The Natural Course of Things is Inevitable, Not Preventable

Posted by Capital Trading Group on Jan 17, 2019 9:39:05 AM

Dead cat bounce or does the equity market have what it takes to reverse that negative bear market stigma? As we highlighted over the last few weekly notes, we suspected the equity markets would bounce. However now, we feel that the euphoria has hit some technical levels that should put to test the veracity of this rally. We like to take a longer-term approach in times like this as everyone is all goosed up about the rebound, because fundamentally nothing has really changed. In fact, one can argue where fundamentals are concerned, the backdrop continues to weaken, global instability continues to gain, and the US government furlough seems to be foolishly overlooked.

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They Will Indeed Continue Their Rate Hike Campaign

Posted by Capital Trading Group on Nov 5, 2018 8:55:11 AM

We have a lot to get into and we will start this note off with this week’s big news, which was delivered by Apple. Here are the numbers as reported:

 

  • Q4 EPS: 2.91BN, beating Exp. $2.78
  • Revenue: $62.9BN, beating Exp. $61.44 billion
  • iPhone sales: 46.9 million, missing Exp. 48.4 million
  • iPad sales: 9.8 million, missing Exp. 10.5 million, and down from 10.3 million a year ago
  • Mac sales: 5.3 million, beating Exp. 4.9 million, and down from 5.4 million a year ago
  • iPhone ASP: $793, up from $618, smashing Exp. $729
  • Guidance for holiday quarter revenue: $89-$93billion, with the midline below Wall Street estimates of $92.74 billion (Zerohedge)

 

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Fed Raises Rates in Highly Anticipated Move

Posted by Capital Trading Group on Sep 27, 2018 10:12:20 AM

The FOMC decided to raise rates another 25bp to a high mark range of 2.25%. We applaud the continued move; however, we feel that we could be doing more and doing it faster. Holding interest rates or real rates still negative, some 10 years after the 2008 crisis is deeply concerning. All too often people focus on the Fed Funds rate, but the real rate, the FF less inflation, is still negative. Rates are still very accommodative...although the FED left that word out of the statement today. Watching Powell is like watching your Accounting professor discuss reconciling the balance sheet on a late spring afternoon. He and the FED continue to use words like transitory, gradual and appropriate, a decade into a recovery and we are still using these words. The dot plots are all calling for continued hikes peaking around 3.25/3.65%. We view this as highly opportunistic and we do not think the global economy nor the domestic economy will be able to absorb such a short rate given the sheer size of global debt growth. For those that haven’t seen, we often use our own “dot plot” picture:

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