Morning Audibles

OK... So I guess it's about time for another ANNOTATED BERNANKE installment (in case you missed BERNANKRUPT's "op-ed" piece in the Washington Post yesterday)...



"Two years have passed since the worst financial crisis since the 1930s dealt a body blow to the world economy."


Translation: 23 years have passed since me & my predecessor started blowing bubbles that started the ball rolling on this mess... The last 2 years were when the "money shot" moment occurred...

"Working with policymakers at home and abroad, the Federal Reserve responded with strong and creative measures to help stabilize the financial system and the economy."

Translation: change "policymakers" to "our slave master bankers" - keep the rest...

"These steps helped end the economic free fall and set the stage for a resumption of economic growth in mid-2009."

Translation: These steps ensured that our bonuses have been paid on time and that the "hookers" & "coke dealers" won't have to go on unemployment...

"Notwithstanding the progress that has been made, when the Fed's monetary policymaking committee - the Federal Open Market Committee (FOMC) - met this week to review the economic situation, we could hardly be satisfied."

Translation: When we're not watching porn on our computer screens, we've discovered there are actually NEW ways to shake you down...

"Unfortunately, the job market remains quite weak; the national unemployment rate is nearly 10 percent, a large number of people can find only part-time work, and a substantial fraction of the unemployed have been out of work six months or longer."

Translation: If all you people that get fired from your jobs would turn into pornstars & crack dealers... You'll see how our policies would begin to come to fruition.

"Although low inflation is generally good, inflation that is too low can pose risks to the economy."

Translation: Says the chairman of the ponzi scheme fractional reserve banking system... "We're the fractional reservists - and TRUST US, we're here to help"...

"In the most extreme case, very low inflation can morph into deflation (falling prices and wages), which can contribute to long periods of economic stagnation."

Translation: Deflation sucks because we don't get bonuses that way...

"The FOMC decided this week that, with unemployment high and inflation very low, further support to the economy is needed."

Translation: Lucky for us that the "inflation" numbers we use don't include food, fuel, and things that you need to survive... We've loaded up our balance sheet with CATFOOD FUTURES, which is why we're targeting this inflation metric... We're hoping the rest of you will just get with the program & die...

"This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action."

Translation: All we know how to do is blow asset bubbles... It's like Christmas every morning...

"Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion."

Translation: Prices for everything are going up (get used to it)... The purchasing power of your dollars are going down... When you see it at the gas pump, we'll rattle some sabres with the arabs or blow up a couple of oil rigs... The President will ask you to "make sacrifices", and do his part by sending his wife & her entourage on a Spanish vacation... You'll see pictures of it in the tabloids and think you need a new designer bag... As for food, your bread will still cost $1.89 a loaf at the supermarket, but you won't notice that the loaf just got a little smaller... 2 large tomatoes will cost you more than 5 bucks... Michele Obama will get some slaves to grow okra in the White House garden, put them in little jars with bows on them, and go on THE VIEW to show you how cute they are... See people? It's YOUR FAULT!

"While they have been used successfully in the United States and elsewhere, purchases of longer-term securities are a less familiar monetary policy tool than cutting short-term interest rates. That is one reason the FOMC has been cautious, balancing the costs and benefits before acting. We will review the purchase program regularly to ensure it is working as intended and to assess whether adjustments are needed as economic conditions change."

Translation: We don't know what the fuck we're doing... We're just pushing all the buttons and pulling all the levers at once hoping the plane will come out of its tailspin...

"Our earlier use of this policy approach had little effect on the amount of currency in circulation or on other broad measures of the money supply, such as bank deposits. Nor did it result in higher inflation."

Translation: The last time we did this, the banks used the money to pay bonuses, and create a cash flow hoarde to last them a few more months... Frankly, they're tired of all that austerity crap... This time they're GOING TO VEGAS baby!

"The Federal Reserve cannot solve all the economy's problems on its own."

Translation: You're GREAT at CREATING them on your own though, aren't you? SUCK IT UP people!

"The Fed is committed to both parts of its dual mandate."

Translation: Part 1 is turning you upside down... Part 2 is shaking every last coin out of your pocket...

"Steps taken this week should help us fulfill that obligation."

Translation: Agreed!

(CV's original Bernanke Annotated - July, 2010)

Anyway... We're all so glad that you took the time to open up to us Ben... We're so glad to hear you're feelin' alright... Unfortunately, we're not feelin' too good ourselves...



Seems I got to have a change of scene
Cause every night I have the strangest dreams
Imprisoned by the way it used to be
Left here on my own or so it seems
I got to leave before I start to scream
But someone's locked the door and took the key

You're Feelin' alright
Not feelin' too good myself
You're Feelin' alright
Not feelin' too good myself

Boy you sure took me for one big ride

Even now I sit and wonder why
And when I think of you I start to cry
Got to stop belivin' in all your lies
Cause I got to much to do before I die

211 comments:

«Oldest   ‹Older   1 – 200 of 211   Newer›   Newest»
ben22 said...

too bad I missed the LOTR discussion last night, I was also a huge fan of them, saw the first one in the theatre 7 times thanks the dollar movies back in Erie. My wife and I usually bum around for a day during the holidays and watch all three of them marathon style.

ahab,

samwise....crying all the time!?.....he's a hero!

McFearless said...

Fuel for further rally?

http://www.aaii.com/sentimentsurvey

gl today all, I"m tied up all day so won't be around.

Bruce in Tennessee said...

http://www.bloomberg.com/news/2010-11-04/productivity-in-u-s-rose-more-than-economists-estimated-in-third-quarter.html

"Employers in the U.S. squeezed more productivity from workers in the third quarter, leading to an unexpected drop in costs that signals inflation will remain low.

Employee output per hour rose at a 1.9 percent annual rate, more than forecast, after falling 1.8 percent in the previous three months, Labor Department figures showed today in Washington. Worker costs fell for the fifth time in the past seven quarters.

Companies remain focused on cutting expenses to boost profits more than a year into the economic recovery, indicating why the Federal Reserve yesterday said progress toward cutting unemployment and boosting growth was “disappointingly slow.” Another report showed more Americans filed claims for jobless benefits last week, reinforcing expectations the labor market will take time to improve.

“Corporate America is running extremely lean,” said Ellen Zentner, a senior economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, who correctly forecast the drop in costs. “They’ve only been hiring the bare minimum. That’s part and parcel behind what is driving the Fed at this feverish pace to try to bring unemployment down.”

...This is the sort of information that suggests corporate hiring is still going to be very slow. Add the layoffs coming in the state and local government, and it looks like more of the same to me...

Bruce in Tennessee said...

and by the way, and it is no news to anybody on this site, but I detest this sort of reporting that jobless claims rose...what happened is that two weeks ago we had ONE blip down about 20k, and this week's numbers are back at the usual unemployment numbers we've had for many months. It was the blip down that was unusual, not the return to normal this week....


...Sheeesh...

call me ahab said...

That’s part and parcel behind what is driving the Fed at this feverish pace to try to bring unemployment down.”

what- give everyone a job at the fed?

CV said...

@Bruce

Not to mention that for about 20 times in a row now, the jobless numbers get jacked upwards (when the revisions come out)...

How about that STOCK MARKET though?

call me ahab said...

I think food prices are going to skyrocket- all the basic materials are shooting up-

CV- farm land is going through the roof

AmenRa said...

Yet the participation rate falls from 64.7 to 64.5, the "Not in labor force" increased 462k, "27 weeks or longer" unemployed increased 83k.

Yeah, this is good news {/sarcasm}

call me ahab said...

interesting quote (and as I have been saying)regarding the Obama health care bill- and the huge losses by the democrats:

"The idea that government can force you to buy health insurance just goes against the independent spirit," he said [Saunders, the campaign strategist from Virginia]. "It's a cultural thing. Democrats just don't get the culture down here."

and there are those that want to make voting mandatory-

no . . .sorry you can't sit on your ass on election day- you have to vote-

it's your right- and we're going to force you to exercise it

Bruce in Tennessee said...

CV:

I decided to hold onto the UPRO for awhile...you know I agree with the majority of us here at your site, this is an increasingly manipulated world economy, and will not end well. However, there are many ways to play this, and I think what I'm doing here is rational....

Dern cold this morning here in East Tennessee...

Leftback said...

Watch out for the profit taking by the leveraged EM players, Bruce. Unwind of the recent dollar carry trade may lower all boats later on.

Rotation out of EMs and commodity stocks into dividend paying stocks is my guess for the next move as the indices churn..

CV said...

@Bruce

You don't have to agree with me or anybody else...

Just make money (or try not to lose it)...

karen said...

Thanks for the translations, CV! Morning..

Get Ready: Ron Paul wants dollar backed by gold and silver

http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=114275&sn=Detail&pid=110649

call me ahab said...

karen-

possibly zinc (it's more plentiful)

karen said...

TBT has really asserted itself now..

Leftback said...

JOHNNY likes the number.

LB thinks that buying Japan and hedging the currency risk might be a decent play as the liquidity machine looks for a new market to goose.

JPY can't get much stronger here, so you could buy EWJ and short JPY as a hedge.

LB is short EURUSD. If anyone can throw up a EURJPY chart that would be great. We should be monitoring AUDJPY as the risk proxy.

What LB expects is a switch from USD carry back to JPY carry, so that would be bullish Japan stocks and neutral US. This would be bearish US bonds.

CV said...

@Bruce

Actually... My point is a COMPLETELY DIFFERENT one...

As you know... The S&P was up 1.5% yesterday...

But Silver was up 6%, And a whole basket of other commodities were up between 2.5% to 5%...

So if someone was playing STRAIGHT index... THEY LOST PURCHASING POWER yesterday...

Now those dynamics will fluctuate and even out over time... But the direction is CLEAR... Paper assets are going to LOSE VALUE versus hard assets...

Worse... You will have to pay capital gains on paper assets to redeem your winnings...

I'm preferring MY OWN STRATEGY of owning a farm... And buying up as much INFRASTRUCTURE as fast as I can with my soon to be worthless cash...

At least I'll own something productive in the end... & I don't get taxed on the transaction in the process (except for normal retail sales taxes - which will be HIGHER for those who continue to put this process off)...

Leftback said...

K.,

The short end hasn't moved, as though they don't believe the number. Watch out shorting banks here, the steeper curve is bank positive, so stay away from that for a bit.

karen said...

http://www.creditwritedowns.com/2010/11/open-bank-of-americas-books-and-set-the-record-straight.html

We argued that the FDIC should place Bank of America in receivership and the federal banking agencies should impose a moratorium on foreclosures until the mortgage servicers correct their systems, which currently often rely on massive fraud and perjury.

karen said...

FAZ at new low

Leftback said...

This might be a good time to take one of the banks and restructure it. Bernanke put in place, market at a top and employment improving.

Just a thought...

cv said...

"If anyone can throw up a EURJPY chart that would be great..."

AMEN should be able to put up that chart better than what I have at my fingertips...

If he has time...

karen said...

FXA (aussie) made a new high

Bruce in Tennessee said...

I still remember the fellow from New Orleans who got the recession right, was in QID and SRS as I recall (at TBP, I think) and when the market turned on him, refused to sell his QID et al...don't ever see him post anywhere now...

cv said...

@LB

CV would like the "short euro - long gold pair"

CV said...

Germany is going to remove ALL silver content from its 10 Euro coin stampings...

Are you listening people?

karen said...

MacroMan: We hate to say it but the USD may meander on QE fallout vs Euro-woe, however, you would have to think that both functions are god for gold... Sorry "good" for Gold... The god Gold. In fact, we were wondering yesterday what God's number plate on his little car (a Honda Pious we assume) would be. And we started looking through the reg plates available on the UK sites. Though GOD 1 was unavailable, having been bought by Gordon Brown we assume, we did find a useful set of XAU numbers available. The best being G20 XAU, which can currently be purchased here for £310. Unfortunately we haven't got time to trawl for all suitable market plates available so we invite you to use that site to come up with suggestions matching available plates and who you would give them to.

AmenRa said...

LB

Here's AUDJPY: http://tinyurl.com/382yh2k

Seems to be finding resistance at the 76.4% retrace.

karen said...

from today's Pfenning: I had a lot of people stop by to ask me my opinion on whether or not it was a good idea to buy currencies and gold at this point, with them being so high VS the dollar.

Well. maybe there's a pull-back. but, come on, if there's a pull back, it will be strictly technical in nature, and short-lived. The U.S. has made its bed with the dollar, and now it has to lay in it! There are all kinds of resistance levels that the currencies are going through right now VS the dollar. And I would say, that it certainly seems risky to enter into these markets right now. But I think back, and I told a customer this today, and that's that customers told me that $800 Gold seemed to be too high to buy. then $900 Gold. then $1,000 Gold. and it goes on and on .

Bruce in Tennessee said...

By the LB, I pay attention, close attention, every day to your bond musings...I would rather give you grief, however.....

AmenRa said...

and here's EURJPY: http://tinyurl.com/36m4wjv

Which happens to be confirming an evening star.

CV said...

@karen

It'll be fun when I need to go buy a new truck to just walk in and flip 'em a "pre 1964" SILVER DOLLAR...

get handed a set of keys (and change back)...

AmenRa said...

OT: Why did Pending Home Sales move to 12:30 PM ET from 10:00 AM ET?

karen said...

Nov. 5 (Bloomberg) -- Japan’s newest sensation is one of the world’s oldest: scantily clad women serving cheap booze.

http://noir.bloomberg.com/apps/news?pid=20601010&sid=aBK3iZVI3u60

CV said...

@Bruce

If it'd had been CV who made 20K yesterday...

I'd cash... escrow $7,000 for taxes...

Take the $13,000 and buy (4) 400 gallon fuel grade storage tanks... put them on the corner of my property... fill them up with gasoline... and buy a case or two of octane additive...

:-)

I know you're a PRIUS driver though... As such, money actually spits out of your heater ducts & car speakers while you drive... Whereby you just scoop it all up...

karen said...

http://cobrasmarketview.blogspot.com/

CV said...

@LB

Isn't it like GUY FAWKES day or something?

karen said...

XHB in breakout follow thru..

CV said...

@karen

21 unfilled gaps... (Sticks out like a sore thumb)...

karen said...

mrtopstep, [09:15:12 AM]: .... top notch has daily Fib 1223.50.

karen said...

C is real sickness.

karen said...

10.35 low in FAZ now.

CV said...

@karen

Now go buy something on AMAZON to help Cobra's blog...

karen said...

YooDman, @mrtopstep I've got weekly 61.8% $SPX fib at 1228.75; fwiw

karen said...

10.25 on FAZ.. i'm leaving the screen for a bit.

Bruce in Tennessee said...

http://www.cnbc.com/id/40026377

Market in Fed's 'Hall of Mirrors' Again

"1) buying bonds isn't good enough any more: the Bank of Japan confirmed that as part of its next round of stimulus it would be buying ETFs linked to the Topix Index and the Nikkei, as well as Japanese REITs. I repeat: the BOJ is now going to buy stocks and real estate. It's part of a $62 billion asset buying plan."

...What can you say? It is hard to kill the Manipulation Zombie...he has more lives than a cat...

CV said...

@karen (10:26)

So does that mean that if I got in at 2,018... It might be time to "double down"?

CV said...

@Bruce (10:30)

Catfood futures... My final warning!

CV said...

Think I'm joking?

Americans On Foodstamps Hits New Record In August, Increase By Over Half A Million To 42.4 Million, 17% Increase Year Over Year

http://www.zerohedge.com/article/americans-foodstamps-hits-new-record-august-increase-over-half-million-424-million-17-increa

Bruce in Tennessee said...

Normally I would be out hiking today, or fishing, or something..my day off...but it is completely overcast and cold today, (and windy!) so I think this morning I'll stay in and catch up on the "markets" or whatever that means these days....

CV said...

If you have a job as a network IT operator at a company that sells fitness videos you should be immune to any systemic risk though...

CV said...

@Bruce

Just watch that series of videos that I linked on AMEN RA's thread last night...

It'll give you that outdoor "feel"...

karen said...

must read: http://www.zerohedge.com/article/goldman-explains-why-orphaned-30-year-will-soon-see-buying-interest-expects-drop-10s30s-back

Bruce in Tennessee said...

It appears they are going to jab Bernanke with a sharp stick in Korea..today I read Brazil, Germany, Korea, China,...essentially everyone who like to kick his little academic ass...

CV said...

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/11/5_Jim_Rickards_-_Fed_May_Go_Bankrupt.html

Bruce in Tennessee said...

http://www.voanews.com/english/news/Fed-Easing-Prompts-Further-Currency-Concern-Skepticism-in-Asia-106754388.html

"And, some economists in the region say, it may not do much to help the stagnant U.S. economy.

In a speech and remarks to reporters in Seoul Friday, even the chairman of President Obama's economic recovery advisory board, Paul Volcker, was less than optimistic about the Fed's move.

"The object of the exercise is obviously to provide some support for the American economy. I don't think that will be very large. That doesn't say there won't be any. And there are certainly hopes there will be some. But I don't think that action alone will make a very dramatic difference," said Volcker."

...They keep handing Paul the kool-aid, and he just keeps forgetting to drink it. Timmmmaayyy said, "Look, watch me drink a whole quart at a time." And then he did. But poor Tall Paul, he just don't seem to be teachable...

karen said...

smsearsBarrons

it is like the entire market is smoking crack. normally calm guys are delirious b/c so much money is being made.

CV said...

silver bitchez!

CV said...

@Bruce

Once again... The SPY is up .05% and silver is up 2.5%...

You're losing buying power...

AmenRa said...

DXY up. SPX up. Who is gonna blink first?

karen said...

The dollar is still in the dirt.. 22.09 on uup.. fxe is showing reversal signs, however. what that portends for next week is a possible market correction that will get bot hand over fist, i imagine.

CV said...

latest rising wedge (SPY) is starting to give way a little...

but unless there's a real sharp move down here, it's just buying time...

CV said...

C hit on exactly a 61.8% fib retrace from April high (5.07) to May low (3.53)...

CV said...

In retrospect... it may end up looking like a 2 day sprint to print that FIBO before the market corrects...

BinT said...

Gotta review for an ACLS recertification...back this afternoon bubbas and bubbettes..

CV said...

83.13% DAILY RSI on $SPX

UFB!

karen said...

CV, i use RSI 3.. 98.59!!!

CV said...

OK...

So from right here...

- a 61.8% correction (to 1040) takes you to the chart gap at 1110

- a 61.8% correction (to 1010) tales you to the chart gap at (1089)

karen said...

Nov. 5 (Bloomberg) -- Central banks marked their busiest week since uniting to fight the financial crisis of 2008 by taking divergent steps to keep economic recoveries on track.

What Danske Bank A/S called “hell week” ended today with the Bank of Japan fleshing out details of its stimulus plan about 33 hours after the Federal Reserve pledged to buy $600 billion in Treasury securities to fight deflation. With inflation the greater challenge in Australia and India, their central banks raised interest rates, while climbing prices and threatened recoveries left the European Central Bank and Bank of England in limbo awaiting the impact of fiscal decisions.

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aukrnZ1uo.I0

Hell week.. I can vouch for that.

karen said...

CV.. you've got to be kidding.. doubt we'll even see 1200 again.

AmenRa said...

I'm still cracking up on the Fed meeting at Jekyll Island since their existence has come under scrutiny. Is there a possible Xmas move to take away the ability of Congress to open the Federal Reserve Act?

CV said...

You can't be serious...

karen said...

wow.. jeffrey cooper is up to his number tricks again.. very spooky..

on his Square of 9 charts.. 1225/1230 very important SPX level..
in addition, spx has now satisfied a possible megaphone top above last April's high.. Reminds him of the 10 month megaphone on the weekly chart of 2007.

he also states that the bear market was 910 spx points. .618 of that is 562 pts.

and here we go.. 666 + 562 = 1228! LOL

karen said...

FXE drop!

CV said...

@karen

see (9:52)

karen said...

S&P 500 near price and time zone of interest
11:46 AM ET 11/5/10 | Briefing.com

The impressive run this week has brought the S&P near the 62% retracement of the entire 2007 to 2009 decline (1228) and the 161.8% Fibonacci Extension target based on the July-Aug rally off the late Aug low (1231). The Fibonacci Time Interval based on the number of day from the July low to the Aug low (127.2%) comes into play on Monday -- Click for chart.

karen said...

look at fxe now.. this could make for an interesting close..

CV said...

@karen (11:52)

Little "Sunday Night meeting" rumors getting leaked?

CV said...

as Europe is closing up shop for the day...

karen said...

CV, a must read!! http://www.zerohedge.com/article/street-treasury-qe

karen said...

another MUST READ!

...If you combine the 4 major anti poverty programs (a) Medicaid (b) unemployment benefits (c) food stamps and (d) welfare - their cost has actually surpassed Medicare. Staggering.

http://www.fundmymutualfund.com/2010/11/usa-today-anti-poverty-programs-surpass.html

AmenRa said...

JNK, HYG, LQD, TIP, 2YR, 5YR, 10YR, 30YR all down. GOLD, SILVER, DOLLAR all up. Correlations blowing up?

karen said...

optionMONSTERfd

Big call sale in American Express: The financial giant has been unable to break above recent highs, and a big o... http://bit.ly/bh9lJq

CV said...

@Amen

Here's your lunch menu...

a) There's nothing that you can afford on the menu... Unless Ritholtz is buying... He'll have to send out his limousine to pick you up though because you can't afford to drive to the restaurant...

b) There's nothing actually ON the menu because prices are deflated so much that there is no profit to bring food to the marketplace and pay margins to all the middlemen in between... Go back to your house and eat dirt...

karen said...

MORE DAVID STOCKMAN!

http://www.ritholtz.com/blog/2010/11/stockman-on-bloomberg-tv/

Anonymous said...

It seems like everyone is repeating "buy 30-year Ts" today. I think we saw a memo out from Goldman this morning, and some doof was raving about 30-years on CNBC a few minutes ago.

If I remember correctly, Leftback was saying the opposite. I wonder if any of the price action has him buying more junk, or lightening.

Leftback said...

JNK, HYG, LQD, TIP, 2YR, 5YR, 10YR, 30YR all down.

Profit taking, and a bit of fear. Also auctions ahoy in the 3y, 10y and 30y next week so you would expect weakness. It's a good time not to be long bonds, although I will buy any significant dip in JNK or HYG with gusto.

CV said...

Nothing like the thrill of owning stocks is there?

What a better way to say... "I'm bullish on America, our instututions, & our President" (for the next 3 ticks of the tape, then I'm OUT!)

Leftback said...

LB thinks that when there is strength in the 30y, like next week after the auctions or after a 20y-30y POMO, that you should sell that strength.

Leftback said...

As Karen has pointed out, the price action in TLT and TBT tells its own story. The charts tell you everything you need to know.

DL said...

Gary Shilling has a new book out:

“The Age of Deleveraging: Investment Strategies for a Decade of Slow Growth and Deflation”


(Don’t know if it’s any good or not)

Leftback said...

Michael Burry.

Michael Burry on QE2

LB has often done the 61.8% calculation of the bear market retrace, and this is our second visit to this level, April being a near miss. What's the next Fib up from here, that would be what, another 100 points or so?

Markets rarely ignore very important Fib levels without some kind of measurable retrace. A 108 point move down to the 50% fib level at 1107 or so? Anyone want to see the KT again?

Gary Shilling said...

That is an excellent book.

Leftback said...

Wonder if Karen would like me to use a Gary Shilling icon...?

DL said...

Is gold going to hit $1400 today, or do we have to wait until Monday?

Leftback said...

It's going up $50 a day.... GGUF... !!!

CB intervention this weekend, anyone? Now that Bucky has rallied, how about BoJ sells yen and gold and buys dollars? That would be a pain trade for an awful lot of punters?

CV said...

@LB (12:49)

On my (11:15) comment... I drew out the FIB retracement numbers to the summer lows...

Of course... at (11:19), I was put in my place by karen who is CERTAIN that we'll never even see 1200, ever again...

DL said...

If there's even a small rally on Monday, I'll probably short a futures contract or two in the hope of catching a small pullback.

Leftback said...

The easy money has been made on QE2. The crowd is just waking up to emerging market stocks, gold, rare earths and so on. Now watch out for the big people taking some of that off the table.

LB may go back to trading blocks of TLT/TBT around the POMOs and Treasury auctions. We seem to be fairly good at that, but this time we will employ a bearish bias on the long bond. Neutral on equities for the time being.

Leftback said...

The Greek 10-year bond yield gained 37 basis points to 11.72 percent, pushing the yield difference, or spread, over bunds above 900 basis points for the first time since Sept. 20.

I think this is the new market focus for the time being. This is once again at levels that are unsustainable, and European banks are on the hook for this, b/c somebody had to buy those recent issues. Ireland has abated for a day or so, but it is still festering.

Some of the gold buying even with a rising dollar may be hard-working Greeks spending their hard-earned Euros after tax.....

* Engage snark detector

CV said...

I don't get it...

If you're a MOMO or a hedgie... You took started taking profits at the beginning of this year as the market went up to 1150...

In the beginning of February... You bought 1040 and rode it up to 1220 (probably with some leverage)...

Got out (hell - you didn't even need to go short), just sit in cash...

In July, you bought 1040 again (1010 if you were lucky)... and had another 15% ride to here...

So - with NO LEVERAGE, and no trades on the short side, you're up 33% on the year...

And you want to get "greedy" here into the end of the year where the market could EASILY correct 10% at any moment and give you the opportunity to tack on ANOTHER 10%...

Sounds like we're re-defining GREED here... Or is everyone THAT sure?

George Papandreaou said...

Greek bonds are a screaming buy.

CV said...

If I was sitting on that 33% described above (and was still long)... I'd be SELLING Nov & Dec OTM calls, buying worthless puts (with the premium), then trying to FLASH CRASH this thing...

Collect up, and go long...

CV said...

@George P

Did you say that Greek bonds are screaming "BYE"?

DL said...

CV,

So go ahead and sell some Dec OTM calls.

Leftback said...

So - with NO LEVERAGE, and no trades on the short side, you're up 33% on the year...

Actually, 31%, in my case, although I missed the first ride and made my first 15% riding Treasuries into the summer. No leverage, nothing clever.

Sit and wait for some big boys to take their profits and go home, that's exactly the strategy where LB is sitting. Then buy it again....

The hedging, that's just for giggles and to stay sharp.

CV said...

@DL

I don't play that game...

And, as usual, you totally missed my point...

I described the scenario AS IF I was a "long only" momo who'd acted as I described (1:12)...

And when I said SELL CALLS (I'd be referring to selling "covered calls")... So what if they got called away... I'd have already booked 33%...

You need to read the fine print lad...

CV said...

@LB

Better explain it to DL...

CV said...

@LB

Though I don't classify you as a "long only" momo (just to be clear)...

karen said...

Never over the last 40 years have the stock market and US Dollar been as inversely correlated on a day-to-day basis as they have been over the last year. Below is a chart highlighting the rolling 1-year correlation between the daily percentage changes of the S&P 500 and the US Dollar. Since making a short-term peak in late 2008, the correlation between the two has gone straight down to nearly -0.5 at the moment. As a client recently noted, it looks like the Fed's new dual mandate to increase stock prices and debase the dollar has been working perfectly.

http://www.bespokeinvest.com/thinkbig/2010/11/5/dollar-and-stocks-not-getting-along-so-well-lately.html

Leftback said...

The likelihood of a 5,7 or 10% correction in SPX is higher than most people imagine here.

Put/call ratios, JOHN E activity, bull/bear ratio, VIX heading to zero. All these indicators are saying the same thing.

What's to stop PTJ saying, "fuck it lads, we've had a darn good year if we shut it down right here. Let's get ready for Thanksgiving, have a few parties, turn on the Christmas lights in Belle Haven and call it a roaring success..." ?

CV said...

"Never over the last 40 years have the stock market and US Dollar been as inversely correlated on a day-to-day basis as they have been over the last year..."

Translation:... Never before has the US economy been so bad and devoid of hope, that the only way for the S&P not to be at 600 or below is for Ben Bernankrupt to buy spoos...

Leftback said...

We just had parity on the CADDY. That was the last one on my list of FX targets. Can't see any more round numbers that anyone wants to nail.

CV said...

@LB (1:26)

That's EXACTLY what I'm saying (1:16)...

Hell... there's even enough time to CRASH this thing and go long again just for giggles (and to keep JOHN E in again while he tries to get his money back)...

Leftback said...

Though I don't classify you as a "long only" momo (just to be clear)...

LB doesn't do a lot of shorting, although shorting long bonds provides hours of amusement. We are going to stay long high yield bonds and divvies, because we are yield investors now. We will also take defined shots in equities from the long side.

But we agree with PTJ. We already got paid, and it was easy, so why go the pennies/steamroller route now? We can dick about with a few little hedges to keep ourselves amused.

AmenRa said...

LB

I have noticed that there have been corrections on the SPX after the CADDY/LOONIE reached parity.

CV said...

If I was PTJ (or some such whale)... I might be thinking about what what hedgies are CHASING here...

...and BLOW THEM UP...

Leftback said...

there's even enough time to CRASH this thing and go long again just for giggles

Sure. Only takes a week to run SPX down 5% or so. 2-3 weeks they can bleed JOHN E for 9-10% without it being a bear market, and then buy in at the big support levels. I mean, who doesn't enjoy a trip to the 200 DMA?

After that you can get your SANTA BERNANKE rally on and tack on another 10% into EoY. Result: +40% and bigger bonii.

How about it, big hedgies? Anyone game? Lloyd...? C'MON, MAN?

Leftback said...

I have noticed that there have been corrections on the SPX after the CADDY/LOONIE reached parity.

Canada is a massive currency manipulator. They will be buying dollars this weekend so the rock and tree industry can stay in business.

karen said...

overlay of $cdw and $spx.. an even better fit than fxa

DL said...

Bonii...?

Leftback said...

Keep an eye on large scale UUP call activity, remember how that went ballistic last time we had a decent upturn in the dollar?

Leftback said...

Bonii, plural of bonus.

Leftback said...

Betty was saying this morning that WS trading desk EoY bonii might be down, b/c banks had to use a lot of their comp pool on new hires for signing bonii in the spring, and then volume didn't stay high enough.

A few of the boys might be pissed off, might dump some big blocks of SPY one day "by mistake"...

Leftback said...

We are back in the Dead Zone for VIX (15-19). Usually we don't stay down here for too long. The April low was about 15.55.

karen said...

if $cdw is headed to 110 (2007 high).. it should take crude and the spx with it.

karen said...

mrtopstep

New Video: "BEARS NEED NOT APPLY" http://mrtopstep.com/?p=1166,

AmenRa said...

Loonie had a high on 1.0022 on 4/14/10, chilled for a few days and then had highs above parity from 4/20/10 to 4/26/10. On 5/6/10 Loonie had a low of 0.9268 and on 5/7/10 the SPX had a low of 1094.15. Hmmm...

karen said...

You can't look at a weekly $spx chart and not think DOUBLE TOP. so i guess it isn't : )

CV said...

@LB

Right now you need a touch of about 17 (or 16.98) print on VIX to get it to tap the WEEKLY (2,20) BB's...

That's usually good & reliable to give it a quick round trip to 30...

karen said...

1200-1250 is serious serious resistance.. and i think the market shot up all the QE at once.. Fed better have next syringe ready.. wonder a vein can be found.

Leftback said...

Declining wedge next week, anyone?

CV said...

@Amen Ra (1:58)

You hearin the music?

http://www.youtube.com/watch?v=F9S7yhD5M9A

Leftback said...

The market shot up ALL of the extra $100B that wasn't already priced in. That's basically the difference in the market cap between Tuesday and today.

Wonder how many old 'uns rode it all the way down and back up and then down again in May, said if we ever get back here......

They have to crash equities now and again or there would be no bond market!!

Leftback said...

LB likes pizza. Did I ever mention that?

CV said...

@karen

QE2 is so... like... passe'...

They'll be discussing QE3 over the lobster pasta this weekend...

mcHAPPY said...

Karen,

With the similarities between the economic conditions (greed and excess) of the '20s that lead to the economic conditions of the '30s (unpayable debts and poverty) and today, this chart may have relevance.

http://1.bp.blogspot.com/_TwUS3GyHKsQ/TE4n8haO5LI/AAAAAAAAGnw/kTmrnTxm2So/s1600/2010-07-26-PROPHET.png

I'm not going to lie though - it is pretty disheartening of late. I don't say this as someone trying to short the market and getting burned. I say it as someone who sees the implications for the average person. I would imagine most here know what those implications are.

Leftback said...

Karen,

In this post QE2 hiatus only one of your famous underwear icons could wake this market from its slumber.

DL said...

Pizza?

Preferred by 4 out of 5 cardiologists.

Everyone's Ex-Girlfriend said...

QE2 is so... like... passe'...

I kno, right? (scrunchie nose...)

Anonymous Proctologist said...

Proctologists like pizza too.

When we're not applying cold steel...

CV said...

@LB

Here's your next pizza... Coming right up...

http://www.youtube.com/watch?v=lGDUmGlMJzU

AmenRa said...

CV

Theme song from the Fed meeting on Jekyll Island.

CV said...

all I know is...

The last time I felt this much like going ahead and going long... was back in April...

Good thing I resisted...

Though I WOULD be up .001% if I'd have held on...

karen said...

bond bubble bust?? Jeff Kronthal (a fixed income hedgie)
markets are counting on better than expected growth.. and a floor to growth.. and getting complacent..

some of the other effects of QE2, the orphan child is the 30 year bond.. long dated treasury strips will outperform.

http://www.cnbc.com/id/15840232?video=1634382487&play=1

karen said...

spx on the 60 min candles..

karen said...

http://www.optionmonster.com/drj_blog/article.jsp?page=drj_blog/come_on_folks_show_topnotch_some_love_spx_50718.html

anyone watch it?? i am..

18 said...

karen said...
1200-1250 is serious serious resistance..


Above "18" 1242... not much resistance, but, we seem to be teetering at 1224 for now. Feeling a slight pullback.

CV, go long if anything below 1206 ;)

karen said...

vix sonar, Jamie: Is 25 The New 30 for $VIX?

http://www.optionmonster.com/drj_blog/article.jsp?page=drj_blog/jamie_is_25_the_new_30_for_vix_50717.html

CV said...

@18

Funny you should mention 1206...

NEW CHART IN THREAD

With some of the fun "33 Liberty" action while you all were sleeping...

AmenRa said...

In April we barely got above the 1.8276% at 1218.63. Currently having problems getting above the 1.8408% at 1227.43.

karen said...

fantastic chart, CV!!

karen said...

i don't like to beg but PLEEEEEZE let this be a dbl top in $cdw..

karen said...

today's $cdw candle is so annoying!!

CV said...

An EARLY start on your Friday afternoon festivities...

"Godzilla vs. Mothra" (Fleckenstein vs. Barton Biggs on QE2 - Bloomberg...

http://www.youtube.com/watch?v=Vtxm1BLJByg&feature=player_embedded

CV said...

@karen (2:29)

I'm waiting for I-Man to chime in on that one...

He's the GANN MAN with the PLAN)...

Leftback said...

Mmmm... a BETTY video. She pouts nicely at times.

Leftback said...

That 1200 gap is going to get filled.

18 said...

CV, ahhhh 1206 area again.

(using 18's)
I've calc'd 1206 as weak support but probably where we'd bounce if it goes their soon.
Much stronger support @ near 1188.

Wouldn't doubt in this crazy market we see 1296 before years end... (just thinking outloud)

silver, no nothing about the stuff other than it's shiny... we in a mini bubble now? Wanna buy some but not at these prices.

CV said...

...on the video

(1:42) is fucking classic...

Fleckenstein: "Betty - in the summer of 2007, were the markets in a good mood?"

Betty: "We have to go to commercial break"

karen said...

"U.S. gasoline demand fell 0.8 percent last week, the second consecutive drop, MasterCard Inc., the second-biggest payments network company, said in its Nov. 2 SpendingPulse report. Motorists bought an average 9.03 million barrels a day in the week ended Oct. 29, it said. Consumption was the lowest in three weeks."

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aEFgzAZUMc6w

AmenRa said...

So how long can a person tread water? Eerily similar to what the market is doing right now.

CV said...

@18

on silver...

Despite all my recent rantings... I wouldn't chase SILVER here either...

But I am ecstatic over one prospect...

The recent move... IMO... Is just "pointing the way" towards where silver is going to go when INFLATION hits IN EARNEST...

Things are becoming clearer now...

LISTEN TO ME PEOPLE

You can almost "coin it" right now...

Someday - The DOW & the DOLLAR price of gold are going to come in to line...

Gold will trade at a 15-1 premium to silver...

Just FILL IN THE BLANKS as to what actual "prices" you want that to be...

Silver is the BETA here...

Leftback said...

More on Euro peripherals:

http://www.nakedcapitalism.com/2010/11/the-irish-mess-iv.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

It's the French and German banks on the hook for Greece, UK banks have exposure to Ireland. US, Japan, China not much at all.

Now Mangler might SAY there will be no bailouts, but that's before the gentleman from the ECB tells her Deutsche is technically insolvent again....

karen said...

COMING UP: Consumer credit for September
WASHINGTON (MarketWatch) -- The Federal Reserve's report on consumer credit for September is due for release at 3:00 p.m. Eastern. Credit has fallen in 18 out of the last 19 months and economists expect the trend will continue in September. However, there are signs that the pace of the deleveraging is slowing and credit conditions are improving.

Leftback said...

CV,

How long were those sell-off downdrafts in duration in between the 55 trading day UPWARD marches? Just curious whether we have time for a CLAVADISTA before we start the EoY melt-up?

CV said...

@LB

Off the top of my head... ALMOST ALL fit themselves perfectly into tight fibos...

5 days... 8 days... 13 days (trading)...

check back on the April 16, 2010 thread (on this blog)... I think I had a chart on it...

Also... that week... I'd put up some VIX equivalents...

It was a GREAT week for TA...

18 said...

CV, gold/silver ratio now at 53, so what you're saying it's a buy now!? even with the run-up we just had.

current-gold-silver-ratio

Leftback said...

So, my point is they could sink this easily for 8 trading days, couple of 1% sliders and 1 or 2 big puke 3% days in there, before we all get back in 7-10% lower and ride Bernanke back up again..?

Leftback said...

You just KNOW there are some evil hedgies out there who think like LB does....

Lord Blankfiend said...

Hmm, I lie the way you think, LB.

Giles...?

mcHAPPY said...

LB

I believe you said you shorted EUR/USD. It is down about 1.5% since yesterday - I'm sure you noticed. I know this is normally a healthy sign in a currency. Seems to me money is shifting and trouble be a-coming.

Giles Straightarrow said...

Yes, Lord?

karen said...

BergenCapital

WOW - US Consumer revolving credit collapses at a FASTER rate in Sept. Revolving credit falls $8.3BN, a 12.1% annual rate !! Wow

Leftback said...

Giles,

Please FOMENT more disorder in the European peripherals. There's a good chap. Buy the CDS in Greece and see if we can get some more of the Krauts to sell and buy Bunds. If Greek spreads blow out, maybe Deutsche will SCHATZ themselves..!

Giles Straightarrow said...

That's funny, Sire. At once....

karen said...

http://247wallst.com/2010/11/05/bofa-tally-on-mortgage-securities-375-billion-bac/

CV said...

@18

Basically... YES...

But it's rich (though it still may go further on this wave)...

To crunch a bunch of things together... Here's my thesis...

BEFORE QE2 - I's been waiting for a pullback to $14... (that's why I keep typing the snarky THANK YOU FOR TALKING ME OUT OF BUYING SILVER COINS THIS SUMMER comments lately)...

AFTER QE2 - Hell, I'm just waiting right now for the charts to tell me how high silver will go when the REAL inflation actually sets in... It's getting higher by the day...

But my NEW FLOOR is in the $20 range (not $14)...

This won't all happen tomorrow...

and frankly - if I wasn't prepared... I'd be buying food, fuel, land, lumber, & tools right now (before buying silver)...

But CV has all those OTHER bases covered already...

Leftback said...

Revolving credit falls $8.3BN

Consumer deleveraging, BITCHEZ...

AmenRa said...

Karen

"UNEXPECTEDLY"

That is all.

CV said...

@LB (3:08)

Yup...

The simple way to do it would be to:

- watch the waves
- watch the fibos
- watch the gaps

Ought to tell you HOW DEEP

CV said...

BRUCE!

Leftback said...

No inflation without higher wage costs, CV,

The commodity bubble will burst, otherwise the costs will have to be absorbed by corporate America, b/c most companies are unable to pass on those costs to the cash-strapped consumer. Demand destruction awaits all who step out of line as deleveraging continues.

Remember the old economy where corporate commodity and fuel costs cut into profits and gas prices cut into consumer demand? Pretty soon we are going to be looking at the effects of that in this market. After all, we can't trade crack cocaine/QE2 for ever.

Leftback said...

What LB is saying is that, unless commodities recede, the Q1 '11 earnings are going to take a hit.

CV said...

The "reported" numbers on CREDIT are a farce...

If you HAD a $25,000 credit limit on your card (before)... Even if you were a long time customer, they just recently raised your NEW PURCHASE interest rate to 27% (thanks Barney Frank)...

So... You REBELLED, and paid off the $8,000 balance you were paying off at a 1-3% teaser rate...

Your reward?

They reduced your credit limit to within 10% of what you paid your balance down to...

They need that cash to pay bonuses & speculate on SPOOS (as it turns out)...

AmenRa said...

Is that drop in revolving debt a precursor to the holiday shopping season?

Leftback said...

Next week Tiny Tim has to sell some Ts at shitty low rates. Usually it helps if Mr Market is having one of his periodic plunges during these periods.

Leftback said...

Go on, EURUSD, go in the crapper. You go on....

karen said...

a great review:

http://blog.afraidtotrade.com/remember-remember-the-fibonaccis-in-november/

karen said...

http://www.housingwire.com/2010/11/05/moodys-changes-ratings-on-6-billion-of-bank-of-america-alt-a-rmbs

18 said...

I agree silver will continue to go up for years, IMO it was way under valued for many years. Just seems @ $26+ that's way to much to pay for it right now. On the other hand not long ago, $20 was to much... LOL

I do remember the $12-$14 range and did buy a couple of 10 oz bars. Should have bought more... grrr


Last Call on SPX... take it up guys!

Leftback said...

Don't suppose anyone wants to be short equities into the weekend..?

Nah. Not me, either, not in front of the momos.
USDEUR feels like it might be OK to take home.

Bond auction week usually has a TURNAROUND TUESDAY.

Leftback said...

Great post by Corey, thanks Karen !!

CV said...

@LB (3:18)

You're being a DL there and not differentiating a theoretical argument from a practical one...

POINTS:

- YES you're right... there will be no inflation without higher wage costs...

- But you're WRONG in application... Inflation metrics don't account for food & fuel...

a) You won't NOTICE food going up (because they'll either REDUCE portion sizes on your cereal box & charge you the same price; EAT the margin - but only for so long - more than 6 months? sorry Charlie; or BLAME the rise on some UNEXPECTED meterological phenomenon "Oh people" there was a drought in India - pfft)

b) Fuel? Won't go us HORRIBLY... But NO WAY it reflects actual demand... PETRODOLLARS shall lose value in a BERNANKE BUCK World... Otherwise... The House of Saud, instead of making Obama "bow" to the King, will require that he perform fellatio...

---

Here's what I think...

YES - There will be another POP in the dollar... But the next one, will be the LAST one... Right now - the charts are just marking their lines as to where they want to go when the dollar UTTERLY COLLAPSES...

So this next little "tree shake" of commodity longs (that you refer to - and that I agree will happen)... Will be the last time to GET ON BOARD the EXPRESS...

I (and I think karen, ben, and others... in gold terms... have been "pining" for another visit to $600 gold... That got changed to 8 handles, then $1000 handles... and now probably resides in the $1200 handle range)...

I'm sticking with that... Ans I STILL think silver is a high beta to that... Hell - at 15-1, that still puts silver at $75 an ounce...

SOMEBODY - in this "fiat de-valuation" world is going to, at some point, BACK A CURRENCY on silver...

Let's hope, for their sake, they don't end up like John F. Kennedy when he tried to do it...

karen said...

http://www.minyanville.com/businessmarkets/articles/midterm-elections-quantitative-easing-qe2-fomc/11/4/2010/id/30936?page=1

David Stockman: So the real question from Tuesday night's outcome is how long can the US government issue its own increasingly toxic sovereign debt into the global market at a rate twice as fast as underlying economic growth? The cynic might say: as long as the Fed can continue to monetize 100% of the new debt issue, as it promised in Wednesday's $100 billion per month quantitative easing 2 (QE2) announcement. But it should be obvious to all except the insouciant boys and girls and robots of Wall Street that the world’s leading central bank is now dispensing pure monetary heroin. And, ironically, that’s likely to kill the patient before the fiscal question is even addressed.

DL said...

MSNBC suspends Kieth Olberman for making political contributions to Democrat candidates.

http://nyti.ms/b06SDd


I am shocked, SHOCKED at the notion that Olberman might have a political bias.

karen said...

http://www.optionmonster.com/drj_blog/article.jsp?page=drj_blog/rmbrenna_xlf_trade_killed_baby_50720.html

18 said...

There's inflation (even though many say it's not much). Don't normally do this but was on a long trip, pulled through Wendy's and ordered one of their healthy salads (ya know, with walnuts and whatever) and a "biggie" coke...

$9.80!

frik'n outrageous!

Leftback said...

Karen,

Would love a RED CANDLE confirmation from you on FXE.

I bet you look sensational in red.
Or black, for that matter....

CV said...

@karen (3:44)

Minyanville is dishing up "day old" pasta...

Look people... it's simple (post QE2)...

Just look at the DALIY moves on everything (from here on)...

STOP valuing things in DOLLARS... and START valuing things in gold...

Write yourself an APPLICATION (that converts the DOLLAR price of everything into the GOLD equivalent price of everything)...

Then, go from there...

- If GOLD was "up" 1% and the SPX was up .05%... YOU LOST MONEY...

- If Silver was up 6% and Gold was up 2%... You made money...

- If SPX was DOWN 5% and Gold was down 3%... you made money...

It's as simple as that... (then - apply your winnings to your grocery bill... and if you like imported wines - YOU'RE FUCKED)...

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