February 12, 2018 | Uncategorized, You Might Have Missed |
After getting their heads handed to them when volatility rocketed to 37.32 on the VIX on February 5 from 11.33 on February 1, low volatility traders were back today betting the the CBOE S&P 500 Volatility Index (VIX) would continue its fall from 25.61 at the close today. That’s another drop of 11.87% today. After that 230% move to the upside, which resulted in some low volatility ETFs recording 90% losses, the VIX is down 31.4% from its February 5 high.
February 12, 2018 | Daily JAM, Short Term |
The Standard & Poor’s 500 and the Dow Jones Industrial Average both finished in the green today, up 1.39% and 1.70%, respectively, after having held off a bout of selling around 3:46 p.m. New York time. Volatility also made progress on returning to normal.
February 12, 2018 | Daily JAM, Morning Briefing, Short Term, Volatility |
As is so often the case, liquidity was the driver for Chinese stock today, Monday. The Shanghai Composite Index rose 0.78% to 3,154.13 points by the close of trading Monday, after initially falling 0.45% during the morning. Two indexes with more exposure to China’s smaller companies and entrepreneurial sector showed bigger gains. The Shenzhen Component Index rebounded by 2.91%, while the startup-heavy ChiNext exchange gained 3.49%
February 11, 2018 | Daily JAM, Short Term |
The big, market-shaping news will be the CPI (Consumer Price Index) inflation report before the market opens on Wednesday. Since this decline began on February 2, the driving fear has that the stimulus in the Tax Cuts and Jobs Act, first, and now the $300 billion in new higher spending in last week’s legislation to fund the government for the next two years, and the still pending $200 billion in new money from infrastructure would kick off higher inflation in an economy that may (and this is a key area of disagreement among economists) be already running at full capacity.
February 10, 2018 | Daily JAM, Friday Trick or Trend |
This week did brought attention to how spectacularly wrong a trading strategy that had bet that the prevailing low volatility continuing had gone wrong. The posture children for the blow up of this strategy was when two exchange-traded funds (ETFs) that bet on lower volatility, VelocityShares Daily Inverse VIX Short-term Futures ETN (XIV) and ProShares Short VIX Short-term Futures (SVXY,) fell about 95%. But the implosion of these two ETFs is just the tip of the low volatility debacle that unfolded this week. And that helped drive volatility in during this correction.
February 9, 2018 | BABA, Daily JAM, TCEHY |
While our eyes have been glued to the volatility in U.S. markets, Chinese stocks have staged their own correction. The Shanghai Composite is down 12.1% from its high on January 24 to the low on Thursday, February 8. With the Lunar New Year and the week-long Spring Festival Holiday almost upon us, it’s not surprising that this is a volatile week.
February 9, 2018 | Uncategorized, You Might Have Missed |
Once upon a time, before the U.S. stock market moved into an actual correction and before bond yields spiked, the Federal Reserve was clearly on track to raise short-term interest rates at its March 21 meeting. The debate in the financial markets was about whether the Fed would increase its benchmark interest rate three or four times in 2018. But then we got tax cuts piled on top of spending increases.
February 9, 2018 | Daily JAM, Mid Term, Morning Briefing |
Notice that the signing of a bill early this morning to keep the government open and to fund operations for two years hasn’t resulted in a serious rally in either stocks or bonds. And mind you, this deal also “solves” the debt ceiling crisis by suspending the debt ceiling until March 2019. That passes for statesman-like foresight in Washington these days and this certainly counts as good news. So why no big upside move on these events?
February 8, 2018 | Daily JAM, Short Term |
Here we go again. After a pause that raised hopes that the slide in U.S. stocks was over, today the sell off has resumed. As of 3:30 p.m. New York time, the S&P 500 stock index was down 2.59%, or 60.3 points, to 2612.
February 8, 2018 | Daily JAM, Morning Briefing |
The Senate is set to vote later today on a deal that would fund the government for two years and add $500 billion in new spending to a deficit already pegged at north of $1 trillion
February 7, 2018 | Daily JAM, Morning Briefing, Short Term |
Today the yield on the 10-year Treasury moved up 3 basis points, back above 2.80% to 2.83%, just about where it was before the flight to the safety of Treasuries sent yields back towards 2.70%
February 5, 2018 | Daily JAM, Morning Briefing |
The next level in this market that might bring some buyers off the sidelines and slow the plunge in stocks comes at the 200-day moving average near 2538.
