The Daily Market Catch
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The One Big Thing
Back on October 2nd I suggested to clients markets would run up into Oct. 31 – and target SPX $3060 and NYSE $13,333 – with lower prices starting in mid-November through the end of the year. I consider current price action around this level to be ‘cruising altitude’ before it gets a little bumpy again.
In my article for MarketWatch, I predicted higher yields:Despite the Fed’s support, this stock market is headed lower
Then, just last week we had a historic move lower in bonds for which I was positioned for clients (short bonds and gold, long value and commodities).
Top Charts
This past week we had a dramatic selloff in bonds that triggered higher yields and boosted cyclical and value stocks.
Blame it on Trade War Truce Talks and Interest Rate Traders no longer pricing in Fed rate cuts this year (although CTA unwind was part of it), but the 12 bps jump in the 10-year Thursday nearly erased the entirety of the August plunge.
Top Tweets
Not only was the bond move a nearly 3-sigma move in 10-year yields relative to one year [of] history, but over 2.5M Treasury options traded on Thursday – the 2nd highest all-time.
Top Trades
Marco Kolanovic of BAC thinks the move toward increasing exposure to value and away from duration and bond proxies (crowded defensives and momentum names), which started in September, will continue. (My mantra since my last historic bond short.)
Needless to say, any nods at fiscal stimulus or signs that aggressive easing by central banks is starting to work its way through and manifest itself in better growth outcomes, inflections in manufacturing PMIs and/or higher inflation expectations, could accelerate the rotation away from crowded consensual trades.
Top Reads / Videos
At little conspiracy theory for your weekend reading.
“to ensure that JPM’s tens of billions in buybacks and dividends continue flowing smoothly and enriching the company’s shareholders, Jamie Dimon may have held the entire US financial system hostage, forcing the Fed’s hand to restart “Not QE.”
For more charts and links like these check out my twitter feed.
To Great Fishing!
Samantha LaDuc
Founder LaDucTrading
CIO LaDuc Capital LLC
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