Macro Market Commentary

10/11 Market Commentary:

There you have it, risk develops slowly and then BAM! All at once. It was a good day to be long treasuries, gold, utilities, and other bond proxies - not a good day to be anywhere else. Major market trendlines were broken in every major market index, and the selling continued on thru the night in the futures markets (the Nikkei got hit for about 3.5% overnight). This looked like a Quad 4 day of growth decelerating and inflation decelerating. Be data dependent, and not CNBC headline dependent. Your tv pundits want to blame rising interest rates, but something out there is telling me that markets are front running something much bigger the slowing of the growth cycle via y/y gdp and corp profits and earnings. As Ive mentioned time and time again, we dont get any confirming data of out of Q4 18 until Nov/Dec/Jan. Remember all of the news and data coming in is still Q3 data. Oil plunged over 3% yesterday and is now down 7% in the last week. As I look at the board early on, the selling has abated somewhat, and could absolutely see a rebound today but were sellers of rallys back to the top of our respective ranges from here on out (unless the data proves us wrong). Todays CPI data will show us consumer inflation well keep you posted as to how that comes out, but bear in mind, lasts months price ramp in the energy component of the CRB will be included in this number. As I look at the rest of the commodity space, it all still looks pretty terrible.

Stocks: immediate term oversold, but now bearish trend across the board except for the Dow. SP500, Nasdaq, and Russell are all signaling bearish trend now.

Oil: Oversold back at the low end of our range, still bullish trend. Longer-term outlook is that were bearish on classic supply and demand outlook.

Gold: were warming up to gold, as our outlook for the economic data going forward could begin to weigh on the USD and interest rates. Gold remains bearish trend, and now bouncing close to the top of the trading range. We do have a small position long in Gold, but nothing worth mentioning or signaling to our process followers.

If we see something, well get it out to you..there is a currency trade were looking at now, well keep you posted.

Remember, when the trading tape is nice and neat, its easy to chase markets higher and make money - but whos your risk manager when the VIX spikes north of 20.00 or 30.00 or even 40.00? Hopefully not CNBC. Yesterday the market corrected 3% - imagine what 10,15,20% might look like at present valuations! Tune out all the noise and stick to the process and manage risk.

UPDATE: CPI misses y/y 2.3% vs 2.4% prior.

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