April 7, 2023

8:00 am

Good Morning!

Today, Good Friday, is a market holiday, although Federal Employees are still expected to work.  This anomaly may produce some unforeseen results, since the SPX futures market closes at 9:30 am, after the March  Employment Situation Summary is released.  Be prepared for some volatility.  I may not be able to comment on it this morning, as I am due to be elsewhere.

ZeroHedge reports, “While US cash markets are closed for the Good Friday holiday, futures are open but judging by the lack of action they may as well be closed. As of 7:45a ET, index futs were little changed after underlying indexes rose modestly in already thinned trading ahead of a three-day weekend that will see a crucial jobs report. S&P eminis were down 0.13% to 4,127 while Nasdaq futures dipped -0.08%. The yen fluctuated after declining Thursday against the dollar for the first time this week. Gold traded around $2010 while bitcoin drifted lower, sliding to $27800.

 

 

This morning’s study of the Cycles Model produced a stunning revelation.  Yesterday may have been the Master Cycle low despite it being on day 237.  You see, Master Cycles average 258 days with a standard variance up to 17.2 days.  That leaves the the normal window for a Master Cycle to be 241 – 275 days, with 92% clustered within 4.3 days of 258.  What makes this Master Cycle unique is that its predecessor was a  rare 282 days in length, so the average of the two is a normal 259.5 days.

 

There is a probability of BKX completing its corrective phase with a brief probe to the Cycle Bottom at 85.09.  Chances of going higher are small, but don’t rule out a  spike high before resuming the decline.  Disintermediation will continue for some time, weakening the banks.

ZeroHedge comments, “One week ago, we discussed a recent report from Barclays‘ repo guru Joseph Abate, who predicted that no matter the amount of emergency mitigation measures implemented by the Fed, the second, slower-burning phase of the bank run had begun as “depositors had finally awoken” about the opportunity cost of keeping their deposits at potentially challenged banks while earnings far less than they can earn by keeping their money in effectively risk free securities such as T-bills or parking deposits at Money Market funds.

Abate’s conclusion was that as long as the Fed kept Fed Funds rates high, i.e., 5% or so where they are now, the rotation out of deposits and into money markets would continue so long as the rate gap between deposits and money market rates is 200bps or higher, which is where it is now.”

 

 

TNX futures burst higher this morning, to a new high at 33.55.  This may confirm the Master Cycle bottom which occurred yesterday.  Since TNX has been making successively lower bottoms over the last 4 months, analysts have decided that the trend must continue.  There is no calculation of the drain that the war in the Ukraine has put on the US treasury which may cause rates to rally even further.  The one-year target for the 10-year is 5.3%.

 

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