Wednesday, April 22, 2020

Evening Note

A notification just crossed my phone from Bloomberg advertising a podcast titled “How the Crisis Pushed the Fed Into New Territory”

Well, my immediate thought was uhh…. no, let’s do one titled “How the Fed Fostered Yet Another Credit Bubble That, Like the Last Two, Has Them Charting New Territory To Try and Circumvent the Consequences of Their Own Doing.” 

Yeah, I know, that title is too big to fit anywhere. But I digress....

Stocks rallied hard today, thanks to a little pumping from the top and to some short-covering by the army of traders who are trying to catch the next big dip.

If we’re looking for signs that there’s a new bull market afoot, we’d be looking at things like credit spreads, the movement of funds/indexes that capture where the serious risk lies (private equity, leveraged loans, junk bonds, etc.) and trends in trading volume, breadth, sector leadership, etc.

Here’s today’s snapshot of much of what we parse daily for those signs. 

I'm offering this up just to give you a feel, via color-coding, for the present state of general conditions.

Click to enlarge (2 snips, break between communications and Verizon)

Without deciphering for you every line above, suffice to say that on balance it signals that we are through the initial liquidity-crisis phase of the bear market, but are nowhere near through the real-world (or insolvency) phase. 

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