Permabear Doomster

Wednesday, 10 June 2020

Near zero rates to end of 2022

US equity indexes mostly closed on a weak note, sp -17pts (0.5%) at 3190. Nasdaq comp' +0.7%. Dow -1.0%. The Transports settled -2.5%.

sp'daily5

VIX'daily3

Summary

The day began in pre-market with the US President...

Nasdaq 10K is certainly something for the economic and market bulls to tout.

Equities opened in chop mode, and naturally remained that way into the 2pm hour, when the Fed issued a press release.

The Fed, and later Powell, noted they do not expect ANY rate hikes until at least the end of 2022. So, we're another 2.5 years of ZERO rates, and that arguably assumes a broad economic recovery, with no secondary Corona wave, or any other 'surprises'. On any basis... its a headline that should terrify the financials. On the flip side, the gold/silver, and related mining bulls, can laugh themselves into the weekend... if not, the next few years!

The afternoon saw considerable equity chop, leaning on the weaker side.
The VIX was itself subdued, settling u/c at 27.57.

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Goodnight from London
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Tuesday, 9 June 2020

The dash to trash

US equity indexes mostly closed weak, sp -25pts (0.8%) at 3207. Nasdaq comp' +0.3%. Dow -1.1%. The Transports settled -2.3%.

sp'daily5

VIX'daily3

Summary

US equities opened broadly lower, largely pressured via very significantly lower European markets.

Meanwhile, the US President appeared in pre-market...

Somewhat surprisingly, there was no comment (before the close), noting the Nasdaq did break >10K.

The afternoon saw a recovery to sp'3222, but with a little closing hour cooling.

Volatility picked up a little ahead of the Fed, the VIX settling +6.8% to 27.57. Things only turn 'interesting' <sp'3090, and with VIX >30.50s.

The dash to trash

The past few weeks have seen an increasing interest in highly speculative stocks. This movement, the 'dash to trash' is not a healthy sign. Some are arguing it is indirectly linked to the lockdown, with more retail amateurs having the time to day/swing trade. Further, there is also an element of desperation, in the newly jobless trying to make some money.

Key stocks...
-Luckin Coffee, a company which was a fraud since the May 2019 IPO. Set to be delisted late June/July.
-Chesapeake Energy, a mountain of debt, still set to implode, as its resource - Nat' gas, remains broadly subdued <$2.00.
-Hertz, a company that has recently filed for bankruptcy.
-Transocean, long term horror, and it remains difficult to see this one surviving. I'd expect Schlumberger to pick up the pieces, for cents on the dollar.

Your view...

Of the four, I'd have chosen LK, but that company is to be seen as tier'1 communist garbage. As I often say, there is a lot to be said for a big and boring Dow component.
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Pre-dawn moon

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

Goodnight from London
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Monday, 8 June 2020

Starting positive

US equity indexes closed significantly higher, sp +38pts (1.2%) at 3233. Nasdaq comp' +1.1%. Dow +1.7%. The Transports settled +1.8%.

sp'daily5

VIX'daily3

Summary

US equities opened on a moderately positive note, helped by other world markets.

The US President appeared in late morning...

For now, the US President is very pleased with the ongoing equity ramp, and its been some time since we've seen any criticism of the fed/Powell.

Equities saw considerable chop, but leaned upward into the late afternoon.

Volatility was itself subdued, the VIX settling +5.3% at 25.81. Tuesday/early Wednesday offer broad chop ahead of the Wed' FOMC. Next resistance are the sp'3250s, which might sync with VIX tagging the upper end of legacy gap of 22/17s.

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Your views...

Its difficult to see the fed changing rates before year end.

A mere 6.2% expect a surge in inflation >10% by end 2021.

96.9% accept the Fed's balance sheet will be at least >$8tn by year end. A break above ten trillion will require the excuse of another stimulus bill, and subsequent T-bond issuance. Right now, the (eventually probable) infrastructure bill looks a stretch ahead of the election.
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The skies remain unusually quiet

A fine end to the day