Over the past month, pandemonium has broken loose on Wall Street, tanking the values of munis, treasuries and high yield corporate debt. Moreover, REITs and utilities have been hammered into panned cakes.
Since 2008, I’ve kept a Risk Appetite Index inside of The PPT to track potential dislocations in credit. It was supposed to warn members of impending doom. But it was a different world back then. Now Detroit can filed for bankruptcy and the Dow trades up on the news. Truly bizarre.
1 mo view of RAI
Pretty bad, eh?
Now have a look at the chart over a longer time frame.
POW! That chart screams “punch me in the face with a bag of wooden nickels.” Yet, markets have yawned it off, while eating a plate filled with boiled yams.
The Fed is either going to confirm “TAPERMANIA” or deny it, thereby causing a few things to happen.
Under a confirmation of TAPERMANIA, the following should occur.
1. TLT will get smashed.
2. REITs and Utilities will drop 3%.
3. Commodities and the overall markets will undergo significant selling pressure.
If TAPERMANIA is denied, the following should occur.
1. TLT will edge higher. It will not rip, because stocks will do that.
2. REITs and utilities will sharply rebound.
3. Beaten down commodity plays, like Iron Ore, Gold and Coal, will outperform the markets.
4. Market soars.
I do not believe there is a middle ground. I know every single Fed meeting is the most important meeting of all time. The media has a way of over-dramatizing these events. Nonetheless, you shouldn’t enter tomorrow without a game plan. Failure to deny TAPERMANIA will most likely lead to the cancellation of the summer rally, in exchange for 5 weeks of misery.
Rub some VXX on your chests, eat hearty, for tomorrow you will trade from hell.
http://www.youtube.com/watch?v=wXLRgDUtuqg
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Detroit like defaulted.
When shall we expect the official Le Fly Review of Yeezus?
One of the worst albums I’ve ever heard in my life.
He should be arrested, tortured and released into the Amazon jungle for this crap.
Check out Action Bronson’s latest instead. And the dude’s a chef to boot!
Yes! Pure Shite. Yeezus. No Talent. Knock up more!
Fingers crossed Jay’s album isnt this bad or IM REALLY GONNA BE PISSED!
What you have described makes perfect sense, the thing is I forgot when markets made any sense… I wish it would happen whichever way you have described so I can feel markets are back to normal.. I really do not know what to expect in reality, that is why I am high er than normal (47%) cash and will stay this way until next week.
PS: for the PM die-hearts – rebound in gold and silver would not necessarily mean that PM miners will rebound , for that you need something bigger than the old clam making bubbles…
There is no way the bernack confirms a taper and let’s it all fall apart. I’m actually pretty flat going into tomorrow so would love to see a huge pullback, but I just don’t see that happening.
I predict obfuscation from the Fed.
Hilsenrath will fix it later after they assess the damage.
So shorting TLT HAS THE BEST RISK/ reward?
curious how did you come up with this conclusion
Short spy, short TLT Pairs trade.
The correlations have flipped and may revert to mean.
Probably
Fly. I hope to hell you are right about the Clams reveal tomorrow. However, he will give us “on one hand and on the other speech”. Therefore it will will be shit or go blind for the markets. Again, I hope he is as crystal clear as you say.
The Fly is always right, even when he is wrong.
For my special friends in the Ibankcoin crowd I will provide what I plan to say tomorrow in advance…
Here it is, in its entirety. Be prepared to have your mind blown.
“I am here to say with great enjoyment, I will give no more speeches. You get nothing today. I have talked out of one side of my mouth long enough. I’m sick of this shit… the market is fucked without me, I quit.”
Lol
The free money has not fucked the correct holes enough. The rich getting richer is bidding up mansions and art and other let them eat cake with dogshit syrup assets. So… How do they fix this fuck you poor asshat problem? Take the froth off the virgin. They like the scalp on the skull. We trade down for awhile. The deck gets reset.
Or… Nothing matters but up stocks. Then NUGT should explode. Pensions of the united states will cheer and cry. The old will get hips and sex changes. All will be well.
No real recovery because of aggressively hunting down wealth and tax Havens slows the velocity of money…. As well as Europee Austerity…
With S&P at 999… It’s time for some 9-9-9!
Now who wants some Pizza?
P.S. ladies night at Herman Cains Pizza… Get 2 Pizzas, get my stimulus package free.
Bernstein bases scientific analysis on number of Google searches for BBRY! (Reads, we need to take this fucker down before options expire this Friday!)
BlackBerry downgraded to Underperform from Market Perform at Bernstein
Bernstein downgraded BlackBerry following checks that indicate consumer uptake is slow and that the second half will disappoint investor expectations. The firm sees increased risk of only partial BB10 adoption with corporate customers and believes consensus estimates have risen too high. Price target lowered to $10 from $15.
We do up no matter what. Give me my $100 on the Dow!
The Fall after the Pride!
{slumps into deep thinks; fingering worry beads}
Well looks like the opposite of what “should occur” actually happened….