BLUF: 100% G-Fund (Bonds), waiting for the next entry point! Looking at I-Fund ivo 03Jun and jumping on any pullbacks in the C or S. Europe is not about to lead global markets, I just see a small opportunity in the I-Fund..TBD!
Chart: Reflects past correlation to watch. The range that Traders shorting the markets thus increasing all of the volatility (2800-2900). Look at those different levels with the red lines, so if this market goes Higher or Lower, opportunity coming with better entry points…place your bet!
Market Research:
***5/6/19 Financial Stability Report (FOMC) here
Finally, the consequent U.S. dollar appreciation and weaker global demand in such a scenario would depress the U.S. economy through trade channels, which could reduce earnings of some U.S. businesses, particularly exporters. Such effects could harm the creditworthiness of affected U.S. businesses, particularly those that already have high levels of debt.
Potential Shocks Cited in Market Outreach
Trade frictions 75.00%
Fed policy risks 54.17%
China sharp slowdown 45.83%
Brexit 41.67%
**These adjustments can of course happen without any help from the Fed. However, if the Fed chooses to aid these adjustment so it can taper for longer, the moves could be even bigger – Libor-OIS could even go negative by June. Either way, this can be the year when the Fed, after a decade of absence, gets active in money markets again – either as a buyer of bills or a repo lender.
*The U.S. fixed income market will have to deal with four uncomfortable facts in 2019:
(1) The net supply of U.S. Treasuries will increase by over $1 trillion...
(2) ...and the U.S. needs foreign investors to buy a share of new supply. But...
(3) ...foreign official buyers are no longer voracious buyers of Treasuries, and...
(4) ...foreign private buyers are unlikely to buy either due to FX hedging costs.
Conversation Notes:
Two Scenario’s: 1) US Markets is topping with LowerLows coming similar to Oct18 or 2) we see HigherHighs (BlowOffTop). The good news you will see more future entry points with the Traders shorting the market and retail going long in this “GoldiLocks-Economy.” I will post what I see and my moves as I see the setups take place! Always keep a reserve and always have the situational awareness to admit "I am wrong" when opportunity is right in front of us! See what others do not!
Five Things to Watch:
1) USD goes up-Market goes up or USD does up-Bonds go Up-Markets go down? Which is it???
2) TW solution continues to get kicked down the road, further pricing into the market with every week decreasing its
relevance…consumers pay the tax.
3) Fed-Rate-Cut, do not count on it,,,they will kick and scream until they are forced to lower rates and I question its outcome this time compared to the past. How bout QE? Europe will do it first, then Asia...Liquidity Crunch?
4) EuroDollar Futures and global liquidity. Who is buying UST and at what volume? What will global Feds do?
Disclosure: This is an as-needed-assessment that I provide for my own learning that I share with others to form their own educated assessment. I am not a professional trader, nor am I offering investment advice or any other service. The past 12 months of TSP returns ending 04/30/2019 is 33.36%. I am a 29-year military veteran and current civil servant in the government. Thanks for reading!
Chart: Reflects past correlation to watch. The range that Traders shorting the markets thus increasing all of the volatility (2800-2900). Look at those different levels with the red lines, so if this market goes Higher or Lower, opportunity coming with better entry points…place your bet!
Market Research:
***5/6/19 Financial Stability Report (FOMC) here
Finally, the consequent U.S. dollar appreciation and weaker global demand in such a scenario would depress the U.S. economy through trade channels, which could reduce earnings of some U.S. businesses, particularly exporters. Such effects could harm the creditworthiness of affected U.S. businesses, particularly those that already have high levels of debt.
Potential Shocks Cited in Market Outreach
Trade frictions 75.00%
Fed policy risks 54.17%
China sharp slowdown 45.83%
Brexit 41.67%
**These adjustments can of course happen without any help from the Fed. However, if the Fed chooses to aid these adjustment so it can taper for longer, the moves could be even bigger – Libor-OIS could even go negative by June. Either way, this can be the year when the Fed, after a decade of absence, gets active in money markets again – either as a buyer of bills or a repo lender.
*The U.S. fixed income market will have to deal with four uncomfortable facts in 2019:
(1) The net supply of U.S. Treasuries will increase by over $1 trillion...
(2) ...and the U.S. needs foreign investors to buy a share of new supply. But...
(3) ...foreign official buyers are no longer voracious buyers of Treasuries, and...
(4) ...foreign private buyers are unlikely to buy either due to FX hedging costs.
Conversation Notes:
Two Scenario’s: 1) US Markets is topping with LowerLows coming similar to Oct18 or 2) we see HigherHighs (BlowOffTop). The good news you will see more future entry points with the Traders shorting the market and retail going long in this “GoldiLocks-Economy.” I will post what I see and my moves as I see the setups take place! Always keep a reserve and always have the situational awareness to admit "I am wrong" when opportunity is right in front of us! See what others do not!
Five Things to Watch:
1) USD goes up-Market goes up or USD does up-Bonds go Up-Markets go down? Which is it???
2) TW solution continues to get kicked down the road, further pricing into the market with every week decreasing its
relevance…consumers pay the tax.
3) Fed-Rate-Cut, do not count on it,,,they will kick and scream until they are forced to lower rates and I question its outcome this time compared to the past. How bout QE? Europe will do it first, then Asia...Liquidity Crunch?
4) EuroDollar Futures and global liquidity. Who is buying UST and at what volume? What will global Feds do?
Disclosure: This is an as-needed-assessment that I provide for my own learning that I share with others to form their own educated assessment. I am not a professional trader, nor am I offering investment advice or any other service. The past 12 months of TSP returns ending 04/30/2019 is 33.36%. I am a 29-year military veteran and current civil servant in the government. Thanks for reading!