Video commentary for September 11th 2019
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics covered include: bonds continue to decline from deep overbought conditions,Wall Street firms, led by technology and other cyclicals, gold steadies, oil encounters resistance in the region of the trend mean. Euro weakens and Dollar Index rebounds impressively from intraday lows. ECB rate decision tomorrow.
As the Ice Age turns bond yields deeply negative, what happens next?
Thanks to a subscriber for this report by albert Edwards for SocGen which may be of interest.
A link to the full report and a section from it are posted in the Subscriber's Area.
The Federal Reserve in particular has stated it is aware of the risks to the economic expansion and is willing to do what is necessary to ensure it persists. This is quite different from what Alan Greenspan was saying in 1998 when he made his irrational exuberance speech.
Factors or Fundamentals, Quant Tremor Is Field Day for the Geeks
This article by Sarah Ponczek and Vildana Hajric for Bloomberg may be of interest to subscribers. Here is a section:
You wouldn’t know it from benchmarks, but beneath a tranquil surface violent swings are lashing traders along obscure fault lines. Companies like real-estate firms that rose the most in 2019 are plunging, and some that have trailed are being pushed out front. It’s been a mild reckoning for hedge funds and others who have bet on the status quo persisting.
Amid all the churn has been a renewed focus on a quantitative concept known as factor investing, which groups companies not by industry but traits such as how fast their prices move or profits rise. A question gaining currency in the past few days is whether these categories are just handy descriptions of twists in the market -- or are at some level guiding them.
“It seems very mechanical right now,” said John Swarr, investment specialist at Penn Mutual Asset Management, which has $27 billion under management. “If you look within some of these stocks that are being hit the hardest, some are in much better shape than others and yet they’re all being affected similarly,” he said. “It does feel like it’s a rules-based rotation.”
The total of negative yields bonds was at $17 trillion for a brief time at the end of August and has since contracted to $14.3 trillion. That’s a big more in a little less than two weeks.
The failure of the German government to sell a full allocation of bonds and failed auctions at the US Treasury in August were probably the catalysts for sapping investor demand for bonds globally. The unwinding of leveraged long positions now has the scope for meaningfully move bond yields higher with clear upward dynamics evident across multiple markets.
On Target September 9th 2019
Thanks to Martin Spring for this edition of his ever- interesting letter. Here is a section:
America Is Losing Mideast Allies
Mainstream media are strangely reluctant to report the major changes in the Mideast that are strengthening Iran’s negotiating position relative to its enemies.
According to Yossef Bodansky of GIS/Defense & Foreign, both Saudi Arabia and the United Arab Emirates are engulfed in a major crisis in their relations with the US.
Arab leaders urged America to strike Iran hard in retaliation for shooting down the Global Hawk drone. Trump refused to do that. Both the Saudi crown prince, Mohammed bin Salman (“MBS”) and the crown prince of Abu Dhabi, Mohammed bin Zayed (“MBZ”), considered the last-minute cancellation of the retaliatory strike a personal affront and humiliation.
Both have for a long time suspected that the US has been hiding major matters from them. That got confirmed last month when the US ambassador to Iraq, Matthew Tuellier, publicly admitted: “We have direct communication channels with Tehran.” Bodansky says “both Riyadh and Doha were stunned and humiliated, because the Trump White House did not bother to inform them of the Baghdad back-channel… while pressuring them to avoid all contacts and negotiations with Iran.”
However the deterioration in relations between the US and its anti-Iran allies goes far beyond the current tiff.
The USA was the biggest consumer and importer of oil so it made sense to have a strong relationship with the countries where it was buying oil. Perhaps more correctly it was important to have solid relationships with the biggest producers, so the global market for oil had some stability because oil price spikes cause recessions. That created both a ready market for US debt instruments but also clear rationale for a globally present military force to protect sea lanes.
Eoin's personal portfolio precious metal trading position profit taken September 5th 2019
One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change. I'll change the title to the date of publication of new details so you will know when the information was provided.
2019: The 50th year of The Chart Seminar
The London Philharmonic Orchestra is holding a concert in David’s memory on October 5th October at the Royal Festival Hall. There is a reception between 5.30 and 6.45 in the Foyle Pavilion, Level 3, Green Side and subscribers are well to join David’s family there for light refreshments. Following the reception, we will move to the Beecham Bar, Blue Side, Level 5 for a short talk by Tim Walker, Chairman of the LPO.
If you wish to attend the concert as well, which includes a performance of Elgar’s Cello Concerto by the Young Musician of the Year, it begins at 7.30 and you may book tickets (£67) by telephone on 020 7840 4242 quoting the code Fuller Concert.
Since this is the 50th year of The Chart Seminar we will be conducting the event on October 3rd and 4th to coincide with the memorial on the Saturday.
In the meantime, if you have any questions, would like to attend, or have a suggestion for another venue please feel to reach out to Sarah at [email protected]
The full rate for The Chart Seminar is £1799 + VAT. (Please note US, Australian and Asian delegates, as non-EU residents are not liable for VAT). Annual subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.