SPX - 3UP & 3DN - FookinFedBalSheet
Updated
BLUF: 3-UP & 3-DN - Sideways - WhoFookinKnows? Depends on the Fed's Reduction template...Let's Watch the ShitShow...Grab a Cold Beer!
FED Balance Sheet (Total Assets)
fred.stlouisfed.org/series/WALCL...
FED Powell...The central bank currently expects to conduct repo operations "at least through April," when the income tax return season is likely to drain some bank reserves. The Fed is also currently projecting reserves will reach the desired "ample" level sometime in the second quarter, and reserves will be $1.5 trillion at the very least going forward. Officials plan on reducing the pace of purchases as they approach that point and transition to a smaller purchase program, Powell said.
"We're committed to completing the transition to our longer-run ample reserves regime smoothly and predictably," Powell said. "Of course, we will continue to closely monitor conditions in money markets and we will adjust these plans as conditions warrant."
FED Balance Sheet (Total Assets)
fred.stlouisfed.org/series/WALCL...
FED Powell...The central bank currently expects to conduct repo operations "at least through April," when the income tax return season is likely to drain some bank reserves. The Fed is also currently projecting reserves will reach the desired "ample" level sometime in the second quarter, and reserves will be $1.5 trillion at the very least going forward. Officials plan on reducing the pace of purchases as they approach that point and transition to a smaller purchase program, Powell said.
"We're committed to completing the transition to our longer-run ample reserves regime smoothly and predictably," Powell said. "Of course, we will continue to closely monitor conditions in money markets and we will adjust these plans as conditions warrant."
Note
We can see it in the data…but I really think the world is shifting under us. There is a point to make about mean reversion: mean reversion works until it doesn’t. And much of what we do in investing now, we learned in the US on data from the second half of the 20th century. And in that time period the US market was a unique market. If you look at the history of markets over time, it was the most mean reverting, stable market of all time. And when you take the most mean-reverting, stable market of all time, all kinds of mean reversion are going to work for you.So my concern is that maybe we’re taking rules that were developed for the most mean-reverting, stable market of all time and trying to apply them in a new world order where markets might be reverting, but we don’t know to what. And so, I have a concern with any kind of tilted approach where you’re tilting based on past data. I’m not sure the payoff is there. Maybe twenty years ago, my answer would have been different. For me, 2008 was the dividing line where I think there was a structural break in the global markets. I am less and less trusting of mean reversion on a daily basis.
-NYU Professor Aswath Damodaran
aswathdamodaran.blogspot.com
Note
The decade to comeIt has been said that those who forget the past are destined to relive it, and that is one reason why we pore over historical track records, hoping to get insight for the future. But it has also been said that army generals who prepare too intensely to fight the last war will lose the next one, suggesting that reading too much into history can be dangerous. To me the biggest lesson of the last decade is to keep an open mind and to not take conventional wisdom as a given. I don’t know what the next decade will bring us, but I can guarantee you that it will not look like the last one or any of the prior ones, So, strap on your seat belts and get ready! It’s going to be a wild ride!
aswathdamodaran.blogspot.com/2020/01/data-update-2-for-2020-retrospective-on.html
Note
Favorite note so far in my morning READs...The biggest buyer for U.S. equities this past decade has been corporate buybacks, but the insiders are also engaged in markets. Corporate executives have taken an opposite position to market’s achieving record levels of late. Recent insider transaction data suggests that there were five insider sales for every one buy, according to data compiled by Washington Service. That’s poised to be the highest since early 2017. Insiders have been stepping up the pace of sales to-date, taking advantage of the S&P 500’s continued rally since Q4 2019.
A similar spike in insider sales coincided with the market’s peak in January 2018 that gave way to a sell-off later in the year.
“In the broad-brush sense, more sellers than buyers is somewhat related to valuations,” Peter Jankovskis, Oakbrook Investments LLC’s co-chief investment officer, said by phone. “It does provide a note of caution as we continue to see the market surging higher and higher.”
Note
Note...Going forward, investors will need to be mindful of analysts’ revisions with respect to the Q1 2020 EPS estimates. Should COVID-19 prove to elongate the period of economic suppression in China, we might witness analysts cut their Q1 EPS estimates at the beginning of March, which may also prove to halt the equity market rally temporarily. The unknowns surrounding a resumption of normal Chinese business and transportation operations remains a wild card in the 2020 economic and EPS forecasts. It continues to bear monitoring as the fluidity of the situation moves from one week to the next. At present, this remains the risk for market downside.
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