Goldman Sachs predicts June 8th or 9th as the most likely dates the US Treasury would run out of money: https://finance.yahoo.com/news/treasury-run-low-cash-june-004502457.html
And wasn't Yellen first like June 1st, and now I see some shit about June 15th?
And I read some other tweet that said this is all bullshit and we could realistically last till like September for critical stuff.
Who knows. Maybe we fall so quickly those waiting to short don't get the chance. Maybe we keep rising and just stay there and all the bears get fucked.
Notes for the morrow...
AMZN - bearish engulfing
BA bearish engulfing - however wick stopped perfectly at trendline
BABA bearish engulfing
BAC support on trendline after breakout, bullish above 27.85ish
CAT trendline breakout 2 days ago then retest, bullish above 212.50ish bearish below
CLF - Bearish engulfing daily, but rising trendline support, bullish above 14.5
COIN - pure level watch - 56.5 breaks down I short
CRM looks like a trendline break with retest now ready to go
DAL defending 36
DDOG looks ready to break down watch for relative weakness
DE violent rejection off 200, Jesus christ a casual 13 dollar candle on the 5 minute chart friday
GS continues to respect a trendline that should no longer be valid after retesting, looks like it wants lower
KR key level 50
LCID 7.5 make or break
MSFT breakout inception
NCLH rejection off 200
NET broke 200
NKE found support on 200
OPEN broke 200
PARA bearish if it takes out lows 14.88
S rejected off 200 after breaking it previous day
While I know things move fast, and out of public opprobrium and outrage we will suddenly see a resolution or can kick; this is a bit concerned from a “good” resolution perceptive?
If we have no good news by noon tomorrow I imagine the market may proper tantrum
Watching AGCO, still on the fence.
There's a reason John Deere is the bigger company, and their model focuses more on recurring revenue, between parts and value-added Precision Ag services. In terms of what AGCO offers, it just isn't as good.
The market needs competitors, but John Deere is to Ag equipment what Apple is to Tech. If you go of any objective measure, their product isn't any better than their competitors, but it works inside of an ecosystem and they've fostered incredible brand loyalty.
AGCO can get carried by headwinds in agriculture, but as farms are getting bigger, I see corporate owners not looking to buy equipment, but instead "equipment-solutions" which is something they don't really offer.
Seems TA experts I follow agree on a pullback to new 52-week highs coming up as their most likely market path. The range of the pullback varies as does how likely they view it happening. Just thought I'd do a comment on how the charts looks minus any external factors.
Mancini: [https://twitter.com/AdamMancini4/status/1659957673687670784](https://twitter.com/AdamMancini4/status/1659957673687670784)
EfficientEnzyme: [https://twitter.com/efficientenzyme/status/1660374409037660160](https://twitter.com/efficientenzyme/status/1660374409037660160)
Vazdooh: [https://www.youtube.com/watch?v=fQxB7ZAoesM](https://www.youtube.com/watch?v=fQxB7ZAoesM)
Maybe I’m misunderstanding what you are saying, but a ‘pullback’ and a ‘new 52 week high’ are two different directions on a chart. Are you saying we are going to pullback and then rip?
Why is coke up 23% this month? Is it because the risk free rate is not that risk free and big money is starting to see established dividend paying companies as less risky?
Biden and McCarthy will meet tomorrow (ie. no deal today): https://twitter.com/bresreports/status/1660321551613394947
McCarthy draws a red line that spending must be reduced from FY2023: https://twitter.com/bresreports/status/1660323737034424320
Essentially in a game of seeing if one side will cave on spending first until the last minute arrives imo. Public positioning makes a compromise difficult now.
The language now from McCarthy is productive since he didn’t seem to mention work requirements from what I see. There’s plenty of places to cut spending (superficially) that both sides could agree on while kicking the can on real causes of concern
As an additional update, according to McCarthy, there is no agreement on anything which would include work requirements: https://twitter.com/JulieNBCNews/status/1660340358012710913
There is a demand for military spending to go up with inflation due to the geopolitical instability as of late. I've seen articles that there isn't a way to cut non-military spending without impact due to that military budget increase + inflation for non-military spending.
It isn't going to be simple to find "superficial" areas to eliminate for such a large spending cut.
and because if this, they need a last minute deal, because otherwise they cannot sell this to their own base respectively.
Everything before the last deadline and last minutes just screams "you could have tried more! You gave up early - you are a disappointment. You gonna keep caving in to the others".
They MUST have a scenario to the extent of "this is just to avoid catastrophy". We are not there yet. There must be panic
It will have a bigger impact on the stock price in the short term than on the actual business.
China is now not recommending MU chips for critical infrastructure. This is absolute payback for Huawei.
The economic impact on MU will be pretty small and this move isn't a surprise.
I am still so amused, how the surprised pikachu faces are starting to get more because there is no debt ceiling deal.
Crazy to me how anybody could have really believed that this was gonna go smooth and without any craziness. But I am really learning from this, that the market will probably always be in a "just take any reason to go up" mode.,
If we don’t see any meaningful debt ceiling progress by Tuesday with Biden back, and the market still continues to shrug it off… then I dunno what at this point would stop the rally until much later this year.
Maybe russias “final straw” on the F16s /s
Europoors with long dollar equities portfolios, are you hedging for the debt ceiling risk? I'm getting worried about a dollar dump and am thinking of getting some short USD/EUR futures.
That's where everyone will run if worst case scenario plays out, right?
Or would USD/JPY be a better pair?
My home currency (SEK) has not done well under the uncertainty of the last years, so I don't think it would now either.
Starting in Molle ( we chose places to hike with our dog) going up to fuluflajllet in multiple stages. Then back down to Gla Forest for 1 week canoo trip. Then from skinskatteberg down to Tived and keep going south Store Mosse to end in Stenshuvud. Many national parks for our hikes
Doing a deep dive into the stocks on the agriculture supply chain. The name of the CEO of Corteva, a seed company, is Chuck Magro.
That man was destined to work in agriculture.
I'm not confident enough yet to give recommendations. There's a couple stocks I like so far like Corteva and CF Industries but I have nothing written up at the moment.
Yes, but with a dip before that, as I understand it. I suppose a dip would also give fuel for the SPY gap fill to overshoot more than otherwise. Probably best to just sit on one's hands if the portfolio is long.
LCID is at an interesting point here with trend lines - 7.5 ish is the hard line - if it stays below it or shows weakness short with 7.5 as SL. IF it breaks 7.5 (breaks definitively without reversal candle following) long. Because of downward sloping trendline this is only valid for Monday, after that levels change. I'd guess down with market using debt ceiling as narrative for dump. But full disclosure, I'm bearish on institutions dumping everything but mega caps right now. If you wanted to be super safe, recent low of 6.64 could be a good entry for short.
Edit: likewise CLF could be near bottom here with 14.5 looking like a good entry for longs, if it holds lower than that exit with below 14.20 being a level to start thinking about shorts.
I known Yellen said June 1st, but I see conflicting info online about when an official default would occur. Treasury cash balance is something like $68 billion as of Friday. If we break under $50 billion do we get that credit downgrade you think?
June 1st is just the earliest possible default date. The exact date depends on tax revenue received from those that filed with an extension. Some articles state we could likely last through July potentially.
An outlook downgrade isn't some exact science. Just an unknown as most didn't expect the downgrade to happen in 2011.
Statement from the White House on negotiations: https://twitter.com/JakeSherman/status/1660061312418734083
Blames Republicans for issues with the talks.
For this reason alone, I don't see a default happening. It is too risky for both political parties to have this happen. A credit downgrade if this drags out to the deadline seems plausible.
THE WHITE HOUSE SAYS THE STOCK MARKET WILL CRASH BY OVER 45% IF THE DEBT CEILING ISN'T RAISED AND US DEFAULTS.
https://twitter.com/gurgavin/status/1659988171013206016?t=DNqVRUtxauPp3zeVqSGF2w&s=19
The main risk is still the default risk but if they default it won’t be to bond holders it will be instead not meeting social security payments, veteran benefits etc.
Now the interesting thing will be the market reaction, either it treats it as a nothing burger or drops by say 30% and leads to huge ramifications (I’d say the latter is more likely with a default). But with that said if there is a default then regardless of the outcome the debt ceiling will be removed forever, because if it doesn’t cause any issues to market then it makes it an irrelevant treat and if it blows up the economy the politicians will remove it fully.
As for the rating downgrade I don’t think that is a big deal or issue at all solely because the US is already AA by one agency and AAA by the other two. So they ain’t going to single A and if one of the others moves them to AA big deal as they already have that rating.
I still remember when US did get downgraded to AA and Warren Buffet was asked if US should be AAA rated and he said no Us debt is AAAA rated
The credit downgrade is the real risk, agreed. But the market still has to have insurance for the infinitesimal chance of a default that it has ignored right now.
The latest on the status of talks as of an hour ago don't look good for an agreement soon: https://twitter.com/JakeSherman/status/1659999671505518592
Latest is now talks to resume once Biden is back from Japan: https://www.cnbc.com/2023/05/20/mccarthy-says-debt-negotiations-cant-resume-until-biden-returns.html
Biden said he isn't worried about the deal.
Hmmmm this is exactly what I was saying Thurs/Fri. That even though the WH appointed someone (and McCarthy was happy with that) to rep the WH, it would take the presence of Biden in DC to actually get this done at this point.
DEMOCRATS SAY DEBT DISCUSSIONS ARE GOING IN THE WRONG DIRECTION - PUNCHBOWL NEWS.
https://twitter.com/financialjuice/status/1659991896700116996?t=fgc9Cs9LFucRIWB8-1tIfw&s=19
US DEBT CEILING NEGOTIATORS NOT SET TO MEET TODAY - PUNCHBOWL NEWS, CITING SOURCES.
https://twitter.com/financialjuice/status/1659951810772185088?t=wyrGa0l-Xyk2jYrFwQ4DRQ&s=19
Really good recent episode of The Compound and Friends. Interesting statistic they mentioned was the following.
12 month fwd PE ratio on S&P is 18x
Five year average is 18.6x and ten year average is 17.3x
That doesn’t read like stocks are trading at high valuations to me.
Look at the five and ten year average interest rates compared to the current ones, often (but not always) higher rates result in lower multiples.
But even if the current multiple is high, market at 19x 2023 EPS estimates of 220, if this is trough earnings then that is fine. The market will always trade at an elevated multiple on trough earnings. The real question is whether earnings have bottomed.
Although this discussion ignores another major issue which is that valuation is incredibly distorted by megacaps. From BAC:
" YTD it's the "The Magnificent Seven"...Big 7 monopolistic US Tech\* stocks (up 61%) trading on 30x PE vs 17x for rest of S&P, Big 7 aspirational European
Luxury stocks (up 25%) trading on 36x vs rest of Stoxx 600 trading on 12x PE"
I brought this up with you this week, I just don’t think earnings actually bottomed. The consumer is still strong, and while it’s totally possible that the consumer continues to hold up, they could be running on fumes in 2H2023.
What happens when all thr companies called bottom, and it turns out that was wrong? Positioning is not currently ready for thst, and the market will turn down harshly.
I assign a 40% chance to this
Here is the thing that really confuses me About the market
For several FOMC meetings, JPoe continuously said no rate cuts. But the market figured he is bluffing and did not believe him.
But when Kevin McCarthy of all people said there might be progress, the market immediately believed this naively without a doubt and Rallyed like crazy.
When then suddenly the negotiations stopped, the reaction was like -0.3%
Like where is any kind of logic in all of that? Yes, in the end Mr. market is right and I am wrong. But srsly, how can you even try to trade something like this, when trying to apply basic human logic? Like where is any rationality in all of this?
Bottom line for me is that the market is simply like a call-drug addict. A drug addict will construct any kind of, no matter how abstruse, reasoning to rise and take their call -drugs, while ignoring any sanity. Once all this is over, I will probably never go short again...
One (debt deal) is short term the other (rate cut) is long term. You also keep forgetting that they’re mostly pricing in rate cuts based on something really bad happening which to me doesn’t seem to be increasing in odds as we get to the middle of the year.
The market does not think jpow is bluffing, the market expects that this time is *not* different, hikes until recession/something breaks, then "fix" it by cutting, as usual. It's just that the elusive recession is kinda hard to time, and the warm EU winter was only annoying and not the economic death sentence everyone expected it to be, inflation is not getting out of hand either, so everything, including spy, has been kinda stuck.
I think you are overestimating the effect politicians have on the market. Noise will be noise.
On the other hand what jpow says has a big effect, but markets simply don’t believe him, in my opinion, because he has been wrong so many times before.
But why did the market Rallye +1.2% or so on the positive news that there might be a deal,but when this completely blew up, these gains were not reversed?
I think news is just used for positioning, as is JPow. There have been several rallies off FOMC that seemed like the could have gone either way but were explained away later.
Imo, if they default it will be on purpose. That would give fed the ability to negotiate down its own debt with itself. Pulling a page from the old 50's/60's playbook, inflate it away.
In 2020 the 'stimulus' flowed through the economy right down to the small business and citizens. (87,000 new irs agents will promptly retrieve those loans, errr i mean stimi's)
this time, theres gonna be 'stimulus' in the form of bailouts, only for key banks i imagine. Small business and citizens get fucked. Jmho
There aren't many AAA rated countries and a lot of them are small countries. Just think about what it means for all the funds which are forced to only invest in bonds with a rating of AAA for whatever reason if the US loses that rating. Think about what gives unbacked fiat currency like USD its value. It's literally a matter of faith and that faith is now based on the political stability of the US.
No progress on debt talks for Friday and the next meeting wasn't scheduled yet: https://www.cnbc.com/2023/05/20/white-house-republican-team-say-no-progress-in-debt-ceiling-talks.html
[This feels like a pause provided inflation data doesn’t actively move higher.](https://twitter.com/thechiefnerd/status/1659588025217679362?s=61&t=_N1uONgphPVrh5x0qBb7Kw)
FFR went from 30% June hike to 15%.
CPI trend should be what matters now.
I'm impressed the market called the bluff on debt ceiling negotiations today by not going down more. Also, wondering if it would have been better to throw a full tantrum to get them back to negotiating.
The FANG+ Index was down 1%. That's kinda what everyone should be looking at, right? It's the megacaps that are in focus. I'm also watching IWM. If that starts to go up it indicates this is more than just a violent bear rally. So far, it has been kept in check.
Bob, you know man, in hindsight it would've just been better to sit on our hands and buy quality stocks at attractive valuations. We didn't need to get greedy and seek returns in the form of puts.
In all realness, i think this batch of puts will be the last one i'll ever buy. Best i'll do from now is sell some OTM spreads into big SUPPLY zones as a hedge and just buy attractive stocks.
There's no need to act like a hero and short the market. You'll make plenty of gains longing quality stocks into the weakness. Make use of the IV to sell some CSP's to boost returns. I think i have my lessons learned from this bear market.
I'm writing this shit down to remind myself to not continue to be stupid and try to act bigger than the market.
All that said, i won't be buying shit now as things don't look attractive to me (and cash is empty) and i still lean bearish.
I hope everyone learned some fun lessons during the past 1,5 years. Goodluck Bob.
Goldman Sachs predicts June 8th or 9th as the most likely dates the US Treasury would run out of money: https://finance.yahoo.com/news/treasury-run-low-cash-june-004502457.html
And wasn't Yellen first like June 1st, and now I see some shit about June 15th? And I read some other tweet that said this is all bullshit and we could realistically last till like September for critical stuff.
So buy at 410-415 and sell at 420-425 if you just wanna swing?
Who knows. Maybe we fall so quickly those waiting to short don't get the chance. Maybe we keep rising and just stay there and all the bears get fucked.
Notes for the morrow... AMZN - bearish engulfing BA bearish engulfing - however wick stopped perfectly at trendline BABA bearish engulfing BAC support on trendline after breakout, bullish above 27.85ish CAT trendline breakout 2 days ago then retest, bullish above 212.50ish bearish below CLF - Bearish engulfing daily, but rising trendline support, bullish above 14.5 COIN - pure level watch - 56.5 breaks down I short CRM looks like a trendline break with retest now ready to go DAL defending 36 DDOG looks ready to break down watch for relative weakness DE violent rejection off 200, Jesus christ a casual 13 dollar candle on the 5 minute chart friday GS continues to respect a trendline that should no longer be valid after retesting, looks like it wants lower KR key level 50 LCID 7.5 make or break MSFT breakout inception NCLH rejection off 200 NET broke 200 NKE found support on 200 OPEN broke 200 PARA bearish if it takes out lows 14.88 S rejected off 200 after breaking it previous day
Flip flopped on DDOG and went long just now since it looked so strong
Seems like its gonna be a bearish day
You're just saying that because you have eyes and ears and logic.
Washington DC: LOOK AT US... WE ARE CRAZY! Futes: Seen worse bro.
While I know things move fast, and out of public opprobrium and outrage we will suddenly see a resolution or can kick; this is a bit concerned from a “good” resolution perceptive? If we have no good news by noon tomorrow I imagine the market may proper tantrum
Any vitards own AGCO and willing to give me some DD anecdotes, or a gestalt thesis?
Watching AGCO, still on the fence. There's a reason John Deere is the bigger company, and their model focuses more on recurring revenue, between parts and value-added Precision Ag services. In terms of what AGCO offers, it just isn't as good. The market needs competitors, but John Deere is to Ag equipment what Apple is to Tech. If you go of any objective measure, their product isn't any better than their competitors, but it works inside of an ecosystem and they've fostered incredible brand loyalty. AGCO can get carried by headwinds in agriculture, but as farms are getting bigger, I see corporate owners not looking to buy equipment, but instead "equipment-solutions" which is something they don't really offer.
Seems TA experts I follow agree on a pullback to new 52-week highs coming up as their most likely market path. The range of the pullback varies as does how likely they view it happening. Just thought I'd do a comment on how the charts looks minus any external factors. Mancini: [https://twitter.com/AdamMancini4/status/1659957673687670784](https://twitter.com/AdamMancini4/status/1659957673687670784) EfficientEnzyme: [https://twitter.com/efficientenzyme/status/1660374409037660160](https://twitter.com/efficientenzyme/status/1660374409037660160) Vazdooh: [https://www.youtube.com/watch?v=fQxB7ZAoesM](https://www.youtube.com/watch?v=fQxB7ZAoesM)
I haven’t dabbled in TA too much besides drawing lines, but what i do know is when everyone is expecting we go higher we usually go lower
Maybe I’m misunderstanding what you are saying, but a ‘pullback’ and a ‘new 52 week high’ are two different directions on a chart. Are you saying we are going to pullback and then rip?
Yes, pullback and rip and then crash… assuming debt ceiling resolves in most likely way
I'm 40% cash... ready for 50% sell off this week!! 
Why is coke up 23% this month? Is it because the risk free rate is not that risk free and big money is starting to see established dividend paying companies as less risky?
Odd divergence from Ko, looks like other bottlers up. Kof up a bit more. Institutions maybe. Edit... image below
https://preview.redd.it/eo96569p5a1b1.jpeg?width=1080&format=pjpg&auto=webp&s=1619a4552929ed0cabbfb56d4307e99bca0fabba
Which app is this?
Marketbeat, just compiles the 13fs nicely
How can it be up on Sunday?
How can a 40 year old man have no reading comprehension skills?
There are 80 year old men that can't read ..
Biden and McCarthy will meet tomorrow (ie. no deal today): https://twitter.com/bresreports/status/1660321551613394947 McCarthy draws a red line that spending must be reduced from FY2023: https://twitter.com/bresreports/status/1660323737034424320 Essentially in a game of seeing if one side will cave on spending first until the last minute arrives imo. Public positioning makes a compromise difficult now.
Meeting tomorrow pm. Bloody day inbound?
probably markets will give them one more chance.. but if we do not get progress on Monday, markets might finally wake up
https://twitter.com/financialjuice/status/1660331688675758084?s=46 meeting today too
Nope
The language now from McCarthy is productive since he didn’t seem to mention work requirements from what I see. There’s plenty of places to cut spending (superficially) that both sides could agree on while kicking the can on real causes of concern
As an additional update, according to McCarthy, there is no agreement on anything which would include work requirements: https://twitter.com/JulieNBCNews/status/1660340358012710913
Thx for keeping us updated. I genuinely appreciate it since wading through Twitter is a bitch
There is a demand for military spending to go up with inflation due to the geopolitical instability as of late. I've seen articles that there isn't a way to cut non-military spending without impact due to that military budget increase + inflation for non-military spending. It isn't going to be simple to find "superficial" areas to eliminate for such a large spending cut.
and because if this, they need a last minute deal, because otherwise they cannot sell this to their own base respectively. Everything before the last deadline and last minutes just screams "you could have tried more! You gave up early - you are a disappointment. You gonna keep caving in to the others". They MUST have a scenario to the extent of "this is just to avoid catastrophy". We are not there yet. There must be panic
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It will have a bigger impact on the stock price in the short term than on the actual business. China is now not recommending MU chips for critical infrastructure. This is absolute payback for Huawei. The economic impact on MU will be pretty small and this move isn't a surprise.
I am still so amused, how the surprised pikachu faces are starting to get more because there is no debt ceiling deal. Crazy to me how anybody could have really believed that this was gonna go smooth and without any craziness. But I am really learning from this, that the market will probably always be in a "just take any reason to go up" mode.,
Sounds like they’re making progress though
this time for sure™
If we don’t see any meaningful debt ceiling progress by Tuesday with Biden back, and the market still continues to shrug it off… then I dunno what at this point would stop the rally until much later this year. Maybe russias “final straw” on the F16s /s
Kinda wondering if the market needs to react to put pressure on negotiators.
something must happen, so that the parties can compromise wihtout losing too much face
Biden kinda came out trying to get the market scared to out the pressure on
Europoors with long dollar equities portfolios, are you hedging for the debt ceiling risk? I'm getting worried about a dollar dump and am thinking of getting some short USD/EUR futures. That's where everyone will run if worst case scenario plays out, right? Or would USD/JPY be a better pair? My home currency (SEK) has not done well under the uncertainty of the last years, so I don't think it would now either.
i hedged in usdsek atm. that and taking in some profits from usa. last weeks rally has been sick gains for us swedistans(if you were long NQ that is)
Coming to sweden for 3 weeks at june 16th! Roadtrip
Neat, starting and going to? 3 weeks is a long time roadtripping
Starting in Molle ( we chose places to hike with our dog) going up to fuluflajllet in multiple stages. Then back down to Gla Forest for 1 week canoo trip. Then from skinskatteberg down to Tived and keep going south Store Mosse to end in Stenshuvud. Many national parks for our hikes
hope you like fir and pine, endless woods of fir and pine. sound awesome!
Doing a deep dive into the stocks on the agriculture supply chain. The name of the CEO of Corteva, a seed company, is Chuck Magro. That man was destined to work in agriculture.
Any good insights or companies you like/dislike so far?
I'm not confident enough yet to give recommendations. There's a couple stocks I like so far like Corteva and CF Industries but I have nothing written up at the moment.
Fresh vazdooh content https://youtu.be/fQxB7ZAoesM
A bit of a shift in sentiment vs Thursday. Looking like now he thinks we could rally very hard
Yes, but with a dip before that, as I understand it. I suppose a dip would also give fuel for the SPY gap fill to overshoot more than otherwise. Probably best to just sit on one's hands if the portfolio is long.
LCID is at an interesting point here with trend lines - 7.5 ish is the hard line - if it stays below it or shows weakness short with 7.5 as SL. IF it breaks 7.5 (breaks definitively without reversal candle following) long. Because of downward sloping trendline this is only valid for Monday, after that levels change. I'd guess down with market using debt ceiling as narrative for dump. But full disclosure, I'm bearish on institutions dumping everything but mega caps right now. If you wanted to be super safe, recent low of 6.64 could be a good entry for short. Edit: likewise CLF could be near bottom here with 14.5 looking like a good entry for longs, if it holds lower than that exit with below 14.20 being a level to start thinking about shorts.
I known Yellen said June 1st, but I see conflicting info online about when an official default would occur. Treasury cash balance is something like $68 billion as of Friday. If we break under $50 billion do we get that credit downgrade you think?
$68 billion was the Wednesday number, TGA was at $57 billion as of Thursday. https://fsapps.fiscal.treasury.gov/dts/issues
June 1st is just the earliest possible default date. The exact date depends on tax revenue received from those that filed with an extension. Some articles state we could likely last through July potentially. An outlook downgrade isn't some exact science. Just an unknown as most didn't expect the downgrade to happen in 2011.
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When you have the best credit rating, and huge amounts of debt, and you keep telling the bank you might not pay them next month...
It happened in 2011. Just getting close to default can lead to one's debt as being viewed as more risky.
How quickly did the downgrade come?
Statement from the White House on negotiations: https://twitter.com/JakeSherman/status/1660061312418734083 Blames Republicans for issues with the talks.
Invoke the 14th and let the dice land how they will
Larry Mcdonald sees "Sp500 crashing 30% by December.." 
For this reason alone, I don't see a default happening. It is too risky for both political parties to have this happen. A credit downgrade if this drags out to the deadline seems plausible. THE WHITE HOUSE SAYS THE STOCK MARKET WILL CRASH BY OVER 45% IF THE DEBT CEILING ISN'T RAISED AND US DEFAULTS. https://twitter.com/gurgavin/status/1659988171013206016?t=DNqVRUtxauPp3zeVqSGF2w&s=19
The main risk is still the default risk but if they default it won’t be to bond holders it will be instead not meeting social security payments, veteran benefits etc. Now the interesting thing will be the market reaction, either it treats it as a nothing burger or drops by say 30% and leads to huge ramifications (I’d say the latter is more likely with a default). But with that said if there is a default then regardless of the outcome the debt ceiling will be removed forever, because if it doesn’t cause any issues to market then it makes it an irrelevant treat and if it blows up the economy the politicians will remove it fully. As for the rating downgrade I don’t think that is a big deal or issue at all solely because the US is already AA by one agency and AAA by the other two. So they ain’t going to single A and if one of the others moves them to AA big deal as they already have that rating. I still remember when US did get downgraded to AA and Warren Buffet was asked if US should be AAA rated and he said no Us debt is AAAA rated
Credit downgrade would still cause a huge correction imho. Thats what happened in 2011. They extended it but got credit downgraded
The credit downgrade is the real risk, agreed. But the market still has to have insurance for the infinitesimal chance of a default that it has ignored right now. The latest on the status of talks as of an hour ago don't look good for an agreement soon: https://twitter.com/JakeSherman/status/1659999671505518592
Latest is now talks to resume once Biden is back from Japan: https://www.cnbc.com/2023/05/20/mccarthy-says-debt-negotiations-cant-resume-until-biden-returns.html Biden said he isn't worried about the deal.
Hmmmm this is exactly what I was saying Thurs/Fri. That even though the WH appointed someone (and McCarthy was happy with that) to rep the WH, it would take the presence of Biden in DC to actually get this done at this point.
DEMOCRATS SAY DEBT DISCUSSIONS ARE GOING IN THE WRONG DIRECTION - PUNCHBOWL NEWS. https://twitter.com/financialjuice/status/1659991896700116996?t=fgc9Cs9LFucRIWB8-1tIfw&s=19
Looking forward to the new debt floor.
US DEBT CEILING NEGOTIATORS NOT SET TO MEET TODAY - PUNCHBOWL NEWS, CITING SOURCES. https://twitter.com/financialjuice/status/1659951810772185088?t=wyrGa0l-Xyk2jYrFwQ4DRQ&s=19
Really good recent episode of The Compound and Friends. Interesting statistic they mentioned was the following. 12 month fwd PE ratio on S&P is 18x Five year average is 18.6x and ten year average is 17.3x That doesn’t read like stocks are trading at high valuations to me.
Look at the five and ten year average interest rates compared to the current ones, often (but not always) higher rates result in lower multiples. But even if the current multiple is high, market at 19x 2023 EPS estimates of 220, if this is trough earnings then that is fine. The market will always trade at an elevated multiple on trough earnings. The real question is whether earnings have bottomed. Although this discussion ignores another major issue which is that valuation is incredibly distorted by megacaps. From BAC: " YTD it's the "The Magnificent Seven"...Big 7 monopolistic US Tech\* stocks (up 61%) trading on 30x PE vs 17x for rest of S&P, Big 7 aspirational European Luxury stocks (up 25%) trading on 36x vs rest of Stoxx 600 trading on 12x PE"
I brought this up with you this week, I just don’t think earnings actually bottomed. The consumer is still strong, and while it’s totally possible that the consumer continues to hold up, they could be running on fumes in 2H2023. What happens when all thr companies called bottom, and it turns out that was wrong? Positioning is not currently ready for thst, and the market will turn down harshly. I assign a 40% chance to this
I agree, I think it’s 50/50 earnings have bottomed
Here is the thing that really confuses me About the market For several FOMC meetings, JPoe continuously said no rate cuts. But the market figured he is bluffing and did not believe him. But when Kevin McCarthy of all people said there might be progress, the market immediately believed this naively without a doubt and Rallyed like crazy. When then suddenly the negotiations stopped, the reaction was like -0.3% Like where is any kind of logic in all of that? Yes, in the end Mr. market is right and I am wrong. But srsly, how can you even try to trade something like this, when trying to apply basic human logic? Like where is any rationality in all of this? Bottom line for me is that the market is simply like a call-drug addict. A drug addict will construct any kind of, no matter how abstruse, reasoning to rise and take their call -drugs, while ignoring any sanity. Once all this is over, I will probably never go short again...
One (debt deal) is short term the other (rate cut) is long term. You also keep forgetting that they’re mostly pricing in rate cuts based on something really bad happening which to me doesn’t seem to be increasing in odds as we get to the middle of the year.
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The consequences aren’t but the talking points moving the market are absolutely short term.
The market does not think jpow is bluffing, the market expects that this time is *not* different, hikes until recession/something breaks, then "fix" it by cutting, as usual. It's just that the elusive recession is kinda hard to time, and the warm EU winter was only annoying and not the economic death sentence everyone expected it to be, inflation is not getting out of hand either, so everything, including spy, has been kinda stuck.
Daily market moves are mostly just option flows, positioning, trend following, etc. I wouldn't read much into it
In the short run the market approaches randomness. This is what most fail to understand.
Pretty much, I'm in it for the long-term and maninly buy on dips. The whole day trading/options trading can be mentally taxing imo.
Underrated comment!
I just watched a piece from thursday with Cem Karson. Its all about flows. Vol unpinning after may opex, chop incoming was the jist.
I think you are overestimating the effect politicians have on the market. Noise will be noise. On the other hand what jpow says has a big effect, but markets simply don’t believe him, in my opinion, because he has been wrong so many times before.
But why did the market Rallye +1.2% or so on the positive news that there might be a deal,but when this completely blew up, these gains were not reversed?
I think news is just used for positioning, as is JPow. There have been several rallies off FOMC that seemed like the could have gone either way but were explained away later.
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Imo, if they default it will be on purpose. That would give fed the ability to negotiate down its own debt with itself. Pulling a page from the old 50's/60's playbook, inflate it away. In 2020 the 'stimulus' flowed through the economy right down to the small business and citizens. (87,000 new irs agents will promptly retrieve those loans, errr i mean stimi's) this time, theres gonna be 'stimulus' in the form of bailouts, only for key banks i imagine. Small business and citizens get fucked. Jmho
honest question, who cares if the US’s credit rating goes down? i guess i don’t fully understand what that means
There aren't many AAA rated countries and a lot of them are small countries. Just think about what it means for all the funds which are forced to only invest in bonds with a rating of AAA for whatever reason if the US loses that rating. Think about what gives unbacked fiat currency like USD its value. It's literally a matter of faith and that faith is now based on the political stability of the US.
Adding to this, imagine if usd unpins from oil
No progress on debt talks for Friday and the next meeting wasn't scheduled yet: https://www.cnbc.com/2023/05/20/white-house-republican-team-say-no-progress-in-debt-ceiling-talks.html
[This feels like a pause provided inflation data doesn’t actively move higher.](https://twitter.com/thechiefnerd/status/1659588025217679362?s=61&t=_N1uONgphPVrh5x0qBb7Kw) FFR went from 30% June hike to 15%. CPI trend should be what matters now.
Cramer "doubling down on negativity on Zim" on Lightning Round tonight. He "likes" PLTR 
dump pltr, load the boat on ZIM🇮🇱
As a Zim holder..... I like this.
I'm impressed the market called the bluff on debt ceiling negotiations today by not going down more. Also, wondering if it would have been better to throw a full tantrum to get them back to negotiating.
I did find that interesting. The market has been remarkably calm about this whole mess.
Mr market is now medicated and thinking clearly. He's not prone to emotional over reactions when he's taking his meds
Are we looking at the same market? Maybe at the index level it is calm, but it’s a full on clown show underneath
True. Mr market must be experimenting with various drug cocktails
Then again the market sold the fuck out of LULU and ULTA on Foot Locker’s earnings.
I was just in Ulta. Packed with long lines to check out. This is during the week. I’m considering putting some $$$ on Monday.
🤣 good point
Debt ceiling negotiators getting back together tonight. Maybe we’ll have more news before the market opens Monday. Have a good weekend Vitards!
If the market was open we’d probably jump 50 points just because of that.
The pause curiously lasted roughly the overnight hours in Japan where Biden is
Bears around the world rejoice as SPY finishes down -0.15%. Some hope in a week where many have been obliterated.
The FANG+ Index was down 1%. That's kinda what everyone should be looking at, right? It's the megacaps that are in focus. I'm also watching IWM. If that starts to go up it indicates this is more than just a violent bear rally. So far, it has been kept in check.
https://preview.redd.it/5eciwius2x0b1.jpeg?width=1080&format=pjpg&auto=webp&s=534841ce33710dc04b1d64ba6aa699308acb0ecb
 Stop reading my mind
Bob, you know man, in hindsight it would've just been better to sit on our hands and buy quality stocks at attractive valuations. We didn't need to get greedy and seek returns in the form of puts. In all realness, i think this batch of puts will be the last one i'll ever buy. Best i'll do from now is sell some OTM spreads into big SUPPLY zones as a hedge and just buy attractive stocks. There's no need to act like a hero and short the market. You'll make plenty of gains longing quality stocks into the weakness. Make use of the IV to sell some CSP's to boost returns. I think i have my lessons learned from this bear market. I'm writing this shit down to remind myself to not continue to be stupid and try to act bigger than the market. All that said, i won't be buying shit now as things don't look attractive to me (and cash is empty) and i still lean bearish. I hope everyone learned some fun lessons during the past 1,5 years. Goodluck Bob.
When you guys say bears, do you mean puts? Cos I just sit mostly on cash/savings.
Thanks Bob.
Are you a Bob?
