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About Our 'Market On Open' Notes
These notes, published daily, form part of the Equity Index Strategy that we employ here in the Inner Circle service and, indeed, in Cestrian Capital Research, Inc staff personal accounts. You can read all about our Equity Index Strategy, here.
Just Twiddling Our Thumbs Here
This market is about to either move upwards, and rather sharply, as the 10-year yield snaps back to the downside and a light is finally shone upon the underlying earnings growth of the companies issuing the stocks that drive the indices - or downwards as for some unbeknownst reason, selling takes hold for real. As you know our house view is the former. But in the game of securities analysis and index prediction one is often wrong, so if positioned long (as we are in staff personal accounts) then one must always be ready to turn around and hedge or even go net short. In our own opinion we are not at that stage, but if the yield keeps climbing then we will have to think about that.
Per yesterday's 10-year yield chart - which is more or less the same as today's - 5% is probably the key level which if surpassed means that something else is afoot and one should be careful with long equities. We aren't there yet. So for now in staff personal accounts we are doing nothing as regards index positioning, just whiling away the time whilst the yield decides on its trajectory.
Today the ECB did what the Fed shied away from and said, no new hikes - watch my lips, no new hikes - I rather think this was to correct for the fretfulness that seems to have seeped into markets since the Fed failed to clearly communicate their likely intent (which we also believe to be, no new hikes). We'll see if this has any impact.
Here's the 10-year right now.
Now, whilst we're sat here thinking about, did we just write a note saying markets could go up or down, and if so, is that really a good use of compute and telecom resources, let's take a look at our long- and short-term equity index charts.