Permabear Doomster

Tuesday, 19 May 2020

Comedic delusions from Powell

US equity indexes closed on a broadly weak note, sp -30pts (1.0%) at 2922. Nasdaq comp' -0.5%. Dow -1.6%. The Transports settled -1.1%.

sp'daily5

VIX'daily3

Summary

US equities opened choppy, leaning on the weaker side.

Meanwhile...

Powell was issuing some grade A comedy material to the US senate, arguing the fed's balance sheet could be expected to 'gradually shrink'. This is the same guy whom prior to Aug'2019, expected the balance sheet would be brought down to (at least) $2.5trn.

As things are, the balance sheet stands at $6.934trn. The Thursday update will very likely show it breaking above $7trn. The 8s look easy, and the only issue issue is whether we settle the year in the 9s or >$10trn. In either case, Powell is either lying (I'd say no), stupid (he isn't that), or just deluded.

So, I have to deem Powell as just deluded. Further, it will only take another equity swing of -10/15% or so, and the bond market will take yields negative, and the Fed will be forced to follow.
-

The afternoon saw further equity chop, but the closing hour saw distinct downside on a Corona-vaccine related headline. Volatility was itself subdued, but did pick up into the close, the VIX settling +4.2% to 30.53.
--

Air traffic is picking up.. at least a little

The view from the ground, as summer is near.

--
Extra charts in AH (usually around 5pm EST) @ https://twitter.com/permabear_uk

Goodnight from London
--
If you value my work, subscribe to my intraday service.
For details and the latest offers, see: Permabeardoomster.com

Monday, 18 May 2020

SW to EIFA in 13hrs

US equity indexes closed powerfully higher, sp +90pts (3.1%) at 2953 . Nasdaq comp' +2.4%. Dow +3.8%. The Transports settled +7.2%.

sp'daily5

VIX'daily3

Summary

US equities opened very significantly higher, partly inspired by Sunday evening Powell talk, but more so, early morning news from Moderna (MRNA) about its Corona vaccine study.

With WTIC printing the $33s, the US President appeared just after 11am...

Indeed, Trump is relived that oil continues to recover. Yet... the $30s, even if sustained, aren't a profitable level for the US producers. The sector is still going to need to be bailed out.

Meanwhile, Elon chimed in on the central banks...

The afternoon saw the market claw upward to new cycle highs.
Volatility was naturally grounded lower, the VIX settling -8.1% at 29.30.

SW to EIFA in 13hrs

Early Thursday morning saw the SPX print 2766. From there, we saw a rather natural bounce wave, with Friday-OPEX seeing broad chop, if leaning on the moderately positive side.

With Monday breaking a new cycle high of 2968, the mainstream cheerleaders have effectively swung from being on 'suicide watch' to 'everything is fine again' mode in just thirteen trading hours. These monstrous swings in market sentiment remain truly bizarre.

I can almost understand those who believe a vaccine will be found and issued before year end. Maybe it will.... maybe it won't. Regardless, injecting (eventually.... forcibly) semi-tested vaccines into tens of millions of jobless won't do anything to help them find a job.

The economic damage has been done, and we're going to see in the weeks/months ahead, just how critically broken the economy, and society itself is. Good luck to those buying into SPX 3K.
--