Dan’s Inner Circle
Euro Short getting Risky? by speculators in the euro as of
last Tuesday was 288,376 contracts. That is equivalent to a
$45 billion short position. The net short position (total shorts
minus total longs) was 187,211, which is about a $35 billion
short position. Still very impressive.
The yen is showing similar concentration. Total short
positions by speculators in yen futures on the CME
approached a notional value of nearly $26 billion, while
the net short position came to around $20 billion.
• 288,376 Contracts
• $45 billion short position
• Usual Government Currency
intervention is Less Than $1 billion
• Yen at $26 billion short position
• Potential Short Squeeze
Pure TV Hype
• Persistent shortfall of economic growth and inflation
in the euro area could lead to a further appreciation
of the dollar and have adverse effects on the US
external sector.
• At the same time, a couple of participants pointed
out that the appreciation of the dollar might also
tend to slow the gradual increase in inflation toward
the FOMC's 2 percent goal.
Cross currents.
Conflicting signals
Stock market divergence
followed by KEY REVERSAL
Cumulative Net Points
Cumulative Net Volume
S&P 500
This is a medium term divergence. Could reverse itself now. This is what you
should watch for…
As of this morning
See new lows next…
Divergence
A new character starting March 2014. Ratio SPX:COMPQX.
Nasdaq Strong then reverses
Beginning of
tough market?
Hat tip to Helene Meisler of TheStreet.com for this chart./
The more profitable the more it fell out of favor.
Fast profit growth doesn’t matter
Short term Bottom
?
Key reversal
Key reversal
Alternate is DTO
it will end with the price being driven below the marginal
cost of production as revenue-maximizing state firms try to
cover their fixed costs, with high-cost secondary recovery
techniques such as oil sands being rendered uneconomic
and with the inevitable growth in global petroleum demand
soaking up excess production capacity.
Once this process is underway, pricing control will shift back
to producers as it always has and always will. Then the cycle
will repeat.
What Drives the Stock Market?
What Drives Oil Prices?
Yellen in Jackson Hole mentioned a 19-component index developed by Fed economists, as well as an
even broader 24-component Labor Market Conditions Index (LMCI) developed by the Kansas City Fed.
-98.3%
correlation
Future interest rate expectations suggest easing, while everyone expects tightening. More confusion.
Zero Allowance for Inflation: another deal with no risk premium. Investors opt for more yield now!
Fed would
normally be
easing here
Small business lending: benefit from socialist regulation
Benefit from the business cycle instead of being stuck in it.