Other than the usual dreck, the FOMC minutes revealed that maybe its OK if stock markets go down.
“… members considered the advantages and disadvantages of adding language to the statement to acknowledge recent developments in financial markets. On the one hand, including a reference would show that the Committee was monitoring financial developments while also providing an opportunity to note that financial conditions remained highly supportive of growth. On the other hand, including a reference risked the possibility of suggesting greater concern on the part of the Committee than was actually the case, perhaps leading to the misimpression that monetary policy was likely to respond to increases in volatility. In the end, the Committee decided not to include such a reference.”
Source: FOMC minutes
I believe the Fed just took away your binky. Please don’t cry. No more Bulltard stick save comments.
It would not surprise me to see the market weaken considerably from here. I am not going to bore you with technical mumbo jumbo but the bottom line is I think we are making a near term top. The IWM has rolled just like it did in September before the Dow and S&P collapsed. How fast and how far we fall remains to be seen but the deflationary backdrop is alarming. The amount of HY debt that is becoming impaired in the commodity complex is frightening. HY is not confirming this rally and it will spill into the equity markets at some point. I bought more IWM puts on Monday (Still lots of cash). I have burned some of my profits by reloading too soon before the BOJ nonsense but I am still up 10% YTD. I think the Santa rally has already occurred and now we retest October lows. Could I be wrong? Absolutely! However, when I look at positioning I see that people are off-sides again. The Fed just told you that they are OK with more volatility. I ask you are the markets priced that way? Are levered players ready for more volatility or do they need to take down some gross? Good luck.
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Blue,
What strike are you playing on IWM. I am doing dec 19 spread 112/105.
People have been saying that with so many funds lagging benchmark they will push into YE to try make some back…
I wonder if we were to get some downside momentum, will they all pile on to try and generate some alpha?
Some times even the sun shines on
a dogs arse.The bears got lucky.
Where is Bernanke now
They look like Key Stone cops right
.We will raise rates,well maybe,maybe
not,is It tSunday ,okay we’ll just sing,
do we all have the same song sheet
is that yes or no
Thanks for the update Bluestar. Always appreciate getting your take. And reading between the lines of this statement is no exception. I’m currently reading The Great Deformation by David Stockman. He is very critical of Greenspan/Bernanke catering to the “Cramerite speculators.” It will be interesting to see if this truly is a change of character where the folks in the Eccles building stop worrying about the market averages.
One other resource I recently found interesting was this chart of the bifurcation in the high yield debt market. It seems debt-financed shale operators are the main culprit for the drop in high yield credit.
http://www.otterwoodcapital.com/2014/11/17/whats-driving-high-yield-credit-lower/
Thanks as always
Bluestar: If they break out the Russell to new highs, will you flip the cards over? Thanks, Trader X
Bill,
110 105
jworthy,
The multiplier effect from the energy space will feed into weakness from the rest of the economy. 1/3 of all capex over the last 5 years has come from energy.
Trader x.
Yes i will flip.
fwiw, something I read that isn’t today’s business but it could come home to roost at some point.
“Meanwhile, there has been a HUGE amount of low grade debt piled up chasing the “fracking miracle”. Everyone and his cousin piled on leverage to take advantage of the tertiary oil and gas recovery boom. That was fine with $100+ oil prices and $6 gas prices. But, a lot of that “sub prime” debt is looking shaky with oil below $75 and likely headed below $65. This is based partly on an assumption that the Saudis feel a threat from high cost “fracking” and want to run that potential competition out of business. Below $70, much of the “fracking” risk/reward equation collapses. It might be possible that “fracking debt” becomes this cycle’s sub prime mortgage debt in the sense that the stuff got securitized and stuffed into places it doesn’t belong. We all know about sub prime auto debt and student loan debt, etc. but the “fracking debt” has seen little discussion so its size and complexity seems to be a great secret.”
Looks like China just jammed a binky down the markets throat!
One Fed taketh away das Blinky, another Fed giveth back das Blinky. It’s a really tough game to game the giveth & taketh of das Blinky’s and mostly particularly on the short side.
That’s why it’s a terrible bet
The market like women likes em long.
That being said its much harder being a
a short as you have to work twice as hard.
the%20continued%20move%20up%20is%20almost%20unreal..%20
BlueStar? You there?
thomas,
i have been busy with other things. will post soon. I was not expecting ECB, BOJ and China bazookas. I have been wrong for now.