{"id":50531,"date":"2020-01-12T12:49:41","date_gmt":"2020-01-12T17:49:41","guid":{"rendered":"https:\/\/olduvai.ca\/?p=50531"},"modified":"2020-01-12T12:49:43","modified_gmt":"2020-01-12T17:49:43","slug":"mind-the-gap","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=50531","title":{"rendered":"Mind the Gap"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/northmantrader.com\/2020\/01\/12\/mind-the-gap\/\">Mind the Gap<\/a><\/h3>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignright\"><a href=\"https:\/\/northmantrader.com\/mind-the-gap\/\"><img decoding=\"async\" src=\"https:\/\/i0.wp.com\/northmantrader.com\/wp-content\/uploads\/2020\/01\/Mind-the-Gap.png?resize=213%2C113&amp;ssl=1\" alt=\"\" class=\"wp-image-74226\"\/><\/a><\/figure><\/div>\n\n\n\n<p class=\"wp-block-paragraph\">Amid all the ferocious market rallying there\u2019s a gap building and nobody seems to notice, and nobody seems to care. I say: Mind the gap.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The banking index, much like the rest of the market, has been rallying furiously ever since the Fed began expanding its balance sheet on an accelerated pace since October. $BKX jumped on the liquidity train and broke above its previously well contained 2018-2019 range, except it didn\u2019t make new all time highs yet.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A chart I\u2019ve been highlighting again in my latest&nbsp;<a href=\"https:\/\/northmantrader.com\/2020\/01\/11\/popping-the-bubble-2\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>weekend update<\/strong><\/a>&nbsp;keeps highlighting a glaring gap:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><a href=\"https:\/\/i2.wp.com\/northmantrader.com\/wp-content\/uploads\/2020\/01\/BKXW-1.png?ssl=1\"><img decoding=\"async\" src=\"https:\/\/i2.wp.com\/northmantrader.com\/wp-content\/uploads\/2020\/01\/BKXW-1.png?resize=639%2C379&amp;ssl=1\" alt=\"\" class=\"wp-image-74223\"\/><\/a><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">What was a comfortable relationship between the 10 year ($TNX) and the banking index ($BKX) broke down in early 2019 and remains broken to this day.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Despite both yields and the banking index improving in recent months the gap remains and signals something profoundly afoot:<ins><\/ins><\/p>\n\n\n\n<figure class=\"wp-block-image\"><a href=\"https:\/\/i2.wp.com\/northmantrader.com\/wp-content\/uploads\/2020\/01\/BKX-3.png?ssl=1\"><img decoding=\"async\" src=\"https:\/\/i2.wp.com\/northmantrader.com\/wp-content\/uploads\/2020\/01\/BKX-3.png?resize=639%2C450&amp;ssl=1\" alt=\"\" class=\"wp-image-74224\"\/><\/a><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">The yield gap remains with $TNX contained in a rising channel not confirming a resurgence of economic growth and strength the larger markets appears to want to price in.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But note something else here. While the main indices, $DJIA, $SPX and $NDX went on to make new all time highs here in early 2020, the $BKX did not. It never made new highs versus 2018 and so far it hasn\u2019t made new highs versus 2019.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Incidentally the same story applies to small caps with heavy exposure to financials:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><a href=\"https:\/\/i1.wp.com\/northmantrader.com\/wp-content\/uploads\/2020\/01\/IWM.png?ssl=1\"><img decoding=\"async\" src=\"https:\/\/i1.wp.com\/northmantrader.com\/wp-content\/uploads\/2020\/01\/IWM.png?resize=639%2C379&amp;ssl=1\" alt=\"\" class=\"wp-image-74231\"\/><\/a><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">So it\u2019s not just $BKX dragging its heels.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">How big is the gap in performance? It\u2019s quite dramatic actually.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">What if I told you $BKX has gone nowhere during the past month while $NDX has tagged on another 7%+ in performance?<\/p>\n\n\n\n<figure class=\"wp-block-image\"><a href=\"https:\/\/i1.wp.com\/northmantrader.com\/wp-content\/uploads\/2020\/01\/BKX-NDX.png?ssl=1\"><img decoding=\"async\" src=\"https:\/\/i1.wp.com\/northmantrader.com\/wp-content\/uploads\/2020\/01\/BKX-NDX.png?resize=639%2C310&amp;ssl=1\" alt=\"\" class=\"wp-image-74225\"\/><\/a><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Mind the Gap Amid all the ferocious market rallying there\u2019s a gap building and nobody seems to notice, and nobody seems to care. I say: Mind the gap. The banking index, much like the rest of the market, has been rallying furiously ever since the Fed began expanding its balance sheet on an accelerated pace [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[7542,23808],"class_list":["post-50531","post","type-post","status-publish","format-standard","hentry","category-economics","tag-northman-trader","tag-sven-henrich"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50531","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=50531"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50531\/revisions"}],"predecessor-version":[{"id":50532,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50531\/revisions\/50532"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=50531"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=50531"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=50531"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}