ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION
November 6, 2022 | Trading Desk Notes For November 5, 2022
Inter-market relationships I’m a Macro tourist: I constantly monitor intra-market and inter-market relationships and correlations. It’s an old habit, and it often leaves me more perplexed than enlightened, but sometimes I find clues that help me see a trading opportunity. I look at correlations as a trader, not an economist or statistician; in other words, […]
October 30, 2022 | Trading Desk Notes For October 30, 2022
October 13, 2022, was a Key Turn Date A Key Turn Date occurs when several different markets reverse course on (or around) the same date. The fact that several different markets “pivot” simultaneously indicates that something significant has happened – for instance, there has been a significant “shift” in sentiment or a critical geopolitical event. On October 13, the US CPI report was […]
October 23, 2022 | Trading Desk Notes For October 23, 2022
Markets may be turning I’m writing the TD Notes on Sunday afternoon this week. I left my desk last Thursday morning, flew to Calgary to attend Joseph Schachter’s fantastic annual energy conference (more on that below), and got home Sunday afternoon. The Notes will have to be shorter this week – I’ll comment on several […]
October 15, 2022 | Trading Desk Notes For October 15, 2022
Will the Fed pause/pivot before or after “something breaks?” The Fed is determined to continue tightening monetary policy until inflation falls. Stocks and bonds have fallen sharply, and the US Dollar has soared as inflation has remained “hot” despite the Fed’s continued efforts. The market “knows” (and we assume so does the Fed) that “something will break” as a result of […]
October 8, 2022 | Trading Desk Notes For October 8, 2022
WTI crude oil soared ~$17 (22%) from last week’s low to this week’s high/close Front-month WTI futures closed ~$76 on Monday, September 26 – the lowest level since the first week of January. The damage to the Nordstream pipelines was discovered that day. Since then, prices have rallied sharply and closed this week at ~$93.30. The […]
October 1, 2022 | Trading Desk Notes For October 1, 2022
“The most important thing” for the financial markets the past few months, and especially for the last three weeks, has been the realization that the Fed is DETERMINED to get inflation down and “break the back” of future inflation expectations. Credit markets US bond yields YTD have had the steepest rise ever – with 2/3 of the move […]
September 24, 2022 | Trading Desk Notes for September 24, 2022
Is this as bad as it gets, or is the “worst” yet to come? In last week’s TD Notes, I declared, “Expectations of more Fed tightening is the “most important thing” for financial markets.” That was after risk assets took a swan dive following Tuesday’s CPI data. This week, the swan dive continued, especially after the […]
September 17, 2022 | Trading Desk Notes For September 17, 2022
Expectations of more Fed tightening is the “most important thing” for financial markets Markets reacted dramatically to the “stronger than expected” CPI report Tuesday morning. The DJIA futures dropped ~800 points in five minutes and was down >1,650 points later in the day. Friday’s low was ~2,150 points below Tuesday’s high. It was the biggest weekly loss since the […]
September 10, 2022 | Trading Desk Notes For September 9, 2022
Trading against sentiment extremes One of my favourite trading questions is, “How much is already in the price?” Market sentiment has recently become very negative, and with good reason; the “news” has been bad, and markets have priced in the bad news with higher interest rates, lower stocks and commodities and a US Dollar at 20-year highs. I think markets have […]
September 3, 2022 | Trading Desk Notes For September 3, 2022
Demand destruction requires higher for longer. The DJI is down >2,000 points since Powell made it “perfectly clear” in his August 26 Jackson Hole speech that the Fed is determined to do “whatever it takes” to bring inflation back down to 2%, regardless of the combination of factors which caused it to rise substantially above the Fed’s target. The […]
August 27, 2022 | Trading Desk Notes For August 27, 2022
Powell was more hawkish than expected – stocks, bonds, and gold tumble – USDX hits a new 20-year high Powell’s Jackson Hole speech on August 26 was much more hawkish than markets had expected. He said that the Fed is determined to get inflation back to its 2% target and that “restoring price stability will likely require maintaining a […]
August 20, 2022 | Trading Desk Notes For August 20, 2022
Will markets get “back to business” with a BANG after Labor Day, Sept 5th? We are in the “silly summer season,” and the “adults” are away. Trading volumes are light, but my veteran trader’s intuition tells me that markets may get “back to business” with a BANG once we get past Labor Day. September will bring “winter” into focus – especially concerning soaring […]
August 13, 2022 | Trading Desk Notes For August 13, 2022
Global stock markets continue the rally from the June lows, S+P up ~18%, NAZ up 23%, AAPL up 33% The S+P, DJI and VTI (Vanguard total stock market ETF) have recovered >50% of their decline from the January All-Time Highs to the 20-month lows made around the mid-June FOMC meeting – when the Fed raised […]
August 6, 2022 | Trading Desk Notes For August 6, 2022
Markets that don’t fall on “bad” news probably go higher My macro bias over the past few weeks has been that inflation would stay higher for longer than markets were pricing. I thought stock indices were in a bear market rally, based on the notion that Peak Fed had come and gone with the June […]
July 31, 2022 | Trading Desk Notes For July 30, 2022
Markets assume “Peak Fed Tightening” has come and gone – stocks, bonds, commodities and gold rally, the US Dollar weakens The Fed raised s/t rates by 75bps Wednesday. The initial market reaction was muted, but during Powell’s press conference, markets decided the Fed would be less aggressive than previously thought – stocks and bonds rallied hard, […]
July 24, 2022 | Trading Desk Notes For July 23, 2022
Is anything going right in Europe? Germany reported a monthly trade deficit in May for the first time since 1991 (following the reunification of East and West Germany) as a direct result of soaring imported energy costs. Energy shortages across the Eurozone may result in rationing later this year, exacerbating the current economic slowdown. […]
July 16, 2022 | Trading Desk Notes For July 16, 2022
“Don’t fight the Fed,” they say, but what will the Fed do? The markets understand that the Fed is determined to cool inflation by raising interest rates another ~125bps between now and December. But then what? The forward markets see the Fed beginning to cut interest rates in early 2023, likely in response to recessionary […]
July 10, 2022 | Trading Desk Notes For July 9, 2022
Fossil fuels – the Last Man Standing takes a tumble – but bounces back – a bit Front-month NYMEX WTI futures dropped as much as $19 from last week’s high to this week’s low – but bounced back ~$10 by Friday’s close. The high/low range on Tuesday (after the long weekend) was $14, with the price […]
July 2, 2022 | Trading Desk Notes For July 2, 2022
Market worries switch from “relentlessly rising inflation” to “looming recession” The Fed raised s/t rates by 75bps two weeks ago and warned that they will continue to raise rates in an “unconditional” manner until inflation cries “Uncle.” But interest rates have DROPPED since then as the market focuses on the looming recession rather than on relentless inflation. Credit markets March […]
June 25, 2022 | Trading Desk Notes For June 25, 2022
Inflation fears morph into recession fears; stocks and bonds rally, commodities and the USD weaken The Fed hiked s/t interest rates by 75bps on Wednesday of last week, with Powell using the term “unconditional” to describe the strength of their efforts to reduce inflation. The US Treasury 10-year bond yield touched a 12-year high of 3.5% that day and began […]
June 18, 2022 | Trading Desk Notes For June 18, 2022
Central Banks dominated the markets this week The Fed raised rates by 75bps and forecasts much more to come. The Swiss National Bank surprised markets with a 50bps raise (to minus 25bps), the BoE raised 25bps, the ECB indicated that they would likely raise by more than 25bps in July, and the BoJ stood pat. […]
June 11, 2022 | Trading Desk Notes For June 11, 2022
Markets expect Central Banks to become more aggressive – stocks tumble, while interest rates and the US Dollar surge higher The ECB finally “grasped the nettle” on Thursday, but their announced intentions (to raise interest rates by 0.25% next month and to also stop buying bonds) were tepid relative to soaring inflation, so the Euro fell sharply Vs. […]
May 28, 2022 | Trading Desk Notes For May 28, 2022
S+P futures: biggest weekly rally since April 2020, after falling for seven consecutive weeks S+P futures rallied 10% from last Friday’s lows to this Friday’s close, DJIA futures were up 8% (2,650 points), NAZ 100 futures rallied 11%, and Russell small-cap futures rose 10%. TSE futures were up 4%. At last Friday’s lows, S+P futures […]
May 21, 2022 | Trading Desk Notes For May 21, 2022
Stock market sentiment is extremely negative – with good reason! The leading stock market indices have closed lower for seven consecutive weeks (the DJIA is down for eight straight weeks – its worst in 90 years.) The S+P was briefly down >20% from ATH on Friday before rallying into the close. Virtually all sectors, save […]
May 14, 2022 | Trading Desk Notes For May 14, 2022
Stock indices down, US Dollar up for six consecutive weeks Looming American exceptionalism in monetary tightening (a determination to reign in no-longer-transitory inflation by discouraging demand) has magnified negative stock market sentiment (fear of inflation, then recession). In contrast, the US Dollar has surged higher against virtually all other currencies as capital flows to America […]