Tuesday 31 March 2020

A fiercely bearish March

US equity indexes closed significantly lower, sp -42pts (1.6%) at 2584. Nasdaq comp' -0.9%. Dow -1.8%. The Transports settled -0.7%. Near term outlook offers cooling to at least the mid sp'2300s.

sp'daily5



VIX'daily3



Summary

US equities opened a little weak to 2592, but swung upward to break a fractional new cycle high of 2641. Meanwhile...


So... if that is eventually agreed, the Fed will no doubt be buying (if indirectly) another $2trn of bonds. If you think that is a valid solution to the current economic depression, I got a bridge that spans the Atlantic ocean I can sell you.

The afternoon saw renewed weakness, with the market ending the month/Q1 on a pretty weak note. Volatility was in cooling mode, with the VIX settling -6.2% to 53.54.


A fiercely bearish March

Despite a seven day swing from 2191 to 2641, it was unquestionably a fiercely bearish March, as February's bearish engulfing candle played out.

spx'm1b


For the month, the SPX saw a net decline of -369pts (12.5%) to 2584, having printed a low of 2191.

I would merely ask... what 'drama' will April/Q2 offer? 
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The sun sets on March/Q1

Full moon is April 7th
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Monday 30 March 2020

Peter Schiff has the high ground

US equity indexes closed very significantly higher, sp +85pts (3.3%) at 2626. Nasdaq comp' +3.6%. Dow +3.2%. The Transports settled +1.2%. Near term outlook offers a turnaround Tuesday, into the March/Q1 settlement.

sp'daily5



VIX'daily3



Summary

US equities opened choppy, leaning on the upward side, but the gains were shaky, with a few indexes briefly turning red, and then resuming upward.

Social distancing between the Faber and Cramer

The afternoon saw considerable chop, but leaning upward to print sp'2631 in the closing hour. Volatility remains extremely high, with the VIX settling -12.9% at 57.08.

As for the Corona, much of everything I expected is coming to pass. Here in the UK, the lockdown is now expected to continue into May... if not June. There is even talk of 'social distancing measures' to extend into 2021.

For now, I'll merely suggest you listen to the following from Denniger. Its the best 13mins and 45 seconds of audio so far this year.



Whilst you might not like what he has to say, he is merely stating the facts.
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Peter Schiff has the high ground

Of the many Star Wars memes, 'Peter Schiff has the high ground' came to mind.



I guess you could also say... he was the chosen one.

ps. Its safe to assume Youtube (via Comcast or Sony) will pull this video sooner, rather than later. Download a copy!
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Sunset in the city of Corona

Full moon will be April 7th
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Saturday 28 March 2020

Weekend update - US equity indexes

It was another wild, but net-bullish week for US equity indexes, with gains ranging from +12.8% (Dow), +12.6% (Trans), +11.5% (NYSE comp'), +10.3% (SPX), to +9.0% (Nasdaq comp').


Lets take our regular look at five of the main US indexes

sp'500



Nasdaq comp'



Dow



NYSE comp'



Trans





Summary

All five US equity indexes settled very powerfully higher.

Four of the indexes broke new cycle lows on Monday, the Transports being the exception.

The Dow lead the way up, with the Nasdaq a little laggy.



Looking ahead

Another very busy week can be expected, not least with literally hundreds of Corona related news headlines each day. The Friday jobs data from the BLS will not be pretty, and will be indicative of the US economy collapsing into an economic depression.

Earnings: RH (Mon'), BB (Tues'), STZ (Fri').

Econ-data: 

M - Pending home sales, Dallas Fed manu'
T - Case-Shiller HPI, Chicago PMI (market con: 40, vs 49prior), consumer con'
W - ADP jobs, PMI/ISM manu', construction, EIA Pet'
T - Weekly jobs, intl' trade, vehicle sales, EIA NG', Fed bal' sheet
F - Monthly jobs, PMI/ISM serv'
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*UK/European clocks jump ahead one hour, the night of Mar'28/29.
**As Tuesday is end month/Q1, I would expect more dynamic price action on extremely high volume.
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Final note

Last week was wild, swinging from sp'2191 to 2637, for what was a classic 'bear market rally', and such extremely powerful rebounds have to be expected. I could highlight a fair number of monthly charts for some perspective, and after some thought, this sums up what I want to emphasise...

SPX, m1b


February's hyper bearish engulfing candle counts as month'1 down. March has seen severe bearish follow through, notably breaking the l/t upward trend from 2009. Further, I would note the technical divergence that stretches back to Jan'2018.

The grander issue - at least to yours truly, is whether the 10MA can be broken and settled above on a multi-week/month bounce. Even with trillions of QE being thrown at the system, it won't be easy to turn the m/t trend back to outright bullish.

If the bulls can't break and hold >3000 (to be decisive), then a subsequent wave to 1700/1500 could be expected. That is likely some very considerable time away though. First things first... the market needs to find/build a floor, and then push for 2900/3000.

On the Corona, I will merely say... as an onlooker to humanity, its fascinating to see how easy a society/species is willing to give up their freedom on the command of the very same political hacks, who never accepted the virus was a serious problem until just a few weeks ago. UK PM Johnson is a prime example, who chose to shake the hands of known infected patients, and now ranks as the first world leader to have the virus. Am I supposed to have any degree of respect for him? Never mind that he is the same arrogant fool that took away my right to live and work within the EU.

To the older and the ill... stay at home! To the rest of you, I offer the hope that semi-normalcy might occur by June/July. Be careful out there... in the twilight zone.

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Have a good weekend
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*the next post on this page will likely appear 5pm EDT on Monday.

Friday 27 March 2020

Who should bail it out?

US equity indexes closed powerfully lower, sp -88pts (3.4%) at 2541. Nasdaq comp' -3.8%. Dow -4.1%. The Transports settled -4.3%.

sp'daily5



VIX'daily3



Summary

US equities opened very significantly lower, as the three day bear market rally - which is what it was, came to an end. The afternoon saw considerable chop, leaning on the upward side to 2615, but then spiraling lower to 2534, a rather classic (and not surprising) case of 'rats selling into the weekend'.

Volatility picked up, with the VIX settling +7.4% at 65.54.
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Who should bail it out?

As we proceed along the twisted path within the twilight zone, I'm hearing many of the same things I heard in 2008/09.

Original tweet thread/link:
https://twitter.com/NickPerrotta2/status/1243564831778779138



On an individual level, any failing business is a soul destroying event for both the owners and employees, but that is the nature of business. There is a risk of failure, as much as there is one of success.

Q. Is it such a radical thought (I realise to most it is), that a business have cash reserves to help them survive at least a few months of 'crisis' ?

Ohh, and I don't want to hear anything along the lines of 'this time is different'. The fact remains, the entire economic system has been perpetually on the edge of the financial abyss for years. Most companies are loaded with debt, leveraged to an insane degree, and have next to zero cash reserves.

I have ZERO sympathy for such companies, especially the mid/large cap' giants. Boeing is a prime example of the INSANITY in the early 21st century. A company that spent tens of billions on stock buybacks to manipulate their EPS and stock price upward, and when a crisis occurs... they immediately go to the US Govt'/taxpayer with a begging bowl... or rather... a 'request/demand' list. 

... and most pathetic of all, is that the US Govt' are doing exactly as they have been asked. The political elite really do care that CEO Calhoun* is able to afford a 100ft yacht. 

*Keep in mind, Boeing, lead by Calhoun, continues to attempt to pressure the FAA to re-certify the 737MAX, an inherently unbalanced plane, trying to fix a hardware problem, via a software update. Incredible!

Your view...


For the record, I would vote 3.

Ohh, and I want to make it clear, I don't much agree with the current lockdown, which is sending the US/global economy into a depression. The lockdown is almost entirely pointless, except for 'flattening the curve', in terms of the number of old/ill people who are being affected by the virus, and pressuring the healthcare system.

I'm well aware some of you don't wanna hear that. Further, is it now borderline illegal to suggest the lockdown is a 'net problem', rather than a 'net solution'?

I'm guessing you might also be the same person who in late Jan/early Feb', (even as late as early March?) who didn't see what was coming, and who didn't prepare ahead of the populace who would (inevitably) turn hysterical, and empty the shelves in your local grocery store.

We have an interesting summer, and more so... autumn/winter ahead. 
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Eyes on.. yours truly

One of the very few planes departing

A moment of peace

Twilight sky - Venus and the Crescent moon
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Thursday 26 March 2020

Leverage at Print Central

US equity indexes closed powerfully higher, sp +154pts (6.2%) at 2630. Nasdaq comp' +5.6%. Dow +6.4%. The Transports settled +4.1%.

sp'daily5



VIX'daily3



Summary

US equities opened on a positive note, which was a distinct improvement from overnight/pre-market. The gains were impressive considering the horrific weekly jobless claims number of 3.283M.

Powell appeared...


.. and duly suggested "... we may well in a recession". Ya think?

The afternoon saw considerable chop, but with a closing ramp to new cycle highs. Volatility was in cooling mode, the VIX settling -4.6% at 61.00.


Leverage at Print Central

The following is highly recommended, even if you can't stand 'the progressives'...



So... a special '$500bn fund'.
That fund is itself arguably to seen as being funded via the US Govt' issuing t-bonds, which will be bought by... can you guess?

Indeed, Print Central will be the buyer of those bonds, well, shortly after they've first been bought by the primary dealers, who then sell them to the Fed with a slight markup. Its good work if you can get it.

Of the $500bn fund, $75bn is set aside, with the other $425bn being credited to the Fed, whom might  leverage it up by 10x, offering a possible collective loan of $4.25trn to large/mid cap' US businesses.

In addition to the financial issues, the ethical conflicts and implications of what the Fed have begun are monstrous. The following is more of Dore, but with guest Rattigan. Again, whether you like either, its highly recommended...




 ps. If you're not mad after viewing the above, check you have a pulse.
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Wednesday 25 March 2020

Remaining very unstable

US equity indexes mostly closed higher, sp +28pts (1.1%) at 2475. Nasdaq comp' -0.4%. Dow +2.4%. The Transports settled +2.4%. Near term outlook offers some bearish drama into the weekend.

sp'daily5



VIX'daily3



Summary


The day began with another wheel barrow of guests on clown finance TV, not least Bullard - whom I'm still guessing with succeed Powell, and followed by the Ben Bernanke.


Bernanke was actually reluctant to even admit the US is in a recession, never mind an actual depression (GDP <10%). For now, the big names are mostly tip toeing on what is a horrific reality. 

With sig' gains reversing to sig' declines in early morning, this came to mind...


A $2trn bailout works out to around $14k per US taxpayer. These remain wild times within the twilight zone, and yes, we're gonna need a bigger bailout.

US equities settled mostly net higher, despite an ugly closing 15mins, as Sanders was threatening to block a bailout bill.

Intraday price action remains very unstable, as reflected in the VIX, which today settled +3.7% at 63.95. Thursday will be 'interesting', not least as we're due a 'historic' weekly jobless claims number.
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Bullish the green shoots of spring!

A rare sight these days, as the London skies are bizarrely quiet.

Another sunset closer to British Summer Time (BST)... due 2am, Mar29th.
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Tuesday 24 March 2020

Rebounding on bailout hopes

US equity indexes closed extremely higher, sp +209pts (9.4%) at 2447. Nasdaq comp' +8.1%. Dow +11.4%. The Transports settled +12.5%.

sp'daily5



VIX'daily3



Summary

US equities opened powerfully higher on hopes of a bailout agreement/vote, and built gains into the early afternoon.

Meanwhile, CEO Calhoun of Boeing was doing the media rounds...


His claim that the current aid packages can't be compared to past 'aid packages' is laughable, but even more so... contemptible. Boeing spent tens of billions in precious cash on stock buybacks. Hell, the company only withdrew the dividend last week.

Your views...


For the record, I'd support a bailout, but only if the US taxpayer takes control of 100% of the equity. Its safe to say Calhoun won't be accepting anything like that.
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In early morning, the Cramer was once again actively cheerleading for multi-trillion bailouts, and touting the importance of the Fed... just as he did in 2008.

The 'look', when Cramer needs a bailout

The afternoon saw considerable equity chop, with a closing hour ramp to settle at the highs, with VIX settling +0.1% at 61.67.
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One of the few departing planes

A brief moment of serenity
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Extra charts in AH (usually around 5pm EST) @ https://twitter.com/permabear_uk

Goodnight from London
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