Diary of a Financier

Top Newsstuffs (April 7-13)

In Bookshelf on Sun 13 Apr 2014 at 05:55

Spring brings out the skirts…

VIX is flashing a buy signal | Dave Lutz (ETF trading & strategy, Stifel Nicolaus)
On Friday 4/11, the front-end of the $VIX futures curve inverted into backwardation, meaning that protection in the front-month contract (April) has grown more expensive than 1-3 months out (May-July):
“This term structure shows ‘exhaustion of stress,’ and it was a sharp buying signal 4 times in 2013 [then once more on 1/24/14].”
[$SPX drawdown reached -4.4% so far.]
#Bullish

Rail traffic weekly: Rally continues at incredible velocity | Association of American Railroads (AAR)
Weekly traffic: +12.6% y/y
Growth ytd: +0.4pp @ +2.7%
Carload groups: 9 of 10 posted gains, including grain +16.8%, petroleum +11, motor vehicles +9.8; forestry -0.7
[Pent-up demand still manifest for 4th straight week.]
#Bullish! $DBA $XLE $USO $UNG

Momentum boom-busts: Is it baked-in? | The Fly (iBankCoin)
Watch today’s biggest momo busts during 1q14 earnings next week, a good barometer of risk-on/off; the selloff may be overdone & expectations sufficiently low.
The following are the first to report, and they may rally regardless of misses/hits/beats in earnings & guidance:
4/17– $ATHN (-1.5% on miss)
4/21– $NFLX (+7% on beat)
4/22– $CREE
4/23- $ANGI
4/24- $AMZN $AWAY $BIDU $CRTO
4/28- $N
4/29- $TWTR
4/30- $LL
5/1– $CTCT (+30% on increased guidance 4/8) $IMPV (-40% on lowered guidance 4/10)
5/2- $WETF
[Stocks don’t care about “good or bad earnings & guidance reports”; they only care about “better or worse than expectations.”]
#Tech 2.0 $IBB $FEYE

The future for real interest rates | Gavyn Davie (The Financial Times)
In its latest World Economic Outlook (WEO), the IMF explored the phenomenon of zero-bound interest rates amidst 120% global debt/GDP, concluding that 1980-90s disinflation was a result of Volcker’s tightening cycle (1979-82), but post-2000’s continuation was caused by:
1. Investment demand– developed markets’ demand for loanable funds has dropped in part due to technology lowering costs
2. Savings glut- emerging markets’ excess savings has increased the supply of loanable funds (reducing real rates)
3. Portfolio composition- investors have slowly overweighted bonds over equities in a mass reallocation due to demographics
IMF says #2 should reverse soon, increasing investment and real rates +0-150bps between 2013-18.
[See also: Larry Summers theory of secular stagnation & Technology revelation’s effect on CapEx]

–Romeo

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  1. […] See also: Bearish $QQQ technical setup; Previously: Nothing but the very best (tech) & Q2 earnings a momo barometer] #Momo #Tech 2.0 $IBB […]

  2. […] project can get funded” [Previously: Larry Summers’ theory of secular stagnation, IMF expects more ZIRP in the future of interest rates & The technology revelation’s effect on capex] #Counterfactual #Talking his book? […]

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