MorningWord 3/30/16: If I’m Here, And You’re Here …

by Dan March 30, 2016 10:19 am • Commentary

Yesterday, while Fed Chairwoman Yellen was in a QE/ZIRP time-warp squeezing U.S. stocks and Treasuries higher on increased Dovishness, I was enjoying this with my family:


When I set out for a day of fun in the sun I of course knew that Ms, Yellen was speaking. I knew that she was not likely to raise the potential for further rate hikes anytime soon as was advertised after the March FOMC meeting, and while I had no idea how the markets would react to this commentary, I did not have the slightest inclination to cover any shorts into her speech. I have been losing on the short side since mid to late February, but regular readers know that not only did I make money on the short side in Dec/Jan/early Feb, but also made on the long side in U.S. Telcos, Utilities and U.S. Treasuries during that time as well. As a writer for a service like RiskReversal and a platform like the TickerDistrict, and pundit on CNBC, I offer lots of opinions and explanations for what I am doing in the financial markets and why. I rarely take victory laps when I am right, and I do my best to admit when I am wrong. I was not expecting the market to squeeze this much higher for these reasons, and I’ve clearly been too early in laying out most broad market shorts.

On numerous occasions since the bottom in February I have offered my opinion and reasons why I believe U.S. stocks remain in a precarious spot (it’s all here in time sequential order). At no time do I believe any of the commentary was fear mongering or ill advised.  Maybe the jokes on me, but there has been very little by way of economic data in the U.S. or abroad for that matter, on the corporate earnings front, or even geopolitically that leads me to believe that after an 18 month stall in U.S. stocks, and 3 massive bouts of downward volatility (Oct 2014, Aug/Sept 2015 and Jan/Feb 2016) that current global central bank policy is bullish for risk assets.  We are now in truly uncharted territory, where old crisis monetary policies are being stretched to the limit and many markets minds much smarter than me (Gross here and Gundlach here) feel they may not only be losing their effectiveness but ultimately result in the very economic calamity they were originally enacted to avoid in the wake of the financial crisis and the great recession.

But that’s neither here nor there, despite suggesting on numerous occasions since mid February the SPX could easily re-take 2000, or maybe even 2050, its been my view that the SPX has been in the process of making a rounding top, and the lower low that was put in on February 11th was significant as it was the first instance the largest equity index in the world did such a thing since the start of the bull market 7 years ago this month. So is this post simply a mea culpa? Does that make it the top? Read it however you like 🙂

The fact that you are actually reading the 700 word posts says you get what I am trying to do and not merely making judgements about my opinions or process from a soundbite on CNBC or a 140 character tweet. RiskReversal readers know we try to take nuanced views and be as transparent as possible. And that transparency hopefully informs your own trading and investing as you can see our successes as well as our failures and arrive at your own conclusions.

Oh and to be 100% honest this commentary, while focused on me, my market views and how I chose to express those views in the markets, is really about you. I have said this probably 100 times on the site, you are the only one who can make yourself money in the markets, not the plethora of talking heads on tv or the web who routinely talk out of both sides of their mouths. So while I appreciate you reading RiskReversal, the TickerDistrict, following me on Twitter and watching me on CNBC, my commentary should acts as merely one input on a long list of many as it relates to how you invest your hard earned cash.

So with all that said and likely little resolved this should not be a shocker to you… Yellen’s commentary yesterday changes nothing in my view and unfortunately for OUR money it merely raises the stakes. I still feel strongly in my market view. But now we need to figure out what the new time frame is as volatility looks like it’s in exhaustion mode from the flare up in Jan/Feb. And that’s not that uncommon after periods like that.

So as for me and you, I promise not to spew cover my ass nonsense market commentary that pervades financial media, and you promise not to think of me as your hedge fund manager or stock broker. To quote an infamous Californian while I am in this great state, Jeff Spicoli:

If I’m here and you’re here, doesn’t that make it our time?

So let’s call it what it is and make our time together productive as Mr. Hand would like it.