Saturday, January 28, 2017

Buy SPX puts

There's an ominous pattern to R-gDp:

10/1/2007 ,,,, 1.4
01/1/2008 ,,,, -2.7 lower
04/1/2008 ,,,, 0..2
07/1/2008 ,,,, -1.9
10/1/2008 ,,,, -8.2
01/1/2009 ,,,, -5.4 higher (recession ending)
04/1/2009 ,,,, -0.5
07/1/2009 ,,,, 1.3
10/1/2009 ,,,, 3.9
01/1/2010 ,,,, 1.7 lower
04/1/2010 ,,,, 3.9
07/1/2010 ,,,, 2.7
10/1/2010 ,,,, 2.5
01/1/2011 ,,,, -1.5 lower
04/1/2011 ,,,, 2.9
07/1/2011 ,,,, 0.8
10/1/2011 ,,,, 4.6
01/1/2012 ,,,, 2.7 lower
04/1/2012 ,,,, 1.9
07/1/2012 ,,,, 0.5
10/1/2012 ,,,, 0.1
01/1/2013 ,,,, 2.8 higher (FDIC safety net lowered)
04/1/2013 ,,,, 0.8
07/1/2013 ,,,, 3.1
10/1/2013 ,,,, 4
01/1/2014 ,,,, -1.2 lower
04/1/2014 ,,,, 4
07/1/2014 ,,,, 5
10/1/2014 ,,,, 2.3
01/1/2015 ,,,, 2 lower
04/1/2015 ,,,, 2.6
07/1/2015 ,,,, 2
10/1/2015 ,,,, 0.9
01/1/2016 ,,,, 0.8 lower
04/1/2016 ,,,, 1.4
07/1/2016 ,,,, 3.5
10/1/2016 ,,,, 1.9

And money flows (volume x velocity) is lower in the 1st qtr. of 2017.


George S said...
This comment has been removed by the author.
George S said...

Sir, flow5, Spencer,

whatever your name is. Do you think the US economy is going into recession in 2018? My prediction is that SP500 should top out this year at a certain price (just couple percent left) and then it should halve in value. But this year is going to be choppy like 2016, I agree we may see couple percent dip in February, my SP500 top was at 2300 flat. I also see bond market seloff but not a huge one, 3%+ on the 10yr (I trade the futures so not sure about the exact nominal IR). But then rates should bounce back down in my opinion (118 in ZN is a tough nut, rates should bounce there).
Your oil bet is not going well yet, it is due to Iran and final cycle accumulation, it wants to take out certain R level first in the brent contracts.

I see peak dollar this year and a beginning of a long term selling cycle. I think the coming years are about to bring very heavy selling in the USD index.

Are you following international markets/ macro outside of the US too?

You seem to me as a very intriguing person, please respond to me. I would appreciate it a great deal. We may both have just pieces of a much larger puzzle than we recognize! It goes beyond what you are saying... A lot happened in the 70ies, things we do not understand yet. You are part of the larger picture, I see it now.

George S said...

I do not know how good are you regarding the precise price... but if you can get the macro jibes right and the, trends and the trend reversals right, I can tell you precisely at what price that happens. Exact top, exact bottom, to the last dollar, to the last basis point. There is no such thing as randomness in the real world, future is deterministic.

Eitherway, you do not need me, but it would still be nice to speak.

Thank You!

George S said...

Your call on oil is too hasty, it is not going to happen before the next recession hits, OPEC has its fingers in it for now. They want futures curve backwardation but they can't control the demand (even if they could do so with supply temporarily).

I see your Prediction from 3/4 months ago was a miss, now I believe we could complement each other perfectly!

George S said...

"The next free-fall in stocks is Oct. The next free-fall in yields and free-fall in oil/commodities is @ Nov. month-end (the kind of outlier which prompted the Treasury’s joint staff study of the Treasury market in Oct 2014 – which I warned them about).

But warning people about what will happen, like that the bond bubble bursts in 2017 (& it will), doesn’t cause panic. And the fact that c. 1973, I’ve never missed an economic swing doesn’t make any difference either (I’m the greatest market timer in history)."

This one did not work out well Spencer, you wanted to fight the cycle, which is a no go. Interestingly though, you predicted the days right, but direction was wrong because of the cycle. It was actually clear that after the initial drop in equity futures over the election night, the animal spirits, the irrational exuberance would be rekindled. Because cycle is not yet finished. Markets need to push up before they can crash. Trump compressed returnes! His old friend Carl Icahn bought $1bn worth of SP500 futures the morning after election.

You only have a piece of the puzzle, don't be conceited! There is still a lot out there...

George S said...

"Based upon monetary flows HOUSING BOTTOMs in JAN. Of course the Case-Shiller index is a 3 month moving average – so its bottom will come a month or two later.
“This index family includes 20 metropolitan area indices and two composite indices as aggregates of the metropolitan areas. The composite and city indices are normalized to have a value of 100 in January 2000”
MVt peaked in Feb 2006. Case-Shiller then peaked in the 2nd qtr 2006 @ 189.93 (because of the 3 month average).
Options and futures based on Case–Shiller index are traded on the Chicago Mercantile Exchange."

You were one year too early on housing.