Faber News Flow

We brake down the market into three specific time frames looking at the short, intermediate, and long-term technical backdrop of the markets. In this analysis, our premise is a  "reflexive bounce"  in the markets, and what to do during the process of that move.  To wit: "On a daily basis, the market is back to a level of oversold (top panel) rarely seen from a historical perspective. Furthermore, the rapid decline this week took the markets 5-standard deviations below the 50-dma." Chart updated through Monday. "To put this into some perspective, prices tend to exist within a 2-standard deviation range above and below the 50-dma.  The top or bottom of that range constitutes 95.45% of ALL POSSIBLE price movements within a given period. A 5-standard deviation event equates to 99.9999% of all potential price movement in a given direction.  This is the equivalent of taking a rubber band and stretching it to its absolute maximum." Importantly, like a rubber band...

The forces of intervention are gathering  and stewing over what they might do to minimize the economic storm clouds gathering and their primary goal is to prevent stocks from selling off any further. Panic in the "save stocks at all costs" world was evident yesterday,  but, as Bloomberg's Richard Breslow explains,  it's way too early to be in awe of this bounce... People are rightly rattled by the threats stemming from the coronavirus. The risk of getting seriously ill certainly focuses the mind.  The way equity, credit and yields behaved over the last couple of weeks, it appeared clear that financial markets had gotten a similar message as to its seriousness.  Economic forecasts were being dramatically cut and it was hard to fathom how supply chains could be sustained. The extent and immanence of recession risk was a major topic of debate. The new OECD outlook practically merited banner headlines. Rout in Stocks Halts Amid Stimulus Hopes We know public health officia...

OPEC+ is moving quickly to try to halt the meltdown in oil prices as the demand hit from the coronavirus continues to grow. The Joint Technical Committee (JTC) meets Tuesday and Wednesday to assess the damage and to recommend a course of action. Press reports suggest OPEC+ is considering deeper cuts on the order of 500,000 bpd to 1 million barrels per day (mb/d). The rumor was enough to halt the slide in oil prices on Tuesday, after WTI briefly dipped below $50 per barrel during intraday trading on Monday. BP's CFO Brian Gilvary said that the coronavirus could shave off 300,000 to 500,000 bpd from demand growth this year. "We will see how it plays out, but that will soften (demand). If OPEC roll their cuts through the end of year , that should sweep up any excess of supply and re-balance the market," he told Reuters . Oil prices have declined by 20 percent decline over the past month. The oil market was "already slightly oversupplied in January," before t...

One look at the latest GDP print out of Japan, and one would think the country's economy was already being ravaged by the coronavirus: at -1.6% Q/Q and a whopping -6.3% annualized - nearly double the 3.8% estimated drop - this was the second worst GDP print since the financial crisis and the second-worst quarter of the Shinzo Abe era, surpassing even the drop in the aftermath of the Fukushima disaster. Of course, the latest plunge in Japan's GDP has nothing to do with the coronavirus as it took place in Q4, and the drop was largely a byproduct of the sale tax hike, which led to a similar collapse in Q2 2014 GDP, following the first such tax hike. One look at the GDP components confirms that the plunge was largely the result of collapsing consumption, with Houshehold Consumption plunging at an 11.5% annualized pace, the second biggest drop that Private Demand plummeted at an -11.1% annualized basis... ... the second worst on record, and also just behind the -18.1% drop recorded ...

With last week's collapse in the stock market, the internet has been set ablaze with discussion of a new crash looming on the horizon (even with today's record-breaking point-gain in the Dow).  The fact that such a chain reaction collapse was only kept at bay due to massive liquidity injections by the Federal Reserve's overnight repo loans should not be ignored. These injections which began in September 2019, have grown to over $100 billion per night… all that to support the largest financial bubble in human history with global derivatives estimated at $1.2 quadrillion (20 times the global GDP!). Sadly economic illiteracy is so pervasive among today's modern economists that the real reasons for this crisis have been entirely misdiagnosed with financial experts from CNN, to Forbes blaming the volatility on the spread of the Corona virus! NOT THE CORONA VIRUS: THE REAL CAUSE OF THE ONCOMING FINANCIAL COLLAPSE. As refreshing as it is to hear candid criticisms of the system...