There weren’t many places to hide today, with 90% of stocks lower for the session. Gold, Silver and other commodities were the big dogs for the day, all encumbered with harrowing losses, some in the double digits. REITs sold off and everyone is panicked over a Fed rate hike. Meanwhile, the people who actually control the Fed’s decisions are only giving a 24% chance for a September hike and 57% chance for one in December. Lots of fuckery can happen from now until December, when horrible retail sales will likely rear its ugly head.
Two things to take into account.
1. We are overdue a correction and September is the most likely time for it to happen, being the worst month for stocks historically.
2. The market isn’t pricing in political risk or even remotely taking into account that the Fed is intending to hike rates, or jawbone about it, at a time when recent economic data is suggesting the economy is weakening.
This tone deafness out of the Yellen Fed is something of a hallmark for her. I used to joke on the Twitter about her partaking in podiatrist appointments, or eating clubbed sandwiches, while the world burned. Somethings never change. Unlike Dr. Benjamin Bernanke, who used to lamp up in his dimly lit office at the Federal Reserve, smoking joints and enacting big balled Fed policy to save the world–because he was a hero, Yellen is much more comfortable with trying to justify her existence and incessantly worrying about the inflation boogeyman–who was killed a long time ago.
Have a great weekend and don’t forget to join the league of gentlemen in Exodus, for an oversold signal might be right around the bend.
If you enjoy the content at iBankCoin, please follow us on Twitter
Gold was not a big dog it seriously outperformed the market…
not miners
True enough.. I’m wondering why the PPT cavalry wasn’t brought in, maybe the leading candidate is becoming a burden
Because the Fed wants the market lower.
Any chance hike would work to get hillary in ofivce? Bit of market turmoil could be used to scare people away from trump.
I bet the opposite is true. Remember, Hillary is considered the status quo candidate, and Trump has been warning of economic doom.
Could go eaither way.
McClellan actually has a chart that shows correlation between market drops and Trump gaining popularity in the polls. Its just shitty poll data though, so take with a grain of salt.
Trump will cause markets to drop initially, like BREXIT. Then people will figure out low taxes will cause 5% GDP growth and markets will roar.
Considering there’s a recession roughly every seven years, I believe we are overdue for one regardless of who’s President
>Any chance hike would work to get hillary in ofivce?
You would need something like S&P to give up another 100, or Dow 16900
Vix 30+ in October.
Trumps the only person telling the truth about the economy. Everybody else resides in candy land. There’s more blood to be shed in coming months, much more. Board the ark, today was a great day to be avg in on TLTs, ZROZ, and anything that resembles a government bond.
Yes sir, that’s what I was doing today along with lightening up the portfolio.
You don’t believe bonds and stocks can go down at the same time? Considering they have both been going up in unison, I think it’s very possible that both will come down.
Mind you, bonds won’t drop nearly as much as stocks, but then again, bonds aren’t up nearly as much either.
The play today was to short the market at any time. Monday will be a blood bath even worse than today, IMO.
So much can happen over a weekend. Monday will surprise you, unless your firm belief is that we have already fallen off a cliff and are in freefall.
The only reason why bonds were going up with stocks is because of negative rates and uncertainty. Bonds will become a safe haven as markets get dicey. Bank on it
The dollar is the ultimate safe haven in a crash. Central banks only magnify the direction of the market. Macro decides the dominant direction.
TLT is the dollar with a yield.
only if rates are high and going lower, not when yield is rising from zero. what am I missing fly?
Bonds might become a safe haven again if markets get dicey, however, for quite a bit of time now bonds have been going up WITH equities, which we can safely speculate is because of the ECB/BOJ.
Yesterday we saw the first bit of an unwind of the ECB QE positioning and it is not suprised that TLT dropped with equities.
So before TLT becomes a “safe heaven” again, how much does it need to drop?
Well TLT was trading at 120 before the start of euro QE or another 12% drop from here.
Now let’s project ourselves in the future when that has happened. TLT will be 120, SPY might be 207.50 (5% correction, 200 moving average).
At this point what are people going to do? That’s the real question that needs to be answered to make heavy money. I don’t claim I have it. I do believe that on a technical basis, bonds have become a giant bubble, possibly the largest bubble I have ever seen ( 50 years 0 yield or so in japan germany swiss is beyond absurd no matter what happens, if you can’t see that, nothing i can do for you).
Back to our concern, if I’m right that bonds are a giant bubble, with TLT dropping to 120, it will technically be broken. A bubble associated with a broken chart is usually a sell, not a buy. I don’t even care about logic/fundamentals here. Those are always debatable.
But good luck to you sir.
As an equity guy, for how long have you heard about buying GIS JNJ MO K? Since 09 yes. Now take a look at the chart of those. People have been buying those hands over fists, for years, winning consistently.
You’re an experience trader aren’t you? What happens eventually to popular, feel good trade, that work 7 years in a row?
Aside of that take a look at GIS chart for example and how it had the largest 2 days up move, EVER, at all time high, in June.
Maybe I’m from another planet, but tell me fly please, how can you be supportive still of this trade? Seriously?
Let’s consider the retail flows now. What have seen heavy, consistent inflows? What have seen consistent outflows?
Well yes, bonds etf, index etf have seen heavy inflows, pretty much since 09.
And yes, managed equity funds have seen steady outflows.
Let’s consider the psychology right now. Most analysts have S&P price targets at or below current level.
Very few people are optimistic about all this. Very few people think inflation despite the trillions of printing. All they can think about is deflation.
Even the big bears, the zero hedge kinda guys. They think SPY goes down 80%, TLT to the moon. So it’s pretty much everybody.
Those things are facts and not debatable. Now again as an experienced trader you should be guessing that it’s not the equity side of things that is truly vulnerable. It’s the “safe trade”. Bonds/ div stocks. This is the hard truth no matter how much people hate it.
By the way the reason why people hate it is that the human mind is programmed to think alike others. It is extremely hard if not downright impossible to have ideas opposed to the vast majority of people. Typically the crowd will crush you.
defaults cause crashes. what causes defaults? there is too much credit and not enough REAL cash.
At this stage do people have too much bonds or too much dollars?