-Market momentum driven by inaccurate hopes of a phase 1 trade deal, and the Fed’s $60 bilion per month QE had created the biggest asset bubble in the history of stock market. -Trade risks are too complacently priced, which is bad news for earnings -Rates Curve steepening doesn’t mean Bonds recession warning has vanished. -The FED QEs essentially had a dampening effect of creating 3 month lead which is by the way the usual curve reaction ahead of an actual recession
Market Odyssey Central banks abnormal monetary policy story is like Odysseus journey far from home (negative rate, yields, rising deficit).
Eventually central banks need to come home (normalise rate) like Odysseus did. Just like Odysseus central banks need to choose to go home facing Scylla (Mother of all crashes) or Charybdis (End of global economy). Odysseus choose Scylla and lost more than 60% its crew.
My views is that the medium long term is bleak and disaster written all over it. Even short term market LONG is dangerously overbought.
Since Oct majority of technical indicators stopped working because of ALGO manipulation and avalanche of good news and repeated optimism for phase 1 trade deal with China.
The timing of this rally is very curious as it coincides with JPM causing a spike in Sept, forcing Fed to buy $60 Billion per month QE T-bills that ends in Dec
The odd part is relentless vertical move to the upside with no pullbacks? Why? What is the rush? Why not let anyone in on it?
Market always allow pull backs to draw investors in who felt they are left behind.
Since mid Oct, there is no meaningful pull backs. This is very very odd. As if market makers and wall street and Fed knows something but not telling us.
If you tracked Asian and Europe market, they all went through natural up, pullback and up cycle. SPX without exception magically remained at a high level ignoring all the downside from ASIA but not the upside.
One reason for this bizarre vertical upside is 60% departure of investors from Active Funds to passive ETF funds. Because from investors point of view when everting goes up why bother paying management fee? Meaning they know people would not participate in their funds. So if they crash the market they are in control of when to short it. They can then say, active funds are better than passive funds to draw people back in
I cover a simplified version of the truth about the current market on tweeter to warn those who are not trapped emotionally by FOMO.
twitter.com/StockMktUpdate
stockmarketupdate
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Bridgewater Bets $1.5 Billion That Market Will Crash By March
At the beginning of 2018, Ray Dalio said during one of his annual speeches at Davos that investors would feel "pretty stupid" if they were holding cash. Over the following 11 months, one of the biggest market blowups since the crisis left US stocks in the red for the year. But somehow, Bridgewater emerged as one of the best-performing firms of 2018, with one of its funds up double digits.
Two years later, Dalio has made it clear that he's worried about the state of the global economy, and he's willing to risk losing 1% of his firm's assets to make sure Bridgewater is protected.
Since Oct majority of technical indicators stopped working because of ALGO manipulation and avalanche of good news and repeated optimism for phase 1 trade deal with China.
The timing of this rally is very curious as it coincides with JPM causing a spike in Sept, forcing Fed to buy $60 Billion per month QE T-bills that ends in Dec
The odd part is relentless vertical move to the upside with no pullbacks? Why? What is the rush? Why not let anyone in on it?
Market always allow pull backs to draw investors in who felt they are left behind.
Since mid Oct, there is no meaningful pull backs. This is very very odd. As if market makers and wall street and Fed knows something but not telling us.
If you tracked Asian and Europe market, they all went through natural up, pullback and up cycle. SPX without exception magically remained at a high level ignoring all the downside from ASIA but not the upside.
One reason for this bizarre vertical upside is 60% departure of investors from Active Funds to passive ETF funds. Because from investors point of view when everting goes up why bother paying management fee? Meaning they know people would not participate in their funds. So if they crash the market they are in control of when to short it. They can then say, active funds are better than passive funds to draw people back in
I cover a simplified version of the truth about the current market on tweeter to warn those who are not trapped emotionally by FOMO.
twitter.com/StockMktUpdate