Massive Break-Out in Trade-Weighted USD vs. SPX Signals Intensification of Global Financial Stress
In the first chart below I show a scatter plot of the weekly returns in the trade-weighted USD (USTWBROA; y-axis) vs. gold (x-axis) dating back 20 years into 1995. The red dot is this week’s data point. Note that this…...
Channeling Wayne Gretzky
Over the past few months we’ve outlined in increasing detail and conviction within the site’s bear market category that the global bull cycle from 2009 had likely come to its end in 2015. The framework we’ve used in building that case…...
Ratio of Advancing vs. Declining Issues on NYSE Increasingly Washed Out, But Must Equity Prices Rise Sustainably as a Result?
Top panel below you’ll see a 10 day MA of the ratio b/t NYSE advancing vs. declining issues; bottom panel is a plot of the SPX. As of the Wednesday close this ratio printed 0.55. Dating back to the ~1987…...
Nimr al-Nimr as Franz Ferdinand (Echoes of 1914 Update)
As far back as 7/23/15, three weeks before the CNH devaluation and a full four weeks before global risk assets began plunging, I laid out what I thought was a compelling case for the period of 2004-2015 for emerging market equities…...
WMT Attractive on a Relative Basis
Suggested a long in WMT on 11/18/15 when the stock was ~$60 in this post. With today’s gains the stock is now printing ~$63, so ~+500 bps since then. By contrast, the SPX is -300 bps over the same period. That’s…...
Russell 2000 Finalizes Bearish Topping Pattern with Significant Breakdown to Start 2016
Per the chart below, with today’s material break-down in global equities, the Russell 2000 appears to have completed a major, bearish, head & shoulders topping pattern that has formed over the past two years. Similar patterns formed around the index’s…...
Unveiling a New (Bullish) Framework for 2016
I generally believe the name of the game when it comes to my investment process is to idea-generate objective, fact-based historical frameworks – be they statistical, technical, analog or all of the above – that help map out various contingencies of how…
The Diminishing Marginal Utility of Global QE
In the chart below I plot total U.S. market cap and the size of the Fed’s balance sheet (B/S) in the top panel; in the lower panel I plot a ratio b/t the same two items [market cap / (Fed B/S)]. Disregarding anything…...
TED Spreads Lead & The Real Driver Behind The Fed’s Decision to Hike Rates
I’ve written a good deal this week about TED spreads blowing out significantly recently. Today I wanted to look at snapshots of the last few times TED spreads have blown out like they are now to see how the equity…...
China’s Depression Set to Intensify in the Early Part of 2016?
Based on the significant deterioration over the past year or two in electricity production in China alone, some might assume the country is in depression. Comparing the SSEC’s decline off its Jun-15 high to the move the SPX took off…...