Category: Financial Markets 2021
The analysis published under this category are as follows.
Tuesday, December 21, 2021
US Dollar‘s Stock Market Warning Signal / Stock-Markets / Financial Markets 2021
By: Monica_Kingsley
S&P 500 fading the FOMC rally went a bit too far – credit markets aren‘t panicking, so I doubt a fresh lasting downtrend is starting here. Chop, yes – the 4,720 area is proving a tough nut to crack, but it would be overcome. If there are two arguments in favor, it‘s the financials and HYG – the likely rebound in the former, and Friday‘s resilience in the latter. Given that Thursday‘s spurt to 4,750 evaporated so fast, I‘m not looking for a stellar year end. Positive given where we‘re trading currently, sure.
Markets are now grappling with faster Fed tapering (which has opened the way to a rate hike in Q2 2022), getting slowly more afraid of fresh corona restrictions, and dealing with inflation that‘s not going anywhere. Outpacing wage growth, with real yields being deeply negative (no, 10-year Treasury yield at even 2% doesn‘t cut it – that‘s my 2022 target, by the way), the administration would be hard pressed in the year of midterms to counter the corrosive inflation effects on poll numbers. And the Fed expects to keep tightening when the real economy is already suffering from contracting liquidity as seen also in strengthening dollar?
The central bank will have a hard time taming inflation, and in my view won‘t succeed – the persistently high inflation rates are going to be with us for years to come, and outpacing wages. Corona response is another uncertainty, and given the APT performance, the odds of seeing economic activity (just at a time when supply chains would need to keep working off prior setbacks) restricted, have increased. Similar to the recent high PPI reading, this is one more argument for why inflation isn‘t receding in the short run – not when demand isn‘t likewise being destroyed. As if consumer sentiment weren‘t struggling already...
Saturday, December 18, 2021
Fed Interest Rate Actions 1999 to Present – Stock Market What’s Next? / Interest-Rates / Financial Markets 2021
By: Chris_Vermeulen
Let’s continue to explore the past 20 years of US Fed actions. I believe the US Fed has created a global expansion of both economies and debts/liabilities that may become somewhat painful for foreign nations – and possibly the US.
Reading The Data & What To Expect in 2022 And Beyond
In the first part of this research article, I highlighted the past 25 years of US Fed actions related to the DOT COM bubble, the 9/11 terrorist attack, the 2008-09 US Housing/Credit crisis, and the recent COVID-19 virus event. Each time, the US Federal reserve had attempted to raise interest rates before these crisis events – only to be forced to lower interest rates as the US economy contracted with each unique disruption. The US Fed was taking what it believed were necessary steps to protect the US economy and support the global economy into a recovery period.
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Saturday, December 11, 2021
Socionomics the Key to Predicting Trends in Culture, Business, Politics and More / Stock-Markets / Financial Markets 2021
By: EWI
Hi,
Have you heard of socionomics?
Socionomics is a budding field that uses trends in stock prices to predict and prepare for trends in business, the economy, politics, pop culture, polarization, societal health and much more.
It's an exciting perspective with (near) limitless practical application.
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Wednesday, December 01, 2021
Will the Anointed Finanical Experts Get It Wrong Again? / Stock-Markets / Financial Markets 2021
By: MoneyMetals
The emergence of the new Omicron coronavirus strain is roiling financial and precious metals markets. Investors fear government health officials will order new lockdowns to try to contain it.
Never mind that previous lockdowns don’t appear to have worked. Some of the most draconian were imposed by Michigan governor Gretchen Whitmer. Her state now records the nation's highest seven-day rate of infections.
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Tuesday, November 30, 2021
Omicron Covid Wave 4 Impact on Financial Markets / Stock-Markets / Financial Markets 2021
By: Monica_Kingsley
Day That Changed the World?
S&P 500 and pretty much everything apart from Treasuries and safe haven plays down precipitously, with panic hitting oil the hardest. The post Thanksgiving session turned out not so light volume one, but the fear wasn‘t sending every risk-on asset cratering by a comparable amount. What we have seen, is an overreaction to uncertainty (again, we‘re hearing contagion and fatality rate speculations – this time coupled with question mark over vaccine efficiency for this alleged variant), and the real question is the real world effect of this announcement, also as seen in the authorities‘ reactions.
Lockdowns or semi-equivalent curbs to economic activity are clearly feared, and the focus remains on the demand side for now, but supply would inevitably suffer as well. Do you believe the Fed would sit idly as the economic data deteriorate? Only if they don‘t extend a helping hand, we are looking at a sharp selloff. Given the political realities, that‘s unlikely to happen – the inflation fighting effect of this fear-based contraction would be balanced out before it gets into a self-reinforcing loop. With the fresh stimulus checks lining up the pocket books, Child and Dependent Care Tax Credit etc., we‘re almost imperceptibly moving closer to some form of universal basic income. Again, unless the governments go the hard lockdown route over scary medical prognostications (doesn‘t seem to be the case now), such initiatives would cushion financial markets‘ selloffs.
Wednesday, November 24, 2021
Your once-a-year All-Access Financial Markets Analysis Pass / Stock-Markets / Financial Markets 2021
By: EWI
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Monday, November 01, 2021
Wild Choppy Stock Market Moves / Stock-Markets / Financial Markets 2021
By: Monica_Kingsley
One-sided S&P 500 session, perhaps a bit too much – the bulls are likely to face issues extending gains when VIX is examined. The stock market sentiment remains mixed, and one could easily be pardoned for expecting larger gains on yesterday‘s magnitute of the dollar slump. And long-dated Treasuries barely moved – their daily candle approximates nicely the volatility one as both give the impression of wanting to move a bit higher while their Thursday‘s move was a countertrend one.
Not even value was able to surge past its Wednesday‘s setback, which makes me think the bears can return easily. At the same time, tech stepped into the void, and had a positive day, balancing the dowwnside S&P 500 risks significantly. The very short-term outlook in stocks is unclear, and choppy trading between yesterday‘s highs and 4,550 shouldn‘t be surprising today.
At the same time, precious metals could have had a much stronger day – but the sentiment was risk-off in spite of the tanking dollar and doubted yields as the rising tech and gold at the expense of silver illustrate. Miners recent outperformance was absent just as much as commodities vigor with the exception of copper. And it‘s more celebrations in the red metal following its steep and far reaching correction, that‘s the part of missing ingredients as much as fresh inflation fears (yes, adding to risk-off mood, inflation expectations declined yesterday).
Sunday, October 31, 2021
Inflationary Wonderland / Stock-Markets / Financial Markets 2021
By: Gary_Tanashian
Inflation has permeated the macro markets; where to from here?
Apologies in advance for some of the possibly confusing content to follow. But if this were easy anyone could do it, eh? There are a lot of balls in the air; balls known as inflation vs. deflation and most of all time frames.
The media present inflation as this guy picking out higher priced fruit. Wait til he gets to the meat department! You can click the graphic for the article at CNBC.
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Tuesday, October 26, 2021
Has Zillow’s Collapse Signaled A Warning For The Capital Markets? / Stock-Markets / Financial Markets 2021
By: Chris_Vermeulen
Watching Zillow (ZG) move from over $200 per share to recent levels below $90, reflecting a more than 55% collapse in price, while the housing market continues to rally may be an indication that traders/investors have already discounted the future peak in the US capital markets and Real Estate assets related to the current market environment. Zillow is not the only symbol experiencing this broad price decline. Redfin (RDFN) has also declined more than 54% over the past 7+ months.
Is The Peak In Real Estate Flippers Prices Sending A Strong Warning For Traders/Investors?
The peak in these stocks happened near February 16~22, 2021. This date, interestingly enough, aligns with a peak in global capital markets using my proprietary Smart Cash Index and a very clear peak in the Chinese Hang Seng Index.
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Monday, October 18, 2021
Inflation Peaked Again, Right? / Stock-Markets / Financial Markets 2021
By: Monica_Kingsley
S&P 500 upswing continues, and is dealing with the 4,470 resistance – but the credit markets don‘t confirm. Still, that‘s rather a sign of stock market strength than of pending doom. The break back above the 50-day moving average has very good odds of sticking, and the sectoral performance bodes well for further advances. Financials and consumer discretionaries liked the daily upswing in yields while tech and real estates fared well regardless. VIX is likely to probe even lower values, it seems.
So, the open S&P 500 long position is working out well, and will likely continue to do so as higher yields just can‘t help the dollar rise. Inflation expectations are again turning up as we have moved from 1H 2021 Fed saying that inflation was transitory to the current phrase that inflation is transitory, but would last longer than we though. The next stage (arriving latest in Q1 2022) will likely be that inflation is sticky but we have tools to deal with it, followed by putting up a happy face that it‘s a good thing we have inflation after all.
Silver will likely keep leading gold, and the nearest target for the gold to silver ratio is 73. Crucially, miners keep confirming the upswing, and the copper example bodes well for silver as both metals are essential for the green economy, talking which means that crude oil is also likely to keep rising. Time to extend the commodity profits even more at a time when crypto gains keep doing great.
Reflation is slowly giving way to stagflation – GDP growth is slowing down while inflation isn‘t disappearing, to put it mildly. The copper upswing isn‘t so much a function of improving economy prospects but of record low stockpiles. Anyway, much more to look for in the commodities and precious metals bull markets that are likely to appreciate much more than stocks this decade.
Thursday, October 14, 2021
The Only way to Crush Inflation (not stocks) / Stock-Markets / Financial Markets 2021
By: Stephen_McBride
Folks are freaking out about inflation.
The US government’s own numbers show prices are rising at their fastest pace in 12 years…
Google searches for inflation hit their highest level ever last month…
You’re likely feeling it in your pocket too.
Tried to buy a car lately? If you can get your hands on one, it’ll cost you 40% more than last year.
Home prices are rising at their fastest pace in more than 30 years. And here in Ireland, the average heating bill is expected to jump $500 this winter.
Thursday, September 30, 2021
Stock Market Gauntlet to the Fed / Stock-Markets / Financial Markets 2021
By: Monica_Kingsley
S&P 500 was unable to sustain intraday gains, and both VIX and volume show the bears want to move. Arguably, the key market to watch, are the Treasuries – the 10-year yield continues rising, knocking on the 1.50% door again. On the day of Powell‘s testimony, that‘s quite a message to the central bank.
As I wrote yesterday:
(…) Rising yields (the market believes in taper, it appears) across the board, with high yield corporate bonds holding up much better than quality debt instruments – I have seen stronger risk-on constellations really.
Importantly, the huge weekly jump in Treasury yields (the 10-year yield jumped over 20 basis points to 1.47%) failed to lift the dollar, which says a lot given the risk-off entry to the week. Meanwhile, the Fed jawboning continues, and the bigger picture leaves the ambitious Nov tapering suspect.
At the same time, the Fed‘s foot is to a large degree off the gas pedal, and even global liquidity is shrinking. New taxes are kicking in, job market woes are persisting, inflation isn‘t going away any time soon, challenged supply chains are forcing globalization into reverse, workforce is shrinking, GDP growth is decelerating, and no fresh fiscal initiatives are on the horizon – sounds like a recipe for stagflation.
The Fed can adjust (and even reverse) the tapering projections any time it pleases – it has played the job market card already. The dollar failing to gain traction though, is telling. Not even commodities as such are rolling over to the downside – actually, energies (oil, natural gas) have been the star performers (even within the S&P 500 sectors), and agrifoods are well positioned to do great as well. Copper and precious metals are feeling the short-term heat (still, the red metal offered a great entry point earlier today, making the open position profitable from the get-go), but the metals would stop reacting to the bad news while ignoring negative real rates (yes, transitory inflation is another myth the market place believes in) at some point. All roads lead to gold – inflationary and deflationary ones alike.
Wednesday, September 29, 2021
Stock Market Wishing Away Inflation / Stock-Markets / Financial Markets 2021
By: Monica_Kingsley
S&P 500 bears did indeed move, and the dip wasn‘t much bought. VIX with its prominent upper knot may not have said the last word yet, but a brief consolidation of the key volatility metrics is favored next. Even the overnight rebound (dead cat bounce, better said), is losing traction, prompting me to issue a stock market update to subscribers hours ago – fresh short profits can keep growing:
(…) Following yesterday’s slide, the S&P 500 upswing appears running into headwinds as credit markets keep putting pressure on the Fed. Rising dollar is thus far having little effect on commodities, and precious metals have retraced a sizable part of the intraday downswing. Tech remains more vulnerable than value, and this correction appears as not (at all) yet over.
While the dollar upswing hasn‘t been strongest over the prior week, higher yields are causing it to rise somewhat still. The commodity complex is remarkably resilient – the open long positions are likely to keep doing well – and I don‘t mean only energies. Copper is holding up in the mid 4.20s while precious metals are giving the bears a break – a tentative one, but nonetheless encouraging – as I have written yesterday:
(…) the metals would stop reacting to the bad news while ignoring negative real rates (yes, transitory inflation is another myth the market place believes in) at some point. All roads lead to gold – inflationary and deflationary ones alike.
Tuesday, September 28, 2021
Reflation vs. Economic Stagflation / Stock-Markets / Financial Markets 2021
By: Monica_Kingsley
S&P 500 didn‘t give in to the opening weakness, and eked out minor gains. There was no selling into the close either – the table looks set for the muddle through to continue on Monday. Tech and value – uninspiring on the day, and the same could be said of the credit markets. Rising yields (the market believes in taper, it appears) across the board, with high yield corporate bonds holding up much better than quality debt instruments – I have seen stronger risk-on constellations really.
Importantly, the huge weekly jump in Treasury yields (the 10-year yield jumped over 20 basis points to 1.47%) failed to lift the dollar, which says a lot given the risk-off entry to the week. Meanwhile, the Fed jawboning continues, and the bigger picture leaves the ambitious Nov tapering suspect.
At the same time, the Fed‘s foot is to a large degree off the gas pedal, and even global liquidity is shrinking. New taxes are kicking in, job market woes are persisting, inflation isn‘t going away any time soon, challenged supply chains are forcing globalization into reverse, workforce is shrinking, GDP growth is decelerating, and no fresh fiscal initiatives are on the horizon – sounds like a recipe for stagflation.
Saturday, September 25, 2021
Markets Deflationary Winds Howling / Stock-Markets / Financial Markets 2021
By: Monica_Kingsley
Without looking back, S&P 500 rallied in what feels as a short squeeze in ongoing risk-off environment. Daily rise in yields was not only unable to propel the dollar, but resulted in a much higher upswing in tech than value stocks – and that‘s a little fishy, especially when the long upper knot in VTV is considered.
The post-Fed relief simply took the bears for a little ride, and the Evergrande yuan bond repayment calmed the nerves. As if though the real estate sector was universally healthy – I think copper prices and the BHP stock price tell a different story. Things will still get interested in spite of PBOC moving in. The current macroeconomic environment will be very hard (economically and politically) to tighten into – have you noticed that the Turkish central bank unexpectedly cut rates?
Tuesday, September 21, 2021
The Fed Is Playing The Biggest Game Of Chicken In History / Stock-Markets / Financial Markets 2021
By: Avi_Gilburt
Yeah, I know everyone is so certain that inflation is what we will be battling for the foreseeable future. The main reason why many of you are so certain we are battling inflation is because you are seeing prices rise on food and other items for which you shop. But, do rising prices really mean we are dealing with the true economic definition of inflation?
To be honest, I really don’t care what you call it. It makes no difference to me since our analysis tells me when to get in and out of the market. You see, I and many others correctly recognize that the stock market leads the economy. So economic definitions have no bearing upon our forward-looking expectations regarding the stock market. And, I have explained why this is the case in past articles:
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Tuesday, September 07, 2021
US Dollar Upswing, S&P 500 and Nasdaq Outlook / Stock-Markets / Financial Markets 2021
By: Monica_Kingsley
S&P 500 didn‘t get hammered on the NFPs miss – stocks did reasonably well, saved by the daily rush into tech. Volatility didn‘t spike throughout the week at all, and credit markets maintain their risk-on posture. Still, the real economy deceleration made itself heard, pushing back Fed taper speculations even further from September. Jerome Powell wanted to see more jobs data, and would want even more so now. I wouldn‘t be really surprised if no taper was announced in November.
Markets are thus far unconcerned about a policy mistake in letting inflation get entrenched even more – Treasury yields moved up, but don‘t expect to see them gallop just yet. Slow and steady, orderly grind higher is the most likely trajectory ahead, and even that won‘t propel the dollar higher, or keep it really afloat. Greenback‘s support is at 91.70, and I‘m looking for it to give in over the nearest weeks, which carries tremendous implications for commodity and precious metals trades. And for risk assets in general.
Precious metals thus far remain tame, and should continue chugging along just fine. Commodities such as copper and oil won‘t be derailed, but might panic temporarily in case of really bad incoming data. Copper‘s continued underperformance of the commodity index highlights the growth woes of the day, and even if the red metal might look to some as ready to roll over, the positive stockpile situation should cushion potential downside. In short, I‘m not looking for a meaningful disturbance to the commodities bull, as the inventory replenishment cycle has far from run its course, and inflation is bound to get hotter this year still.
Monday, September 06, 2021
What‘s Not to Love About Crypto Market Fireworks / Stock-Markets / Financial Markets 2021
By: Monica_Kingsley
Another weak selling attempt in stocks – are these setting up for tomorrow‘s NFPs volatility? It sure appears so, but buy the dip mentality looks likely to emerge victorious. The current period of low VIX will probably give way to a brief spike, which within bull markets is usually resolved with another upswing.
No matter the momentary hesitation in the credit markets, where we‘re moving two steps forward, one step backwards. Or rather two steps backwards, as can be seen this week. Risk off is still with us as key commodities aren‘t surging, leaving yesterday‘s silver upswing a little suspect on a daily basis. Copper and oil are struggling somewhat at the moment as well, taking (a bit too much) time as the dollar is only modestly declining and yields aren‘t rising.
The current trading environment favors still risk off, sectoral rotations are tame, and inflation expectations continue basing before money printing becomes an ever bigger problem for 2022 and the years ahead. Ethereum keeps doing wonders, and Bitcoin is joining in – finally, as expected. Hope you‘re riding open profitable positions too!
Sunday, August 29, 2021
Play the Odds: Avoid Gambling in Rigged Markets / Stock-Markets / Financial Markets 2021
By: MoneyMetals
Is America becoming a nation of gamblers?
The lure of potential cash windfalls is driving rampant speculation in financial markets and record traffic to casinos.
The commercial gaming industry generated a record $13.6 billion in revenues during the second quarter, according to the Las Vegas Review-Journal. Casinos in Las Vegas, Massachusetts, Louisiana, and elsewhere now expect 2021 to be their best year ever.
On the flip side, since all games on a casino floor are rigged in favor of the house, it’s a good bet that gamblers are losing record amounts of money.
Tuesday, August 24, 2021
Surprising Consumer Activity Suggests A Deeper Shift In The Finanical Markets / Stock-Markets / Financial Markets 2021
By: Chris_Vermeulen
This final portion of our research article into the shifting US/global consumer spending/economic activities will help to set up forward expectations related to how assets and the stock market may react over the next 12+ months. In our opinion, the reflation trade/rally is complete, and consumers have already run the course with regards to stimulus spending, hyper-speculation of assets (cryptos, commodities, equities/stocks, and others). What happens next is we shift into the real-world future where post-reflation valuations, consumer activities, and corporate earnings will drive expectations.
There was a time, shortly after the November 2020 elections, that was very opportunistic for traders/speculators. The US Fed was prompting very easy monetary policy while multiple stimulus programs were still taking place. Additionally, the US economy was still early into the post-COVID reflation attempts. This created a real opportunity for traders and speculators to ride a hyper-speculative rally phase in late 2020 and into early 2021 as the Month-over-Month and Year-over-Year economic output data ramped up from the extreme COVID lows.
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