Our comments surrounding the vagaries of the note this week.
It seems as of late, I have been working hard to specify the difference between a bias that may show up in the weekly note, a process, and discretionary expectations.
As noted in our Twitter Stream, last week we turned “Neutral” on Equities as a whole on the indices. What does this change in stance, with TIME, allow us to take advantage of?
You can find the video as below on YouTube, and is available in many other video venues (Vimeo, Odysee, etc)
And yes, here is the the note itself, for this week on a 0 to 15 day Periodicity …
This Week on the Calendar:
Wednesday: 8:00 AM EST Mortgage Data
10:15 AM EST Fed Chair Powell Speech
Thursday: 9:30 AM EST Continuing Jobless Claims
3:00 PM EST Fed Chair Powell Speech
Friday: 11:00 AM EST Michigan Consumer Sentiment
SOFR Yield Curve: So before long, we’ll start thinking about the December roll. We’re not there yet. Especially with the funky way that the SR3 Contracts price their data (Average transactional data, causing December to ‘technically’ expire much later than December). But March 2024 (SR3H2024) volume is starting to build. Something to keep in mind, as much of the volume and ‘thickness’ of the market is still from June 2024 to the March 2025 terms.
Treasury Yield Curve: Inverted, and we are 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.
Overall Risk: (Stock Indices, Long Bond, Bills): Overall Risk has switched us away from “Neutral” to “Bullish” general, broad, overall bias.
Equity Volatility: (VIX) We are at 15.43 and +0.49 at the moment on the day. We have volatility that I would rank as warm ….
Equity Volatility VIX TERM STRUCTURE: Normal conditions in Contango and nothing popping off to alert us.
Equities: (SPY, SPX or possibly the /ES) We have switched to 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 we remain neutral on price, neutral on yield. On from IEI to IEF (Farthest out), we are switching to 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 are switching over to neutral on price, neutral on yield. For Emerging Market Equity Prices (VWO), we remain bearish.
High-Yield: (HYG, JNK) We are switching over to neutral on price, neutral on yield.
Commodities: (GSCI, DBC or GSG) We remain neutral 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. This, with current geo-politcial factors indicating DEMAND conditions for Oil now, where it’s better to pay whatever price now, than wait to later.
Crude Oil Specifically: (USO, USL and /CL) We have switched over to neutral on Oil Prices.
Gasoline Specifically: (UGA and /RB) We remain neutral on Gasoline Prices.
Gold and Silver Specifically: (GLD / /GC and SLV /SI) We remain bullish on Gold. We remain neutral on Silver.
Currency: ($DXY:IFUS, UUP) We have switched over to neutral on the US Dollar.
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