Making Sense

As Howard Marks says The most important thing is "Awareness of the pendulum'. The mood swings of the market resemble the movement of a pendulum. Although the mid point of the arc best describes the location of the pendulum "on average", it actually spends very little of its time there. In fact, it is the movement towards an extreme itself that supplies the energy for the swing back.  Investment markets follow a pendulum like swing - b/w euphoria and depression, between celebrating positive developments and obsessing over negative ones and thus between over priced and underpriced.  While we may not know what the futures holds but me must have a fair sense of where we are headed. I hope this blog has helped you navigate the course of the markets by identifying these pendulum type swings and through the analysis, has helped you get a sense of how the data is evolving. The Economic calendar was heavy with Top Tier Data.  BoJ raised the overnight call rate by 15 bps to 2...

India Global Mfg PMI slipped to 54.90 in December, declining from prior month reading of 56.00 and below estimates of 55.90. Substantial rises in new orders and production were seen and Input cost inflation was among weakest in 3.5 years. 

"Everything should be made as simple as possible but not simpler" - Albert Einstein The HKMA, BoE and Norges Bank kept the interest rate unchanged yesterday following the Fed Reserve. Global Equities surged higher. S&P 500 closed at 4318 (+1.89%). Of the more than 375 S&P 500 companies that have reported earnings to date, about 80% turned in results that beat analyst expectations, according to LSEG. That compares with 67% in a typical quarter.(source WSJ). Long end of the US curve outperformed with yield on US10s dipping to as low as 4.63% , 31 bps lower in 2 days.  Yields on US2s initially dipped to 4.92% but closed near session highs at 4.99%. US2s have been fairly anchored between the 4.90% - 5.25% yields since Sep and break below the 4.90% handle could see further gains accrue. US2s10s spread widened to -34 bps USD index continues the consolidation from October to trade in the 105.50 - 107.00 handle. On the Implied Fed Fund Pricing, Peak Terminal Rates 5.41% Dec 2...

Risk sentiment is off to a perky start with Equities in the green and Bond yields lower after the FOMC Rate decision.  USD Index closed near the opening levels of 106.67 after peaking at 107.11. We have a Gravestone Doji on the USD Index charts.  On US Yields, US10s broke below the 4.80% - 5.00% consolidation and treasuries closed at the best levels on the day. US2s closed near the best levels on the day at 4.94% (-14 bps) with resistance seen at 4.92%. US2s10s spread closed at -23 bps. FOMC kept the interest rate unchanged at 5.25%-5.50% and the stance restrictive while noting the resilience of the US economy (Q3 GDP 4.9% yoy), rebalancing of the labor market(+266K 3m average), encouraging inflation prints (PCE 3.40% , Core PCE 3.70%) and tightening of financial conditions. The outlook is beset with uncertainties as the lagged effects of monetary policy work through the system and the recent tightening in financial conditions weighs on economic activity. The Fed will be in a ...