Well here it is in a nutshell. In particular, Crimea is at the center of the current focus. The S&P finally broke 1850 resistance, soared to 1868, then gave it all back before rebounding and finishing at 1856.45 after which the response to the Crimean situation became clearer. Presidential speech, no red line across the freeway out of the Trampled Red Paint inventory, whatEVER! Futures are at 1860.75 as of this writing Friday after close.
So it is the weekend now, new month, and into March we go. A lot can happen before futures come back on stream Sunday evening at 6 PM Eastern. It looks like they (Russia) are trying to protect their naval interests in the Black Sea, much to the chagrin of the Interim Ukrainian Government that sent Russia packin'... again. GC Gold Futures sit at 1328.6. Not a real flight trade there like it used to be whenever geopolitical risk ratcheted up. VIX dropped back to 14 after being up as high as 14.79 with VX March Futures climbing to 15.70 an hour before close.
So there you have it. Russia up to its old tricks with the Ukraine, some even say a new Cold War, and the market goes berserk.
Annualized GDP came in at 2.4 on a 2.5 expectation to start out but then personal consumption numbers were up to fuel the rip. One geopolitical shock took most of it back... for now. The Update: Ah yes, now it looks like Crimea is just the camel's nose under the tent as More Troops are going for the whole enchilada... The entire country of Ukraine. Look for the S+P to continue a down slide Monday morning as Russian troop carriers with little dots of Red Line on the tires deploy to "rescue" Yanukovic's skidded government.
There will likely be "Appease" in our time on the way to a good old World War in East Europe, but Democrats to the rescue again for their number one depression busting industry: War. Former UN Ambassador John Bolton saw it coming and said they never should have had Russia in the G8 with Putin at the helm. Ironically, this is in the neighborhood of Yalta where they gave away half of Europe for half a century the last time they cut a deal there.
Look for them to campaign on the slogan, "He kept us out of The War," exactly like they have before all the bloodiest conflicts in History they got into. It worked when they spun off of the KKK, and it has worked ever since.
Sunday Update: Now they are getting Tuff... They, along with France, are not going to attend the Planning sessions for the G8 meeting in Sochi in June. Russia continues to mobilize into the Crimean peninsula and Eastern Ukraine unabated, but now with the addition of a full Wah-mbulance Division. Morningstar has a financial take on it.
Friday 28 February 2014
Tuesday 25 February 2014
Where do we go now?
Not much is making sense these days. TSLA is trading at a wild P/E ratio. Sure they sell battery cars, but that doesn't answer the age old problem of that. Engineers would say once you have an electron, you want to use it, and not store it. There are losses in transmission and storage so you are fighting a losing battle. That has not gone away, but all the common sense has.
Governments always come up with some kind of New Deal right before really bad wars. Look at Kiev and Caracas. Both places are in chaos and financial trouble. Afghanistan and Iraq are both reverting to their old states with Egypt and Syria messed up in the middle this time. Gee, I can't see how that would screw up.
The aforementioned pundits are aware that something is up, or about to boil over, but they can't put their finger on it. Richard Maybury might be able to put some objectivity to it, but that isn't really great news. So where does one go now?
I guess we have to read the last link again about "objectivity," even though Richard himself says he hasn't got all the answers. At least we have some sort of forward vision in a world of back-testing, and where everybody seems to be plotting their way through a virtual minefield.
The markets opened Wednesday AM with a sell-off with Mortgage applications down 8.5% until New Home Sales came in up 9.6%. Talk about a whipsaw. Just how does one play that? If that is the baseline, it is pretty rough sailing with gale force winds whipping up the chop. Volatility is coming back strong with the Fed Taper out of providing a soft landing, and the markets reverting to news driven environment.
Colorado is having a $1B per year Pot Rush. There is no mention on the social costs of that yet. Make no mistake, it is not all good. Simply look at side effects of marijuana use and it is definitely a ticking time bomb there. Take a well armed populace of depressed and/or stressed people... Give 'em a phattie, and Voila! Of course the marijuana lobby will do everything they can to keep the lid on that until it explodes in their face. Then what?
Well, is the Munchie Trade crowded yet? Ya ride that Tiger, it's going to get hungry.
Governments always come up with some kind of New Deal right before really bad wars. Look at Kiev and Caracas. Both places are in chaos and financial trouble. Afghanistan and Iraq are both reverting to their old states with Egypt and Syria messed up in the middle this time. Gee, I can't see how that would screw up.
The aforementioned pundits are aware that something is up, or about to boil over, but they can't put their finger on it. Richard Maybury might be able to put some objectivity to it, but that isn't really great news. So where does one go now?
I guess we have to read the last link again about "objectivity," even though Richard himself says he hasn't got all the answers. At least we have some sort of forward vision in a world of back-testing, and where everybody seems to be plotting their way through a virtual minefield.
The markets opened Wednesday AM with a sell-off with Mortgage applications down 8.5% until New Home Sales came in up 9.6%. Talk about a whipsaw. Just how does one play that? If that is the baseline, it is pretty rough sailing with gale force winds whipping up the chop. Volatility is coming back strong with the Fed Taper out of providing a soft landing, and the markets reverting to news driven environment.
Colorado is having a $1B per year Pot Rush. There is no mention on the social costs of that yet. Make no mistake, it is not all good. Simply look at side effects of marijuana use and it is definitely a ticking time bomb there. Take a well armed populace of depressed and/or stressed people... Give 'em a phattie, and Voila! Of course the marijuana lobby will do everything they can to keep the lid on that until it explodes in their face. Then what?
Well, is the Munchie Trade crowded yet? Ya ride that Tiger, it's going to get hungry.
Saturday 22 February 2014
What happened to Bitcoin?
Good question. A "bit" more than a week ago, this happened. It fell to as low as $96 at Mt. Gox, the largest Bitcoin exchange, where withdrawals were suspended until the Bug is sorted out. Today, there must be some news again because it has doubled in less than a day to over $230 and may even be headed back to its high near $1200.
Anyways, faith in the BTC has been shaken to the core although BTC Futures at 796.com hung around $550 and as of this writing were $612. Suffice to say, crypto-currencies are having growing pains leading to wild volatility swings on top of this large spread between futures and the spot market.
It hasn't stopped Robocoin from trying to add more Bitcoin ATM's yet though. We will have to wait and see as this new method of foreign exchange plays out. As for speculation, it is still too wild a market to look at seriously until all the glitches can be sorted out. But if you have a lot of faith in it, it hasn't been this low for several months.
The Bank of Montreal is not amused though, and moved to close accounts of bitcoin businesses. The Canadian Government, unlike the USA, also does not recognize Bitcoin as legal tender. It seems like the more people one asks for an official position or price, the more different answers one gets on Bitcoin. And that in itself calls out for caution.
Anyways, the latest on the problem can be found here.
An Update: Mt. Gox has reportedly gone off line as the exchange may have been bankrupted by all this now. Or you can believe them in that they are stopping to protect the 744K bitcoins they reportedly hold until the problem is solved. At any rate, they are making headlines. Bill Still has also weighed in on his site.
Anyways, faith in the BTC has been shaken to the core although BTC Futures at 796.com hung around $550 and as of this writing were $612. Suffice to say, crypto-currencies are having growing pains leading to wild volatility swings on top of this large spread between futures and the spot market.
It hasn't stopped Robocoin from trying to add more Bitcoin ATM's yet though. We will have to wait and see as this new method of foreign exchange plays out. As for speculation, it is still too wild a market to look at seriously until all the glitches can be sorted out. But if you have a lot of faith in it, it hasn't been this low for several months.
The Bank of Montreal is not amused though, and moved to close accounts of bitcoin businesses. The Canadian Government, unlike the USA, also does not recognize Bitcoin as legal tender. It seems like the more people one asks for an official position or price, the more different answers one gets on Bitcoin. And that in itself calls out for caution.
Anyways, the latest on the problem can be found here.
An Update: Mt. Gox has reportedly gone off line as the exchange may have been bankrupted by all this now. Or you can believe them in that they are stopping to protect the 744K bitcoins they reportedly hold until the problem is solved. At any rate, they are making headlines. Bill Still has also weighed in on his site.
Wednesday 19 February 2014
Link to the FOMC Minutes
http://federalreserve.gov/monetarypolicy/fomcminutes20140129.htm is here. Volatility rose as a result with the S&P SPX Trading down 12 handles 0.65% for the day at 1828.75 as the Fed continues to add to its sizable holdings of Long Term bonds and mortgages.
Bad news was again blamed on the weather, but the same weather couldn't account for 12% increased housing starts in NY. So maybe the gig is up trying to blame it on the weather. Do the wheels fall off here now? Stay tuned...
Bad news was again blamed on the weather, but the same weather couldn't account for 12% increased housing starts in NY. So maybe the gig is up trying to blame it on the weather. Do the wheels fall off here now? Stay tuned...
Thursday 13 February 2014
The Floating Market
The analogy is like a softball floating on a lake. Kids dive and take it down under the water, then continue to throw rocks at it to try and sink it. But it always floats back up, slowly but surely. Meanwhile, through the QE program, the Fed continues to pump and pour water into the lake, albeit slower than before. As the economy grows by itself, it is like the snowpack melting and adding water as well. It has been a bit of a drought, but who cares when the Fed irrigates it?
It scares some wiser people. Guy Adami of Fast Money fame is one of them. The last correction did not correct far enough for his liking. The 1725 level wasn't really broached as the SPX Index touched 1737.92. After that precipitous drop nearly 13 handles short of the mark on Feb 5, it rebounded with a vengeance. Speculators were baking in Mother Janet Yellen to the rescue in her amply sized Wah-mbulance full of Band-Aids with little hearts on them, Absorbine Jr. on tap, and crates of Lollipops. They ignored that dismal non farms payroll report, and another Retail miserable miss this morning. Weather kept her from a second chat with the Senate Banking Committee this afternoon, postponed to next week.
Two NYSE traders echoed the same sentiment. There is a lot of dry powder waiting on the sidelines for a massive one again as all the news has been kinda lousy recently with saccharine earnings sweetening the gruel. Not really many bidders eager for buying into this faux rally, and a Feb VIX expiration looming next Tuesday. So who is buying these dips?
They would be of the type that are having a gun held to their head. PBGC.gov would fit that bill: The Pension Benefit Guarantee Company. There are also lots of funds and ETF's rebalancing. It is a train that cannot stop. Thus, Guy Adami is rightfully leery of this one. I am in that camp too, where you can't ignore that this could re-correct hard, and harder than last time.
As for a chance of that, 30 % at present, but after the three day weekend, more likely after the VIX Expiration, and the next Janet Yellen answer to the Senate Banking gang.
It scares some wiser people. Guy Adami of Fast Money fame is one of them. The last correction did not correct far enough for his liking. The 1725 level wasn't really broached as the SPX Index touched 1737.92. After that precipitous drop nearly 13 handles short of the mark on Feb 5, it rebounded with a vengeance. Speculators were baking in Mother Janet Yellen to the rescue in her amply sized Wah-mbulance full of Band-Aids with little hearts on them, Absorbine Jr. on tap, and crates of Lollipops. They ignored that dismal non farms payroll report, and another Retail miserable miss this morning. Weather kept her from a second chat with the Senate Banking Committee this afternoon, postponed to next week.
Two NYSE traders echoed the same sentiment. There is a lot of dry powder waiting on the sidelines for a massive one again as all the news has been kinda lousy recently with saccharine earnings sweetening the gruel. Not really many bidders eager for buying into this faux rally, and a Feb VIX expiration looming next Tuesday. So who is buying these dips?
They would be of the type that are having a gun held to their head. PBGC.gov would fit that bill: The Pension Benefit Guarantee Company. There are also lots of funds and ETF's rebalancing. It is a train that cannot stop. Thus, Guy Adami is rightfully leery of this one. I am in that camp too, where you can't ignore that this could re-correct hard, and harder than last time.
As for a chance of that, 30 % at present, but after the three day weekend, more likely after the VIX Expiration, and the next Janet Yellen answer to the Senate Banking gang.
Tuesday 11 February 2014
Janet delivers
There was nothing new. The market likes that. Janet testified before Congress today. She does another Speech again on Thursday as well. (Note: That was cancelled Thursday morning, possibly due to weather) She hasn't made any break from Ben Bernanke which is welcomed. Mortgages are holding at slightly higher rates, which has cooled down the refinance and housing markets. but the Fed fund rate remains at near zero. If inflation should return, that will be the control mechanism to keep it in check.
Various Hawks continue to testify regarding the nuts and bolts of the Fed Policy, but there are no surprises for now. The S+P is higher by 22 points as a result. Work on the Money Supply is ongoing, meaning no change in the Fed for now. Volatility relaxed to the low 14 levels with a week to go until February Expiration.
There is a little selloff with 5 minutes to go until the Closing Bell, being rung by Paul Rodgers of Bad Company. Profit Taking it seems. Buy the dip they say at the exchange looking for some bargains, and a possible second correction. 1819.74 seems to be where it has settled.
Now is a time to own Volatility some say, even at VIX 14. This appears to be the Taper Effect coming back in as the markets slowly trudge their way back to a pre-QE volatility behavior. For today at least, they behaved like QE was still on.
Norway leads the medals, but Canada got another couple at Sochi too.
Various Hawks continue to testify regarding the nuts and bolts of the Fed Policy, but there are no surprises for now. The S+P is higher by 22 points as a result. Work on the Money Supply is ongoing, meaning no change in the Fed for now. Volatility relaxed to the low 14 levels with a week to go until February Expiration.
There is a little selloff with 5 minutes to go until the Closing Bell, being rung by Paul Rodgers of Bad Company. Profit Taking it seems. Buy the dip they say at the exchange looking for some bargains, and a possible second correction. 1819.74 seems to be where it has settled.
Now is a time to own Volatility some say, even at VIX 14. This appears to be the Taper Effect coming back in as the markets slowly trudge their way back to a pre-QE volatility behavior. For today at least, they behaved like QE was still on.
Norway leads the medals, but Canada got another couple at Sochi too.
Monday 10 February 2014
Waiting On a Friend
The markets moved slightly up, but generally sideways today. Everybody is waiting on Janet Yellen's first testimony before Congress as Chair of the Federal Reserve, and that starts tomorrow. Unusually, there will also be speechs by other members of the Federal Reserve Board, and they are described to be "Hawks" or in other words, they are for a tighter fiscal policy than we have seen in the years since Quantitative Easing was implemented.
The feeling stands that Janet Yellen will be for a continuation of Tapering the QE3 program. The additions of the board members is likely to confirm that should it somehow not be transmitted clearly. That happened last year when the taper guessing started. Dallas Fed member Fisher recently already went as far as to say that he thought QE3 created more damage than good.
So that is where we are again around an 1800 plateau in the S&P 500. And everybody waits and watches the Sochi Winter Olympics again, replete with fake viral scandals. They have trouble with getting the numbers right, but it looks like a nice place, and likely ripe for a party after all the hours it took to create it from scratch. As it stands, Canada is leading the medals, but it is only a few days in. Women's and Men's Moguls and Short Track Speed Skating started the Gold. Lots more to go.
The feeling stands that Janet Yellen will be for a continuation of Tapering the QE3 program. The additions of the board members is likely to confirm that should it somehow not be transmitted clearly. That happened last year when the taper guessing started. Dallas Fed member Fisher recently already went as far as to say that he thought QE3 created more damage than good.
So that is where we are again around an 1800 plateau in the S&P 500. And everybody waits and watches the Sochi Winter Olympics again, replete with fake viral scandals. They have trouble with getting the numbers right, but it looks like a nice place, and likely ripe for a party after all the hours it took to create it from scratch. As it stands, Canada is leading the medals, but it is only a few days in. Women's and Men's Moguls and Short Track Speed Skating started the Gold. Lots more to go.
Friday 7 February 2014
Bad News is Good news
They are counting on The Fed for a bailout again. The Non Farm Payroll Employment numbers missed by a mile. They were 113K versus 185K expected, but the Unemployment Rate strangely fell to 6.6% versus an expected 6.7%. More people came off the official unemployed ranks possibly moving to the U6.
They are looking to The Fed to return us to easing, but several Fed regional Presidents have been coming out letting us know why they are on a program for eliminating QE3. Now on the TV they are saying the Bureau of Labor Statistic numbers are suspect. This is adding up to a large disconnect between perceptions.
So only a couple Taper Payments in and the kids are baking in a bailout. We had a pre-week long move in volatility this time though, but it was cut short by by the good news bad news return crowd. I wonder how it will treat the debt ceiling this time as the kids return for another visit? Have to wait for a correction to the correction for that one.
Former Fed Chairman Alan Greenspan, who was more aware of the stock market than some, weighed in with some concerns. Janet Yellen reports to Congress next week. That should be another good one. And the CBOE is moving to add Weekly VIX Futures. That will add another dimension to the rip and dip scene with Weekly chances to hedge where there was only monthly before. We are living in interesting times.
They are looking to The Fed to return us to easing, but several Fed regional Presidents have been coming out letting us know why they are on a program for eliminating QE3. Now on the TV they are saying the Bureau of Labor Statistic numbers are suspect. This is adding up to a large disconnect between perceptions.
So only a couple Taper Payments in and the kids are baking in a bailout. We had a pre-week long move in volatility this time though, but it was cut short by by the good news bad news return crowd. I wonder how it will treat the debt ceiling this time as the kids return for another visit? Have to wait for a correction to the correction for that one.
Former Fed Chairman Alan Greenspan, who was more aware of the stock market than some, weighed in with some concerns. Janet Yellen reports to Congress next week. That should be another good one. And the CBOE is moving to add Weekly VIX Futures. That will add another dimension to the rip and dip scene with Weekly chances to hedge where there was only monthly before. We are living in interesting times.
Thursday 6 February 2014
Triple Dip and a Rip
We've been here before... on Monday morning, before all H-E-Dubble Hockey Stix broke loose. The SPX, which dropped as low as 1737.92, is back to 1773.40, but Volatility really slacked off back to where it was. That is sure odd the evening before Non Farm Payrolls and Employment* Figures come out. That is a big asterisk because a lot of people were kicked off pogey over the new year. And we have a revisit to the Debt Ceiling looming.
To see what it looks like with the Fed Tapered Off, plot a ten year of the SPX, count backwards from 2011. That booster stage has dropped away unless they re-ignite another stage for QE"x", and another shot. They ain't gonna tell you but they don't want to. Count how many double corrections there has been. Stock Market isn't really in their mandate. The cherry picked U1 unemployment (Try U6 for a more solid blast of reality) and the non farm payrolls, linked to housing, is.
Hank Paulson, Treasury Sec over The Big One in '08, gave an interview yesterday where he said the banking regs don't address the root cause: Fannie and Freddie. So proceed with caution. He thinks it is the same darn setup. Yikes. These guys can't give an answer over Libya after more than a year, let alone answer to one of those whoppers.
It shows the unpredictability of trying to pick bottom. Over the past few weeks, the market progressed to a series of newer lows from a new high set of SPX 1850.84 on January 15. There were lots of fake rallys that would get wiped out. Yesterday finally rose sharply before the market even opened and after yet another test of the new low 1740 area after closing Wednesday. Even traders at the exchanges were getting worried at that point.
But what a difference a day makes. So watch out and happy trails. Watch out for news an hour before the open. Be on the lookout for a sudden snapback after the best day of 2014 so far. After all, the VVIX is back and still holding 92.xx + levels after touching 109.67 Wednesday after lunch.
To see what it looks like with the Fed Tapered Off, plot a ten year of the SPX, count backwards from 2011. That booster stage has dropped away unless they re-ignite another stage for QE"x", and another shot. They ain't gonna tell you but they don't want to. Count how many double corrections there has been. Stock Market isn't really in their mandate. The cherry picked U1 unemployment (Try U6 for a more solid blast of reality) and the non farm payrolls, linked to housing, is.
Hank Paulson, Treasury Sec over The Big One in '08, gave an interview yesterday where he said the banking regs don't address the root cause: Fannie and Freddie. So proceed with caution. He thinks it is the same darn setup. Yikes. These guys can't give an answer over Libya after more than a year, let alone answer to one of those whoppers.
It shows the unpredictability of trying to pick bottom. Over the past few weeks, the market progressed to a series of newer lows from a new high set of SPX 1850.84 on January 15. There were lots of fake rallys that would get wiped out. Yesterday finally rose sharply before the market even opened and after yet another test of the new low 1740 area after closing Wednesday. Even traders at the exchanges were getting worried at that point.
But what a difference a day makes. So watch out and happy trails. Watch out for news an hour before the open. Be on the lookout for a sudden snapback after the best day of 2014 so far. After all, the VVIX is back and still holding 92.xx + levels after touching 109.67 Wednesday after lunch.
Tuesday 4 February 2014
Dead Cat Bounce
Yesterday they headed for the exits. It was one of those awful Mondays. The S+P touched 1739.66 15 minutes before the close. Today they were looking for the Bounce. It was more like a splat followed by occasional spasms of dashed hope. It ended at 1755.20 but fell apart after hours. There is too much baggage in the news with employment coming on Friday. The Hopers were hoping for a perfect Good News/Bad News both Good setup like last year. Their hope kept it afloat like Denver Fans I guess.
Emerging markets saw their shadow and went all Ground Hog a day late after the StuporBowl. Two marijuana states came to play, but Denver (AFC) got stoned an' they missed it against the greatest defense to lace up the cleats lately. Seattle took the hardware home with Paul Allen.
The VVIX remains high after falling below 98 to 100.4 at the close. Yesterday it made 109.67 They are having trouble selling this bounce through all that fluff. Janet Yellen had a hard first day after being sworn in on the job. On her second day, fund managers were looking for more correction. After all, emerging markets are 45-50% of the S+P.
That deceased feline still hit a $65 B padding being taped away to a sheet on the asphalt. It still has inflation to bounce off of after all that injected liquidity. There was no gnashing of teeth though, and no real panic. This was just the expected correction to the late year end rally that wouldn't quit. One pundit surmised that traders were having a Taper Tantrum but the Fed was still off on vacation.
We will have to see if it is a sucker bounce like the last few here, but it was a fair correction. But they are looking for more if they can. The Fed doesn't meet until March 18. China markets are closed for New Year of the Horse until Friday (Thursday evening) pre Employment news as well.
Putin may have his Persian Pussy, but the Winter Olympics will open then too. Let's watch it all unfold....
Emerging markets saw their shadow and went all Ground Hog a day late after the StuporBowl. Two marijuana states came to play, but Denver (AFC) got stoned an' they missed it against the greatest defense to lace up the cleats lately. Seattle took the hardware home with Paul Allen.
The VVIX remains high after falling below 98 to 100.4 at the close. Yesterday it made 109.67 They are having trouble selling this bounce through all that fluff. Janet Yellen had a hard first day after being sworn in on the job. On her second day, fund managers were looking for more correction. After all, emerging markets are 45-50% of the S+P.
That deceased feline still hit a $65 B padding being taped away to a sheet on the asphalt. It still has inflation to bounce off of after all that injected liquidity. There was no gnashing of teeth though, and no real panic. This was just the expected correction to the late year end rally that wouldn't quit. One pundit surmised that traders were having a Taper Tantrum but the Fed was still off on vacation.
We will have to see if it is a sucker bounce like the last few here, but it was a fair correction. But they are looking for more if they can. The Fed doesn't meet until March 18. China markets are closed for New Year of the Horse until Friday (Thursday evening) pre Employment news as well.
Putin may have his Persian Pussy, but the Winter Olympics will open then too. Let's watch it all unfold....
Monday 3 February 2014
The Post Fed Week
Finally a correction. People are finally re-examining the market that always went up for a year. Where do we go from here?
There are three possibilities: 1. Continue up, inflationary as that seems. 2. Sideways, flat and/or unsettled, and 3. The Bear Market. What is the situation, and can we get a clue from that?
The situation that is unwinding is an unprecedented series of Fed liquidity injections slowly but consistently being withdrawn. That led to a Government based economy, where the winners spun off of that. Government service industries created a bifurcated consumer liquidity situation where consumer discretionary spending trickled down from that. That is just what I have noticed. People with government spin-off jobs are easy to spend money while those outside that loop are a lot tighter before making any purchases.
This has infiltrated energy and fuel. The extension of that is food and the automotive/agricultural industrial sector. There are a lot of food stamps in that pie. Gasoline remains relatively low now. Diesel not so much. The enviro crowd refuses to understand the equation while they try to shortcut the solar-portable energy chain, and waste even more trying to store it in batteries. Incredibly, this is approved filthy waste though.
P.T. Barnum said a sucker is born every minute though. They are kept misdirected looking at fragile little phones as they walk over the cliff. If you want to get your message heard, it has to somehow get into that little piece of glass powered by a brain made of solid rock to emulate modern management. GOOG and AAPL rule the roost, while everybody looks to PCLN to get away. To boldly go where someone else has gone before.
Volatility has returned somewhat. It still isn't up to the historical VIX 20 average, but it is finally returning a bit towards that. Contango and volatility itself still erode VIX options, but the booty is less. In any return to normal, however stretched out or gently tapered, risk will be coming back into the equation. It is no longer a simple game where you just throw money at it. While the VVIX Index even disappeared a few times last year, it is back to front center stage.
Apparently there is also a Superbowl Effect. Everybody was assuming a Denver AFC win to continue the Bearish market . Denver didn't even show up it seemed! If you believe that, it foretells a Bull Market.
The Return of Uncertainty is almost a Certainty. Take it for what it is worth, but markets do not like uncertainty.
There are three possibilities: 1. Continue up, inflationary as that seems. 2. Sideways, flat and/or unsettled, and 3. The Bear Market. What is the situation, and can we get a clue from that?
The situation that is unwinding is an unprecedented series of Fed liquidity injections slowly but consistently being withdrawn. That led to a Government based economy, where the winners spun off of that. Government service industries created a bifurcated consumer liquidity situation where consumer discretionary spending trickled down from that. That is just what I have noticed. People with government spin-off jobs are easy to spend money while those outside that loop are a lot tighter before making any purchases.
This has infiltrated energy and fuel. The extension of that is food and the automotive/agricultural industrial sector. There are a lot of food stamps in that pie. Gasoline remains relatively low now. Diesel not so much. The enviro crowd refuses to understand the equation while they try to shortcut the solar-portable energy chain, and waste even more trying to store it in batteries. Incredibly, this is approved filthy waste though.
P.T. Barnum said a sucker is born every minute though. They are kept misdirected looking at fragile little phones as they walk over the cliff. If you want to get your message heard, it has to somehow get into that little piece of glass powered by a brain made of solid rock to emulate modern management. GOOG and AAPL rule the roost, while everybody looks to PCLN to get away. To boldly go where someone else has gone before.
Volatility has returned somewhat. It still isn't up to the historical VIX 20 average, but it is finally returning a bit towards that. Contango and volatility itself still erode VIX options, but the booty is less. In any return to normal, however stretched out or gently tapered, risk will be coming back into the equation. It is no longer a simple game where you just throw money at it. While the VVIX Index even disappeared a few times last year, it is back to front center stage.
Apparently there is also a Superbowl Effect. Everybody was assuming a Denver AFC win to continue the Bearish market . Denver didn't even show up it seemed! If you believe that, it foretells a Bull Market.
The Return of Uncertainty is almost a Certainty. Take it for what it is worth, but markets do not like uncertainty.
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