Thought of the Day

There are some signals that suggest we are entering in a Recession. However the market is near all time highs. My view has always been that the falling market precipitates the recession and not the opposite. Fortunately we have a tool to tell us what the stock market is going to do. the stock market

yes the stock market is the best predictor of the stock market

Yes it looks a bit circular but there are signs than precede dangerous markets and those are not all present. As Charles Gave of Gave kal says the only thing you have to do is to find out if there are more fools or more money.

To me I still see more money than fools. Usually the marked sells off after the FOMC meeting and that did not happening. Let's give the market a chance. We are in range since jan 2018 perhaps after a difficult period we will get an easy period.

I am in NY and NY is not the world but

terrible traffic
i rented a city bike USD 12 a day and even with a bike i can not circulate in midtown
doesn't look like a recession
Supermarkets don't sell wine!
in restaurants wine is crazy expensive
GAP stores disappeared from midtown. No more toys shops too. Real estate too expensive to sell jeans
NY is different from Europe people have lunch during lunch time meetings. That is a very useful habit.
Full of events after hours with my hedge fund friends from NY.
beautiful city

I spend the day in a great Hedge fund conference in Stamford
at the end of the day i was invited by a friend for a boat sunset ride!
amazing

notes

the houses in the Connecticut water line are like palaces. i wonder who want to live there! not my wife!
In USA everything is old but works great (trains etc.....). newark airport is a mess but works
the price of a data card for the cell phone is USD 75 too much
spend 2 hours clearing border/passports
I tried the train to Penn station. better than the cab.
If you have nothing better to do read John Corey (Nelson DEmile_) novels the best ever.
I saw a friend that start Keto diet i could not recognize him (I need to be more radical)
Today i will have a day full of meetings in NY with sunshine . what else do i need.
I plan to rent city bikes to move around
I went to Whole Foods love it all.
Tomorrow i will report more

The market rallies into the meetings and then .......BUM or at least cools a bit

If the FED does not cut 25 b.p. it's going to be fireworks.

From Gary Savage weekend report

Those red arrows are FOMC meetings. As you can see most of the time the market rises into an FOMC meeting and then drops afterwards.

I read this from Gary Savage service

Of course the big question is whether this a game changer for oil? I really don’t have a good answer at this moment. I’m always hesitant to assume a news event will drive markets for anything other than a short term move. Most of the time the world recovers and goes back to doing what it was doing before the event. I suppose it will depend on how long the market thinks it will take for the damage to be repaired and the plants come back on line.

News does not drive markets or prices; it is the markets that drive news

If you really like to trade news do this

take note of the high and low of the first hour after the news

after if the market stay 15 minutes above the high or low put a position on the direction of the breakout with a stop in the other side

i believe this is a low quality trade.

don't trade news, it does not work

best strategy buy a boring market that is going up
sell a boring market that with no reason is going down. these are quantity trades when no one knows why the market is moving

I think it works like this

Start QE, Central Banks buy bonds,more liquidity a bit more inflation economy gets stronger, PMI rise lower Bond Prices higher rates

QE ends. stop buying bonds less inflation lower PMI's, higher Bond prices lower yields

QE is not good to bonds it's good for stocks

A sudden shift from momentum stocks to value plays could mean investors are betting on higher interest rates.

From Sentiment Trader.com

What is my take!

Don't bet in the reflation
Technology is deflationary
if there is no war there is deflation
we are in the brink of a slowdown if we are not already in recession
There is a pull to zero because there is more money than opportunities
JCP is not the future for sure

But don't be fooled, this rotation can be nasty, you need to survive this rotation. In order to do that i am recommending 5 things to my clients

1.if you panic panic fast
2."Be sure you put your feet in the right place, then stand firm"
Abraham Lincoln
3.Do a shopping list , if MA (Mastercard) trades at 250 you buy one unit if it trades at 200 you buy another unit etc...
4.Don't buy JCP it's a lousy future. I have been there
finally these rotations precede market crashes or Breakouts. In the past mostly good times for the market.

PS Do your list. these opportunities are rare.

If Trump does not put the markets down the FED is not going to CUT 50b.p.

Trump doesn't need the market rallying now

he needs the market rallying in 1 year

how to do it

prevent a big rally now, get the FED to cut now enjoy big rally next year