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

To: Chip McVickar who wrote (19447)	6/23/2017 7:08:29 AM
From: John Pitera	Respond to of 33421

Hi Chip, the DJIA continues to adhere to the support - resistance of the tines of the Andrew's pitchfork... I am a firm believer that the DJIA is not the orchetra leader that if leading the US equity indicies, and other asset markets. the DJIA has had a renewed level of interest compared to 3 or 4 years ago. Since Dec 2016, the NDA and the real big tech names have been pacing the action in the US stockmarket it seems...... although the market shows some signs of renewed broadening..... with sectors such as the healthcare sector acting exceptionally well on a relative basis. Message 31157461 JOhn

To: Chip McVickar who wrote (19447)	6/23/2017 3:30:23 PM
From: John Pitera	3 Recommendations Recommended By 3bar Brian Sullivan roguedolphin Read Replies (2) \| Respond to of 33421

The crude oil is in a bear market once again: Energy Markets1. Crude oil entered a bear market, closing down over 20% from the 2017 highs. NYMEX oil futures dipped below $43/bbl before bouncing slightly in the afternoon. Equity Markets1. Energy shares’ underperformance worsened on Tuesday, with the S&P O&G Exploration & Production Index (XOP) now lagging the S&P 500 by 30% over the past year. Once again, is it possible that we get a bounce amid all the negative headlines? 2. Energy MLPs (such as pipeline companies) got hammered again, hitting the lowest level in over a year. Who said MLPs are not exposed to oil prices? 3. Retail shares continue to tumble, now lagging the S&P 500 by almost 25% over the past year. Here is an updated projection for US retail store closings. Source: Credit Suisse It’s worth noting, however, that the Johnson Redbook Index of same-store sales has been improving lately. 4. As investors rotate out of consumer staples, energy, and even tech, the (beaten down) healthcare and pharma sectors benefit. Some analysts have been putting out constructive reports on healthcare and pharma/biotech performance for the second half of the year. Here is the S&P Healthcare Index relative to the S&P 500. This chart shows the Nasdaq Biotech Index. 5. The Russell 1000 (large cap) Growth Index has been substantially outperforming the Russell 1000 Value in the last few months. Has the divergence gone too far? 6. Transportation shares are lagging the broader market again. *A bearish sign for the market as a whole?* ---------------------------------------------------------- CreditKKR made it into the top ten US leveraged loan underwriters. Are the big private equity firms moving deeper into credit underwriting? KKR is expanding into an area that has definite risks, it seems they are trying to find higher margin businesses, which are decreasing One way of looking at this is that in a mature economic cycle were the easy profitability after a severe market dislocation, like we had in 2000-2003 and then in 2008-2009... there were lots of opportunities for relatively easy business growth and opportunities for the investment banking firms to make money. As the economic cycle has played out since March of 2009..... it becomes increasing difficult for even the best of breed firms to find areas where they can make money.... When was the last time that Goldman Sach had a Quarterly earnings report as weak as their most recent one..... It was 9 years ago. Source: @lcdnews, @FT, @EricGPlatt, @josephncohen; Read full article Back to Index Rates1. The Treasury curve is now the “flattest” in a decade when measured in terms of the spread between the 30yr and the 2yr yields. The market is betting on slow growth in the US. 2. As discussed previously, long-term US inflation expectations are sinking. Here is the 10yr breakeven rate. Shorter-term breakeven rates are slumping as well amid tumbling oil prices. 3. US real yields are rising as inflation expectations ease. Here is the 5yr TIPS yield showing that the “effective” monetary conditions are tightening. As discussed previously, this trend creates headwinds for gold. ------------------------------------ the Argentinian government's 100 year bonds are so hot they are crowding out the 30 year Govt bonds of argentina. Emerging Markets1. Argentina’s newly *issued “century” bonds are crowding out the 30yr paper* (investors sold the 30yr bonds to make room for the 100yr debt). For insitutiional investors with a 3 to 5 to 7 year time frame the 100 year bonds, will almost certainly prove to be a fantastic opportunity to short the bonds and just leave the long term position on for 5, 7,10, and 20 years.... imo.... or for firms like MS to trade around a core short bond position (anticipating higher interest rates in coming years) 2. The Brazilian real took another hit on Tuesday amid the *risk-off sentiment spreading through the global markets.* Here is the largest US-based Brazil stock market ETF. There have been so many institutional money managers and WS sell side folks that have been on CNBC, Bloomberg, and are quoted in a slew of articles in the WSJ, real clear money telling individual investors to diversify into emerging market assets. The sell side analysts have been encouraging retail investors to get into emerging markets via ETF's such as the EEM , EZU and other more exotic investments. I sincerely believe that the sell side Wall Street firms have been distributing emerging market stocks, bonds, currency exposure and all manner of E M assets that will not do well over the next 1 to 2 years. Imagine how the EEM and all this emerging market debt, debt with currency exposure etc will fair in the event of a more significant sell off in US and Mature economy stocks, bonds etc. Especially if in a flight to safety the USD and the Yen appreciate ...which they often do in flights to quality. ------------------------------ this afternoon is the Russell 1000 and RUT 2000 rebalancing so there will be lots of wheeling in dealing quite a few equities as some companies are dropped and the indexers will be causing some of those companies to plummet ... and then the twin edge of the sword where we shall be hearing about the companies added to the RUT and those companies and the sectors that pick up exposure will be the toast of the town and should "Rosy -glasses" hue to the market action today...... The volume is pretty sure to be one of the largest days of the year. ------------------------------------------------- the Argentinian government's 100 year bonds are so hot they are crowding out the 30 year Govt bonds of argentina. Emerging Markets1. Argentina’s newly *issued “century” bonds are crowding out the 30yr paper* (investors sold the 30yr bonds to make room for the 100yr debt). For insitutiional investors with a 3 to 5 to 7 year time frame the 100 year bonds, will almost certainly prove to be a fantastic opportunity to short the bonds and just leave the long term position on for 5, 7,10, and 20 years.... imo.... or for firms like MS to trade around a core short bond position (anticipating higher interest rates in coming years) 2. The Brazilian real took another hit on Tuesday amid the *risk-off sentiment spreading through the global markets.* Here is the largest US-based Brazil stock market ETF. There have been so many institutional money managers and WS sell side folks that have been on CNBC, Bloomberg, and are quoted in a slew of articles in the WSJ, real clear money telling individual investors to diversify into emerging market assets. The sell side analysts have been encouraging retail investors to get into emerging markets via ETF's such as the EEM , EZU and other more exotic investments. I sincerely believe that the sell side Wall Street firms have been distributing emerging market stocks, bonds, currency exposure and all manner of E M assets that will not do well over the next 1 to 2 years. Imagine how the EEM and all this emerging market debt, debt with currency exposure etc will fair in the event of a more significant sell off in US and Mature economy stocks, bonds etc. Especially if in a flight to safety the USD and the Yen appreciate ...which they often do in flights to quality. ------------------------------ this afternoon is the Russell 1000 and RUT 2000 rebalancing so there will be lots of wheeling in dealing quite a few equities as some companies are dropped and the indexers will be causing some of those companies to plummet ... and then the twin edge of the sword where we shall be hearing about the companies added to the RUT and those companies and the sectors that pick up exposure will be the toast of the town and should "Rosy -glasses" hue to the market action today...... The volume is pretty sure to be one of the largest days of the year. --------------------------------------- -------------------------------------- The United States1. Boston Fed’s Rosengren is concerned about low rates for a number of reasons. Source: Federal Reserve Bank of Boston • If there is an economic slowdown, the Fed won’t be able to ease much by cutting rates before hitting zero (zero lower bound or ZLB). Source: Federal Reserve Bank of Boston • The “reach for yield” poses risks to financial stability. Commercial real estate is one example. – Foreign capital flooding into US commercial real estate: Source: Federal Reserve Bank of Boston – Declining capitalization of commercial properties (rising leverage): Source: Federal Reserve Bank of Boston 2. The Fed’s Evans, on the other hand, suggests that he would be OK waiting until December to hike rates while the central bank begins the process of shrinking its balance sheet. Evans seems to be a bit worried about slowing inflation. Source: @WSJ; Read full article Back to Index Global Developments1. Here is one trend the central banks should be worried about: declining volatility across asset classes. Source: Harlyn Research 2. The global reflation narrative is fading. Source: BMI Research 3. The pension gap (the difference between the value of pension assets and discounted liabilities) is expected to grow dramatically as the world’s population ages (and lives longer). Source: @jsblokland, @wef, @LarryFeldmanNYC