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Kanga Commando

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If any of you follow macro stuff, especially oil and currencies, have a read of this guys work - very informative.



Twitter is full of crackpots, but at least this guy only does chart work so you know what you are dealing with.

IMHO, this bear market has not bottomed. The Fed and Central Banks will not stop until inflation is stopped, and with the US running at over 8% annual rate, there will be no pivot for some time. That 8% is an annual rate, and it needs to wash out.

FWIW - Fedex dropped more than 20% last night. I'm expecting next week to be worse for the general market. My short seems to be holding better this time.
 

Gigantic

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Hi everyone, 1st post on these threads.
I’ve noticed some commentary on Lithium stocks.
I set up my own SMSF back in 2016, as I was fed up with the pitiful returns (and losses) the industry funds were generating.
Since inception my fund has grown over 500%, purely on the back of my Lithium investments. Sure it has been volatile, but plenty of research has now put me in a position where retirement by 60 is quite possible, whereas 6 yrs back, it was work till I die.
Whilst I’m not a huge fan of Ev’s per se, it’s fairly obvious that we will all be driving one at some stage, and demand for the white gold is increasing exponentially each year.
Good luck to all in your investment journey!
I’m in Oslo, Norway atm and 3/4 cars if not more on the road are EVs. That’s anecdotally but I’m sure the stats of new car sales are not far off. It really is a future that will be coming sooner than many think.
 

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Purple7x08_24

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If any of you follow macro stuff, especially oil and currencies, have a read of this guys work - very informative.



Twitter is full of crackpots, but at least this guy only does chart work so you know what you are dealing with.

IMHO, this bear market has not bottomed. The Fed and Central Banks will not stop until inflation is stopped, and with the US running at over 8% annual rate, there will be no pivot for some time. That 8% is an annual rate, and it needs to wash out.

FWIW - Fedex dropped more than 20% last night. I'm expecting next week to be worse for the general market. My short seems to be holding better this time.

Hypothetically I have 75K cash available, should I dump it down on the back of tax free high interest savings in my mortgage, or should I wait for a drop and smash it on shares?
 

Kanga Commando

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Hypothetically I have 75K cash available, should I dump it down on the back of tax free high interest savings in my mortgage, or should I wait for a drop and smash it on shares?
Everyone is different mate, tax and personal situation counts for a lot.... Personally, i am avoiding/minimizing debt because I feel rates are going higher, and neutral to short on the market, because I feel it will go lower AT LEAST until the fed stops....

I am keeping my powder dry.

Please understand I have chosen my words very carefully. I don't think people should give specific advice on here, nor take it.

Unless people post their trades in advance, take everything as an education...
 

Purple7x08_24

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Everyone is different mate, tax and personal situation counts for a lot.... Personally, i am avoiding/minimizing debt because I feel rates are going higher, and neutral to short on the market, because I feel it will go lower AT LEAST until the fed stops....

I am keeping my powder dry.

Please understand I have chosen my words very carefully. I don't think people should give specific advice on here, nor take it.

Unless people post their trades in advance, take everything as an education...
I get it, and it's a very complex situation we are in.

I previously floated the idea of selling everything up at the high point and renting for a while through transtition (I'm moving eventually anyway) but the rental crisis is making that a bad idea.

I borrowed to 80% with the intention of leaving it in the mortgage to use as a deposit later on or capitalizing on opportunistic environments, such as making 20% in 6 months. I bought CBA shares at $60 in '20 they made it up to 110 from memory. That's 60K to 100K in less than a year (with a greater investment).
 

Kanga Commando

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I get it, and it's a very complex situation we are in.

I previously floated the idea of selling everything up at the high point and renting for a while through transtition (I'm moving eventually anyway) but the rental crisis is making that a bad idea.

I borrowed to 80% with the intention of leaving it in the mortgage to use as a deposit later on or capitalizing on opportunistic environments, such as making 20% in 6 months. I bought CBA shares at $60 in '20 they made it up to 110 from memory. That's 60K to 100K in less than a year (with a greater investment).
thats pretty good, especially considering the dividend..
 

Teagueeee15

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I get it, and it's a very complex situation we are in.

I previously floated the idea of selling everything up at the high point and renting for a while through transtition (I'm moving eventually anyway) but the rental crisis is making that a bad idea.

I borrowed to 80% with the intention of leaving it in the mortgage to use as a deposit later on or capitalizing on opportunistic environments, such as making 20% in 6 months. I bought CBA shares at $60 in '20 they made it up to 110 from memory. That's 60K to 100K in less than a year (with a greater investment).

Do you have an offset account with your mortgage? It is effectively earning a tax free return equal to your mortgage rate if you have one and the funds are sitting in it.

It isn’t for everyone, but there are opportunities to refinance and get a $3-4k cashback depending on the lender. The threat of a discharge form may also prompt your current lender to drop your rate down.
 

Purple7x08_24

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Do you have an offset account with your mortgage? It is effectively earning a tax free return equal to your mortgage rate if you have one and the funds are sitting in it.

It isn’t for everyone, but there are opportunities to refinance and get a $3-4k cashback depending on the lender. The threat of a discharge form may also prompt your current lender to drop your rate down

My mortgage is under 300k So I miss out on those bonuses. I did get a call from the bank along those lines when I wanted to switch.

I do my offset manually, and have a plan of attack in the next month or so.

Put everything into the mortgage, and pay every thing onto my cards. Keep 2K in the bank, and pay the cards when necessary.
 

Mofra

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What entry price are you looking at?

It looks setup for a quick win, not really an investing stock. I might have a nibble.
I tend to invest rather than trade so I'm happy to let the dust settle and form a clear bottom before entry. No specific price set.
 

Kram

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I tend to invest rather than trade so I'm happy to let the dust settle and form a clear bottom before entry. No specific price set.
Remember to ring a bell for everybody when it gets there, cheers.
 

Mofra

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Remember to ring a bell for everybody when it gets there, cheers.
I've been a net seller for quite some time (ignoring DRPs and ANZ entitlement).
Did pick up some FMG to divvie strip and keep as a LT hold - I do like the green hydrogen play, they have deeper pocket than a lot of competitors in that space and as time goes by they'll be more than just an ore digger.
 

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Kram

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I'm not smart enough to pick bottoms or short markets so I'm just going to slowly average into mostly bottom drawer stuff I already own in small $1-3k buys.

Looking broadly prices of some stuff is starting to look a lot closer to being pretty reasonable.
 

Kanga Commando

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Don't forget folks.... FOMC meets on the 21st ( NY time )... and also, the current issue of VIX options expire the same day.

Pre-market tonight showing some scary numbers
Further to this - 16 CB's are issuing rate notices this week.

And, Japan inflation is ticking up. Once they stop YCC a lot of money flows are going to change ( ref my previous twitter post )

FWIW my short got stopped out last night at a small profit. Will look for new short levels again this week.
 
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Kram

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No doubt will be light volume but will see how we trade today after a couple of poor nights in the US.
 

Kram

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A few may have not wanted to sit on positions with 2 more trading sessions over in the US before we come back from holidays. Futures look bad as well atm.
 

Kram

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Equities slow to get the Fed’s message​




a day ago
Print Wire


Christopher Joye
Coolabah Capital







On December 15 last year, the US Federal Reserve expected its near-zero cash rate (known as the Federal funds rate) to rise only modestly to 0.9 per cent by the end of 2022 and to 1.6 per cent by 2023. Financial markets had a similar view, pricing in just a 1 percentage point Fed funds rate 12 months ahead.
This week, the Fed’s chairman, Jay Powell, delivered yet another hawkish shock to investors. The Fed raised rates by 0.75 percentage points, as widely expected, but accompanied this with big upside surprises to its projections for where it thinks its cash rate will land at the end of 2022, 2023 and 2024. This has serious ramifications for global asset pricing.
In June, the Fed forecast that it would probably boost the Fed funds rate to 3.375 per cent by December. On Wednesday, markets were fingering a higher 4.23 per cent rate. The Fed comfortably bested this estimate, lifting the central expectation for the Fed funds rate in December to 4.4 per cent via its statement of economic projections, also known as the “dot plots”.
The June dot plots had the Fed hitting a peak cash rate of 3.75 per cent by the end of 2023. Financial market pricing this week pointed to a 3.97 per cent rate at that juncture. The new dot plots blew this out of the water, forecasting 4.6 per cent.
Finally, markets had been pricing in a materially lower cash rate of about 3.1 per cent for the end of 2024. In June, the Fed was broadly in that ballpark, projecting 3.375 per cent. The latest dot plots racked this much higher to 3.9 per cent, underlining the Fed’s position that it is not likely to provide much in the way of interest rate relief for years to come.



Concurrently, the Fed has slashed its estimate for economic growth this year from 1.7 per cent to nothing and now anticipates a more meaningful increase in the unemployment rate from 3.7 per cent to 4.4 per cent.
“The Fed joins the Bank of England and Riksbank in effectively factoring in a recession as the cost of containing inflation,” says Kieran Davies, our chief macro strategist.

Jackson Hole game-changer​

Coming into the Fed meeting this week, we had taken profits on about half of our shorts/hedges in US and European credit. After being short over $8 billion of US and Euro credit since late last year, we had monetised almost all of this position over May and June on the basis we thought risk would rally.
While this came to pass, Powell’s blockbuster Jackson Hole speech in late August was a game-changer. Within about one minute of reading it, we had reinitiated some of our US/Euro credit hedges/shorts. The core message from that speech was that Powell was singularly focused on crushing inflation and inflation expectations, and would not be halted by the threat of a recession.
One new nuance in this context has been the political pressure being placed on central banks to eliminate the global inflation problem, which has opened the door to much more restrictive settings. Rather than populist politicians acting as a handbrake on rate increases, they are in many cases lubricating the wheels of the monetary policy machine.

About 10 seconds after the shockingly high US core inflation print last week, we doubled the size of our credit hedges/shorts, taking profits on these positions just before the Fed’s meeting.
We re-entered these positions again after the Fed’s announcement once we had synthesised the signal from the change in the dot plots, which seemed to be unambiguously bad news for risk and equities more specifically.
Bank deposit rates north of 3 to 4 per cent and high-grade bonds paying 6 to 7 per cent are massively increasing the hurdle rates for all investments. And as much higher long-term interest rates reduce the estimated value of defined benefit pension fund liabilities globally, trustees are inexorably shifting out of the high-risk equities exposures they had previously assumed to try to generate aggressive returns to close the gap between their assets and their unfunded future obligations. One beneficiary is likely to be much lower-risk cash and fixed-income securities that are suddenly offering historically attractive (and liquid) risk-adjusted returns.

Difficulty decoding Fed speak​

Curiously, equities initially rallied after the Fed decision and into the first part of Powell’s press conference. This continued a thematic we have noticed since last year where the equities market has struggled to accurately unravel the meaning of key data releases and Fed communications.
One explanation is that the growth in the influence of passive funds and retail investor participation has made the sharemarket noisier and less informationally efficient. Another is that the algorithms and quants that control much of the short-term price action are finding it difficult to decode the import of data surprises and Fed speak.

About 45 minutes after the Fed decision, the S&P 500 had bizarrely rallied more than 1 per cent, which made no sense. Yet as with many prior sessions along these lines, it slumped to a loss of more than two percentage points by the time the market closed. That primary Ponzi proxy, bitcoin, naturally followed suit, trading down into the low $US18,000 territory.
Other global central banks are synchronising alongside the Fed, sharply increasing their cash rates in the knowledge that they will crush demand, materially boost jobless rates and, in time, put downward pressure on wage growth and inflation.
Despite no evidence of a wage breakout in Australia based on either the official wage price index or the RBA’s liaison with businesses, our central bank has been among the most aggressive in the world, imposing 2.25 percentage points of rate increases on borrowers over its past five meetings.
Given the potency of domestic rate changes due to Australia’s unusual preponderance of variable-rate debt, this has triggered the fastest housing correction in modern history.
All of this is bad news for most asset classes, including equities, commercial and residential property [and] infrastructure.
Desperate to avoid any more policy missteps vis-à-vis peers in the face of the federal government’s independent review of its decision-making framework, the risk is the RBA blindly follows the Fed even though governor Philip Lowe has recently been at pains to point out that Australia does not share the same labour cost concerns as the US.

This is somewhat ironic because the RBA has previously argued that emerging wage pressures were one reason it was keen to normalise its cash rate to its neutral level while acknowledging it has no clear understanding of where that neutral cash rate actually lies.
All of this is bad news for most asset classes, including equities, commercial and residential property, infrastructure and the riskier parts of the illiquid loan and high-yield bond market. Investment banks are highlighting a noticeable reduction in high-yield bond issuance in the US and Europe as companies hope they can wait out the turbulence by drawing down on their cash reserves and locking in cheaper interest rates at some more benign point in the future. Bank traders have similarly noticed a dramatic reduction in the secondary trading of high-yield bonds as global funds suffer outflows.
Our central case remains that this interest rate cycle will drive a sharp increase in defaults and stealthy restructurings in the riskier bond and loan markets that were providing non-bank finance to companies that could not access the money via the more conservative banking system.
Equities slow to get the Fed’s message
 

Kanga Commando

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So Monday ASX will drop again. Do you expect that to continue all week or a few minor rallies here or there?

October 13 will basically decide the next 3 to 6 months you'd imagine.

We have equaled the june low, and there is not much volume profile support from here down to 3380. But we bounced off this level once before, so who knows. We are probably coming due for another bear market rally, maybe to 3900.

Never underestimate the power of the market to bite you and chase your liquidity in the wrong direction.

Once this is over there will be some bargains for sure.

I still think the Fed is going to be the decider.

Edit : forgot one thing. Market sentiment ( ie put/call ratio ) is hideously short - record proportions. if i find the chart i will post it.
 
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Kanga Commando

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We have equaled the june low, and there is not much volume profile support from here down to 3380. But we bounced off this level once before, so who knows. We are probably coming due for another bear market rally, maybe to 3900.

Never underestimate the power of the market to bite you and chase your liquidity in the wrong direction.

Once this is over there will be some bargains for sure.

I still think the Fed is going to be the decider.

Edit : forgot one thing. Market sentiment ( ie put/call ratio ) is hideously short - record proportions. if i find the chart i will post it.
FdavWwWXkAItyKx


I saw another that goes further back. Not sure where it went...
 

Kram

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Yeah especially after talking to someone over the weekend and more thinking I might sit right back for a while now..
 

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