Friday, September 23, 2016

After the "SuperWednesday": No Rate Hike

FED decission: No Rate Hike

At noon the bottom plate. The FED decided not to raise interest rates this month, maintaining the 0.25-0.5%, after a decision of 7 members in favor and 3 against (in the FOMC meeting in July the committee had voted 9 to 1). It falls of mature that in December the Rate Hike must be given, but I explain below because I believe it. Obviously, the rise in the stock market strengthened in all sectors, closing the SPX at + 1.09%. Despite the bad macro data, they see their economy solid because, they say, domestic consumption is. On the employment side, they also see it as strong and on the target inflation they believe that it will still be reached in the medium term. In short, everything goes wonderfully, so do not do anything, total and another government comes and better take care of our posts without risking ... The full text of today here

'I'm worried, but I better not do anything, finally another 
government is coming ...' seems to be Yellen's ultra-dovish philosophy.

The Yen, the other protagonist

After the 'Super Wednesday' Wall Street is taking a break, the actors are rearranged and clarifying the picture. Thursday was a expected positive reaction to the decision of the FED, and today Friday there was the usual profit-taking, which pushed back the SPX -0.57%. The dollar suffered the impact of the no-Rate Hike, but it seems that it can remain stable until December, where it is almost discounted that the rate hike will occur. It is very unlikely that there will be any news in November, the electoral month. Meanwhile FED hawkish members as Rosenberg will continue, as today, insisting on the need not to delay the rate hike so much ... and I give them all the reason.

A brief comment of the other protagonist of the supermiercoles: the yen. Today in Japan, the Nikkei index closed slightly lower. What measures the Bank of Japan will be able to take in these months? It is very uncertain to know, not even to intuit it. If they see that their measures do not work, they will intervene in the yen again. They continue with their rate in negative territory and try to invert the yield curve of their bonds, the yield curve, as a solution to a deflation that seems to approach the country of the rising sun.

In this regard, Ben Bernanke, president of the FED before Yellen, posted his opinion on Bank of Japan's decisions on his blog. Reading, very technical, recommended, of one of the chiefs of the macroeconomy.

2016 Chart for the pair Dollar/Yen (USD/JPY). Behavior, clearly favorable to the latter.

Pullback on Crude Oil before Algeria

Today the Crude Oil /CL had a sudden fall that knocked down the accumulated profits to many, including who writes. At noon, the sudden announcement by a representative of Arabia, in the sense that the meeting of producers of the next in Algeria was not going to make any decision, but only talk, did not fall well at all to the oil traders. They started selling immediately: in one hour it was almost 2%! Any previous technical analysis that indicated an increase in this commodity was destroyed with that comment. I support my idea that, outside the FED a couple of months, the crude will be the exclusive protagonist of the movement of the world stock exchanges until Christmas.

Europe Bond bubble !

I agree with the many analysts who oppose the hallucinatory 'negative rates' that are imposed by the various central banks of countries in crisis, generating a bubble in government and corporate bonds, which at some point will burst. With those minimum yields, they are artificially raising the prices of the bonds, without a real livelihood. Just look at this comparative chart of what happens with treasury bonds in European countries.

When the party ended in bonds? Or rather, how will it end ...

Earnings Season begins

The beginning of the last Earning Season of 2016 is coming in October, with all the exciting that this entails, since it is the best opportunity for the trader to obtain quick profits 'playing' against the results of the companies. There are other traders who are sure, as who writes, and we prefer to know the results and then buy or sell based on them. I will tell you later some of my strategies to buy in earnings.

By the way, I read this article today, a study of some teachers on how to play and win with the earnings. In summary, they argue that stocks that have sharp movements, of 5% or more, with respect to the market in the week before their earnings data, tend to revert quickly as soon as the data is given. They say it has a high percentage of efficiency ... it sounds too attractive, I'll review it. This is the link. Try it.

Twitter exploded today, more than 21%, and not because of earnings, but 
because of the rumor its probable acquisition by Google and Salesforce.