SPX...Where's the Bottom?

27 Feb 2020

BLUF: Does the M roll over to a W forming the next shoulder and down she goes again or just continue down forcing the Feds' Hands...Election Year...the fireworks between FookinT-Fed will be memorable to say the least...Who Fookin Knows...have Plan and Execute...Let's watch the ShitShow!

Question: In a world where US is the only game in town....Fed lowers rates...Does the "Advantage dissipate while we look like everyone else? You would think low rates = Great for Housing...not so much if people are "ScaredShitless"....FEAR...TBD!

***Sure the Smartypants will blame the KungFluVirus...but the conditions were set long ago and slowly building...people see what they want to see...."We are what we Pretend to Be.."

Notes:
But would a Fed rate cut even do any good? After all, the primary concern is the potential disruption to the supply side of the economy. The Fed can’t restart factories. The Fed can’t make a vaccine. And on the demand side, the Fed can’t make people spend if they are too scared to leave their homes. --Tim Duy

Bottom Line: For the time being, the Covid-19 virus will dominate headlines. It will depress activity in the short run. We don’t know how long the short-run will last, nor do we know what trip wires we may hit along the way.
P.S. New home sales climbed in January, reaching their highest level since 2007. --Tim Duy

27 Feb 2020

Catatan

blogs.uoregon.edu/timduyfedwatch/2020/02/26/markets-pressuring-fed-to-act/

blogs.uoregon.edu/timduyfedwatch/2020/02/27/this-is-going-to-take-some-time-to-play-out/

27 Feb 2020

Catatan

Perpetuating many of these dynamics is a Federal Reserve that still isn’t dovish enough relative to the economic outlook. That’s what financial markets, in particular U.S. Dollar strength, are telling you right now.

Unless the Fed takes a more dovish stance, the pressure of U.S. Dollar strength will continue to tighten financial conditions globally and actually exacerbate already challenging conditions (in both the U.S. and China).

But the Fed is now putting themselves in a position where if they don’t do more balance sheet expansion, it will effectively be a monetary tightening into a slowdown. Ironically, the Fed might even be the next catalyst for further U.S. economic weakness. FOMC already have an April target date to think about winding down the pace of “not QE” balance sheet expansion.

Recall what happened to financial markets the last time the Fed tightened into a slowdown at the end of 2018. The S&P 500’s performance in December 2018 was the worst December since the Great Depression.

The Fed will Not be dovish enough (Always Reactive but never Proactive)...Ohhhh the Fireworks are a comin'!

27 Feb 2020

Catatan

At the moment, no Fed Funds change should be expected despite many forecasts for another cut.

Markets set rates and the Fed follows!

seekingalpha.com/article/4327631-fed-not-set-rates-follows-market

27 Feb 2020

Catatan

VIX @ 32.14....Crazy...Lots of FEAR...KungFluVirus & Bernie...Pure Comedy!