Saturday, May 30, 2020

Quote of the Day

As you've noticed, I've been calling your attention to presently high levels of short-interest and the short-covering phenomenon throughout the course of what has been a most impressive rally off of the March lows.

Macro Update

Here's the up-to-date graph of our proprietary macro index (you're sitting down?):

Friday, May 29, 2020

Quote of the Day

Keith McCullough is, once again, making sense this morning:

Quick market update

In this morning's note I wrote:

Morning Note: The Greenhouse Effect

Listening to a couple of expert interviews yesterday evening I found myself pondering the punditry's forever need to identify the ultimate catalyst that'll instigate the next great change in stock market trend. 

Thursday, May 28, 2020

Morning Note: The Proverbial "What If" Question

European equities are enjoying a strong rally this morning on the prospects for a stimulus package that of course involves some serious lending, but also some serious granting (of some $500 billion) to member countries. Thing is, The Netherlands, Denmark, Austria and Sweden aren't that enthused about backstopping weaker states. Interesting that Germany, the usual hardliner, doesn't make the list of dissenters.

Wednesday, May 27, 2020

Quote of the Day: Bubbles...

Without question Guggenheim's Scott Minerd is a pundit worth listening to. He and I aren't always on the same page, but he is smart, experienced, thoughtful and, above all, objective.

This Week's Message: A Macro and Market Update (video)

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

Tuesday, May 26, 2020

Evening Note

You'll recall that a major headwind for equity markets over the past couple years has been the US/China trade dispute(s).

Morning Note

"This market makes no sense" is the present mantra among many macro analysts/investors/traders, and even among individual investors who've been around the block a time or two.

Sunday, May 24, 2020

Quotes of the Day

We've acknowledged herein of late the millennial-trader phenomenon that some believe helps explain the latest somewhat counter-intuitive rally in stocks off of the March lows. I've noted that it reminds me a bit of the dotcom craze of the late-'90s.

Saturday, May 23, 2020

Quotes of the Day

I sympathize with RealVision CEO/Macro Strategist Raoul Pal's comments yesterday:

Macro Update

Once again I can keep the macro update relatively light on narrative and heavy on charts.

Friday, May 22, 2020

Morning Note

The world of asset prices is mostly making sense this morning.

Asian equities, Hong Kong big time, got hammered overnight. Re: Hong Kong; China is abandoning all pretense by introducing legislation that would do a real number on HK's autonomy -- right, frankly, in the US's face.

Thursday, May 21, 2020

Quote of the Day!!!

Man! Hedgeye's Keith McCullough and I are on the same page these days!
"Super short-term performance anxiety. That's what a lot of people have right now, super short-term, that's a problem. It's embedded in all of our behavioral and biological issues. But these problems, if you go back and study this point in time; the spring of 2008, the spring of 2000, people* that had those and acted on those lost their fund, lost their job. You know, this is a big time, a big time for us, and if it wasn't a big problem for some, if you didn't have this almost existential FOMO**, then it wouldn't be happening. Something to think about at VIX*** 30." 
*Portfolio managers.
**Fear Of Missing Out
***S&P 500 Volatility Index


Morning Note

Another 2+ million folks filed for unemployment last week, bringing the total to 38+ million, and, as I type, the Dow’s up 60 points, gold’s down $14/ounce, silver’s off 1%, copper’s flat, oil’s up 3%, ag commodities are mixed (introduced to portfolios yesterday) and the 10-year treasury note is up a smidge (yield down a smidge).

Wednesday, May 20, 2020

This Week's Message: Half-Court Shots

I could honestly just limit this week's message to the last paragraph of last evening's note (but I won't):
"...while, per the above, it's not just us, our experience with past bear markets, our deep study of conditions and our understanding of the signaling within market internals in no way guarantees -- as our messaging of late may imply -- that the bear market's next leg lower will be soon upon us; it simply says that the risk/reward setup right here demands that we hedge our bets."

Tuesday, May 19, 2020

Evening Note

As I've noted herein multiple times of late, the market "internals" have been messy throughout much of what appears on the surface as a strong rally off of the March lows. I've referenced dynamics around leadership, volume, breadth, short interest, sentiment and so on. 

Quotes of the Day: Curiouser and Curiouser

As you've noticed, I'm fond of quotes. In fact, featured prominently in the document where I record the data I collect during my daily macro grind are no fewer than 30 that I like to peruse before digging in. 

Morning Note: Historic

US equities opened a bit lower but turned green within 30 minutes I suspect on the prospects of positive commentary coming out of Mnuchin’s and Powell’s testimony this morning on the CARES Act. The market’s ultimate reaction today will be influenced by how Mnuchin, in particular, fields what’ll be pointed questions, and to the extent both gentlemen further the we’ll-do-whatever-it-takes narrative.

Monday, May 18, 2020

Evening Note

Jerome Powell suggested -- in a 60-minute interview last evening -- that unemployment could hit 30% and that the economy may not see full recovery until the end of 2021, and, lo and behold, stocks staged an epoch across-the-board rally today.

No 'Big' Surprise

Per last Thursday's note, while this morning's rally feels big, there's nothing really shocking going on today:

Morning Note

US equity futures began their strong rally last evening when traders bought Fed Chair Powell's (60-minute interview) statement that they have plenty of tools left in the box, and dismissed his warning that the economy may not fully recover until the end of 2021.

Sunday, May 17, 2020

Quote of the Day

While perusing one of history's best reads on human nature this evening I came across the following which had me thinking about tonight's 60-minute interview with Fed Chair J. Powell, and the futures market's reaction:

A Bit Less 'Positioning' Advantage for the Bulls

I've stressed aplenty the past few weeks how high short interest in the market can essentially serve to support stock prices. I.e., when traders are concentrated on the bear side of the boat, particularly while wearing no life jackets (shorting is risky business), the slightest tilting toward the water on the bear side -- i.e., a rally lifting the bull's side -- will have the bears scampering toward at least the center of the boat for safety (ie., buying to cover their short positions).

Friday, May 15, 2020

Macro Update

I'm offering very little narrative in this week's macro update, as none's really needed; the featured charts speak for themselves.

Morning Note: Focus On The Right "Why"

The S&P opened lower this morning on what you’d expect from retail sales and industrial production data. Although, as I type it’s staging an impressive rebound; essentially flat at the moment. Futures were off over 1% pre-open on the data and on news that the US plans to ban Huawei from the American chip market and China’s threat to retaliate by way of iconic US brands such as Boeing and Apple.

Thursday, May 14, 2020

Evening Note

US stocks staged an impressive rally today off of what was a notably lower start. From what I gathered from the internals and the leadership, short-covering legitimately deserves the credit. But what inspired the initial pop that had the shorts rushing for cover? Looks entirely technical.

The S&P 500 failed once again -- last Friday and again this Monday -- to pierce the all-important 61.8% retracement level, then in just two days it pounded its way back down to the 50% line; which was an area that was virtually bound to offer some relief. The bounce clearly spooked the shorts into action:


Click to enlarge...


Coincidentally, I touched on this likelihood this morning while stocks were still in the red:

“Stocks are attempting a threepeat daily selloff, although they're coming off the lows a bit as I type. Make no mistake, even if we are now embarking on the next leg lower, along the way the market will be met with some aggressive buying, and, therefore, impressive intraday (and all-day/week/month/months) rallies as (along with occasional spike on the market-pumping headline) technically-inclined bullish traders rush in to battle the bears at previously-established support/resistance lines. Those market "internal" statistics I often reference give us a sense as to which side has the most conviction.”
Speaking of those “internal statistics”, today’s were sloppy. Although, at first blush you’d think, at least in terms of volume, that the day’s action was bullish; with total S&P 500 volume 11% above the 20-day average on a nice 1.15% up day. Problem is, the volume peaked at 8:30am pt when the index was significantly in the red. From there the market staged a rally that -- save for one brief dip -- carried through to the end of the session, but on volume that trended lower throughout. Moreover, while the NYSE up/down volume (3805/1866) was decent, as was the S&P 500 advance/decline line (386/117), the Nasdaq actually saw fewer advancers than decliners on an up day (1260/1360) and the number of stocks hitting 52-week highs vs 52-week lows was the opposite of bullish: Within the S&P 500 4 hit new one-year highs while 16 hit new lows; for the Nasdaq the new highs totaled 20, while new lows totaled 108.

As for economic data, all you need to know is that 2.9 million Americans filed new unemployment claims last week. Added up we’re now looking at roughly 25% of the American workforce being currently unemployed. The notion that stocks at present levels accurately reflect such a statistic is -- to put it mildly -- at odds with market history and fundamental commonsense.

Thanks for reading,
Marty



Quote of the Day

I've probably hit on short positioning the past few weeks more so than any present market trading dynamic. I've been saying that, given the significant net short interest in S&P 500 futures contracts, anything that might have the market rallying a bit is virtually certain to be exacerbated to the upside by short-covering.

Morning Note: What It's Not Okay Not Knowing

While Tuesday checked every bear market session box save for volume, yesterday was a clean sweep: The major averages sold off notably, with S&P 500 total volume 17% above the 20-day average and NYSE up/down volume finishing the day at 728/6477. The S&P 500 saw 52 of its members rise in price, while 451 declined. The Nasdaq’s advance/decline mix was 479/2164. The rest of the internals we track told the same story.

Wednesday, May 13, 2020

The Week's Message: A Week's Worth of Messages

There's a lot on our research plate this week, so, in an effort to buy myself some extra time -- while keeping the weekly message pertinent, and, ideally, useful to subscribers -- I'm going to highlight what I believe to be the highlights from the blog since last week's weekly message:

Morning Note: The Lure Of Easy Money

US equity futures look to be giving up overnight gains as Fed Chair Powell tells the Peterson Institute that essentially times are tough; really tough.

Tuesday, May 12, 2020

Evening Note

Just a quick rundown of the day's action, then a couple of quotes. One from a Wall Street legend whose story is on my shortlist of recommended bios to study anytime a newbie trader asks my advice. The other's from an article published this afternoon on the latest actions of today's newbie traders.

Quote of the Day

Keith McCullough points to where, even in this US equity market that seems so detached from economic reality, fundamentals are making sense -- and will likely continue to going forward:

Morning Note: This Is, Alas, A Historic Day

An old (in terms of how long we've known each other 😎) friend and client said to me yesterday, “this is like nothing we’ve ever seen.”

Monday, May 11, 2020

Evening Note

Quick note tonight... just a little thinking out loud...

Pre-market headline this morning read that the Saudi's will cut oil production by another 1 million barrels/day after a call from President Trump.

Quote of the Day

Hedgeye's Managing Director and macro strategist Darius Dale is making perfect sense to us this morning:

Morning Note

Per this weekend’s video commentary, individual investors (save for the Robin Hoodies) remain scared, investment advisors are feeling braver, and futures traders believe it's just a matter of time before the bottom falls out. I’ll add this morning that the latest trend in the VIX and the equity put/call ratio says options traders are feeling, let’s say, less-scared of late.

Sunday, May 10, 2020

Chart of the Day

The on the surface indicators that give us a feel for short-term equity market prospects are on balance supportive. I.e., while there are a few signs here and there that short-term bears may be defecting to the bull camp, there remains sufficient fear to keep the market afloat at current levels, or higher (i.e., in the short-run you're smart to be a contrarian).

Saturday, May 9, 2020

Macro and Market Update (video)

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

Friday, May 8, 2020

Quote of the Day

Larry from Texas emailed a comment into Hedgeye's morning macro conversation:
"I own three restaurants in Texas, cannot get staff to come to work because they make more money collecting unemployment, we'll continue losing money with only 25% allowed seating capacity."

Morning Note

Judging by the pop in U.S. equity futures on this morning's jobs report you'd think we actually experienced a nice bout of job creation. Instead, and incredibly sadly, an estimated 20.5 million Americans found themselves newly out of work last month; based on data compiled during the reference week that included April 12th.

Thursday, May 7, 2020

Quote of the Months to Come...

Macro analyst Roger Hirst in a RealVision conversation this evening speaks smartly about the risks the economy and markets face in the months to come:

Evening Note

The narrative around today’s rally was fascinating (in that it presumably sparked the rally), and familiar. Against yet another literally economy-shattering jobless claims number came news that U.S. and China trade negotiators are up for a chat next week.

Morning Note

Analyst Jim Bianco tweeted a link to an article this morning on the rush among pharma to produce a COVID vaccine. He suggested that hope for a vaccine is what’s driving this morning’s rally, then concluded with “I guess hope’s a strategy”.

Wednesday, May 6, 2020

Evening Note

Having blogged at you plenty already today, I'll keep this evening's note brief and to the point.

Chanos On Reality

Investor Jim Chanos, in a Bloomberg interview this morning with Barry Ritholtz pretty much echoed my earlier note featuring BlackRock's CEO, as well as -- per a reply to that earlier note ("sounds like yesterday's discussion!") -- (while I have my own nuance) my own conversations with clients:

Larry Fink On Reality...

The following, from an advisor to the President, and the CEO of the Wall Street Firm presently doing the Fed's bidding in asset markets, while spot on, is interesting, considering the source.

This Week's Message: Price or Conditions? -- Or -- Taking Only "Good" Shots

In this week's message I'm dispensing with all charts and data (save for 1 point), you get plenty of that from me everyday. 

Recently I've found myself thinking more than usual about the price of stocks, or, I should say, about the price movement of stocks... well... actually, about the fact that the recent price movement of stocks -- all bear market history lessons aside -- in no way jibes with present general conditions.

Tuesday, May 5, 2020

Evening Note

In this morning's note I suggested that the momentum from yesterday’s late-day rally was looking to push into today’s session, and that today’s session would likely see better breadth -- vs yesterday’s rally that turned out to be quite narrow/uninspiring.

Question of the Day

Question of the day: Can you solve a debt crisis by piling on more debt?

Morning Note

Yesterday’s late rally, as narrow as it was, is gaining steam, and, I suspect, some breadth heading into this morning’s open.

Monday, May 4, 2020

Quote of the Day

Macro strategist Cameron Crise, in today's "Macro Man" column touched on liquidity vs solvency:

Evening Note

J.Crew and Golds Gym filed for bankruptcy protection today. The likes of Sears, Neiman Marcus and JC Penney are likely next on the retail chopping block. These, as you might imagine, would be on virtually any analyst’s list of obvious recession casualties, regardless of the cause. But of course COVID-19 is anything but your run-of-the-mill “cause”.

Morning Note

Warren Buffett’s out of airline stocks, sits on a mound of cash, and the take away from his annual shareholders' meeting over the weekend is, well, the famous value investor has dumped an industry that’s off 50% from its peak, and he sits on a mound of cash. 

Saturday, May 2, 2020

Quotes of the Day: The Stories Central Bankers Tell

In Princes of the Yen, Japan's Central Bankers and the Transformation of the Economy, a documentary film based on Richard Werner's book of the same name, the author himself concludes with:

Friday, May 1, 2020

Macro Update

Just finished the weekly scoring of our macro index. This from The Economist this morning essentially sums up the present state of general conditions:

Morning Note

“US Futures Lower amid Trade War Fears”
--Investing.com
Seeing several similar headlines this morning. Apparently the President mouthed a sentence yesterday that featured the words China and tariffs.

Of course stocks selling off couldn’t have anything to do with 30 million American’s having filed for unemployment amid the start of the worst recession since the Great Depression, could it?