Wkly Market Round-Up thru Aug 17th 2018; Stress & Ambien

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Aug 182018
 

Hey Folks, I guess when you combine lack of sleep with stress and throw in some Ambien and what do you get? You may think an erratic Rat Brain Trader, and perhaps you may be right. But you also get an erratic Elon Musk tweet that has rocked his company’s stock and put him into some difficult times…I believe longer term it will all work out but for now, trading TSLA has been very profitable for our members that have followed the momentum…and now, on to other interesting tidbits;

• The US Trade war shows the strength and dominance of the US over other countries when it comes to economic power…about 60% of the World’s Capitalization is represented by 18 major countries and in each, the US is in the top 3 trading partners for those countries…in comparison, the US is an island onto itself with US imports from any one country totaling no more than 5.% of trade…in general, in order to grow at a faster clip, the World needs the American Economy more than the US needs the rest of the World…but things never endure…
• FANG Stocks see the dentist and get trimmed a bit…Other than AMZN, exposure to the other FANG stocks declined in the 2nd Qtr by 50 of the largest Hedge Funds – FB and NFLX by 1.2 Billion each and GOOGL by 1 Billion…However, overall Tech Sector grew from these same Hedge Funds by over 8 Billion…more rotation is going on here in a profit taking mode…
• China has issues – none of Trump’s Trade Tariff’s origins…Baby Bust – 1 Child Policy for over 35 years has now caused a future problem of not enough workers to support an aging population…Bank Bust – 13.2% YoY growth in loan growth…now China must manage a balancing act of too much debt (270% of GDP) while managing a sharp reduction in trade war issues and fiscal policy stimulation…
• Crypto Currencies off over 70% from highs in late 2017…but Wall Street continues to push trading vehicles for investors to part with their cash for virtual currencies…the SEC has delayed until Sept 30th a decision on a proposed Bitcoin ETF…if approved look for Bitcoin to rally a good deal…

 

Don’t Be A Rat Brain Trader — Trade Smart !!
hpb

Wkly Market Round-Up thru Aug 10th 2018; When Foggy – Drive Slowly

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Aug 112018
 

Hey everyone, this week’s price action is all about caution, even though we move up towards our all time highs in the S&P.

• Hyman Minsky postulates (American Economists who died in 1996) that over prolonged period of prosperity, investors take on more and more risk until lending exceeds what borrower can pay of causing the markets to fall…which is contrary to the prevailing efficient market hypothesis which says markets are always efficiently priced and that humans are mostly rational…”Minsky Moment” means humans can and do act irrationally in times of extreme stress causing moments or periods of panic….
• Summer months always seem to bring on some market turmoil; for example, in July 1997 the devaluation of the Thai Baht caused the lead-in to the Asian debt crisis; August 1998 we saw the Russian Ruble devaluation and then in August of 2015 we saw China devalue the Yuan over 2.5% and now we are seeing in August of 2018 the machinations in the Turkish markets with their Lira…it has fallen over 23% for the week…at play were large European Banks in Spain, Italy and France that have over 100 Billion of loans across Turkey’s Banks…we also saw most Emerging markets fall on this news…
• Peak Earnings – S&P close to all time highs made this past January…and while the price level is close, the forward PE back in January was at 18.6 while now it is around 16.7…Stronger Earnings have been growing faster than the increase in prices…so far, of the 458 companies reporting earnings we are seeing a growth rate of 24.6% which puts the S&P on track for its 3rd consecutive Qtr. of double digit gains…

Here is my take on current market action with this week’s Weekly Round-up.

 

Don’t Be A Rat Brain Trader — Trade Smart !!
hpb

Wkly Market Round-Up thru Aug 3rd 2018; Tug-O-War continues

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Aug 042018
 

Hey folks, the Trade Tariffs vs Corp Earnings Growth battle continues. For the past 5 weeks we’ve seen both the S&P and the DOW post consecutive weekly gains. At least for now the DOW is shrugging off any talk of Trade Tariff escalation but this could all quickly end in the coming months should the Trump Administration not back down and China does the same. Volatility finished the week with a VIX reading of 11.64 which I consider very low given the inherent risks currently facing Global Markets. Get my take on the markets in this week’s Weekly Round-Up.

 

Don’t Be A Rat Brain Trader — Trade Smart !!
hpb

Wkly Market Round-Up Thru July 27th 2018; Facebook implodes

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Jul 282018
 

Hey Folks, I hope your weekend is going great for you.

• FB gives up the most market cap of any company in one day of over $119 Billion…however the ripple effect thru the rest of the markets was relatively small…We saw the US GDP come in at 4.1% giving us the strongest GDP print on over 4 years…we also saw Trade Tensions ease with Europe as Trump and Juncker agreed to work on a “no tariff” trade deal…of course the markets, especially the DOW moved higher on the news..
• We’ve seen of the FANG Stocks, GOOGL, MSFT and AMZN beat earnings while NFLX, FB and TWTR got beat up by earnings…next up will be AAPL on Tuesday…
• The Options markets are flashing more of a warning sign with elevated skew levels in OTM Put Options on the SPX…we’re also seeing it across most indexes and money seeks possible hedge safety net as we go into the second half of 2018…

Get my current take on the markets in this week’s Weekly Round-Up;

 

Don’t be a Rat Brain Trader — Trade Smart !!
hpb

Wkly Market Round-Up thru July 20th 2018; Earnings vs Tariffs

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Jul 212018
 

Hey Folks, the shiny object the markets are focusing on this past week seems to jump between Trade Tariffs and Q2 Corporate Earnings. And on any given day, one jumps in front of the other in terms of focus.

• The coming Q2 Corp Earnings vs China Trade Tariffs are still in play…Trump has now threatened over 500B of import taxes on all Chinese goods coming into to the US…meanwhile EU visits White House this week to present a trade plan for Autos…

• Everyone is focusing on the 2s over 10s (the Yield Spread) and the possible inversion signaling higher likelihood of a US Recession…this time could be a bit different due to the “over 9.2 Trillion” in global negative Interest Rates currently in play…Feds starting hiking rates 7 times starting in Dec 2015 to its current rate of 1.75% to 2.00%…and over an 80% probability of another rate hike this coming Sept…markets only forecast about a sub 50% shot at a hike in Dec…

• Wage Growth in the US has been growing very slowly but we could begin to see a spike in Growth and hence, more pressure to raise IR at a quicker pace…

• Whether this bull market remains alive or not will be greatly reinforced if the S&P makes new all time highs or the high has been made this past January 2018…Since the mid-1940s it has taken, on average about 5 months for the S&P to make new all time highs when in a bull market…

• So the war is on; Earnings vs Tariffs! Longer term, Corp Earnings and growth will outweigh any near term view of Trade Tariffs, but for current price action it will clearly bring more volatility to the markets Get my take on current market price action below in this week’s Weekly Round-Up;

 

Don’t Be A Rat Brain Trader — Trade Smart !!
hpb

Wkly Market Round-Up thru July 13th 2018; Joker’s Wild!

 Weekly Updates  Comments Off on Wkly Market Round-Up thru July 13th 2018; Joker’s Wild!
Jul 142018
 

Hey Everyone, I hope your weekend is going well for you.

Joker’s Wild is how I feel the current markets are for most traders. Whose the Joker? Trump of course and his tweets can take a bullish day and quickly turn it into a very bearish day; or vice versa! The markets are in a reactionary mode to almost all of his tweets as it relates to trade tariffs. The markets affected by his Tweets are most all sectors and the Energy Complex. We’ve seen Oil make wide swings both to the upside and to the downside, more so than I’ve seen in over a decade. Now that we know the Joker’s in the card deck, how do we play it? Check out my current take on this week’s Weekly Round-Up in the video.

 

Don’t Be A Rat Brain Trader — Trade Smart !!
hpb