Hello traders everywhere. The stock market is finishing up the week mixed, much like the entirety of the week was. We saw wild swings in both the stock market and Bitcoin. And it might not be over yet with a couple of things looming.
There's potential for a government shutdown. On Thursday, the House passed a bill to avoid a government shutdown, but the bill is now in the Senate's hands, where 60 votes are needed to send it to President Donald Trump's desk. Most experts believe that there is a 50/50 percent chance that we will see a shutdown. Historically, a government shutdown has led to a short-term pullback in the stock market.
Consumer sentiment unexpectedly declined in January to a six-month low as American households viewed the economy less favorably, as reported by the University of Michigan report that was released Friday.
The decline in sentiment included a decrease in a measure of buying conditions for big-ticket goods, indicating consumer spending may slow early this year after a solid holiday shopping season.
The setback in purchasing conditions was mainly due to less attractive pricing, according to the University of Michigan. That was reflected in a pickup in increases in expected inflation rates over the coming year and longer term.
At the same time, the expectations index remained stable, with 70% of respondents saying they thought the impact of the tax reform act would be positive. What's more, the survey showed lingering strength in personal finances. Improved finances were reported by half of all respondents, matching the 2017 average which was the best in 17 years.
Key levels to watch next week: Continue reading "Wall Streets Wild Week"
On January 2, 2018, Byron R. Wien, Vice Chairman in the Private Wealth Solutions group at Blackstone, issued his list of Ten Surprises for 2018. “Byron defines a “surprise” as an event that the average investor would only assign a one out of three chance of taking place but which Byron believes is “probable,” having a better than 50% likelihood of happening.”
Byron’s Ten Surprises for 2018 includes
“The price of West Texas Intermediate Crude moves above $80. The price rises because of continued world growth and unexpected demand from developing markets, together with disappointing hydraulic fracking production, diminished inventories, OPEC discipline and only modest production increases from Russia, Nigeria, Venezuela, Iraq, and Iran.” Continue reading "Why $80 Crude Oil Is Highly Unlikely In 2018"
The U.S. bond market took it on the chin again last week. The question is: Was this is a harbinger of even higher yields to come or just an overreaction to some potentially scary headlines – some of which turned out to be fake news – and therefore a potential buying opportunity?
“Bond King” Bill Gross started the fun on Tuesday when he tweeted out these ominous words: “Bond bear market confirmed.” He did tone that down in his market commentary to his Janus Henderson clients, saying, “We have begun a bear market although not a dangerous one for bond investors. Annual returns should still likely be positive, although marginally so.”
Still, that’s not a whole lot to be happy about, unless you’re heavily invested in stocks, where the returns may be even worse, i.e., negative. The other so-called Bond King, Jeffrey Gundlach of DoubleLine Capital, predicted that the S&P 500 Index would end the year with a negative return. He also said that if the 10-year Treasury yield pushes past 2.63% – which it almost did last week – it will accelerate higher.
The news got worse after that. Continue reading "Are We Really In A Bond Bear Market?"
Another year has passed, and we have started 2018 looking for new opportunities and facing new challenges. It is time to see the result of the 4th Pendulum swing published in the middle of 2017. To remind you, we had pitted palladium against orange juice in that race and below are your bets for that experiment.
Chart 1. Poll results
Chart courtesy of INO.com
These poll results show a good split of opinions as it wasn’t ultra-biased in favor of the metal. The majority of readers hit it right as their prediction came true and palladium (+23.5%) could easily beat not only the orange juice (1.7%) but most of the futures over the last half of the year, ranking the 6th. Moreover, this is the first failure of the experiment as it was thought that the previous loser orange juice would beat the last winner palladium, but it didn’t happen.
I am not upset about this outcome because when you start an experiment, you like to see how your hypothesis works out. Any success or failure is the part of a test, and quite often you find out something genuinely new, which is outside of your initial thought. Many things in this world are invented during the experiments that were meant to find something different.
From the very beginning, I knew that one thing was inevitably imperfect in this experiment, I always choose the top performing/underperforming metal instead of the top losing/gaining futures against the other futures to stay focused on the metals. Another thing is the period of the experiment. This is also a crucial variable of the experiment. So far it works pretty well, and I would tune only the first imperfection to let the futures, not metal to be picked against each other from now on. Continue reading "Pendulum Experiment No.4: The First Failure"
Hello traders everywhere. The January Bitcoin (CME:BRTI) selloff gained momentum on Tuesday when the cryptocurrency dropped as much as 13% in early trading as the prospect of global regulatory crackdowns appeared to spread.
A South Korean news website Yonhap reported that Finance Minister Kim Dong-yeon had told a local radio station that the government would be coming up with a set of measures to clamp down on the "irrational" cryptocurrency investment craze.
South Korea said on Monday that its plans to ban virtual coin exchanges had not yet been finalized, as government agencies were still in talks to decide how to regulate the market.
That news broke just as a report surfaced that a senior Chinese central banker had said authorities should ban centralized trading of virtual currencies and prohibit individuals and businesses from providing related services.
China shut down exchanges operating on the mainland last year - a move that also sparked a selloff.
The January selloff has seen Bitcoin (CME:BRTI) fall 42% from it's December 2017 high of 19,528.87.
Key levels to watch next week: Continue reading "Bitcoin Falls On Global Regulatory Concerns"