IBB
338.12
+1.28
+0.38%
 
AAPL
160.47
+0.59
+0.37%
 
TVIX
8.86
+0.03
+0.34%
 
XIV
109.53
-0.15
-0.14%
 
TNA
65.66
-0.59
-0.89%
 
TZA
13.47
+0.12
+0.90%
 
UVXY
16.22
+0.08
+0.50%
 
NASDAQ
6623.657
-0.348
-0.0052%
 
S&P500
2559.36
+1.72
+0.07%
 
NYSE
12349.97
-9.55
-0.08%
 
IBB
338.12
+1.28
+0.38%
 
AAPL
160.47
+0.59
+0.37%
 
TVIX
8.86
+0.03
+0.34%
 
XIV
109.53
-0.15
-0.14%
 
TNA
65.66
-0.59
-0.89%
 
TZA
13.47
+0.12
+0.90%
 
UVXY
16.22
+0.08
+0.50%
 
NASDAQ
6623.657
-0.348
-0.0052%
 
S&P500
2559.36
+1.72
+0.07%
 
NYSE
12349.97
-9.55
-0.08%
 
Morning Note March 31, 2016

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Morning Note-

Thur, March 31, 16

08:45 ET                                           Update: [Stockboardasset] S&P futures Flat

08:45 ET                                           Update: [Stockboardasset] Nikkei -136bps

 

The Crude Awakening will be not just be WTI reverting back to a mean prior to the Shanghai Accord, but SPX will go back to fundamentals. SPX has undergone 3 consecutive quarters of decline in earnings commonly referred to as an earnings recession. 1Q16 is set to report with buybacks on hold could put an end to this rally unless earnings improve. According to Factset, negative earnings for 1Q is forecasted marking the 4th consecutive quarter Y/Y since 4Q08. SPX Price to ebitda just hit the highest ever. Overnight, we saw S&P downgrade the Chinese outlook to negative from stable, due to debt load. PBOC made a statement by squeezing Yuan shorts the most since 2005. Reuters reported OPEC production increase this month contrary to the narrative advancing WTI/BRENT from FEB lows. WTI fundamental imbalances have only gotten worse since Feb as inventories continue to build. With another surge in inventory, along with precedents supporting liquidation after such surge, we can only guess what happens next.

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Morning Note March 30, 2016

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Morning Note-

Wed, March 30, 16

08:45 ET                                    Update: [Stockboardasset] S&P futures +51bps

08:45 ET                                    Update: [Stockboardasset] Nikkei -05bps

 

Prior Session, FED Chair Yellen attended an economic conference in NYC unleashing a surprising Dovish Tone. The chance of a US Rate Hike has narrowed this year from 4->2, as she cites global growth deterioration. Forget the US Data dependent FED, Yellen is now the central banker of the world. Yellen’s Dovish and globalist comments connect the dots of the Shanghai Accord to weaken the USD. In return, she thinks the world problems are resolved. The issue is most central banks are at ZLB or even NIRP, as a handful of global institutions such as IMF have issued global economic woes ahead. What’s startling, is that US Equities rallied on the heels of such Dovish comments as bad news is good news. Even commodities such as WTI are a supply and demand mechinsim, but continue to rally despite bad news is good news. The conflict arises of FED authorities interfering with natural market forces and we all know how that ends.

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Morning Note March 29, 2016

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Morning Note-  

Tues, March 29, 16

08: 45 ET         Update: [Stockboardasset] S&P futures -30bps

08:45 ET          Update: [Stockboardasset] Nikkei -62ps

08:45 ET          Update: [Stockboardasset]FTSE100 -89bps DAX -57bps

 

The Rollercoaster of this quarter is nearing an end on paper, but don’t think the ride is over yet. Yellen speaks at 11:30am ET today. Goldman Sachs Cuts 1QGDP Estimate to 1.7% from 2.1% citing revisions to the real consumer spending. Atlanta FED revises 1Q GDP -57% to .6%. Earnings recession is in full swing expecting a dismal 1Q, as equities continue a rich valuation. HY (HYG, JNK, CORP) decoupling from equities signaling stress is returning. 30 energy companies coupon’s are due next month, which should reopen the discussion of HY Defaults. The US is in a tightening cycle this comes at no surprise. US Default Rates have surpassed Lehman Levels. An interesting piece by Wells Fargo: 25% probability of US Recession in the next 6 months. The use of Non-GAAP has increased since 2014 as Warren Buffet, Factset, and even the SEC have spoke out against such practices.

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Morning Note March 28, 2016

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Morning Note- 

Monday, March 28, 16

08:45 ET         Update: [Stockboardasset] S&P futures +17bps

08:45 ET         Update: [Stockboardasset] Nikkei +118ps

08:45 ET         Update: [Stockboardasset]FTSE100 -48bps DAX -97bps

Behind Friday’s GDP numbers, corporate profits have decreased consecutively for the third quarter. FACTSET’s 1Q forecasts earnings decline at -8.4%, and if the index is confirmed at a decline, it will mark the first time 4 consecutive quarters Y/Y decline since 4Q08. Atlanta FED revised their 1Q GDP to 1.4%, down from 1.9%. We’ve noticed elevated stress levels in Kansas, Cleveland and St. Louis FED districts. Total Business Inventories to sales Ratio has printed Oct’08 highs. Auto sales across the US are in a bear flag, as 20-year delinquency rates print. The largest ever jump in retail funds in Jan’16 coming in at 18.6%, as Investors Park their cash away from the casino stock market. Wilshire 5000 rounding a top with successive lower highs and lower lows. The US is fully exposed to the 100-year commodity super cycle, which has hit an unfair high (6 years to produce) and currently reverting, during the time US industrial production is rounding a top. The almighty consumer in retail and food sales have flat lined from last summer, as well as imports from Japan/China are lackluster. Where is the consumer or most importantly where is the discretionary spending from cheap oil? Perhaps servicing debt.

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Morning Note March 24, 2016

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Morning Note-

Thur, March 24, 16

08:45 ET                                             Update: [Stockboardasset] S&P futures -54bps

08:45 ET                                             Update: [Stockboardasset] Nikkei -92ps

08:45 ET                                             Update: [Stockboardasset]FTSE100 -100bps DAX -117bps

 

We are issuing an unfair high warning for SPX and WTI. Recent advancements were artificial in nature producing unstable structures. The month long inclines were primary forced by short covering, central banks, and headline chasing crowds on speculation. Fundamentals were completely disregarded, which this is a symptom of a dying breed. The month long phenomenon took place in most developed economies around the world. The Shanghai Accord last month of central bankers most likely played apart. Massive short squeezes in risk assets and commodities flourished in an unexplainable fashion. We’ve seen the story before as longer timeframes do not believe the current market structure as forced buy-in exhaust to only revert back to the liquidity floor to be only jawboned by a FED speaker. Rinse and Repeat (Bullard Bounce). This time, we have the BIS,IMF, and OECD issuing stark global warnings of over excess monetary accommodations and lackluster growth. The global economy in sync is in a stall, and or contraction. From Brazil, China, EU,EM, and even the US the warnings are on the wall.

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Morning Note March 23, 2016

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Morning Note-

Wed, March 23, 16

08:45 ET                                             Update: [Stockboardasset] S&P futures +2bps

08:45 ET                                             Update: [Stockboardasset] Nikkei +12ps

08:45 ET                                             Update: [Stockboardasset]FTSE100 +26bps DAX+117bps

 

Global Equities continue to show their resilience after Brussels’s worst terrorist attack in history. The EU has a whirlwind of economic, and now apparent non-economic headwinds. The IMF labels geopolitics, terrorism, refugees, and global economic spillovers from the middle east for EU’2016. This comes at a time where IMF,BIS, and OECD are warning global economies of Stall Danger, and excess monetary issue. In the duration of the ZLB, economic and non-economic shocks are the norm these days. We are on watch for a Moody’s downgrade of D Brexit fears have reentered the limelight, and the Brussels’s event produces a stronger case for the exit. GBPUSD and EURUSD continue with sell pressure. The Guardian overnight has labeled top firms in the UK could be at risk for downgrade in light of a BREXIT. Then Lautenschlaeger appears overnight saying the ECB’s rates can go lower! What’s comical to us is Lagarde’s call of NIRP saving the world, but IMF/OECD/BIS warn of such accommodative measures. Nevertheless, German’s officials cut FY’16 GDP overnight +1.5% vs. +1.6%.

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Morning Note March 22, 2016

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Morning Note
Tues, March 22, 16

 

08:45 ET Update:  [Stockboardasset] S&P futures -42ps

08:45 ET Update:  [Stockboardasset] Nikkei +17ps

08:45 ET Update:  [Stockboardasset]FTSE100 -77bps DAX -47bps

 

Brussels’s in the overnight hour has been rocked by terrorist attacks. Global Equities were hit with overhead supply during the attack in the 4am hour. Market bids have been provided to stabilize price in FX and Indexes. These developments point to higher risks on EU due to immigration. The EU is vulnerable to non-economic origin-related events of geopolitics (Brexit), terrorism (France & Brussels), refugees, and global spillovers. The Pound and EURUSD large sells, but market overseers provided stabilization to stem contagion. German and French Manufacturing PMIs had a slight miss, as the Eurozone as a whole was flat. Next on the plate will be BREXIT.

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Morning Note March 21, 2016

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Morning Note-

Mon, March 21, 16

08:45 ET                                             Update:  [Stockboardasset] S&P futures -09bps

08:45 ET                                             Update:  [Stockboardasset] Nikkei -0bps

08:45ET                                              Update:  [Stockboardasset]FTSE100 -16bps DAX -25bps

 

US Companies are set to report a dismal earnings season for 1Q. “If the index reports a decline in earnings for Q1, it will mark the first time the index has seen four consecutive quarters of year-over-year declines in earnings since Q4 2008 through Q3 2009”FACTSET. A tactical reset in valuations for the SPX is at 1700. The number 1 buyer of corporate equity are corporations themselves. Expect a blackout of buybacks to commence as earning season starts. The great divergence of market price vs. fundamentals is at an all time high. A decade of ZIRP, and now NIRP is leading global economies into a liquidity trap. The latest rally in equities and commodities have had an absence of fundamentals due to 3 central banks priming the market in a coordinated fashion. Last year, this tactic by central banks would of only taken 1 , but shows the belief system in central banks is waning. Central Banks generate an illusion that markets cannot go down. We’ve seen this in the 2-year Dome (rounding top) in US Equities. Growth will not return to US markets until 2H16. We continue our call of finding the unfair high of this so-called rally and play reversions to point of control SPY low 190s.

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Morning Note March 18, 2016

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Morning Note-

Fri, March 18, 16

08:45 ET                                             Update:  [Stockboardasset] S&P futures +28ps

08:45 ET                                             Update:  [Stockboardasset] Nikkei -59ps

08:45ET                                               Update:  [Stockboardasset]FTSE100 +41bps DAX +37bps

On an OPEX day, we continue to see WTI surging into the 40 handle, USD down most since 2009 in a 2 day period, and SPY is at the same levels of March’15, when EPS, GDP, and projections were higher. Our hats are tipped to the OPEC Oil Minister, and 3 of the largest central banks in the stimulation of commodities and equity indexes alike since early FEB. We assume one central bank doesn’t have the kick as it use to. VIX is down 45% over the past 5 weeks, the largest decline in history. We also assume there is no risk (sarcasm). A few weeks ago, the IMF,BIS, and OECD issued stark warnings of global growth, excessive monetary accommodations, and NIRP. Headline Chasing and limited fundamentals inducing this advancement are symptoms of a dying breed. Have we forgot that US corporate earnings are projected to shrink further in Q1, as the FED continues a tighten cycle. This narrative was all the talk just 3 weeks ago. Operational profits of major US Banks are in focus, as we see layoff after layoff in the news. All is fine as WTI surges +55% since Feb as the market prices in gasoline demand, and a minor slip in production. Storage woes in Cushing continue to be a major concern, as the fundamentals have not changed domestically and globally since WTI <30. The US default rate has surpassed Lehman era crisis, and the next round of negative sentiment for HY will be in April. Not just a wave of defaults from the oil and gas complex, but we’re seeing the contagion spread. Energy and Material companies, one in particular is Peabody Energy warns of possible Bankruptcy. In biotech, Valeant’s bonds are up for possible cut from Moody’s and risk default. We’ve seen Biotech IBB in a bear flag break from the channel, and not fully participate in the broad-spectrum rally in US equities. Fitch reckons another $52bn in defaults over the course of the year, and already has topped $18bn in 3 months. The default in HY level is the highest in a non-recessionary period.

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