Posted on 03/03/2020 7:10:27 AM PST by L,TOWM
But - I want you to look at what is happening since the actual announcement: It ripped up (and a lot of cheerleaders on here who really don't know you know what from Shinola) starting singing "Happy Days are here again" - yet we are now down 3% from that rip up. Now - that doesn't mean we can't run up higher....but here is what is dangerous: 1) We are sitting right at the 200-day exponential moving average - and just moved back down below it; 2) As I explained to a poster yesterday (who was lamenting the selling of his portfolio on Friday) - the Vix long term futures for April and July went UP - and April was up big on massive volume. That means the ALGOS (more next paragraph) think this is not over. This is a dead cat bounce. The big money already figured in the rate hike - and it banking on the VIX being higher next month than what it is now. For the record - it is ALMOST ALWAYS a great investment to short the longterm vix. When the market is bullish - it is a 100% (almost) guaranteed profit to go longterm shorts on the VIX futures. But the Algos are going long.
And that brings me to my final point: ALGOs. Too many people on here fail to remember that 90%+ of all trading is done by computers today. The stock market floors are almost bare. It is not a situation where, yesterday, the average investor decided he wanted to get back in because stocks were cheap. It was purely the algos closing the shorts. Had investors REALLY thought stocks were cheap - it's time for another melt-up - you would see people piling on even now - 2 hours after the rate cut announcement. And I just looked - TNX at all-time lows. NOT GOOD. Anyone who thinks it is has a hole in their head (when the economy is supposed to be so healthy).
Remember -- in a healthy economy - the FED should not be needed to constantly pump tens of billions into the overnight repo market - and constantly save the markets from tanking. However - they have been doing this for months. They saved it in late January. They have stepped in in the middle of the night NUMEROUS occasions with $50 billion loans to the banks - otherwise, you would have woken up with a bank run. These are not things that go on during a great, financially stable, free-market economy.
All one has to do is be honest and ask themselves ONE question: Where would we be without ZERO FED intervention? No 10's - 100s of Billions from the PPT - no rate cuts - no repo markets saves - no stock buybacks. Where would the market be if hundreds of trillions of dollars had not been printed and put into the market? For a bunch of people who are supposed to be about free markets - that should be an honest question. And a scary one.
Trump has been correct in his assessment and his criticisms, but I am not sure why they acted so dramatically today.
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It brings the funds rate more in line with the yield curve.
https://stockcharts.com/freecharts/yieldcurve.php
I've also been long on /6J since the collapse. Go do some calculations there. ;-)
See 61
Well thanks for your opinion.
And for the record - I also went into GLD calls on Friday. I knew that Gold was falling only because a bunch of people were having to liquidate their gold and silver to avoid margin calls. I think that storm is over (gold crash). It bounced off the 50 day mov-avg and I think that’s the support. I will hang on to those calls and do very well
A quarter cut would have made more sense, but HALF just seems freakin desperate I dont think the market liked it
Now - in full transparency - I am currently down (as of right this minute) $6,150 in /VXV20 (October -VIX futures). But - I was down about $20K yesterday and I added to the position and put a stop loss in for about $30K. The long term volatilities are great until you get some crazy events like this. I currently have 29 short contracts - and if it continues to go down - I will do very well. I would like to see a mini bull rally for the rest of the week. My long term puts are for the 15 May and 19 Jun expiration dates. So - I think I will be OK.
I am a value investor, not a better.
Actually, it is that. Lending required borrowers. Lower rates entices borrowers.
But we import a HUGE % of what we as consumers buy and consumer spending is fully 2/3 of our economy.
The fed knows that there is risk to our economy from Covid-19 (panic, hysteria) likely through summer due to supply chain disruptions + fewer people "out & about spending" that will have a ripple effect short term.
The underlying fundamentals are solid, but we'll likely see a number of companies report lower financials in the next quarter.
I’m not an economist and want to know why the government controls interest rates. I thought we had a free market economy.
Exactly, it almost seems like they deliberately tanked the markets by announcing a rate cut in the middle of the day. They could have done this after hours. It was very unusual.
Hmmm.... Are you just as concern about doctors killings 1000s times more. And this is throughout the country? There is no safe spot. Medical malpractice kills around 440,000 a year.
Hell, I am a little worried sure, but so far this is a nothing burger compared dozens of other things. Why should we worried more about this than the hundreds of things more deadly. And yes, the sun and heat will kill off this virus soon, if it doesn’t new treatments are on the way (soon), and there might be a vaccine in a couple weeks.
Are you not worried about the 125 young children that died of the flu this year? Or 18,000 elderly who also died of the flu?
for later...
In fact this latest episode of herd panic hysteria has made me realize just how weak willed most people truly are. I had a sense of course, but now my eyes are wide open to how pervasive the problem is of brainless cattle stampeding to the media narrative right on cue.
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Ain’t that the truth. I was under the mistaken belief that all Freepers were a stronger, smarter bunch than the average Amercian.
Your medical malpractice comparison is idiotic, given how many lives doctors also save each year. Sharpen up!
Thanks for that response Nelson. I enjoy the pros on here that can discuss the markets in technical terms and know where to look for sentiment.
I got a pretty good seat on the show, although it galls me that the terminal we’re hooked into goes into mini-Mike’s wallet.
There is some discussion around the flat screens of a 50 bps cut looking like a “Holy S——t, they know there is something even more awful coming.”
My systematic buys these days are canned goods and .223 ammo.
Anyone that knows anything about economic history and particularly the sordid history of banks knows how this movie ends. And if it does not end that way, we would be unique. One of the great ironies of this board is how many can educate each other on the failures of communism, but very few can ID those times when capitalism was perverted and then done wrong...
Wrong.
Although, there were some interesting rumors about “Operator 130” on the GS desk around 12-13 years ago...
Just rumors though. Fed intervention in the equity markets violates their charter after all.
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