The Bank of Japan gave us a glimpse as to just how far down the rabbit hole we may have to follow global policy makers as we try to make sense of ever more complex and shall we say, innovative ‘tools’ being used in the effort to engineer individual economies and asset markets within the global financial system. BoJ announced it would conduct “JGB purchase operations” in order to “prevent the yield curve from deviating substantially from the current levels”.
The market initially interpreted this to mean BoJ stood in support of a rising yield curve, which would for example, help the banks (ref. MTU and SMFG, which exploded higher off of the support levels we had projected), but by the end of the week the Japanese Yield Curve had eased substantially and there seemed to be confusion about what the policy’s intent, or would-be effects, actually were. I wonder if the BoJ even fully knows what it is doing now. Lots of moving parts in a complex system.
Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,210, and profit target at 2,050, S&P 500 index).
Our intraday outlook is bearish, and our short-term outlook is bearish. Our medium-term outlook is neutral, following S&P 500 index breakout above last year’s all-time high:
Intraday outlook (next 24 hours): bearish
Short-term outlook (next 1-2 weeks): bearish
Medium-term outlook (next 1-3 months): neutral
Long-term outlook (next year): neutral
The week started at SPX 2139. The market rallied, after a gap up opening, to SPX 2154 on Monday. Then after the opening gap was closed on Monday the market finished unchanged. This sequence continued on Tuesday: gap up opening- close gap. On Wednesday another gap up opening-close gap sequence occurred, but during the FOMC statement/press conference the market rallied. The rallied continued to SPX 2180 on Thursday after another gap up opening, then pulled back to 2164 on Friday. For the week the SPX/DOW gained 1.4%, and the NDX/NAZ gained 1.4%. Economic reports for the week were sparse and mostly negative. On the downtick: housing starts, building permits, existing home sales, leading indicators and the Q3 GDP estimate. On the uptick: the NAHB, FHFA and weekly jobless claims improved. Next week’s reports will be highlighted by Q2 GDP, the PCE and the Chicago PMI. Best to your week!
Competition amongst equity release lenders has clearly intensified in recent years and it is now at a point where perspective equity release customers have never been better served in terms of choice and interest rates, according to the latest research by Moneyfacts.
In fact, there are now a total of 75 different lifetime mortgage equity release deals available, covering a wide spread of options and loan-to-values (LTVs), an increase of 63% on the number of deals available a year ago and more than double the total number three years ago.
There’s definitely something in air across the western world which may not go as far as be classed as a revolution but at the very least ‘rebellion’, of where the mass of ordinary people are rebelling against the ruling establishment elite who have had an increasing grip on power through institutions and the media for at least the past 40 years as evidenced by the fact that the gap between the rich and rest has widened in virtually every year for the past 40 years, reaching levels not seen since before the second world war, ripe for rebellion even mass uprisings.
As we enter into the last week before the end of the Jubilee Year, the National Guard has been deployed in Charlotte, North Carolina and massive military convoys have been deployed in the streets of New York City.
This is a continuation of last summer’s Jade Helm seven-state military exercise that many in the area saw as a prelude to military occupation. After Jade Helm came the US Army Special Operations Command’s Unconventional Warfare Exercise 16 (UWEX 16) that ran in Texas through June.
Current Position of the Market
SPX Long-term trend: The long-term trend is up but weakening. Potential final phase of bull market.
SPX Intermediate trend: The uptrend from 1810 continues, but it has entered a corrective phase.
Analysis of the short-term trend is done on a daily basis with the help of hourly charts. It is an important adjunct to the analysis of daily and weekly charts which discuss longer market trends.
If black athletes in the NFL honestly think that African Americans who live under Old Glory are as ‘equally protected ‘as whites, then they should stand up during the national anthem and sing-along. But if they know that blacks aren’t getting a square deal, and that blacks can be gunned down at any time by trigger-happy cops who never face the consequences, then they owe it to themselves and their country to demand change by remaining seated.
The New York Post, a Rupert Murdoch tabloid publication that isn’t likely to win a Pulitzer Prize anytime soon, splashed a full page picture of a smiling Jennifer Anniston on its Sept. 21 front cover. In the upper left-hand space it placed all-capitals text: “BRANGELINA 2004–2016.” Inside the Post were four full consecutive pages, and a half page and part of a column deeper in the newspaper, all devoted to one of the most critical social issues facing the country—Brad Pitt and Angelina Jolie are getting a divorce.
There’s definitely something in the air in many nations across the western world which may not go as far as be classed as a revolution but at the very least ‘rebellion’, of where the mass of ordinary people are rebelling against the ruling establishment elite who have had an increasing grip on power through institutions and the media for at least the past 40 years as evidenced by the fact that the gap between the rich and rest has widened in virtually every year for the past 40 years, reaching levels not seen since before the second world war, ripe for rebellion even mass uprisings. The middle classes and working poor have had enough of being systematically turned into slaves in the service of the ruling elite, now in open rebellion as the supposed peoples power has effectively been transferred over to the corporations, bankers and billionaires who like Zuckerberg engage in publicity stunts of donating a few billion dollars here and there in an attempt to mask the magnitude of their greed. If the likes of Gates and Zuckerberg really wanted to help ordinary people then they would pay their fair share of tax rather than the pittance that allows them to amass obscenely huge fortunes.
As widely expected, the Fed left interest rates unchanged at the September 21, 2016 FOMC meeting. The Fed felt things were balanced, and was looking for a pick up into the fourth quarter of 2016. The Fed also left open the possibility of a rate hike at the December FOMC. There were three Fed dissenters, the highest number since 2014. The BOJ also made an announcement to maintain its QE programs and do some switching of long maturities for short maturities (the BOJ’s version of Operation Twist?).
GDP estimates for third and fourth quarter are now in a free-fall.
Last Friday the FRBNY Nowcast was in a blackout period because of the FOMC meeting on Wednesday.
Today we see estimates tor the last two weeks. Let’s also take a look at my guess of the estimates vs. how the estimates came in.
There were some hopes that a non-move by the Fed would end the current correction in precious metals and spark a move to new highs. Unfortunately, the Federal Reserve cannot override the supply and demand component of the market. Gold and gold stocks popped higher but less than two days later the sector (and specifically the miners) has given those gains back. That tells us plenty of sellers remain and this sector needs more time and perhaps lower prices before this correction ends.
70 RSI is as 70 RSI does. Sure, you can go well above. I understand that, but yesterday most of the key index charts hit 70 RSI on the short-term, sixty-minute charts. Normally you pull back from there and today was no different. The market gapped down a little bit and spent the day below the flat line. Nothing dramatic, but it did succeed in allowing the overbought oscillators to begin and unwinding process, which, of course, many will question as to whether we’ve seen the ultimate top. Probably not, but you never know. Markets sell when they get too overbought to allow for more energy on the next attempted move higher. This seems to be no different.
The cycle since 2009 has been different from other market cycles, throughout history, in only one significant manner. That having been said, it is the Global Central Banks that have intentionally pushed interest rates to zero and below. This encouraged investors to speculate in the equity markets which have now become ‘dangerously overvalued, overbought, as well as ‘over bullish’ extremes according to all measures. In my opinion, this has “deferred” and not eliminated the disruptive unwinding of this “speculative” episode.
Our interest rates strategist explains more in this new interview
Peter DeSario, editor of our Interest Rates Pro Service, explains why this was a “monumental” week in the bond markets — and offers a preview of which markets he’s keeping his eye on.
Britain’s secret service, MI6 is about to see their number of intelligence agents boosted by 1/3rd in attempt to fight and counter future digital cyber terror attacks and wars. This is in addition to the expansion of other arms of Britain’s secret police such as GCHQ and MI5.
However, the government is making the SAME mistake it always tends to make when it engages in such job creation exercises for bureaucratic institutions in that they are ALWAYS looking in the rear view mirror of what happened in the past and thus how they could have averted for instance 9/11 or 7/7 if they had x,y,z number of personnel in place and then go ahead and implement such capacity expansion a decade after the fact, whilst failing to realise that the nature of the threat has moved on.
So much for the narrative.
The latest myth being promoted in economic circles is that median income growth exploded higher last year. The people promoting this myth obviously didn’t bother reading the actual report and don’t understand what the word “median” means.
A big hat tip goes to John Williams who actually DID read the report and found that the Census has adjusted its methodology to include what interest income WOULD be if rates were not at zero.
As we’re still readjusting to life in a small Argentine pueblo miles from anywhere, I’ve asked Stephen McBride, my associate and now neighbor (he just moved here), to take the reins for the bulk of this week’s assemblage of news, analysis, and wry commentary about the never-boring antics of the human ape.
You may recall Stephen’s wonderful exposé on George Soros, an article that continues to bounce around the Internet doing good service by alerting people to Soros’s nefarious deeds.
The reported shortfall for the California Public Employees Retirement System (Calpers) is $139 billion – but that is based upon investment assumptions that may be unlikely in current markets.
As developed using a 40 year financial model and recent actual results, the real present value shortfall could be in the $500 billion to $1 trillion range, which is 4X to 7X as great as reported.
Calpers is used as a real world example to explore nationwide issues that could change our financial futures – and our choices – as investors, taxpayers and pension beneficiaries.