Our comments surrounding the vagaries of the note this week.
As noted in our Twitter Stream, two weeks ago we turned “Neutral” on Equities as a whole on the indices. I’m going to stress it again this week. A ‘neutral stance’ on a market, does not mean there is no opportunity to make money
You can find the video as below on YouTube, and is available in many other video venues (Vimeo, Odysee, etc)
Here is the the note itself, for this week on a 0 to 15 day Periodicity …
This Week on the Calendar:
Tuesday: 8:30 AM EST – Inflation Data
Wednesday: 8:30 AM EST – PPI MoM
8:30 AM EST – Retail Sales
Friday: 8:30 AM EST – Building Permits and Housing Starts
SOFR Yield Curve: All this month, in the individual terms, we have seen the terms move to higher rates. Naturally the devil is in the details with the relative movement between those terms as the curve adjusts.
Treasury Yield Curve: Inverted, and leaning towards a Bear Steepener. We saw yield peel off to lower yields last week. Now to see how much of that is short term volatility, and will ‘stick’, or if we mean revert.
This last week we have seen the front of the curve move to higher yields a bit faster, than what we saw in the back. A bit opposite of what I’ve sort of been expecting, but we’ll see if this relative movement is just a bit of a breather.
Overall Risk: (Stock Indices, Long Bond, Bills): Overall Risk we remain “Bullish” in a general, broad, overall bias.
Equity Volatility: (VIX) We are at 14.76 and +0.59 at the moment on the day. We have volatility that I would rank as cooling from warm…
Equity Volatility VIX TERM STRUCTURE: Normal conditions in Contango and nothing popping off to alert us. A bit of a bounce here though, would not surprise me.
Equities: (SPY, SPX or possibly the /ES): We remain neutral on Equities.
S&P 500 High Yield: (SPHD) We remain bearish on S&P 500 High Yield price, bullish on yield.
Treasuries: (FRONT: SHY, MIDCURVE: IEI, IEF, BACKEND: TLT or the /ZT, /ZF, /ZN, /TN, /ZB and /UB). On SHY out to IEF we remain neutral on price, neutral on yield. For TLT, we remain bearish on price, bullish on yield.
Emerging Markets: (PCY, VWO) On Emerging Market Debt prices (PCY), we remain neutral on price, neutral on yield. For Emerging Market Equity Prices (VWO), we are switching to neutral.
High-Yield: (HYG, JNK) We remain neutral on price, neutral on yield.
Commodities: (GSCI, DBC or GSG) We are switching over to bearish on Commodity Prices as a whole index.
Crude Oil Term Structure: December (CLZ2023) (Closest Month) is MORE expensive than February (CLG2023). December being worth more. Meaning we have are in Backwardation … December, being at a premium to February. And then from there, into subsequent terms.
Crude Oil Specifically: (USO, USL and /CL) We have switched over to bearish on Oil Prices, on Price Action.
Gasoline Specifically: (UGA and /RB) We remain neutral on Gasoline Prices.
Gold and Silver Specifically: (GLD / /GC and SLV /SI) We are switching over to neutral on Gold prices. We remain neutral on Silver.
Currency: ($DXY:IFUS, UUP) We remain neutral on the US Dollar.
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