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Macroeconomics

Seasonal weakness has likely arrived as MACD makes bearish crossSeasonal investors who follow the "Stock Trader's Almanac" approach to investing use June's first downward cross on the MACD indicator as their signal to exit the market until October. We got that all-important signal this week, which suggests that we have now entered the period of seasonal weakness. My experience is that there's money to be made by investing in July, August, and September, but it takes a different mindset, because the dips are a lot bigger than they are the rest of the year, so you have to wait a little longer before buying dips. I think we'll see some mid-month doldrums here in June, as coronavirus case counts continue to rise. Arizona is facing a crisis because it's out of ventilators and ICU beds, and Twin Cities, MN and Dallas, TX are on the verge of a similar crisis. LA County expects to run out of beds in 2-4 weeks. The public pressure is all toward reopening, but I suspect that some of the big liberal cities will actually tighten distancing rules this month to slow the growth of new cases. A bigger problem for the stock market is that we're probably headed toward some kind of reckoning for debt. Deferment periods have lulled us all into a false sense of security, but those deferments are now ending, and we're seeing rising numbers of defaults, layoffs, and bankruptcies. I wouldn't be surprised to see a housing market crash or a weakening of the jobs recovery in the coming months. Unfortunately I can't guess when it might hit. In early July we will probably see a rally, as Congress considers another stimulus bill, movie theaters look to reopen, and the first vaccine human trials get started. We could see more volatility in August as the first trial results come in. There's probably about a 75% chance that one of the vaccine candidates passes in human trials, in which case the market could rally very strongly into the end of the year. The next two years will then be a period of seasonal weakness, as the first couple years of a presidential term usually are. The market will also be reckoning with the lingering effects of high unemployment and a loss of consumer confidence and consumer demand.
AMEX:SPY
by ChristopherCarrollSmith
PETER SCHIFF VS JEFF SNIDER!THIS POST WILL HELP YOU UNDERSTAND THE COMPETING VIEW POINTS ON THE FUTURE PERFORMANCE OF THE U.S. DOLLAR RELATIVE TO OTHER CURRENCIES! JEFF SNIDER'S POSITION ON THE DOLLAR: THE U.S. DOLLAR IS STRONG BECAUSE OF A SHORTAGE OF DOLLARS WORLDWIDE TO CONDUCT GLOBAL TRADE IN, DUE TO TO FED'S INABILITY TO TRULY SATISFY DEMAND FOR U$Ds, AND WILL CONTINUE TO STRENGTHEN AS LONG AS FOREIGN CURRENCIES ARE SOLD TO BUY U$Ds. PETER SCHIFF'S POSITION ON THE DOLLAR: THE U.S. DOLLAR IS STRONG BECAUSE OF AN IRRATIONAL FAITH IN THE U.S. ECONOMY BY FOREIGNERS AND THE WILLINGNESS OF PRODUCTIVE ECONOMIES WORLDWIDE TO USE AND ACCEPT PRINTED U.S. DOLLARS IN GLOBAL TRADE, SUBSIDIZING THE CONSUMPTION AND TRADE DEFICIT OF THE U.S. JEFF SNIDER'S POSITION ON U.S. TREASURIES: THE U.S. GOVERNMENT BOND MARKET HAS BEEN BID HIGHER FOR DECADES AS U.S. TREASURIES PROVIDE THE SAFEST SOURCE OF U$Ds AND ARE THE MOST ACCEPTED FORM OF COLLATERAL FOR U$D LEVERAGE. IF U$D LIQUIDITY BECOMES CONSTRAINED ENOUGH WORLDWIDE, A SELL-OFF IN THE GLOBAL U.S. TREASURY MARKET CAN OCCUR AS AS THEY ARE SOLD FOR THE IMMEDIATELY NEEDED U$Ds, RAISING INTEREST RATES THROUGHOUT THE FINANCIAL SYSTEM AND THE ECONOMY. PETER SCHFF'S POSITION ON U.S. TREASURIES: THE FEDERAL RESERVE'S ARTIFICIAL SUPPRESSION OF INTEREST RATES SINCE THE 1990's THROUGH QE, COUPLED WITH THE USE OF U$Ds IN GLOBAL TRADE AND THE IRRATIONAL FAITH BY FOREIGNERS THAT THE FEDERAL RESERVE COULD SHRINK ITS BALANCE SHEET AND NORMALIZE INTEREST RATES HAS LED TO FOREIGN CAPITAL BIDDING UP THE PRICE OF U.S. GOVERNMENT BONDS. ONCE THAT FAITH IN THE DOLLAR'S SCARCITY IS DIMINISHED AND PRODUCTIVE ECONOMIES WORLDWIDE REFUSE TO HOLD/ACCEPT U$Ds AND SUBSIDIZE AMERICAN CONSUMPTION, U.S. TREASURIES WILL BE SOLD-OFF, RAISING INTEREST RATES THROUGHOUT THE FINANCIAL SYSTEM AND THE ECONOMY. JEFF SNIDER'S VIEW ON THE FUTURE OF THE DOLLAR: AS LONG AS THE FEDERAL RESERVE FAILS TO ADDRESS THE COMPLEX NEED FOR U$Ds AND AS LONG AS THE U$D REMAINS THE WORLD RESERVE CURRENCY, DEMAND WILL OUTPACE SUPPLY, AND THE U$D WILL CONTINUE TO STRENGTHEN AGAINST OTHER CURRENCIES UNTIL A CULMINATION OF DEFAULTS AND RESTRUCTURING RAVAGES THE COUNTRIES WITH THE MOST SEVERE LACK OF U$Ds, SENDING THE U$D SKY HIGH, LEADING TO AN ABANDONMENT OF THE U$D AS WORLD RESERVE CURRENCY. PETER SCHIFF'S VIEW ON THE FUTURE OF THE DOLLAR: ONCE PRODUCTIVE COUNTRIES WORLDWIDE BECOME DISILLUSIONED WITH THE AMOUNT OF EASILY CREATED U$Ds CHASING PRICES, THE APPETITE TO ACCEPT THOSE U$Ds IN EXCHANGE FOR GOODS/SERVICES AT CURRENT PRICES WILL DIMINISH, ALONG WITH THE DESIRE TO HOLD U$Ds, U.S. ASSETS AND U.S. TREASURIES. ONCE U$Ds AND U$Ds OBTAINED THROUGH THE SALE OF U.S. ASSETS AND U.S. TREASURIES ARE SOLD FOR OTHER CURRENCIES, THE U$D WILL WEAKEN SIGNIFICANTLY, FURTHER INCREASING THE PRICES OF IMPORTED GOODS/SERVICES, SENDING THE U$D INTO AN INFLATIONARY SPIRAL, MARKING ITS END AS THE WORLD RESERVE CURRENCY. IN THIS CASE, IF THE FEDERAL RESERVE MONETIZED THE SOLD U.S. TREASURIES TO PREVENT INTEREST RATES FROM RISING, THIS COULD EASILY LEAD TO HYPERINFLATION. -IT IS IMPORTANT TO NOTE THAT THE 0% YIELD ON U.S. 10 YEAR GOVERNMENT BOND IS A DANGER ZONE IN EITHER CASE, AS FOREIGN ENTITIES WILL NO LONGER HAVE AN INCENTIVE TO HOLD U.S. TREASURIES, PREFERRING CASH, GOLD OR OTHER ASSETS OVER A NEGATIVE YIELDING BOND. -THE NOTES ON THE CHART OFFER CONTRIBUTING FACTORS AS TO WHY YIELDS BOTTOMED OR PEAKED AT VARIOUS POINTS DURING THIS BOND BULL MARKET.
TVC:US10YEducation
by UnknownUnicorn4195243
Weekly Preview: Good News Keep Coming!The market is coming back to its previous bullish trend, two proves of that: - Nasdaq is already in neutral territory YTD - Volatility is around 48%, well below its peaks - Some companies, specially American technology are regaining ground effectively sooner than expected which is also good news. The two pillars within this environment that are working are two: 1./ Central bank aid (this was expected to work immediately) Stimulus from central banks and governments has brought confidence to the market 2./ Covid-19 numbers Trend of better daily numbers of new cases are consolidating and some businesses are starting to reopen - Bearing in mind this, the market doesn’t react to an economy, it foresees what the economy will do and act base on that. Current Context: March was harmful, April is better with consolidation taking place. Even times are going better than expected with numbers improving faster than expected. Again, Nasdaq has already recovered those YTD loses and this is important because normally it brings the rest of indexes with it. First the DOJ, which represents more classic companies with high dividends, and after Europe. Then, short term facts are being positive too. 1. Gilead Sciences has reported successful treatment of Covid patients and can be a ray of hope. 2. American attitude, they are focused in reopening the economy and that creates big expectations. To finish, we´ll have some economic indicators with more government meetings that will still bring more confident to the market and strengthen this faster than expected recovery.
FX:NAS100Long
by PepeMafia