Bullish

Sentiment Update: Bullish Enthusiasm Reduced, But Not Eliminated

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What’s in Today’s Report: Sentiment Update: Bullish Enthusiasm Reduced, But Not Eliminated

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FOMC Meeting Preview

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The Expected Scenario:

- No tapering of QE in December, but a strong signal by the Committee that tapering of QE will happen in January or March.

- Tapering Logistics:  If asked about how tapering will work, the market expects to see an initial tapering of $10 billion-$15 billion, and the process to be linear (tapering the same amount each month or quarter, whichever they decide).  And, markets expect the first taper to be weighted toward Treasuries, while mortgage-backed securities are left alone (to help soften the blow on the mortgage market, although I’m not sure it’ll make much of a difference).

If this is what we get Thursday, don’t expect any significant, volatile reactions from the various asset classes, as again this is what’s priced in.  As far as how markets will trade beyond the immediate reaction, that’s a tough one to call.  We could either see a “sell the taper rumor/buy the taper news” reaction. Or we could see markets drop on the news, due as much to the calendar and the skittishness of money managers I’ve been talking about, given the gains so far this year. Read More

The Economy: A Look Back and What’s Ahead (12.16.13)

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Bottom line is it’s a big week from a policy and real economy perspective.

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Still Keep an Eye on SHY

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SHY: The last few days have seen the short end of the curve sell of moderately as a December taper becomes a possibility. As long as the decline doesn’t accelerate materially, though, tapering won’t kill the rally in stocks.

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Is the S&P 500 forming a double top?

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Is the S&P 500 forming a double top?

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Term Structure in Natural Gas Has Turned Bullish

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Any real commodity trader or analyst knows that watching the “term structure” of commodities can offer substantial insight into whether the trend in that commodity is turning bullish, or bearish. The term structure of natural gas has become significantly “backward-dated” in that the current month’s prices (for January delivery) are trading higher than February’s price. Prices for February delivery are trading at a higher price than March delivery, and this lasts all the way out until June 2014. Term structures can be an important indicator of physical demand for a commodity, and as the backwardation in natural gas implies, we are seeing a systemic increase in demand for natural gas—not just a temporary uptick in demand due to cold weather to start the winter. And, that is potentially bullish not just for natural gas, but for natural gas producers. Read More

The Economy: A Look Back And What’s Ahead This Week 12.9.13

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Last Week Last week’s economic data continued the trend of surprising to the upside, highlighted by the jobs report on Friday. The takeaways from last week’s data were threefold: First, from an economic perspective, the data further implied we’re seeing a mild uptick in economic activity, although nothing huge. Second, from a WWFD (What Will […]

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