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1/29/24
#Stocks –
#Macro – $SPX, $VIX,
Mike’s Reading The Markets Macro Subscription Service on Seeking Alpha
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- Options Update: NETFLIX Earnings Preview
Stocks got a bump late in the day after the US Treasury announced it would borrow $55 billion less than projected last quarter. It now expects to borrow just $760 billion in privately held net marketable debt, assuming an end-of-March cash balance of $750 billion. Meanwhile, the Treasury also noted it would need to borrow $202 billion in the April to June quarter.
This led to the 10-year rate falling an additional 2 bps on the day. They had already been down four bps before the announcement and finished the day lower by six bps.
This also helped to take away some of the day’s gains in the dollar. The dollar has still been unable to get above the 103.50 region of resistance. At least for now, the momentum still appears bullish, but it can still look as bullish as it wants; it doesn’t mean anything until the DXY gets through the 103.5 level of resistance.
The VIX was also higher today, which isn’t unusual for a Monday. It was unusual that the VIX didn’t give back all of its gains throughout the day. It is never strange to wake up on a Monday to see the VIX green. Typically, though, that results in volatility selling all day, helping to push stock prices higher. What isn’t typical is to see the VIX green all on a Monday, for volatility selling not to show and the S&P 500 rally anyway.
What was also odd was that the implied correlation indexes for the 1,9 and 12 months moved higher, while the 3-month index was flat. Typically, you don’t see the S&P 500 rally with these indexes moving higher.
At least based on several factors, if I had known all of the above, I don’t think I would have guessed that the S&P 500 rose by 75 bps on the day. I would have figured flat to down.
The rest of this week seems less clear, given a slew of economic data points, earnings reports, the Fed, and how the Treasury intends to issue all of this net debt.
I think that is going to be it for today. Things get more interesting tomorrow.
-Mike
Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.