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WEEKLY MACRO NOTE - Endogenous effects
Energy, Option Market Dynamics, Crypto Contagion and more
Read Time: 9mins
Prices are not driven solely by real-world events, news, and people. When investors, speculators, industrialists, and bankers come together in a real marketplace, a special, new kind of dynamic emerges greater than, and different from, the sum of the parts. To use the economists' terms: In substantial part, prices are determined by endogenous effects peculiar to the inner workings of the markets
themselves, rather than solely by the exogenous action of outside
events.
Too often traders try to explain the WHY of every single move. This is an impossible and useless task.It is the whole that matters, not the single parts. And the whole is bigger and more complex than all the parts put together.
TABLE OF CONTENTS
WEEKLY WRAP UP
ENERGY
OPTION MARKET DYNAMICS
CRYPTO CONTAGION CONTINUED
SENTIMENT
ECONOMIC CALENDAR
THE ROAD AHEAD
WEEKLY WRAP UP
For all the commotion and excitement you would have thought we rallied this week, but most global indicies were actually down.
SPX -0.69%NDX -1.18%DJI -0.01%RUT -1.75%
KOSPI (South Korea) -0.46%SENSEX (India) -0.21%NIKKEI (Japan) -1.29%AUS (Australia) -0.28%TSX (Canada) -0.65%
There were a few bright spotsSX5E (Europe) +1.46%STI (Singapore) +1.36%SSE (Shanghai) +0.32%VNI (Vietnam) +1.55%
Most equity sectors were down, except for 'defensives'Staples +1.58% Utilities +1.13% Healthcare +1.08%Defence +1.01%The worse performers wereConsumer Discretionary -2.83%and baskets of crap such as Cathy Wood's ARKK -9.50%(more on her in a bit...)
The Dollar rallied off the lows, DXY was up +0.52%.The only major currency to gain against the King was the GBP +0.47%, which now sits in severely overbought territory. Meanwhile, the long Brazilian Real trade is getting unwound.Believe it or not the Real is one of the few currencies which is still up YTD against the Dollar, by +3.7%.However, after losing -6% over the last two weeks, momentum here is turning bearish.I guess markets are not so convinced about President Lula round 2?
Interest rates rose on the short end with the US02Y year yield closing at 4.53%, while they declined on the long end with the US30Y year yield closing at 3.93%.The recent rally in bonds (yields and bond prices are inversely correlated) has eased some of the pain in the mortgage market, US 30 year fixed mortgage rates declined to +6.9%. But don't get too exited, this is still the highest borrowing cost new home owners have had to face in over 20 years.
US 30Y FIXED MORTGAGE RATES
On the precious metal front GOLD was down -1.15% and SILVER -3.09% after I pointed out they were overbought. With the Dollar poised to rise in the coming weeks and Bond Volatility still high I still wonder whether a better opportunity awaits for both precious metals.
Commodities declined across the boardCRB Index -3.29%Use this link to redeem the special Black Friday Discount and upgrade to premium for $12.75 a month for the next year. *offer ends Saturday
