haha yeah thanks largely to the fed rate cut odds for the july meeting has spiked pretty dramatically after the most recent NFPs it'll be interesting to monitor this over the course of the coming weeks, or at least up until to the next fomc meet which i think is coming up next week.
Yeah last week the market actually went up on some not so good economic data, will be interesting to see how the market will react if we actually see some improved data. Would be pretty funny if the market goes down on some good economic data since it would mean less chance of a rate cut
Morning Lineup - Small Business Sentiment Back on Track Tue, Jun 11, 2019 After five straight months of declines from an all-time high back in August, it appears as though small business sentiment has gotten back on track. This morning's release of the NFIB Index of Small Business Sentiment showed a larger than expected increase as the headline index came in at a level of 105.0 compared to estimates for a reading of 102.0. While the index is still off its record high of 108.8 from last August, it has risen for four straight months now, which is tied for the longest streak of increases since the four months that followed the 2016 election. In other news, foreign equity markets are in rally mode once again despite relatively weak economic readings. In the US, PPI will be released shortly, but as the President already tweeted, "The United States has VERY LOW INFLATION, a beautiful thing!" As markets have started to recover, the yield curve is still inverted (as it has been for the last three weeks), but it has become less so over the last six trading days. As shown in the chart below, the curve has steepened from a low of negative 25 bps on June 3rd to 9 bps this morning. That's the largest six-day steepening since October.
Trend Analyzer - 6/11/19 - Back Above the 50-Day Equities are looking to keep the streak of gains going today which over the past week has brought all of the major index ETFs—except for the Micro-Cap ETF (IWC)—out of extremely oversold territory and into neutral. As shown in the Trading Range section of our Trend Analyzer tool, the long tails to the left indicate the rapid moves from oversold levels for all of these indices. The move has been strong enough to lift more than half of the ETFs above their 50-DMAs. Large caps especially have moved the highest above this moving average. Small-caps, on the other hand, have continued to lag the rest of the market. The aforementioned IWC has seen the smallest gains of only 2.24% in the past week and is still 2.87% below its 50-DMA. Conversely, the Nasdaq (QQQ) has rocketed the most, rising 7.66% in the past five days. And still, QQQ remains under the 50-day! Looking at the charts of the these ETFs, while they have mostly broken through resistance at the moving averages, yesterday's session did show signs of exhaustion as they sold off from the intraday highs as some like the Dow (DIA) or Core S&P 500 (IVV) even continued to fall below the opening price (resembling the shooting star pattern). While this may be a bit of a sign of hesitation in the current rally, these ETFs have also recently broken out of their short term downtrends. In other words, the technical picture of the major indices has improved even if the rip higher from the past week takes a breather.
Best Starts to June, Any Month As of mid-day, the S&P 500 was up 5% month-to-date. Below is a look at the best starts to June through seven trading days for the S&P since the index's inception in 1928. As shown, this ranks as the fifth best start to June on record, and it's the S&P 500's best start to June since 1974 when it was up 5.73% through the month's first seven trading days. As far as what to expect going forward based on historical seasonality, in the week following all 3%+ starts to June through seven trading days, the S&P has averaged a decline of 0.66% over the next week. And while the index has averaged a gain of 0.99% for the remainder of June following 3%+ gains through seven trading days, the median rest-of-month change is actually negative at -0.03%. This is due to the outlier gain of 16.3% for the remainder of June 1938 after a gain of 7.23% over that month's first seven trading days. While we've seen the 5th best start to June on record, this is also the best start to any month through seven trading days since October 2011 when the S&P rallied 5.67%. Below we show all 4%+ starts to a month through seven trading days since 1980. The most notable takeaway from this data in our view is that the last nine times we've seen the S&P gain 4%+ in a month's first seven trading days, the index has been up over the next week 8 out of 9 times, and it has been up 9 out of 9 times for the remainder of the month.
Market back to the green, rooting for a green close and so my winning streak for the market direction in the daily contest could continue
haha, oh man looks like this'll come down to the wire today actually am also rooting for the green prints at the close today even though i went red ... c'mon spx you can do it!
Morning Lineup - Bounce in Japanese Cap Ex; Beware of Consensus Wed, Jun 12, 2019 The 'pause' in the rally from yesterday's early highs is continuing this morning as equity markets around the globe are all trading moderately lower, including the US. Beware of the consensus. As data and economic models have proliferated throughout the years, investors have increasingly become reliant on them to predict future events. If the 'market' or excel model says it's going to happen, then we are all too ready to take it as a given. A perfect example is the path of Fed policy. With the futures market increasingly pricing in the likelihood that the Fed will cut rates, that's what everyone now expects. As of this morning, for example, the futures market was pricing in a greater than a three-quarters chance that the FOMC will cut rates between now and the end of July. Three weeks ago, those odds were less than 15%! So, it's pretty much guaranteed that the Fed will cut rates and cut them aggressively right? While it's certainly possible that we may see rate cuts in the months ahead, keep in mind that the consensus often gets it wrong and sometimes incredibly wrong. A perfect example is the 10-year US Treasury yield. The chart below is from a Wall Street Journal article earlier this week and shows how when it came to the direction of long term interest rates in 2019, the consensus couldn't have been more wrong. The chart shows the path of the 10-year yield so far in 2019 compared to various forecasts from Wall Street and the economic community. At the end of 2018, not a single economist expected the 10-year yield to be below 2.5% and the average forecast was closer to 3.0%. Right now, the 10-year yield is under 2.12%!
