Do we need to adjust our way of looking at the markets?
Chris says we need to assess the way we all look at these markets to make the best investing decisions. The driver in the markets continues to be the US dollar and Euro trade.
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Interesting thought jj on Yellen’s comments and Friday’s NFP.
I no longer know what a bullish NFP number is – is it more or less jobs?
good point Bob if I’m understanding your comment correctly, weak jobs data suggests rate hike cycle pushed off sending US equities higher, yes what ever happened to market fundamentals, gone, everything is trading off cheap money
The fed is like a wedge on a chart, break out our break down the time is closing in on Yellen talking economic recovery and her acting on it by raising rates, Fri NFP reaction will be very interesting
I would be surprised to see a NFP that beats estimates. That said I don’t have a crystal ball.
I agree that the bond market and Yellen’s comments do point to a possible rate increase…
Of many scenarios, I agree that this is the most probable…though I have talked a fair bit about the “Stagflation lite” scenario unfolding, it’s still too early to back up the truck.
This was actually a response to jj…still don’t know how I often end up WAY below where I thought I’d appear!
Temple,
Your comment that it’s easy to see what’s happen in the markets is true IMO.
The dollar is about to blastoff which should make PMs and oil drop hard. PMs much more than oil. The markets were iffy there for a while, but now it looks pretty clear.
There always is the Fed curveball however.
This next run up on the dollar to maybe 105 or so should be the top for many years. Somewhere near 105 is when the dollar/euro hit parity.
I tend to agree Chartster for the mid-term…. but want to see what happens for Friday and the beginning of next week to see if we get any market surprises.
In the short-term, I could see the dollar sell off a little more and have a 92 target where I expect it turn and over a few months break that March high of 100.39, possibly going as high as 110. I think this will be the final run for the dollar and then expect years of declines.
As for PMs, there can be a case made that if the jobs number is really ugly, that Gold may pick up a safe haven bid temporarily giving it a pop, and traders may think this will push off the Fed rate hike until 2016. Having said that, when the dollar does turn around and start heading higher it will pressure all commodities and this is what will force the major bottom in the CRB Commodity index to its major low.
While it was possible the 210 was the low on the CRB index, I am not really convinced of that, and think we may have a little further to drop. Yes, there is strong support at the 183-184 level where it double bottomed in 1999 and 2001, but also think it is unlikely it will be that perfect and bottom there again. My best guess is that we’ll split the difference between that level and the most recent low at 202.47, so that would put in the 193 area. I definitely think we’ll break 200 on the major bottom.
Chris is right. I am crying over my oil position today. :(……
Great commentary Cory and Chris !
The housing crisis as we were suppose to believe was not a housing crisis at all. In reality it was a credit default swap crisis led by the housing crisis.Credit default swaps were around 6x subprime debt.
The problem is worse now due to the OTC derivatives and the threat of contagion.
Contagion is a large worry of mine. It is hard to know exactly what will be impacted and how hard but that fact is very little is safe in my eyes.
Excellent commentary Chris! Many thanks. I really appreciated what you were saying and found myself nodding my head in agreement to almost all your comments today.
CNN evening news reported that the rebels have gain a majority control of a major refinery near Mosul, Iraq. Meanwhile India and China are striking deals with Iran while our US Congress banters about doing their best to keep our unilateral sanctions in tact. Sometimes, it’s just plain silly to watch them bluster cause it sounds so good to be so tough.
The parallels between Iraq and Vietnam grow ever brighter. Instead of a Madam Butterfly, we find ourselves propping up a pro-Iranian potentate who is supposed to be on our side. Oh boy, he’s supposed to be our boy! Our boy who all too often finds himself dancing on hot coals and tiptoeing on knife blades. Indeed, the legacy of the Bush Dynasty lives on–as does the civil war in Iraq and the unraveling of the Middle East.
As a side bar: everyone laments the death of a police officer killed in the line duty, which is understandable. Now multiply that by a few thousand and you have the body count of dead US soldiers killed policing the streets of Iraq under the nationbuilding phase of our ill gotten undeclared war–and ne’er a peep from the corporate media. These soldiers worked 24/7, weren’t paid overtime, and couldn’t turn in their badge if they wanted to–but there our 1,000s dead and tens of thousands permanently disabled–yet out of sight and out of mind..
I don’t know if its important but the Shanghai is currently down 8% since April 28th and the declines there began right about the time the long bond (30 year) started to sell off. Should the Shanghai declines continue in China today we might anticipate a correction in US markets is coming soon….possibly to get underway early next week. In any event I see this drop in Asia as a good buying opportunity so I hope its correction goes a little deeper than this very minor decline thus far.
The main driver behind the US$ is the interest rate outlook, bond market is suggesting a Fed rate hike cycle to kick in, bullish NFP Fri will suggest June is again possible, Yellen saying US equities are overvalued suggest rate hikes are coming.
If this is the case the US$ will be testing 100 again sending the Euro$ rolling over will also send oil back down as oil and the euro have been trending together, chart it