Market Talk December 2nd, 2015
In Europe we saw a mixed close with losses seen in the DAX and CAC (-0.65% and -0.2%) whilst the FTSE gained 0.4% but saw losses in its currency (GBP -1.2%). Poor Euro-Zone inflation data (0.1%) remains well under the expected ECB annual target rate of 2%. Dealers are still waiting ECB meeting Thursday for additional stimulus action.
In the US this evening we heard from Fed Chair Janet Yellen and her declaration that their decision remains in the balance ahead of the December meeting. Meanwhile earlier today we saw the ADP release above the expected 196,000 as we saw a healthy 217,000 jobs created in November. Obviously, Non-Farms is due Friday so today’s ADP number is pushing-up dealers expectations above the 200,000 forecasts! All this news did not provide support for US stocks and late in the day the DOW was off around 157 points being led by Oil stocks. This sell-off puts the Dow into negative territory for the year.
The strong US Dollar, a build-up in inventories and only modest growth projected in the Beige Book all added to push Oil to close below the $40 level (on the day down 4.1%). Many districts within the report were driven only by temporary and entry-level positions and therefore insufficient to project a stronger outlook. Gold equally saw heavy selling pressure and was last seen around 1% lower at $1052.
Given the Beige Book, the ADP report and Janet Yellens’ comments the Bond market saw curve flattening yet again. As we expected the losses continue to be focused on the front end with 2’s and 5’s the main victims. 2’s lost 3.5BP with 5’s down 5BP and 10’s losing 3BP. Interesting that 30’s were almost unchanged at 2.91%. The 10yr spread between US and Germany closed +170BP.
The Institutional Conference
Yes the Institutional Conference next Spring will be priced at $10,000 per entity and will include a 2 week trial to that level of service.
Politicians & the Denial of Order
COMMENT:
Dear Martin,
This conference was an eye-opener for me, in various respects. I am a
really hard-nosed evidentialist by education and a well-tought chartist
in various theoretical constructs for more than 30 years. But I never
came across your sort of thinking and applying these thoughts to the
markets. I am truly impressed and I am really keen on catching up on the
readings you sent out.
Something by the side:
I confronted a highly commended physicist with your thougths about a hidden order in our world, (even influencing our way of thinking, our behaviour) that manifests itself in cycles which might be directly or indirectly dependent on Pi. He was far less astonished than I imagined and expressed in his own somewhat gruffy way the conviction that it was “about time” that someone applied this theoretically much discussed theme to “something useful” (his words).
Looking forward to your service for traders, actually, even I understood that the investment level will be available first.
A heartfelt “Thank you” and best regards,
AB
Something by the side:
I confronted a highly commended physicist with your thougths about a hidden order in our world, (even influencing our way of thinking, our behaviour) that manifests itself in cycles which might be directly or indirectly dependent on Pi. He was far less astonished than I imagined and expressed in his own somewhat gruffy way the conviction that it was “about time” that someone applied this theoretically much discussed theme to “something useful” (his words).
Looking forward to your service for traders, actually, even I understood that the investment level will be available first.
A heartfelt “Thank you” and best regards,
AB
REPLY:
It is truly astonishing how in the real world of tangible science Pi is
understood and when you cross into the social “sciences” we refuse to
accept there is even a business cycle. Politicians further their career
by representing they can alter the cycles and create utopia by taxing
the rich or some other nonsense. In reality, they prevent society from
understanding reality.
The FED v Bias & Prejudice
COMMENT: If the Fed is so smart and understands the problem with low/negative interest rates, then why didn’t it hike rates in September? Better yet, why didn’t they raise rates YEARS ago? The Fed has kept rates near zero for seven years but now suddenly realizes that this is a problem?
I am surprised that you think so highly of them. The Fed
consists of a bunch of academics with no real-world experience, no
different than the ECB.
REPLY: Your bias and prejudice blind you. The ECB is run by Mario Draghi who is ex-Goldman Sachs. Mario Draghi faces
a currency that is collapsing and a power structure that is
fundamentally flawed. This is entirely different from the problems
facing the Fed. Europe is in deep recession that is intensely
deflationary. That is not the case yet in the USA.
Yellen has inherited a nightmare. It was Ben Bernanke
who made the mess we are in today. He lowered rates, bought in
long-term bonds the Fed cannot now sell and must wait for them to simply
mature. Yellen is trapped for she cannot reverse QE and sell the bonds Bernanke bought
and she is facing a meltdown in pension funds because rates are too low
for too long. Yellen has no escape. You are also blind to how politics
functions and all you are doing is listening to the bullshit that is
spun by pretend analysts who know nothing about what really goes on
behind the curtain.
The mere fact that the IMF came out publicly to ask the Fed not
to raise rates in June was a political maneuver to counteract Yellen.
Things of this nature are discussed behind the curtain – never in front.
The IMF turned to the press to STOP Yellen because she would have raised rates back in June. It was Ben Bernanke who listened to the bankers and created insanity.
It is clear that Ben Bernanke lacked any
experience as an academic to run the Fed. He became a professor at
Harvard after graduating. If you have no real world experience, you will
never understand reality. Book smart does not cut it in finance.
Bernanke bought in 30 year bonds to help reduce
the competition with mortgages and to inject cash into the system from a
very book perspective looking at the economy in theory, not in
reality.. The bankers then complained they needed excess reserve
facility to earn money if they had no more bonds. Creating this facility
defeated the very purpose of QE and ensured that there would be no
inflation for the banks did not lend the money out. The money created
did not stimulate for two reasons. First, the Chinese sold their
long-term debt holdings and reduced their maturity. Then the excess
reserves allowed banks to park money rather than lend it. Dropping rates
to virtually zero and paying the banks 0.25% defeated everything
intended to restart liquidity and inflation.
Hence, the Fed is in danger of losing its sovereignty
allowing itself to delay its domestic policy objectives for
international concerns. Your bias and prejudice prevent you from even
seeing what the crisis is all about..
BTW – that highway bill has emerged from a House-Senate
conference committee that will pay for the roads by reducing the 6
percent annual dividend paid to the banks on Fed stock. The Fed should
now eliminate the excess reserve facility and stop the welfare for the
banks paying them for money the Fed does not even use.
China’s Renminbi Reserve Status
While the International Monetary Fund (IMF) is expected to give the renminbi (yuan) a political victory by including the Chinese currency in the list of reserve currencies, few in the West even understand what this means. Including the renminbi in the SDR economically means nothing for it will not dethrone the dollar any more than the other currencies in the SDR, The only way to dethrone the dollar is to provide a deep currency where big money can park.’
However, the black market in China known as the shadow banking system has indeed been shut down. This has been done to cut off capital out flow. Making the renminbi part of the SDR by September 2016, means the outflow of capital can resume. China’s effort to support its markets has followed the same general path as Japan whereby the government discourages short selling. Restricting free investment may have the opposite impact and China must float its currency to survive.
Government Demanding Source Code by CFTC Rule
The problem with this is huge. They have no expertise on how to even figure out the code and sure they could hire some kids with programming skills, but without trading skills, they really would never figure it out.
The only possible solution will be to exit the US markets. If you do not, whatever code you “deposit” with the government will waive all intellectual property rights for the government can take everyone’s code. Government employees can be bribed and just as Snowden exposed, NSA staff were passing around nude photos of girls they sent to their boyfriends. SEC regulators were caught watching porn at work. There will be a complete loss of all intellectual property rights on a wholesale basis.
May 2016 Institutional Conference
We will be holding an exclusive Institutional Conference in May 2016 to coincide with the launch of the Institutional Services. Seating will be $10,000 where this will be geared exclusively for institutions globally. The location is to be determined.
We will also be holding a session in Shanghai for the professional audiences.
Everything Has a Cycle
COMMENT: Mr Armstrong, You are infectious (pun intended)! Since you have stated that we are due for a pandemic in the next few years 2019 ± a year or 2, I started on a review of what is out there. I’m not done, however, I did find some cycle patterns even in the different ones out there. Influenza typically has a doozy every 10-11 years. Ebola has a outbreak/spike every 5 years ±.
Thanks for opening my eyes.
DK
REPLY: I really do not understand why cyclical analysis is so foreign outside of physics. We are being provides some data collected on epilepsy to determine the cycle when it will cause a incident. Everything has a cycle. Absolutely everything. Even your brain.
No comments:
Post a Comment