Monday Macros

Could Friday's NonFarm Numbers Curtail Powell Dovish Tint...Chinese Blink

The risk-on overnight trade to start the month was in full vogue until about 30 minutes ago when S+P's have given back half of their gains... And bonds yields are pushing near the lows again... This is a classic where bonds see fears of Delta variants causing havoc in the global economy, while equities see a much more positive near term economic road... Overnight we had two positives, one, the Chinese Politburo blinked in their meeting on Friday, which has sent the CSI 300 up 2.55% this morning, followed by other Chinese gains of around 2%... The Chinese want to save their ability to have their companies issue IPO's in the US and want to start a serious dialogue with the SEC... Second, there was a lot of talk of PBOC easing to help the Chinese economy, especially now that the Delta variant has dramatically increased in about half of their provinces... Second, is the expected passage of the first infrastructure bill, where we expect a positive bipartisan vote this week...

Fed...Bullard could not have been clearer Friday morning about wanting to determine the tapering schedule at the September meeting... And ending tapering by the end of the first quarter in 2022... Brainard spoke at the Aspen Institute Friday night, where she said not so fast... That she wants to see September's numbers before making decisions... This would put the determinations at the November 3 meeting... But Brainard, who clearly wants Powell's job, said she would use more of the regulatory bully pulpit power of the Fed against Banks, Risk, and bubbles than Powell would... And would be slow to raise rates... So Brainard is leaning towards those senators who want the Fed to be more aggressive against Banks... If this is her tactics, we would prefer Bostic... Nonetheless Powell is still in charge and he has clearly said, without the backing of many of the Fed members, that if the employment situation improves dramatically, he will schedule tapering... On Friday we have the nonfarm numbers, where the expectation is 900,000 and our colleagues at Jefferies, who have been overestimating most of this year, have 1.25mm... We think 900, after the 850 number last month, is enough to get Powell's attention.. Add in a good number for August, and we think we get the tapering schedule at the September meeting.

Equities...So we are entering a potential tough period for equities... We still think the next few weeks are ok... With infrastructure spending now looking like it will pass... And the Chinese starting to wake up how they are hurting their capital markets ... The jury is out as to their next move... But we are concerned as we get into the Jackson Hole conference to see what the tone of the Powell speech looks like...equities are high, but there is little that has positive real returns in the bond markets...so we still see trillions of dollars on the sidelines destined towards equities... Whether it is the 2 trillion on corporate balance sheets to buy back stock or issue dividends, or the retail money on the sidelines looking to be put to work..The incremental buyer continues to be retail. Retail demand has been averaging 1.4 billion a day last week and through much of July... We expect that to continue.

Corporate debt...Expect about 90 billion for the month of August... 30 billion of junk debt was issued in July, the busiest July ever. The market cap of the BB/Barclays Baa corporate has grown by 22% since the start of last year. It accounts, according to BB, for more than half of all IG debt, and more than twice the size of the HY market. The index has a duration of 8.6 years and yields about 105 over treasuries. With tips at negative 1.43%, the real yield on BBB corporate bonds in dollars is below zero... One needs to go to junk to get a positive yield based on tips... If you look at the recent CPI or PPI numbers, or other inflation indices, the only positive real return is in the equity markets... Hence our adage that the equity markets are the least dirty shirt in the laundry...

We expect a choppy week, with the most important number at the end of the week.... That could reset the Fed tone...while we see equities doing well this morning to start the new month, we are aware that the bond markets are telling a different story of higher Covid, more problems ahead and some fear... 1.22 is no long a good resistance for 10 years... We now see 1.18 and then the recent low of 1...August has a deflationary tinge to it... But there are plenty of reflationary technical's that will kick in... So be careful, and avoid the margin clerk at all costs...

Today is a bit unnerving lol

I have NO pivots to look at. They calculate at the open of the new period, so obviously I don't see daily until the open....but it's a new week so I have to wait on those also....but it's also a new month!

MY CHARTS ARE NAKED.

7 bagger on tsla. I needed that.

WWR volume spike

slacker00 said:

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That just from today or you were in last week?

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Last week. I bought 08/06 700C last week.

Took all my TSLA and NIO off in that push into $720 looks like its going to keep going and wish I had left some runners on but can't complain about the homeruns on a Monday morning.

The TexAgs profanity filters are so dumb

Can't even hide t w a t 30 times in the middle of a financial article. Geez

Prognightmare said:

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White House Road said:

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Prognightmare said:

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Let me just say that what happened is bull**** and I'll be adding more Monday because I think that it will open lower and probably close the day green. Miss you guys.

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Silver lining, it let those of us late to the party another chance to start a position.

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Correct! This one may go lower and not immediately climb but their update of the phase 3 trial hit on all cylinders. The test group showed improvement at the 9 month mark and that's big, with no side effects. I believe they'll get FDA approval when this is phase 3 is over. It may be in 10 months, but ignore the emotion and wait because I think you'll be rewarded.

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I agree with you. SAVA is rebounding nicely this morning. It was completely asinine to be linked to the other drug company and to use the no placebo group as an excuse to sell off when everyone knew there was no placebo group going into it.

Small account and building.. only bought 4 of the NIO calls. Followed oa1 tweet about small accounts scale a little earlier to book profits and lower risk. So i sold 1 last week and then placed order for 2 at net free price
Those git this morning so I've booked profits and still have 1 runner!