Monday, April 28, 2014

Some Monday morning news

Here's a few little boring newsbits:

BI - traders are buying the dips. And for those doomers predicting an imminent crash in the US economy, here's a quote from Ed Yardeni:
"I’ve previously made the case for a secular bull market in stocks on the premise that subpar economic growth in the US and around the world reduces the likelihood of a recession," wrote Yardeni. "That’s because slow growth is bound to keep a lid on inflation, which means that the major central banks are more likely to maintain their easy monetary policies. In the past, maturing economic expansions often ended when inflationary booms caused monetary policy to tighten. The boom was then followed by a bust."
You either get short recessions caused by large rate adjustments from the Fed to choke off incipient inflation spikes, or depressionary troughs caused by catastrophic liquidity crises. Which of those is supposed to be happening in the next few years? Hm? None?

Bespoke - bearish sentiment spikes. Because reasons. Buy SPY and fuck off for 10 years.

Bloomberg - hedge funds shortest the R2K since 2004. Just like Kitco's gold survey, the hedgies are a fantastic lagging indicator, no? And thus they're a contrary indicator, no?

Reformed Borker (Bork Bork Bork!) - oh look at me, I'm so clever, I said a flat market would frustrate the most people and look at what we've got now! Sarcasm aside, it is useful to remind us that a digestive pause is normally followed by more years of strong gains, especially given the point we're at right now of very low interest rates and very low inflation. So all of his points are worth considering. Um, except this one:
5. Quietly rising commodity prices – oil, gas, agricultural, etc – spooking the old timers (sneak into the office of a PM who’d traded through the 70′s and 80′s and whisper ‘inflation!’, guy will jump out of his f***ing chair).
Oh really? Commodity prices are spooking the old-timers? Because inflation, you say? Interesting. Hey, isn't there some sort of thing that people buy to protect against inflation? Some sort of yellow metal, or something? Are people buying that? Or did they just finish puking it all into China's lap in disgust?

FT Alphaville - the drop in commodity correlation is intriguing. Really intriguing! The idea is that the de-financialization of commodity markets is eliminating the price distortions. I guess this is a sign that the investment banking industry feels the secular EM growth play is over. But I wonder what happens if a particular commodity price goes up during de-financialization? Is there an "oh shit let's get back in" moment?

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