Another algorithmic 'FED induced' rally as we brace for the beginning of earnings…Yesterday’s expected slight bounce off the Nasdaq short term oversold condition was enhanced when the FED released last month’s FOMC mins….what could they possibly say – that traders did not already know? I mean – by now – those minutes were old news – the mkt got to react to them on FOMC rate decision day back in March – when the mkt assumed Janet was a bit more hawkish than anticipated – remember that?
FLASHBACK: The mkt sold off as traders threw a temper tantrum – rate rise? “How could she?” “What are they thinking?”
To recap THAT day we learned that: The Fed cut its monthly asset purchases by another $10 billion, to $55 billion, and dropped its explicit "6.5 percent" unemployment rate threshold, choosing instead to consider a more qualitative form of forward guidance. However, what some thought was a “surprising move”, she and her band of merry men quickened (in the mkts mind) the expected pace of its rate hike cycle.
If you recall – she spoke for an hour and said a lot – but traders (not long term asset managers) focused on this one sentence:
“The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.”
Considerable time? What did she mean? And then it hit the fan….You would think this was new news….HF Traders (not investors) and their ‘smart algo’s’ went into a tizzy – on her definition –
“Something on the order of six months, or that type of thing….”
Many of us applauded her honesty finally hopeful that the madness would stop and maybe force those clowns in DC to actually do something to really stimulate the economy - but alas it is a mid-term election year….the last thing those Bozo’s wanted was a mkt in distress and since they have shirked their responsibility thus far – the pressure fell back on the FED's lap - we saw different FED President's and Yellen re-consider the words and stance to soothe the mkt…..….the mkt stabilized and even rallied as traders celebrated her ‘change of heart’…..the mkt went to new highs testing the next century mark – S&P 1900.
Fast forward to now – mkt was taking a breather – as it digested the latest move up and the expected softer earnings season as prices became a bit more disconnected to reality. Concerns about housing, durable goods, capacity utilization, job creation, PMI, CPI, PPI, and all the other acronyms you can think of gave traders a reason to pause and allow the mkt to adjust –
Growth names – that have really outperformed – sold off, money went into the value names and on the sidelines awaiting a chance to get back in. Nasdaq and the Russell gave back about 7% while the Dow and S&P gave up less than 2.5%....All of this is healthy…This was not that ‘sell off’ that some analysts are calling for....
Yes – some individual highfliers went into correction mode – but they should have – they were so overdone on the upside but for the most part - the broader mkt held in.
Then yesterday - at 2 pm - when the mins were released - the HFT's unleashed their 'smart algo's' (or dumb algo's as it depends on your point of view) as computers read and interpreted the language in the minutes...But really what was different? Nothing !
Is it new news that the FED is concerned over persistently low levels of inflation - No. Is it new news that the recovery takes 2 steps forward and 1 step back - No, Is it new news that global central bankers are getting a bit more concerned and launching their own stimulus programs? - No. Aren't we still stimulating the economy at $55 bil/mo? - Yes Aren't rates still artificially low? - Yes. Does anyone really expect that after all this - the FED will ignore signs of a real marked slowdown? - No. Did the minutes suggest that Yellen will up the ante? - No. So how come the dramatic move ?
Here's the rub - when you speak to customers - I mean human customers - they scratch their head and ask - What changed? But the world as we know it is no longer controlled by humans.....we have turned over the controls to a bunch of computers that look to 'outsmart' each other. Automated, computerized algorithmic 'traders' that do not have the ability to interpret language or tone or meaning and apparently "think" that the FED will go into overdrive...and BOOM...They rush to cover shorts and push the mkt back towards the highs - and when we pierced resistance at 1860 - then the momo (momentum) guys kick it into high gear - hoping to drag the real smart money in. Well in fact they do....except the smart money is selling up here - not buying...... Longer term asset managers - take advantage of the opportunity created by the noise.
It is difficult to see much more of a bounce from here...1874 on the S&P takes us back to the resistance created in late Feb/early March. My sense is that the underlying trend during this earnings season is still a bit lower.....Not panic - just a consolidation...the Nasdaq and Russell moves yesterday screamed of panicky short covering - especially in the sectors that have been clobbered....Nasdaq remains below its 50 DMA at 4200 - and this will prove to be a pivotal point.
Look where we are.....essentially stuck in the middle - again. Well within the 1840/1880 price range.... Is there really any fundamental reason for the mkt to push up and thru right now? Any pressure to the downside is met with real support - so it is a faceoff between the bulls and the bears. The 'trendless' action - mkt up 1.2% ytd....speaks volumes about the confusion that investors are feeling. Each time we attempt to move higher - it is on less volume - suggesting that this may be the top for now. A re-test of the most recent lows - 1840 ish....will prove whether or not it's all good.....but a breach at this level will certainly cause more downside action....
This week we will learn more about the FED's actions to 'wean' Wall St off of being so dependent. Regulators are about to release tougher limits on some types of debt funding and credit derivatives. (Think GS, JPM, MS) The largest US banks will need to raise capital levels by some $70 bil in order to be compliant With banks starting to report tomorrow - what we hear? We are already expecting weaker numbers - so will a 'beat' cause a buying spree?
US futures are flat right now....Eco data today includes Init Jobless Claims of 318k and Cont claims of 2.83 mil. The only other thing is another speech by Charles Evans - Fed Pres (Chicago) at 11:50.
International mkts were mixed. China’s imports and exports both contracted in March, with trade data falling well short of forecasts and rattling nerves over the state of the world’s second-biggest economy. Chinese Premier Li Keqiang has all but ruled out major stimulus to fight short-term dips in growth in that country - dashing hopes that the government would aggressively combat a slowdown in activity. He stressed on Thursday that ' job creation' was the main policy priority... " Japan flat , Hong Kong +1.5%, ASX +0.31%. and China +1.33%.
In Europe - mkts are mixed....the BoE is holding rates steady at a record low of 0.5%....no change....and continued asset purchases totaling some $630 bil. Greece - remember her? - getting ready to launch its 1st bond sale in 4 yrs....signaling a new confidence in that country. FTSE +0.34%, CAC 40 +0.13%, DAX +0.38%, Eurostoxx -0.1% , Spain -0.62% and Italy -0.20%
You will need: Campanelle pasta (Italian for “little bells”), Mascarpone cheese (room temp), zest & juice of a Lemon, s&p, olive oil, minced garlic, diced onion, chopped sun-dried tomatoes, 1 bag baby spinach, toasted bread crumbs and of course fresh grated Parmegiana or Pecornio Romano Cheese.
Begin by combining the zest, lemon juice, mascarpone, and s&p in a bowl, whisk to combine.
Bring a pot of salted water to boil – add pasta.
While this is happening (you have like 8 mins) heat the oil in a skillet, add the garlic and diced onion and cook until fragrant. Turn off heat and set aside.
Cook the pasta until al dente, like 8 mins….do not let it get soft and mushy. Strain reserving a mugful of the pasta water.
Return the pasta to the pot, and set over medium heat. Stir in the garlic and oil – toss well. Now add the mascarpone and lemon mixture, sun-dried tomatoes, and spinach. Add back about ¼ c of the pasta water and toss together until the spinach has wilted and everything is piping hot, adding a little additional pasta water if needed.
Serve immediately in warmed bowls topping each bowl with grated cheese and some toasted breadcrumbs – do not overdo.
Buon Appetito.
FLASHBACK: The mkt sold off as traders threw a temper tantrum – rate rise? “How could she?” “What are they thinking?”
To recap THAT day we learned that: The Fed cut its monthly asset purchases by another $10 billion, to $55 billion, and dropped its explicit "6.5 percent" unemployment rate threshold, choosing instead to consider a more qualitative form of forward guidance. However, what some thought was a “surprising move”, she and her band of merry men quickened (in the mkts mind) the expected pace of its rate hike cycle.
If you recall – she spoke for an hour and said a lot – but traders (not long term asset managers) focused on this one sentence:
“The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.”
Considerable time? What did she mean? And then it hit the fan….You would think this was new news….HF Traders (not investors) and their ‘smart algo’s’ went into a tizzy – on her definition –
“Something on the order of six months, or that type of thing….”
Many of us applauded her honesty finally hopeful that the madness would stop and maybe force those clowns in DC to actually do something to really stimulate the economy - but alas it is a mid-term election year….the last thing those Bozo’s wanted was a mkt in distress and since they have shirked their responsibility thus far – the pressure fell back on the FED's lap - we saw different FED President's and Yellen re-consider the words and stance to soothe the mkt…..….the mkt stabilized and even rallied as traders celebrated her ‘change of heart’…..the mkt went to new highs testing the next century mark – S&P 1900.
Fast forward to now – mkt was taking a breather – as it digested the latest move up and the expected softer earnings season as prices became a bit more disconnected to reality. Concerns about housing, durable goods, capacity utilization, job creation, PMI, CPI, PPI, and all the other acronyms you can think of gave traders a reason to pause and allow the mkt to adjust –
Growth names – that have really outperformed – sold off, money went into the value names and on the sidelines awaiting a chance to get back in. Nasdaq and the Russell gave back about 7% while the Dow and S&P gave up less than 2.5%....All of this is healthy…This was not that ‘sell off’ that some analysts are calling for....
Yes – some individual highfliers went into correction mode – but they should have – they were so overdone on the upside but for the most part - the broader mkt held in.
Then yesterday - at 2 pm - when the mins were released - the HFT's unleashed their 'smart algo's' (or dumb algo's as it depends on your point of view) as computers read and interpreted the language in the minutes...But really what was different? Nothing !
Is it new news that the FED is concerned over persistently low levels of inflation - No. Is it new news that the recovery takes 2 steps forward and 1 step back - No, Is it new news that global central bankers are getting a bit more concerned and launching their own stimulus programs? - No. Aren't we still stimulating the economy at $55 bil/mo? - Yes Aren't rates still artificially low? - Yes. Does anyone really expect that after all this - the FED will ignore signs of a real marked slowdown? - No. Did the minutes suggest that Yellen will up the ante? - No. So how come the dramatic move ?
Here's the rub - when you speak to customers - I mean human customers - they scratch their head and ask - What changed? But the world as we know it is no longer controlled by humans.....we have turned over the controls to a bunch of computers that look to 'outsmart' each other. Automated, computerized algorithmic 'traders' that do not have the ability to interpret language or tone or meaning and apparently "think" that the FED will go into overdrive...and BOOM...They rush to cover shorts and push the mkt back towards the highs - and when we pierced resistance at 1860 - then the momo (momentum) guys kick it into high gear - hoping to drag the real smart money in. Well in fact they do....except the smart money is selling up here - not buying...... Longer term asset managers - take advantage of the opportunity created by the noise.
It is difficult to see much more of a bounce from here...1874 on the S&P takes us back to the resistance created in late Feb/early March. My sense is that the underlying trend during this earnings season is still a bit lower.....Not panic - just a consolidation...the Nasdaq and Russell moves yesterday screamed of panicky short covering - especially in the sectors that have been clobbered....Nasdaq remains below its 50 DMA at 4200 - and this will prove to be a pivotal point.
Look where we are.....essentially stuck in the middle - again. Well within the 1840/1880 price range.... Is there really any fundamental reason for the mkt to push up and thru right now? Any pressure to the downside is met with real support - so it is a faceoff between the bulls and the bears. The 'trendless' action - mkt up 1.2% ytd....speaks volumes about the confusion that investors are feeling. Each time we attempt to move higher - it is on less volume - suggesting that this may be the top for now. A re-test of the most recent lows - 1840 ish....will prove whether or not it's all good.....but a breach at this level will certainly cause more downside action....
This week we will learn more about the FED's actions to 'wean' Wall St off of being so dependent. Regulators are about to release tougher limits on some types of debt funding and credit derivatives. (Think GS, JPM, MS) The largest US banks will need to raise capital levels by some $70 bil in order to be compliant With banks starting to report tomorrow - what we hear? We are already expecting weaker numbers - so will a 'beat' cause a buying spree?
US futures are flat right now....Eco data today includes Init Jobless Claims of 318k and Cont claims of 2.83 mil. The only other thing is another speech by Charles Evans - Fed Pres (Chicago) at 11:50.
International mkts were mixed. China’s imports and exports both contracted in March, with trade data falling well short of forecasts and rattling nerves over the state of the world’s second-biggest economy. Chinese Premier Li Keqiang has all but ruled out major stimulus to fight short-term dips in growth in that country - dashing hopes that the government would aggressively combat a slowdown in activity. He stressed on Thursday that ' job creation' was the main policy priority... " Japan flat , Hong Kong +1.5%, ASX +0.31%. and China +1.33%.
In Europe - mkts are mixed....the BoE is holding rates steady at a record low of 0.5%....no change....and continued asset purchases totaling some $630 bil. Greece - remember her? - getting ready to launch its 1st bond sale in 4 yrs....signaling a new confidence in that country. FTSE +0.34%, CAC 40 +0.13%, DAX +0.38%, Eurostoxx -0.1% , Spain -0.62% and Italy -0.20%
Campanelle w/Spinach, Sun Dried Tomatoes & Marscapone Cheese
This is a simple 20 min recipe. It uses mascarpone cheese….for those of you who do not know what that is – it is a soft creamy cheese – it has a tingle of sweetness and is used in many Italian deserts. But I have to tell you – it is very versatile and can be used in a number of ways in pasta dishes….and here is one for you…You will need: Campanelle pasta (Italian for “little bells”), Mascarpone cheese (room temp), zest & juice of a Lemon, s&p, olive oil, minced garlic, diced onion, chopped sun-dried tomatoes, 1 bag baby spinach, toasted bread crumbs and of course fresh grated Parmegiana or Pecornio Romano Cheese.
Begin by combining the zest, lemon juice, mascarpone, and s&p in a bowl, whisk to combine.
Bring a pot of salted water to boil – add pasta.
While this is happening (you have like 8 mins) heat the oil in a skillet, add the garlic and diced onion and cook until fragrant. Turn off heat and set aside.
Cook the pasta until al dente, like 8 mins….do not let it get soft and mushy. Strain reserving a mugful of the pasta water.
Return the pasta to the pot, and set over medium heat. Stir in the garlic and oil – toss well. Now add the mascarpone and lemon mixture, sun-dried tomatoes, and spinach. Add back about ¼ c of the pasta water and toss together until the spinach has wilted and everything is piping hot, adding a little additional pasta water if needed.
Serve immediately in warmed bowls topping each bowl with grated cheese and some toasted breadcrumbs – do not overdo.
Buon Appetito.
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