by phil - January 17th, 2017 7:57 am
Are we there yet?
The average volume trading on SPY, the S&P ETF is 100M shares per day yet this month, the average has been 70M so about 30% less trading than "usual", which was very slow to begin with (down 25% from last year). A lot of times, if you are day-trading and you feel like you're the only one in a position – you are probably right!
As you can see from the above chart, when you see these kind of toppy, sloppy patterns – it's best just not to trade and wise traders go to CASH!!! (have I mentioned how much I like CASH!!! lately?) and wait PATIENTLY for conditions to improve. If that chart looks familiar to you – just check out what the S&P 500 Futures (/ES) have been doing for the past few weeks:
That is what they call a "textbook" example of a market that is not good to trade. That's why we stopped making calls in our morning posts after a fantastic first week of the year: A) We didn't want to ruin our perfect record and B) There were no longer any very obvious trades to call. We did, however, call oil short at $54 on the 6th and it's been up and down but now $53.20, which is still up $800 per contract from where we called it and now we're calling that one short again (/CL) as well as Gasoline (/RB) at the $1.65 line.
Why are we short oil and gasoline? Well oil, in particular, is nothing more than a gigantic fraud of a market that is based on the artificial manipulation of what has always been, historically, a plentiful supply. As we all know, OPEC spent most of last year promising to cut production and, FINALLY, this January they actually did cut production, by 1.5% of Global supply and this morning they spiked oil from $52.20 to $53.20 by releasing a statement from the Secretary General predicting oil prices would stabilize in 2017 and hit $70 by the year's end.
by ilene - January 16th, 2017 7:20 pm
Courtesy of Zero Hedge
Over the weekend, Barron's published its annual roundtable in which prominent investors previewed what they expect out of 2017: "a year of seismic shifts for the markets and, quite possibly, the world. Or, as Goldman Sachs strategist Abby Joseph Cohen said at this year’s Barron’s Roundtable, “We are breaking a lot of trends.” As Barron's dubbed it, "this could be the year the movie runs backward: Inflation awakens. Bond yields reboot. Stocks stumble. Active management rules. And we haven’t even touched on the coming regime change in Washington, which will usher tax cutters and regulatory reformers back to power after an eight-year absence."
While there were many insightful observations by the group of participants – whose sentiment was decidedly more bearish than during last year's event – which included Scott Black, Felix Zulauf, Mario Gabelli, Meryl Witmer, Brian Rogers, Oscar Schafer, and Abby Cohen, we will focus on the predictions of Jeffrey Gundlach, if only due to his track record from the similar Barron's roundtable one year earlier, in which he turned out to be far more prescient than most of his peers, not least of all because he "made the greatest prediction at last year’s Roundtable—that Trump would win the presidency."
The first question posed to Gundlach was also the broadest one: what are you predicting now?
People have forgotten the mood regarding stocks and bonds in the middle of 2016. Investors embraced the idea that zero interest rates and negative rates would be with us for a very long time. People said on TV that you should buy stocks for income and bonds for capital gains. This is when 10-year Treasuries were yielding 1.32%. Someone actually said rates would never rise again. When you hear “never” in this business, that usually means what could “never” happen is about to happen. I told our asset-allocation team in early July that this was the worst setup I’d seen in my entire career for U.S. bonds. It occurred to me that the bond-market rally was probably very near an end, and fiscal stimulus would soon become the order of the day.
Based on a comparison in July of nominal Treasuries to Treasury Inflation-Protected Securities, or TIPS, the bond market was
by ilene - January 15th, 2017 5:45 pm
Courtesy of Zero Hedge
While U.S. political journalist Matt Taibbi has made no bones about his dislike of Donald Trump… (via Rolling Stone a day after the election):
Most of us smarty-pants analysts never thought Trump could win because we saw his run as a half-baked white-supremacist movement fueled by last-gasp, racist frustrations of America's shrinking silent majority. Sure, Trump had enough jackbooted nut jobs and conspiracist stragglers under his wing to ruin the Republican Party. But surely there was no way he could topple America's reigning multicultural consensus. How could he? After all, the country had already twice voted in an African-American Democrat to the White House.
Yes, Trump's win was a triumph of the hideous racism, sexism and xenophobia that has always run through American society. But his coalition also took aim at the neoliberal gentry's pathetic reliance on proxies to communicate with flyover America. They fed on the widespread visceral disdain red-staters felt toward the very people Hillary Clinton's campaign enlisted all year to speak on its behalf: Hollywood actors, big-ticket musicians, Beltway activists, academics, and especially media figures.
Trump's rebellion was born at the intersection of two toxic American myths, the post-racial society and the classless society.
CBC reports that the Rolling Stone columnist admits in his new book - "Insane Clown President: Dispatches from the 2016 Circus" – the president-elect got more than a few things right during an election campaign that brought to the forefront America's struggles with racism, class divide and economic stagnation.
One of Trump's gambles that really paid off, according to Taibbi, was painting a target on the back of the U.S. political media.
"The media and politicians had spent so much time with each other that they lost touch with regular people, and Trump capitalized on that. He made us in the media villains, representative of this out of touch, ivory tower political culture," he said.
"I think there's some fairness to it, as much as I dislike Donald Trump, he hit a note, several notes, in this campaign that were true, and that was one of them."
Another one, he says, is Washington corruption.
by ilene - January 14th, 2017 5:25 pm
Courtesy of Dana Lyons
Speculators in crude oil futures are back near their “obscene” record net-long position set just prior to the 2014 collapse in oil prices.
When we started posting our charts on social media and writing this blog some three years ago, one of the most popular early posts dealt with trader positioning in crude oil futures. That was at the beginning of July 2014, and to this day it remains one of our most popular posts. The title of the post was “Large Speculators Net-Long To Obscene Extreme”. And to look at the chart was to instantly understand the impetus behind the title.
Chart from July 3, 2014 post:
At the time, the trajectory of the record net-long position in crude oil futures by Non-Commercial Speculators (and by extension, the record net-short position by Commercial Hedgers) had gone fully parabolic. In the case of the Speculators, prior to 2013, their largest ever net-long position in crude oil futures was 276,000 contracts, and prior to 2011, the record was 176,000 contracts. At the end of June 2014, their net-long position was a record-smashing 459,000 contracts. On the flip side, Hedgers’ net-short position had grown to a record 492,000 contracts.
Why was that important? As we have explained on many occasions in these pages, this data from the CFTC’s Commitment Of Traders (COT) report provides a very useful look at the positioning of various groups of traders. The 2 biggest groups are Non-Commercial Speculators and Commercial Hedgers:
- Non-Commercial Speculators are by and large commodity pools and hedge funds that exist mainly to trade the market long and short. These funds are normally trend-following entities. And while they can be on the correct side of a long trend, at extremes they are considered “dumb money” as they are typically “off-sides”.
- Commercial Hedgers are typically financial firms and institutions involved directly in an industry reliant upon a particular commodity. Most of the time, they are truly “hedging” within the commodity market, primarily taking the other side of the Speculators’ trades.
by ilene - January 14th, 2017 3:06 pm
Yertle, the Commander-in-Chief
Courtesy of Michael Winship
This post first appeared on BillMoyers.com.
Dr. Seuss taught me to read. My older brother brought Seuss books home to me from the local public library because I was too young to have a library card of my own.
The Cat in the Hat, Bartholomew and the Oobleck, Horton Hears a Who! — all, for better or worse, played a role in my early childhood development, a phase from which I have yet to emerge, but never mind. Yet as I watched Donald Trump’s press conference on Wednesday morning, a performance reminiscent of PT Barnum — if Barnum suffered from Attention Deficit Disorder, congenital petulance and anger management issues — I was reminded of a different Dr. Seuss masterwork:
Yertle, you see, is the king of the pond “on the faraway island of Sala-ma-Sond.” But not content with the size of his smallish but prosperous domain, he orders nine other turtles to climb on one another’s backs to create a new throne much higher than before so he can have a more expansive view and rule over it all.
"All mine!" Yertle cried. "Oh, the things I now rule!
I'm the king of a cow! And I'm the king of a mule!
I'm the king of a house! And, what's more, beyond that
I'm the king of a blueberry bush and a cat!
I'm Yertle the Turtle! Oh, marvelous me!
For I am the ruler of all that I see!"
You get the picture. Except for Yertle’s Seuss-given ability to speak in anapestic tetrameter, a quality rare in turtles, our president-elect seems to share a number of his ego-driven traits, especially when he makes such grandiose pronouncements, as he did at Wednesday’s news conference, that “I will be the greatest jobs producer that God ever created.” Meanwhile, back at Sala-ma-Sond, at the bottom of the stack, a turtle named Mack mildly complains about all the weight, which causes Yertle to demand hundreds of more turtles to lift him higher still. Mack protests again:
by ilene - January 14th, 2017 1:13 am
New index of economic marginalisation helps explain Trump, Brexit and alt.right
?If 2016 brought Brexit, Donald Trump and a backlash against cosmopolitan visions of globalisation and society, the great fear for 2017 is further shocks from right-wing populists like Geert Wilders in Holland and Marine Le Pen in France. A new mood of intolerance, xenophobia and protectionist economics seems to be in the air.
In a world of zero-hour contracts, Uber, Deliveroo and the gig economy, access to decent work and a sustainable family income remains the main fault line between the winners and losers from globalisation. Drill into the voter data behind Brexit and Trump and they have much to do with economically marginalised voters in old industrial areas, from South Wales to Nord-Pas-de-Calais, from Tyneside to Ohio and Michigan.
These voters’ economic concerns about industrial closures, immigrants and businesses decamping to low-wage countries seemed ignored by a liberal elite espousing free trade, flexible labour and deregulation. They turned instead to populist “outsiders” with simplistic yet ultimately flawed political and economic narratives.
Much has been said about the crisis of liberal political democracy, but these trends look inextricably linked with what is sometimes referred to as economic democracy. This is about how well dispersed economic decision-making power is and how much control and financial security people have over their lives. I’ve been involved in a project to look at how this compares between different countries. The results say much about the point we have reached, and where we might be heading in future.
Our economic democracy index looked at 32 countries in the OECD (omitting Turkey and Mexico, which had too much missing data). While economic democracy tends to focus on levels of trade union influence and the extent of cooperative ownership in a country, we wanted to take in other relevant factors.
We added three additional indicators: “workplace and employment rights”; “distribution of economic decision-making powers”, including everything from the strength of the financial sector to the extent to which tax powers are centralised; and “transparency and democratic engagement in macroeconomic decision-making”, which takes in corruption, accountability, central bank transparency…