No. of Recommendations: 6
- DXY (dollar strength index vs other currencies) has moved up a bit, often occurs along with market drops.
https://www.marketwatch.com/investing/index/dxy-----------
- VIX has moved up recently, now over 20, rising VIX is also associated with markets dropping.
https://www.marketwatch.com/investing/index/vix- Literally yesterday, financial news talking about the VIX staying under 20:
https://www.marketwatch.com/livecoverage/stock-mar..."Closes below 20 for 15th straight day"
- How quickly the world changes!
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- Fear and greed seems to have made a 'top' sort of shape. Peaked 80/81, now 72.
https://edition.cnn.com/markets/fear-and-greed- And the metrics that are used to make it, all seem to be bottoming out / topping out at the same time.
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- $SPY appears to have peaked at $417 recently and is set to open around $405 in the futures market.
https://finance.yahoo.com/quote/SPY?p=SPY- $QQQ set to open around $298
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- Memes dropped back in the last few days.
https://finance.yahoo.com/quote/COINhttps://finance.yahoo.com/quote/AMChttps://finance.yahoo.com/quote/ARKK- Cryptocurrency too, Bitcoin from $24k to under $22k
https://finance.yahoo.com/quote/BTC-USD-----------
- Long term treasuries have dropped back a bit.
https://finance.yahoo.com/quote/TLT- To a lesser extent so has the broader bond market.
https://finance.yahoo.com/quote/BND-----------
- Rates are to continue rising in Europe and the US, market expectations are slowly moving up.
https://www.bloomberg.com/news/articles/2023-02-08..."Traders Are Starting to Put Big Money on the Fed Going to 6%"
- In the EU...
https://www.ecb.europa.eu/press/pr/date/2023/html/...- One analyst ("Dwor-Frecaut") believes, per Taylor rule, rates will go to 8% in the USA and yield curve will invert further.
https://www.bloomberg.com/news/articles/2023-02-09...-----------
- Yield curve is very inverted and has been inverted for an unusually long time.
https://www.bloomberg.com/news/articles/2023-02-09..."Treasury Yield-Curve Inversion Reaches Deepest Level Since 1980s"
- The current situation makes both 2000 and 2007 look quite brief, mild inversions.
https://fred.stlouisfed.org/series/T10Y2Y(Set this to "MAX" on the top right).
- The FT has written an article called "How Steep Is Your Curve?"
"We're living in a world of fools, breaking us down, when they all should let R* be higher by 150-200bp"
https://www.ft.com/content/073f3c0e-4766-45e9-89a1...- It makes an argument that yield curve inversion today is tied to beliefs about the 'neutral' rate of interest.
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- Estimates of future earnings for 2022/2023/2024 continue to fall.
- High PER plus low or zero earnings growth is a very bad combo.
https://twitter.com/MichaelMOTTCM/status/162239206...-----------
- Some countries have seen unexpected increases in inflation rates despite rate rises (e.g. Australia).
https://www.business-standard.com/topic/inflation-..."Pak Inflation Creates New Record In Jan, Hits Highest Level After 1975"
"Australian Dollar Jumps, Kiwi Slumps After Unexpected Inflation Data"
"Egypt's Annual Headline Inflation Increased To 21.9% In December 2022"
- It's interesting to wonder what will happen to the US market if the next reading comes in hot.
- It will be interesting to see the effects of the Chinese economy unlocking upon world inflation, in terms of supply/demand changes.
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- Unusual currency moves continue
https://www.bloomberg.com/news/articles/2023-02-06..."A Housing Crash Takes Down the Krona and Sounds Inflation Alarm"
"Swedish currency tumbles to its weakest vs euro since 2009"
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- "Troubled situations" continue to develop.
- Adani group losses at $117 billion so far. Norway's sovereign wealth fund has dumped everything Adani this week.
- Credit Suisse in poor shape.
- The war in Ukraine is escalating in terms of people and materials.
- It appears a major Russian 'anniversary' attack that has been prepared for months, with twice as many soldiers as the original invasion, has now begun.
https://www.bbc.co.uk/news/world-europe-64551937https://www.bbc.co.uk/news/world-europe-64528580https://news.sky.com/story/ukraine-war-latest-news...- The earthquake in Turkey shows that terrible new national events can strike anywhere, instantly, unexpectedly.
- Avian Flu H5N1 (56% death rate in humans) birdlife outbreak is spilling over to more mammalian species.
https://www.politico.eu/article/who-issues-warning...https://www.bloomberg.com/opinion/articles/2023-02...-----------
- New strains of covid continue to show up.
https://asianews.network/thailands-new-kraken-orth...https://www.medpagetoday.com/special-reports/featu...- Here's an interesting link. Very recent, and pre-print.
https://www.biorxiv.org/content/10.1101/2023.01.16..."Extraordinary Evasion of Neutralizing Antibody Response by Omicron XBB.1.5, CH.1.1 and CA.3.1 Variants"
"However, CH.1.1 and CA.3.1 variants were highly resistant to both monovalent and bivalent mRNA vaccinations. "
- "Bivalent" vaccination means the latest revised generation of booster that some of you will have taken in October-December 2022.
- Not good.
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- Housing markets continue to flatten or decline, globally. Some declining near the fastest pace on record.
https://www.afr.com/wealth/personal-finance/histor..."On our estimates, Aussie housing should register its worst cumulative loss
in 42 years within two to three months."
- UK
https://www.theguardian.com/business/2023/feb/09/u...- It's starting to get people nervous about the broader economic shock.
https://www.fool.com.au/2023/02/10/could-an-aussie..."Meantime, Australian home values are falling at their fastest and steepest rate ever, amid the most aggressive interest rate hiking cycle on record. So, are we going to have an Aussie house price crash, and will it take the ASX 200 with it?"
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- Jobs data in the US has been unexpectedly strong.
https://tradingeconomics.com/united-states/non-far...- 53-year low and the nearest points of comparisons involve large stockmarket crashes.
https://i.redd.it/qymko8sccbga1.jpg- The Fed is warning of higher rates than previously discussed if it continues.
https://www.ft.com/content/10b6d4f2-d48f-401f-8407...-----------
- Interesting moves in ETF flows:
https://www.reuters.com/markets/us/us-equity-funds..."U.S. equity funds see outflows for 12th week in a row"
https://www.etf.com/sections/features-and-news/sqq..."SQQQ Inflows Soar as Investors Bet Against Tech"
- ETF flows tool. Can be interesting if you look at a few weeks data.
https://www.etf.com/etfanalytics/etf-fund-flows-to...-----------
- Options market continues to be totally dominated by 0DTE bets (zero day to expiry / same day). Around half of all options trading.
- These allow you to obtain e.g. 100-1000x gearing on your bets for one day, easily and without risk of the account going below zero.
- Very popular with young investors.
https://www.barrons.com/articles/zero-options-fuel...- I read recently, in several places, that many funds have unwound put/short positions as the market rallied. However I can't find a single source for this claim right now. The impact of this would be that if we see a sudden drop in the market, there may be no 'forced buyers' at the bottom to slow or soften it. If someone knows a source let me know. This would be different to the drops in 2022.
- Some are noting possible parallels with modern option trading and 'portfolio insurance', whereby as the market goes down, everyone is forced to sell at the same time.
https://za.investing.com/analysis/options-market-s...- A similar effect could occur with very cheap out-of-the-money puts that start out on low delta. As the market dumps quickly, market makers need to quickly sell short so they're not on the hook for growing losses on the put options as they move towards 'in the money'. Short dated, well out-of-the-money options were not so popular historically but nowadays, among young adults who gamble on stocks, they are extremely popular. They offer a chance to get a massive win in a short amount of time, little money needed, and no change of a negative balance, and with an element of skill and timing involved in guessing when a crash might come, and how quickly.
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Please feel welcome to add any other interesting topical observations to this thread...
