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Fleck's Thoughts
IndexClose% Change
Dow Transports11111.670.82
Dow Utilities725.710.17
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Nasdaq 1007447.170.62
Russel 20001691.850.99
VIX Index13.32-9.88
10 Year Gov't Yield2.890.44
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Crude Oil67.240.06
Dollar Index96.720.35
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Japanese 10 Year0.1-1.9
Shanghai SE2780.96-0.18
Long Bond 20-year144.03-0.19

As Liquidity Recedes


The market blasted off right from the get-go and by midday the indices had gained about 0.75%, with the Dow lagging a bit, as the burgeoning emerging-market/currency/trade war issues were deemed to be "contained" (not that anyone said that, it's just my interpretation of what U.S. stock bulls must be feeling).

Finding Its Level On the subject of the current turbulence we're seeing in so many places, I would like to point out that with the world awash in liquidity for so long, thanks to the reckless policies of the central banks, and now that said liquidity is starting to go the other way, as it has since the Fed began QT, the consequences are showing up in the weakest or most speculative markets first (as they typically do, historically).

Thus, in late December the cryptos cracked for no apparent reason (their collective market cap set a new low for the year today), and that was followed by a rolling series of problems with various countries, e.g., Venezuela, Turkey, China, etc. This will continue to be the case.

Some have asked whether Turkey was the beginning of something systemic. That question is over my pay grade, but the Lord of the Dark Matter today suggested that Turkey's problems have been obvious for quite some time to those who are knowledgeable about these types of investments.

"Break Bitter Furies of Complexity" He also said he does not believe that Turkey would, "metastasize into a systemic event," although that doesn't mean there won't be a fair amount of pain for those who are exposed to the various types of speculative positions that many have piled into, thanks to ridiculously low interest rates around the world.

Turning back to the action, in the afternoon the market drifted sideways until I left, with an hour to go. Please check the box scores to see the final outcome. Away from stocks, green paper was a little stronger, oil was flat, fixed income was a little lower, and the metals saw a microscopic bounce.