Posts Tagged ‘excess liquidity’

Rosenberg’s Explanation For Recent Market Surge: Liquidity Pump & Short Covering

Rosenberg’s Explanation For Recent Market Surge: Liquidity Pump And Short Covering

Courtesy of Tyler Durden at Zero Hedge 

It seems everyone is perplexed by the most recent irrational bout of July market action. Like clockwork, once July rolls in, the market surges, no questions asked. This year, the ramp is particularly blatant because as the attached chart demonstrates, bonds, which are a far more credible barometer of market (in)sanity, indicate the S&P is rich by at about 50 points. As this spread will most certainly converge eventually as we discussed previously, a short stock, short bond position would generate some much needed P&L in this world of deranged fractal algorithms. As to what may have caused the most recent bout of irrational exuberance, David Rosenberg has the most logical, and generic solution: excess liquidity and a short covering spree, and "nothing fundamental here."

From Breakfast with Dave

WHAT’S DRIVING THE MARKET?

We’ve been asked repeatedly how the stock market has managed to bounce off the nearby lows with such veracity. Especially with the ongoing weakness we have seen in the incoming U.S. economic data due to the fact that the retail investor still refuses to participate and is solely focused on income-generating strategies. The answer is that the market may have been on the receiving end of another few jolts of liquidity. M2 money supply has expanded $38.5 million in the past two weeks and the M1 money multiple has risen from 0.839 to 0.862.

When we go to the weekly data from the Fed, we see that “trading assets” on commercial bank balance sheets expanded to $325 billion in the past two weeks from $297 billion. And, when we go to the Commitment of Traders report, we see that there has been a big swing in the net speculation position on the S&P 500 “E-minis” on the Mercantile Exchange (futures and options) to a net long position of 28,172 contracts from 15,155 net shorts just two weeks ago. That’s a big part of the bounce-back — prop traders and short-coverings. Nothing fundamental here, as far as we can see.

JUST CALL IT A WHOLE LOT OF VOLATILITY

  • Last week’s 5.4% increase was the best performance since mid-July 2009 (week of July 17th). But yet, prior to last week, the S&P 500 saw the largest decline (-5% during the week of July 2nd) in eight


continue reading


Tags: , , , , ,




The credibility of farmers, priests and prostitutes – and bankers?

First, welcome to Michael Pettis.  Michael is a professor at Peking University’s Guanghua School of Management, where he specializes in Chinese financial markets.  He is also Senior Associate at the Carnegie Endowment for International Peace.  Second, this is an excellent article that provides insight into the thoughts of the Chinese people. – Ilene

The credibility of farmers, priests and prostitutes – and bankers?

chinese prostitute - credibility highCourtesy of Michael Pettis at China Financial Markets

Three weeks ago China Daily published a pretty funny article about a recent survey on credibility that had taken place in China. According to the article,

At a time when shamelessness is pervasive, we are often at loss as to who can be trusted. The five most trustworthy groups, according to a survey by the Research Center of the Xiaokang Magazine, are farmers, religious workers, sex workers, soldiers and students.

A list like this is at the same time surprising and embarrassing. The sex business is illegal and thus underground in this country. The sex workers’ unexpected prominence on this list of honor, based on an online poll of more than 3,000 people, is indeed unusual.

It took the pollsters aback that people like scientists and teachers were ranked way below, and government functionaries, too, scored hardly better.  Yet given the constant feed of scandals involving the country’s elite, this is not bad at all. At least they have not slid into the least credible category, which consists of real estate developers, secretaries, agents, entertainers and directors.

I am not sure what secretaries have done to get themselves such poor rankings (could they mean party secretaries?), and I am not sure what kind of directors they mean (movie directors? managing directors?) but not everyone found this survey funny.  Last week a columnist in the People’s Daily had this to say about the same survey:

In recent years, China has already paid a high price for the prevailing credibility crisis. The annual losses caused by bad debts have reportedly amounted to about 180 billion yuan, and the direct economic losses induced by contract fraud each year is also up to 5.5 billion yuan. Besides, shoddy and fake products contribute to another great loss involving at least 200 billion yuan. Generally, credibility crisis would cost China as much as 600 billion…
continue reading


Tags: , , , , , , , , , , , , , ,




 
 
 

Phil's Favorites

How George Washington used his first Thanksgiving as president to unite a new country

 

How George Washington used his first Thanksgiving as president to unite a new country

President George Washington aimed to unify the country with his first Thanksgiving message. Getty Images

Courtesy of Maurizio Valsania, Università di Torino

On Thursday, Nov. 26, 1789, George Washington woke early. Assisted by his enslaved valets – William “Billy” Lee and the young ...



more from Ilene

ValueWalk

Crash Protection For Tesla

By David Pinsen. Originally published at ValueWalk.

At the end of May, Elon Musk’s SpaceX sent two astronauts into space – the first manned launch from U.S. soil in nine years. Also at the end of May, Tesla (TSLA) made our list of top ten names. Since then, the stock’s up 256%.

Astronauts onboard the SpaceX Dragon capsule approach the International Space Station on May 31st (photo via SpaceX).

Tesla Shares Rocket Higher

Still Bullish On Tesla, But Others Have Issues

Our system is still bullish on Tesla. Our a...



more from ValueWalk

Zero Hedge

Dow Drops Below 30,000, Global Rally Fizzles Ahead Of Data Deluge

Courtesy of ZeroHedge View original post here.

US index futures dropped alongside shares in Europe with Dow Jones futures sliding back under 30,000...

... as a furious three-day rally paused ahead of a slew of pre-holiday economic indicators. Data, from jobless claims to consumer confidence and personal income, are due before markets close and traders head off for Thanksgiving.Ppositive vaccine news and the formal start of President-elect Joe Biden’s transition to power - including the selection of Jan...



more from Tyler

Biotech/COVID-19

Oxford-AstraZeneca vaccine is cheaper than Pfizer's and Moderna's and doesn't require supercold temperature

 

Oxford-AstraZeneca vaccine is cheaper than Pfizer's and Moderna's and doesn't require supercold temperature

Now there is a third possible vaccine for fighting the COVID-19 pandemic. Jakub Porzycki/NurPhoto via Getty Images

Courtesy of Sanjay Mishra, Vanderbilt University

The biopharmaceutical company AstraZeneca has released data on what is now the third promising vaccine candidate against COVID-19 – and it has several advantages over those of its competitors, ...



more from Biotech/COVID-19

Politics

TRUMP CONCEDES (SORT OF)

 

TRUMP CONCEDES (SORT OF)

Courtesy of Teri Kanefield

The Trump Legal team filed more documents today in the appellate court. I tweeted a bit about how silly they were (let me know if you all want me to march through them). Then this happened:

Trump giving the go-ahead for the transition to get underway was (I believe) the closest he will get to conceding the election. Two amusing things happened. First, Trump tweeted this about 10 minutes after Emily Murphy submitted a letter saying she would move forward, and that she has made her decisions solely on her own and not at anyone’s direction. Looks like Trump wanted people to think that she was, in fact, acting at his direction.

The other amusing part was that Tr...



more from Politics

Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Friday, 12 June 2020, 08:06:43 PM

Click for popup. Clear your browser cache if image is not showing.


Comment: Interesting (2)



Date Found: Saturday, 13 June 2020, 12:27:02 AM

Click for popup. Clear your browser cache if image is not showing.


Comment: Recession Forecasts Time Frame



Date Found: Monday, 15 June 2020, 11:07:52 PM

...

more from Chart School

Kimble Charting Solutions

Transports Sending Strong Bullish Message To Other Dow Indices?

Courtesy of Chris Kimble

Are Transportation stocks about to send a quality bullish message to other Dow indices this month? Sure could be!

This 3-pack looks at the Dow Jones Industrials, Transports, and Utilities indices on a monthly basis.

One week from the end of a month, the DJ Transports are attempting an important bullish breakout at (1). Unless a sharp reversal takes place in the next week, Transports could close out the month at new monthly closing highs!

The Dow is attempting to close at all-time highs this month, while the Dow Utilities Index remains a few percent below 2020 highs....



more from Kimble C.S.

Digital Currencies

Dalio Admits "I Might Be Missing Something" As Bitcoin Surges Above $18,000

Courtesy of ZeroHedge

Since the US election, Bitcoin prices (in USD) have surged a stunning 40%, also lurching higher after each vaccine headline hit.

Source: Bloomberg

Getting ever closer to its all-time record high...

Source: Bloomberg

As crypto prices soared overnight, Bridgewater Associates founder Ray Dalio stepped back into the fray, saying in a Twitter thread that “I might be missing something about Bitco...



more from Bitcoin

Mapping The Market

COVID-19 Forces More Than Half of Asset Management Firms to Accelerate Adoption of Digital Marketing Technology

By Jacob Wolinsky. Originally published at ValueWalk.

There is no doubt that the use of technology to support client engagement initiatives brings both opportunities and threats but this has been brought into sharp focus this year with the COVID-19 pandemic.

The crisis has brought to the fore the need for firms to enable flexibility in client engagement – the expectation that providers will communicate to clients on their terms, at their speed and frequency and on their preferred channels, is now a given. This is even more critical when clients are experiencing unparalleled anxiety from both market conditions and their own personal circumstances.

...

more from M.T.M.

The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



more from Tech. Traders

Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



more from Lee

Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

http://www.insidercow.com/ more from Insider

Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

...

more from Promotions





About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.