Market On Open, Friday 14 November
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Wen Liquidity?
by Alex King, CEO, Cestrian Capital Research, Inc
Well, those liquidity dollars are notable only by their absence at this point in time. The market is in a fragile state at present; we have a growing narrative about a weakening economy and so far an absence of anything to prop up confidence or, as a result, asset prices. Absent hard economic data from the shutdown period, there is no factual counter to the weak-economy chatterati; and absent a money-printer in its various forms, we have no “caution to the wind” salve for these worries either.
So, something has to give. Either (1) we see positive economic data that will shore up confidence based on fundamentals and/or (2) we see policy action designed to support asset prices even at the risk of inflation or other hits to the real economy, or (3) down we go. It’s a toss-up which of these happens, I think. We have the midterms in a year; typically the incumbent Administration wants the good feeling to persist into the midterms so one would expect that even if the economy turns out to be weaker than many believe, policy actions would be taken to support asset prices. This has been the way in the US since 2009 and it’s now what markets expect. When finally there is regime change in the market, it’s going to hit hard. Is that today? I don’t think so, no, but I think it’s wise to prepare if you haven’t already. What does “prepare” mean? It means get your house in order. Know what you own and why you own it; know your stop-loss levels on the things you own, or if you use hedging not stops, make sure your hedging ratios are allowing you to sleep soundly.
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NEW! Commodities
I don’t know whether commodities are the next bull market after growth stocks start to fade, whenever that happens. But they might be. And what I do know is that commodities and equities have not much of a correlation, particularly if you can trade across a basket of commodities not just gold and oil. So I definitely want to be able to invest and trade them successfully because it gives me a new way to try to make money over and above the usual stocks and ETFs.
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Alex King
The algorithmic method is the same as for our Crypto Signals and Systematic Signals services, which gives me confidence as those services have performed well since launch.
OK. Let’s get to work - our daily Market On Open note below covers yields, bonds, equity indices, sectors, oil, gold, Ether, Bitcoin and more, as always.