…As $1.1 TRILLION Is Injected Into Markets Via Repos (Curves Kinked)
China’s central bank, the People’s Bank Of China, now has the world’s largest balance sheet topping even the European Central Bank (ECB). Only The Federal Reserve is shrinking its balance sheet … for now.
The PBOC has injected almost $1.1 trillion in the market over the past two days.
And we come full circle back again. It’s not what they say, it’s what they do. Kansas City Fed CEO Esther George was at least consistent, unlike all the other voting FOMC members. Throughout 2015 and 2016, the rest of them would say the economy was strong but then vote the other way, no “rate hike.” December 2015 was the lone exception (and perfectly fitting).
President George, on the other hand, was almost irredeemably optimistic about the economy and voted that way, too. While the majority held steady, Esther was the one who would dissent against the then Fed Pause. The few times she didn’t was in early 2016 when the US economy approached recession conditions.
You knew it was serious when the hawkest of hawks stopped walking how she talked. In March 2015, George had said:
t’s cliche, but what a difference a year makes. We started 2018 with a very bullish market for metals and mining stocks. The euphoria, however, was short lived with the market starting to roll over in February with another leg down starting in July and a horrendous December. In fact, the major US indices recorded their worst December since the Great Depression. The Chinese Zodiac calendar had 2018 as the year of the Dog. In hindsight, I’d say that was pretty apt. RIP 2018!
Since we’re on the topic of the Chinese Zodiac calendar, 2019 is the year of the Pig (starting Feb. 5). I don’t believe in zodiac signs or horoscopes but, interestingly, analyzing S&P 500 returns over the past 90 years indicates:
Mortgage applications increased 13.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 11, 2019.
The Refinance Index increased 19 percent from the previous week to its highest level since March 2018. The seasonally adjusted Purchase Index increased 9 percent from one week earlier to its highest level since April 2010. The unadjusted Purchase Index increased 43 percent compared with the previous week and was 11 percent higher than the same week one year ago.
You can see the spike in refi apps coinciding with a decline in 30-year mortgage rates.
A bit of a WTF from the BCSC this evening, as its press release updating on the so-called (and they so-called it, after all) “BridgeMark Scam” has revised and extended temporary prohibitions and cease-trade orders. But only on some of the players, not all of them and, believe it or not, one of the named entities no longer under prohibition order is BridgeMark Financial Corp. The reason seems to be buried in the decision document, where the judge on the case has agreed that in four of the eleven companies the prosecution has provided enough evidence but in the other seven, they have not. Here’s the segment, from page 15 of the decision:
Below are the nine S&P 500 sector ETFs and their performance for the 14 days heading into the December 24th market bottom, and then their performance for the 14 days since.
As you can see, the sectors that were stretched the farthest to the downside have bounced the highest to the upside. The sectors that held up a little better during the selling have not had nearly the same bounce. This is typical of a market coming off a V-bottom. This does not mean the groups that have bounced the most to this point are the ones that are most capable of leading a new bull market. Those potential leaders are yet to be determined. It simply shows the rubber-band effect off the deeply oversold low.
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Just yesterday, I mentioned 2626 as an important limit for the ES. Well, just to screw with me, they managed to get it to 2626……..and a quarter point. But at least it retreated rapidly afterwards.
Thanks for late-day news about Huawei (which is bound to do wonders for the completely stalled China/US trade talks), the NASDAQ actually managed to close……….gasp……….ever-so-slightly in the red. I thought this was outlawed in 2019.
As I write this around 11am EST both NFLX and CELG are threatening to close up > 50% from their December 24th closing price, just 14 trading days ago. While that sometimes happens with speculative smallcap stocks, it is very unusual to see a largecap S&P 100 stock accomplish such strong gains in such a short period of time. In fact, the last instance of a 50% close to close gain within 15 days for an S&P 100 stock occurred in 2009. I looked back at other times since 2000 where it has occurred among S&P 100 components, and found only 38 occurrences. Below is the complete list.