December in Question?
At Mission Impossible? Correlations In Action, The Fed, PBOC, Treasuries, The Dollar and Swaps.
MarkC,
"I love your writing style and depth of your content, much appreciated. Based on your list of market plays, i am assuming that you believe that mega cap stocks are now the best place to park your benjamins? Also, any update as to whether you still see a liquidity driven flash crash in December?"
We Natter: Thank you for the affirmation and comment. IMHO, mega caps are the safest equity i.e. PG However, due to PE and EPS, most all equities are overpriced. Q3 and Q4 earnings season will BEAR that out with lowered forward guidance and revenue misses est. 70% negative reporting for Q3.
Interpreting negative bond rates, i.e. flight to safety as investors take a loss to park their money, nothing is safe.
The excess supply of dollars from China, Brazil, Norway, Russia, Taiwan, EM, etc. could reduce the effect of the monetary flow seasonal downturn in Dec. Depends on how those "dollars" get used, so TBD.
Whereas oil +3%, commodities and equities have benefited i.e. more dollars, lower dollar, higher prices. However, the reciprocal force of global recession has muted these sales i.e. less dollars, less petrodollars, less eurodollar, stronger dollar.
As for the Dec flash crash, we mentioned sometime back the disturbances that China/EM UST bond and Fed reduction of balance sheet sales could make. So far the latter has not occurred, while the former is well under way.
With all the "forces" involved, the "dollar" has THUS FAR, weathered the storm with minor downside. Should the "dollar squeeze" resume, commodities and equities will adjust accordingly. Watch the bond sales and dollar, closely.
As for market liquidity, judging from the amount of cash reserves that the Fed pumped into their branches, and the HQLA that the banksters needed, that IS a scarce commodity, if volatility breaks out, watch out.
Just another measurement of the continuing contraction: St. Louis Adjusted Monetary Base = currency in circulation outside Federal Reserve Banks and the Treasury; deposits of domestic depository institutions at Federal Reserve Banks; and float-pricing related as-of adjustments.
STLAMB just spiked its 2nd largest drop since the crisis and is not painting a pretty picture in YOY % ROC terms.
That measure STLAMB is inflated as it contains deposits at Fed banks. I said it before, I will say it again, velocity and capital has been sequestered. Bernanke never loosened and the Fed continues to tighten. If they ever raise, it will be only to spook the herd further into bonds and after the fallout, at the following meeting they will say mea culpa and lower.
Glory be to the ZIRP, and to the Holy Fed. May the Blessings of the FOMC Almighty, and the Fellowship of the Holy Economic Fallout, descend upon us all. As it was in the beginning, is now, and ever shall be. World without end. This day and forever more. Amen. Damn those dirty talking apes… they blew it all to hell.
MarkC,
"I love your writing style and depth of your content, much appreciated. Based on your list of market plays, i am assuming that you believe that mega cap stocks are now the best place to park your benjamins? Also, any update as to whether you still see a liquidity driven flash crash in December?"
We Natter: Thank you for the affirmation and comment. IMHO, mega caps are the safest equity i.e. PG However, due to PE and EPS, most all equities are overpriced. Q3 and Q4 earnings season will BEAR that out with lowered forward guidance and revenue misses est. 70% negative reporting for Q3.
Interpreting negative bond rates, i.e. flight to safety as investors take a loss to park their money, nothing is safe.
The excess supply of dollars from China, Brazil, Norway, Russia, Taiwan, EM, etc. could reduce the effect of the monetary flow seasonal downturn in Dec. Depends on how those "dollars" get used, so TBD.
Whereas oil +3%, commodities and equities have benefited i.e. more dollars, lower dollar, higher prices. However, the reciprocal force of global recession has muted these sales i.e. less dollars, less petrodollars, less eurodollar, stronger dollar.
As for the Dec flash crash, we mentioned sometime back the disturbances that China/EM UST bond and Fed reduction of balance sheet sales could make. So far the latter has not occurred, while the former is well under way.
With all the "forces" involved, the "dollar" has THUS FAR, weathered the storm with minor downside. Should the "dollar squeeze" resume, commodities and equities will adjust accordingly. Watch the bond sales and dollar, closely.
As for market liquidity, judging from the amount of cash reserves that the Fed pumped into their branches, and the HQLA that the banksters needed, that IS a scarce commodity, if volatility breaks out, watch out.
Just another measurement of the continuing contraction: St. Louis Adjusted Monetary Base = currency in circulation outside Federal Reserve Banks and the Treasury; deposits of domestic depository institutions at Federal Reserve Banks; and float-pricing related as-of adjustments.
STLAMB just spiked its 2nd largest drop since the crisis and is not painting a pretty picture in YOY % ROC terms.
That measure STLAMB is inflated as it contains deposits at Fed banks. I said it before, I will say it again, velocity and capital has been sequestered. Bernanke never loosened and the Fed continues to tighten. If they ever raise, it will be only to spook the herd further into bonds and after the fallout, at the following meeting they will say mea culpa and lower.
Glory be to the ZIRP, and to the Holy Fed. May the Blessings of the FOMC Almighty, and the Fellowship of the Holy Economic Fallout, descend upon us all. As it was in the beginning, is now, and ever shall be. World without end. This day and forever more. Amen. Damn those dirty talking apes… they blew it all to hell.
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