Charge-Offs Increase As The Debt Bubble Comes Close To Bursting
Debt Bubble As a clarification to a previous article, I showed a chart which had an elevated level of equity financing as a percentage of U.S. M&A. It’s worth emphasizing that while equity issuances have been funding M&A at a high level, net equity issuance is the lowest since 2007. As you can see from…
Are Sellers Just Warming Up?
On Thursday traders made it clear that they did not want to be long going into a 3 day weekend. Stocks sold off sending the S&P to the lowest level since March 27th. The small cap stocks continue to get hit the hardest as the Russell has now fallen into negative territory year to date.…
Does Trump Want A Dovish Fed Chairperson?
The biggest news in the financial world on Wednesday was the President’s interview with the Wall Street Journal which I briefly touched on in my last article. Trump mentioned that the dollar is too strong for American exports to compete. This sent the dollar lower. A weak dollar would help exports, multinationals’ profits, and tourism.…
Long Bond, VIX, & Commodities Show Reflation Trade Is Over
The stock market had another small drawdown on Wednesday as it is down about 2.5% from its all-time high. The last 5% decline was in June 2016 which is about ten months ago. The minimal size of the stock market correction is remarkable when you look at in the context of other markets. As I…
Game On! Volatility Readings Explode Higher
Stocks ended the day lower off about .50% except for the RUT which faired much worse down 1.3%. Tonight video is critical to watch. Volatility risk readings have exploded higher and have reached critical points. These levels are signaling that market risk is imminent. Watch the video so you know what has happened the last…
Atlanta Fed Forecast Uses More Hard Data
Before I get into a discussion of the latest market action, I will make a clarification of an aspect which I wasn’t aware of. As I have mentioned a few times in the past few weeks, the NY Fed’s Nowcast Q1 GDP growth estimate and the Atlanta Fed’s Q1 GDP Now growth estimate are far…
Climbing the Wall of Worry Again
Stocks sold off in early trading as bonds got bid up to a key level. Short term volatility continued to get bid up as the APR volatility futures contracts are now a full 1.50 points higher than May volatility. Despite the short term concerns of the market internals stocks got bid up the rest of…
Are Small Businesses Overly Optimistic?
There has been an increase in stock prices since the election based on optimism about the Trump administration. Investors focused on the potential tax cuts, regulatory reform, healthcare reform, and infrastructure stimulus. The fact that investors were swooning over a politician’s rhetoric showed how far the hope trade had gotten in this cycle. The chart…
Reflation Trade #3 Is Putrid
Monday’s trading was yet another example of a day where the market went up and the VIX went up. There seems to be quite a few of these occurrences happening as the market hasn’t fallen much, but the VIX occasionally catches a bid because of various potential worries such as geopolitical or monetary policy concerns.…
Risk Gauges are Rising Fast
Stocks rallied this morning before selling off back to where they started. The one thing that kept rallying all day was short term volatility. With this risk gauge rising fast watch this video to find out the best opportunity right now...