Twisted Volatility Rules the Markets
The sector to watch right now is financials which are pricing in more risk in the next 2 days than 9 days from now. What does that mean? It could that financials are giving off the first signs of volatility coming back into the market place. The other place to look is at bonds. What…
Revisiting Oil Prices As “Surprise” Inventory Build Sends Crude Tumbling
We’ve talked quite a bit in these pages about what drives oil prices. Our argument, generally speaking, is part common sense and part geopolitics. On the common sense side of things, there’s a supply glut. Plain and simple. You can of course parse the API and EIA data which sometimes agrees and sometimes doesn’t, but…
Bonds Have “Absolutely No Value And Represent Huge Risk”
It was just yesterday when we warned of a “bond bloodbath” in the event central banks ever take the proverbial plunge and attempt to normalize policy. Specifically, we brought you the following graph from Goldman which shows you the extent of the damage should yields mean revert: (Chart: Goldman) As you can see, that’s a…
“You’re Not Being Productive Enough”
Earlier today we discussed how the Bank of England and the ECB’s corporate bond buying programs are likely to drive demand for US investment grade credit. The rationale is pretty simple. Here’s BofAML: “We find that, by deflating sterling and euro credit spreads, the BOE and ECB corporate bond QE programs are creating a lot…
GroundHogs Day; What to do in a Low Volaility Climate
The stock market is at record low volatility. What does that mean? Well, if you're a premium seller you are selling some of the lowest premium ever recorded! That is why we have been using In Out Spreads to take directional exposure to the market. Believe me, I love non-directional strategies, but they just aren't…
Failure To Launch: Bank Of England Can’t Find Enough Bonds To Buy
Back in March, we got a look at just how absurd the dynamic between central banks and the market has become when the Osaka circuit breaker was tripped after the bid-to-cover in a Bank of Japan bond buying operation jumped to 3.58 from 2.93 the previous week. Basically, everyone had rushed in the previous day…
Around the Horn with the Sector SPYders
Let's start the week with a look at the all the major sectors. It's helpful to look at all the sectors on fractal time frames to get an idea of the big picture and where we are going...
Talking Dollars On A Snoozer Monday
Let’s talk about dollars. As you might have observed, the broad dollar got quite a boost from Friday’s strong payrolls number: That’s basically just rate hike expectations. It’s a kind of “ok Janet, how are you going to justify not hiking now?” bet. Of course the irony is that that dollar strength can and has…
The Search for Alpha
Where do you go for returns in this market place? Stocks are at all time highs. Bonds are at all time highs. Gold is up 25% in the last 6 months. Since May, we’ve heard negative equity calls from Stan Druckenmiller, George Soros, Carl Icahn, Jeff Gundlach and Bill Gross. Why? Because being short is…
Hockey Sticks In The Matrix
If you’re a bear, the funny thing about this market is that pullbacks don’t feel like they should. That is, when stocks close red, you don’t feel vindicated. In fact, it’s the opposite. When you hear the closing bell you almost feel like maybe you should have bought the dip. It’s like we’ve reached a…