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Finance 0
10-Year/2-Year Treasury Spread Falls To Post-Recession Low
The debate about the value of the Treasury spread for business-cycle analysis is set to intensify in the wake of the latest slide in the difference between the 10-year and 2-year rates. Although the US economic trend remains healthy, the ongoing decline in the yield spread implies trouble ahead, based on this indicator’s historical record. US recessions over the last four decades have been preceded by a falling yield spread that lifts the 2-year rate above the 10-year rate – an inverted yield curve. Although the spread is still positive, the difference has narrowed to a relatively thin 65 basis points as of yesterday (Nov. 17) – the s... -
Finance 0
WTI Crude Oil And Natural Gas Forecast – Friday, Nov. 17
WTI Crude Oil The WTI Crude Oil market continues to dance around the $55 level, finding support at that level. However, the question now is whether we can break down or not. If we do, the market will probably find support at $53, as supply continues to be a significant issue. Alternately, if we were to break above the $56 level, I think that the market goes looking for the $58 level next. Either way, we had gotten a bit ahead of ourselves, so it makes sense that this pullback is not only structurally needed, but timely as well. I suspect the buyers are waiting for signs of support or impulsivity to the upside to take advantage of. The volatil... -
Finance 0
Is Behavior Economics Good Economics?
Recently, a relatively new economics called Behavioral Economics (BE) has started to gain popularity. Its practitioners such as Daniel Kahneman, Vernon Smith and Richard Thaler were awarded Nobel prizes for their contribution in the field of BE. The BE framework emerged on account of dissatisfaction with the neo-classical theory regarding consumer choices. A major problem with the neo-classical theory that people presented as if a scale of preferences is hard-wired in their heads. Regardless of anything else, this scale remains the same all the time. The practitioners of BE hold that this is a very unrealistic case. Hence, to make the mainstr... -
Finance 0
Above The 40 – A Swift Break From The Market’s Downward Drip
AT40 = 45.8% of stocks are trading above their respective 40-day moving averages (DMAs)AT200 = 53.8% of stocks are trading above their respective 200DMAsVIX = 11.8 (10.4% loss)Short-term Trading Call: cautiously bullish Commentary It was one of THOSE days for anyone or anything standing in the way of the buyers. An overwhelming rush to the basket… (Philadelphia 76ers Joel Embiid vs. L.A. Lakers rookie Lonzo Ball) Source: Twitter Right after I pointed out the mildly ominous indicators of a market that “wants to drop,” the buyers finally stepped into the market with conviction again. AT40 (T2108), the percentage of stocks trading abov... -
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E How Small Businesses Are Differentiating Themselves From E-Commerce Giants
The e-commerce industry is largely dominated by few giants. Amazon (AMZN) is the largest player in the market in terms of market capitalization. On the other side of the world, Alibaba (BABA) is growing fast as it continues to capitalize on its home country’s massive population and a growing community of online shoppers. Amazon and Alibaba have a combined market value of more than $1 trillion. In the U.S. the likes of eBay (EBAY) and BestBuy (BBY) among others continue to trail Amazon while a flurry of traditional retail stores has also joined the race. This presumably leaves startup e-commerce players with little room to capitali... -
Finance 0
Draghi Hails The Solid Economic Expansion – EUR/USD Looks Solid
The president of the ECB has increasing confidence that the economic expansion is solid. This sounds like an upgrade in comparison to previous statements, which acknowledged the progress but did not sound so optimistic. However, inflation hasn’t reached the point of being self-sustained. Draghi is basically keeping things balanced with the normal caution about inflation. However, his optimism comes after the upbeat German data earlier this week. As usual, he calls on governments to take advantage of the current positive environment to make the necessary reforms. This kind of message also accompanies the text Draghi reads in every rate st... -
Finance 0
Industrial Production Still Reflating
Industrial Production benefited from a hurricane rebound in October 2017, rising 2.9% above October 2016. That is the highest growth rate in nearly three years going back to January 2015. With IP lagging behind the rest of the manufacturing turnaround, this may be the best growth rate the sector will experience. Production overall was still contracting all the way to November 2016, providing the index favorable base comparisons that won’t last past next month. Industrial output is now again about even with the peak registered three years before in November 2014, and only slightly more than the one seven years before that in November 2007. I... -
Finance 0
Yield Curve To Completely Flatten In 2018: But How?
The T. Rowe Price Group expects the yield curve to completely flatten in 2018. This is not a surprise as I have been commenting the same way for quite some time. The more important question is how? By yields converging up, down, or a mix? Please consider Bond Traders Should Prepare for Yield Curve to Zero Out in 2018. Just how much further can the relentless flattening of the U.S. yield curve go? All the way to zero, according to T. Rowe Price Group. “The peak yield on the 10-year Treasury should roughly approximate where the final level of fed funds settles out, so that to us implies a flat yield curve if we assume the Fed will do two or ... -
Finance 0
Perspective From A Trading Technologist — Attacking Unique Problems
Audio Length: 01:06:37 Rick Lane is the current CEO of Trading Technologies—a software provider that develop high-performance trading platforms which are used by; proprietary traders, hedge funds, CTAs, brokers and banks etc. The reason why I asked Rick to appear on this episode is because, as we know, not everyone is cut out to be a trader. And that’s fine! I’d like to highlight, there are many other roles in the world of trading where you can have a great impact by leveraging skills which you may have already attained… Prior to teaming up with his cousin, a large interest rate trader, who anticipated the inflection point of automate... -
Finance 0
EUR/USD Bullish Bounce At 50% Fibonacci And 1.1750 Support
EUR/USD 4 hour EUR/USD retraced back to and bounced at the 1.1750 support level. Price then broke above the resistance trend line (dotted red) and therefore could be extending the wave 3 (pink). 1 hour The EUR/USD bounced at the 50% Fibonacci level of wave 4 (purple). There could be a wave 5 (purple) continuation as long as price stays above the support trend line (blue). GBP/USD 4 hour The GBP/USD broke above the resistance (dotted orange) trend line and moved up to retest the higher Fibonacci level at 1.3260. A breakout above the top (100% Fib) or below the support trend line (green) is needed before a larger directional move can be expecte...
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