19-June-2021: Another sample of text from today's MarcusToday Saturday weekly wrap email:
Thought that might happen - Dow Jones down, 533, SPI Futures down 111. Volume was big as well (up 50% on the 20 day average - which may have been the options expiry).
It takes a few days for the big institutions (the World’s biggest fund managers and the very active investment bank trading desks – the ones that make the markets move each day with their short term views) to decide what to do at significant Central Bank moments.
On Thursday the FOMC effectively declared that they have hit “Peak Accommodation” in the US (it has already happened in Brazil, Canada and the UK) and whilst the market survived the next two hours of trade on Thursday afternoon after the FOMC announcement (hinting at rate rises next year), when the market dawned on the second day (last night in the US) some of the institutions have had their regular morning asset allocation meetings and made the call to sell something possibly because in the words of Maverick's rear… “It doesn’t get to look any better than that”.
[insert Top Gun image here - "It doesn't get to look any better than that." - you know that when guys say things like that in movies they're going to meet with an unpleasant end... Bear77 note.]
That was a pivotal moment for the markets, the day the Fed called the bottom on interest rates and called the top on QE. They have been buying $80bn worth of bonds and $40bn of Mortgage-Backed Securities a month - that continues for now but the writing is on the wall.
It's not a disaster. Nothing has suddenly gone wrong. It was all inevitable and mostly expected. But this is “The Moment”, the moment the US Central Bank, the most influential Central Bank in the World, called the end to the endless stimulus that has underwritten the equity markets for the last 13 years (since the GFC) and the last 15 months, since the pandemic lows.
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On the one hand, Marcus says he's not selling yet, he's waiting for the market to start selling first. On the other hand, he says, "...I’d be turning my screens on a bit earlier in the morning and if it was my money, and I was trading my personal account (“PA”), I’d be taking some profits. Just in case. The risk has risen overnight."
Remember he's a long time stockbroker turned funds manager now, so his moves are not always best followed by ordinary retail investors. There was a time when Marcus happily explained that he always sold EVERYTHING before he went on holidays - so he wouldn't have a care in the world while on holidays - and then bought it all back when he got back to work afterwards. That might work for a stockbroker, but gets expensive for the likes of you and me, particularly if we hold a lot of different positions. Also, I would be far more relaxed being fully invested during my holidays than being out of the market, because I'd be worried that companies I was no longer in would suddenly get positively re-rated by the market while I had zero exposure to them. But different strokes for different folks, horses for courses, ...and so on. Metaphors... Love them or loathe them. No, not a question. So, my takewaway from today's excerpt is that Marcus thinks that the US Federal Reserve (their central bank) has called the top of QE and the bottom for interest rates, which could result in the end of this bull market, or not. Guess we shall see.
[I remain between fully invested and almost fully invested]
10-Apr-2021: Two sample paragraphs below from Marcus Padley's Saturday (weekly wrap) email:
The final point of caution is the fact that the ASX 200 is approaching it’s all-time high, which was set in February last year, at 7197. For some reason, in Australia we don’t seem to have the same mentality as our bullish counterparts in the US, who celebrate with much fanfare an index hitting a fresh record. They celebrate it with the expectation that another record will arrive soon thereafter. From my humble observations, we perhaps more conservative Australian investors tend to ask the question ‘what the heck are we doing up here?’ as we approach and indeed create fresh record highs. Americans ask ‘what can I buy?’, Australians ask ‘what can I sell?’ And none of this is a criticism to either side, it’s just what I have observed over the past 20 years of watching markets. But it feeds into what might happen next and what we, as participants in the Australian version of the game called ‘market’, need to be aware of… alert but not alarmed.
So, to put a bow on it, right now I am bullish and willing to take on risk. As a trend trader my job is to follow the trend until it gives me strong enough evidence that it is not likely to continue. And that's what we have right now - a strong trend with some minor things to be aware of, but nothing to warrant jumping off just yet. Marcus’ quiet bull market theory is playing out nicely. But, like everyone else, I will be keeping a close eye on the evidence that suggests the trend is weakening – the sliding volumes, the foray into overbought territory, and the likelihood that we’ll all ask the question if and we challenge the all-time high.
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Carl Capolingua from Think Markets is also a trend follower, so it would be interesting to hear his take on things at this point. We haven't heard much from him since the Strawman Classic competition ended, unless I'm just not watching the right shows or looking at the right sites.
Marcus Padley is of course from the MarcusToday newsletter and website - click here for a free 30-day trial to his newsletter and website. It's not like this site - it's not interactive. It just provides a lot of info, and a 3x daily newsletter (Mon-Fri x3, + 1 on Saturdays) and I use it to keep up to date with the markets both here and overseas. I find it very useful, as are his views on occasion. I am not a trader, and while I like to be aware of trends, I do not often follow them. This week I found his views on the US market's reactions to hitting new highs vs. the equivalent reaction here in Australia quite interesting, as they are both quite different. Part of that, in my opinion, could be that they have had a President for the past 4 years (prior to Biden) that equated markets hitting new highs with personal achievement and success. In short, they had an Administration that was keen to prop up equity markets there, whatever it took, and always tried to stem panic and doubt whenever it started to creep in. I think that started to reinforce the belief that if you invested in shares, you could rarely lose. Shares always go up. Even when they drop, they'll always bounce back.
It's never that simple of course. Plenty of companies go broke, others are permanently negatively rerated by the market (as ex-growth, or simply previously overvalued). Not all shares go up and stay up, although the majority of larger companies have share prices that will rise, the majority of the time, or over time. There are still landmines in every market. Many companies considered safe and reliable have blown up or gone broke. Plenty more of lesser quality and size have too. We've just seen a lot of those companies propped up over the past year and a bit, and many that would have failed have not - due to government stimulis and government assistance. I think that's an unsustainable situation, i.e. it can't last forever, but I have no idea how long it can last for. Just not forever.
I am not particularly bearish or bullish right now. I think we could easily grind higher from here, but we could just as easily see a 10% correction or a deeper pull-back if one or two things go wrong or if governments and central banks don't placate markets and market participants enough every single time there is an issue that needs to be addressed.
So I remain mostly fully invested, most of the time, in most of my portfolios, because I'm no good at market timing, but I certainly remain cautious and I absolutely believe that portfolio positioning is very important when we're up here (near or at new market highs), as I've mentioned previously in this thread.
When does the naivety end? “Hey, I’ll look this way, you look that way.… tis Norm”!
An alternative perspective... If you haven’t had a chance to watch the unveiling of RBA's 20 yrs+ banking fraud along with other 'supposed' Central/ Private banks... 'watch' Senate Estimates hearing in Parliament. Senators Defy The High Priesthood Of Finance! (Martin North show-Youtube). Very insightful from another perspective…
Well done to the three Senators-: Gerard Rennick (Senator QLD), Mick McKim (Senator Tasmania) & Hon. Matt Canavan... questioned Guy Debell sent to represent the RBA (An Independent Private Bank Governing Australia). RBA's 25yrs of manipulating interest rates, yield curves etc, printing free money for low interest loans to banks, for higher interest loans for citizens to buy houses, to borrow to build houses to on sell over to other over indebted citizens (or) to borrow to add a patios/ new bathroom to an overpriced 35yr asbestos dwellings at the cost of a 2bdrm unit in any normal country (or) the much needed additional loan programs for more housing developments to sell to incoming migrants & overseas investors. The RBA's continuous Put Option on Australian's has been in play from 1990 lowering interest rates ‘forever’ to keep Australia mortgaged & re-mortgaged (Long only) speculative housing sector built on Central Bank printing of free credit (to-be paid) by tax payers everyday so-as Banking brotherhoods can keep giving cheap loans to each other. This is 101-progressive planning by unbalanced Keynesian Socialist self-governing pvt Bank high on sipping too many bubbles surely or we’re just in a Pandemic right?
This week I watched people at the supermarket slowly cruising the meat isle trollies empty shaking their heads. Tin foods & the specials trolley seem to be doing well… could be saying something & we might see this roll out into earnings.
Micro/Macro examinations, assumptions & parallels of the economic relationships within our ‘regulated system’ & continuation of major failings & freedoms for Institutions unregulated by regulated systems.
ASX & Market regulations fail investors-
Observational inconsistencies: Example one of many…. RSG is 90%+ owned Banks/Institutions & has now finished being plundered 'almost' into receivership through Institutional Short/hedged positions over the past 2 years+. However, the majority of retail investor were not able to hedge their position i.e. Short Warrants mini's until this week. After RSG's massive sell off last week now looking at its all-time lows in 20yrs, Citifirst have made available for retail investors after the selloff Short Warrant mini's. The Institutions created such a mess for RSG LT investors, Goldman Sach had to release a ‘Buy' rating for their Institutional buddies to try to reverse the panic selloff this week to savour any legitimacy in the Underlying Listing what-so-ever.
Interestingly enough all this has been happening whilst CommSec & other institutional analysts have been rating the stock for retail investors as a BUY. Tis not so comical; as Citifirst had only issuing Long Warrant mini’s to retail investors whilst Institutions where knocking them out one-by-one with Short positions. Well, that has changed this week… Citifirst are now issuing Short Warrants minis with RSG at all practically all-time lows o,0 Hmms…
As for the Ghanaian Mines & Minerals Department & CN Company(s) buying the mine, ‘common sense says’; by simply cancelling the current mine lease contract, it would create enough panic in an Institutional manipulated ‘ASX listed market’ for the company to 'Sell Now Buy Later' (SNBL). Don’t confuse this with BNPL for all you retail investors & law-abiding folk…. No, No this is Institutional agreement SNBL thus either using the market to dip into the sale of the RSG mine through trade price manipulation & giving CN Company purchasing RSG's mine a discounted or even a freebie (in a foreign manipulated market place).
When you are able to leveraged a hedged L/S position while other participants are ‘not’ it’s certainly become very easy for foreign Gumints, Institutions & Companies to take advantage of ASX, & other Exchanges & Markets through fraudulent Institutional interrelations, back door agreements etc. However, you could not blame Institutions, Foreign Gumints or Companies from taking advantage of failings on behalf of Western Exchanges & taking investors’ money… economies have been groomed by the Institutional establishment for a long time & play by the same Ponzi framework/ rulings the Exchanges are upholding as ‘Norm’ & told are culturally accepted practice.
So how long will the nativity remain? I’m older than most but you’ll be told…“… you need to understand more complex markets models; gold price down, no silver up, no bitcoin up/down, seriously no its coz we’re in COVIDs a major pandemic”! If you still not sold on this misdirection “… you need to understand the complexities in bond yields, CPI, Unemployment, Housing & other macro/micro economic factors & strategic relationships we can’t enter into herein” o,0 Mmm ok (so only one acceptable & unfailable thought pattern exists)?
Quite simply my observation if an Exchange, Index, Market or Company listing (society) are artificially manipulated for gain by creation of Institutional interdependence & independence; it comes at the expense of the underlying price and its inability to; organically grow in a manner that is consistent, fair & equitable for all participants in the market. This inhibits all self-determining free ranging motion of the underlying price & momentum, stagnates the underlying from potential price discovery & the possibilities of the underlying to be progressive or digressive by its value to investors. The underlying becomes unanswerable to the market as a whole as a false market participant, unpliable to future turbulence & non-dynamic to its successes or failures in regards to what would be otherwise be economically expected or accountable thereof.
So… this takes us right back to the very first paragraph of this post; RBA's 20 yrs+ banking fraud along with other 'supposed' Central/ Private Ponzi frameworks in which participants are forced to operate under. Where does the naivety end & how dare ‘you’ mention such a thing in such ideological Socialist times?
… Not sure if this is what the Post was asking for? I'll go bak to my long distance calls, in shorty shorts, drinking pink bubbles in my big white house. (Jokes)
