Monthly Archives: October 2016

Complacent Market; Fraught with Risk

October 28, 2016
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Complacent Market; Fraught with Risk

In a shockingly flat stretch, noteworthy for the lack of volatility, and an incredibly tight range, the market has gone absolutely NOWHERE from July to October. 20-30 basis point moves feel outsized, even though they are not, in any sort of historical context. On days when the market goes up, the VIX falls to a 12-handle. Almost each and every session, the tape is “heavy” for some sort of “reason”, at some point in the morning, only to “rip” violently, for no apparent reason, undoing any meaningful move down. It’s been torturous for traders, the market is very expensive, the economy is late-cycle, yet the market can’t go down meaningfully for any reason. CJF believes that in a period of light volumes, algorithmic trading is increasingly dominating market action,...

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Pounded; BREXIT Risks Hit Markets

October 12, 2016
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Pounded; BREXIT Risks Hit Markets

In a low volatility, range bound market, it doesn’t take much to cause a break. Rising global bonds yields are a major concern that double-impact the market; higher future business costs of funding growth, financing acquisitions, and implementing share repurchases, while, in tandem, high equity valuations are pressured. Now the market has another major worry. Over the past week, the British Pound sank dramatically, to a value (1.215) vs. the US dollar not seen since 1985. The weakness in the Pound (GBP) highlights the risks of a hard exit from the EU. Selling accelerated after Theresa May stated that the U.K. would give priority to the issue of controlling immigration rather than preserving the nation’s access to a single EU market. Francois Hollande stated that “there must be a...

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No Man’s Land

October 5, 2016
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No Man’s Land

an anomalous, ambiguous, or indefinite area especially of operation, application, or jurisdiction definition two: financial market direction over the 2015-2016 period The meandering, low-volatility, sine wave oscillations of the tape continue. How did markets arrive at a point where a 3% pull-back is petrifying, and a 5% pull-back feels like a crash? The Brexit pull-back in June, was just about 5% on the nose, but it lasted only 2-days. Policy maker support of markets , vis-a-vis central bank actions, and ultra-low interest rates, stumble upon the end of the rainbow. Now what? The pressure on the Fed to assert its independence from politics, specifically the democratic party, is rising. Last week, Janet Yellen short circuited (in this clip) when confronted by Representative Scott Garrett of New Jersey. Donald Trump,...

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