This past week investors took a blow from a sharp selloff in the financial markets. Now that the correction has occurred, at least to some degree, the question that must be answered is simply: “Is it over?” That is the basis of this weekend’s reading list which is a compilation of reads that debate this point. The bulls remain wildly bullish, believing that this is simply a “dip” in the ongoing “bull market.” The more pessimistic crowd sees the opposite.
Many market participants are looking dumbstruck at the miraculous surge in Dow Transports and Small Caps this week off the bond-short-puke lows of Wednesday morning. The answer - sadly for those who believe this is presaging new new highs and utopia once again - is that this was the biggest weekly short-squeeze in 11 months... and more troubling for the bulls - it ran out of steam today.
Despite a Bullard-bullshit-driven rampalicious surge in the last 36 hours, this is the first weekly close below the 200DMA for the S&P 500 in 2 years and longest losing streak since August 2011. Today was the best day of the year for the Dow Industrials and 4th up-day in a row for the Transports (which ended the week up 3%) as the major indices saw significant divergence on the week. The USDollar closed lower for the 2nd week in a row with EUR strength the main driver. Treasury yields ended the week remarkably stable (30Y -3bps, 5Y -11bps) up 30-40bps above intraday lows on Wednesday. Despite USD weakness, only gold managed gains in the commodity complex. Oil bounced off $80 but ended the week down 3.2% (around $82). VIX was slammed lower at the open today, closing -3 at 22 (+1 on the week).
Despite the 'sound and fury' from various Fed-Heads, the world - according to Deutsche Bank - faces 10 significant factors that will (one way or another) drive markets for the remainder of the year...
In essence, despite a zero interest rate policy that mainly helps the wealthy, struggling families with falling incomes ought to take steps to accumulate "considerable assets," as retirees take part-time jobs to make ends meet. Let them eat cake, indeed.
News about the spread of the Ebola virus has been an increasing focus for market participants in recent days. Despite rising media coverage, Ebola seems to have had little discernible effect on consumer sentiment to date. However, as Goldman Sachs notes, the "fear factor" associated with Ebola appears more significant than in past instances of pandemic concern. While expert opinion sees the likelihood of a significant outbreak of Ebola in the US as very low, it is likely any negative macroeconomic consequences are most likely to be transmitted through fear or risk-aversion channels.
Few are the market makers that make money no matter what the market does (especially since HFT firms, long since exposed for merely frontrunning big order blocks instead of providing liquidity, are now disappearing at an accelerating pace), and there are those who, rigged casino analogies notwithstanding, still want to place their money in the market betting on either more upside or downside. For their benefit a few days ago we posted "The "Crazy Ivan" Playbook: How To Time A Near-Term Market Bottom" however, we realize that most people are visual learners, so for them, here is the Investor Business Daily's compendium of the most notable market tops and bottoms in recent market history.
If U.S. stocks have stabilized – granted, a big 'IF' - you can thank the fact that markets don’t believe the Federal Reserve’s outlook on interest rates. Bad news will keep the doves “Fed” (yes, a pun… it’s Friday) and the hawks at bay. A spate of good U.S. news while the rest of the developed world slows is the worst potential outcome in this narrative.
Arlington County Fire Department and Fairfax County HAZMAT Teams are on the scene after a woman - alleged to have recently traveled from West Africa - fell ill and started vomiting in The Pentagon parking lot this morning. Arlington Public Health has activated its Emergency Operations Center to manage the incident.
WOMAN WHO VOMITED IN PENTAGON PARKING LOT VISITED LIBERIA TWO WEEKS AGO -- FOX CITING DEFENSE SOURCE
"If you like your phone secretly spied on, you can keep it," appears to be the message from the FBI. As Bloomberg reports, FBI Director James Comey said yesterday that companies like Apple and Google should be required to build surveillance capabilities into their products to help law enforcement with their probes, adding "if the challenges of real time data interception threatened to leave us in the dark, encryption threatens to lead us all to a very dark place."
For those who doubt that America is ruled by a narrow elite: three charts.