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The Beauty of Weekly Puts

Daily Rap 08-17-2017

The day began in interesting fashion (note that "interesting" is my code word for something "different" and "unauthorized," like stock market weakness), with the indices losing about 0.7% (the Nasdaq was down nearly a full percent by midday). There was no news to account for this, although I'm sure the mainstream media will find something (e.g., the rumor, later denied, that NEC head Gary Cohn was resigning).

It could be blamed on bad news from Walmart, the industrial production data, or of course anything Donald Trump-related. The fact of the matter, however, is that the market has been acting dodgier recently, which I have discussed, and thus I really don't think it is the news driving the market, but rather the market driving itself.

After...more


Last year's posts for Ask Fleck

Q: Bill, just my 2 cents on the discussion yesterday about central banks losing control of the sovereign bond markets. I think all eyes should be on the ECB and their likely attempt to 'taper' its purchases either late this year or beginning in January. We got a highlight of what might result when after Draghi spoke in Sintra a few months ago, the German 10 yr bund yield more than doubled in 8 trading days. Investors should also look at what happened in 2015 when that yield went from 7 bps to 100 bps in just 2 months. We know the European bond market is in an epic bubble and Mario next week inadvertently might be bringing a pin to Jackson Hole.

Fleck: What I am referring to is not seeing the bond market weaken when the CBs reduce liquidity, but rather seeing it weaken when they increase liquidity. This won't happen until after their attempt to reduce QE helps cause stocks to tank, IMO.
(posted: 8/16/2017)


Q: Bill
I'm either just too old or I've fallen into a rabbit hole.
Just watched an interview on Bloomberg about Bitcoin and the wonders of Bitcoin "mining". I can't believe they talk about Bitcoin and electronic currency with a straight face.
When more and more currency is printed we expect the relative value to decrease. More and more Bitcoin "mining" only increases the relative price.
Truly, I don't get it.

Fleck: I get that, but to be clear, it isn't the "mining" that increases the price, it's the momentum chasers. It's a lot like Tulip Mania, i.e., the madness of crowds.
(posted: 8/16/2017)


Q: Mania Chronicles. This reads just like late 1999, but with faster internet speeds.

How Brokerage App Robinhood Got Millennials To Love The Market

Fleck: Lots of stuff is more bizarre now.
(posted: 8/16/2017)


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