Death: It comes to all of us, including empires, paper currencies and countries. Debt: The world is drowning in debt – $150 to $200 trillion. The U.S. government is sinking into a black hole of debt – $20 trillion official and another $100 – $200 trillion in unfunded obligations. Total U.S. debt securities exceed $40 trillion according to the St. Louis Federal Reserve. Devaluation: Given unpayable debt and unwillingness to face the insanity, the remaining option is devaluation. Taxes: Governments need more revenue. It will come from taxes and “printing.” Both are poor choices. SO WHAT? Since 1913 debt has been a necessity...
If we had to summarize what’s happened in eight years of “recovery,” we could start with this: everyone’s been pushed into risky assets while being told risk has been transformed from something to avoid (by buying risk-off assets) to something you chase to score essentially guaranteed gains (by buying risk-on assets). The successful strategy for eight years has been buy the dips because risk-on assets always recover and hit new highs: housing, stocks, bonds, bat guano futures–you name it. Those who bought the dip in hot housing markets have seen spectacular gains since 2011. Those who bought every dip in th...
Following The Fed’s 3rd rate hike in 11 years, the PBOC decided, unexpectedly, to follow in the Fed’s footsteps, and tighten conditions by raising the interest rates on its open-market operations, the 7-, 14-, and 28-day reverse-repos, by 10bps each, to 2.45%, 2.6% and 2.75% respectively. That followed an increase of 10 basis points at the beginning of February, which in turn was the first increase in the 28-day contracts since 2015 and since 2013 for the other two tenors. One month ago, the PBOC also – for the first time ever – increased the rate on the PBOC’s Medium-Term Lending Facility, or MLF. It did it ag...
Yesterday we talked about a form of breakouts that discovered and used by Nicolas Darvas Box trading that you can check out right here. This time around I want to highlight further the different forms of breakout trading. The S&P 500 bounced hard today and it is going to look to continue that momentum into tomorrow. So I’ve put together three seperate breakout trading plays that should materialize nicely for us. Long Builders FirstSource (BLDR) Long Delek US Holdings (DK) Short Tyco Connectivity (TEL)...
The Fed remarked today that they will continue to maintain their large Treasury holdings for the time being rather than let them roll off as many investors expected. It is believed that by maintaining these large holdings, the Fed is keeping longer-term rates low. In other words, the Fed is focusing on promoting growth over fighting inflation. This news gave the inflation-sensitive and growth-sensitive groups a big boost, and pushed down the rate-sensitive group along with the US Dollar. Junk bonds and small caps rallied. I think the big rally in some these groups was also due to a short-term oversold general market based on the PMO index. Th...
ProPetro (Pending: PUMP) filed an S-1/A with the Securities and Exchange Commission for its upcoming initial public offering. The company plans to sell 20 million shares at a marketed price range of $16 to $19, with an additional 3 million shares as an over allotment option for its underwriters. Of these shares, 47% are being offered by company insiders. The company expects to receive $171.4 million of net proceeds from this offering. If the company prices at the mid-point of its price range, it would command a market cap value of $1.47B and trade at a 3.38x price/sales multiple. The underwriters for the IPO include: Goldman, Sachs & Co...
In the past, the Federal Reserve was accused of “working for Wall Street”. This claim is questionable, but there is no doubt that the Fed watches markets. It’s no secret. When the Fed basically told us that it is raising rates in March, many thought that the Fed has upgraded its forecasts and is set to accelerate the pace of the rate hikes. The Fed took its sweet time to prepare us for a hike in 2015, waited a year until the next hike and suddenly it raised rates within three months. So, it is hard to blame those market participants for understanding that the Fed is more confident. So when the Fed raised rates but left everything el...
GOLD PRICE FENDS OFF USUAL HIT; PREDICTED TO SOAR BY YEAR’S END The United States Federal Reserve carried through on weeks of speculation by boosting its benchmark interest rate by a quarter point to a range between 0.75 and one percent. This marks the second straight quarterly increase, and the first of three forecast by the Fed for this year. As usually occurs in the face of higher interest rates, the price of gold weakened to a five-week low… but BEFORE the official announcement by Fed Chair Janet Yellen. The spot price and futures for April subsequently stabilized, and both rebounded afterwards. Given that several Fed governors had be...
Podcast: Play in new window | Play in new window (Duration: 13:15 — 7.6MB) DOW + 112 = 20,950 SPX + 19 = 2385 NAS + 43 = 5900 RUT + 20 = 1382 10 Y – .08 = 2.51% OIL + 1.24 = 48.96 GOLD + 21.10 = 1220.70 Today is Fed Day. Policymakers at the Federal Open Market Committee of the Federal Reserve raised interest rates, as expected. The decision to lift the target overnight interest rate by 25 basis points to a range of 0.75 percent to 1.00 percent marked one of the Fed’s most convincing steps yet in the effort to return monetary policy to a more normal footing. This was the second interest rate hike in the past 3 months, and only the th...
During the session on Thursday, there are a lot of announcements that could move the markets. The day should be volatile, but there three markets look particularly interesting to us. WTI Oil While rising above the hammer from the previous session on Wednesday was a good sign, it is likely that the fundamental reasons for the commodity will continue to be negative overall. With this, it is likely that the put buyers will look at a rally as an opportunity. Gold Gold markets seem to be struggling a bit, and it is likely that the put buyers will be encouraged by this. Rallies could bring out the bearish traders in the short-term. DAX The German m...