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Wisdom 4/6/23


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11 hours ago, SiP said:

Making money on the markets in my opinion is getting harder and harder, or is it getting easier? It depends how you look at it.
Unfortunately, it doesn't matter how much time I spend analysing the news, data from the economy, following twitter, gurus, or even liquidity analysis that nevertheless assumed declines or at least a difficult period for the markets in the last months. I hardly know people who have made a shit load of money since October 2022.
To me the only rule is - trade what you SEE, f. the rest and what you THINK. Which is mega hard. I read a news about bankruptcies, upcoming recession, banks and CRE problems and what the market did? Well, you you know.

WTF?! its really hard for me to find the logic here. just plain TA. Nothing more, f. the rest

Really. There's nothing to add. 

Well, maybe the fact that the US Treasury is pumping $55 billion in cash into the accounts of various dealers, investors, and others in the week of April 4-11, with more to come throughout April. Maybe that matters

Meanwhile, in the here and now, the ES 24 hour S&P futures have bounced off the bottom of the uptrend channel on the hourly chart, now in its 9th day. This is consistent with a 5 day cycle upturn that's ideally due to top out on Monday or Tuesday, depending on whether or not Good Friday counts. If this thing clears 4092 this morning, the next step should be 4107, then up, up and away if they get through that. If that happens, then on Monday we'll all say, "Look, it is risen!" 

-py87

Meanwhile, the 10 year Treasury yield has edged to a new low in the massive 6 month top pattern. But it hasn't broken down because the neckline is ever so slightly descending. It's at about 3.24 currently. If it breaks down, the conventional measured move target would be 2.24. That would go a long way toward a self mitigating banking crisis. But such a move would have a horrendous corollary in stocks. But the timing of that won't be concurrent. It will be more of a delayed reaction.

The short term cycle projection is 3.05, which implies that yes, a breakdown is coming. 

-pya5

Living in Europe on a US dollar income, I was very happy when the doolah was soaring and the yeerow was sliding. 

Now, not so much. Currency pair value trends are always a matter of relative central bank policy, for example whether the Fed is printing more than the ECB, or vice a versa. Or in the recent months, which is tighter, i.e. which is pulling more money out of the worldwide sea of money (aka liquidity). 

In the current situation, the more emergency printing the Fed does relative to the ECB, the more dollars will be around relative to euros, and the stronger the euro will be against the dollar. I have bought some euros in recent months, but not enough. Now the question is whether to average up. Is this situation of the Fed being easier than the ECB temporary, or long term. I don't have the answer. I suspect that it will see saw, so maybe I should pay more attention to the daily TA. 

-pyht

Now let's take a longer term view of SafeCoin, fka Buttcoin. The BDC (Bank Diarrhea Crisis) has changed everyone's perspective on BTC, including mine. If you buy it through an exchange, you're still at risk. There's hacking risk. There's the risk of forgetting the password to your BTC wallet. There's AI risk. I mean what if it takes over the world. We're all dead, right? So there's that. 

But in terms of big money looking to get out of the banking system, this is another underground parking lot where the only thing you might need to worry about is the occasional smash and grab. Or at least some people see it as a safe parking place. So it broke out of this big saucer base, with a price target of 34-35k. THe 9 month cycle projection is 32-33k. Take that FWIW. 

-pyk2

 

I've never been much of a gold bug, but I think I'm getting religion. Again, great way to avoid the banks, right Bob? 

But also technically, muy interesante! Update on this coming Tamara.

-pyls

Also coming up at Liquidity Trader, an update on real time Federal Tax Collections including the data for March, in particular Withholding taxes. No need to guess what the US economy is doing. We have the tax collection data through yesterday. 

For moron the markets, see:

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Tax collections for March, and the month ended April 4, were so weak that they indicate that the US economy is now in recession. Non-subscribers, click here for access.

Subscribers, click here to download the report.

If the BLS were tied to reality, that would mean a very bad Nonfarm Payrolls report coming up Friday. Yes, the report is scheduled for the first Friday as usual, even though the markets are closed. Non-subscribers, click here for access.

The bottom line is that the report should be a shocker, which I explain below. And that will be xxxxxxxx for bonds, and xxxxxxx for stocks. Non-subscribers, click here for access.

However, the usual seasonal tax bulge in April funds Treasury paydowns which stuff cash back into the pockets of dealers and investors. That could temporarily xxxxxx xxxxxxxx xxxxxxxx xxx effects of a weak jobs report on stocks. Non-subscribers, click here for access.

The consensus median forecast of the priesthood of Economism is for a gain of 238,000 jobs in March. If reality mattered, which it does not in the initial release, then the number would be negative. That won’t happen, but if the weakness in tax collections persists this month, then the BLS will be forced to catch up in the months ahead. Non-subscribers, click here for access.

We’ve seen that they can do that in one of two ways. They can revise previous months, or they can use their screwed up X13 Arima moving average to adjust the current month. X-13 ARIMA is like a paint brush that uses 5 years of imaginary future data to paint a picture of current reality. The BLS uses that to apply often absurd assumptions to adjust the current month to refit what happened in the past. It’s why the BLS Nonfarm Payrolls report is something more akin to impressionistic art than actual economic data. Non-subscribers, click here for access.

Eventually, they do fit the curve to what actually happened, but the process includes two monthly revisions and a once a year benchmark to real data. So it usually takes a year to adjust the current month to reality. Then there are additional annual benchmark tweaks for 4 years after that to account for the imaginary X13 ARIMA smoothing data that was initially applied. So the chart lines you see for nonfarm payrolls from traditional sources are actually fit to reality AFTER THE FACT. Non-subscribers, click here for access.

Withholding tax data has no such shortcomings. It’s real. It’s real time. And it is raw, unadjusted fact. We just smooth it so that we can make meaningful comparisons year to year and month to month. The easiest way to interpret it is to simply put it on a chart and look at it with our own two eyes. We don’t need no damn fool Wall Street egonomists to tell us what it means. We can see it for ourselves. And the chart is ugly (subscriber report). Non-subscribers, click here for access.

Again about the jobs report, I’ve observed that the new BLS reports tend to correlate more with the withholding data from two months before, not the previous month. That stands to reason because the BLS surveys employers on the 12th of the month. So the report for March is based on an employer survey as of March 12. That would mostly tend to represent February payrolls, not March. And therefore it would correlate more with February’s tax data. Non-subscribers, click here for access.

February’s withholding tax collections were way below January’s collections on a year to year change basis. And March was even worse, in fact, negative. So there should be a couple of shockingly bad jobs reports ahead. xxxxxxx for the bond market, and therefore for the idea of a potentially xxxxxxxxxxxxxxxx banking crisis. The scarier it gets, the more the market turns toward buying bonds, pushing yields down and prices up. xxxx xxxxxxxxx xxxxxx xxxxxxxxxx xxxxxxxxx xxxxxxxx problem of massive hidden losses on bank balance sheets. Non-subscribers, click here for access.

In that regard, weak jobs numbers would be just what the doctor ordered in the current environment. For bulls or bears? Find out in this report. Non-subscribers, click here for access.

Subscribers, click here to download the report.

KNOW WHAT’S HAPPENING NOW, before the Street does, read Lee Adler’s Liquidity Trader risk free for 90 days! Act on real-time reality! 

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The hidden losses will recede if they own USTs or other 'high quality'  debt. If they own some structured, pass thru item dependant on 72 month car loans made in the past year maybe not so much. Credit problems are the next piano for Wile E's head and those are the killers.

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6 minutes ago, TurdButter said:

The hidden losses will recede if they own USTs or other 'high quality'  debt.  

Depends on the direction of prices. So if, and only if, there's a bull market in bonds, yes. Self mitigating crisis.  

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For the week ended April 5, there were 60 charts with multiple buy signals as of the last two trading days. There were 53 multiple sells. Plenty of charts to visually review on both sides.  Non-subscribers click here for access.

Technical Trader subscribers click here to download the complete report.

On the buy side, I did see lots of structural base breakouts that looked well supported. Most were in Utilities and Fixed Income. Yawn. I added one of them, and a couple of others that were more interesting in terms of beta.  Non-subscribers click here for access.

On the sell side, I found 4 charts to add as shorts.  Non-subscribers click here for access.

Of the two picks left over from last week, one hit its stop. The other is hanging out. The performance or lack thereof, of existing picks is shown on the table below (subscriber report). New picks will be tracked as of the 1 PM ET price on Thursday April 6. No stops this week.  Non-subscribers click here for access.

Technical Trader subscribers click here to download the complete report.

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2 hours ago, TurdButter said:

Credit problems are the next piano for Wile E's head and those are the killers.

CDO's in Credit Cards, Autos, Commercial real estate, Corporate Bonds, Tranches issued by other CDOs (:wacko2:), on and on and on....

If credit defaults start to mount, we will soon find out who is holding all this shit.  Forget about the interest rate risk on US government bonds (they at least have no chance of default, unless political stupidity), wait until the actual losses from the structured debt start working their way up the tranches.

Wonder if Insurance companies might be holding mountains of this after chasing after higher yields in the past decade of fed funds zero interest rate?  If the SHTF, even AAA tranches are not going to go unaffected.  God help the lower tranches...

Thinking of retiring with a nice pension?  Guess what your pension fund is holding?

If the payments stop coming in on the credit cards, auto loans, ect.... (even if it is backed by collateral, what will the losses be in a forced sell of the collateral in a weak economy when everyone else is also selling?), JUNK first, then investment grades are going to get punished.

So far, not much fear in the High Yield Bonds.  But if that begins to change and they start to sell off (yields rise) it will be the warning sign of much worse to come...

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13 minutes ago, WTF said:

If credit defaults start to mount, we will soon find out who is holding all this shit.

As sure as night follows day, when defaults mount, we are imposed to take involuntary custody of all this shit....

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1 hour ago, Jimi said:

As sure as night follows day, when defaults mount, we are imposed to take involuntary custody of all this shit....

The bag holders of last resort, the US taxpayer... unfortunately I can't argue with you.

Privatized profits, socialized losses... a great business model if you can get it.  Encourages only the safest of investments!!!  Heads I win, Tails you lose...

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2 hours ago, WTF said:

CDO's in Credit Cards, Autos, Commercial real estate, Corporate Bonds, Tranches issued by other CDOs (:wacko2:), on and on and on....

If credit defaults start to mount, we will soon find out who is holding all this shit.  Forget about the interest rate risk on US government bonds (they at least have no chance of default, unless political stupidity), wait until the actual losses from the structured debt start working their way up the tranches.

Wonder if Insurance companies might be holding mountains of this after chasing after higher yields in the past decade of fed funds zero interest rate?  If the SHTF, even AAA tranches are not going to go unaffected.  God help the lower tranches...

Thinking of retiring with a nice pension?  Guess what your pension fund is holding?

If the payments stop coming in on the credit cards, auto loans, ect.... (even if it is backed by collateral, what will the losses be in a forced sell of the collateral in a weak economy when everyone else is also selling?), JUNK first, then investment grades are going to get punished.

So far, not much fear in the High Yield Bonds.  But if that begins to change and they start to sell off (yields rise) it will be the warning sign of much worse to come...

Amen!

The sponsorship for CLO / ABS BBB mezzanines is collapsing as ratings are no longer sufficient for insurance and pension participation and the NAIC has already announced they are going to crack down in insurance company sponsorship. Insurance companies own $255 billion of this garbage (about half the market). And you can’t securitize without them. Synthetic ABS is going to implode. The NAIC will no longer allow CLOs, CMBS, and CFOs to be considered "exempt" from filings. I expect pensions and insurance companies to be stress tested in future as well. The GILT blow-up was a warning short. They pose an existential threat to the Treasury market. Time to end the Fed put and ZIRP. We have no other way forward with $30T in debt.

High yield issuance is down 85% year-over-year. Basically, there is no issuance anymore. And trying to judge actual yields using JNK or HYG doesn’t capture real yields required to make new issuance pencil out. These ETF mainly trade about two dozen energy sector companies, all the other 1080 or so names haven’t traded in years. Open ended bond funds like HYG should also require stress tests. And they are already showing wear-and-tear. HYG is 1.2% below net asset value and JNK is 1.8% below net asset value.

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19 minutes ago, WTF said:

The bag holders of last resort, the US taxpayer... unfortunately I can't argue with you.

Privatized profits, socialized losses... a great business model if you can get it.  Encourages only the safest of investments!!!  Heads I win, Tails you lose...

Exactly! Next up from congress? Taxpayers need better returns on their social security trust fund. To that end they will introduce a bill for the social security trust fund to buy all the toxic shit just before private equity, insurance companies and pension funds are about to implode. 

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The Federal government is about to be in a world of hurt for funding in the next couple of years. I'd suggest they starting auditing all those tens of thousands of companies formed in the Cayman Islands in the lest half dozen years holding trillions of dollars and requiring them to disclose where all that money came from. The size of these beasts has grown gigantic in a very few years.

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6 minutes ago, sandy beach said:

The Federal government is about to be in a world of hurt for funding in the next couple of years. I'd suggest they starting auditing all those tens of thousands of companies formed in the Cayman Islands in the lest half dozen years holding trillions of dollars and requiring them to disclose where all that money came from. The size of these beasts has grown gigantic in a very few years.

                                             MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES
                                                       (in billions of dollars)
                                                     HOLDINGS 1/ AT END OF PERIOD


                                  Jan     Dec     Nov     Oct     Sep     Aug     Jul     Jun     May     Apr     Mar     Feb     Jan
Country                           2023    2022    2022    2022    2022    2022    2022    2022    2022    2022    2022    2022    2022
                                ------  ------  ------  ------  ------  ------  ------  ------  ------  ------  ------  ------  ------

Japan                           1104.4  1076.3  1082.3  1064.4  1116.4  1196.0  1230.7  1232.7  1219.9  1215.0  1229.0  1303.0  1299.9
China, Mainland                  859.4   867.1   870.2   877.9   901.7   938.6   939.2   938.8   951.8   976.0  1013.2  1028.7  1033.8
United Kingdom                   668.3   654.5   645.8   641.3   664.8   646.5   636.6   617.3   636.5   614.3   636.5   627.0   610.7
Belgium                          331.1   354.3   332.9   327.2   325.0   287.8   285.4   273.5   268.2   255.6   264.5   258.4   243.0
Luxembourg                       318.2   329.4   311.1   298.4   299.9   308.4   306.5   309.3   296.5   296.2   303.2   316.4   313.0
Switzerland                      290.5   269.7   266.5   258.4   273.3   290.6   283.1   291.5   287.1   268.0   270.7   278.0   295.4
Cayman Islands                   285.3   283.8   283.5   291.7   301.5   308.6   293.4   302.3   295.4   292.5   293.9   275.9   272.1

 

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