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These Are The Five "Good News" That Can Cause A Market Selloff Acccording To Bank of America
"If bad news is great for stocks, then is good news bad?"
Bank of America reminded us earlier that just this month, the PBoC cut rates, the ECB confirmed QE2, Sweden announced additional QE, and the BoJ promised additional easing if necessary 'without hesitation', and for markets, "the stimulus of October 2015 has worked, with equities and corporate bonds rallying hard."
The main driver of this newly unleashed central bank intervention? Terrible global economic data.
BofA further says that "central banks are easing because global growth is weak" (in the process making global growth even weaker but at least pushing risk assets to new highs) adding that "global profits are down 4% since February. Even the US has struggled: payroll growth has decelerated and the latest US GDP growth rate was a pitiful 1.5% in Q3. And the level of US inventories is unambiguously recessionary."
But while "confidence in quantitative success for the economy is nonetheless low" the 'loss of faith in central planning' trade which emerged briefly in late August and September, promptly fizzled as "don't fight the Fed" once again regained its top position on the pantheon of Wall Street aphorisms, right above BTFD.
So if terrible economic news is great for stocks, will the opposite be true as well, especially with a resurgent hawkish Fed and odds of a December rate hike soaring to the highest level yet?
Here are the five "good is bad" things which according to BofA, will change the narrative, and lead to a market selloff in November.
What changes this narrative? What signals Q3 was the trough for macro expectations? What causes a market sell-off in bonds in November? Strong October data & market validation of a higher rates/higher growth scenario in coming quarters:
- China PMI>50.5
- US ISM>52
- US payroll>225K
- US banks rally: XLF>$26 would confirm stronger “domestic demand” expectations.
- US dollar stable: if the Fed can hike without boosting dollar this is positive; DXY must not breach 100; a rally in ADXY (Asia FX index) above 110 crucial as this would erase the apocalyptic view of China growth prospects.
There is another potential adverse catalyst: while often cited as a source of market strength, the end of Obama's second term may be just the opposite.
The “Wall Street boom, Main Street bust” narrative is one central banks would very much like to avoid in 2016, especially as 2016 is a US election year. And it’s worth noting that the end of a two-term Presidential cycle has often signaled the end of an excess valuation somewhere in the global financial markets: the overvaluation of the US$ after JFK/LBJ, the undervaluation of bonds after Ford/Carter, the overvaluation of tech after Clinton and the overvaluation of housing after Bush (see Chart 7).
Will the S&P crash at the end of 2016? We won't know, but it certainly would be a fitting conclusion to Obama's second term if the stock bubble, the only thing Bernanke Yellen Obama "got right" and doubled it (at a cost of only $10 trillion in government debt), were to wipe out all its gains since 2009 and confirm to everyone just how naked the US president had been all along.
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How about Oct. car sales, coming out tomorrow I guess?
Time to get cookin'!
Payroll would be the killer. All that QE hitting Main Street would be crack-up boom time. What the Fed is looking at is employment. They do not care about sales other than money hitting the streets. When the money hits the street all hell will break loose and they know it. They are looking at the employment/pop ratio. As long as it is stable the games go on as they are now. To them this game is easy as long as it stays with employment stagnant. When that changes the game changes.
I think even the main street people know employment as per u3 is a lie at 5.1 that would in the past indicate a decent economy.
And what velocity of money is like 1.4? Never been lower.
Never say Never.
In 1932, during the depths of the prior Depression, the velocity of money came in at 1.281, and even that was eclipsed after WWII in 1946 with a print of 1.163.
https://research.stlouisfed.org/fred2/series/A14187USA163NNBR
Is it truly any wonder that Back to the Future was playing in the movie theatres recently ?......
Soon to be replaced with the Running Man in 2017.
Instead, how about a dose of reality?
I picture things in the future being more like Burt Lancaster in "The Swimmer".
I never heard of the movie "the Swimmer", but after reading the plot, I can easily see one's point, of deluding oneself that everything is just fine inspite of how things are.
Car sales will be so channel stuffed that merely walking onto a lot means you bought a car.
ALSO:
Looks like Tyler's got a new intern in charge of archives. Everything from last night back is now history. Sorry, no way to respond to any that made posts.
Weekend warriors.
Q3 money velocity fell. Money is going nowhere fast and neither are rates.
The money is most definitely going into the 0.1% pockets.
Its certainly not circulating within the economy. People are absolutely stressed and miserable.
paging ... Neil Mc Curry/Murray.
BAC/ CIT blocked my search nicely.
Google is a farce. Yahoo kicks ass recently. Yandex, is the best of both worlds.
. Mr. Potato Head? It's funny how these " FX heads" aka clowns get toasted every couple of months Tyler.
When you have a gargoyle running the Fed. anything is possible?
"Here Are The Five "Good News" That Can Cause A Market Selloff According To Bank of America"
and all of them can be over-ridden with more pre-open e-mini purchases by the fed and implementing rule 48 again and again and all the while printing and selling gold/pm futures...rinse and repeat
We, BAC already proved that they are almost more wrong then goldman sachs when they make predictions so fuck those bastards and let's watch how they'll burn in the next banking crisis.
Almost everyone expecting and preparing for a major Grand Collapse.
That will NOT happen.
Instead, this Grand Collapse will only take place near the recovery, probably around 6 months before 2020-2024, when the next super boom starts.
In other words, the central bankers and their crony henchmen bankers will not let investors make money easily. They will continue to manipulate the market up (easy because of much illiquidity that they need only low capital to do it) even when the economy continue to crumble into oblivion, until 6 months before the next generational boom, i.e. 2020-2024, then they will let loose the hell and everything will collapse substantially. Along the way investors will be totally confused and perplexed on what really matters to investing.
The world will fall into another Great Depression (stock market depression, that is). Then 6 months later (or +/- around 1 year to be conservative), they will announce they have a new currency to save the world economy and it will be backed by gold.
Anyone that have sold everything now will miss another mega rally.
Anyone that have sold everything and being impatient for the collapse only to see the market continue to go up may risk capitulating and end up buying at or near the peak (around 2018-2019) only to suffer another massive blow that will certainly bankrupt them.
Forget about the economy. Forget about the Fed humbugs. Just buy the market. Ride the rally to probably 2018. Then sell everything. Wait for a MAJOR + SHARP collapse of the market. Scoop up everything in dirt cheap price. Then enjoy another generational rally from 2020-2024 onward.
This is how the Fed manipulates the market and this is how we should trade/invest.
+1 since the repeal of glass-steagall their psychological warfare has been successful against me...i've been frozen in place financially
The Fed will try to confuse as many people as possible so that as few people can make money as possible.
Today fumdamentals don't matter. Good news is both good and bad. Bad news is no different.
The reason is because market is so fragmented and illiquid that the Fed can manipulate the market direction cheaply (besides, they have infinite capital).
Seeing almost everyone has sold everything, the Fed will not let the market to collapse, or else most people will have the opportunity to buy at bargain. This the Fed cannot allow to happen. Thus, the Fed will continue to manipulate the market up. Along the way, the economy will continue to be decimated with lots of negative news.
The Fed will only allow a major collapse once every bear has capitulated and buy back near the top. And this major collapse will be very near the next recovery, so that the window of opportunity for the bargain sale of a lifetime will be narrow and short that only a few smart enough to get it will profit from it while most others will be slaughtered again. Last time few were informed. Thus collapse was gradual. Today many are informed. Thus collapse will need to be swift, sharp, and sudden.
The next demographic boom will be around 2020 onward. The Collapse will take place 6 months to a year before that.
This is how the Fed manipulates the market and this is how we should trade/invest.
The Fed will only allow a major collapse once Obola is safely out of office and the blame can be laid elsewhere.
Even if Hillary is the next prez? I can see the status quo sticking around for awhile if that happens.
some stuff may cause a sell-off - but there is one and only one reason for a crash
learn - trust
i've got a good track record
r
https://thereinhardtreport.wordpress.com/
how do you have a "sell-off" if the money printing central bankers are buying stocks and giving unlimited zerorate money for pumpers and dumper hedgefunds. So what if companies revenue is falling and labor participation is falling.