The Question Is: Did He or Didn’t He? The Answer?

As I’m typing this the tenor, tone and outright absolution as to the consensus of both Jerome Powell and the entirety at the Federal Reserve is summed up in one word: capitulation.

Again, via every media outlet I have perused, both mainstream and specialized, the consensus is that Mr. Powell along with the FOMC capitulated and folded to the “markets” whims making a cheap suit envious.

This may be entirely correct, however, let me ask you this: What did they actually do? Not – what he said they could do.

Again: Did they pause the balance sheet normalization process (QT) or even reduce its size from the now still running on cruise control $50Billion per month?

Hint: No. And that should tell you far more about what you truly need to know rather, than what the Fed is telling you you should hope for.

Over the weekend I laid out what I felt were important harbingers as to what may be forthcoming in terms of “market” gyrations and more. In that piece I noted some earnings, trade talk consequences and of course The Fed. As I type this I am still of the same opinion. i.e., “Good luck, you’re gonna need it.” Here’s why…

The word currently is “All is clear! The Fed’s got your back. Buy, buy, buy, then buy some more!!!” The reasoning? Hint: Earnings are great, the Fed capitulated.

I’ll ask again: They are and did?

Apple™ beat a disastrous downgrading of its prior expectations. That’s not a “beat” rally taking place in Apple-the-stock via my interpretations, that’s a sigh of relief rally helped with a few scalded-shorts thrown in for good measure.

Hint: Does a $165 rally get Mr. Buffet back to break even? Think about that very carefully before you accept all the current hype.

Facebook™ beat!

Again, why wouldn’t they? It’s the 4th Quarter which means the holiday season. What needs to be seen is how all those ads paid off for retail over the holiday shopping season, for we do not actually know via any reports because of the government shut down, meaning: will those ads continue into the next Qtr?

To reiterate, once again, Facebook is basically one of the two remaining (Google™ the other) last-man-standing when it comes to hope-and-spray mindless advertising. 1st Quarter will be far more telling.

Remember, at the beginning of that Qtr. the consensus was “everything is great!” Then it wasn’t – but ad buys into a holiday season are already decided, as well as many already inked at that point.

Think about what everyone (as in media, as well as the Fed itself) was stating about the health and wealth of the economy as early as September of last year. Remember the narrative of the economy back then? It was doing so well that even the Fed decided it was so good terms like “more hikes” and “autopilot” were of little concern.

Then they said them – and it all came off the rails causing them to backtrack so fast and so furious it seems worthy of its own sequel titlling resembling its movie counterpart .

Then we have all this taking place within the same week of both a month end, as well as a new month for portfolio rebalancing and exposure. The “fun and games” of window dressing (as I stated prior) would probably go to 11. And so far, that seems the case. Again, all conjecture on my part, but I seem to be the only one stating what I believe is the obvious – not the trite and tripe I hear across the mainstream business/financial outlets currently.

Now to the Fed: Did they capitulate? Well, it depends on what your definition of is, is? Or, said differently, they did – sorta.

If one watched Mr. Powell’s presser I would like to ask you this very pertinent question: Is the balance sheet paused, or has the monthly $50Billion roll-off been reduced? By any amount?

Answer: No. Period, full stop. And that’s where you need to be paying attention. i.e., not what he said, but what they’ve done.

As I’ve stated ad nauseam at every post meeting since the “autopilot” debacle there is, and will continue to be, $50Billion less per month for Wall Street to play with. Again: every – single – month.

Since there has been no declaration via the Chair that there has been any alteration to the process. And even reaffirmed that it was still going on as advertised, where the committee itself agreed and voted that it should continue on unabated means, that from now until March, almost $200Billion will be removed (generalization for example math, but you get the point) or allowed to be rolled-off until Wall Street has another glimpse into what happens next.

And “next” just might be another $100Billion (e.g., April) till the next meeting. Think about that, again very carefully.

Mr. Powell did give the impression that both he and the Fed would capitulate, or “pause,” or whatever should circumstances call for it.

However, Wall Street is a front-running surety type of entity – not a could, should, might, ____________(fill in the blank.) You don’t get rich on Wall Street, as they say “guessing.” Think Mr. Buffet guesses? If you do, I have some very nice oceanfront property in KY you can have for a steal – trust me.

The conditions and factors that the Fed introduced which caused the volatility in the first place are still there – and – are increasing (or rolling- off if you will) to the tune of $50Billion per month still.

The 2018 year-end debacle happened when the “markets” got their first glimpse of what that actually meant (e.g., $50Billion going “poof”.) It now has to deal with the same assumptions till at the least March, 20th.

Should the “markets” remain at these levels alone (i.e., scream sideways for an even longer duration) the Fed may be so inclined to stay the course on QT, but also may decide with such “stabilization” it warrants another rate hike. And if that happens? Hint: assuming another $50 or $100Billion removed and its consequences all rolled into the prospects or possibility of another hike. Think about it.

So, the question still remains: Did he or, didn’t he?

Answer, in words: absolutely. In deeds? Absolutely not.

I contend if the balance sheet normalization process mattered at all (which I have been one of the few resolute in the opinion of: it’s all that has ever mattered) then once this week ends and all the ancillary happenings that has helped fuel much of what I’ll still refer to as “window dressing based shenanigans” to continue – everything that scared the “markets” originally back in October returns with a vengeance, as in…

QT continues on, in “autopilot” until it has what may be called another car sequel comparison. Hint: see Tesla™ autopilot for clues.

As always, we’ll see.

© 2019 Mark St.Cyr

Dear Jerome: Good Luck This Week, You’re Gonna Need It

As we sit here and await the new week of “market” machinations still basking in the afterglow of what can only be called a resumption of BTFD (buy the f’n dip) euphoria. It appears the old expression in regards to the Federal Reserve and the “punch bowl” has morphed from being the so-called “adults” in the room and taking it away when prudent, to one similar to a parent trying to ween their kid off of a smart-phone. i.e., The sooner they (children) start screaming (the louder the better) – the sooner they’ll get it back.

It appears that a 20% sell off scream was all it takes today, for get it back they did.

Well, sorta, is probably more like it, which is where the real ramifications now await. i.e., followthrough on promises made.

Make no mistake “sorta” will not cut it to either the “markets” or that hypothetical child. Mr. Powell, along with others of the Fed, insinuated via the customary Fed-speak that they would return the so-called “punch bowl.” i.e., halt or “pause” the balance sheet normalization schedule (QT) along with halt or “pause” any further rate hikes.

Think of it as the equivalent of that aforementioned “child” being returned their $1000+ phone. The “markets,” much like that child, are not expecting nor will they be satisfied with any sort of implied – maybe. They are expecting delivery of said promise, in hand – Wednesday.

If the Fed thinks it can talk its way out of not producing (via verifiable deed and explicit wording) and promising another “maybe” as some sort of parental “we’ll see” insinuation for the next meeting? I’ll only say one thing…

Good luck with that, you’re gonna need it.

To a child, as well as these markets, any form of insinuations or alluding to returning something they want means the same. e.g. you promised, now give it back!

The adult can sit there till the stars burn out trying to explain how they really never did “promise.” But as anyone who’s ever dealt with a demanding child – maybe means promised or, you’ll pay the price one way or another.

However, this is far from the only issue that will be surrounding those still basking in the afterglow. Because when it comes to the potential hangover awaiting this latest three week excursion of BTFD exuberance – the potential for any headaches turning into clinical, fetal-position inducing migraines are significant.

Let’s just remember where we are and how we got (back) here for a moment as to re-emphasize the reasoning for caution.

Three weeks ago the “markets” were plummeting and if not for the Treasury Secretary openly implying that the PPT (plunge protection team) was being asked to suit-up and be ready-to-engage they may be well lower. This then prompted (I would use the word demanded, but that’s just me) not only the Fed Chair but also others within the Eccles Building to get in front of anything with a camera, microphone or keyboard and jawbone as much “pause” as plausible.

So far it has worked. Well, then again, sorta. Let’s look at a few of what they call in Silicon Valley “pictures” to put things in a bit more perspective, shall we? To wit:

I posted the above chart back on Jan. 17th and indicated that the “anywhere in here” was an area worth watching for further clues. It seems my hunch was correct. Although we have bounced above it we have also bounced back squarely within it over several days. Here’s an updated version. Again, to wit:

(Source)

The reasoning why the above are significant is via their technical implications, for if we fall back through and below that notated “anywhere…” level, then there is a higher possibility we resume the prior selling of December with a quick test into the “then here” levels, retesting the lows of only a few weeks ago.

The real issue for both the “markets” and the Fed will be if that low holds. If not? Everything as far as further calamitous upheavals of panic and more are squarely back on the table.

Make no mistake about it, regardless of what the so-called “smart-crowd” across the mainstream financial/business media insinuates. Should we get back into that area (as in Dec. lows) everything, and by that I mean just that – everything – is back squarely on the table.

Speaking of “table.” Let’s look at what other potential menu items are due to be served-up this week that have the potential for giving the “markets” an acute case of indigestion.

  • A Chinese trade delegation arrives Monday for supposed “talks.”
  • Caterpillar™ reports earnings. A significant global-health bellwether.
  • Apple™ reports Tuesday. Need I say more?
  • Then, throughout the week you’ll have others such as Facebook™, Amazon™, Boeing™ and of course everyone’s “I gotsta know” favorite, Tesla™.
  • Thursday is the end of the month so the normal gyrations apply, as well as the same for Friday, for that’s the beginning of the new month for February. Or said differently – look for normal month-end and month-start hyper positioning activity to go to 11.
  • Friday we are also to get the latest jobs report. We may also (conjecture but noteworthy) since the government shutdown has been put “on pause” we could have a slew of prior unreleased reports suddenly being released, unannounced. Again, conjecture but noteworthy should it happen.
  • Since the government will now be open – the now open and newly appointed House with its various “impeach at any cost” committees will be free to resume, will they make up for lost time and interject their views into the “markets?” Hint: Bank CEO’s, congressional panels.

The above is only a handful of what is on-deck for this coming week. And smack-dab in the middle of it we have what may be the most important Fed meeting (Tuesday and Wednesday) of the entire year as far as the “markets” are concerned.

To say there may be a bit of pressure on the Fed this time around may just be worthy of the term understatement as ever there was.

However, there is also a flip-side to all this, and it is this:

As much as there is the potential for calamity there is also the same potential for more – far more – BTFD exuberance and euphoria should any of the above listed turn into favorable outcomes.

As one can see on the above chart I notated with the “anywhere…” box, the “markets” are currently sitting above, and in actuality, gapped higher to those up-and-out levels on several occasions where they remain as of this writing. Meaning: The hope is for Mr. Powell to return the necessary “punch bowl” to help fuel its progression onward and upward.

Remember: the “markets” (much like that child I cited prior) are of the assumption their “punch bowl” is to be returned on Wednesday.

Should Mr. Powell take to the stage in the Wednesday presser and deliver something of the equivalent to antacid and aspirin Fed-speak, as opposed to a punchbowl filled with some hair-of-the-dog type equivalent. This market is going to show just how childlike it can be when said “child” suddenly finds out they’ve been duped by mom or dad and their $1000+ smartphone isn’t forth coming.

As I said in the beginning, if that happens?

Good luck with that, you’re gonna need it.

© 2019 Mark St.Cyr

MYTR Broadcast Update

Hello all. Just a reminder that Mark and the broadcast are on hiatus and will return on Monday, February 4th. As Mark discussed during his show he has been summoned for two weeks of jury duty. There is a possibility his service schedule could be shortened, if so we’ll post the details right away.

It’s plausible he may post written articles during this time if he is contained to the jury pool and not seated, possible not a surety.

As always thanks to all!

V.V. -StreetCry Media

Looks Like We’re Back To The “Dirty Harry” Market Once Again

It’s been an amazing turn of events when one looks over the past few weeks in regards to the “markets.” On Christmas Eve the entirety of Wall Street had suddenly come to conclusion that, “All was lost!” Now, only weeks later, all that doom and gloom has been replaced with, “Happy days are here again!” It’s been a case study for mass psychosis if ever I’ve seen one.

The reason for the title above is that I’ve used it more than once (and it’s been shown correct just as many times) to describe where we might be in relation to what is being told-and-sold across most of the mainstream business/financial media. In other words, riverboat gambling and its consequences has now become the modus operandi for financial commentary and investing prowess.

If you are one of the few that has remained doubtful that the capital markets have become nothing more than a “casino?” You now know why that expression was used to express such. i.e., 2018 “in the black” was supposed to be a “sure thing.” Hint: it wasn’t.

To the bewilderment of patrons, along with their croupier of choice, they watched in horror as their winning “ball” rolled out of the “black” only to land in the “Red.”

The only thing adding more insult to the injury was this happened just when it appeared the spin was all but over and the celebratory rounds of libations (aka bonuses) ordered – only to then stand and watch as all their “chips” were suddenly swept off the table. i.e., and out of one’s 401K balance.

So now it’s the same cohort of casino “Market wizards” shouting out to anyone left that will listen (and that still has any remaining funds) that it’s time to get back in there and BTFD (buy the f’n dip)!

Well, then, there’s only one remaining question one needs to ask, “Do you feel lucky?”

If you were one that answered that question last time I asked it back in July of 2018 with a resounding “Yes!” Then you did quite well, until – October. (on a side note, I thought it was going to be a Yuan induced roiling, but the Chinese politburo seems to have thrown anything-and-everything at making sure that is the one area that doesn’t show weakness. And the reasoning behind that conclusion I’ve stated many times prior. Hint: SDR, IMF’s “Special Drawing Rights” and all it implies geopolitically)

But after that? Then, not only did you lose your winnings back to July, but you lost all of 2018 all the way back to March of 2017. e.g., 3 months of wins wiped clean followed with an additional 16+months of prior winnings, again, wiped clean as in – wiped from one’s account balance. All in less than 60 trading days.

Again, for this point can not be made too many times: all after it was assured by the croupiers across “bubble-vision” that 2018 in-the-black was a “sure thing.”

Still think the term “casino” isn’t fitting?

So now here we are just three week into the new year from what was deemed by many as a “near death experience,” this same group is now touting that 2018 was a “one off,” and that the “Powell Put” is now known and will be respected. i.e., The Fed’s got your back – again. BTFD – again!

Well, maybe they do, and then again, maybe they don’t. For the answer to that question is still confusing at best and down right alchemic at worst. i.e., everyone is saying it’s now possible – but yet there is still no proof, only words of fancy incantations. Hint: “we could or would ‘pause'” is something very different than “we paused.”

Said differently: “Looks and feels like gold” doesn’t make it such, hence the alchemic reference.

But that’s not the way this most recent “market” upswing is being portrayed. It’s now being marketed as “Everyone’s a winner – just pick your lottery ticket ETF of choice, sit back, and watch the winnings roll in in 2019.” i.e., “buy, Buy, BUY!”

Again, may be, and maybe not. So in the immortal words of Harry Callahan you now, once again, need to ask, “Do I feel lucky?” Because that’s what you’re asking in reality. For if you still think the so-called “smart crowd” has any idea? Hint: they, along with the Fed itself stated ad nauseam that both interest rate hikes, along with the balance sheet normalization process, was all “known knowns” beginning in January 2018. And the “balance sheet” process would be basically unnoticeable. i.e., running in background.

Then all those “known knowns” suddenly blindsided them – all of them – in October as they were all busy tabulating their winnings for end of year. Need I say more?

As we sit here today there are a few other “known knowns” that have the potential to unleash a myriad of unknowns across all sectors of business and politics that very few can imagine, never-mind contemplate their severity.

The Federal Reserve meets for its January conclave. At this moment no interest rate adjustment (such as hike) is seen forthcoming. However, that is not what the “markets” are truly concerned about.

The only thing (and by that I mean, just that) the “markets” want confirmation of is that the Balance Sheet Normalization Process (QT) has either been already paused or, is being paused via an actual date or amount. Period.

The Fed (and all its various players) have been out, one after another, touting a rake hike pause is basically “in the cards.” When it comes to the question surrounding QT they have all been superficially sympathetic, with most responses revolving around one form of “of course we could, possibly, might, maybe, _______(fill in the blank)”

But there has been no, “We shall, we have or, we did” as of yet. I am of the opinion that’s the only form of verbiage the “market” is going to accept as proof they actually did something. All other forms of word counting will be inconsequential.

The other of the “known knowns” into unknown territory is that of the political, both here in the U.S., as well as abroad in places such as France, Italy, U.K., China and more.

Here in the U.S. the President made what by many was seen as, at the least, a reasonable start for further negotiations. The opposing party sent their refusal or, no before the proposal had even been fully heard.

No matter what side of the political aisle one sits, one thing is unquestionable: One side has made it abundantly clear they have no intention of negotiating, regardless of what is being reported. The act of sending a reply of no – before the address was even finished – tells you all one needs to know. It’s not called political skullduggery for nothing.

So now we await the fall-out. What happens now that the “markets” have to accept that a shutdown in the U.S. may indeed be closer to the beginning rather, then the end? Add to that what happens as European countries squabble over not only throwing away the idea of an E.U., but rather the idea of their entire home political members as well?

Then, of course, there’s China. What happens to their entire politburo model should the effects of the current stalemate in tariffs not end soon?

So far Hong Kong home prices are floundering, factories are announcing major lay-offs. The PBoC has had to inject massive amounts of liquidity into its financial system just stabilize already growing nervousness.

Then, suddenly, the Chinese politburo announced the other day that it would actively inject money (e.g., buy) into its own stock market and purchase shares of companies as a way to both stabilize and boost investor confidence. A once absolute “never would” assertion. (Makes one wonder why now if everything is/was so great, hmmm? But I digress.)

In the U.S. the “markets” are closed for an observed holiday (e.g., MLK Day) Yet, the Asia, along with European markets will be open and we may get a quick look at what everyone thinks of all this recent U.S. news and how it may, or may not, effect their markets.

We also could basically see no movement except for what I call a “screaming sideways” rendition of bouncing, or pinging higher and lower in-and-around this area, until the Fed renders its verdict of deliberations at the end of month.

Regardless, until then, anyone contemplating if this is another “great opportunity” to once again “BTFD,” there’s really one one way to answer. Again…

“Do I feel lucky?”

© 2019 Mark St.Cyr

Evaluating the Re-evaluation

It’s as simple as this: You (or we) are now here. To wit:


(Source)

Here’s my original call and outlook. (link here)

As one can see we are now precisely within the area I marked out prior which now should bear out the biggest clues. i.e., If my original prognostications are still valid, then we should begin to see some very significant weakening soon, as in very soon.

As always, we shall see.

© 2019 Mark St.Cyr

Mr. Cook’s Dilemma

If one wanted a true “picture” as they say in Silicon Valley of just how “different this time” it is for the once most beloved stock in the world. Here is something I believe is currently keeping Mr. Cook up at night. To wit:

(Source)

There are two things of note to the above side-by-side. The first is when it comes to all the nascent calls of “The bottom is in Buy, Buy, Buy!”

This most recent “historic” bounce off the lows is not as spectacular when put into context of where we were just 3 months ago when the same “buy, buy, buy” hawkers were touting such a sell off was all but impossible, let alone improbable.

With that said, what is even more instructive is when it comes to this bounce the once “most valuable company” whose CEO decided it it was they that controlled the narrative, not Wall Street, has not only not partaken in-kind in this rally, but has barely budged off its lows.

Again, because it’s a very important point, not only is the stock lagging in this most recent BTFD (buy the f’n dip) mania. But rather – it seems it’s fallen and it can’t get up even with a near face-ripping-rally going on in the back drop.

Remember when it used to be said (like just a few months ago by the same “buy, buy, buy” hawkers) that “as goes Apple™ so goes the market?”

Let me just say to that, they had better hope it is – different this time. For if Apple is still the directional leader?

Need I say more?

© 2019 Mark St.Cyr

Time To Re-evaluate?

In an earlier observation I said “If the S&P 500™ traveled above the 2600 area I would then re-evaluate,” whether or not I still thought the current bounce was either, just that, “a bounce” before a possible resumption of the downward progression. Or, as is now being touted incessantly across the mainstream business/financial media – “The worst is over, buy, buy, buy!” So here’s my thoughts…

My thoughts of it all just being a bounce (a far more powerful one than I thought possible originally, I will admit) has not yet changed, for as it has been progressing it’s looking more to my technical eye to be just that.

Here’s what I’m now watching for further clues. To wit:

(Source)

Again, although we are above the 2600 level it still fits the bounce interpretation. It could actually run even higher (i.e., High 2700’s) and still fit in technically, however, I think looking for some type of running-out-of-steam within that area actually fits more closely into the “looking for clues” genre that are noteworthy. I notated the above chart with “anywhere in here” zone.

Should the run stop somewhere in there and suddenly fall back with some sort of followthrough back towards the lower levels is what I’m focusing on as to continue holding my original view.

As always, we shall see.

© 2019 Mark St.Cyr