What You Need To Know About JackHole

All you need to know about JackHole is that Janet will talk up her book the same way she has done since taking office.  She will try to figure out a way to tell investors that a rate hike is coming in December without scaring the shit out of them.  She wants us to stop being so complacent.  Investors will be hanging on every word.

What I don’t understand is how we continuously believe every word that spews from every central banker’s mouth.  When the market goes down we blame it on rate hike talks.  Yet we’ve hiked 1 time in the past 9 years and the dot plot looks like shit.

As you can see from the chart below, the market hasn’t moved in a month, in fact it has moved less in the past month than any other period in the past 20 years.  Thankfully I’ve gotten in many rounds of golf without coming back to an Armageddon.  Last year was quite different. Only a few days before the Jackson Hole Summit of 2015, the market quickly took a +10% haircut in 3 days.

If we are lucky, maybe we will see a guest appearance from the bearded clam.

Yellen’s speech begins at 10am ET on Friday.  Bring popcorn and EpiPens.  We deserve 2200.

The stock market can be easily relatable to things that on the surface may seem unrelatable.  Take Game of Thrones for instance; there are many similarities that may never have been realized before.  The story line follows a bunch of savages (homegamers) trying to capture the throne (get rich and retire early) yet no one has rightful claim to the throne (no one is smarter than the market).  The heathens band together into powerful armies (buy orders) and fight to the death with anyone who gets in their way (shortsellers) to capture the throne (retirement).  There is a giant wall that protects the entire realm (the Fed and PPT) from harm.  Everyone appears to be incestual with each other (insider trading) as well as whore their stuff around (sell newsletters).

As it currently stands, your grace, Lord Ramp sits on the iron wheelchair throne and I never intend to give it up.  My recent 8 day win streak and the breakdown of market volume proves that I am in full control and command of the seven kingdoms.  Moreover, new ATHs are now hit on a daily basis and $VIX is approaching single digits (I will soon hang its head on a spike outside of my office).

As the old stocked market adage goes: Amateurs open the market, but professionals close it.  Below you will find the breakdown of volume for NYSE stocks from Monday.  On a typical day the Ramp accounts for somewhere between 30-50% of the daily market volume, hence why it is referred to as the most bullish half hour of the day by the liberal media.  Lest we not forget all of the liquidity I am providing to the peasants.  You can now see how House Ramp has become rightful heir to the throne.

Winter is coming and I expect $SPX 2300 by Thanksgiving.  Anything less would be considered treason and a direct threat to the throne and House Ramp.

Like all of you, I’ve had enough of the two-party political system in America. Both the Democratic and Republican National Conventions have been outright ridiculous.  Both parties continue to shit on each other while homegamers are left to figure out who the least shitty candidate is.  Sure they make for great Twitter but they don’t make for a greater future.

That’s why I’ve decided to throw my hat into the ring and break up the two-party system and form the Rampublican party and run for President. Now, this isn’t your independent tea party bullshit or a fascist or demagogue state as all the hipsters like to call Trump. This is a party that caters to the homegamers, a centralist idea (think central banks) that spans a range that starts in the lower left and ends in the upper right.

If you are unsure of who to vote for come November, just remember who had your back during the worst start to the year ever for the market, during Brexit, during the 2015 December rate hike, at ATHs, and when $TWTR reported shitty numbers (#RIPTwitter).  I did.

My platform is for every homegamer to retire early, to run helicopter money drops twice a year at a minimum, and no rate hikes ever again.  The Rampublican party will lift people out of poverty on a strict time schedule starting every day at 3:30pm.  I will also look to abolish short selling and imprison any offenders.  I will make sure the $VIX stays in single digits for my entire tenure.

I want to see my name written on the ticket. I’ll send reminders when the time approaches but I fully expect to see some pictures of ballots with my name on it.  America, free market capitalism, and $SPY depend on it.

#VoteRamp

Back in early February when Godzilla was roaming the streets of NYC, spitting napalm out of his gullet, I tweeted out that I missed greed.  At that time, the CNN Fear & Greed indicator was flashing extreme fear and hovering in the single digits.  Flash forward 5 months later, the streets have been cleaned up, the skyscrapers rebuilt and renovated, hipsters back on the streets searching for Pokemon; and the indicator is now sitting at extreme greed levels in the 90s.  Gartman has been known to trade off of this indicator, hence why I like to keep an eye on it.  With the indicator being in the 90s, it appears we may soon be headed for helicopter money territory.

With the VIX approaching 52 week lows and the biggest 3 week crush in history it only seems prudent to take profits here.  At least that is what I’m sure your gut is telling you right now.

Volatility Index is down over 50% since Brexit, the largest 3-week decline in history. From 25.76 to 12.67. $VIX pic.twitter.com/leFWrI8X7z

— Charlie Bilello, CMT (@MktOutperform) July 15, 2016

However, as we all know, the market can stay irrational for long periods of time.  I think we have entered the melt-up phase once again.  Earnings season will once again be filled with bullish musings which will then result in multiple expansions as a result of a stock beating some analyst’s estimates and whisper number while completely ignoring all fundamentals.  So basically nothing out of the ordinary.

As always, you can safely hide in the Ramp as it is not affected by earnings, or Brexit, or greed.  Well, technically, I guess it is affected by greed.  Nevertheless, I expect some of you to take your profits, and put on your hedges.  Just be prepared to lose money on those hedges.

Top 10 repeated words from the June FOMC minutes:

Market – 80

Inflation – 76

Rate – 71

Economic – 65

Participant – 53

Labor – 50

Decline – 50

Price – 50

Committee – 49

Expect – 48

Brexit was only briefly touched upon a handful of times to cover their ass in case there was fallout before the vote (there was).  I expect next meeting minutes to reveal more mentions of Brexit and how it will affect our inflation and labor participation rates.

There were only 3 mentions of “hike”. Remember when we hiked back in December of last year and every US bond yield has gotten murdered since?  The 30 year yield is now below the S&P 500 yield for the first time since the financial crisis.  If you haven’t noticed, the market will do whatever it wants to do.  It doesn’t take orders from the Fed anymore.

And just for fun I thought it would be worthwhile to include the latest and greatest dot plot.  There appears to be a lone ranger lingering around the 0.5% fed funds target.  Not sure if he/she will be the first person to get a raise or get fired.  I can’t wait to look back at this 2 years from now and see we are still at or below 0.5%.

Market HODing and off the lows after the minutes were released.  It also appears the Brexit worries have waned and the 1-day bear market has come to an end.  You are now free to put your kids back in school and come out from the bomb shelter/your parent’s basement.  Let’s see if we can’t take out new highs this week.  We deserve them.

In case you’ve been living in a hole, last night was an historic event.  It was pretty impressive to watch the calamity ensue after the UK voted to leave the EU.  Spooz went limit down last night hitting the magic 1999 level as pajama traders snorted entirely too much cocaine.  Update on the market 30 minutes after the open and we are sitting at 2070, flat on the week.

The Fly has already embarked on his journey, the Ark has set sail, we bid him farewell.  I warned him that seas may be choppy and to return to port before 3:30pm.  The Ark is fundamentally flawed, built by cheap labor, filled with stupid animals.  It’s never too late to join the Ramp Camp.  We have the Fed and The PPT on our side.  Plus we all saw what happened at the close yesterday.  Do you really want to bet against that?

Moreover, the Fed funds are now predicting a 12% rate cut in September.  Bad news = QE4 = Spooz 2100.

As I mentioned yesterday, I will be out golfing today, working on my 330 yard drive.  I will be available remotely in case of emergency.  Don’t do anything stupid today.

Don’t forget to fill out your Fed BINGO playing card.  You can rearrange the the squares as you see fit before the press conference begins at 2:30pm ET.  Good luck to all.

Side note: The adult version of this game is take a shot every time you hear a buzzword.

FOMC meetings start today.  Investors are calling the Fed’s bluff once again, the bluff being that they will actually raise rates.  The whammy came a couple weeks ago with the terrible NFP report.  I love how we can take a single data point and extrapolate it to determine Fed policy.  Right now the CME Group FedWatch is predicting a 2% chance of a rate hike, down from 30% a month ago.  You have to go all the way out to the December meeting to even get a probability of a hike greater than 50%.

The Fed was supposed to hike twice in 2016.  That doesn’t look like it will become reality unless the pull off a July/December combo.  A New York Times piece written a month ago on May 18th had the following to say:

The Federal Reserve sent a sharp, simple message to financial markets on Wednesday: Pay attention. The Fed is thinking seriously about raising its benchmark interest rate at its next meeting, in June.

The unusually frank bulletin was delivered in the official account of the Fed’s April meeting, which said explicitly that most officials thought “it likely would be appropriate” to raise rates in June if the economy shows clear signs of a rebound from a weak winter.

Still the account made clear that Fed officials want markets to take the possibility more seriously.

The Fed wants us to take them more seriously.  Okie dokie.

My prediction is thus: We will continue to muddle up and down, trading sideways mostly.  As long as Spooz stay under 2100 Janet will never pull the trigger.  Last week we were above 2100 the entire time, then reality struck that there was a Fed meeting this week and we started to selloff again.  Once the Fed meeting is over and they announce no hike, we will rip higher again, as always.  Then we will repeat this process in July, September, November and probably December as well.  The Fed is data dependent AKA S&P500 price dependent.

On a side note: The Fly has taken a personal vendetta against yours truly.  He has waged war against the Ramp because he wants the Ark to set sea yet my consistent Ramp attempts keep puncturing the sides of the Ark, causing delays and disembarkation.  It is time to choose sides.  You can either take a seat on the Ark, if there is room available next to Rikki Tikki Tavi, or you can grab a weapon and begin dismantling the Ark.  Choose your side, wisely.

The bulls have alligator blood, the bears just can’t get rid of them.  They showed up all the ‘Sell in May’ naysayers by making a late push to close up in May.  Even the first two days of June have seen 0.5% opening declines being swallowed up before lunch.  New highs are so close you can taste them.  The only problem is that the higher we go, the higher the percentage chance of a rate hike since Janet is S&P 500 data-dependent.

Tomorrow’s NFP will be unimportant as always.  Good or bad, ignore it.

There is a clear supply of sell orders above 2100 trying to prevent the bulls from another win.  I’m not concerned though as we haven’t even hit the animal spirits phase of the latest rally.

Speaking of alligators, I’m never playing golf in Florida again.

The god-damned millennials are back at it again, but this time it’s not with white Vans.  Watch this short clip:

Millennials are nuts. What is even more crazy is the fact that someone is trying to sell this signed bottle on eBay.  Current bid is $6k.  No bubble here.  Why not just put $6k in $MILN ETF?

Not sure which is more insane: millennials going apeshit over a bottle flip or grown ups being punked by a set of glasses sitting on the floor of an art gallery.

Our society is doomed.

I can only hope we get this excited when we break through 2100 today.