Thursday, July 27, 2017

FOMC Trading Action: Love Is In The Air

It's out. We love the Fed Chair and
we love the bond action yesterday.
Ah Fed day. Never knew it could
be this good.
It's Fed day not Valentines Day but we are in love anyway with the trading action in bonds yesterday. Fed Chair Janet Yellen pulled-forward the timing of the long-awaited taper to an official "relatively soon." That's terrible for the bond market. This $4 Trillion bond holder (With a "T") is showing their cards they are backing off. But what did bonds do? Absolutely nothing. That's why we are head-over-heals in love with the action in bonds and the stock markets yesterday.

First, The FOMC Change In Language

After the June meeting the Fed said, "The Committee currently expects to begin implementing a balance sheet normalization program this year."

Yesterday's FOMC statement changed the language from "this year" to "relatively soon."

Fed officials had been publicly commenting about the potential for a Q3 taper but nothing was etched into an official FOMC statement. Yesterday that all changed and we now know the taper's coming pretty "soon."

Get ready!

Terrible For Bonds? Right? It is? It Should Have Been, Right? It Wasn't? What's Up?

The Fed has been in-there buying bonds for a decade taking interest rates to pre-historic lows. Officially pulling back on that buying to a zero over time should spook markets that interest rates are going to spike from these artificial-sweetener lows.

So after the 2PM statement we had our noses to the screens. But look at what happened.

bond action good after fed day
Chart By Interactive Brokers: 20 Year Bond ETF TLT: Not so bad.
Bonds (represented by the ETF TLT) above went up after that 2 PM FOMC statement. That's not so bad.

So What's Up? Why Weren't Bonds Killed?

Traders are telling you that this long-feared bond buying taper is not going to be as terrible as feared. There are plenty of bullish counter-drivers pushing bonds higher like low inflation and baby boomers who aren't letting go of their safe assets.  Also many are still not sold on the 2nd half economy so bonds are fine.

That's a sign of "bad news" "bullish action" and it should cause you to fall in love all over again.

Ah Fed day...

Attaboy Trump

With all the love in the air we were relieved to hear that President Trump is considering renewing Janet Yellen as Fed Chair when her term expires in 2018.

With bullish reactions from bond and stock markets to taper news that appears to be a good move.

Nice move Trump!

Wrap It Up For Me Elazar: Make Me Some Money

We said we were bullish going into this Fed meeting.  Nothing happened except an official pull-forward of the timing for this scary taper. But with markets not reacting you have an incredibly bullish reaction, no reaction.  We think it's another sign that this bull market is still very much on course.

OK, Sorry Class, It's Reading Comprehension Time

President Trump is considering:

A) Replacing Fed Chair Mark Zuckerberg with Elon Musk in 2018.
B) Replacing Fed Chair Elon Musk with Mark Zuckerberg in 2018.
C) Firing Both Elon Musk, Mark Zuckerberg and maybe even Jeff Bezos.
D) Keeping Janet Yellen on as Fed Chair in 2018 when her term is up.
This is a tough one so please take your time and give your best answer in comments.




Please, don't stop reading thinking we're finished...

I'm sorry, we almost know as much as Google. We see how many read our stuff and we see how
many are signed up to this Free Email Alert list. You did NOT all sign up yet, what's up?
Come on, please, just sign up. If not for you, for me, ok?
Great marketing, Elazar, you convinced me. Free emails, what else is there?


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By: Chaim Siegel, Elazar Advisors, LLC, Happy and profitable trading!

Oh, and please share (the love).

What We Said On Chat Yesterday
14:03 7/26/17
they changed wording from 'this year' to 'relatively soon' to start the tapering of bonds
Elazar Advisors, LLC14:03 7/26/17
and bonds are ok w/ that which is VERY bullish
Elazar Advisors, LLC14:04 7/26/17
so far of course first 30 mins after can swing wildly
Elazar Advisors, LLC14:04 7/26/17
but so far it looks much slower than historically after the fed meeting which looks bullish for spy and tlt
Elazar Advisors, LLC14:04 7/26/17
i expect (its very early so we'll see) that tlt will see some short covering to go higher
Elazar Advisors, LLC14:04 7/26/17
and so stocks will go up w/ bonds
Elazar Advisors, LLC14:05 7/26/17
as you can tell im excited about the change in the statement b/c the reaction is bullish
Elazar Advisors, LLC14:08 7/26/17
still this action is no action so far which is very bullish
Elazar Advisors, LLC14:08 7/26/17
i think more new highs
Elazar Advisors, LLC14:26 7/26/17
no action is bullish action
Elazar Advisors, LLC14:26 7/26/17
big news, no movement. very bullish

Disclaimer: Stocks reported by Elazar Advisors, LLC are guided by our daily, weekly and monthly methodologies. We have a daily overlay which changes more frequently which is reported to our premium members and could differ from the above report. Portions of this report may have been issued in advance to subscribers or clients. All investments have many risks and can lose principal in the short and long term. This article is for information purposes only. Ratings are based on hypothetical trade directions. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC and their related parties harmless. Any trading strategy can lose money and any investor should understand the risks.

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2 comments:

  1. Replies
    1. David, you are the best. Wishing you a ton of success today and every day! I love it too.

      Elazar way too haughty!

      what i love it too.

      haughty.

      ok, thanks David. Glad you enjoy

      see, that's what you're supposed to say. well done.

      Delete

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