The Market Perspective

Rates on the Rise

Weekend Feb 14 2021

I have used this space to warn of rising interest rates.   The lead editorial in the WSJ this weekend shows the national debt now equal to annual GDP.  The last time this happened was WWII.

That was understandable. This is not.  Team Biden is just beginning to spend money we don't have.  Friday the long bond crossed the  2% threshold.

One can clearly see the spike low during the worst of the initial pandemic sell off as the DJIA hit 18,000.  Rates have doubled from  1 to 2% since.

One of my friends said well 2% sounds low, it is but this is just the start of an up market in yields just at the summer of 1982 was the start of an up move in the DJIA from 800 to 31,000.

It is the trend that is important not the actual rate.  And the trend in rates is up.

The way to play this is the ETF TBF.

Rates will rise much faster than they fell.

20 Year view

Note the V shaped reversal. Next target is  2.5% at the  87 month MA.

NYSE Summation Index

the summation index fell as the NYSE bottom panel rose, a non confirmation and divergence.  Maybe it is emerging from  a fourth wave whether it makes a new high may be telling.

Social Mood

Investors have been wildly positive to this point as evidenced by wild bets on Gamestock and TSLA. Elsewhere mood is trending negative.

Protests continue in Moscow.

The treatment of Mr. Navalny may have lit the fuse for protests, but the rallies quickly became an outlet for Russians’ widespread grievances about falling living standards, collapsing infrastructure and chronic corruption, and mark a tectonic shift in relations between ordinary citizens and the Kremlin.

https://www.wsj.com/articles/protests-go-beyond-navalny-as-putins-reserve-of-good-will-wanes-11613313541

Nancy is zero for two on impeachment and is on boil about it

https://news.sky.com/video/oh-these-cowardly-senators-nancy-pelosis-reaction-to-donald-trumps-impeachment-acquittal-12217612

Italy has a new government what else is new

https://www.nbcnews.com/news/world/mario-draghi-forms-new-government-italy-politicians-technocrats-named-ministers-n1257670

And  Revenge on Trump has not stopped, now the AG of Georgia wants to prosecute him

https://dnyuz.com/2021/02/13/in-georgia-a-new-district-attorney-starts-circling-trump-and-his-allies/

Apparently she has murder, burglary, car theft all under control in GA

Let's watch the summation index this week.

 

A Bit Toppy

Thursday Feb 11, 2021

We have been looking for a a late January high, it lasted into February but now looks like it might pull back from here.

 

 

TBF continues to hold, marijuana stocks got hit hard today.

.Five Waves up Finaly?

Tuesday  February 10, 2021

 

 

It finally appears that we have five waves completed from the March low.

Attempts to call a top  thus far have all failed.

But if this is the high in the market, it would be celebrated by a fitting end, the 2nd ever impeachment of a President already out of office.

Marijuana stocks are smoking  pun intended.

 

Hedge

It is early to say if this is bottoming

 

action in Hedge but looks promising, more tomorrow

I will update tomorrow morning

Yields on the Rise

Tuesday Feb 9 2021

 

We have been warning of the rise in long term T bond rates.  That correct prediction is now showing up in main stream financial news.

https://www.yahoo.com/finance/news/surging-inflation-may-force-fed-160358143.html

 

Note the hilarious comment that the FED may need to cap long term rates, the last time that happened was when Volcker capped rates by letting them go to double digit extremes.  The FED follows no leads the market.

Summation Indexex Bottoming

Weekend Feb 7 2021

RSI at top of each graphy is turning up. PMO is approaching zero.

the newspapers and internet channels are chock full of stories of teenagers and even an 87 year old winnin g big on gamestop.

the bull market of  1982-2000 did not begin  this way.

Two Februarys a year apart

I am not predicting a 12,000 point fall as we had a year ago but confidence is too high when 8 year olds are winning big.

Bonds

The rate on the 30year bond fell from 12-14% in 1982 to .0823% during the pandemic.  thatr rate has already climbed to  1.974%, a doubling  from the spike low bottom.

Expect a long term advance in rates profit with a buy of TBF.

 

Stocks Defy Negative Mood

Friday Feb 5 2021

Stocks Defy Negative Mood..

The presence of widespread positive social mood leads to expansive behavior. People spend money and buy real estate and stocks.   Negative mood has the opposite effect with money flowing out of real estate and stocks.

The odd thing is that negative mood is evident in Congress. A second impeachment gets underway next week. Democrats just stripped a new Republican of her committee seats, apparently believing they will be in the majority forever. Maxine Waters wants former President Trump tried for murder, ramping up her call to harass Trump supporters at every opportunity.  Harsh words like impeachment, abortion, racism, and murder are tossed about like references to blue shies or green grass. Can such a trend be reversed?

My best explanation is that the lockdown has some 40% of workers doing just that from home. Money that was spent on transportation or going to lunch at work, continues to flow into the stock market.   the NYSE advance decline line has accelerated to a new high. It is the most reliable indicator of stock market direction. So despite similarities to the dot.com peak such as the speculation in Gamestop and AMC, the markets are headed higher.

As predicted, Team Biden has declared war on the oil and gas industry. Here is the rundown for year 2020 in Texas.

• 60,000 exploration jobs are gone
• Employment in exploration fell by 25%
• 150,000 upstream jobs remain, the fewest in 15 years
• Texas crude oil production hit a record 5.4 million barrels per day in March and plunged to 4.3 mbpd by May
• The number of operating drilling rigs olunged 60% to 155 by year end, the lowest level since the count began in 1944
• The number of drilling permits issued fell by half, the lowest sincxe the 1960s
• If automakers are going 100% electric by   2035, what will power the new demand for 25% more electricity-no one knows

Despite all that the price of crude has risen to about $57 a barrel. It seems that lower production and increased travel has firmed prices.

Why are we paying Congress to simply engage in Revenge Politics? Is Congress accomplishing anything positive for anyone?

We remind you that FED Chair Jerome Powell apparently cannot read a graph of bond yields. Since August the 30 year bond yield has risen from 1.2% to 1.943%, a 60% increase. As Team Biden throws around the kind of numbers usually reserved for astronomers, expect this process to accelerate. Granting student loan forgiveness will open a Pandora’s Box that will be hard to close.   Those who choose not to attend college and those who paid their loans will surely scream foul. And if one gets $50,000 in loan forgiveness, does one receive a 1099 from the IRS for that much income, apparently not. That has been the rule for loan forgiveness in the past.

2021 is shaping up to be an interesting year.

Changing World Order 221

use this link to watch Murray Gunn Changing World Order

Link: https://www.elliottwave.com/Investing/The-Changing-World-Order-in-2021?utm_medium=aff&utm_campaign=cr-cwo21&utm_content=eml&utm_term=affem&acn=11tmp&utm_source=11tmp&rcn=affem Suggested Subject:

 

Overthrow?

T
PMO toping ana bit of pullback at end of day,extended wave two?

DJIA

 

one can make the case that yes this was a terrific bear rally but it still just over  shot the downtrend line

 

we shall see tomorrow

 

The Real Gamestop

Tuesday Feb 2 2021

 

Not the total disconnect between. thee stock price and the actual company.

The retailer reported a $19 million loss in the most recent quarter, even as the ongoing pandemic helped lift the overall industry to record highs. Sales have fallen for 10 of the past 11 quarters, with the most pronounced declines occurring in 2020, when the overall sector grew 26%, according to NPD Group. GameStop has not turned a profit since 2017 and has gone through five chief executives in that time. Its current CEO, George Sherman, who formerly led Advance Auto Parts and Best Buy Services, took over in April 2019.

https://www.sandiegouniontribune.com/business/story/2021-02-01/gamestop-struggles-to-stay-afloat-despite-stock-surge

the original book on this topic was written I believe in  1836 - 1842.

It details the Holland Tulip Bulb Craze in  1636, the South Sea bubble and mississippi schemes of  1720.

Read those stories at this link

https://en.wikipedia.org/wiki/Stock_market_bubble

nothing new under the sun.

The Best Loved Stock in America Stair Stepping Down

Monday Feb 1 2021

Like the DJIA we showed intra day, BRK B is stair stepping down with surprising gaps on the chart.

Trend is changing on proxy stock CFR

Subtle but the trend is changing