International markets traders banter

[sinner]

FWIW:

T-Bills are pricing a Dec 2015 Hike of 0.25%. Expectations have certainly been moved out for years though. This was just the latest instalment.

I'm just going off FedWatch and using a 60% threshold. I think they use FFR futs to calculate.

http://www.cmegroup.com/trading/interest-rates/fed-funds-flash.html

Dec prob: 41%
Jan prob: 50%
Mar prob: 64%

Puzzled abt no real growth comment.

There is a tightly coupled relationship between the short term rate and the ratio of monetary base per dollar of nominal GDP which implies that increases in the rate must be met by either a commensurate rising in nominal GDP or decline in the monetary base. Above when I said "real growth" I was referring to nominal GDP growth at a rate greater than the increase in monetary base.

In this case I am merely commenting that I feel it's unlikely for near term future nominal GDP growth to exceed near term future increases in the monetary base. So assuming that the relationship between rates and the ratio continues, I doubt the Fed could hike rates (and if so only by the smallest of fractions).

 

[PennD]

End of the bull market?
http://northmantrader.com/2015/09/20/game-over/

 

[qldfrog]

Thanks for thearticle, I believe we start seeing some acknowledgement of these long term trends which are massive wealth destroyers and in some case end up as society destroyers
no middle class anymore, deflation yet higher cost of living , and loss of jobs to outsourcing/automation now reaching white collars..not much left....

 

[CanOz]

Thanks for thearticle, I believe we start seeing some acknowledgement of these long term trends which are massive wealth destroyers and in some case end up as society destroyers
no middle class anymore, deflation yet higher cost of living , and loss of jobs to outsourcing/automation now reaching white collars..not much left....

I think you should change your Avatar QLDFROG.....

 

[Logique]

End of the bull market?
http://northmantrader.com/2015/09/20/game-over/

Good contribution PennD. An informative article, and as the author says, there isn't much room left for easing policy!

Game Over
by NORTHMANTRADER, SEPTEMBER 20, 2015
http://northmantrader.com/2015/09/20/game-over/

..The reality is all these bubbles and subsequent economic disasters have been managed by one primary tool: Long term reduction in interest rates..

 

[Wysiwyg]

The DOW's (4 hr chart) ascending triangle against the backdrop of the cascade sell off in August looks scary.

 

[shouldaindex]

Fantastic article by Northman, or should I say could be.

I noticed in one of his graphs, the -26% from peak coincides with the previous S&P peak in 2007.

It caught my eye because I had marked on the Dow Jones -26% from peak hitting the 2012 peak, which was the last one before a final surge that began a 30 month rally.

I don't see how major markets can be spared a bear market (-20%), so setting potential levels is going to be an interesting exercise in the coming months.

If trend lines continue, -30% fits the timeframe by end of year.

 

[sinner]

Rather large miss on the Richmond Fed Manufacturing Index number that just came out now. Forecast was 4, previous print was 0 and the number for today was -5, i.e. a -9 delta on forecast.

Market looked like it was a little bid in the 30 min leadup to the news and so far holding steady.

I am guessing the new post FOMC logic is (not that I necessarily agree):

Bad news => Fed will have to print => Better frontrun the Fed => Buy risk

 

[sinner]

Market looked like it was a little bid in the 30 min leadup to the news and so far holding steady.

lol, well that evaporated pretty quickly.

 

[Logique]

An ordinary night on European markets.

If the US and Asia Pacific are dithering around, wondering which way it will break, Europe might have made it's own decision, based on last night's action.

 

[sinner]

sinner macro update

sinner macro update (click the little green arrow from above quote to see the previous charts). Executive summary for the bored: still not looking great, basically a month of consolidation on all inputs.

VIX. Simply does not want to return to the good old days. This is not a great sign, IMHO. This kind of higher volatility can lead to a medium term (6-12months) structural uptrend in vols, the sort of thing we saw leading the GFC. I like the VIX as a global proxy for vols, compared to other measures I have tested like bond market IV or ASX IV.


Breadth. Definitely no signs of "breadth divergence" or similar signals of bullish marginal risk preference. Other breadth measures actually look worse and are signalling trouble ahead. During strong trends, "oversold/overbought" indications (even in measures as simple as RSI14) normally indicate a consolidation rather than reversal, so further lows would be a good indication that this is the beginning of a longer trend.


TED making new 3y highs now. As per the VIX comment, high spreads here can lead to structural uptrend in the spread. 0.5 is really the historical line in the sand marking the difference between "natural business cycle low point" and "holy crap oh no" moments. So we still have a little breathing room here, but making highs is never good in the short term.


Credit. Dead cat bounce? Building a base? Too early too tell I think. But what we can definitely see is no demand on the part of the marginal investor.


Industrial commodities, looks like a dead cat to me.

 

[sinner]

Brent. One thing to note is that if you compare this to the industrial commodities chart above, oil is showing considerably more strength than the complex as a whole. My guess is that this is because malinvestment was so much higher in the industrial metals than energy, where demand has not really changed that much compared to say 3y ago. I guess the combo of Iranian sanction lifting plus the fight between the Saudis and US shale is the primary driver of this decline. The worlds biggest game of chicken, right there but my guess is the Saudis will win and the US oil miracle will fade significantly (allowing the Saudis to cut back on their own production to support future prices). Give it another year or so I guess.


BDI. Still looking kind of good from a very low base. I continue to watch with interest.


Sentiment (AAII investor 6 month outlook http://www.aaii.com/sentimentsurvey). Bulls are slightly more bullish, but the real big move here is that the bears have migrated significantly out of the bear camp and into neutral. In case you didn't check, the previous reading I posted was 38% for the bears, that's a pretty big move away from bearish. If this is a downtrend, we are obviously nowhere near anything resembling capitulation lows.

 

[CanOz]

Sinner, thanks for your analysis!

Regarding the Dax, i reckon we're getting the makings of a strong counter trend rally soon, perhaps we need to test the low at 9317 first, ideally that would give us three drives to a low as on the hourly...

So just a heads up that in my view we could have a nice shirt covering rally coming. I'm looking at levels around 9580, 9490 and 9400...9380 FWIW

 

[CanOz]

Anybody get onto that nice rally on the Dax yesty?

 

[cynic]

Anybody get onto that nice rally on the Dax yesty?

Managed to take a few EUROS out of it. Was my best night to date for this quarter (DEC15) and a nice ending to another turbulent week.

 

[CanOz]

Managed to take a few EUROS out of it. Was my best night to date for this quarter (DEC15) and a nice ending to another turbulent week.

Good to hear cynic!

 

[sinner]

Anybody get onto that nice rally on the Dax yesty?

Does it count if one is always a little bit long? : I've been running about 30% net long (with about 30% of that in Germany) for over a year now

 

[CanOz]

Does it count if one is always a little bit long? : I've been running about 30% net long (with about 30% of that in Germany) for over a year now

Well the Dax is an index, so if you're long it or a constituent then I guess you caught the rally!

 

[CanOz]

Well there's the Aug low in pre cash on the Dax....can we retest in cash?

 

[Trembling Hand]

Well there's the Aug low in pre cash on the Dax....can we retest in cash?