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Started By
Message
re: There are some major issues lurking in the US financial markets
Posted on 12/1/18 at 8:53 pm to Doc Fenton
Posted on 12/1/18 at 8:53 pm to Doc Fenton
quote:
I'd lean toward the 30% option occurring this weekend
And here it is: " Trump, Xi declare truce on new tariffs as trade talks continue"
quote:
UPDATE: 9:19 p.m.:
President Donald Trump and Chinese President Xi Jinping have agreed to a ceasefire on trade, with Trump agreeing not to raise tariffs further while negotiations continue, the White House said in a statement. China will agree to purchase more U.S. agricultural, energy and other products.
The move means that U.S. tariffs on $200 billion worth of goods will not rise to 25 percent on Jan. 1, from 10 percent currently, as Trump had previously threatened.
...
So we likely see a bump to begin next week, and both of the usual mechanisms for rejuvenating a slumping market have been fully deployed once again over the past week. We'll see where it goes from there.
1
Posted on 12/2/18 at 1:18 pm to Doc Fenton
Probably the best short term news possible from g20 short of an actual deal.
Posted on 12/2/18 at 5:17 pm to Pendulum
Yep. Now two big things hanging over the market, Powell’s early October comments on interest rates and the trade war, have been taken care of short term. 3000 on the SP500, here we come.
Posted on 12/2/18 at 5:25 pm to CajunTiger92
Possibly. Next year we are going to start to see the narrative change though. Housing declines and Doc's corporate bonds will be major headwinds.
Posted on 12/2/18 at 7:07 pm to LSUtoOmaha
Indeed, there are walls of worry to climb. That's what secular bull markets do.
Posted on 12/3/18 at 8:22 pm to CajunTiger92
And now there's also an inverted 5-2-yr yield curve.
Posted on 12/4/18 at 5:43 am to Doc Fenton
So now the 5-2 is the curve we are to use to predict economic doom? Talking heads on the financial channels were talking this up this morning shilling for ratings. The bears are trying their best to defend the 2800 resistance level and take control. It won’t work.
Posted on 12/4/18 at 9:36 am to CajunTiger92
quote:Of course not. The 2-5 inverted yield curve is not a reliable predictor of a recession, unlike the 2-10 inverted yield curve.
So now the 5-2 is the curve we are to use to predict economic doom?
In fact, while an inverted 2-10 yield curve has not always accurately predicted a recession, every recession in the last 50 years has had an inverted 2-10 yield curve precede the start of the recession by 6-18 months.
Posted on 12/4/18 at 11:26 am to LSURussian
quote:
Of course not. The 2-5 inverted yield curve is not a reliable predictor of a recession, unlike the 2-10 inverted yield curve.
That was my point but you did a better job of making it.
Posted on 12/4/18 at 2:33 pm to LSURussian
I’m pretty sure it’s the 90 day to the 10 year that’s the important onetime watch.
The 2-10 only started making headlines recently bc it would invert before the 90day would and that made it more news worthy.
The 2-10 only started making headlines recently bc it would invert before the 90day would and that made it more news worthy.
Posted on 12/4/18 at 3:25 pm to Shepherd88
quote:
I’m pretty sure it’s the 90 day to the 10 year that’s the important onetime watch.
quote:
It passed with little fanfare, but the spread between the 2-year and 5-year Treasury notes went negative yesterday, the first inversion of the yield curve since 2007.
Why wasn't this the top headline in the financial media?
Because the 2-year/5-year spread is much less widely followed than the 2-year/10-year spread.
The 10-year U.S. Treasury note is the most liquid of the Treasuries and one of the most liquid securities in all of global markets and thus it the true benchmark for interest rate traders. The 5-year Treasury lies in what is known as the "belly" of the yield curve and attracts far fewer investor dollars than the 10-year.
So, breathe a sigh of relief if you will, but the 2/10 spread is currently a minuscule 13 basis points, and thus the margin for error for an upward-sloping yield curve is basically nonexistent.
Forbes 12/4/18
Posted on 12/4/18 at 9:38 pm to LSUtoOmaha
At 4:00pm ET today, I couldn't help but think of Stonewall Jackson's line from Gods and Generals whilst eating a peach after a battle at Antietam.
“God has been very kind to us this day.” -- General Thomas Jackson, 9/17/1862
But now my mind is turning with worry toward what General Grant said after the first day of battle at Shiloh.
"Yes, lick ’em tomorrow, though." -- General Ulysses Grant, 4/6/1862
“God has been very kind to us this day.” -- General Thomas Jackson, 9/17/1862
But now my mind is turning with worry toward what General Grant said after the first day of battle at Shiloh.
"Yes, lick ’em tomorrow, though." -- General Ulysses Grant, 4/6/1862
Posted on 12/4/18 at 9:53 pm to Doc Fenton
I miss peaches, haven’t had a ripe one in some time
Posted on 12/5/18 at 9:01 am to LSURussian
quote:
In fact, while an inverted 2-10 yield curve has not always accurately predicted a recession, every recession in the last 50 years has had an inverted 2-10 yield curve precede the start of the recession by 6-18 months.
while not all milk drinkers are crackheads, EVERY crackhead started with milk making milk a good sign of crackheads.
I hate this type of nonsense.
Posted on 12/7/18 at 5:40 am to CajunTiger92
quote:
So now the 5-2 is the curve we are to use to predict economic doom? Talking heads on the financial channels were talking this up this morning shilling for ratings. The bears are trying their best to defend the 2800 resistance level and take control. It won’t work.
Perhaps you are getting too emotional about this.
Posted on 12/7/18 at 5:45 am to Doc Fenton
quote:
And now there's also an inverted 5-2-yr yield curve.
We now know that this curve inversion in the bond markets on Monday, and the drop in equities markets on Tuesday, was a result of investors getting ahead of the news of the arrest of Huawei CFO, (Sabrina) Meng Wanzhou, in Vancouver.
NYT: " Arrest of Huawei Executive Intensifies Trade War Fears"
quote:
WASHINGTON — At dinner with China’s president, Xi Jinping, on Saturday night in Buenos Aires, President Trump celebrated their “special” relationship and all but predicted they would emerge with a truce in the trade war between the United States and China.
Seven thousand miles away, unbeknown to both leaders, Canadian police acting at the request of the United States were in the process of detaining Meng Wanzhou, a top executive of one of China’s flagship technology firms, as she changed planes in Vancouver.
So the arrest occurred on Saturday and was planned in advance. Bolton knew about it, but President Trump was not briefed before his meeting with Xi.
The news did not break to the public until Wednesday evening, and this spurred a little bit of the initial drop on Thursday. However, the smart money had already moved markets on Monday and Tuesday.
Posted on 12/7/18 at 10:43 am to Doc Fenton
The 2-5 year yield curve was pretty much an unheard of metric before this week. At least one of the anchors on the show called it like it was and basically said they were just trying to keep people from changing the channel.
This is all noise. Invest as you see it. I’m on the side of the bulls. Let the stampede begin.
This is all noise. Invest as you see it. I’m on the side of the bulls. Let the stampede begin.
Posted on 12/7/18 at 1:05 pm to CajunTiger92
Posted on 12/10/18 at 5:09 pm to LSUtoOmaha
That really took me on a tour of old memories.
I used to follow the Case-Shiller and NAR statistics religiously back in 2008-2011, but lately I haven't paid as much attention. I've been focusing on stories about sales volume slipping and niche luxury markets getting hit hard, but overall the prices haven't started to slip yet. So I went back and looked and saw that both S&P (which keeps C-S HPI stats) and NAR have made it harder to download data. NAR just does PDF stat sheets on their website now. (I'll have to write an angry letter to Lawrence Yun.)
Anyway, I went back to some ancient threads of mine and dug up some old stats:
According to the FRED chart ( LINK), the NAR's data on the median sales price hit $273,800 in June 2018. That's a good bit higher than 2006.
Looking at some historical peaks and troughs from the Case-Shiller Real HPI back in August 2011, we had:
The numbers have been revised a little bit, and now read as follows:
Or if you prefer nominal prices...
quote:
Since February 2012, when the price declines associated with the last financial crisis ended, prices for existing homes in the United States have been rising steadily and enormously. According to the S&P/CoreLogic/Case-Shiller National Home Price Index (which I helped to create) as of September, the prices were 53 percent higher than they were at the bottom of the market in 2012.
I used to follow the Case-Shiller and NAR statistics religiously back in 2008-2011, but lately I haven't paid as much attention. I've been focusing on stories about sales volume slipping and niche luxury markets getting hit hard, but overall the prices haven't started to slip yet. So I went back and looked and saw that both S&P (which keeps C-S HPI stats) and NAR have made it harder to download data. NAR just does PDF stat sheets on their website now. (I'll have to write an angry letter to Lawrence Yun.)
Anyway, I went back to some ancient threads of mine and dug up some old stats:
quote:
NAR's Existing Home Sales and Their Median Prices LINK
(seasonally-adjusted annual rates, in millions)
(Year-Month, U.S. Sales, U.S. Median Prices, U.S. Inventory in Months)
2005-TOT, 7.076, $219600, 4.5
2006-TOT, 6.478, $221900, 6.5
2007-TOT, 5.632, $219000, 8.9
According to the FRED chart ( LINK), the NAR's data on the median sales price hit $273,800 in June 2018. That's a good bit higher than 2006.
Looking at some historical peaks and troughs from the Case-Shiller Real HPI back in August 2011, we had:
quote:
Real Home Price Index LINK
1894, 123.98
1942, 68.50
1979-1Q, 121.81
1996-4Q, 106.73
2006-1Q, 198.01
2011-1Q, 118.52
The numbers have been revised a little bit, and now read as follows:
quote:
Real Home Price Index LINK
1894, 123.98
1942, 68.50
1979-Aug, 121.55
1997-Feb, 112.11
2006-Oct, 195.16
2012-Feb, 125.94
2018-Aug, 174.52
Or if you prefer nominal prices...
quote:
Nominal Home Price Index LINK
1894, 3.97
1942, 5.03
1979-Aug, 41.92
1997-Feb, 83.62
2006-Oct, 184.06
2012-Feb, 134.00
2018-Aug, 205.66
Posted on 12/10/18 at 5:19 pm to LSUtoOmaha
Anyway, I have raked in a whole lot in about 3 days last week. It might be getting close to time to take some profits and ease up a bit on some of my short positions going into that FOMC meeting on Dec. 18-19 next week. I tend to agree somewhat with Paul Tudor Jones's position that the Fed has boxed itself into a rate hike this month, but will likely signal a much more dovish tone for 2019. That could give the market another quick sugar boost, and form a bull trap that would allow for some better pricing on shorts.
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