Quick Magnelibra Econemotions Thought

Today's Leaning Lesson for All

As far as Magnelibra’s GFBP model it continues within a defensive postured Hedged Long, but playing it very cautiously as the equities are being led by momentum chasing in NQ and RV selling in RTY which is a one way freight train, plus the US Dollar continues to weaken with only minor bouts of short covering like today.

Energies seem at a cross roads as do Metals and all in our opinion are due for a healthy pull back and some profit taking, but not sure the catalyst. We haven't tracked FED QE lately, but I believe without it the markets would fall and fall systematically not suddenly, as they are basically doing $13Bn a day via FED direct, which is obviously supportive of tech stock outperformance. Well we aren’t going to be lazy, so let’s actually look at how much QE the FED did this week by analyzing their H4 report:

So there you have it $70Bn in QE, which as you know goes to the first in line receivers (banks and funds) who then use the cash plus leverage to well, you know what, that’s right buy, buy, buy! Can you imagine $70Bn a week, that’s some $14Bn a day! So when you see the NQ run and run and run and housing run, run and run, well you know why. Whoever wrote economic textbooks and equations we suppose never considered central bank QE, no wonder Socialist Democrats resonate with their push for UBI, as staunch conservative constitutionalist Austrian economists at heart, let’s just say we understand the plight, but will never agree with the rationale.

I think this is the reason hedge funds have had it very tough over the last decade, they are astute and they don't trust the rug that can be pulled at any time, yet the FED and the global CBanks seem pot committed at this point and all the evidence exists to back up this claim...as far as the GFBP it is cautiously long front end vs long end, i.e. US Treasury yield curve steepeners and not willing to jump into the other markets right now as August volume has notoriously been lackluster and doesn't substantiate any claims to any of these movements, rather its all fast money flows, dumping in the equities on the open by weighted adjusters to only be bought all day slowly by Algo systematic self-fullfillers!

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-Magnelibra Econemotions

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