Trader’s Narrative

Most people assume automatically that a sustained interest rate cut campaign by the Federal Reserve has obvious consequences for the stock market, the dollar, commodities and gold.
The common line of thinking goes that interest rate cuts will help the market, by making equities more attractive relative to bonds, hurt the dollar by making it less […]

So after the Fed cut rates as expected, and the market was miffed that it wouldn’t be enough to remedy the credit crisis wreaking havoc in the financial sector.
And then a day later the Fed came out with all guns blazing, with their international “friends” in Switzerland, Canada, Europe and England by their side.
But, to […]

So the Fed came in with a 25 basis point cut, as expected by the markets, and everything went to hell in a hand basket. Hmm, I wonder if you can tell when, exactly, the news came out:

The bond market closes at 3pm, while the equity markets close an hour later. So stocks had one […]

As I mentioned a few days ago, my gut instinct tells me that the major central banks are about to turn and enter into an easing cycle. The Australian monetary authority and their European counterparts stayed pat but the British had a surprise in store for the markets today.
Bank of England’s “Surprise” Cut
Today, the BoE […]

According to sentiment, it is time to sell bonds (and buy stocks).
Bond Market Sentiment
A few days ago the Hulbert Bond Newsletter Sentiment Index reached 47.4% — that’s four times the average sentiment over the past year and eerily enough, it is a repeat of what happened last year at this time. We had a slightly […]