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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: robert b furman who wrote (19350)	6/6/2017 12:42:24 PM
From: John Pitera	1 Recommendation Recommended By 3bar Respond to of 33421

Hi Bob, In my humble opinion, you have just written a piece of brilliant analysis.... and I agree. with you...... We've been listening to some of NVDA's conference today and the GPU's and other technologies, they have created are really synchronizing with the work the cloud companies are doing and the inferencing and machine learning and A I development that Alphabet GOOGL, AMZN, and the autonomous driving companies are developing..... It is a typical beginning of a euphoric rally that given more time - will roll over as far as big caps are concerned and fill in with higher (on a percentage basis) run up on the small caps. Of course it can be different - but what we want to look for is breadth improvement and mid caps rotate - when small caps are the only thing going up it'll be time to unload - a bit early. So far breezes chart that shows this 4th wave was a rare running flat and we are now early into a new impulsive 5 up seems to have a power all of its own. I think going short to play the swings is far too dangerous in a fast market. All surprises are to the up side. What takes discipline is to have ice in your veins and watch the run up. No need for new positions - just let your winners run! It has been a fools errand to short the stock market..... Rick Santelli , Carter Worth and the entire WS community are paying big attention to the FX markets and to what is going on in the yield curve and commodities..... all the base metals .... 20 of them have all roled over and the composite CRB is mucking about at very depressed levels..... So the currencies and USD are an additional significant focus. John

To: robert b furman who wrote (19350)	6/15/2017 12:43:07 AM
From: John Pitera	Respond to of 33421

ALERT -- CHINA YIELD CURVE INVERSION China’s Bond Yields Throw Another Curve as Inversion Deteriorates Yield on 10-year bonds falls to 3.55%, well below the yield on one-year debt By Shen Hong @shenhongdjn June 13, 2017 SHANGHAI—An anomaly in China’s $1.7 trillion government-bond market has worsened, *as an odd combination of tight funding conditions and economic pessimism* pushed long-dated yields well below those on one-year bonds, the shortest-dated government debt. In the latest sign of stress in a market pressured by Beijing’s effort to clean up a debt-laden financial system, the yield on 10-year bonds fell *to 3.55% on Tuesday, less than the one-year paper’s 3.61%. That is a situation unseen since June 2013, when an unprecedented cash crunch jolted Chinese markets.* A so-called yield-curve inversion first surfaced in China a month ago, when the yield on less actively traded five-year bonds broke above that on the popular 10-year bonds. Yields move inversely to bond prices. Two weeks later, the anomaly took on a rare, new form: The yield on the illiquid seven-year bonds rose above those on both the five-year and 10-year paper. An inverted yield curve defies the common understanding that bonds requiring a longer commitment should compensate investors with a higher return. It usually reflects pessimism among investors about a country’s long-term prospects for growth and inflation. *When the U.S. Treasury yield curve* inverted in 2006 and 2007, most analysts cited Asian central banks’ heavy buying of longer-dated U.S. government debt. “But the curve inversion we are seeing right now *is one with Chinese characteristics and it’s different from the previous one in the U.S.,”* said Deng Haiqing, chief economist at JZ Securities. The current development in the Chinese bond market is partly the result of mild inflation and expectations of a slowing economy, Mr. Deng said. “At the same time, *short-term interest rates will likely stay elevated* because the authorities will keep borrowing costs high so as to facilitate the deleveraging campaign,” he said. Since last summer, Beijing has embarked on a campaign to reduce long-term financial risk caused by reckless lending behavior among banks and leveraged investing that has created one asset bubble after another. The effort intensified in February and March when the People’s Bank of China raised a suite of key money-market interest rates, which has since pushed up yields across the bond curve, especially those on short-dated debt. As a result, *the one-year bond yield rose to a 31-month high of 3.66% on Thursday,* while the increase in the yield on 10-year bonds has lagged behind. In fact, the *10-year yield has fallen more quickly than its short-dated counterpart since Monday,* when a brief, largely speculative rebound in bond prices emerged after Beijing sent somewhat soothing messages on its deleveraging campaign, analysts say. In an article published Saturday, the central bank’s flagship newspaper, Financial News, said the severe credit crunch four years ago won’t repeat itself this month because the bank will keep liquidity conditions “not too loose but also not too tight.” (my my said baby bear, this bowl of porridge,is too too, that other one is too cold.... maybe this one is just right.... and baby bear was so happy...... editorial parable by your intrepid editoral observer JJP) Chinese financial markets tend to be particularly jittery in June because of a seasonal surge of cash demand arising from corporate-tax payments and banks’ need to meet regulatory requirements on capital. On Sunday, the official Xinhua news agency ran a similar commentary that sought to stabilize expectations. “Don’t panic,” it urged investors. (the cover of the Hitchhiker's guide to the Galacy..."Don't Panic, so everything is ok) Beijing’s clampdown on financial risk has also sent ripples well beyond China’s shores. In the latest global fund-manager survey conducted by Bank of America Merrill Lynch last week, credit tightening in China ranked as the top “tail risk” for the second straight month, with 61% of the investors polled saying that tighter Chinese monetary policy will slow the country’s manufacturing sector. “The authorities’ soothing rhetoric certainly helped drive down yields and I think even if the curve inversion disappears one day, the curve will look pretty flat for quite some time,” said Qin Han, chief fixed-income analyst at Guotai Junan Securities. “It’s determined by the fundamentals at both the short and long ends of the curve,” Mr. Qin said. Corrections & Amplifications Qin Han is the chief fixed-income analyst at Guotai Junan Securities. An earlier version of this article misspelled his surname. (June 14, 2017) http://www.wsj.com/articles/chinas-bond-yields-throw-another-curve-as-inversion-deteriorates-1497333163