Keybot the Quant Turns Bullish but Stock Market Remains a Coin-Flip

Keystone's proprietary trading robot, Keybot the Quant, flips to the long side on Friday at SPX 5736. Copper and commodities goosed the stock market early Friday but both lost their gains turning bearish as the session played out and the quant already wants to flip short again. The bears need an 8-point pullback in the SPX to flip the model back to the short side. Watch copper because as copper goes, so goes the stock market.

Keybot the Quant

US Treasuries Yield Curve Losing the Dip in the Belly

Something interesting happened yesterday and no one noticed. The 5-year yield moved above the 2-year yield lifting the belly of the curve up towards normalcy. The yield curve must be on a diet since it is losing its belly. Time for a belly dance in Dubai. 3-year yield remains below the 2-year by only 2 bips so that would be expected to adjust next.

The rates are listed on the chart. The 20-year yield is a newer oddball trying to attract money with a higher rate. The heart of the US yield curve is the 2-5-10-30 curve that has now returned to normalcy. The bond gurus will have to figure out what the return to normalcy means as a US recession remains on a milk carton (missing).

The Godot Recession remains in place in the United States. There are ongoing recessions in the US housing market, manufacturing sector, and labor market, for over a year, which would typically guarantee an overall US recession, but alas, the US recession continues to party with Godot and not show up. Go figure. Something's got to give at some point. Is the election the catalyst everyone is waiting for?

The obscene money-printing by the Federal Reserve since 2009, and the mountains of additional fiscal stimulus pumped into the economy by Congress during the pandemic, have sent the stock market to the stratosphere, making America's wealthy class filthy rich beyond their dreams. Too bad that one-half of the country does not own a single share of stock. Such is the crony capitalism system; be glad it is in its last throes.

The non-stop consumer spending by the elite wealthy class, and the upper middle class sycophants that service the privileged class daily, prevent the overall US recession from appearing. However, think about it, how many $9K refrigerators, $15K vacation trips, and $100K new cars can you buy even if you are filthy rich? This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added Wednesday, 11/6/24, at 7:15 AM EST: Donald Trump wins reelection as the 47th POTUS. Yields catapult higher with the normalization clearly in place. The yields are; 2-year 4.28%, 5-year 4.31%, 10-year 4.47%, 30-year 4.66%. The 2-10 spread is 19 bips.

Note Added Thursday, 11/14/24, at 7:00 AM EST:  The yields are; 2-year 4.27%, 3-year 4.25%, 5-year 4.30%, 7-year 4.38%, 10-year 4.44%, 30-year 4.62%. The 2-10 spread is 17 bips. The yield curve normalizes for the 2, 5, 7, 10, 30 notes and bonds but the 3-year yield remains 2 bips below the 2's. The belly still has a small paunch. This is the third time the yield curve has normalized since the initial move described above on 11/2/24 only 12 days ago.