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MARKET OUTLOOK - Global & Local, Perspectives & General Market Feeling
nipper
post Posted: Dec 29 2018, 07:55 PM
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No serious scientist would run a two-variable experiment. By that I mean, you run an experiment with one variable to see what happens. If you have two variables in your experiment and something either good or bad happens, you don’t know which variable was the cause. You first run the experiment with one variable, then do it again with the second one. After that, you have the knowledge to run an experiment with both of them.

The Federal Reserve is running a two-variable experiment without the benefit of ever having run a one-variable experiment to determine what the results would be. It is decidedly the stupidest monetary policy mistake in a long line of Fed mistakes.

(Like I said earlier, the gloves are off. This is my opinion. You may disagree.)

What are the two variables? They are raising interest rates (albeit slowly) and aggressively reducing their balance sheet. I think many of the problems we see in the market are results of this combination. They should do one or the other, not both.

Of these two, everybody wants to blame the last rate hike, but let’s look at the other variable.

While the Fed radically reduces its balance sheet, the European Central Bank is also ending its QE (quantitative easing), as are other central banks. They are taking away the market’s crack cocaine. Note also that all of the QE began to disappear worldwide toward the beginning of October. While I realize correlation is not causation, especially with only one data point, I find it suspicious that the markets turned volatile about that same time.
- John Mauldin

.... maybe, maybe not. He has a point, though



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
triage
post Posted: Dec 27 2018, 07:20 PM
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In Reply To: nipper's post @ Dec 27 2018, 07:45 AM

nip - JohnR at macrobusiness posted this link earlier today.

https://twitter.com/OddStats/status/1078033224801177607

It seems that yesterday's jump is in less than salubrious company. Also if the plunge protection team was to hit the market the day after Christmas would likely give them the biggest bang per buck possible (due to really low trading levels).

Let's see how things pan out when everyone is back at work.



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"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog
 
nipper
post Posted: Dec 27 2018, 07:45 AM
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A happier mood among traders on Wall Street.

The Dow Jones Industrial Average surged more than 1000 points for the first time in a single session, rebounding after a bruising four-session sell-off put the blue-chip index and the S&P 500 on the brink of a bear market.

The powerful US bounce followed strong retail sales data, a soaring oil price and White House reassurances Fed chair Jerome Powell won’t be fired.

All 30 stocks in the Dow industrials notched gains, as did each of the 11 sectors in the broader S&P....

- and local SPI up 40 for the opening



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Dec 21 2018, 12:09 PM
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Jerome Powell .. would go on shrinking the Fed's balance sheet by $US50 billion ($70.5 billion) a month, even though the world economy is coming apart at the seams. Markets expected a rise in interest rates at Wednesday's meeting. But they did not expect the Fed's "dot plot" sketch to schedule two more rate rises in 2019. It is the double-barrelled nature of this tightening that makes it so potent, and so unpredictable for a global financial system that has racked up $US12.8 trillion of offshore dollar debt and has never been more leveraged to US borrowing costs.

The Fed undoubtedly has a superb staff but is wedded to a "new neoclassical synthesis" model with three blind spots:
- it misses global undercurrents;
- it ignores monetary data; and
- it fails to adjust for the Faustian costs of "intertemporal" robbery - stealing growth from the future, until it catches up with you.

European banks lack access to stable dollar deposits and rely on short-term funding from the wholesale capital markets to plug the gap, leaving them "particularly vulnerable to bouts of stress". The Stoxx 600 Banks index in Europe has crashed by 18 per cent over the last three months. The Fed is also raising the cost of global borrowing. Three-month Libor rates used to price $US9 trillion of contracts worldwide have doubled over the last year to 2.78 per cent.

The dollar shortage has led to a credit crunch in emerging markets. Turkey and Argentina buckled earlier this year. The trouble has since spread far and wide in Asia, Latin America, Africa and parts of the Middle East. JP Morgan's instant Nowcast tracker for the fourth quarter shows that both Brazil and Mexico are contracting.

The World Bank estimates that emerging markets make up 59 per cent of global GDP, up from 37 per cent in 1990. Much of this nexus is in the trough of a recessionary cycle. These countries are a big enough force to throw the world economy into a downturn. This is already hitting Germany and the eurozone through trade export channels. The risk for the US is that global strains eventually boomerang back into its own economy....

The European Central Bank's decision to halt QE as of this week may be just as important as anything the Fed is doing. This source of funding has been waning as the ECB tapers down to zero from a peak of €80 billion ($129 billion)a month.

The Bank of Japan has slashed its bond purchases in half.

All three of these indicators are issuing critical warnings, if only the Fed could see them... The Fed squeeze is hitting the world on two fronts at once. It is draining dollar liquidity and bleeding the offshore dollar funding markets in Europe and Asia.

....the net effect of the big three central banks hitting the brakes together is the most violent dive in global liquidity since the 2008 crisis..
Ambrose Evans -PritchardThe Telegraph , London



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: henrietta  
 
nipper
post Posted: Dec 21 2018, 08:14 AM
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Australian stocks are set to edge lower amid an extended global sell-off, and in particular heavy, and volatile, selling on Wall Street.

Also denting sentiment, benchmark oil tumbled more than 4.5 per cent, dragging the US dollar lower too. Aluminium touched a 16-month low.

Despite the drop in Europe and further losses on Wall Street, ASX futures were down a modest 1 point to 5430 near 9am AEDT; they have traded in a range of 85 points overnight from a high of 5490 to a low of 5405. The Australian dollar edged higher.

Trading in New York was once again marked by massive swings with the Dow shedding near 680 points at its low. At 2.20pm, the Dow was 625 points lower; it had recouped near 400 points by 2.48pm before the selling resumed. At 3pm the Dow was down 408 points. At 3.08pm, the loss was 529 points. At 3.12pm the losses were pared to just 427 points. At 4pm, the Dow was 470 points lower. It ended the day down 464 points or 2 per cent lower.

The VIX - Wall Street's fear gauge, surged to its highest since February during the session. It ended 11 per cent higher; it now is up 158 per cent so far this year.




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: early birds  lgrif  
 
nipper
post Posted: Dec 20 2018, 08:04 AM
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US Fed raises rates
QUOTE
.... markets have become more volatile in recent months and financial conditions more generally have become tighter, and there are signs of "some softening" in the economy.... [b]ut none of that, Jerome Powell said, has "fundamentally altered the outlook".

Rather than three rate hikes in 2019, next year will see two, he said.

Clearly this isn't what markets - and presumably the president - want.

The Dow Jones Industrial Index ended down after a wild afternoon of swings. The benchmark was up more than 350 points ahead of the Fed statement; it ended down 352 points.


- and now what?



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 

sentifi.com

Share Cafe Sentifi Top themes and market attention on:


blacksheep
post Posted: Dec 18 2018, 01:04 PM
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In Reply To: blacksheep's post @ Dec 18 2018, 09:50 AM

Interesting chart
QUOTE
There are some BIG names in bear territory right now.

And the list of bear-market stocks keeps growing every day, as the Dow Jones Industrial DJIA, -2.11% , the S&P 500 SPX, -2.08% and the Nasdaq Composite COMP, -2.27% mark their worst start to December trading since 1980.

https://www.marketwatch.com/story/all-the-b...17?link=sfmw_tw
Attached File  MW_HA526_bear_t_20181217190702_NS.jpg ( 415.47K ) Number of downloads: 0


Meanwhile Hedgeye's bull has taken to the "drink"

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Attached File  Dup8_m0WwAAqPsJ.jpg ( 73.32K ) Number of downloads: 0

 




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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Dec 18 2018, 09:50 AM
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In Reply To: nipper's post @ Dec 18 2018, 08:07 AM

Australian share market plunges, wiping out gains from past two years
By business reporter David Chau
Posted 21 minutes ago

QUOTE
The local share market has plunged in early trade, wiping out all its gains in the last two years.

Australia's benchmark index, the ASX 200, had fallen by 1 per cent to 5,600 at 10:10am (AEDT).

Meanwhile, the broader All Ordinaries index tumbled by a similar level to 5,675 points.

It follows a volatile session on Wall Street overnight, as it continued to fall deeper into correction territory.

The Dow Jones index shed 508 points and the benchmark S&P 500 fell to a 14-month low.

Investors are on edge about a potential recession in the United States, and the Federal Reserve's widely expected rate hike on Wednesday afternoon (New York time).

Every Australian sector is in the red, with energy (-2pc) and financials (-1.2pc) being the worst performers.

Origin Energy (-2.1pc), Nine (-2pc), Bluescope Steel (-2pc) and Fortescue Metals (-1.7pc) are some of the big-name stocks that have fallen by the most.

The big four banks have dropped between 0.8 and 1.6 per cent.

The Australian dollar has risen slightly to 71.8 US cents.

Attached File(s)
Attached File  z11907d0aze52098d244d94e968ae77766dcdf8531.png ( 12.02K ) Number of downloads: 0

 




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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
nipper
post Posted: Dec 18 2018, 08:07 AM
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QUOTE
Australian shares are set to drop sharply as markets extend a pre-Christmas slump. ASX futures were down 85 points to 5587 at 8.00am AEDT, extending a slide from earlier in the session.

The RBA will release minutes of its board meeting today. Capital Economics' Ben Udy and Stephen Brown said, "The RBA minutes may provide some further insight into the central bank's thinking. But given that the minutes were written before the latest GDP data, this view is likely to be somewhat out of date."

QUOTE
Shares on Wall Street sank further at the start of the final full trading week of 2018. The Dow Jones fell 300 points in early trading before steadying.

President Donald Trump criticised the Federal Reserve for its current series of interest-rate increases, days before the US central bank is expected to push up interest rates again. "It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory!" Trump wrote in a tweet.

Almost all economists expect the Fed to raise rates again at its meeting this week, while many also see the central bank making increases next year, although at a slower pace in the face of a possible economic recession.
https://www.afr.com/markets/equity-markets/...20181218-h1985d

UD flat at 71.74 US cents at 8.00am AEDT

On Wall St in New York: Dow -2.1% S&P 500 -2.2% Nasdaq -2.3%

In Europe: Stoxx 50 -0.9% FTSE -1.1% CAC -1.1% DAX -0.9%

Gold +0.7% to $US1246.61 an ounce

Brent crude -0.9% to $US59.73 a barrel

Iron ore -0.4% to $US70.47 a tonne

LME aluminium +0.8% to $US1942 a tonne

LME copper -0.1% to $US6123 a tonne

10-year yield: US 2.87% Australia 2.44% Germany 0.26%



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: early birds  
 
blacksheep
post Posted: Dec 14 2018, 09:02 PM
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LONDON (Reuters) - Stocks worldwide tumbled on Friday after weak economic data from China and Europe fanned concerns of a global economic slowdown and left investors fretting over the wider impact of a still-unresolved Sino-U.S. trade dispute.


https://www.reuters.com/article/us-global-m...e-idUSKBN1OD021

The trade dispute resolution is looking a little brighter following this olive branch from Beijing - depends on the Trump man now, I guess

QUOTE
BEIJING (Reuters) - China’s finance ministry said on Friday it will suspend additional tariffs on U.S.-made vehicles and auto parts for three months starting Jan. 1, 2019.

The government will suspend 25 percent tariffs on 144 U.S. vehicle and auto part items and 5 percent tariffs on 67 auto items between Jan. 1 and March 31, 2019, the ministry said in a statement on its website.

The Ministry of Finance also said it hopes China and the United States can speed up negotiations to remove all additional tariffs on each other’s goods.[


https://www.reuters.com/article/us-china-us...1-idUSKBN1OD165



--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
 


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