Bad News is Good News for Risk Again

Grayscale Wins Decision on ETF for Bitcoin

Alright traders and investors, today we want to take a look at the “risk on” move that we are seeing off of the abysmal JOLTs number this morning. We often see this regime rear its head as equity and risk types always look for the FRB put and often find it within the construct that bad economic numbers means the FRB will come to the rescue, maybe stop raising rates and be forced to cut. As always the fickle equity bull takes this as good news because it means more money in the form of no more QT and lower future rates. However as many long time Magnelibra readers know, its exactly this change in sentiment by the investing public that they should be most afraid of. History has proven that the real market slide from all time highs, comes AFTER THE FRB CUTS RATES post a rate hike regime. So a bit of caution for those with a longer time frame, leave the momentum algos to run everything up, not because of any news, not because of any regime change, but because the top 3 players have balance sheets that others don’t and can move the markets at will without regards to position size or risk. So let’s look at the risk on today:

Source: CQG, Magnelibra

A couple of items to point out here besides the Nasdaq outperforming the other indexes, fixed income and Bitcoin. First the US Bond market saw a stellar 7Y auction today with a 2bp stop thru (high demand) and an indirect takedown of 75.25% well above the 6 month averages (strong appetite, including foreign entities like other central banks). Secondly the JOLTs survey was flat out a mess and as we have been writing for quite sometime, we know the job openings 12 mil. Plus at one time was just a ruse and we are being proven right as time moves forward:

Source: Zerohedge

So that so called strength in the labor market, well, not so much…and today the FED FUNDS are reflecting a reversal of the Jackson Hole rate hike future path as November odds were cut in half:

As far as Bitcoin, well, the Appeals panel in DC overturned an SEC decision to block the ETF from Grayscale. This is indeed a very big deal and further solidifies that Blackrock will also be successful in their attempt to capture all of this Crypto money and gain approval for their ETF sometime early next year: