Trading the Indices on Fundamentals

There is mounting evidence that the RBA has sharpened its skills in being in front of the curve. Having being caught with egg on face for not seeing the GFC coming and raising rates just 2 months before it hit, the RBA has cut rates in 2 consecutive meetings and is now slowly starting to burnish the narrative for starting QE. With the RBA joining other world bankers in taking measures to help avoid a slowdown, it leaves only Powell oblivious to a possible global recession. Powell is still hesitant to cut rates as well as remaining on QE tightening mode... seems the Fed could well be creating a recession in the US while the rest of the world might escape it. God help America with idiots running the economy on ego rather than common sense.

No doubt trade frictions initiated by Trump are what put a spanner in the works of the 2017 synchronised global expansion, however, Trump is doing something that needed to be done (although if he did it in silence & diplomatically the effects and results could be much different), if Trump, congress and the Fed all acted as one to solve the issues, Trump's initiative need not be as disruptive to the economy as it is, but with each body more eager to show the power is with them, a unified front does not exist... quite a circus... a 3 ring circus with each ring trying to outdo the others.
 
Last edited:
US Futures opened with a sizable gap down, DOW is -320pts. Getting out of my longs on Friday and so being net short in the US is paying dividend.
 
The mystery phone call from the vice-chair of China apparently fooled the bots, US markets rose, but professional traders are scratching their head as to why this should be. Apart from the fact that there is no vice-chair position in the Chinese regime, no one other than Trump can verify such a call happened. Has Trump become unhinged over China? He's up against an opponent that does not jump when he says jump and Trump does not know how to deal with this. Perhaps he's having nightmares over China and has started to confuse wishful thinking with fact. Fundamentals on Monday are the same as they were Friday, nothing has changed. I remain short US.

At a political level, China is making a lot of enemies in the region, Trump is missing the opportunity to gather a united support against China by picking fights with allies and mudding the support commitments that are in place with countries being bullied by China. It is obvious to everyone, except Trump, that China is not going to capitulate to the US, perhaps Trump should look at allies more seriously and enlist support rather than pick fights.
 
Last edited:
In the world of diplomacy, heads of state do no insult by making mistakes in titles and positions. It appears to me that Trump did not err but chose to say "vice-chair" because he knows that diplomatic protocol would make it inappropriate for the vice premier to talk to anybody other than the vice president. In other words, the whole thing is make-believe for the purpose of lifting markets.
 
Last edited:
just closed:
S&P of 23Aug longs 2,836.0 at 2,894
RUSSELL of 23Aug longs 1,465.0 at 1,484.0
NDAQ of 23Aug longs 7,500.0 at 7,630
 
Last edited:
The U.S. 30-year yield after reaching a peak above 3% has now dropped below the S&P 500′s 2.6% average dividend yield, the first time since March 2009, when the world was deep into a recession. Normally this would be a bullish sign for stocks, however, I'm still in the view that a flush-out will ocur before the bulls take charge. I remain net short on the US markets and will go long if a major correction happens.
 
Last edited:
Lately, there has been no shortage of experts going in front of cameras to state their view on the markets, most agree that the Fed is behind the curve and needs to stop setting policy on principals and pay attention to what's happening around the world i.e. pick-up their game. They also agree that the US is not in recession now but will be within 24 months or so, were they are split 50-50 is what happens between now and then, however, both camps are using the "violent word". Half say markets will go violently higher then fall, the other half say markets will go violently lower then recover....not much help to traders as one might as well flip a coin and have a 50% chance of being in the right direction for the anticipated "violent" move.

My view hasn't changed, I still expect a flush-out to bring the over-optimism to ground level then a fairly quick recovery, ending the year to about current levels or a bit higher but with rotated sectors.... essentially fulfilling both camps i.e. a violent fall followed by a violent recovery.

I remain net short US and intend to wind-down EU & Asian longs at any rally.
 
Last edited:
You must log in or register to reply here.
Back
Top