There Is No Equilibrium Price - 10/26/23

[DrStool]

No, I don't mean stocks. The S&P is targeting 4135 today. That's the 5 day cycle projection based on the overnight and pre-market action in the ES, S&P 500 24 hour futures. The hourly chart suggests that the market is vectoring even lower, with something like 4195 looking possible, if not likely, later today or early tomorrow. So, bottom line, a little more downside today, then another short covering bounce and we'll see. 

But it's not exactly like we didn't see the possibility of something really bad coming our way, now was it? Beware of Bear Market Crash Potential If you haven't thought of subscribing yet, if not now, when? If not you, who? 😊 

Meanwhile, a lot of stock market bears keep telling us that we should be buying bonds. Haven't they already killed and buried their clients? Who's left to listen to them? The absurdity and denialism of their arguments is frustrating to say the least.

This is not about inflation or the economy. They are irrelevant and immaterial.  This bond bear market has been about the supply. It's still about the supply, and it will continue to be about the supply, until the Fed steps up and starts taking the lion's share of it, as it did with QE. 

And if the bond bulls are right and the economy does sink into recession, the problem will only get worse because the deficits will widen and the supply will only grow. 

Because the problem the bond bulls have is this, you see. There is NO EQUILIBRIUM price as long as the market is forced to absorb 100-200 billion per month in net new supply of Treasury paper, without the Fed taking or funding virtually all of it. That was true before, and it's true now.  

And the argument that the Federal government needs to cut spending to lower the deficit is hogwash. Where can they cut enough to achieve that? Nowhere. This is a revenue problem. And until the politicians grow up and start deciding that they need to collect the taxes to pay for the government programs that the majority wants, then this problem will go on. It will go on until we reach total collapse of the financial system, whether through Fed capitulation which leads to hyperinflation, or the other option, which is continued QT leading to total credit collapse.  

Unfortunately, the political means to tackle the US's fiscal problems do not exist. Instead, the fascists move toward taking control step by step. It will leave the US like Hungary, or Turkey, or worst of all, Russia. We are but frogs, out on the sidewalk on sunny, ever warmer days, feeling sleepier and sleepier, unaware that we are slowly boiling to death.  

Pax vobiscum. 

For moron the markets, see:

• Beware of Bear Market Crash Potential October 23, 2023
• Swing Trade Screen Picks – Which is Better, Late or Never? October 23, 2023
• When the Market Is Ready, an Event Will Appear October 16, 2023
• Dealers Pull In Their Horns October 14, 2023
• Veal Market – Baby Calves Get Slaughtered October 9, 2023
• Gold Breaks Down, With Long Term Implications October 5, 2023
• Tepid Tax Collections Mean It’s the Supply October 4, 2023
• The Rhymes of History September 24, 2023

If you are a new visitor to the Stool, please register and join in! To post your observations and charts, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam folder.

 

[DrStool]

I wonder if my positivity is good for business. 

[DrStool]

There are buyers for the 10 year at 5%. But how long can they sustain a rally? A few days? Weeks? A month or two. Watch 4.80. If they can't take that out, then we're looking much higher, much sooner. If they can manage to break that, the bond bulls may crow for awhile, but it will end in tears yet again. 

[TurdButter]

If/as the yield curve steepens, buying bonds out to 3-4 years is probably the least worst thing to do.

Simple Ewoof suggests we're in 5 of a 5th down, so actually a short term low should be soon.

Spittle flecked rants are never good for business. Guiding the energy to something a huge majority of citizens actually want-slashing US Empire costs-would be productive and save taxpayer resources.

[DrStool]

GDP beats. Futures traders cover shorts. 

[Jorma]

There are legions of securities which have found equilibrium at zero.

[DrStool]

35 minutes ago, DrStool said:

I wonder if my positivity is good for business. 

11 minutes ago, TurdButter said:

ISpittle flecked rants are never good for business. Guiding the energy to something a huge majority of citizens actually want-slashing US Empire costs-would be productive and save taxpayer resources.

Gallows humor, my friend.  

I assume that you are talking about the grotesque US "defense" spending. I don't know that a huge majority support that. 35% doesn't strike me as a huge majority. By my reading, 65% of the people think we are spending about enough or too little. 

https://news.gallup.com/poll/1666/military-national-defense.aspx

[DrStool]

3 minutes ago, Jorma said:

There are legions of securities which have found equilibrium at zero.

Yes, and when on their way to zero, they are culled from the market averages. Can you imagine where the S&P would be if all of them were left in the index? And not replaced with newer, growing businesses? 

[DrStool]

10 minutes ago, DrStool said:

GDP beats. Futures traders cover shorts. 

[potatohead]

1 hour ago, DrStool said:

No, I don't mean stocks. The S&P is targeting 4135 today. That's the 5 day cycle projection based on the overnight and pre-market action in the ES, S&P 500 24 hour futures. The hourly chart suggests that the market is vectoring even lower, with something like 4195 looking possible, if not likely, later today or early tomorrow. So, bottom line, a little more downside today, then another short covering bounce and we'll see. 

But it's not exactly like we didn't see the possibility of something really bad coming our way, now was it? Beware of Bear Market Crash Potential If you haven't thought of subscribing yet, if not now, when? If not you, who? 😊 

Meanwhile, a lot of stock market bears keep telling us that we should be buying bonds. Haven't they already killed and buried their clients? Who's left to listen to them? The absurdity and denialism of their arguments is frustrating to say the least.

This is not about inflation or the economy. They are irrelevant and immaterial.  This bond bear market has been about the supply. It's still about the supply, and it will continue to be about the supply, until the Fed steps up and starts taking the lion's share of it, as it did with QE. 

And if the bond bulls are right and the economy does sink into recession, the problem will only get worse because the deficits will widen and the supply will only grow. 

Because the problem the bond bulls have is this, you see. There is NO EQUILIBRIUM price as long as the market is forced to absorb 100-200 billion per month in net new supply of Treasury paper, without the Fed taking or funding virtually all of it. That was true before, and it's true now.  

And the argument that the Federal government needs to cut spending to lower the deficit is hogwash. Where can they cut enough to achieve that? Nowhere. This is a revenue problem. And until the politicians grow up and start deciding that they need to collect the taxes to pay for the government programs that the majority wants, then this problem will go on. It will go on until we reach total collapse of the financial system, whether through Fed capitulation which leads to hyperinflation, or the other option, which is continued QT leading to total credit collapse.  

Unfortunately, the political means to tackle the US's fiscal problems do not exist. Instead, the fascists move toward taking control step by step. It will leave the US like Hungary, or Turkey, or worst of all, Russia. We are but frogs, out on the sidewalk on sunny, ever warmer days, feeling sleepier and sleepier, unaware that we are slowly boiling to death.  

Pax vobiscum. 

For moron the markets, see:

• Beware of Bear Market Crash Potential October 23, 2023
• Swing Trade Screen Picks – Which is Better, Late or Never? October 23, 2023
• When the Market Is Ready, an Event Will Appear October 16, 2023
• Dealers Pull In Their Horns October 14, 2023
• Veal Market – Baby Calves Get Slaughtered October 9, 2023
• Gold Breaks Down, With Long Term Implications October 5, 2023
• Tepid Tax Collections Mean It’s the Supply October 4, 2023
• The Rhymes of History September 24, 2023

If you are a new visitor to the Stool, please register and join in! To post your observations and charts, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam folder.

 

excellent comments this morning

[potatohead]

 

[potatohead]

Feels like the bottom is going to fall out

[TurdButter]

Empire costs squirreled away throughout the budget and black box spending isn't seen anywhere.

And the 'woof' might be hacking up a hairball.

It's been a long time and memory is fuzzy but starting to get an "87-ish" kinda vibe.

[WTF]

NVDA looking to take the dive off the 400 platform... gap at 305 will be filled as it heads BTTB...

[DrStool]

5 hours ago, DrStool said:

The S&P is targeting 4135 today. That's the 5 day cycle projection based on the overnight and pre-market action in the ES, S&P 500 24 hour futures. The hourly chart suggests that the market is vectoring even lower, with something like 4195 looking possible, if not likely, later today or early tomorrow.

Still like this.