Update #61: Stock Market-High Flyers Fading-So Where’s The Money Going Now?



Well we had lots going on this week as The Fed cut by the widely advertised 1/4 point and had
to pony up Billions to rescue the overnight markets via repurchase agreements as liquidity dried up..a bit scary 10% Fed Funds rate.
While confirming they are not on a pre-set schedule…some said that they do not see Fed Funds under 1 5/8% thru 2022. BOE was steady & BOJ says they’re ready to add stimulus. QE lite may be in play which means Europe-Asia-USA all juicing their economies.
Next week..lots of Fed guys speaking while GDP and durable good plus home sales and personal income is on the docket.
With Oct dead ahead..the Big Question?.was FedEx earnings a precursor of what to come-Complacency + Earnings Misses=Ouch!

The streaming wars have gotten very ugly from some…ROKU off 25 bucks on 65+ million shares/40% off 176 the Sep ’18 highs.
NFLX also not a happy camper off 15 bucks on 23+ million shares/30% off 386 highs. Blame AAPL, T, DIS for entering the game.
Stocks with high dividends such as T, PFE, BMY,BP, RDS.A have improved while insider buying @ KMI & OXY looks interesting.
Watch CRK & WPX. Last month’s low must hold if this turn can be trusted. Some believe Uber & Lyft are more interesting now.
My base case remains 2950-3100 is a sell zone and with the Transports & Russell fading and saber rattling..No changes here.

BOND MARKET…OK we got a Fed cut but nowhere near the the 150 basis points the 10 yr Treasury has fallen since last year.
QE lite is back on the table but so is cracks in the liquidity of the system. The spike we saw last week in yields definitely gave a chunk back this week but I still believe 1.4% we saw on the 10 yr felt a little panicky and the entire planet is looking for more cuts.
What they are not looking for worldwide stimulus to lead to growth and inflation in areas like Europe-Asia-USA….but if they win I believe people holding 16 Trillion in negative yields and Trillions more in low yielding debt will hit the exits–a major liquidity challenge. Trump wants the Dollar down and Growth like a “rocket”.Fed wants Inflation up (already is)…careful what you wish for.

DOLLAR….same story different week…range bound 99 to 95 (DXY=98.42)……when & if it breaks…may expect a Vol spike of size.
Brexit-Trade Talks and Lagarde taking over ECB are major things to keep an eye on in upcoming months.

CRUDE OIL..well we got a spike gap up on the strikes on the Saudi oilfields and subsequent fade…if we fill the gap and hold 54….
we could be talking a Q4 turn..ARAMCO wants to go public and probably not into a collapsing price on a obsolete natural resource.

GOLD-SILVER-COPPER…..my base case remains that 1520-1580 is a sell zone for Gold and unless we break 1600 the odds could still favor further pullback/consolidations as we remain elevated from the 200 day moving average. Despite the rush to Silver…the belief is it will follow suit. Again bring the dollar down and bring rates down and get inflation up is music to the metals ears. If you believe the pullcak is over in GDX, GDXJ,SLV ect….maybe hedge or keep it on a short leash using this months lows as a line in the sand. Copper may be the story no one is talking about. Stocks like FCX & SCCO have been turning a bit and some say China is loading up on the metal. Combine that with possible infrastructure stimulus plays and maybe there is a future here. Other commodities that may show promise in Q4 and beyond may be Soybeans/Bean Oil (China Deal), Sugar (alt fuel) and Coffee.

As usual…lots going on and the exciting Q3 earnings and Q4 year end (Santa Claus Rally?) jockeying staring us right in the face.
So…if you have any questions for us….concerns in the markets……simply email us @ [email protected]

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