Morning 1-19

 Stimulus narrative today Stocks up Spoos +.71%, Nasdaq +.87% Russ +1.16%, Dollar down and treasuries lower. Incoming treasury Secretary Yellen confirmation hearing today at 9:00   European stocks sideways today, Italy’s Mib +.3% as Prime Minister Conte survives a no confidence vote in the House, A senate Vote to follow. China Reported better than forecast GDP over the weekend and this continues to give lift to Asian Stocks along with continued inflows into Emerging market ETFs, last week was the 11th consecutive week of Inflows into them, this is part of the Rotation /reflation trade.  South Korea Kospi +2.6% Taiwan +1.7%, NKy +1.4%, Hong Kong stocks at 20-month highs closed +2.7%. Speaking of reflation Iron ore 9 year highs, UBS  see a copper deficit of 469,000 Tons or 2 % for 2021  Annual Demand, a negative though comes from IEA which  has lowered its demand outlook for current quarter by 600K barrels. Be aware that China is tightening Lockdown measures due to A pop in Virus cases.

 Yellen testimony already released and Dovish of Course from IFR news “In prepared testimony for today’s testimony to the Senate Finance Committee Yellen shouted “Neither the President-elect, nor I, propose this relief package without an appreciation for the country’s debt burden. But right now, with interest rates at historic lows, the smartest thing we can do is act big.” Clearly jump-starting an attempt at a bipartisan push for President-elect Biden’s $1.9 tn American Rescue Plan.

 From bank of America “the proportion of fund managers surveyed by Boa who said that the global economy is in an early-cycle phase, as opposed to a recession, was at its highest in 11 years. A record 19% of investors surveyed said they are currently taking more risk than normal. For the first time since October, a long position on technology companies was knocked off the top spot, as investors said that long bitcoin was the most crowded trade. A short position on the U.S. dollar was seen as the third most crowded.” But “The top tail risks to the economy were thought to be problems with the vaccine rollout (30%), the Fed easing its asset purchases (29%), and a Wall Street bubble (18%).”

Precious metals Small bid on Dollar weakness, I believe short term dollar trend is higher thus les conviction to push Metals higher on lower dollar Yields a touch a higher Bunds have a small range so far today. No Economic releases so focus on yellen hearing and Any tape Bombs from president trump.


  1. Markets rotate. The steeper US yield curve, in combination with antitrust/future M&A worries, is weighing on Big Tech. The combined index weighting of the top five companies in the S&P 500, which currently includes Apple, Microsoft, Amazon, Tesla and Facebook, has retreated to 22% from a peak of 24%, a level last seen during the bubble- Mizuho.
  2. The ICE BofA MOVE Index, a measure of implied volatility in the Treasury market, is near September’s record low.
  3. If the $1.9 trillion relief plan is passed, more than 150 million Americans would likely be eligible for a $1,400 direct payment, on top of the $600 payments approved in December. Across all income groups, December check recipients traded roughly 30% more in the first 10 days of January than they did at the start of December, data from Envestnet Yodlee show (Bloomberg). Trading among those with annual incomes of less than $75,000 who received payments jumped 53%.
  4. Merkel wants to extend lockdowns to Feb 15th.-ITC markets

term Premium

Term premium for 10 year treasury’s higher term premium = increased inflation expectations

Dollar Index DXY working on back to back higher weekly closes haven’t seen that since August. Short term bottom possibly in place and thus a reason for the unwind of the rotation trade, cyclical trade

Morning 1-15

A bit of Risk off Theme, Stocks lower Bonds higher, Dollar higher. JPM earning released earlier were pretty good, beats across the board. Stock a touch volatile for a bit but sits little changed now. WFC and Citi also to report today. Italy expected to announce tighter lockdown measures,   but it appears her political issues have cooled for a now. Biden officially announced his Stimulus package the cost may be a bit to high pass the senate so that too may be weighing on Risk just a bit. Dollar +.27%, it appears that a sideways to higher trade is more likely than a continuation of a downtrend. Citi Out with a warning saying the rapid Move higher in Real rates could start to impact Risky Assetts-BBG

 Russia announce a larger than expected tax increases on Exports “Hike to Russian wheat export tax more aggressive than expected… Russia’s wheat duty will rise to 50 euros a ton ($61) from 25 euros on March 1, the Economy and Trade Ministry said in a statement. The government is also planning to continue taxing shipments into the next season. The agriculture ministry earlier this week proposed an increase to 45 euros from March 15” Pro farmer    Wheat +2.1% Ag inflation. Also, Per Pro Famer much needed rains are forecast for Argentina over weekend keeping a lid on prices. A Long holiday weekend could make todays Close and Monday night open interesting as plenty can happen with weather over the next few days.

 A busy Economic Schedule today unlikely it moves the needle Much. Almost all commodities lower to sideways

Morning 1-14

 A couple things.

  The light at the end Tunnel is a a great term for optimism or hope but what if the tunnel keeps getting longer?

Biden will unveil is Stimulus plan tonight at 7:00, some high lights via WSJ, CNN reported the bill at 8 PM last night.

“Mr. Biden and Democratic legislative leaders have repeatedly endorsed $2,000 direct payments to most Americans, calling the $600 checks in the December bill insufficient. The Biden plan would likely add $1,400 to the earlier payments to reach $2,000 total.

Mr. Biden said Friday there would be “billions of dollars” to speed up vaccine distribution, “tens of millions of dollars to help reopen our schools,” and “tens of billions of dollars” to allow state and local governments to keep paying teachers, police officers and health workers. He cited extending unemployment insurance and rent relief, and suggested he wants to modify the small-business assistance program to ensure more aid for minority-owned businesses. He also reiterated his support for raising the federal minimum wage to $15 an hour from the current $7.25, though it is unclear if that will be part of the relief package.    Below 30-year yield on the Biden stimulus announcement, also Bitcoin Bid +2k on day, Gold and Silver down on Day no stimulus moves here, Dollar Small bid today and rallying a touch. Some rumblings now that that rates and not the dollar is the lynchpin for the reflation trade. Its not he actual level of the 10-year rates but the speed at which

China Trade surplus, touched a record high as Demand for anything and all China goods continues a sampling China made 40 masks for every person around the world (BBG) trade balance expected $72B actual $78.1b 

 Grain markets sideways today Rumor that Russia will announce More export restrictions doing the rounds so watch Wheat. Stocks narrow range in Spoos 13 handles Yuck. European bourses with a small bid Autos, Travel and leisure and basic resources leading Europe higher. Italian Worries are pushing bund Italian spread to 2-month highs.


  • Consider the fact that the CPI component for major household appliances, despite a pandemic, is rising at a 16.6% YoY rate (its index impact masked by an equally large plunge in airline fares), while the Q4 2020 U.S. Chamber of Commerce Commercial Construction survey showed that 71% of contractors are facing at least one material shortage, 83% experiencing product delays, and another 58% putting in higher bids on projects.”
  • AAII US Investor Sentiment Bullish Readings hits….100%.
    Attached. mizuho
  • BN) Manhattan Bargain-Hunters Drive a 94% Jump in Apartment Leases
  • The rise in 10-year Treasury yields to open the year has come
    amid a surge in term premium, or the extra compensation
    investors require to own the maturity rather than rolling over
    a shorter-dated obligation. The premium, which has historically
    been positive, is climbing back toward zero, a level not seen
    since 2018, according to Federal Reserve data

Morning 1-13

Virus Commentary via BBG

China has locked down three cities and asked residents of Beijing, Shanghai and Guangdong province not to leave for the annual Spring Festival holiday, enacting the widest controls the country has had since the initial COVID19 outbreak last year – FT


 Some Clever people on twitter   Are using a new term Ag-Flation yesterday’s USDA Crop report was bullish for grains and beans, below is the Bloomberg Agriculture Subindex up, up and away. No threat of Inflation if the things the Fed doesn’t count keep going up right.

 A bit of a rally US yields this week caused by Some Fed comments about tapering Bond buys sooner than markets have priced, per BBG 4 Fed officials have mentioned it’s possible by year end. Pushback did occur yesterday but genie out of bottle so be prepared   that traders are starting to worry a bit about Higher rates. Oil higher for the 7th Straight day still rallying off the Saudi cut and now much colder weather in parts of Europe and Asia driving demand for fuel oils   a perfect storm so to speak to start year. Be aware that Annual Commodity roll continues till Friday. ECB comments this morning from Lagarde talking about a Strong Euro is not something they want, and she urged a quicker rollout of vaccines and Economic stimulus, she also said Bitcoin should be regulated-BBG.

 Stocks sideways to lower Dollar small bid Treasury’s steady but Bunds and Buxls bid, Precious metals blah Today the house will bring articles of Impeachment to the Floor and it appears that a few republicans will vote yes. Also, some talk that People are trying to have trump Resign aka Richard Nixon we will see. CPI data today and now with the run up in grains   Mid Weather forecasts will become important as Weather especially in South America Will be driving Force.


Eurozone industrial production rose 2.5 percent from a month earlier in November 2020, a seventh consecutive month of growth and compared with market expectations of a 0.2 percent increase

Italy’s industrial production fell 1.4 percent from a month earlier in November 2020, following an upwardly revised 1.4 percent growth in October and compared with market expectations of a 0.4 percent drop.

Exxon mobile Upgraded by JPM for first time in 7 years-BBG

Morning 1-12

  Yields higher again today in Both Europe and USA, 10 year yields   1.16%, bonds at 1.90% Bund yields up through -.5% printing at -.47%/ Early Fed taper? Run up in real rates, 10- and 30-year auctions all playing a part as is the Dem control of the Senate.  Stocks bouncing a bit today Spoos +11 handles, Nas +45 Stocks in Europe sideways. Dollar sideways/ choppy trade   as well. something to note Yuan weaker vs dollar since turn to the new year, Dollar has rallied. Shanghai stocks highest in almost 6 years as financials and Consumer staples lead the index higher.

 Oil bid Nat gas Bid maybe a bit of Colder weather forecast end of Month also Demand for LNG due to Cold snap in Asia as global LNG prices rallying.UK Nat gas 2-year highs, Coal prices near 18-month highs as the scramble for Fuel for power generation grows


 Politico: US House Speaker Pelosi told members in a private call they need to return to the capital on Tuesday night as the impeachment is scheduled for 9am Wednesday morning; if this goes through the House it’d move immediately to the Senate however Senate Majority Leader McConnell has indicated a trial likely won’t start until the chamber reopens on Jan 19th, Senate Minority Leader Schumer wants to use emergency powers to convene the chamber, but this would require buy in from McConnell who’s unlikely to agree  

 Via Axios” warnings concerned an insurrection plot that would involve demonstrators surrounding the Capitol, White House and Supreme Court, and then blocking Democrats from entering the building ― possibly by assassinating them ― so that Republicans could take control of the government.”


  • US small business optimism index drops to 7-month lows,9-10 sub-indexes dropped a gauge of owner’s outlook for general business conditions dropped to lowest levels since 2016.
  • Japan Extending state of emergency to 3 more cities.
  • Lunar new year in China, may bring Further lockdown Measures -WSJ.
  • Crop Report today   buy the rumor sell the news.?  A big deal today
  • Bitcoin up so far today

Market breadth

Below Find the percent of Stocks trading above 200 D MA ,From Morgan Stanley “A back test of forward returns after the % of S&P 500 stocks above 200-day moving averages reached current levels or higher shows that forward returns on a 5-day, 1-month, and 3-month basis all tend to be lower than in other periods and in each case with high statistical significance (p = 0.00). To be clear, absolute returns do not have to be negative, and in about half of cases across the different return periods they are not, but returns do tend to be lower than normal when this indicator gets as extended as it currently is. “

one of the culprits for todays unwind of the reflation trade is fact that real rates are moving higher in fact over last 5 days they are UP 15.9%. short term bottom in place? Daily chart 10 year real rates