Art Cashin, Head of Floor Operations at UBS: We think that the unnoticed part of the Fed action, that is the quantitative tightening, may be kicking into high gear, the money supply growth is falling off a cliff, and if anything else, it’s almost as though the money supply is contracting. And I believe that could have serious Black Swan effect in the financial markets. The problem is which markets, where and when? 

January 6 – (King World News) Art Cashin, Head of Floor Operations at UBS:  The group of old fogies that I belong to, will I think, be watching to see if the second- half of that cycle kicks in. Remember there was a short term cycle that indicated a selloff going into yesterday and possibly today. We got the first half of that. Now let’s see if there’s a follow through on the South side. Most of that probably will depend on the data. 

Black Swan…
And again, next week we’re going to try and get some of this background on the Fed together to see where things are going. We think that the unnoticed part of the Fed action, that is the quantitative tightening, may be kicking into high gear, the money supply growth is falling off a cliff, and if anything else, it’s almost as though the money supply is contracting. And I believe that could have serious Black Swan effect in the financial markets. The problem is which markets, where and when? 

So we will be consulting several of our insightful friends and hope to deal with that as the week progresses. 

In the meantime, you know the current drill. Stay close to the newsticker. Keep your seat belt fastened. Stay nimble and alert. And most of all, stay safe and have an absolutely wonderful weekend. Happy New year. 

Arthur

January 5, 2023

Time To Regroup

Art Cashin, Head of Floor Operations at UBS:  We will need to regroup here and look for some of the incoming changes of the market technicals and what is happening with the Fed balance sheet along with bond yields, which, once again in their recent give and take tug of war, will get our attention. As we had said, as the week began – we old fogey’s have a couple of conflicting cycles that said this might be a whipsaw week and, while we escaped with Santa Claus successfully, there is a lot more to be looked at, but first let’s look at what our foreign friends are going overnight. 

Overnight, foreign equity markets are again showing individual personalities. In Asia, Japan, Hong Kong, and Mainland China are all a bit firmer, focusing in on the Chinese government and Central Bank appearing to continue easing financial policies and signs that they will allow some of the megastars like Alibaba, etc. to become more involved in the global financial markets. All that despite the fact that rumors continue to circulate that the Covid outbreak in China is growing rapidly. So, the traders there seem to be concentrating on a much more different side of the balance sheet. India is a little bit lower, but the rest of Asia is showing small changes. 

European markets are a bit more cautious. We are told some of that began to show up after the Fed minutes came out. Obviously, the European markets were closed then, but gossip says that in after hour trading, there was some sign of caution showing up and that appears to be continuing throughout the morning. 

The U.S. economic calendar is beginning to pick up as we move into the new year. We will have unemployment data this morning in Jobless Claims, in ADP Payroll estimate, and some signs of trading in international goods and services. We also will hear from a couple of Fed speakers, including Bullard a little bit later in the day. Mid to late morning, we will see the PMI Composite and natural gas inventories and oil inventories also since Monday was a holiday. Nothing appears to jump off the calendar as of super importance. 

Santa Claus is in the books and now we will start to go through the first seven trading days, etc. The beginning of the year is always given a certain predictive value. So, you know the current drill. Stay close to the newsticker. Keep your seatbelt fastened. Stay nimble and alert, but most of all try to stay safe and see if we can follow-up on Santa, while the circus in Washington continues. Stay safe.

Black Swan Alert
Hopeful coming attractions – Next week, we hope to delve into the possibility that the recent dramatic collapse in M2 (Money Supply) growth might produce a financial black swan of significant proportions and maybe even speculate the region in which that black swan could occur.

Disclaimer

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