CCheng,
Well said, even with the spike in volatility it seems like the fever pitch
hasn't arrived, the SPY puts I have haven't gone through the roof, selloff
seems orderly.
In this environment, selling begets selling, which could trigger the algos
to set off domino sell programs, margin calls etc etc. The president makes
everything worse, no shock there but this being his barometer it will only
fuel more uncertainty and dangerous advice.
Yes beware of the weekend and headline risk.
~Best
On Thu, Feb 27, 2020 at 5:50 PM cchengbusiness <cchengbusiness@xxxxxxxxx>
wrote:
*Vulnerable to major risks (not bubbles)
On Thu, Feb 27, 2020 at 5:49 PM cchengbusiness <cchengbusiness@xxxxxxxxx>
wrote:
One of the better, more honest take today from Scott Minerd at
Guggeinhem, though a few days late:
1) https://www.youtube.com/watch?v=quBBlYRlDOs&pbjreload=10
2) https://www.youtube.com/watch?v=8E7oceQEFMA
Though I don't agree with him that it's the worst thing in the last 30
years, it has the potential to be. There are also additional risks he has
not mentioned, though overall he does a decent job.
Also to give some background into why the stocks are inherently inflated
for a long time, and why it's so vulnerable to bubbles
https://www.youtube.com/watch?v=VB3_oOxVqdk
Keep in mind a lot of talking heads will be telling you to buy the dip,
not be fearful, etc. while they unload positions and buy protection. They
will be doing the same thing on the way up (don't rush in, etc.) until
they've fully bought in.
Personally I have positions, mostly short through inverse ETFs, and is
vigilantly looking for signs of turning point (not there, too many risks).
Yes if it bounce back, it could very well end up higher than ever due to
monetary/fiscal stimulus. But in the meantime, too many risk factors, more
than any since 2008.
On Thu, Feb 27, 2020 at 5:28 PM cchengbusiness <cchengbusiness@xxxxxxxxx>
wrote:
Want to offer a word of caution here. Most of the technical analysis are
based on the implicit assumption that there isn't great deviation in
fundamentals, with most price movements due to human emotion, and that
patterns/metrics can be used. But in times of great real-world distress,
most of the movement is based on fundamentals, and a terrible news will
obliterate the merits of technical indicators.
To use a dramatic example for illustration, suppose a zombie virus broke
out tomorrow and infected the world, would the support/resistance/MA have
any meaning for valuing companies ... absolutely not, because the world has
fundamentally changed. What would move stock price then isn't technical
indicators, or even monetary/fiscal policies, but cure for Zombieism.
There's still a *laundry list* of negative risk factors on the horizon
and just 2 positive ones that's been somewhat priced in: Fed response, and
fiscal stimulus.
This is a much bigger risk than the trade war and *anything else since
the 2008 financial crisis*, and has the potential to trigger something
even worse than 2008. We are far from a bottom, far from capitulation, and
far from solid buying opportunity. *Even for the scenario where we
effectively contain this and stocks bounce back even higher, it would
require more bad news before things get better.*
Keep in mind, we are heading into the weekend, where more escalating bad
news is expected out of Asia and Europe. Also like Jeff said, the call
premiums and Implied Volatility already bid up to very expensive levels for
both puts and calls.
What you want to look for now are turning points in dealing with the
virus:
1) Europe showing an effective plan for tracking and dealing with the
virus; global coordination
2) Effective US measures (currently woefully inadequate)
3) SK and Japan containing this
4) Warmer weather greatly reducing virus infectiousness (this might be
the biggest factor as most treatments are too slow in the near-term)
5) Effective treatment reducing the severity to something closer to
2009 H1N1 range.
Good news is that China situation is serious, but contained. But it was
done at the cost of maybe -10% to Q1 GDP. That's what's really scaring
people, that even with successful containment comes a painful price.
Supply chain is secondary, the scariest thing about this is demand shock
and economic paralysis, and one that the central banks don't have the tools
to deal with.
On Thu, Feb 27, 2020 at 3:04 PM Chuck Kremer <chuckkremer@xxxxxxxxx>
wrote:
I’m thinking if we get a close on the SP futures in the range of
3065-3045, I will be buying calls on SPX for tomorrow. That range would put
today’s entire candle completely below the Bolinger band on the daily
chart. That is a rare occurrence. I’m thinking if that happens then we see
SP future at least touch around 3080-3100 tomorrow. I’m not convinced
enough to buy a lot (hence the options), but I think it’s a reasonable
guess given the pounding this week. If we close near the bottom of today’s
range then I will not be pursuing this.
On Feb 27, 2020, at 11:47 AM, Bob T <bobtsgt@xxxxxxxxx> wrote:
Looks like a good day to place some trades. Time to make some money.
Let the traunching begin.
Bobby
Sent from Mail <https://go.microsoft.com/fwlink/?LinkId=550986> for
Windows 10
*From: *Alan Shrock <alan.shrock@xxxxxxxxx>
*Sent: *Tuesday, February 25, 2020 6:18 PM
*To: *cincysmi@xxxxxxxxxxxxx
*Subject: *[cincysmi] Re: And Now For A Bearish Note
WallStreetOnarade.com <http://wallstreetonarade.com/> had an
interesting article in their daily emailing today.
https://wallstreetonparade.com/2020/02/wall-street-banks-insurers-sell-off-dangerously-linked-by-derivative-trades/
Yesterday RT America talked about the Conoravirus in a bit more detail
than I usually find.
https://www.youtube.com/watch?v=t_2BdVvoLus&t=669s
The first 11 minutes of the video deal with the Coronavirus, the rest
of the video is irrelevant.
The upshot of the two articles isn't to downplay the danger of
Coronavirus, but RT America filled in the picture more than I had seen
before.
WallStreetOnParade points out that the derivatives trading by the big
banks is likely a bigger problem than Coronavirus in the long term.
On Tue, Feb 25, 2020 at 2:08 PM Chuck Kremer <chuckkremer@xxxxxxxxx>
wrote:
CNBC just said car sales in China down 92% in January. Yowza.
On Feb 24, 2020, at 3:47 PM, Chuck Kremer <chuckkremer@xxxxxxxxx>
wrote:
I’m a day trader and I usually look to trade both sides of the coin at
most times, but I am switching to selling mode only for the foreseeable
future. Please note that I’m not calling for a huge correction though I do
think it’s definitely possible. I’m just erring on the side of short for a
while as I think it’s unlikely that we see any bounces in the short term.
On Feb 24, 2020, at 3:40 PM, cchengbusiness <cchengbusiness@xxxxxxxxx>
wrote:
Looking at the CNBC and Bloomberg reporting today, I'm not sure they
are fully discounting the risks yet. Based on what we've seen with China,
Korea, and the cruise ships, when you get hundreds of confirmed cases like
in Italy, you may also have thousands of carriers who have traveled and
infected others.
Yes the central banks are going to throw everything at this. But be
prepared for continued reporting of escalating numbers from the already hit
regions (Korea, Japan, Italy, Australia, etc.). Cases will pop up in other
European countries like Germany etc., as people have already traveled from
Italy.
What will happen to markets as a string of European countries begin
announcing cases; more countries begin lockdown like in Italy; air and rail
travel gets limited or disrupted; dampened economic activity as people stay
home; supply chain disruption, etc.? How will that affect company
financials? How will that affect investor sentiment? I hear talking heads
saying 2-4 months of the virus like it's no big deal, as if bounce back is
inevitable. But if this stays for 2-4 months, so much of the real and
financial economy will be affected and create secondary effects.
Yeah stocking up on some groceries is not a bad idea. If virus spreads
here in a major way, CDC and gov needs to offer free treatment to clean
this up. Otherwise, with our healthcare system and costs, so many will go
untreated, infect others, and create a huge problem.
-Charles
On Mon, Feb 24, 2020 at 9:56 AM Bobby Tumser <bobtsgt@xxxxxxxxx> wrote:
Well said Charles. The markets are seeing how serious this is and
taking action to cover their asses. Mixing in the outreach of the virus
with the global markets in general has finally gained the attention of the
fund managers. I have been waiting for this buying opportunity myself. I
got my grocery list ready!
On Mon, Feb 24, 2020, 5:24 AM Alan Shrock <alan.shrock@xxxxxxxxx>
wrote:
IAU iShares Gold Trust has already jumped from 15.71 at the close of
regular trading hours on Friday to 16.07 when I just checked it a few
minutes ago.
On Mon, Feb 24, 2020 at 12:01 AM cchengbusiness <
cchengbusiness@xxxxxxxxx> wrote:
Hi all,
Just want to alert everyone to be prepared for a potentially large
selloff and volatility tomorrow and in the days ahead. If you have been
following the news regarding the Corona virus and market's base case
assessment of a V-shaped recovery, you should understand that a lot changed
this weekend. Just offering a couple of my thoughts on the issue:
1) *Global Pandemic* - The rapid spread in Korea, Japan, Italy, Iran,
and other countries means that the probability of this becoming a global
pandemic has become elevated, if not likely. Many densely populated and
vulnerable countries (Indonesia, SE Asia, India, etc.) may be obscuring
infected cases due to lack of testing. Japan may very well end up
postponing the Olympics. Europe will also be confronting a challenging
situation given the amount of tourists in Italy and open borders. The
greatest challenge this virus presents is that it spreads quickly and is
very hard to detect. Thus disruption to transport and normal activity
becomes likely even as governments take the proper and necessary
containment measures.
2) *Demand Side Disruption* - depressed economic activity as people
stay home from due to virus. This is especially problematic if this becomes
global.
3) *Supply Chain Disruption* - supply chain issues will no longer be
limited to China production, but also Korea and Japan (e.g. Samsung factory
lockdown after 1 confirmed infection). Also the interconnectivity of Asia
means risks of infection and supply chain disruption is compounded. This
is without taking into account Europe or countries like Indonesia,
Malaysia, India, Pakistan, which have far less capacity to fight the virus
compared to East Asian and developed countries.
4) *Narrative/Sentiment Adjustment* - V-shaped recovery out of the
window, we are dealing with a protracted crisis. Belief in central bank
printing and debt fueled asset inflation will be tested.
5) *China* - Stabilized enough to resume economic activity. There
will be more infections across the country as activities resumes, and they
will throw drugs (GILD, ABBV, and other treatments) at the problem. But the
healthcare system is unlikely to be overwhelmed like in Wuhan. Essentially
if they don't resume, millions of small businesses will go out of business.
Their hope is that with better treatment, fatality rate will be contained
to around 2009 H1N1 levels.
6) *What to buy?* - GILD, ABBV, [inverse ETFs, VIX etfs, these are
risky and may be priced high already; don't buy unless you fully understand
them] Gold, defensive
My heart hopes the best for the people and economy, but my head says
protracted crisis and a wild week in stocks ahead. Hope everyone the best
and stay healthy.
-Charles
On Wed, Feb 12, 2020 at 11:07 PM cchengbusiness <
cchengbusiness@xxxxxxxxx> wrote:
Yeah the markets have definitely been underestimating the severity of
the outbreak and its impact on the Chinese and global economy, not to
mention lives. I bought some TVIX below 39 today for that exact reason.
Doesn't necessarily mean it's a disastrous scenario, but a lot of
institutional investors are too optimistic and uninformed about
epidemiology/China (VIX below 14). To much to go into, but just throwing a
couple of things out there:
1) There has been a massive under-reporting of cases in Wuhan/Hubei.
Nobody knows the exact number as many are carriers without symptoms, but
the math models of 200k-500k is much more reasonable than the official
figure. Today's spike is just the official figure needing to catch up to
the actual figures.
2) Markets seem assured that this would be a V-shape recovery in
China, partly due to Chinese stimulus. This is hardly guaranteed, they are
not fully discounting the risks.
Now some good news:
3) There has not been rumors of major outbreaks from post-holiday
migration back into the cities. This is the most important element to pay
attention to. Without outbreak outside of Hubei, the situation is
contained. But if this happens, this will get ugly, and stocks will
definitely dive.
4) Though highly infectious, the actual fatality rate is much lower
than 2%, maybe around the 2009 H1N1 range. The reported fatality rate is
higher because while there's been a large under-reporting of fatalities,
there's been a far greater under-reporting of infections.
To be clear, this is not advice to sell positions. The probability of
minimized long-term impact is still good. But there are still major risks
that have not been cleared and potential volatility ahead. We probably
won't get a good sense until end of Feb at earliest.
As to why stocks are so high? Simple, all the world's central banks
have been printing money and leveraging like crazy since 2008. Without
that, the economies would crash harder than '08. But it's also hard to bet
against them because their monetary policies essentially inflates away the
value of cash and bonds.
-Charles
On Wed, Feb 12, 2020 at 3:26 PM Chuck Kremer <chuckkremer@xxxxxxxxx>
wrote:
Feels like 2000 to me.
-Chuck
On Feb 12, 2020, at 3:23 PM, Bob T <bobtsgt@xxxxxxxxx> wrote:
I agree that we are seeing some weird times right now. Global virus is
attacking and killing more then SARS did but yet markets continue to go
back up. A company can beat earnings and bring in higher then expected
revenues but yet the stock price takes a hit because they are calling for a
slight slow down in the future year. I for one have been slowly taking
some profits on certain positions, waiting for the chance to buy them
cheaper.
Bobby
*From: *cchengbusiness <cchengbusiness@xxxxxxxxx>
*Sent: *Wednesday, February 12, 2020 9:35 AM
*To: *cincysmi@xxxxxxxxxxxxx
*Subject: *[cincysmi] Re: And Now For A Bearish Note
This is not necessarily a commentary on how much irrational exuberance
there is in the market, but I can think of three potential causes of the
lull in shipping:
1) Currently, the corona virus crisis has had significant impact on
shipping both to and from China. This is also evident in the commodities
trade.
2) Previous the trade war situation between US, China, and to a lesser
degree Europe.
3) China was already in something of an economic slowdown even before
the trade war, which had depressed demand for durable goods (cars, etc.)
and industrial goods (Caterpillar, Siemens, German exports, etc.)
Since China accounts for such a significant portion of international
trade, I imagine it's bound to impact shipping. Now how these situations
resolve itself may offer insight into how the shipping indexes recovers.
Best,
Charles
On Wed, Feb 12, 2020 at 6:12 AM Alan Shrock <alan.shrock@xxxxxxxxx>
wrote:
Both the Baltic Dry Index and the Cass Freight Index have been in a
downward trend for a while.
The Baltic Dry Index is related to shipping activity, while the Cass
Freight Index is related to land-based transportation of goods.
https://tradingeconomics.com/commodity/baltic
https://www.cassinfo.com/freight-audit-payment/cass-transportation-indexes/cass-freight-index
The attached graph shows the disparity in to growth of the Wilshire
5000 index versus Gross Domestic Product.. While the fact that GDP does
not include the value of services might explain some of the disparity in
growth rates, it still points to the fact that the markets have gotten
ahead of the value of goods produced.
Factor in that the Federal Reserve has been pumping tens of billions of
dollars per day into the repo market for months and I see an unsustainable
bubble in the making.
I think that we are seeing some irrational exuberance in the markets.
--
Alan W, Shrock
9513 Colegate Way
West Chester, OH 45011-9419
(513) 497-2634 (Mobile)
Latitude 39.319576500
Longitude -84.461717800
"Are we being good ancestors?" - Jonas Salk
--
Alan W, Shrock
9513 Colegate Way
West Chester, OH 45011-9419
(513) 497-2634 (Mobile)
Latitude 39.319576500
Longitude -84.461717800
"Are we being good ancestors?" - Jonas Salk
--
Alan W, Shrock
9513 Colegate Way
West Chester, OH 45011-9419
(513) 497-2634 (Mobile)
Latitude 39.319576500
Longitude -84.461717800
"Are we being good ancestors?" - Jonas Salk
