/Silver as they are on a different analysis altogether.

jog on
duc


----------



## qldfrog

over9k said:


> Asian tech's done really well lately too. Might be nice to find an NYSE listed ETF that tracks it.




If you followed that thread, you will find one answer Mr Le Duc gave .i let you do a bit of search before giving the code
I initially was invested but as you may aware US might ban some Chinese companies from US stock exchanges, which could have disastrous effects on these Chinese giants listing.
I played it safe and sold


----------



## over9k

All the indices futures are green but nasdaq futures overwhelmingly highest so looks like tech should have a good day.


----------



## Chronos-Plutus




----------



## over9k

Silver on a tear today. What's your favourite silver etf chronos? My gold is aaau.


----------



## Chronos-Plutus

over9k said:


> Silver on a tear today. What's your favourite silver etf chronos? My gold is aaau.




I was just looking at VanEck GDXJ for junior gold miner ETF.

For physical gold ETF; PMGOLD is the best because the ETF is backed by the WA government and you can take delivery, if you wish, unless its changed.

For silver; I prefer actual physical purchase from Perth Mint over the ETFs. However I have been trading ETPMAG over the years and will buy more in the coming weeks.


----------



## over9k

I own a couple of gold miners here in aus - DEG & MGV. I'm pretty sure AAAU can be delivered too just FYI. 

I'm just tempted to throw a few bucks at a silver etf & see if it skyrockets. Kind of like a penny stock of precious metal.


----------



## Chronos-Plutus

over9k said:


> I own a couple of gold miners here in aus - DEG & MGV. I'm pretty sure AAAU can be delivered too just FYI.
> 
> I'm just tempted to throw a few bucks at a silver etf & see if it skyrockets. Kind of like a penny stock of precious metal.




But is AAAU backed by a sovereign/state government?

I was looking at a Helium stock today. I have to do a bit more research though.


----------



## over9k

Yeah WA gov.


----------



## ducati916

_The earnings slate continues to ramp up next week with 712 total companies scheduled to report. In the table below, we show the largest stocks by market cap that are set to report quarterly results.  _

_On Monday, there will be no company with a market cap above $100 billion reporting with the largest companies being Alexandria Real Estate (ARE) and multiple banks.  _

_On Tuesday, payment processor Visa (V) will be out with earnings in addition to Pfizer (PFE), Amgen (AMGN), McDonald's (MCD), and Raytheon (RTX).  Visa has historically averaged the strongest stock price reaction to earnings of these names but it has gapped down for six straight quarters.  _

_That will be followed by another payment processor, Paypal (PYPL) on Wednesday.  In addition to Paypal, Facebook (FB) is also scheduled to report that same day.  While both stocks have averaged over 2% gains on earnings days historically, ServiceNow (NOW) has seen an even stronger performance with an average gain of 3.64%.  _

_Another major earnings report that will be widely watched is Boeing (BA) to get a gauge on how demolished travel demand has affected the company.  _

_On Thursday, three of the world's largest stocks will also be out with earnings: Apple (AAPL), Amazon (AMZN), and Alphabet (GOOG). Each one has averaged a 1%+ gain on earnings days.  Apple (AAPL) has seen some of the strongest results in recent history with last quarter snapping a streak of four consecutive triple plays.  _

_On Friday, two of the largest energy stocks, Chevron (CVX) and Exxon Mobil (XOM), will round out the week and July's earning calendar.  Both stocks have historically averaged declines on earnings days. _






jog on
duc


----------



## ducati916

Are we about to lose the new daytraders?

_Baseball is back with the first official games of the MLB season taking place last night and today.  Next week, the NBA is also set to resume its season on Thursday. With the return of the biggest sports leagues, sports betting is also back.  As shown in the chart below, Google searches for "sports betting" have surged the past couple of weeks. In fact, it has reached the highest level since New Jersey legalized sports betting in 2018.  While that one time spike is likely to subside eventually, it is showing a massive interest/pent up demand for sports betting.  Additionally, one factor to note of the data is it is highly seasonal with spikes each year in early September which coincides with the start of the NFL season.  Time will tell if COVID shutdowns carry through to the NFL season, disrupting that usual pattern._

_




_

jog on
duc


----------



## over9k

I reckon paypal, amazon, apple, ebay, AMD, shopify, UPS, spotify to be the biggest runners.


----------



## ducati916

And Gold






In addition silver is on a bit of a run as well. The general consensus seems to be 'inflation'.

jog on
duc


----------



## over9k

Reference sports:

Baseball was just shut down after two games. Draftkings is down like 8% today on the news.


Reference gold: All I hear on the news is everyone getting jittery about economic recovery not actually happening, that the reopenings haven't reopened **** basically as everyone are voluntarily isolating etc. 

Exactly like I said was going to happen.


----------



## Chronos-Plutus

over9k said:


> Yeah WA gov.




This is the order for investing in precious metals for me:

1. Purchase actual physical precious metal (Gold, Silver, Platinum) from the Perth Mint. (http://www.perthmintbullion.com/au/default.aspx)

2. Open a precious metal (Gold, Silver, Platinum) account at the Perth Mint to buy or sell precious metals through a precious metal storage account. (https://www.perthmint.com/storage)

3. ETF ASX listed PMGOLD as it is the Perth Mint's direct financial product. (https://www.perthmint.com/storage/perth-mint-gold-asx.html)

Then you can get exposure to equity gold miners through various ETFs like VanEck offer GDX, GDXJ; which are listed on the ASX.

There are also other exchanges around the world to offset sovereign risk to store your precious metals like the Singapore Metals Exchange (https://sgpmx.com/). Or even just to directly trade in the physical metal (https://sgpmx.com/trading/how-it-works) rather than the synthetic ETFs on listed exchanges.


----------



## over9k

Ah yes. PMGOLD on the ASX is AAAU on NYSE. Same product.


----------



## Chronos-Plutus

over9k said:


> Ah yes. PMGOLD on the ASX is AAAU on NYSE. Same product.




The really high net-worth individuals, with serious capital, wouldn't bother with ETFs. They would just open up a storage account directly with various mints/exchanges/vault firms like the Perth Mint and/or the Singapore Metals Exchange and/or specialised storage facilities.


----------



## ducati916

So the PMs






As a reference point.






Silver through the first resistance point. Will it continue towards all time highs with gold?






Gold close(er) to a potential inflection point.






Silver miners at extremes currently.






This is the one for PMs. If there is true 'inflation' then the long end will reprice. 






Gold miners not as extended as silver miners.

Mr flippe-floppe-flye is onboard!






jog on
duc


----------



## ducati916

US dollar:












All will hinge (gold/silver) on what happens here.

jog on
duc


----------



## over9k

We're going into winter. I think we all know what's going to happen.


----------



## Chronos-Plutus

over9k said:


> We're going into winter. I think we all know what's going to happen.




In Australia, we are already in the middle of winter.


----------



## over9k

Yeah but gold's measured in USD?


----------



## Smurf1976

over9k said:


> We're going into winter. I think we all know what's going to happen.



You mean the northern hemisphere?

Or you mean winter in terms of something other than weather?


----------



## over9k

Northern hemisphere. Hence me saying over in the gold thread that I reckon this run has months of legs in it yet. 

I'm just wondering if silver's going to go to the moon as well.


----------



## Chronos-Plutus

over9k said:


> Yeah but gold's measured in USD?




Gold is measured in weight and priced in USD.


----------



## Chronos-Plutus

Smurf1976 said:


> You mean the northern hemisphere?
> 
> Or you mean winter in terms of something other than weather?




I thought it is summer in the northern hemisphere.

Because it is winter in the southern hemisphere.


----------



## over9k

Ok, the price of gold is measured in USD. We both know what was meant.


----------



## Chronos-Plutus

over9k said:


> Ok, the price of gold is measured in USD. We both know what was meant.




Actually: in engineering terms; it is measured in Newtons. You need to account for gravity.

Anyway, let's stop derailing Duc's thread.


----------



## qldfrog

Fwiw
I track the usd aud daily
Today was supposed to have seen the USD fall, and a lot but the AUD USD just went from 1.40xx yesterday to 1.399xx
In simpler term, the AUD has fallen in unison?
This trend thread focuses on the US market but as Australian..and Kiwis..we also need to care about our respective currencies moves vs USD
So that relative fall of AUD vs non US was not expected.


----------



## qldfrog

I investigate


----------



## qldfrog

Yes big dip against euro in the last few days.can not insert picture from phone.


----------



## over9k

Victorian coronavirus cases.


----------



## qldfrog

if of interest in that thread: USD  vs traded weighted basket and USD equivalent:
AUD (missing last 3 days and recent fall)
was on a recent uptrend





USD




on a down trend
For the recent fall of AUD: just retracing back on to  what was already an uptrend of the euro since end of june




So Le Frog forecast: AUD falling against euro, USD carrying on its descent


----------



## qldfrog

And to put this in context with Mr LeDuc @ducati916 in NZ




I was doing a AUD-centric view of currencies:, the AUD itself fell a lot against the NZD during the initial crash but is now back to a higher stable level against the Kiwi.
the variation was nearly 10% which surprised me as I would have seen NZ/AUD more coupled.
The exchange rate can have a drastic effect on international portfolio as we all know.
Where do you put your reference is the issue.


----------



## Chronos-Plutus

The look on the guy's face is hilarious when Alan Greenspan says that the USA can always print money and inflate its way out of debt. Only 30 seconds of your time, to watch this clip:


----------



## ducati916

So I got a little busy at work this week and just didn't have time to really update. Nothing overly dramatic occurred in any case.

The current hot sector...gold and silver. 






First chart up: US dollar (UUP) and Gold. 

2010 to mid 2016. Low correlation. From mid-2016 they trade as a correlation. From May 2020, back to a divergence. Why?






Gold and 20yr Bonds. Nicely correlated from 2010 through 2020. Obvious reasons, flight-to-safety, risk free asset. In addition with yields hitting ZIRP and the (unlikely) possibility of NIRP, the argument is that they are both have essentially the same asset profile. Of course the gold zealots will burn you at the stake for such an opinion.






And finally US dollar as against 20yr Bond. Correlated as between 2010 to May 2020, where, the same divergence is found.

Clearly then (or maybe not) gold and Treasury paper are both considered protection against a falling US dollar. Why? Inflation? Cannot be. Treasuries will lose value in an (true) inflation as they will sell off increasing the yield. Disinflation? Yes. Treasuries will protect you to a point ( but not to a ZIRP/NIRP) in a disinflationary environment. Deflation? Yes. Treasuries will protect you in a deflation. If gold, then in an (true) inflation, yes you are protected. Disinflation? No (generally) but in a ZIRP/NIRP world, yes you are. There is no limit to how high gold can go (in theory). Deflation? No, history demonstrates that it does not.

We don't have inflation currently. We don't have deflation, although we could have had. We have had disinflation since the 1990s. We still have it, although some of the major disinflationary forces are dissipating (China) currently. The risk is that we get a true inflation through a falling (weakening dollar) and rising commodity prices and the big unknown: will fiscal policies of increasing welfare payouts get so high as to trigger inflationary pressures? If they do and interest rates adjust (more) aggressively than they would have otherwise, gold/silver will be taken to the proverbial woodshed.

jog on
duc


----------



## ducati916

Fed meeting this week:






jog on
duc


----------



## ducati916

Rotation continues:






jog on
duc


----------



## Smurf1976

ducati916 said:


> Fed meeting this week



I'm always alert when I read words like "nobody expects......" since that sort of thing tends to be said when the next move ends up being exactly what "nobody expected".

Just an observation for financial markets in general not specifically what the Fed's about to do.


----------



## Chronos-Plutus

ducati916 said:


> Fed meeting this week:
> 
> View attachment 106613
> 
> 
> jog on
> duc




Narrative is to run inflation to service the debt and fiscal spending: Greenspan's legacy.

Or Jay can pull the trigger and there will be blood on Wall Street.

Either way: gold and silver win; from inflation or from safe haven.

Then if we wanted to imagine an environment where these problems don't exist; silver still wins from the tight market and significant demand for the new technology transition to electrify our planet.


----------



## over9k

It was a whole-lotta-nothin'.

Tech was already up and has spiked after it. So did gold after trading flat for the day. Very realistic possibility of gold cracking 2k before the end of the week. Near certain by the end of next week. Looks like I'll be up about 2% for the day.


----------



## over9k

Gold's screaming. The news headlines will be nuts once it cracks 2000.


----------



## ducati916

_For a little over a week now since it last made a new high on 7/20, the Nasdaq Composite has been churning around and consolidating its gains as investors await today's testimony ahead of Congress from Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), and Facebook (FB) and then earnings reports from all four companies after the close on Thursday.  Needless to say, the next two days will go a long way in defining the backdrop for the Technology sector through the rest of the summer.

Since the Nasdaq's high on 7/20, only one of the Technology sector's six industries has posted positive returns, and it's also the smallest industry in the sector.  While the Electronic Equipment industry has gained  1.8% since 7/20, larger industries like Semis, Tech Hardware, and Software are all down over 3%. While these industries have pulled back a bit over the last week or so, QTD they're all still in the black, and on a YTD basis, they still remain among the market's top performers with double-digit percentage gains for all three. On the right side of the image below, we show where each industry is trading relative to its 52-week range, while the tail indicates the change since 7/20.  At the Nasdaq's peak on 7/20, all three industries mentioned above were either at or right near record highs as investors sought growth in a growth starved market._

_



_

While elsewhere, a rotation has been taking place.






Now a rotation does not mean that Tech. simply stops or reverses, simply that Tech slows from its previous red hot advance as money rotates or arrives in other areas of the market. The stock market is typically forward-looking, so the recent strength in these cyclical industries suggests that either the market is uncharacteristically clueless or it sees better economic times ahead.

jog on
duc


----------



## ducati916

So if inflation is your narrative, the economic data will (should) be important in providing evidence for that thesis:












Along with the headline index, just about every sub-index posted expansionary readings. Shipments, Capacity Utilization, and Availability of Skills are in the upper decile of historical readings. When it comes to the indices for future expectations. even more categories are around some of their highest readings on record. For example, the indices for future conditions for Shipments, New Orders, Order Backlogs, Capacity Utilization, Vendor Lead Times, Local Business Conditions, and Number of Employees are all in the 90th percentile or better.

The only areas that remain on the weak side for both present and future conditions are for expenditures.  For current conditions, Capital Expenditures, Equipment & Software Expenditures, and Services Expenditure are all at the low end of historical readings with little improvement in July. Additionally, a greater share of companies continue to report decreases than increases in their workforce as the index for the Number of Employees remained below zero for a fifth consecutive month. Altogether, this points to a generally improved backdrop for mid-Atlantic manufacturing businesses, though they remain hesitant to invest back into and expand their businesses.









Even though the manufacturing sector has staged a massive turnaround, the same cannot be said for the services sector.  Service sector businesses did report Local Business Conditions improved in July, but Demand, Revenues, Expenditures, and employment all remain in contraction.  Expectations are more optimistic, but there were some large declines this month, namely in the expectations indices for Revenues, Demands, and Local Business Conditions.

How does that sit with the inflation narrative?

jog on
duc


----------



## over9k

It's pretty hard to see price inflation when the economy is this far in the toilet. Monetary inflation, however...


----------



## ducati916

Markets and sectors having a good day:









Far more balanced advance. This bodes well (especially given earlier data) for the continued advance of the market. In a healthy market (economy) you really don't want only a single sector outperforming to such a degree, the rest of the market.

jog on
duc


----------



## over9k

Well I ended up 1.9% for the day with after hours reporting sending several of my holdings screaming even further. 

Excellent week so far.


----------



## ducati916

over9k said:


> It's pretty hard to see price inflation when the economy is this far in the toilet. Monetary inflation, however...





Your reply, seems to imply that there are different types of inflation. Is that a fair conclusion? Expand if you wish. I'll be finishing up at work this afternoon and will have time to respond.

jog on
duc


----------



## over9k

Well you can destroy the value of the dollar without prices surging, and cpi doesn't track how much money is printed. I'm an austrian by training so as far as I'm concerned, we should actually have deflation. But different discussion.

Paypal and shopify both screamed today. So did docusign. 

Stay at home baby!


----------



## qldfrog

over9k said:


> Well you can destroy the value of the dollar without prices surging, and cpi doesn't track how much money is printed. I'm an austrian by training so as far as I'm concerned, we should actually have deflation. But different discussion.
> 
> Paypal and shopify both screamed today. So did docusign.
> 
> Stay at home baby!



Tongue in cheek, so have you gained back last week losses?


----------



## over9k

qldfrog said:


> Tongue in cheek, so have you gained back last week losses?



I'm now almost exactly the same as I was a week ago. Since my peak of about 13th of july I'm down just a smidge, but several stocks like paypal are back to all time highs again. I reckon I'll be back to my 13th of july high by the end of the week. 

Edit: just checked, I'm down just over 2% since the 13th, so I reckon I'll be back to it by friday close. 

But my holdings are different now too, I've now got some nvidia and gold added.


----------



## ducati916

over9k said:


> 1. Well you can destroy the value of the dollar without prices surging,
> 
> 2. and cpi doesn't track how much money is printed.
> 
> 3. I'm an austrian by training so as far as I'm concerned, we should actually have deflation.
> 
> 4. But different discussion.




1. Really? And how would you manage to do that? Nixon did that in Aug. 1971. Prices surged through the roof.

2. No it doesn't. Relevance of the statement?

3. With regard to 'deflation': how does  Austrian theory differ from mainstream economic theory?

4. Same discussion definitely.

jog on
duc


----------



## ducati916

So issues with gold as an inflation hedge:



















jog on
duc


----------



## ducati916

In keeping with the manufacturing data: Transports, Rails, Trucking and Heavy Industrials.





















On the move.

jog on
duc


----------



## ducati916

What an epic short squeeze looks like when it rips your face off:


----------



## qldfrog

ducati916 said:


> What an epic short squeeze looks like when it rips your face off:
> 
> View attachment 106652



out of my league: BZX allows users to lend, borrow, and trade in the decentralized finance?
crypto currency loan?
Am I the only one lost here? missing too much knowledge I assume..


----------



## over9k

ducati916 said:


> 1. Really? And how would you manage to do that? Nixon did that in Aug. 1971. Prices surged through the roof.
> 
> 2. No it doesn't. Relevance of the statement?
> 
> 3. With regard to 'deflation': how does  Austrian theory differ from mainstream economic theory?
> 
> 4. Same discussion definitely.
> 
> jog on
> duc




1 & 2: It's to do with the relationship with demand. If everyone just stuff the money under the mattress, it's not going to bid up the price of stuff and therefore destroy the value of the currency already in circulation. 

3: Austrian theory says there shouldn't be a central bank. Interest rates should/would be determined by the supply & demand of savings & loans. 

4: Well the simple reality is that inflation is calculated through a "basket of goods", making it an inherently engineered metric. Things which are not in that basket can head stratospheric (i.e be bid up) and the reserve bank is mandated to do absolutely nothing. 

A very easily demonstrable example of this is housing - if you used house prices to calculate inflation, over the past 20 years or so you'd say inflation was on the moon. 

Understanding things this way is how we can have what you might call "hidden" inflation. I.e that rates are too low and sending the price of stuff (like housing) soaring but because this isn't counted in the metric, we "don't have inflation". 

What I'm saying is that it all depends on how it is calculated. You can flush the country with cash, the country uses it to do nothing but bid up the price of something not in the cpi, and so as far as the fed's concerned, there hasn't been any inflation anywhere, even though there actually might have been tons of it, it just hasn't been counted. Hence the ability to print money to eternity and, officially speaking, not have any inflation anywhere.


----------



## over9k

WELL TODAY'S NOT GOING WELL IS IT? 

Paypal still well into the green though.


----------



## gartley

over9k said:


> WELL TODAY'S NOT GOING WELL IS IT?
> 
> Paypal still well into the green though.



At last some action from the meandering of the last 2 months!!


----------



## over9k

I might actually end up in the green for the day. Gold's in the toilet but everything else looks like it might crack positive territory. Paypal's screamed 5% and climbing.

Edit: Oh boys. It's green again. Even gold's recovering. My prayers have been answered. All hail the printing press.


----------



## over9k

Also, not being funny here: 

Donald Trump's twitter account is as important to watch as the fed. Not joking.


----------



## over9k

Oh dear.




	

		
			
		

		
	
 A security flaw's been discovered.

Good thing I sold 75% of it off the other day.


----------



## ducati916

The broad market is improving. Technology, Communication Services, and Consumer Discretionary are the only sectors that have lagged the S&P 500, and their performance has been dragged down by the mega-cap tech-like stocks of Alphabet (GOOGL), Facebook (FB), and Amazon (AMZN).







On an equal-weighted basis, the S&P 500 is actually up 1.3% since 20 July, and only two sectors (Technology and Materials) have seen negative average returns.  On the upside, Real Estate (4.1%) has been the big winner followed by Consumer Discretionary (3.3%), and Consumer Staples (2.2%). The fact that Consumer Discretionary at the cap-weighted sector level is down over 1.4% while the average performance of stocks in the sector has been a gain of 3.3% illustrates what a mammoth impact AMZN has on that sector.






Breadth among S&P 500 stocks has also been overwhelmingly positive. For the S&P 500 as a whole, 59% of stocks in the index have had positive returns since the close on 20 July.  Only two sectors (Technology and Materials) have seen fewer than half of their components post positive returns over that time, while Real Estate, Consumer Staples, and Utilities have seen roughly three-quarters of their components rally since 20 July. 






The rotation continues, which is a positive for the continuation of the trend (market) higher. There are still sectors that are lagging and as they start to come on board, again, a positive for the overall market.

jog on
duc


----------



## ducati916

Currently, 64.61% of companies have exceeded consensus analyst EPS estimates over the last three months, while 63.75% of companies have beaten consensus sales estimates over the same time frame.

In looking at the chart, you can see a big spike in the EPS beat rate over the last few weeks.  Since earnings season began on July 13th, nearly 80% of companies have posted stronger than expected EPS numbers.  That's a huge beat rate and suggests that analysts were too bearish on Q2 numbers heading into July.  The revenue beat rate held up much better than EPS beats throughout the first half of 2020, but it too is on the upswing this season.






So far this earnings season, the average stock that has reported Q2 numbers has gained 1.31% on its earnings reaction day.  That compares to a historical average one-day change of just 0.06% on earnings reaction days.  As shown below, stocks that have beaten EPS estimates this season have gained 2.2% on earnings reaction days, while companies that have missed EPS estimates have fallen 1.89%.  It's rare to see beats gaining more than misses decline, but that's what is happening this season. 






All the 'virus' headlines has distracted from the underlying improvement in the fundamentals that signalled well ahead of time the improvements occurring. The result being that analysts following their own stocks/industries/sectors seem to have been way off with their estimates.

The market moves higher.

jog on
duc


----------



## ducati916

This story can be found here: https://www.institutionalinvestor.c...e-Best-Market-Neutral-Funds-Is-Run-by-a-Robot

However it was this section that caught my eye:






Castle Ridge is a Robot or AI. Jim Simon's was the pioneer (really) in Quant based trading and was incredibly successful and Bridgewater (who really irritate me) posted big losses.

jog on
duc


----------



## ducati916

As to today's market, relax:






jog on
duc


----------



## over9k

So duc, how confident are you that this "rotation" will remain?


----------



## gartley

Wall St crooks and banksters pumped it in the end as usual.  DAX got dumped big time so we will see how it pans out in the next few sessions


----------



## ducati916

over9k said:


> 1 & 2: It's to do with the relationship with demand. If everyone just stuff the money under the mattress, it's not going to bid up the price of stuff and therefore destroy the value of the currency already in circulation.
> 
> 3: Austrian theory says there shouldn't be a central bank.
> 
> 3(a)Interest rates should/would be determined by the supply & demand of savings & loans.
> 
> 4: Well the simple reality is that inflation is calculated through a "basket of goods", making it an inherently engineered metric. Things which are not in that basket can head stratospheric (i.e be bid up) and the reserve bank is mandated to do absolutely nothing.
> 
> A very easily demonstrable example of this is housing - if you used house prices to calculate inflation, over the past 20 years or so you'd say inflation was on the moon.
> 
> Understanding things this way is how we can have what you might call "hidden" inflation. I.e that rates are too low and sending the price of stuff (like housing) soaring but because this isn't counted in the metric, we "don't have inflation".
> 
> What I'm saying is that it all depends on how it is calculated. You can flush the country with cash, the country uses it to do nothing but bid up the price of something not in the cpi, and so as far as the fed's concerned, there hasn't been any inflation anywhere, even though there actually might have been tons of it, it just hasn't been counted. Hence the ability to print money to eternity and, officially speaking, not have any inflation anywhere.




3. Austrians definitely decry Central Banking. Now, what you haven't actually addressed is the question of a 'deflation'. It is clear however that if there is no Central Bank, then a deflation must simply be allowed to run its course. This would not be so devastating if this had continued to be the model and gold was the world currency. However, the switch to fiat pure in 1971, has allowed bubbles of such enormous size to build, that were they to undergo true deflation, the depression that would likely ensue would rival or exceed that of 1929 - 1934.

3(a) Austrians however go a lot further in their detail of how interest rates (should) be determined. They argue that the 'natural rate' should prevail. Given the situation today what is your guestimate, or even better, provide an analysis of the prevailing natural rate. How far off are the Central Banks currently?

4. Yes it is. We can conveniently divide it into: CPI & PPI. CentralBanks could care less about CPI. They move very quickly against PPI, which has been stated a number of times on this thread. So your 'hidden' inflation isn't hidden at all. It is very clear and out in the open for anyone even remotely interested. 

Therefore anyone buying gold as an inflation hedge in the financial markets are simply kidding themselves. Stocks will rise alongside gold with the added advantage of a dividend return. Should there be a PPI inflation, and interest rates rise, gold gets slaughtered. Stocks are less prone to rate rises, some (financials) benefit. Therefore the whole 'inflation' issue is an interesting one currently as far as the two trends are concerned.

The public are positioning thus:






Yet:






So even CPI inflation is likely to come under downward pressure. Ironically, increased inflation expectations should lead (in a rational response) to increased spending, to get ahead of price rises (as happened in the 1970s). COVID is therefore (a) deflationary to debt, mitigated by Central Bank actions and (b) disinflationary from a CPI perspective. Inflationary pressures are however building in PPI via POO.

1/2. So finally, the volume of money. Austrians state it is the expansion of credit (primarily) that expands the money supply, which is correct. That expansion erodes purchasing power of the money. Correct. The Austrians failed to differentiate between asset price inflation and inflation generally, or PPI and CPI. Possibly it wasn't an issue for them. For those of us trading the markets, it is the primary and central issue. Schiff et al. are calling for the collapse of the US dollar.

If there were true inflation, the US dollar would be in trouble. This would show up in the market.
















The US dollar is a long way away from demonstrating any inflation. What it is demonstrating is increasing confidence around the rest of the world (check exchange rates) that the COVID crisis is over. Economies are re-opening, trade and economic activity is picking up and we are returning to 'normal'. Now normal may well be sub-par when compared to other time periods, but, that has been true for some time. This is good for stocks, bad for gold. Why? Because in a ZIRP/NIRP world which drives fixed income investing, stock dividends are a return that big money must have. Notice the surge in Utilities, the classic safe dividend sector. Tech. (particularly in early stages) does not pay dividends, hence the rotation. There will be further rotations out of gold as dividend paying sectors are adjudged safe and open for business. The only people chasing gold (into another mini-bubble) are the latecomers, momo traders, etc. Silver caught the gold fever, but is still miles from confirming inflation.

The fact is that COVID triggered a massive deflation (similar to 2008) but the speed at which the CB stepped into the market (seems to have fooled many) and prevented the blow-out and an extended recovery, as we had in 2008-2009 or more aptly in 1930-1934. If we were (able) to calculate net-net the deflation and consequent expansion of the Fed's Balance Sheet, what we would actually find? My guess is net-net we are pretty close to zero, although, that bubble in debt is again reflating, which means down-the-line, we will repeat this exercise again.

jog on
duc


----------



## ducati916

over9k said:


> So duc, how confident are you that this "rotation" will remain?





Very.

jog on
duc


----------



## over9k

ducati916 said:


> Very.
> 
> jog on
> duc



Care to elaborate? I'll get to your other big post in a moment.


----------



## qldfrog

May i just add a short point in the inflation deflation debate
The western population age curve is such that the west peak consumption is over
No more nappies new car or house..
Time for gardening and ..used to be cruise ships.
The economy is lagging with production still matching that past peak so as such we have a structural deflation in place.
The higher demand in China for example is isolated in its own economic system.sure they still consume raw materials..our luck..but they do not really buy nappies here or our cars..a few counter examples in luxury goods a2 milk formula etc
But the US factories are not producing for chinese or indian consumers
So lower growth, deflation structurally in the West.
After, the various feds can play with money supply etc but growth is over and we are in a different environment from the one of the last 100 years. past experience may not be always replicated and our natural ratevis negative
my 2c


----------



## qldfrog

And for what it is worth, big activity lately with btc


----------



## over9k

ducati916 said:


> 3. Austrians definitely decry Central Banking. Now, what you haven't actually addressed is the question of a 'deflation'. It is clear however that if there is no Central Bank, then a deflation must simply be allowed to run its course. This would not be so devastating if this had continued to be the model and gold was the world currency. However, the switch to fiat pure in 1971, has allowed bubbles of such enormous size to build, that were they to undergo true deflation, the depression that would likely ensue would rival or exceed that of 1929 - 1934.
> 
> 3(a) Austrians however go a lot further in their detail of how interest rates (should) be determined. They argue that the 'natural rate' should prevail. Given the situation today what is your guestimate, or even better, provide an analysis of the prevailing natural rate. How far off are the Central Banks currently?
> 
> 4. Yes it is. We can conveniently divide it into: CPI & PPI. CentralBanks could care less about CPI. They move very quickly against PPI, which has been stated a number of times on this thread. So your 'hidden' inflation isn't hidden at all. It is very clear and out in the open for anyone even remotely interested.
> 
> 5. Therefore anyone buying gold as an inflation hedge in the financial markets are simply kidding themselves. Stocks will rise alongside gold with the added advantage of a dividend return. Should there be a PPI inflation, and interest rates rise, gold gets slaughtered. Stocks are less prone to rate rises, some (financials) benefit. Therefore the whole 'inflation' issue is an interesting one currently as far as the two trends are concerned.
> 
> The public are positioning thus:
> 
> View attachment 106665
> 
> 
> Yet:
> 
> View attachment 106667
> 
> 
> 6. So even CPI inflation is likely to come under downward pressure. Ironically, increased inflation expectations should lead (in a rational response) to increased spending, to get ahead of price rises (as happened in the 1970s). COVID is therefore (a) deflationary to debt, mitigated by Central Bank actions and (b) disinflationary from a CPI perspective. Inflationary pressures are however building in PPI via POO.
> 
> 1/2. So finally, the volume of money. Austrians state it is the expansion of credit (primarily) that expands the money supply, which is correct. That expansion erodes purchasing power of the money. Correct. The Austrians failed to differentiate between asset price inflation and inflation generally, or PPI and CPI. Possibly it wasn't an issue for them. For those of us trading the markets, it is the primary and central issue. Schiff et al. are calling for the collapse of the US dollar.
> 
> If there were true inflation, the US dollar would be in trouble. This would show up in the market.
> 
> View attachment 106669
> View attachment 106670
> View attachment 106671
> 
> View attachment 106668
> 
> 
> 7. The US dollar is a long way away from demonstrating any inflation. What it is demonstrating is increasing confidence around the rest of the world (check exchange rates) that the COVID crisis is over. Economies are re-opening, trade and economic activity is picking up and we are returning to 'normal'. Now normal may well be sub-par when compared to other time periods, but, that has been true for some time. This is good for stocks, bad for gold. Why? Because in a ZIRP/NIRP world which drives fixed income investing, stock dividends are a return that big money must have. Notice the surge in Utilities, the classic safe dividend sector. Tech. (particularly in early stages) does not pay dividends, hence the rotation. There will be further rotations out of gold as dividend paying sectors are adjudged safe and open for business. The only people chasing gold (into another mini-bubble) are the latecomers, momo traders, etc. Silver caught the gold fever, but is still miles from confirming inflation.
> 
> The fact is that COVID triggered a massive deflation (similar to 2008) but the speed at which the CB stepped into the market (seems to have fooled many) and prevented the blow-out and an extended recovery, as we had in 2008-2009 or more aptly in 1930-1934. If we were (able) to calculate net-net the deflation and consequent expansion of the Fed's Balance Sheet, what we would actually find? My guess is net-net we are pretty close to zero, although, that bubble in debt is again reflating, which means down-the-line, we will repeat this exercise again.
> 
> jog on
> duc




3: Yep, austrians decry fiat currency as well though. We'd again have to focus on/think about which good(s) are dropping in price and why though.

3a: Yep, but an impossible thing to try & put a number on. We don't even know the public's elasticity with reference to time preferences/horizons etc etc. To try to compare with 3/4 of a century ago is a fool's errand as there's obviously a lot of other things that have changed since, not least of all demographics as frog has pointed out. 

What I can say with certainty is that lots of old farts and few youngun's means there's far more supply of cash than there is demand for it, so rates would be (are) far lower than we'd see under a normal population distribution. 

4. So you think the ppi is an accurate measure of inflation? Or is it just like any other index, weighted and imperfect?

The only way you'd ever really know is to compare the price(s) of, well, everything.

5. Sure, but what we have at the moment is stagnation causing a lack of inflation. I agree with what you're saying, and gold's actually tracked the market pretty well, but you've forgotten the third option, the nightmare scenario: Stagflation. It's no coincidence that gold's bounced on the days where the markets have been choppy/mixed with the jitters. Stagflation is the point at which everyone **** themselves and it's the point where gold goes to the moon.

Gold to me is a certainty index, not an inflation hedge. I say that because the inflation metrics are constantly f***ed with/engineered to make things look good. But when markets are uncertain (of a rise OR fall) then gold is where everyone bails to. It's not stagflation per se that drives its rise under that scenario, it's the market's reaction to the stagflation (the aformentioned shitting themselves). It's the last port in the storm, so to speak.

And markets have really had no idea what to think the last month or so, hence the spike in gold.

6. Yes, that huge bounce in saving(s) is precisely why we aren't seeing CPI inflation. That's what they call self-fulfilling irony.

Also worth thinking about the fact that joe public really has no idea about/what to actually do with money. You ask 9/10 people what inflation actually is or what they'd do if you could tell them with certainty that inflation is coming and they'd just stare at you blankly.

6.5: Austrians look at cpi as something that should constantly deflate and ppi or assets as something constantly playing tug-of-war between the utility (profitability) of the land improving (through entrepreneurship) and the increase in demand for capital that an improvement in its deployment would produce being the very force driving up the cost of the capital it wants.

7. I'm not really sure where you've got this idea that the world reckons things are returning to normal as the USD keeps dropping by the day and with very good reason. Virus cases are just hitting record after record, reductions in jobless claims are levelling out, so on and so forth. Hell, even cryptocurrencies are bouncing.


----------



## ducati916

I'm going to have to address the various issues one-by-one. Trying to address all the issues in a single post will simply lead to mass confusion.










So as an Austrian (by training, whatever that actually means), we are addressing the natural rate of interest. The Austrians are very specific in their discussions on interest rates, because historically, this was an area of great confusion and debate. Keynes never really understood Mises' position (which was):

Keynes asserted that Mises' peculiar new theory of interest confused the marginal efficiency of capital with the rate of interest. The point is that the marginal efficiency of capital is the rate of interest because the rate of interest is equal to the rate of price spreads in the various productive stages. It is precisely this 'natural' rate, rather than the loan rate that is the correct rate. The essentials of this doctrine were set forth by Bohem-Bawerk. Therefore (and I repeat my question): 






Given that the natural rate is very 'knowable' and calculable: how far off are the Central Banks currently? Is that rate therefore inflationary?

jog on
duc


----------



## ducati916

You raise the issue of 'stagflation'.






You seemingly seem to assert that there is (a) a stagnant economy and (b) concurrent inflation. I would agree that there is and has been a stagnant economy since 2009, although that hasn't really inhibited the market rising pretty much non-stop since that time, so we can pretty much discount stagnation as being a factor that has any impact.

CPI inflation will also drive the market higher as has been evidenced since 2009.

I would be very surprised if gold were to go to the moon. Conversely, I wouldn't be surprised to see it fall back into that holding pattern. The 1970s stagflation had very specific drivers, which I have discussed a number of times. Few of the necessary variables are present (none currently) and only POO with the potential to create PPI inflation down the road, possibly into 2021. Is it your belief that gold is already pricing in this possibility?

jog on
duc


----------



## ducati916

What on earth are you going on about?












The US dollar is only coming down from its massive inflow of the 'run-to-safety' trade. 

The virus is just a non-issue.

jog on
duc


----------



## ducati916

jog on
duc


----------



## over9k

ducati916 said:


> I'm going to have to address the various issues one-by-one. Trying to address all the issues in a single post will simply lead to mass confusion.
> 
> View attachment 106679
> View attachment 106680
> 
> 
> So as an Austrian (by training, whatever that actually means), we are addressing the natural rate of interest. The Austrians are very specific in their discussions on interest rates, because historically, this was an area of great confusion and debate. Keynes never really understood Mises' position (which was):
> 
> Keynes asserted that Mises' peculiar new theory of interest confused the marginal efficiency of capital with the rate of interest. The point is that the marginal efficiency of capital is the rate of interest because the rate of interest is equal to the rate of price spreads in the various productive stages. It is precisely this 'natural' rate, rather than the loan rate that is the correct rate. The essentials of this doctrine were set forth by Bohem-Bawerk. Therefore (and I repeat my question):
> 
> View attachment 106681
> 
> 
> *Given that the natural rate is very 'knowable' and calculable: how far off are the Central Banks currently? Is that rate therefore inflationary?*
> 
> jog on
> duc




I don't know where you've got this idea from. It isn't without nuking the central bank. What do you mean by an inflationary interest rate?



ducati916 said:


> You raise the issue of 'stagflation'.
> 
> View attachment 106682
> 
> 
> You seemingly seem to assert that there is (a) a stagnant economy and (b) concurrent inflation. I would agree that there is and has been a stagnant economy since 2009, although that hasn't really inhibited the market rising pretty much non-stop since that time, so we can pretty much discount stagnation as being a factor that has any impact.
> 
> CPI inflation will also drive the market higher as has been evidenced since 2009.
> 
> I would be very surprised if gold were to go to the moon. Conversely, I wouldn't be surprised to see it fall back into that holding pattern. The 1970s stagflation had very specific drivers, which I have discussed a number of times. Few of the necessary variables are present (none currently) and only POO with the potential to create PPI inflation down the road, possibly into 2021. Is it your belief that gold is already pricing in this possibility?
> 
> jog on
> duc




I didn't assert that we have stagflation now, I said that that is the situation in which gold skyrockets. I'm doubtful we're going to see runaway PPI. Like I said, I see gold as a confidence index.



ducati916 said:


> What on earth are you going on about?
> 
> View attachment 106686
> View attachment 106684
> View attachment 106685
> 
> 
> The US dollar is only coming down from its massive inflow of the 'run-to-safety' trade.
> 
> The virus is just a non-issue.
> 
> jog on
> duc




You're back to saying that the trajectory flip coinciding with the virus trajectory flip is a, well, coincidence.



ducati916 said:


> View attachment 106688
> View attachment 106687
> 
> 
> jog on
> duc




Ok i'll be more specific: That we're not seeing the runaway inflation that we would expect with mass money printing. Kind of like back in the gfc when the belief that the bank stimulus (rescue) programs would percolate out into the economy due to the "wonder" of fractional reserve banking and the banks instead used the money to buffer their reserves and line their own pockets.


----------



## ducati916

You stated you were (trained) in Austrian economics. This is Austrian economics. So we can simply move on. There is no point in trying to engage in a discussion/analysis of Austrian theory when clearly you do not really have a grasp of Austrian theory (economics) at all.

jog on
duc


----------



## ducati916

But that is the inescapable conclusion. If the economy is stagnant (currently) which it is and there is inflation, which you seem to think that there is, then that is stagflation. But there is no inflation to speak of. Why? Because the shock in Feb. was massively deflationary and the current stimulus, if you actually apply Austrian economic principals, would demonstrate that currently, the environment is (still) disinflationary.

jog on
duc


----------



## ducati916

We're not seeing any inflation.

jog on
duc


----------



## Smurf1976

ducati916 said:


> We're not seeing any inflation.



I think that depends where you measure it.

Someone looking at asset prices, stocks especially, would argue that they're going up relative to most other things (eg wages or consumer prices).

The central bank printed money has to go somewhere doesn't it?


----------



## over9k

ducati916 said:


> View attachment 106724
> 
> 
> You stated you were (trained) in Austrian economics. This is Austrian economics. So we can simply move on. There is no point in trying to engage in a discussion/analysis of Austrian theory when clearly you do not really have a grasp of Austrian theory (economics) at all.
> 
> jog on
> duc




Rubbish. I even went to the mises institute. Right during the GFC in fact. 

Austrian economics would nuke the central bank and fiat currency. You're trying to get me to put a numerical figure on what the interest rate would be if we had a (fairly) static money supply, no fed etc etc. This is impossible. The only thing that can be said for certain is that it would be significantly higher than it is now. 



ducati916 said:


> View attachment 106725
> 
> 
> But that is the inescapable conclusion. If the economy is stagnant (currently) which it is and there is inflation, which you seem to think that there is, then that is stagflation. But there is no inflation to speak of. Why? Because the shock in Feb. was massively deflationary and the current stimulus, if you actually apply Austrian economic principals, would demonstrate that currently, the environment is (still) disinflationary.
> 
> jog on
> duc




No I didn't say that there's inflation. I said quite the opposite. But we got bogged down on which metric we're using. 

We aren't seeing stagflation now and I never said we are. But do I think it more than possible/likely? Absolutely... depending on which metric is used to measure it. 



ducati916 said:


> View attachment 106726
> 
> 
> We're not seeing any inflation.
> 
> jog on
> duc




Which is what I've been saying - like in the GFC, people/banks have just stuffed the money under the proverbial mattress. Fate is not without a sense of irony.


----------



## over9k

Here's what I was talking about reference "things returning to normal".




Things are going to hell in a handbasket in the U.S. Little wonder gold's on a tear.

You seem like one of those guys that can't see the forest for the trees duc.


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## over9k

What's gone on over the last month reference trends/cycles isn't complex:

Profits were taken before earnings season. So tech dips.

The non-tech stuff reported first. It was almost all above estimates. So everything rotated into it. Tech dips more in order for people to be able to do so.

Tech now reports and outperforms estimates like it very obviously was always going to. So now it absolutely screams as everyone go "Ohhhh tech's outperformed estimates just like everything else did. Of course tech would if everything else did too! We should have bought days ago!".

And the market goes nuts.


Even PEZ that I mentioned a while ago has absolutely screamed lately.


----------



## gartley

Looks like yesterday's end of day FED pump is coming undone today......


----------



## over9k

Yep I was going to flog some gold & buy a bit of PEZ yesterday but held off to today and I've made a cheeky sell 1% up on gold and buy 1% down on pez by doing so.


----------



## ducati916

Smurf1976 said:


> I think that depends where you measure it.
> 
> Someone looking at asset prices, stocks especially, would argue that they're going up relative to most other things (eg wages or consumer prices).
> 
> The central bank printed money has to go somewhere doesn't it?




Mr Smurf, there is CPI inflation returning (after a small dip), there is asset price inflation (massive). What there isn't is PPI inflation, which is the only type of inflation the Fed. will (aggressively) lean against. So gold while moving higher is not actually hedging you (protecting) against inflation, it is simply part of an asset price inflation in the same way that Tech stocks are. If there was a true PPI based inflation and interest rates were increased above whatever that PPI inflation rate were, gold would collapse.

You have Schiff et al. pumping gold based on a devaluing dollar. Devaluing against what? All Central Banks are creating credit. China/Japan/ECB/BoE. All fiat currencies are in the same boat so to speak. But the purchasing value, one against another is simply resetting after the huge run to the US dollar in the early part of COVID. The US dollar is no more imminent to collapse than any other fiat currency currently. Schiff et al. will argue: devaluing against gold. Currently that is true. Is it always true? Over long periods of time on aggregate, yes. But you are talking decades and centuries. The fluctuations can be so significant that in any given time frame you can be winning or losing. If you bought gold at $230oz in the 1985-1999 period, of course you are laughing. If you bought it last week, will you still be laughing if interest rates jump back to the 3% level? No you most definitely won't. To win with gold you either need to (a) trade it like any stock or (b) hold it for the next 20-40yrs. Now if you are holding in those sorts of time frames, you could also be holding stocks with some dividend return: which has outperformed? Gold over 35yrs has returned from $200 to $2000: 6.8% compounded. S&P500 (with dividends) in that same time frame has returned 11% compounded. Almost x2. You (should) always compare gold (asset) against comparable assets, not cash. What about RE? How has gold fared against housing and commercial properties?

Arguments will state, well look at Fed money supply, it dwarfs (pick any) their money creation. Yes it does. That is simply because other nations need dollars to service dollar denominated debt. The pros/cons of being the primary Reserve Currency of the world.

CPI inflation is precisely what makes the stock market profitable. The margin or spread between PPI and CPI is the profitability of business. Sure consumers may moan when you go to the supermarket to pick up groceries, but the supermarket stocks are profitable. Do I agree with it? No. But this is the reality.

jog on
duc


----------



## ducati916

If that is all you came away with, you wasted your time there. The natural rate of interest can easily (with a bit of elbow grease) be calculated. The natural rate of interest was first propounded by Bohem-Bawek, expanded upon or clarified by Mises and further elucidated by Rothbard. As you don't even know what I'm talking about, there is no point continuing this conversation.

jog on
duc


----------



## ducati916

And this is the issue: your arguments are incoherent.

jog on
duc


----------



## ducati916

For a healthy market, all sectors need to contribute:






jog on
duc


----------



## ducati916

In the last month:






In the last 3






jog on
duc


----------



## over9k

ducati916 said:


> View attachment 106724
> 
> 
> You stated you were (trained) in Austrian economics. This is Austrian economics. So we can simply move on. There is no point in trying to engage in a discussion/analysis of Austrian theory when clearly you do not really have a grasp of Austrian theory (economics) at all.
> 
> jog on
> duc






ducati916 said:


> View attachment 106738
> 
> View attachment 106737
> 
> 
> And this is the issue: your arguments are incoherent.
> 
> jog on
> duc



No they're not. You just keep putting words in my mouth, and then responding to your own misinterpretation. The very definition of strawman. 

Considering your consistent failure to understand what I am saying, I'd suggest checking your ego. It's not lost on me that every time I defeat your thesis or point(s) you just ignore it and only respond to the stuff that you think you can misrepresent. 

If you genuinely think that I said what you claim I said (or didn't) then you are even dumber than I thought. 

You strike me as a 2nd year uni student deploying the blindingly obvious tactic(s) of trying to shift the focus, muddy the waters, deliberate strawmanning, or even simply assert just straight up bull**** when you've been called out whilst trying to make yourself sound clever. The dead giveaway for any child doing this is always dumping (hurr durr look at all this stuff I know. I mean it has nothing to do with what we're talking about, but I'm letting you know I know it so you can see how clever I am) and the other big one, namedropping, and you just did a ton of it. 

You are as mistaken as you are transparent.


----------



## over9k

Let this be a lesson kids:

The moment someone starts namedropping (in ANY kind of debate), you know you're dealing with someone "really clever". The next thing they'll do is try to lead the discussion on to some tiny esoteric absolutely specific BS thing that they've deliberately memorised for the sole purpose of leading the discussion to it to attempt a "gotcha" when you don't know that one tiny (usually irrelevant) thousandth of the topic that they do.

It is hopelessly transparent if you know what you're looking for.


----------



## qldfrog

over9k said:


> Let this be a lesson kids:
> 
> The moment someone starts namedropping (in ANY kind of debate), you know you're dealing with someone "really clever". The next thing they'll do is try to lead the discussion on to some tiny esoteric absolutely specific BS thing that they've deliberately memorised for the sole purpose of leading the discussion to it to attempt a "gotcha" when you don't know that one tiny (usually irrelevant) thousandth of the topic that they do.
> 
> It is hopelessly transparent if you know what you're looking for.



With all due respect, where was the name dropping?


----------



## Beaches

Sometimes its amazing how much truth there is in old cliches. What comes to mind currently is - Empty vessels make the most noise


----------



## ducati916

So at week's end, this is how we look:









Just your bog standard chart/indicator. SPY is near the all time high. Next week will see the assault. Will it succeed first go or need a couple of bites at the cherry?







The 20's could support the assault, just as easily they might not. Sitting in no-man's land currently.






Much more positive from the 50's. They are close(er) to support and are ready once again to lead the charge.









My tie breaker, slightly closer to support than resistance, so I think we go at it early in the week and 1 of 2 things may happen:

(a) we break through to new all time highs and then test that level as support, or
(b) fail at first attempt and pullback, which will sound a massive chorus from the Bears.

Either way, all we are arguing about is when we break through, not whether. ATM the trend is intact and the fundamentals across all sectors are improving. There are patches of bad news and they might drive sentiment on the day, bearish sentiment that creates a losing day will unlikely see much (if any follow through) and the bulls will grab it back.

Vol:









Is still elevated (by historical norms) but dropping. It looks as if (top chart) daily Vol is now contained by that resistance line, which means on a purely technical level, we won't get a jump in Vol, which means any pullbacks will be minor. The only caveat (as always) if something really unexpected falls out of the tree, a little red line on a chart will mean absolutely zero.

Everyone seems to think 'virus' news is a thing. The virus is a non-issue for the market. It may well be a political issue. It may well be a social issue. It is not and never was apart from in Feb. a market issue. The 1918/19 Flu killed 50M-100M. No one cared. That was after whatever loss of life was already incurred in WWI. Further, there was no lockdown. The virus burned itself out. That is the way of a flu based virus. They mutate so quickly, that the original virus that existed in Feb no longer exists today.

jog on
duc


----------



## qldfrog

I like a breath of fresh sir indeed
Thanks Le Duc


ducati916 said:


> So at week's end, this is how we look:
> 
> View attachment 106746
> View attachment 106747
> 
> 
> Just your bog standard chart/indicator. SPY is near the all time high. Next week will see the assault. Will it succeed first go or need a couple of bites at the cherry?
> 
> 
> View attachment 106750
> 
> 
> The 20's could support the assault, just as easily they might not. Sitting in no-man's land currently.
> 
> View attachment 106751
> 
> 
> Much more positive from the 50's. They are close(er) to support and are ready once again to lead the charge.
> 
> View attachment 106748
> View attachment 106749
> 
> 
> My tie breaker, slightly closer to support than resistance, so I think we go at it early in the week and 1 of 2 things may happen:
> 
> (a) we break through to new all time highs and then test that level as support, or
> (b) fail at first attempt and pullback, which will sound a massive chorus from the Bears.
> 
> Either way, all we are arguing about is when we break through, not whether. ATM the trend is intact and the fundamentals across all sectors are improving. There are patches of bad news and they might drive sentiment on the day, bearish sentiment that creates a losing day will unlikely see much (if any follow through) and the bulls will grab it back.
> 
> Vol:
> 
> View attachment 106752
> View attachment 106753
> 
> 
> Is still elevated (by historical norms) but dropping. It looks as if (top chart) daily Vol is now contained by that resistance line, which means on a purely technical level, we won't get a jump in Vol, which means any pullbacks will be minor. The only caveat (as always) if something really unexpected falls out of the tree, a little red line on a chart will mean absolutely zero.
> 
> Everyone seems to think 'virus' news is a thing. The virus is a non-issue for the market. It may well be a political issue. It may well be a social issue. It is not and never was apart from in Feb. a market issue. The 1918/19 Flu killed 50M-100M. No one cared. That was after whatever loss of life was already incurred in WWI. Further, there was no lockdown. The virus burned itself out. That is the way of a flu based virus. They mutate so quickly, that the original virus that existed in Feb no longer exists today.
> 
> jog on
> duc


----------



## Lucky777

Respect duc. Motivates me to study further. Thanks for the hard work!


----------



## qldfrog

qldfrog said:


> I like a breath of fresh sir indeed
> Thanks Le Duc



Fresh air..oops


----------



## ducati916

If you study Austrian economics, then Bohem-Bawerk, von Mises and Rothbard are names that will be very familiar to you. Add Hayek, Hoppe and De Soto to that list and you have the intellectual contributors that pretty much define Austrian economics.

So Austrians define the natural rate of interest as the marginal efficiency of capital, or, the net profit of the business. What we are looking at therefore is: what is the aggregate net profit of a sector, or market, or individual firm. Since this thread is about the trend of the market and primarily the S&P500, what is the aggregate profit of the index? Is it above or below the current Fed Discount rate?

So data from 1953






So we can see the long term inflation rate is 3.43% via CPI data. Market at that rate of inflation has increased in value, earnings both nominally and in real terms. Dividends are clearly very important to total returns.

So now what is the profitability of the aggregate?






If we called the average profitability 7% of the S&P500 over that time period, that wouldn't be far off (my best glance across the chart). That allows for under/over performance over time.

So the natural rate of interest (on average) is 7%. Currently (as per Q1 2020) it is 8% (slightly above our long term average). The 10yr Bond currently yields 0.55%. This is far below our natural rate of interest.

What then is the effect? Most (many) will argue, certainly Schiff et al. that this is inflationary.

Paradoxically (I would argue) that it is the opposite: it is disinflationary, as would an Austrian analysis. The reasons are as follows:

(a) Prior to the crash in Fed. there was $14T in BBB rated Corporate debt (junk) that would have largely defaulted. Let us say that $7T would have defaulted. That is an overnight $7T contraction in credit or the money supply. That is deflation and very dangerous. The Fed. stepped in and propped up that market. Possibly $500B in the oil patch has defaulted. That is still a problem, but a much smaller problem. A problem that the Banks can handle.

(b) The result of no outright deflation, via insolvencies, defaults, etc. means that we have a lot of firms still in business that really shouldn't be in business because they are not profitable. Being non-profitable means they don't hit our hurdle rate for natural rate of interest at 7%. Not even close. They should go out of business. If they do (as is happening in the oil patch) supply is reduced. Resources are freed up for more profitable firms. Capital is freed up for more profitable re-investment. None of these things are happening. We have zombie firms churning out products at grossly reduced prices, because they can borrow at 0.55% and just hang on. This is disinflationary. Employment is always a political hot potato, particularly in an election year and in addition it is one of the Fed's mandates.

So we end up with the bizarre conclusion that the Fed Funds rate at 0.09% gives rise to a very steep yield curve that is disinflationary.

jog on
duc


----------



## ducati916

Nothing new under the sun.

jog on
duc


----------



## ducati916

If you are a gold bull:









jog on
duc


----------



## ducati916

This is exactly what used to happen in 1999, a stock split, that stock would run. It's back baby!






jog on
duc


----------



## ducati916

Fan of Buffett? 
	

		
			
		

		
	






The trade:












Sell Sept. 18 PUTs at $25 @ $1.50 (from Barrons).

Thinking on it.

jog on
duc


----------



## ducati916

Ton of news in the oil patch:

*Friday, July 31st, 2020*

Oil prices retreated on Thursday after the U.S. posted a horrific second quarter GDP figure. Prices steadied in early trading on Friday, pushing crude benchmarks back to familiar territory – roughly $40 for WTI and $43 for Brent. 

_*ExxonMobil posts huge $1.1 billion loss.*_ *ExxonMobil (NYSE: XOM)* reported a loss of nearly $1.1 billion, the largest quarterly loss in 36 years. Production was down 7 percent, year-on-year. Exxon said its working on cost-cutting plans in a “last ditch” effort to preserve its dividend. and CEO Darren Woods said that the company would not take on more debt. 

_*Chevron announces worst loss in three decades.*_ *Chevron (NYSE: CVX) *reported an adjusted loss of $3 billion, along with an impairment of $5.6 billion. That included writing off Chevron’s entire unit in Venezuela, worth about $2.6 billion. “We would need to see sustained economic recovery and much lower inventory levels before we would add capital back to the Permian or other basins,” Pierre Breber, Chevron’s finance chief, told Reuters. “We’re in a lower for longer world where demand is down and there’s ample supply.” 

_*Occidental in talks to sell Africa and Middle East assets. *_*Occidental Petroleum (NYSE: OXY) *is in talks with Indonesia’s state-owned *PT Pertamina* over the sale of Oxy’s Middle East and African assets. The price could be around $4.5 billion, according to Bloomberg. 

_*Indian refiners cut runs on sinking demand. *_Refiners in India have reduced processing over flagging demand. High retail fuel prices and rising coronavirus numbers have weakened consumption. For example, *Bharat Petroleum Corp (BPCL.NS)* is operating its three refineries at about 70 percent capacity compared to about 90 percent in early June, according to Reuters.

_*Exxon and Hess make another Guyana discovery. *_*ExxonMobil (NYSE: XOM)* and *Hess (NYSE: HES) *said that they made yet another discovery in Guyana, adding to their more than one dozen previous discoveries. “This additional resource is currently being evaluated and will help form the basis for a potential future development,” Hess said.

_*Total takes $8 billion write-down. *_*Total (NYSE: TOT) *wrote down $8 billion in assets, $7 billion of which was in Canada’s oil sands. Total also said that it conducted an assessment over its stranded asset risk, meaning with reserves beyond 20 years and high production costs. Canadian oil sands ran afoul of this test, and Total said it would no longer invest in oil sands. 

_*Dakota Access dampens Bakken prospects. *_The potential loss of the Dakota Access pipeline could stall the North Dakota shale formation’s rebound. Moving oil by rail would add $3 to $6 in costs for producers. Anecdotally, some companies are holding off on drilling until they know more about the fate of Dakota Access, according to Reuters. 

_*Tokyo Gas to spend $657 million on U.S. shale. *_Tokyo Gas Co Ltd said it would spend $657 million to acquire *Castleton Resources*, as well as to buy a solar project. “As U.S. shale gas prices have fallen sharply, we think it is a good time to buy stake in gas assets at a relatively cheap price,” said Koji Yoshizaki, senior general manager of Tokyo Gas.

_*AMLO considers reversing energy reform.*_ Mexican President Andres Manuel Lopez Obrador suggested that he might pursue rolling back the country’s historic energy reform passed under his predecessor, which opened up the oil and gas sector to international investment. 

_*U.S. LNG faces long-term challenges.*_ China may not deliver on long-term LNG trends, which poses risks to U.S. export projects, according to a new report. “A China-led rebound for the U.S. LNG industry will face stiff price resistance from Chinese buyers,” the report says. U.S. LNG may need prices of $8/MMBtu in China over the long-term to be profitable, while prevailing city-gate prices are trading at right around those levels, leaving an exceedingly narrow margin for exporters. 

_*Trump admin approves Keystone capacity expansion.*_ The Trump administration granted approval to TC Energy’s (NYSE: TRP) Keystone pipeline to expand throughput to 760,000 bpd, up from the current 590,000 bpd. 

_*Saudi Arabia to unveil September prices amid market pressure. *_Saudi Arabia is under pressure to lower the price of its oil, according to Bloomberg. Traders expect a price cut for the first time since April. Saudi prices typically set the tone for the market, so the unveiling of prices for September in the next few days will offer clues into the market direction.

_*Apache and Total make offshore Suriname discovery. *_*Apache (NASDAQ: APA)* and *Total (NYSE: TOT) *announced a third “substantial” light oil and condensate discovery in Suriname. “These very encouraging results confirm our exploration strategy in this prolific zone, which targets large volumes of resources at low development costs,” Total said in a statement.

_*Canadian drilling forecast cut again. *_Canada is on track to drill 2,800 wells this year, according to the Petroleum Services Association, the third downward revision for the group. Last year, the industry drilled 4,900 wells.


jog on
duc


----------



## qldfrog

ducati916 said:


> Ton of news in the oil patch:
> 
> *Friday, July 31st, 2020*
> 
> Oil prices retreated on Thursday after the U.S. posted a horrific second quarter GDP figure. Prices steadied in early trading on Friday, pushing crude benchmarks back to familiar territory – roughly $40 for WTI and $43 for Brent.
> 
> _*ExxonMobil posts huge $1.1 billion loss.*_ *ExxonMobil (NYSE: XOM)* reported a loss of nearly $1.1 billion, the largest quarterly loss in 36 years. Production was down 7 percent, year-on-year. Exxon said its working on cost-cutting plans in a “last ditch” effort to preserve its dividend. and CEO Darren Woods said that the company would not take on more debt.
> 
> _*Chevron announces worst loss in three decades.*_ *Chevron (NYSE: CVX) *reported an adjusted loss of $3 billion, along with an impairment of $5.6 billion. That included writing off Chevron’s entire unit in Venezuela, worth about $2.6 billion. “We would need to see sustained economic recovery and much lower inventory levels before we would add capital back to the Permian or other basins,” Pierre Breber, Chevron’s finance chief, told Reuters. “We’re in a lower for longer world where demand is down and there’s ample supply.”
> 
> _*Occidental in talks to sell Africa and Middle East assets. *_*Occidental Petroleum (NYSE: OXY) *is in talks with Indonesia’s state-owned *PT Pertamina* over the sale of Oxy’s Middle East and African assets. The price could be around $4.5 billion, according to Bloomberg.
> 
> _*Indian refiners cut runs on sinking demand. *_Refiners in India have reduced processing over flagging demand. High retail fuel prices and rising coronavirus numbers have weakened consumption. For example, *Bharat Petroleum Corp (BPCL.NS)* is operating its three refineries at about 70 percent capacity compared to about 90 percent in early June, according to Reuters.
> 
> _*Exxon and Hess make another Guyana discovery. *_*ExxonMobil (NYSE: XOM)* and *Hess (NYSE: HES) *said that they made yet another discovery in Guyana, adding to their more than one dozen previous discoveries. “This additional resource is currently being evaluated and will help form the basis for a potential future development,” Hess said.
> 
> _*Total takes $8 billion write-down. *_*Total (NYSE: TOT) *wrote down $8 billion in assets, $7 billion of which was in Canada’s oil sands. Total also said that it conducted an assessment over its stranded asset risk, meaning with reserves beyond 20 years and high production costs. Canadian oil sands ran afoul of this test, and Total said it would no longer invest in oil sands.
> 
> _*Dakota Access dampens Bakken prospects. *_The potential loss of the Dakota Access pipeline could stall the North Dakota shale formation’s rebound. Moving oil by rail would add $3 to $6 in costs for producers. Anecdotally, some companies are holding off on drilling until they know more about the fate of Dakota Access, according to Reuters.
> 
> _*Tokyo Gas to spend $657 million on U.S. shale. *_Tokyo Gas Co Ltd said it would spend $657 million to acquire *Castleton Resources*, as well as to buy a solar project. “As U.S. shale gas prices have fallen sharply, we think it is a good time to buy stake in gas assets at a relatively cheap price,” said Koji Yoshizaki, senior general manager of Tokyo Gas.
> 
> _*AMLO considers reversing energy reform.*_ Mexican President Andres Manuel Lopez Obrador suggested that he might pursue rolling back the country’s historic energy reform passed under his predecessor, which opened up the oil and gas sector to international investment.
> 
> _*U.S. LNG faces long-term challenges.*_ China may not deliver on long-term LNG trends, which poses risks to U.S. export projects, according to a new report. “A China-led rebound for the U.S. LNG industry will face stiff price resistance from Chinese buyers,” the report says. U.S. LNG may need prices of $8/MMBtu in China over the long-term to be profitable, while prevailing city-gate prices are trading at right around those levels, leaving an exceedingly narrow margin for exporters.
> 
> _*Trump admin approves Keystone capacity expansion.*_ The Trump administration granted approval to TC Energy’s (NYSE: TRP) Keystone pipeline to expand throughput to 760,000 bpd, up from the current 590,000 bpd.
> 
> _*Saudi Arabia to unveil September prices amid market pressure. *_Saudi Arabia is under pressure to lower the price of its oil, according to Bloomberg. Traders expect a price cut for the first time since April. Saudi prices typically set the tone for the market, so the unveiling of prices for September in the next few days will offer clues into the market direction.
> 
> _*Apache and Total make offshore Suriname discovery. *_*Apache (NASDAQ: APA)* and *Total (NYSE: TOT) *announced a third “substantial” light oil and condensate discovery in Suriname. “These very encouraging results confirm our exploration strategy in this prolific zone, which targets large volumes of resources at low development costs,” Total said in a statement.
> 
> _*Canadian drilling forecast cut again. *_Canada is on track to drill 2,800 wells this year, according to the Petroleum Services Association, the third downward revision for the group. Last year, the industry drilled 4,900 wells.
> 
> 
> jog on
> duc



I own xom and not unhappy with the overall results above


----------



## Garpal Gumnut

Thanks @qldfrog and @ducati916 

Saudi Arabia seems to be the wildcard in all of this. Political instability is imminent and either a decrease in oil supply or a massive oversupply. The latter more likely. Then again, oils is oils. 

gg


----------



## ducati916

qldfrog said:


> I own xom and not unhappy with the overall results above





Not totally unexpected. XOM and the rest will regain lost ground, particularly now that Shale is in such a mess.

jog on
duc


----------



## ducati916

Garpal Gumnut said:


> Thanks @qldfrog and @ducati916
> 
> Saudi Arabia seems to be the wildcard in all of this. Political instability is imminent and either a decrease in oil supply or a massive oversupply. The latter more likely. Then again, oils is oils.
> 
> gg




I think the Saudi's have accomplished pretty much what they wanted to. It came at a tremendous cost to themselves however. I'm not so sure they want to go the over-supply route again anytime soon: under-supply if anything, get the price higher. That of course leads to the potential of loss of market share to Russia et al. I don't see over-supply, it just cost them far too much.

jog on
duc


----------



## ducati916

The BAC Options trade:













So BAC in XLF. XLF looks quite bullish currently. See how that support holds. BAC itself, a little ahead of XLF, but could well bounce at support. If it does, the trade looks more attractive depending on what happens to that pricing. At $25 the trade (currently) looks pretty solid. I'll see how it trades Monday and possibly at the close might make a decision.

jog on
duc


----------



## ducati916

Theme based ETFs:














_iShares Exponential Technologies ETF (NASDAQ: XT).

The $2.53 billion XT, which is almost 5 years old and holds almost 200 stocks, tracks the Morningstar Exponential Technologies Index.

Why It's Important

Blockchain is often viewed through the lens of technology and XT reflects that view with a 34.57% weight to that sector, but the fund also offer exposure to blockchain's other applications. The health care and communication services combine for about 41% of XT's roster.

While XT is a versatile ETF, what may be keeping some investors at bay regarding blockchain ETFs is perception of an intimate link between blockchain and bitcoin's price action.

What's Next

Some investors may be burned out on hearing about bitcoin and its various fits and starts, but that could actual be a positive for long-term adoption and prove beneficial to ETFs, including XT.

“In the last year and a half, this trough of disillusionment has set in. People have started to tire of the buzz and have started to question it,” according to BlackRock. “But as is typical in that classic Gartner hype cycle, the fundamentals – speed, privacy, security and scalability – are actually improving. That doesn’t mean we’re going to see widespread adoption, and a lot still needs to happen. But we’re certainly starting to see meaningful progress.”_

jog on
duc


----------



## ducati916

Bank stocks:






Bank stocks, relative to their bonds, are undervalued. That is (a) good for bank stocks generally and (b) interesting re. the BAC trade specifically, especially if looking at a Sept. expiry.

jog on
duc


----------



## ducati916

EVs






This would impact TSLA stock how? I would posit that as the competition heats up, valuations accorded to TSLA will fall. That is just the way it is. The Oregon Pension Fund also lightened up in TSLA stock.

jog on
duc


----------



## ducati916

Sports (take 2) re-opening:






The duc'ster is a big NHL (Rangers) fan. I only really have time to watch the highlights on youTube, but glad it's back or will be soon.

jog on
duc


----------



## ducati916

These are the top % holdings of LRNZ:






I have heard of; AMZN, NVDA and AMD. The rest are new to me. Looks interesting though for the following reason: keeping up with the latest Tech. in this space (for me) is almost impossible. All you need are a couple of new AMZNs in there and the ETF will do really well. The odd acquisition in there will also boost returns. I'll have a look at some of the other individual names out of curiosity. A definite possibility for me.

jog on
duc


----------



## ducati916

So here is 1 holding:









Now there is no way that I could/would buy this stock. I can't even figure out what exactly it does. As to its success/failure in delivering whatever it delivers, who knows. But held in an ETF, with enough diversification, maybe. I just looked at DDOG, CRWD, OKTA, TWLO, SDGR, all heading straight up in the market  Most are probably losing money somewhere along the line, their financials (very quick glance) for the most part look horrible. This is a super speccy ETF. These companies though are quite well capitalised, most turning in at $30B.

jog on
duc


----------



## ducati916

Another reason why Tech. is running and why Financials will (eventually) pick-up:












CEOs who are incentivised via stock options and cash them in, have to do buybacks to prevent the massive dilution and eventual lowering of earnings/share that these grants of share options create. As noted above, debt is so cheap, it allows debt to be used to finance the buybacks. One of the issues when the nominal rate (and real rate) is far below the natural rate of interest. Bit of a Ponzi scheme? Of course.

jog on
duc
duc


----------



## qldfrog

Mr Duc @ducati916 : something interesting today; I owe some GSIQ25
*TREAS INDEXED BOND CPI+3.00% 20-09-25 QLY *

and today:




these bonds are usually extremely stable..fat finger or something else?


----------



## ducati916

This morning's ISM report on the manufacturing sector indicated continued improvements in the month of July.  July's rise in the headline number to 54.2 from 52.6 marked back to back months with expansionary readings for the first time since January and February of this year.  It was also a third consecutive month in which the index has risen. That leaves it at its highest level since March of last year.






Most of the sub-indices of the report are likewise now showing expansionary readings.  As shown below, most indices have seen continued improvements with the increases in July being in the upper quartile of historic readings; many of these were actually in the upper decile. Nearly every index is now showing expansionary readings with Backlog Orders, Export Orders, and Import Orders all rising above 50 in July.  At the moment, the only indices to remain in contraction are those for inventories and employment. These are also at the lower end of their historical ranges.  For the indices for inventories, the contractionary readings are not necessarily a glaring negative though as they come off of expansionary readings (rising inventories) in recent months.






Although the numbers are providing a fairly optimistic outlook for the country's manufacturing sector, more anecdotally, the comments in this month's survey had a decent amount of negativity.  As shown below, several comments made mention that even if improved, demand is still down dramatically and uncertainty remains higher.  On the other hand, some respondents like one from the Computer & Electronic Products industry and the Food, Beverage, & Tobacco Products industry are reporting that demand has either returned to normal or is better than a year ago.






Increased demand, and as a result increased production, has been a major boost to the headline number.  As shown below, the index for New Orders saw another huge increase in July rising 5.1 points to 61.5.  Excluding last month's extreme rise of 24.6 points, which was the largest monthly gain on record, you would have to go all the way back to July of 2013 to find another time that the index for New Orders rose by more. That leaves the index at its highest level since September 2018 while the index for Production is at its highest level since August 2018.  Those improved conditions also appear to be fairly broad with 13 of the 18 industries surveyed reporting growth in new orders and 16 of the 18 reporting growth in production; no industry reported a decrease in production in July.











Stronger demand certainly seems to be the reason for that higher production. Over the past two months, inventories have been building as demand was bouncing back.  This month's reading of 47 indicated that reversed as inventories began to be drawn upon. Meanwhile, as New Orders pickup, order backlogs are rising for the first time since February. That was the only other month since April of last year in which order backlogs were rising. The index for Backlog Orders is now at its highest level since April of 2019.









Although production and demand has picked up, employment has been left behind.  In other words, businesses appear to be ramping up output without the help of additional labor.  Granted, that could change as production continues to pick up.  Of the 18 manufacturing indices, ten reported a decrease in employment (again many of these also reported an _increase_ in production) while only five reported growth: Apparel, Printing and Related Support Activities, Furniture, Plastic and Rubber, and Computer and Electronic Products.  While improved from the past few months, the index for employment remains low at 44.3.









While unemployment will remain a political issue and an issue for the Fed. (given its mandate) unemployment issues will not impact the market as (currently anyway) businesses can produce more with less. Given that employment costs are usually a significant % in deductions from gross revenues, profitability could well improve as margins improve.

This is just a further example that as far as the market and its trend is concerned, the virus is just a non-issue. There are however as illustrated by a number of respondents, issues that need to be monitored re. demand etc. moving forward. So while a positive report, underpinning the move higher, vigilance is still required.

jog on
duc


----------



## ducati916

How the Yank's used CARES









jog on
duc


----------



## ducati916

A couple of charts looking at gold v stocks as an inflation hedge since 2008 when the 'printing presses' really ramped up.









Stocks and their additional dividends (which count for a significant % of the return) outperform gold. Gold like the latest hot stock can be traded when it is moving and can provide good profits. It simply isn't a religion as espoused by Schiff, Sprott et al.

jog on
duc


----------



## ducati916

qldfrog said:


> Mr Duc @ducati916 : something interesting today; I owe some GSIQ25
> *TREAS INDEXED BOND CPI+3.00% 20-09-25 QLY *
> 
> and today:
> View attachment 106869
> 
> these bonds are usually extremely stable..fat finger or something else?




Mr Frog from the title, they look like TIPS, but the charts look quite different. That they are indexed, might mean they are indexed to TIPS and have just had a bit of a reset. CPI in the US is moving higher again after dropping in Feb. Not really sure.






jog on
duc


----------



## qldfrog

ducati916 said:


> Mr Frog from the title, they look like TIPS, but the charts look quite different. That they are indexed, might mean they are indexed to TIPS and have just had a bit of a reset. CPI in the US is moving higher again after dropping in Feb. Not really sure.
> 
> View attachment 106894
> 
> 
> jog on
> duc



Thanks,
Was just wondering if i had missed something
Anyway, no complaint
 a nice 2k for the day fully unexpected..will see if still there tonight...


----------



## qldfrog

qldfrog said:


> Thanks,
> Was just wondering if i had missed something
> Anyway, no complaint
> a nice 2k for the day fully unexpected..will see if still there tonight...




was a fat finger it seems:
lost the magic 2.8k today  just got 100$ in the exercise


----------



## ducati916

Worth keeping an eye on, particularly due to approaching US elections: https://www.foreignaffairs.com/articles/united-states/2020-08-03/beware-guns-august-asia






jog on
duc


----------



## ducati916

News from the oil patch:






_*BP cuts dividend, says it will cut production over time. *_*BP (NYSE: BP) *reported a replacement cost loss (similar to net loss) of $6.7 billion in the second quarter, down from a $2.8 billion profit a year earlier. BP also cut its dividend for the first time since the Deepwater Horizon disaster a decade ago. The company cut its dividend to 5.25 cents per share, down by half. BP’s CEO Bernard Looney said he looks to accelerate the company’s low-carbon transition, including a 10-fold increase in investment on renewables while shrinking oil and gas production by 40 percent over the coming decade. BP will also not expand exploration to any more countries. 

_*U.S. oil production plunged to 10 mb/d in May.*_ Newly released data from the EIA shows that U.S. oil production plunged to just 10 mb/d in May, down from 11.9 mb/d in April. Also, weekly estimates by the agency at the time pegged production at over 11 mb/d, so the downward revision is significant. In other words, the depth of the collapse in May was much more substantial than analysts thought at the time.

_*Marathon to close two refineries, and sell retail chain.*_ *Marathon Petroleum (NYSE: MPC)* said it would permanently close two small refineries in California and New Mexico. The move would eliminate 800 jobs. Marathon also agreed to sell its gas station chain to the owners of 7-Eleven convenience stores for $21 billion in the largest U.S. energy deal so far this year. 

_*India’s fuel consumption stalls.*_ Demand for refined fuels from state-owned refiners in India fell by 13 percent in July compared to June. Higher prices and coronavirus-related shutdowns impacted consumption. 

_*Saudi Arabia may have to cut prices again. *_After three consecutive months of raising its crude oil prices, the world’s largest oil exporter, Saudi Arabia, is widely expected to make the first cut to its official selling prices (OSPs) since the OPEC+ group started their record production cuts to prop up the market and prices amid crashing demand.

_*Oil industry embraces remote work. *_The pandemic could induce significant changes to the operations of the oil and gas industry. *Schlumberger (NYSE: SLB)*, *Halliburton (NYSE: HAL)* and *Baker Hughes (NYSE: BKR) *are shifting more tasks to remote work. The changes could mean the elimination of operational and manufacturing jobs while increasing employment for data analysts and engineers.

_*Carbon prices rise in Europe, hitting coal. *_Carbon prices have rebounded from recent lows, raising the cost of coal-fired generation. “The carbon market is working: it’s doing its job,” Lueder Schumacher, head of European utilities Société Générale, told the WSJ. “Many coal plants are no longer profitable at these kinds of levels.” Globally, more coal capacity was taken offline than was added in the first six months of 2020, for the first time ever. 

*U*_*AE brings the first nuclear plant on the Arabian Penisula online.*_ The UAE has started up its $20 billion Barakah nuclear power plant. The project, built with the help of South Korea, will be the first nuclear plant on the Arabian Penisula.

_*GM to build 2,700 EV recharging stations.*_ *GM (NYSE: GM)* said it would build 2,700 fast-charging EV stations, equipped to recharge 60 miles of driving in 20 minutes. The move is intended to bolster sales of GM’s EVs. Unlike *Tesla (NASDAQ: TSLA)*, which built stations only for Tesla models, the stations will be open to any type of EV.

_*Report: rapid U.S. decarbonization would create 25 million jobs.*_ “Rapid and total decarbonization” could create 25 million jobs in an all-out effort to eliminate emissions by 2035, according to a new report.

_*Range Resources selling shale fields for pennies on the dollar.*_ *Range Resources (NYSE: RRC) *agreed to sell its Louisiana shale fields for $245 million, after buying them for $3.3 billion just four years ago.  

_*Fieldwood Energy nears bankruptcy. *_Offshore oil driller *Fieldwood Energy *is nearing bankruptcy, which would be its second chapter 11 filing in two years. 

_*Energy shrinks as share of S&P.*_ Tech giants reported huge earnings last week just as *ExxonMobil (NYSE: XOM) *and *Chevron (NYSE: CVX) *reported massive losses. Tech now makes up 27 percent of the S&P. “Energy was once the largest sector in the S&P 500,” Matt Stucky, portfolio manager Northwestern Mutual, told the FT. “When we sit here today, it is less than 3 percent…What’s going to drive market trends is some of the largest tech companies.”

_*More shale bankruptcies coming. *_So far this year, 23 North American oil and gas companies have filed for bankruptcy, representing more than $30 billion. But more are coming. “It is reasonable to expect that a substantial number of producers will continue to seek protection from creditors in bankruptcy even if oil prices recover over the next few months,” Haynes and Boone said in a report.


jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> News from the oil patch:
> 
> View attachment 106926
> 
> 
> _*BP cuts dividend, says it will cut production over time. *_*BP (NYSE: BP) *reported a replacement cost loss (similar to net loss) of $6.7 billion in the second quarter, down from a $2.8 billion profit a year earlier. BP also cut its dividend for the first time since the Deepwater Horizon disaster a decade ago. The company cut its dividend to 5.25 cents per share, down by half. BP’s CEO Bernard Looney said he looks to accelerate the company’s low-carbon transition, including a 10-fold increase in investment on renewables while shrinking oil and gas production by 40 percent over the coming decade. BP will also not expand exploration to any more countries.
> 
> _*U.S. oil production plunged to 10 mb/d in May.*_ Newly released data from the EIA shows that U.S. oil production plunged to just 10 mb/d in May, down from 11.9 mb/d in April. Also, weekly estimates by the agency at the time pegged production at over 11 mb/d, so the downward revision is significant. In other words, the depth of the collapse in May was much more substantial than analysts thought at the time.
> 
> _*Marathon to close two refineries, and sell retail chain.*_ *Marathon Petroleum (NYSE: MPC)* said it would permanently close two small refineries in California and New Mexico. The move would eliminate 800 jobs. Marathon also agreed to sell its gas station chain to the owners of 7-Eleven convenience stores for $21 billion in the largest U.S. energy deal so far this year.
> 
> _*India’s fuel consumption stalls.*_ Demand for refined fuels from state-owned refiners in India fell by 13 percent in July compared to June. Higher prices and coronavirus-related shutdowns impacted consumption.
> 
> _*Saudi Arabia may have to cut prices again. *_After three consecutive months of raising its crude oil prices, the world’s largest oil exporter, Saudi Arabia, is widely expected to make the first cut to its official selling prices (OSPs) since the OPEC+ group started their record production cuts to prop up the market and prices amid crashing demand.
> 
> _*Oil industry embraces remote work. *_The pandemic could induce significant changes to the operations of the oil and gas industry. *Schlumberger (NYSE: SLB)*, *Halliburton (NYSE: HAL)* and *Baker Hughes (NYSE: BKR) *are shifting more tasks to remote work. The changes could mean the elimination of operational and manufacturing jobs while increasing employment for data analysts and engineers.
> 
> _*Carbon prices rise in Europe, hitting coal. *_Carbon prices have rebounded from recent lows, raising the cost of coal-fired generation. “The carbon market is working: it’s doing its job,” Lueder Schumacher, head of European utilities Société Générale, told the WSJ. “Many coal plants are no longer profitable at these kinds of levels.” Globally, more coal capacity was taken offline than was added in the first six months of 2020, for the first time ever.
> 
> *U*_*AE brings the first nuclear plant on the Arabian Penisula online.*_ The UAE has started up its $20 billion Barakah nuclear power plant. The project, built with the help of South Korea, will be the first nuclear plant on the Arabian Penisula.
> 
> _*GM to build 2,700 EV recharging stations.*_ *GM (NYSE: GM)* said it would build 2,700 fast-charging EV stations, equipped to recharge 60 miles of driving in 20 minutes. The move is intended to bolster sales of GM’s EVs. Unlike *Tesla (NASDAQ: TSLA)*, which built stations only for Tesla models, the stations will be open to any type of EV.
> 
> _*Report: rapid U.S. decarbonization would create 25 million jobs.*_ “Rapid and total decarbonization” could create 25 million jobs in an all-out effort to eliminate emissions by 2035, according to a new report.
> 
> _*Range Resources selling shale fields for pennies on the dollar.*_ *Range Resources (NYSE: RRC) *agreed to sell its Louisiana shale fields for $245 million, after buying them for $3.3 billion just four years ago.
> 
> _*Fieldwood Energy nears bankruptcy. *_Offshore oil driller *Fieldwood Energy *is nearing bankruptcy, which would be its second chapter 11 filing in two years.
> 
> _*Energy shrinks as share of S&P.*_ Tech giants reported huge earnings last week just as *ExxonMobil (NYSE: XOM) *and *Chevron (NYSE: CVX) *reported massive losses. Tech now makes up 27 percent of the S&P. “Energy was once the largest sector in the S&P 500,” Matt Stucky, portfolio manager Northwestern Mutual, told the FT. “When we sit here today, it is less than 3 percent…What’s going to drive market trends is some of the largest tech companies.”
> 
> _*More shale bankruptcies coming. *_So far this year, 23 North American oil and gas companies have filed for bankruptcy, representing more than $30 billion. But more are coming. “It is reasonable to expect that a substantial number of producers will continue to seek protection from creditors in bankruptcy even if oil prices recover over the next few months,” Haynes and Boone said in a report.
> 
> 
> jog on
> duc




You might like these pictures Duc:




https://www.zerohedge.com/markets/disconnects-everywhere





https://grrrgraphics.com/


----------



## ducati916

The $VIX:






We are still in an elevated VIX environment, but, still look to be heading lower. However on the left hand side of the chart we can see an increased number of areas of support/resistance (in this still elevated) VIX environment. As VIX levels encounter these previous levels, we may see some influence being exerted which will lead to a choppier market. Unless something macro changes, we should simply continue lower, albeit in a choppier manner.






In the bigger picture overview we are out of market crash ranges (10% decline range) into the more garden variety declines, say 5% range. Below is the market added.






With elections approaching and all that entails, hardly surprising. Also, if the market has an end of August swoon, this is an indication that the Democrats are likely to win the election. Usually (but not always) US elections drive some of the more US centric macro indicators, particularly around the Financials (ironically Financials have better returns under Democrats than Republicans). If this is the case this time round, we might be able to exit/hedge any August swoon and re-enter for the election proper. We'll see.

jog on
duc


----------



## ducati916

Just looking at US indices, we can see (far left chart) that the small caps are looking to break above their 200EMA. This bodes well for the market as a whole as issues have plagued the small caps to date.







We always want as broad an advance as possible. 

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> The $VIX:
> 
> View attachment 106927
> 
> 
> We are still in an elevated VIX environment, but, still look to be heading lower. However on the left hand side of the chart we can see an increased number of areas of support/resistance (in this still elevated) VIX environment. As VIX levels encounter these previous levels, we may see some influence being exerted which will lead to a choppier market. Unless something macro changes, we should simply continue lower, albeit in a choppier manner.
> 
> View attachment 106928
> 
> 
> In the bigger picture overview we are out of market crash ranges (10% decline range) into the more garden variety declines, say 5% range. Below is the market added.
> 
> View attachment 106929
> 
> 
> With elections approaching and all that entails, hardly surprising. Also, if the market has an end of August swoon, this is an indication that the Democrats are likely to win the election. Usually (but not always) US elections drive some of the more US centric macro indicators, particularly around the Financials (ironically Financials have better returns under Democrats than Republicans). If this is the case this time round, we might be able to exit/hedge any August swoon and re-enter for the election proper. We'll see.
> 
> jog on
> duc




I am looking forward to the US Presidential debates:





https://grrrgraphics.com/


----------



## Chronos-Plutus

Here is my electoral map at the moment:


----------



## ducati916

Another interesting phenomenon of the 1990's has returned along with the newer developments in the markets:
























Haven't seen the 'Dotcom' phenom. in a while, but it's back now.

jog on
duc


----------



## ducati916

Chronos-Plutus said:


> Here is my electoral map at the moment:
> 
> View attachment 106931





So who is your pick?

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> So who is your pick?
> 
> jog on
> duc




Still too early to call for me. I heard Biden is trying to get out of the presidential debates because he is scared and feels incapable of challenging Trump. Then there is the potential postal vote rigging that will need to be stopped before the election.

I think Trump is in a stronger position than Biden at the moment.


----------



## ducati916

More positive economic data:


















Only employment still a negative.

jog on
duc


----------



## ducati916

As to the markets, the opportunities have been myriad: Within the indices, sectors across the board have been making money:






If you are a stock picker via a system:









_For many investors, the holy grail of stock picking is the proverbial ten-bagger.  A ten-bagger is a stock that multiplies by ten times its original price.  Usually, this happens over the span of years, but in the Covid-economy, we've actually seen a number of these ten-baggers play out in the span of months.  While most of these examples are in the small-cap space, shares of Wayfair (W), which has a current market cap of $27.5 billion, have rallied from $21.70 on March 19th to its current price of $290.85 now.  That's a gain of more than 1,200% in less than five months.

Within the entire Russell 1,000, 257 stocks have at least doubled off their 52-week lows, and in the table below we highlight the 34 stocks that are at least a quarter of the way to the ten-bagger club and have rallied more than 250%.  As mentioned above, W tops the list, but Fastly (FSLY), which has barely been public for a year, is just shy of the club with a gain of 992%.  Behind FSLY, Livongo Health (LVGO) is up 855%.  Given that LVGO just got a takeover offer from Teladoc (TDOC), the 11th best-performing stock on the list, it may only make the ten-bagger club under the banner of the TDOC ticker.

In looking through the list of stocks shown, many of these names come from the Health Care, Technology, and Consumer Discretionary sectors and have been direct beneficiaries of the new Covid-economy.  At the same time, six stocks from the Energy sector made the list as well as they recovered from their bombed-out levels after oil prices briefly traded in negative territory earlier this year. _

jog on
duc


----------



## ducati916

Real Estate: https://www.riskhedge.com/outplacement/the-great-american-housing-boom-has-begun/RCM






jog on
duc


----------



## qldfrog

Another great market day in the US with real companies gaining, funnily enough,my only red was a gold miner
Read move views agreeing with Mr Le Duc about inflation:
The way money is injected in the market is not inflationary CPI wise as it does not reach people but just inflate assets.will this change and will various feds start backing banks loans towards the commoners like us, via business home and personal loans, this could change the game
Finance sector not a bad play either way?


----------



## ducati916

Market close to all-time-high









With reasonable movement across all major sectors.

The 'stagflation' meme is percolating through the sub-mainstream:






I was going to read the article on Mr Boockvar's site, but it is a subscription. But from the brief synopsis, it isn't that hard to figure out his basic arguments. Both gold & silver are trading as if that thesis were correct.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> Market close to all-time-high
> 
> View attachment 107007
> View attachment 107008
> 
> 
> With reasonable movement across all major sectors.
> 
> The 'stagflation' meme is percolating through the sub-mainstream:
> 
> View attachment 107005
> 
> 
> I was going to read the article on Mr Boockvar's site, but it is a subscription. But from the brief synopsis, it isn't that hard to figure out his basic arguments. Both gold & silver are trading as if that thesis were correct.
> 
> jog on
> duc




Food inflation is now evident in the USA.

"Food prices at supermarkets surgedduring the pandemic as tens of millions of Americans lost their jobs. 

According to the latest seasonally adjusted data by the Bureau of Economic Analysis (BEA), the virus pandemic has had a tremendous impact on food prices from February to June:

_Meat and poultry prices jumped 11%, with beef prices surging 20%. Pork climbed by 8.5%, egg prices increased by 10%, and cereals and fresh vegetables were up more than 4%."

(https://www.zerohedge.com/markets/p...on-unemployment-stays-great-depression-levels)_


----------



## ducati916

So the market is nicely placed to break through to new all-time-highs for the weekend:









Both the 20EMA and 50EMA show room at the inn.






Vol. is trending lower through another support point. 












Sectors looking pretty good. Most sectors just pulled back marginally. Most are above their 200EMA and can be classified as in a bull market. The only one of note sitting below their 200EMA are the financials. Credit concerns always are an issue with the banks.






Nothing that they haven't reserved for (or at least that's their story). Banks are getting ready to move above their 50EMA and then look at all the blue sky to their 200EMA.






Sentiment:









Sentiment (bullish) is below 25%. Look how often that has been wrong.

jog on
duc


----------



## ducati916

Chronos-Plutus said:


> Food inflation is now evident in the USA.
> 
> "Food prices at supermarkets surgedduring the pandemic as tens of millions of Americans lost their jobs.
> 
> According to the latest seasonally adjusted data by the Bureau of Economic Analysis (BEA), the virus pandemic has had a tremendous impact on food prices from February to June:
> 
> _Meat and poultry prices jumped 11%, with beef prices surging 20%. Pork climbed by 8.5%, egg prices increased by 10%, and cereals and fresh vegetables were up more than 4%."
> 
> (https://www.zerohedge.com/markets/p...on-unemployment-stays-great-depression-levels)_




And your point is?

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> And your point is?
> 
> jog on
> duc





*That stagflation is already here; and the evidence is clear!*


----------



## ducati916

Chronos-Plutus said:


> *That stagflation is already here; and the evidence is clear!*





So let us examine the evidence: 






The value in March 1971 (before Nixon defaulted in August) was 121.38. It then dropped into 1980. Currently we are sitting at 93.06.






The PPI index rose from 1970 through 1980 increasing production costs. Currently we are near the lows of the last 10 years, thus the purchasing power of the dollar is higher for productive businesses.






Unemployment is an issue today. For that 1970-1980 period, apart from that spike in 1975/1976, not so much.









CPI pretty steady upward path. The issue for business is the spread between PPI (costs) and CPI (selling price). When the spread favours businesses, profits are higher.

Now the US has moved to a more services based economy over the decades. Therefore when unemployment is high, there is no pressure on wage rates, which are the input costs similar to PPI. Add to that the collapse of Trade Unionism and there is even less wage pressure. During the 1970-1980 period COLAs added to the stagflationary pressure through wage hikes and active strong Union action.

Look at history of US hourly rates:






In 10yrs rose $0.45 cents






Next 10yrs saw a rise of $1.50






1980 to 1990 they rose $0.70



The evidence suggests that the US is nowhere near the 'stagflation' of the 1970-1980 period.

jog on
duc


----------



## ducati916

Continuing the inflation or stagflation scenario:






Silver, which until quite recently had avoided confirming the move in gold, started to confirm the move in gold and the inflation scenario. Why? Well on August 2 we had this article come out, which was a Sunday. Monday, silver has a significant move.

https://www.wsj.com/articles/fed-we...tive-rate-moves-to-curb-inflation-11596360600

Which is the likely basis for the sudden big moves in gold and silver. Essentially the commentary on the Fed. is that they will allow inflation to run a little hot, up to 4% before squashing it, rather than targeting it at 2%, to make up for all the sub-2% target rate to date.

To date, that is the underpinning of the move in silver.

jog on
duc


----------



## ducati916

While the broad indices are slightly off, the broader market is doing well:






Small and Medium caps moving nicely. This is healthy for the overall market.






Sectors within S&P500 all moving nicely. Only Tech. having a breather. Paper is having a particularly good day, possibly anticipating all of that printing to come!






jog on
duc


----------



## ducati916

Silver (black line behind bar chart) tracking the other 'safe' currency:






At least those chaps might be earning some interest along with their capital appreciation.

jog on
duc


----------



## ducati916

At the end of this week, the rotation continues. Nothing flashy, just catching up by inches.






As stated a number of times, you want (need) that breadth for a healthy market.

And the last word of the week to Flippe-floppe-flye:









jog on
duc


----------



## martyjames

Hi Duc

Where does the above table (sector funds) come from?

cheers


----------



## ducati916

martyjames said:


> Hi Duc
> 
> Where does the above table (sector funds) come from?
> 
> cheers





Stockcharts.

jog on
duc


----------



## martyjames

thanks


----------



## Chronos-Plutus

ducati916 said:


> So let us examine the evidence:
> 
> View attachment 107045
> 
> 
> The value in March 1971 (before Nixon defaulted in August) was 121.38. It then dropped into 1980. Currently we are sitting at 93.06.
> 
> View attachment 107041
> 
> 
> The PPI index rose from 1970 through 1980 increasing production costs. Currently we are near the lows of the last 10 years, thus the purchasing power of the dollar is higher for productive businesses.
> 
> View attachment 107042
> 
> 
> Unemployment is an issue today. For that 1970-1980 period, apart from that spike in 1975/1976, not so much.
> 
> View attachment 107046
> View attachment 107047
> 
> 
> CPI pretty steady upward path. The issue for business is the spread between PPI (costs) and CPI (selling price). When the spread favours businesses, profits are higher.
> 
> Now the US has moved to a more services based economy over the decades. Therefore when unemployment is high, there is no pressure on wage rates, which are the input costs similar to PPI. Add to that the collapse of Trade Unionism and there is even less wage pressure. During the 1970-1980 period COLAs added to the stagflationary pressure through wage hikes and active strong Union action.
> 
> Look at history of US hourly rates:
> 
> View attachment 107051
> 
> 
> In 10yrs rose $0.45 cents
> 
> View attachment 107048
> 
> 
> Next 10yrs saw a rise of $1.50
> 
> View attachment 107049
> 
> 
> 1980 to 1990 they rose $0.70
> 
> 
> 
> The evidence suggests that the US is nowhere near the 'stagflation' of the 1970-1980 period.
> 
> jog on
> duc




Examine what you like Old Sport; the fact is that basic food prices are inflated.


----------



## ducati916

Chronos-Plutus said:


> Examine what you like Old Sport; the fact is that basic food prices are inflated.





Again, no attention to detail: CPI food prices are elevated:







Whereas PPI are not:






The market loves CPI inflation, hates PPI inflation. PPI is 'stagflationary', not CPI, which was the point of my previous post.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> Again, no attention to detail: CPI food prices are elevated:
> 
> View attachment 107144
> 
> 
> Whereas PPI are not:
> 
> View attachment 107143
> 
> 
> The market loves CPI inflation, hates PPI inflation. PPI is 'stagflationary', not CPI, which was the point of my previous post.
> 
> jog on
> duc





Not sure what you're trying to highlight.

CPI and PPI are different metrics used for different aspects of economic activity monitoring:

"The producer price index is often used to calculate real growth by adjusting inflated revenue sources, and the consumer price index is often applied to calculate changes in the cost of living by adjusting revenue and expense sources."

(https://www.investopedia.com/ask/answers/08/ppi-vs-cpi.asp#:~:text=The CPI includes imports; the PPI does not.,these factors do not directly benefit the producer.)


----------



## ducati916

Chronos-Plutus said:


> Not sure what you're trying to highlight.
> 
> CPI and PPI are different metrics used for different aspects of economic activity monitoring:
> 
> "The producer price index is often used to calculate real growth by adjusting inflated revenue sources, and the consumer price index is often applied to calculate changes in the cost of living by adjusting revenue and expense sources."
> 
> (https://www.investopedia.com/ask/answers/08/ppi-vs-cpi.asp#:~:text=The CPI includes imports; the PPI does not.,these factors do not directly benefit the producer.)





This thread is about tracking the stockmarket, specifically the S&P500. What will it do? 

Inflation I agree is a major issue for the market. It is inflation for the MARKET not the consumer. No-one cares overmuch about the consumer (as long as he spends). So PPI:






So our farmer is not doing so great currently. However the stages of production bringing that product to the consumer are clearly doing better because of CPI inflation.






The inter-relationship twixt food commodities and S&P500 over the last 6yrs. Massively disinflationary.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> This thread is about tracking the stockmarket, specifically the S&P500. What will it do?
> 
> Inflation I agree is a major issue for the market. It is inflation for the MARKET not the consumer. No-one cares overmuch about the consumer (as long as he spends). So PPI:
> 
> View attachment 107145
> 
> 
> So our farmer is not doing so great currently. However the stages of production bringing that product to the consumer are clearly doing better because of CPI inflation.
> 
> View attachment 107146
> 
> 
> The inter-relationship twixt food commodities and S&P500 over the last 6yrs. Massively disinflationary.
> 
> jog on
> duc




Disposable income (DPI) has decreased over the decades:






Looking more closely over this year, CPI data indicates significant inflationary pressures have emerged in basic cost of living for food, housing and medical:





(https://www.zerohedge.com/markets/fed-wants-inflation-their-actions-are-deflationary)

As for PPI; energy has become cheap for farmers and wholesale producers, which would make up a major operational cost.

CPI is where we should be looking because that is reflective of the supply and demand pricing in the retail market.


----------



## ducati916

Chronos-Plutus said:


> Disposable income (DPI) has decreased over the decades:
> 
> 
> 
> 
> 
> 
> Looking more closely over this year, CPI data indicates significant inflationary pressures have emerged in basic cost of living for food, housing and medical:
> 
> 
> 
> 
> 
> (https://www.zerohedge.com/markets/fed-wants-inflation-their-actions-are-deflationary)
> 
> As for PPI; energy has become cheap for farmers and wholesale producers, which would make up a major operational cost.
> 
> CPI is where we should be looking because that is reflective of the supply and demand pricing in the retail market.





PPI is currently a non-issue because of course the US is not the only Fiat inflating:
























Currently, relative to other Fiat money, the US dollar sits pretty much in the middle of its historical range. In other words, there is no loss of purchasing power worth discussing.

The gold bugs, Schiff et al. fail to realise one significant issue, which is:






The actual cash creation is still (relatively) minor.









The actual Balance Sheet of the Fed. is not contributing to circulation currently:






Which is still in the toilet.

A significant number of variables will need to change before there is any significant inflation, against which the Fed. must lean.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> PPI is currently a non-issue because of course the US is not the only Fiat inflating:
> 
> View attachment 107173
> View attachment 107174
> View attachment 107175
> View attachment 107176
> View attachment 107177
> View attachment 107178
> View attachment 107179
> 
> 
> Currently, relative to other Fiat money, the US dollar sits pretty much in the middle of its historical range. In other words, there is no loss of purchasing power worth discussing.
> 
> The gold bugs, Schiff et al. fail to realise one significant issue, which is:
> 
> View attachment 107182
> 
> 
> The actual cash creation is still (relatively) minor.
> 
> View attachment 107180
> View attachment 107183
> 
> 
> The actual Balance Sheet of the Fed. is not contributing to circulation currently:
> 
> View attachment 107181
> 
> 
> Which is still in the toilet.
> 
> A significant number of variables will need to change before there is any significant inflation, against which the Fed. must lean.
> 
> jog on
> duc




We have seen an inflation in the price of financial assets; that is without debate. If the world begins to move away from using the USD in trade; then the all those USDs will come flooding back to the USA and hyperinflation of goods will certainly eventuate.

There is no way the FED will be able to reduce/unwind their balance sheet, because much of the assets are toxic and nobody will buy them. Then the FED has another problem where they will never be able to increase rates if the inflation genie comes right out of the bottle, because it will induce a credit crisis.

There was talk amongst Obama's economic advisors for the USA to get its currency off reserve status; so that the USA could structurally reform and reset its economy and currency.


----------



## ducati916

Chronos-Plutus, 

1. We have seen an inflation in the price of financial assets; that is without debate. 

2. If the world begins to move away from using the USD in trade; 

2(a).then the all those USDs will come flooding back to the USA and hyperinflation of goods will certainly eventuate.

3. There is no way the FED will be able to reduce/unwind their balance sheet, because much of the assets are toxic and nobody will buy them. 

4. Then the FED has another problem where they will never be able to increase rates if the inflation genie comes right out of the bottle, because it will induce a credit crisis.

5. There was talk amongst Obama's economic advisors for the USA to get its currency off reserve status; so that the USA could structurally reform and reset its economy and currency.

1. True.

2. While it is possible over time, it will require new infrastructure to actually allow this to happen. By new infrastructure I mean a new system of Correspondent Banks (non-US banking system).

2(a) If [2] were to occur and no-one wanted to hold US dollars (for any reason) and if then those dollars would be used to buy various home currencies (and/or whatever) which would weaken the US dollar in FX markets. Would that trigger a hyper-inflation? Only if in the resulting price rise of commodities/external debts created a situation where further fiat was printed to meet the additional cost repetitively. However there are so many moving parts I doubt anyone could predict the final outcome.

3. Of course they can. They unwound after 2008/2009. It takes time, but for a Central Bank, it can be done.

4. Rates can be raised. Would the outcome be pretty? No of course not. Volcker did it and there was an ugly decade for financial markets. I lived in the States (California) during the 70's and life generally was fine. Possibly the West coast was less affected than the East.

5. Talk is cheap.

jog on
duc


----------



## ducati916

So next week:


















We are close to all of the upper ranges. Can they sneak a little higher first? Possible. However I am more in the camp that we fail the 1'st test of the all-time-highs and have to regroup a little lower. Typically we open at or slightly above the high and sell-off.






I wouldn't expect the sell-off to to be significant (but we still have elevated VIX compared to levels prior to COVID) but at least to the resistance line, which might take (or last) a couple of days.

Then, once the internals have regrouped, we take shot #2.

As ever, the move lower will be attributed to some news item or marginal economic report. It is just what markets do. We had a really good run last week, this week will test the resolve of the late comers. C'est la vie.

jog on
duc


----------



## ducati916

So earnings is a wrap barring a handful of companies.









So no more earnings news to upset the applecart until 3Q.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> Chronos-Plutus,
> 
> 3. There is no way the FED will be able to reduce/unwind their balance sheet, because much of the assets are toxic and nobody will buy them.
> 
> 3. Of course they can. They unwound after 2008/2009. It takes time, but for a Central Bank, it can be done.
> 
> jog on
> duc




The FED after 2008/2009 trimmed like ~25% of the trillions in Mortgage Backed Security junk, however they failed because the assets are largely toxic; that is why the FED had to buy this junk in the first place.






These toxic assets, in the trillions, will need to be written off. This write-off will shake financial markets to the core. So yes, the FED can fully unwind the balance sheet, but not without writing off the trillions in toxic assets, which will likely cause another financial crisis of some kind.

The FED is currently holding ~$1.9 trillion in Mortgage Backed Securities:


----------



## Chronos-Plutus

Chronos-Plutus said:


> The FED after 2008/2009 trimmed like ~25% of the trillions in Mortgage Backed Security junk, however they failed because the assets are largely toxic; that is why the FED had to buy this junk in the first place.
> 
> View attachment 107233
> 
> 
> These toxic assets, in the trillions, will need to be written off. This write-off will shake financial markets to the core. So yes, the FED can fully unwind the balance sheet, but not without writing off the trillions in toxic assets, which will likely cause another financial crisis of some kind.
> 
> The FED is currently holding ~$1.9 trillion in Mortgage Backed Securities:
> 
> View attachment 107234




Should we ask Jolly Old Jay what returns the FED is currently receiving from the $1.9 trillion in Mortgage Backed Securities on their balance sheet , which have the comforting guarantee of being backed by Fannie and Freddie


----------



## ducati916

Chronos-Plutus said:


> Should we ask Jolly Old Jay what returns the FED is currently receiving from the $1.9 trillion in Mortgage Backed Securities on their balance sheet , which have the comforting guarantee of being backed by Fannie and Freddie





Fannie & Freddie had implied, although not statutory backing from government. The Fed. needs no such guarantee. Essentially you have the relationship backwards.

jog on
duc


----------



## ducati916

Markets this morning:









We still have that slow, steady rotation taking place.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> Fannie & Freddie had implied, although not statutory backing from government. The Fed. needs no such guarantee. Essentially you have the relationship backwards.
> 
> jog on
> duc




Well the issuers of the MBS are supposed to back the financial product!

The FED are merely just the investor! Buying the asset on behalf of the American people!


----------



## ducati916

Same old, same old:






There is no 'free' lunch on Wall St. Order flow manipulation is as old as the hills. Market Makers love having access to that data, as, although they can move stocks where they want (short term) it is nice to know exactly how strong the position is that you will trade against.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> Same old, same old:
> 
> View attachment 107281
> 
> 
> There is no 'free' lunch on Wall St. Order flow manipulation is as old as the hills. Market Makers love having access to that data, as, although they can move stocks where they want (short term) it is nice to know exactly how strong the position is that you will trade against.
> 
> jog on
> duc




There is no free lunch Mr Duc.

The bill always falls due, as I have said from the start of our discussion.

If I worked in congress, intel, treasury; I would be asking the FED; where is the return for the MBS asset purchases?

Don't tell me the FED are buying toxic rubbish on behalf of the American people; Jay might end up in jail for treason!

An act of betraying the nation; a very fine line Jay is walking now.


----------



## ducati916

Chronos-Plutus said:


> Well the issuers of the MBS are supposed to back the financial product!
> 
> The FED are merely just the investor! Buying the asset on behalf of the American people!





The Fed. effectively nationalised the two GSEs. As I remember, over time, they turned a profit as RE values rose. However the point is that the Fed. (unlike private enterprise) can hold so called 'toxic' investments and absorb the loss (yes the taxpayer). Is it right? No. But (for the moment) that is the reality.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> The Fed. effectively nationalised the two GSEs. As I remember, over time, they turned a profit as RE values rose. However the point is that the Fed. (unlike private enterprise) can hold so called 'toxic' investments and absorb the loss (yes the taxpayer). Is it right? No. But (for the moment) that is the reality.
> 
> jog on
> duc




So the FED are bankrupting the entire American nation for the sake of a fraction of the people! End of story!

A criminal offense, close to the words of treason.


----------



## ducati916

Chronos-Plutus said:


> There is no free lunch Mr Duc.
> 
> The bill always falls due, as I have said from the start of our discussion.
> 
> If I worked in congress, intel, treasury; I would be asking the FED; where is the return for the MBS asset purchases?
> 
> Don't tell me the FED are buying toxic rubbish on behalf of the American people; Jay might end up in jail for treason!
> 
> An act of betraying the nation; a very fine line Jay is walking now.




Well I never stated that the Fed. was buying/investing for US public. That was you.







What the Fed. is currently engaged in is illegal (outside of the 1913 Act), but it is not 'treason'. Will he ever be prosecuted? I very much doubt that.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> Well I never stated that the Fed. was buying/investing for US public. That was you.
> 
> View attachment 107282
> 
> 
> What the Fed. is currently engaged in is illegal (outside of the 1913 Act), but it is not 'treason'. Will he ever be prosecuted? I very much doubt that.
> 
> jog on
> duc




The FED invest for listed banks, that is it.

I suppose that the USA are lucky at the moment that these listed banks don't have a private army; if it gets to it.

The FED is outside its mandate; and must be brought into line to protect the longevity of the USA.

That is my opinion. I will say no more on this topic, as I am not an American citizen and I am not directly employed by the American government.


----------



## ducati916

Chronos-Plutus said:


> So the FED are bankrupting the entire American nation for the sake of a fraction of the people! End of story!
> 
> A criminal offense, close to the words of treason.





The problem with wide sweeping generalised statements is that almost invariably they are either wrong or so lacking in the specifics as to be virtually worthless.

Is the Fed. 'bankrupting' (making insolvent) the US? Where are your arguments and evidence to support the allegation?

jog on
duc


----------



## ducati916

"Chronos-Plutus,

1. The FED invest for listed banks, that is it.

2.I suppose that the USA are lucky at the moment that these listed banks don't have a private army; if it gets to it.

3. The FED is outside its mandate;  3(a) and must be brought into line to protect the longevity of the USA.

4. That is my opinion. I will say no more on this topic, as I am not an American citizen and I am not directly employed by the American government.

1. Incorrect.

2. I have no idea what you are talking about.

3. True. 3(a) More likely that the mandate will be amended.

4. Fine.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> The problem with wide sweeping generalised statements is that almost invariably they are either wrong or so lacking in the specifics as to be virtually worthless.
> 
> Is the Fed. 'bankrupting' (making insolvent) the US? Where are your arguments and evidence to support the allegation?
> 
> jog on
> duc




My comments about the FED are not merely allegations, they are fact. The FED provide the evidence.


----------



## Chronos-Plutus

ducati916 said:


> "Chronos-Plutus,
> 
> 1. The FED invest for listed banks, that is it.
> 
> 2.I suppose that the USA are lucky at the moment that these listed banks don't have a private army; if it gets to it.
> 
> 3. The FED is outside its mandate;  3(a) and must be brought into line to protect the longevity of the USA.
> 
> 4. That is my opinion. I will say no more on this topic, as I am not an American citizen and I am not directly employed by the American government.
> 
> 1. Incorrect.
> 
> 2. I have no idea what you are talking about.
> 
> 3. True. 3(a) More likely that the mandate will be amended.
> 
> 4. Fine.
> 
> jog on
> duc




1. The FED are known clients of JP Morgan and Goldman.

2. If you don't know now, well you will never know.

3. The FED is a cooked goose.

4. Agreed.


----------



## ducati916

Chronos-Plutus said:


> My comments about the FED are not merely allegations, they are fact. The FED provide the evidence.





You will have to excuse my scepticism. You cannot even state accurately what the Fed. actually does. I have absolutely no confidence in accepting your assertion of the facts.

Please don't post some half-wit on a youtube video as evidence.

jog on
duc


----------



## ducati916

Chronos-Plutus said:


> 1. The FED are known clients of JP Morgan and Goldman.
> 
> 2. If you don't know now, well you will never know.
> 
> 3. The FED is a cooked goose.
> 
> 4. Agreed.




1. Known by whom and evidenced how?

2. Well clearly I don't know and it would seem that you have no explanation.

3. So you say, but always without any argument or evidence.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> You will have to excuse my scepticism. You cannot even state accurately what the Fed. actually does. I have absolutely no confidence in accepting your assertion of the facts.
> 
> Please don't post some half-wit on a youtube video as evidence.
> 
> jog on
> duc




Well despite their (FED) advertising website; they buy toxic assets for investment and commercial banks; essentially bankrupting the American people.

Their (FED) balance sheet is evidence, as I have posted!


----------



## Chronos-Plutus

ducati916 said:


> 1. Known by whom and evidenced how?
> 
> 2. Well clearly I don't know and it would seem that you have no explanation.
> 
> 3. So you say, but always without any argument or evidence.
> 
> jog on
> duc




1. I think you know that answer. Ask your mate Mr Fly; which bank buys assets on behalf of the FED?

2. The FED don't have a military to control the printing presses. The USA government do.

3. The FED are cooked, unless little Jay awakes from his induced coma of servitude to the listed banks and actually starts working for the government of the USA.


----------



## Chronos-Plutus




----------



## Chronos-Plutus

Either way it is not our problem; we are not employed by the government of the USA and we are just investors and traders.


----------



## Chronos-Plutus

Tesla market share crushed in Germany: _*"Tesla’s share of the EV market plunged to 8.7% year-to-date, from 18.4% last year. Competition is now huge and across the spectrum. Tesla faces the same situation globally."

(https://www.zerohedge.com/technology/tesla-crushed-germany-evs-vw-renault-hyundai-group)*_


----------



## ducati916

I don't see this on any of the newswires, maybe flippe-floppe-flye has the world exclusive:






jog on
duc


----------



## ducati916

Chronos-Plutus said:


> 1. I think you know that answer. Ask your mate Mr Fly; which bank buys assets on behalf of the FED?
> 
> 2. The FED don't have a military to control the printing presses. The USA government do.
> 
> 3. The FED are cooked, unless little Jay awakes from his induced coma of servitude to the listed banks and actually starts working for the government of the USA.




The problem with sweeping generalisations, as already stated, is that they are generally inaccurate, misleading or simply incorrect.

So the Federal Reserve:






These are the member Banks.






What they are (supposed) to do:






How they execute FOMC:






What it constitutes:






Through the Primary Dealers:






jog on
duc


----------



## ducati916

Chronos-Plutus said:


> Either way it is not our problem; we are not employed by the government of the USA and we are just investors and traders.





If you are actively investing or trading, then it is very much 'your' (our) problem. If you do not understand accurately, or choose to ignore what and how the Fed. is organised and its purpose, you will fundamentally misunderstand how the world's financial markets operate.

There is an old adage: 'Don't fight the Fed.'. Never was a truer word spoken. You may not like it. You may oppose it on ethical, legal and economic grounds, but don't make the mistake of betting against it.

2008/2009 was a far worse test of the Fed's. power than COVID. COVID is a nothing by comparison. The Fed. managed, from behind the 8-ball, to step in and literally save the world's financial system within 5 hrs over collapse: nothing was clearing through the banking system. I traded this (or rather watched) as trades were unable to clear for about 4hrs, while the system was literally collapsing before you.

My advice: long path, study the Fed. Short path: trade in the same direction as the Fed.

jog on
duc


----------



## ducati916

The rebalance continues:









jog on
duc


----------



## ducati916

Oil patch news:


-    U.S. LNG exports averaged 8 bcf/d in January 2020. By July, exports fell to 3.1 bcf/d. 

-   The last time U.S. gas exports were as low as July levels was in May 2018, back when export capacity was about one-third of current capacity.

-   The week of July 12-18 was particularly low – averaging just 2 bcf/d.  

*Market Movers*

-   *Saudi Aramco (TADAWUL: 2222) *saw its profits fall 73 percent to $6.57 billion in the second quarter. Aramco maintained its dividend.

-   * Cheniere Energy (NYSE: LNG) *said it sees LNG cancellations ending by the winter. 

-   A federal judge ordered the Army Corps of Engineers to detail options by the end of August for resolving the permitting issue with the Dakota Access pipeline.

*Tuesday, August 11, 2020*

Oil prices strengthened again on hopes of a slowdown in coronavirus transmission in the United States. “The fact that the COVID cases seem to be tapering off in the U.S. is making people a little more optimistic about getting it under control and demand recovering toward the end of the year,” said Michael Lynch, president of Strategic Energy & Economic Research. Also, Russia said it was moving forward with a coronavirus vaccine despite the lack of rigorous trials. The health impact is unclear, but any positive vaccine news has tended to spark a bullish reaction from the market. 

_*Rig count slides again.*_ Even as the oil market has stabilized, the U.S. oil industry has not returned to drilling. Even the Permian basin continues to lose rigs. “North American E&Ps are in a battle for investment relevance, not a battle for global market share,” Matt Gallagher, CEO of *Parsley Energy Inc. (NYSE: PE)*, told analysts during a conference call. “Allocating growth capital into a global market with artificially constrained supply is a trap our industry has fallen into time and time again.”

*U.S. oilfield services lose more than 9,000 jobs in July.* The U.S. oilfield-services sector cut 9,344 jobs in July, a sharp increase in job losses from a month earlier. In total, nearly 100,000 jobs have been lost since the start of the pandemic. The expiration of federal support could lead to more job cuts. 

_*Permits for horizontal drilling hit a 10-year low.*_ Not only is the rig count at historic lows, but so are new drilling permits. “Drilling permits, which are increasingly reliable indicators of future activity levels, dipped to a 10-year monthly low this July, with only 454 awards,” Rystad Energy wrote in a report. The firm said that unless WTI prices quickly move to $50 per barrel within the next few weeks, it is unlikely that the rig count will increase significantly before 2021.

_*Canadian oil sands producers lose $C$2.4 billion in the second quarter.*_ Combined, top oil producers in Canada’s oil sands lost C$2.4 billion ($1.8 billion) in the second quarter, following a first quarter loss of C$8.8 billion. Capital is also becoming a concern. Recently, HSBC, Norges Bank, and Deutsche Bank said they would no longer finance Canada’s oil sands.

_*Trump admin to gut methane regulations.*_ The EPA is expected to announce a rollback of standards on methane emissions from oil and gas operations. The move was long expected. However, this regulation could be quickly repealed if the Democrats take control of the Senate and Joe Biden wins the White House. 

_*Occidental loses $8 billion.*_ *Occidental Petroleum (NYSE: OXY) *lost $8 billion in the second quarter, including a $6.6 billion write-down. Oxy also said that its oil and gas production would fall by 13 percent this quarter and by another 5 percent in the fourth quarter. Notably, Oxy said that its Permian production would fall by 37 percent this year. “We remain concerned about the company's high debt load and ability to generate cash flow in a prolonged low oil price environment,” Jennifer Rowland, an analyst with Edward Jones, wrote in a note.

_*9 companies file for bankruptcy in July. *_A new report from Haynes and Boone finds that 9 North American oil and gas companies filed for bankruptcy in July, a 66 percent increase from the same period a year earlier. In the first seven months of the year, 32 companies sought bankruptcy protection.  

_*Nord Stream 2 at risk of non-completion.*_ U.S. sanctions are increasing the odds that the Nord Stream 2 pipeline does not reach completion, according to *Uniper (OTC: UNPPY)*, one of the project’s partners. If the pipeline cannot be completed, Uniper says it “may have to impair the loan provided to Nord Stream 2 and forfeit the planned interest income.”

_*SEB: $60-$80 oil possible, depends on shale. *_The lack of drilling activity could push oil prices up to $60 per barrel at some point next year, but that depends on shale restraint, according to SEB. Any surge in drilling will keep prices depressed. “The US shale oil sector and its investors need to start behaving more like OPEC+ and constrain investments and supply to some extent if they want to walk away with profits,” said Bjarne Schieldrop, chief commodities analyst at SEB.

_*Iran oil exports higher than data suggests. *_Iran is exporting as much as 600,000 barrels daily, using ship-to-ship transfers with transponders turned off to avoid detection, skirting U.S. sanctions. The daily average number compares with an estimate of 227,000 bpd made in a U.S. Congressional report.

_*U.S. producers take oil back from SPR. *_U.S. oil companies have started pulling their crude oil back from government storage tanks, suggesting that the glut that forced them to stash it there in the first place is now easing.

_*Oil majors’ cuts reach 1 mb/d.*_ The five largest oil majors have written down a combined $50 billion in assets and slashed production by 1 mb/d. Only *ExxonMobil (NYSE: XOM) *did not write down any assets, although the company said in a filing that it may revise down its reserves at the end of the year. 

We invite you to read several of the most recent articles we have published which may be of interest to you:


jog on
duc


----------



## qldfrog

Hum a quick look at the major indices and it seems like carnage
Gold and silver down by a lot  vix up indices in red.will check with more details in a couple of hours


----------



## ducati916

qldfrog said:


> Hum a quick look at the major indices and it seems like carnage
> Gold and silver down by a lot  vix up indices in red.will check with more details in a couple of hours





Mr Frog,

Re. w/e analysis, nothing to get too concerned about, VIX was always 'likely' to test resistance, which means a pullback for stocks







So updated VIX, now of course the VIX needs to be monitored. But it also needs to be analysed in context. I'll update the context later.

jog on
duc


----------



## ducati916

So 'vaccine' update:






As opposed to:






jog on
duc


----------



## ducati916

And Gold/Silver









jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> If you are actively investing or trading, then it is very much 'your' (our) problem. If you do not understand accurately, or choose to ignore what and how the Fed. is organised and its purpose, you will fundamentally misunderstand how the world's financial markets operate.
> 
> There is an old adage: 'Don't fight the Fed.'. Never was a truer word spoken. You may not like it. You may oppose it on ethical, legal and economic grounds, but don't make the mistake of betting against it.
> 
> 2008/2009 was a far worse test of the Fed's. power than COVID. COVID is a nothing by comparison. The Fed. managed, from behind the 8-ball, to step in and literally save the world's financial system within 5 hrs over collapse: nothing was clearing through the banking system. I traded this (or rather watched) as trades were unable to clear for about 4hrs, while the system was literally collapsing before you.
> 
> My advice: long path, study the Fed. Short path: trade in the same direction as the Fed.
> 
> jog on
> duc




Yes, I agree as far as trading and investing accordingly.

I am saying that the problems aren't our problem to deal with.


----------



## Chronos-Plutus

ducati916 said:


> The problem with sweeping generalisations, as already stated, is that they are generally inaccurate, misleading or simply incorrect.
> 
> So the Federal Reserve:
> 
> View attachment 107367
> 
> 
> These are the member Banks.
> 
> View attachment 107368
> 
> 
> What they are (supposed) to do:
> 
> View attachment 107369
> 
> 
> How they execute FOMC:
> 
> View attachment 107370
> 
> 
> What it constitutes:
> 
> View attachment 107371
> 
> 
> Through the Primary Dealers:
> 
> View attachment 107372
> 
> 
> jog on
> duc




The legal representative of the FED is on the record before Congress openly stating that the FED purchase assets through the commercial banks.

Make of that, what you will; if I have time to find the testimony for you, I will.


----------



## ducati916

Chronos-Plutus said:


> The legal representative of the FED is on the record before Congress openly stating that the FED purchase assets through the commercial banks.
> 
> Make of that, what you will; if I have time to find the testimony for you, I will.





Clearly you haven't bothered to read what I posted. If you had you would know not to bother wasting your time.

jog on
duc


----------



## ducati916

Chronos-Plutus said:


> Yes, I agree as far as trading and investing accordingly.
> 
> I am saying that the problems aren't our problem to deal with.





Surely that is so fundamental, that it does not even need to be stated. 

jog on
duc


----------



## ducati916

So I find myself with some extra time as Auckland re-enters Level 3 lockdown. I am considered an essential worker, but, nothing essential today. So:






At resistance for the 20EMA. It suggests that we will pullback tomorrow.






The 50EMA went through resistance, but again, suggestive of a pullback.






TRIN already registering today's pullback, will continue into tomorrow. Now it may bottom out quickly tomorrow, which means we may see a lunchtime reversal. Keep an eye out for that.






My tiebreaker also indicating a pullback.






Short term VIX suggests that the pullback is over based on trendline.






Longer term VIX suggests more to come until we test resistance and it holds.

The play will be between TRIN and VIX, which may resolve around lunchtime, absent any bad headlines which might create a little further paranoia and spook the newbies, whom the MM will fleece. Normally, they would extend the selloff (especially if the newbies are silly enough to go short and then on the turn of a dime, reverse the market sharply higher) to catch as many minnows as possible.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> Clearly you haven't bothered to read what I posted. If you had you would know not to bother wasting your time.
> 
> jog on
> duc



It doesn't strike you as strange that the Federal Reserve Bank need commercial banks to purchase assets on the various exchanges?

Clearly you are lacking attention to detail and analytical depth if this hasn't crossed your mind.

You think the commercial banks will not front run the FED? 
Dream on Duc


----------



## ducati916

Chronos-Plutus said:


> 1. It doesn't strike you as strange that the Federal Reserve Bank need commercial banks to purchase assets on the various exchanges?
> 
> 2. Clearly you are lacking attention to detail and analytical depth if this hasn't crossed your mind.
> 
> 3. You think the commercial banks will not front run the FED? Dream on Duc




1. I see that you still haven't bothered to read my earlier post. So here is the relevant part:






So my answer to [1] is: no it does not strike me as strange as that is how the process is designed.

2. Well not only did it cross my mind, but I actually (back in the day) researched it. Something that you clearly haven't bothered to do.

3. Really? To what purpose?

jog on
duc


----------



## ducati916

Re. Gold Miners (as a sector):












Divergence. Always a very strong signal.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> 1. I see that you still haven't bothered to read my earlier post. So here is the relevant part:
> 
> View attachment 107404
> 
> 
> So my answer to [1] is: no it does not strike me as strange as that is how the process is designed.
> 
> 2. Well not only did it cross my mind, but I actually (back in the day) researched it. Something that you clearly haven't bothered to do.
> 
> 3. Really? To what purpose?
> 
> jog on
> duc




This is my point: why does the Federal Reserve Bank need to go through  dealers, when they can go directly into the market themselves to buy and sell what they like.


----------



## Chronos-Plutus

ducati916 said:


> 1. I see that you still haven't bothered to read my earlier post. So here is the relevant part:
> 
> View attachment 107404
> 
> 
> So my answer to [1] is: no it does not strike me as strange as that is how the process is designed.
> 
> 2. Well not only did it cross my mind, but I actually (back in the day) researched it. Something that you clearly haven't bothered to do.
> 
> 3. Really? To what purpose?
> 
> jog on
> duc




So my understanding is the FED tells bank X (primary dealer) to buy asset X for the FED. Bank X goes into the market to buy asset X for the FED.

Just like how you tell your broker to buy your shares.


----------



## ducati916

Chronos-Plutus said:


> This is my point: why does the Federal Reserve Bank need to go through  dealers, when they can go directly into the market themselves to buy and sell what they like.





The Fed. Bank of New York, has a trading desk that directly trades with the Primary Dealers (Money Centre Banks). The purpose is to control the Fed Funds Rate, from which the curve takes its information, through Bank Reserves, which the Banks use in the Repo market for overnight money and settlement. The little guys (Retail banks) come to the Money Centre Banks (Commercial) for overnight Repos.

If you look at the list of Primary Dealers, you will see they are all major money centre banks. The Fed is not going to deal with your local branch of ANZ or whatever.

Sitting at the top of the tree is the Fed.

jog on
duc


----------



## ducati916

Chronos-Plutus said:


> So my understanding is the FED tells bank X (primary dealer) to buy asset X for the FED. Bank X goes into the market to buy asset X for the FED.
> 
> Just like how you tell your broker to buy your shares.





Incorrect.

See above.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> The Fed. Bank of New York, has a trading desk that directly trades with the Primary Dealers (Money Centre Banks). The purpose is to control the Fed Funds Rate, from which the curve takes its information, through Bank Reserves, which the Banks use in the Repo market for overnight money and settlement. The little guys (Retail banks) come to the Money Centre Banks (Commercial) for overnight Repos.
> 
> If you look at the list of Primary Dealers, you will see they are all major money centre banks. The Fed is not going to deal with your local branch of ANZ or whatever.
> 
> Sitting at the top of the tree is the Fed.
> 
> jog on
> duc




Steady-on son. That's for overnight money markets.

What about mortgage backed securities and corporate bonds.


----------



## ducati916

Chronos-Plutus said:


> Steady-on son.
> 
> 1. That's for overnight money markets.
> 
> 2. What about mortgage backed securities and corporate bonds.




1. Incorrect. It is for the Fed Funds rate: which is in addition, the Repo market.

2. GSE securities are/can also be purchased from the Primary Dealers. Now Corporate Bonds are where the Fed. went rogue and outside its remit. The Corporate Bonds were largely purchased directly via the LQD ETF.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> 1. Incorrect. It is for the Fed Funds rate: which is in addition, the Repo market.
> 
> 2. GSE securities are/can also be purchased from the Primary Dealers. Now Corporate Bonds are where the Fed. went rogue and outside its remit. The Corporate Bonds were largely purchased directly via the LQD ETF.
> 
> jog on
> duc




Now what about treasury notes and treasury bonds. Does the FED buy and sell these directly with treasury or do they go through the primary dealers?


----------



## ducati916

Chronos-Plutus said:


> Now what about treasury notes and treasury bonds. Does the FED buy these directly from treasury or do they go through the primary dealers?





For someone who thinks that they know everything, you really know very little. DYOR.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> For someone who thinks that they know everything, you really know very little. DYOR.
> 
> jog on
> duc




Steady-on Son

I thought you have all the answers


----------



## Chronos-Plutus

ducati916 said:


> For someone who thinks that they know everything, you really know very little. DYOR.
> 
> jog on
> duc




Anyway; I will give the whole FED discussion a rest. Just don't try and pretend that the primary dealers aren't making money (a form a government welfare) from the FED asset purchases.

It is what it is, and it is a cluster fark of a sh1tshow. I guess if individuals and institutions can make money from it, so be it, but the music and show will have to end at some point; and when it does it won't be a happy ending for the vast majority of individuals and institutions.


----------



## ducati916

So all those trading the PMs. There was a jump in the PPI and interest rates did this:










Gold and silver sold off hard.

What loves rising interest rates?













The market and specifically banks. In 1951, interest rates were allowed after wartime control (a form of QE) to rise. The market rose right along with them, because, paradoxically, the low controlled rates prevented a rotation out of Bonds and into stocks.

If you follow the oil patch (from the news today) we can see that there are potentially going to be production issues down the road. Production issues could morph into supply issues, which create a price spike. Now we do not particularly want a price spike, but higher prices to +/- $70/barrel are probably manageable.

The caveat is however that interest rates need to keep ahead of PPI inflation. If we lose control of the PPI vis-a-vis interest rates (real as against nominal) then the market will have issues if you get another Volcker having to take remedial action. The only real possibility of PPI surging out of control resides in the oil patch and all the politics currently playing out there.

Rising rates = stronger US dollar = control of PPI as against POO.

jog on
duc


----------



## over9k

There's also the elephant in the room of the stimulus talks at a stalemate duc. Everyone are getting the jitters wondering how long it'll be before the logjam is broken. 

The conspiracy theorist in me says the democrats have engaged in a gambit and are trying to torpedo the economy as a biden election strategy. 

You'll like this - I sold my gold, zoom, and docusign off and rotated into a few etf's a few days ago. IBUY, PEZ, XLI, XLK, XLP, XLY, XLC.


----------



## ducati916

Market just moved through to all-time highs.












I thought there might be a bit more resistance than there actually was.

jog on
duc


----------



## ducati916

FAS rebalanced:






I'm liking these holdings.

jog on
duc


----------



## qldfrog

ducati916 said:


> Market just moved through to all-time highs.
> 
> View attachment 107462
> View attachment 107463
> View attachment 107464
> 
> 
> I thought there might be a bit more resistance than there actually was.
> 
> jog on
> duc



same here I was expecting a week of so so going nowhere among a general up trend, so should we expect a sharp surprise soon? too smooth a ride in that rebalancing don't you think? or are we reaching more stable times..unlikely..


----------



## over9k

Jeez frog, I don't know what you've been holding, but my last month has been anything but smooth.


----------



## ducati916

Election:






Biden seems to be the pollster's favourite to win. The Duc'ster thinks Trump will shave it.

jog on
duc


----------



## martyjames

yes, the pollsters were way out last time, and even more amazing the bookies


----------



## Dark1975

I personally thought trump would win in a close election , and hopefully see the market generally tick upwards through till the end of the year,
In which at this period I am holding 75% of my share portfolio in ANZ, WBC, BOQ and other bank shares in which I see bank shares with the most risk to reward with 35% - 50% undervalued from previous highs, but  more importantly higher dividend yields with 9 - 11% yield which I'm happy with in a longer term of investment ,
Tho with jo biden pulling a hail merry with his VP pick kamala Harris is a smart and quiet maybe winning campaign,  As he has stated his campaigning now as a transitional president making way from Vice president kamala Harris as either a second vote as a the next future president as either next 4years or let's face it , at 78years old will he make it till full term , which gives the VP Presidency by default,
So really dear old joe made a smart move with really using his new VP as a possible future votr and secondly take advantage of the #black live matter movement votes!
I hope I'm wrong, otherwise if Biden goes in I see a little hurdle in the market in november .


----------



## ducati916

So here are the futures currently:






What is with gold/silver? Commodities are definitely picking up currently.

jog on
duc


----------



## over9k

Looooool


----------



## over9k

Also duc, reference nvidia and their new products I was talking about: 

This went live yesterday: https://www.nvidia.com/en-us/geforc...kybGt6NWZjYkU0U1dlSWhoNSJ9#cid=_em-news_en-us 

And the stock rallied just over 5%. All the rumour mills worth listening to were predicting a september launch and it looks like they nailed it.


----------



## ducati916

Just entered this position:






Now if there truely is PPI inflation, the long end of the curve will move, unless the Fed. uses a 1940's style approach. So essentially this is a partial hedge. If there was a true inflation (which will come primarily from POO if it comes) will hedge the remainder of the portfolio as I hold ERX as part of my portfolio anyway.

The advantage is that there is little downside at these current prices.

The advantage over Gold/Silver is that if there is an inflation of PPI and rates move (which they will) both Gold/Silver will be crushed, the other day was an excellent example of just that risk.

jog on
duc


----------



## ducati916

Dark1975 said:


> 1. I personally thought trump would win in a close election , and hopefully see the market generally tick upwards through till the end of the year,
> 
> 2. In which at this period I am holding 75% of my share portfolio in ANZ, WBC, BOQ and other bank shares in which I see bank shares with the most risk to reward with 35% - 50% undervalued from previous highs, but  more importantly higher dividend yields with 9 - 11% yield which I'm happy with in a longer term of investment ,
> 
> 3. Tho with jo biden pulling a hail merry with his VP pick kamala Harris is a smart and quiet maybe winning campaign,  As he has stated his campaigning now as a transitional president making way from Vice president kamala Harris as either a second vote as a the next future president as either next 4years or let's face it , at 78years old will he make it till full term , which gives the VP Presidency by default,
> 
> 4. So really dear old joe made a smart move with really using his new VP as a possible future votr and secondly take advantage of the #black live matter movement votes!
> I hope I'm wrong, otherwise if Biden goes in I see a little hurdle in the market in november .




1. Although all of the polls suggest otherwise, I think Trump will just shave it. I have no basis for that, just a hunch and in part that Biden is such a non-entity.

2. I also like the banks/financial sector for a big sustained move.

3. I had never heard of her until she announced. The trouble with the VP position is that unless Biden were to die in office, the VP is political suicide. It is largely a toothless position. Far less power than remaining in the Senate.

4. Agreed. All VP nominations are essentially to grab votes from a demographic that you are weak in. Funnily enough financials do far better under a Democrat than Republicans. If Biden is going to take it, we'll see and end of August swoon in the market.

jog on
duc


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## ducati916

Waiting on a pullback. Missed this at the lows.






Annoying.

jog on
duc


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## ducati916

Technology as capital investment of GDP:






Productivity (profitability) can grow in the face of high unemployment, which is why when the unemployment figures come out, good or bad, the market is not overly concerned. Employment in the US is service based. These are lower paying jobs and have little to zero effect on S&P500 earnings.

jog on
duc


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## ducati916

A salutary tale from flippe-floppe-flye:









Be careful, especially in the leveraged space, the ETFs and more often ETNs that you trade/hold.

jog on
duc


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## ducati916

This was yesterday's 50EMA:






Which evidences the run through the resistance level and yesterday's bullishness. Today's (after market close) will bring us back down to the resistance levels and a likely sell-off into the w/e. Friday's as we know, tend to be close the trade for the w/e and avoid any bad news that could eventuate over the w/e.









jog on
duc


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## ducati916

Further evidence of the gradual rotation. Now a rotation does not mean the hot sector simply stops performing, more that it slows and other sectors catch up a bit as the overall market balances out.










jog on
duc


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## ducati916

Competition for TSLA?









Personally I think the TSLA tech. is great. I just hate the look of a TSLA. This on the other hand is nice.

jog on
duc


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## ducati916

The inflation trade:






It can be seen that gold moves inversely to the yield. If there is inflation (PPI) and the Fed. does not peg the yield, then yields will rise and gold will fall. Gold will fall (initially) far faster than stocks. If yields ratchet up much past 7% then stocks will have serious issues. Except financials. Financials do pretty well in higher interest rate environments.

Now I don't see much if any inflation before next year, when, possibly POO rises on supply issues into returning demand. Clearly from the oil patch news we can see that supply is going to be constrained. Demand will pick up. Where all that settles out in POO is probably $60/$70. The issue is if there is 'something' that creates a price spike. Even if there is, I don't see it being of long duration, there is still enough swing supply to bring it back down.

The other issue for gold (although no time soon) is when rates are raised by the Fed. The increments will be 25 basis points and spread out. Baby steps. Stocks (in 2018/2019 threw the 'Tantrum') but stocks can absorb up to 5% with no issues, except some of the real overvalued stuff (tech) might have tumbles. Gold however is currently priced for perfection, which is ZIRP and NIRP.

I actually (love) gold and silver. The physical. Not the paper. If there is a monetary armageddon, good luck on getting delivery of your physical, or the output from your mine or whatever. You want it where you can physically control it. Not where you are relying on a 3'rd party. How much do you think you would actually need? Probably not as much as you might think. The stuff is only to facilitate exchange. As long as you have some, you can earn more. Of course if you are simply trading it, ignore all of the above.

jog on
duc


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## ducati916

Pretty quiet day.






All the action is in the Fixed Income markets, where, from mid-curve we have had (pretty much) a 25 basis point move. This is why gold/silver are spooked currently.






This is (really) the first twitch of the market since Feb. of any indication of inflationary issues. Then take a look at the sector ETFs and see which ones held their ground today. It will be interesting now to monitor the FI market much more closely going forward.

jog on
duc


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## ducati916

News on what the big boys are up to and the 'stagflation' meme examined:
























I'm somewhat surprised by Buffett's choices.

jog on
duc


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## ducati916

Now the 'stagflation' meme:


















Now, CPI prices mean very little to zero re. inflation. PPI prices are the driver:













PPI pressures are mounting. This is why last week we had the 25 basis point move in the long end of the curve. Hedging PPI inflation with PMs is a total waste of time unless, the Fed. manages the long end of the curve as they did in the 1940 period for war production.

Given that 1 of the primary mandates is that the Fed. lean against inflation, management of the long end is out of remit. However given that the Fed. has already been colouring well outside the lines, it is not beyond possibility.

From a perspective of: will the POO rise? Almost certainly, once you take into account the damage done to productive capability from the Arab's price war. My guess is it will settle at $60/$70 barrel. But it could spike in the short term higher. Now you get a situation where CPI inflation will run slower than PPI inflation. This is a profit margin compression the wrong way. Corporate earnings are squeezed. The market does not like Corporate margin squeeze. Hence, the Fed. will allow the long end to adjust to market forces. Market forces will see higher yields at the long end.

Some sectors love higher rates (Banks) some sectors hate higher rates (Gold/Silver). Some are up to a point, indifferent. That point is probably a 5% yield. After that, most sectors will fall. A quick research of the 1970-1982 period will disclose which sectors thrive, survive and die.

jog on
duc


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## ducati916

So lots to think about on a macro basis.












*Chart 1.* Bonds (always) turn before stocks. The turn was already present earlier in the year. The signal was simply muted by COVID and all the nonsense that has engendered. Notice the early signal in 2007/2008. Plenty of time before a signal triggers currently (you would think). I have already acted on the signal going short the 20yr last week. Largely because it could well be the 'top' for Bonds and going short today, limits my downside even if nothing much actually happens going forward.

*Chart 2.* Obviously the US dollar falling, makes commodities more expensive. This is the PPI signal. This is also why Silver joined the Gold party. Obviously we need to keep a close eye on developments here. If we head towards and go through that second green line, well things will be hairy and much will depend on interest rates at that point (whether they rise and put a floor under the dollar).

*Chart 3. *Commodities are historically speaking, horribly underpriced, which is why the disinflationary trade has been so dominant. They are rallying, how far they will rally is the question. I would 'expect' back towards the trendline, given the level of supply destruction (production) in the oil patch. At some point, we know demand will return. 

No single chart is determinative. They all interact together. When they all confirm the same story, time to sit up and take notice. They are currently all confirming the same story. We are only at chapter 1. Do we move to chapter 2? We'll see. I'm starting to think yes.

jog on
duc


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## ducati916

The slow roll:









Financials, Con. Staples, Utilities and Industrials generally pay dividends. Tech. generally does not. We have seen from historical return on indices that dividends contribute an important part of that return. Assuming that you are not chasing the latest growth stock, the above sectors will be of interest and why the market is gradually rebalancing. This is particularly true when you look at the following"









Bonds at the long end are repricing for possible PPI inflation. Stocks that pay a dividend compete with this area of the market.

Meanwhile:






The consumer indicates that he is not (recent past) without spending power. Now of course it would be far more informative to know what areas exactly they are spending and you can dig into the releases and find out. You can also look at various market sectors and infer from that.






jog on
duc


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## ducati916

Next 2 charts are interesting however they do not explicitly examine the effect of interest rates on the dollar. Interest rates have trended lower since 1982. However, while they have trended lower, there have been periods where they rallied higher. That information has not been made explicit in the following tables.









jog on
duc


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## ducati916

The Octopus speaks:






jog on
duc


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## ducati916

Oil patch news:






Weekly U.S. gasoline demand plunged by 1.9 mb/d in April, and then bounced back by 1.3 mb/d in May.

-   As gasoline demand bounced back, refining margins for gasoline rose too, prompting refiners to switch their mixes back towards gasoline.

-   Jet fuel refining margins have plunged and not rebounded, however, incentivizing the blending of jet fuel into distillate fuel.  

*Market Movers*

-   *Hess (NYSE: HES)* is laying off 10 percent of its workforce after posting its fifth quarterly loss in a row.

-   U.S. BLM approved *ConocoPhillips’ (NYSE: COP)* drilling plan for the National Petroleum Reserve in Alaska. 

-   * Total (NYSE: TOT) *and its partners have launched the third phase of the development for the Mero oil project in the Libra block off the coast of Brazil. The Mero 3 is using a floating production storage and offloading vessel and is expected to come online in 2024.

*Tuesday, August 18, 2020*

Oil prices rose to a five-month high this week on hopes that the economy is reviving. New coronavirus cases have fallen back in previously hard-hit states such as Florida and Arizona. At the same time, the U.S. shale industry is not rebounding, adding to bullish momentum on the supply side of the equation. Prices fell back in early trading on Tuesday. 

_*Trump admin approves Alaska drilling. *_The Trump administration approved an oil leasing program for the Alaska National Wildlife Refuge (ANWR), opening up 19 million acres of wilderness for drilling for the first time. The Interior Department is aiming to finalize the process to make it difficult to undo if the election results in a change of administration. However, investors question the profitability of the enterprise, and several major banks, including Goldman Sachs and Wells Fargo, have ruled out financing any ANWR drilling.

_*California warns of blackouts amid heatwave. *_California warned of widespread power blackouts on Monday amid high heat and humidity. The state’s large portion of renewable energy posed challenges to grid operators during the latest heatwave. But the grid operator canceled the blackouts Monday night as the disaster seemed to have been averted.

_*Chevron in talks over Iraqi oil field. *_*Chevron (NYSE: CVX)* is in talks with Iraq over a potential investment in the Nassiriya field. 

_*Automakers ink deal with California on emissions.*_ Five automakers – *Ford, Honda, BMW, Volkswagen, and Volvo* – signed a deal that binds them to meet strict state standards on fuel-efficiency requirements. The deal is stricter than the Trump administration’s lower federal fuel economy standards and could have a far-reaching impact because 13 other states follow California. The California standards require average fuel economy to rise from 38 miles per gallon today to 51 miles per gallon by 2026. The Trump standard only requires 40 mpg by then. Still, the California agreement is slightly weaker than the original Obama-era rules. 

_*Refiners retool amid demand uncertainties.*_ *Phillips 66 (NYSE: PSX)* said it would retool its 120,200 b/d Rodeo refinery in California to use renewable fuels and that it will shut its 44,500 b/d Santa Maria refinery. *Valero (NYSE: VLO)*, *Marathon (NYSE: MPC),* and *HollyFrontier (NYSE: HFC) *also have plans to boost renewable fuel refining. 

_*Chaparral Energy files for bankruptcy. *_Oklahoma City-based driller *Chaparral Energy (NYSE: CHAP)* filed for chapter 11 bankruptcy protection on Monday. 

_*China buys more oil from U.S.*_ China is buying 14 million barrels of oil from the U.S. next month to comply with the Phase 1 trade deal signed earlier this year. Those volumes are set to be double the amount purchased in August. 

_*Oil exploration coming to an end. *_Faced with pandemic-driven demand destruction and a relentless call for climate-conscious and ethical investing, oil executives are resigning themselves to the uncomfortable fact that a significant amount of their vast oil and gas reserves will end up totally worthless.

_*Bank of America: Oil to hit $60. *_Bank of America expects oil prices to recover to $60 a barrel for Brent crude in the first half of next year thanks to shrinking global inventories and prices improving faster than previously expected.

_*OPEC compliance hit 95% in July.*_ OPEC compliance with the production cuts reached 95 percent in July. Also, Nigeria and Iraq are expected to cut their production by another 114,000 and 400,000 bpd, respectively, in August and September to compensate for lagging performance in prior months. The success of the deal is notable. “However, in reality, they are likely concerned that it is taking longer for storages to see some material level relief, while the price recovery the alliance was hoping for is also pushed further in time due to the pandemic’s persistence,” Rystad Energy said in a statement. 

_*Elon Musk becomes the world’s fourth-richest person.*_ Elon Musk gained $8 billion to become the world’s fourth-richest person after *Tesla (NASDAQ: TSLA) *shares surged 11 percent on Monday.

_*Guyana cancels oil tender. *_The new government in Guyana canceled a tender for a one-year contract to market the government's share of Liza crude from the offshore Stabroek block. “We made it clear in the campaign that companies should not be submitting bids to an illegal government that was there at that time,” Vice President Bharrat Jagdeo said, referring to deals signed during the five-month political impasse.


jog on
duc


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## qldfrog

Refinery output is interesting. 
Post covid jet fuel snashed but gasoline aka usual car transport back while diesel heavy equipment mining farms and freight remained unaffected alk along
Actually quite positive except for air travel


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## over9k

Same goes with ethanol - just as much corn has been planted but low demand for biofuel means a big glut of corn. 

But most corn is eaten by things which people eat (cows, pigs etc) so all the farmers can expect cheap stock feed


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## ducati916

So just found a bit of time to update some charts. They are all telling pretty much the same story: a short term pullback over the next couple of days to let the market consolidate for the next push higher.


















These are all essentially daily charts (short term) and will (or should) settle.

There are now inner and outer bands on some of the charts. They are the lower volatility support/resistance lines. As you track volatility lower (or higher) so you contract or expand your support resistance levels (BB type of thing).

The other factor is the hybrid market with the FAANGs (or whatever they are now known by) representing 1 area of the market and pretty much everything else the other part. So on this pullback I would expect greater declines on the FAANGS and slightly less on the other sectors which have already pulled back. We'll see.

Nothing too much happening in the stagflation front currently. I'll look at that again at the w/e.

jog on
duc


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## ducati916

So update:






I would expect Vol. to conform to the trendline and settle, which means, we settle and move higher again.






Confirmed by NYMO






Contradicted by TRIN.









Both the 20 and 50 are sitting at levels that could move higher.

In summary, I would be expecting a resumption of the trend higher. We may have some opening weakness which should resolve into the close. If Vol jumps higher through the trend line, then we will need to re-assess.

And NVDA






No longer just for games apparently.

jog on
duc


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## over9k

I explained that when I told you I'd bought it.


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## over9k

Here's some trend for you:

Three weeks after the big unemployment payments ended and the expected stimulus package didn't happen:






The jobless claims number(s) now start spiking:





And the market starts to nosedive literally the day the data comes out:





Wow, how unexpected!


However, this has also caused a drop in the exchange rate, which was just pulling hard almost every day until now:





In fact, expect plenty more of this until the logjam is broken. Depressingly, these spike(s) in numbers might be the catalyst that forces the politicians to finally get something done, but if my gut tells me anything here, it's that things are going to once again have to get a lot worse before they get better (i.e that the powers that be actually do something).

This becomes a doubly strong suspicion when I think about the fact that it's election season and torpedoing the economy might be a hell of a tactic to get trump ousted. I wouldn't put that past the democrats at ALL. 



A drop in the U.S markets combined with a commensurate drop in the exchange rate (it's depressing how much the two have tracked each other over the past few months) means that I now torch most of my positions and simply hold USD.

Most of my position is now effectively a forex trade.


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## Dark1975

Any news on the American 2nd stimulus,  could be the catalyst for a wet blanket on the dow the next few days if they dont approve it?
I thought Congress were in recess next week? I'm not sure need to look in to it


over9k said:


> Here's some trend for you:
> 
> Three weeks after the big unemployment payments ended and the expected stimulus package didn't happen:
> View attachment 107868
> 
> 
> 
> The jobless claims number(s) now start spiking:
> View attachment 107869
> 
> 
> And the market starts to nosedive literally the day the data comes out:
> View attachment 107870
> 
> 
> Wow, how unexpected!
> 
> 
> However, this has also caused a drop in the exchange rate, which was just pulling hard almost every day until now:
> View attachment 107871
> 
> 
> In fact, expect plenty more of this until the logjam is broken. Depressingly, these spike(s) in numbers might be the catalyst that forces the politicians to finally get something done, but if my gut tells me anything here, it's that things are going to once again have to get a lot worse before they get better (i.e that the powers that be actually do something).
> 
> This becomes a doubly strong suspicion when I think about the fact that it's election season and torpedoing the economy might be a hell of a tactic to get trump ousted. I wouldn't put that past the democrats at ALL.
> 
> 
> 
> A drop in the U.S markets combined with a commensurate drop in the exchange rate (it's depressing how much the two have tracked each other over the past few months) means that I now torch most of my positions and simply hold USD.
> 
> Most of my position is now effectively a forex trade.


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## over9k

I keep getting the overwhelming impression that they're trying to torpedo the economy and get trump blamed for it.


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## over9k

So remember when I said Brazil was going to get obliterated and AU was therefore going to make epic iron ore bank? 

https://www.fmgl.com.au/investors/asx-announcements

https://www.afr.com/companies/minin...ay-as-fmg-posts-record-profit-20190826-p52kp2

https://www.fmgl.com.au/docs/defaul...7fc4ead907a14d44ef1c215.pdf?sfvrsn=2727d043_6

Profit up 49% year on year. $1 dividend getting paid.


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