90 Day UST (weekly info)-no change (below mid)
trend=down
low= 0.020
rev= 0.090; mid= 0.055
Looks like the low was made during the week ending 5/6/11. It's definitely moving higher. If it gets above the weekly mid then sentiment is moving towards the Fed raising rates. Add that to QE2 ending and the market volatility may become extreme.
3 month vs Overnight LiborThe spread is down to 0.130 from a recent high on 0.141 back on 4/20/11. That date (4/20) may explain why European financial markets believe everything will be fine. Yet Portugal gets bailed out and Greece may have to rebalance (actually its restructure but they wanted a prettier way to say it).
h/t qqqqtrader
48 comments:
@qqqq
Looking at that chart... Hardly a wonder why QE2 was chosen to play out during the months it did/is doing...
I'm guessing that, besides the paperweight that's still resting on the PRINT button on his computer, that's the only chart on the [ease]l in his office...
"drop the cloak which has hidden them and stand forth in naked and simple beauty"
That's probably what they're telling DSK to do at Rikers at this moment...
wow, Dirk "went off" last night, that was very impressive, they better find an answer for him quick because he won't miss many from the line. Mavs were impressive last night. I'm not really sure why OKC didn't position Durant the same way the Mavs were using Dirk, nobody can guard Durant either.
@Q's
nice chart on Karen, lol!
Westbrook should aim at the basket next game.
@spoonman
Nowitzski unbelievable... Very powerful!
@Wunsacon,
that was an interesting comment you left at TBP, which was that this period of time must be more uncertain due to QE2 "ending" in about 45 days......supposedly.
I guess it doesn't really matter what I think but I have to ask you, if you believe that, then surely you have to agree that QE "creates certainty"....yes? And to take that a step further, that if there is QE then "it is certain what direction markets will go"....and I'm guessing you think that direction can only be up.
That is quite an interesting statement sir. One question that might arise here is to ask what kind of certainty you think the implementation of QE provides to all the people using dollars, which represent some 80+% of ALL global transactions.
I suppose I shouldn't be surprised at the idea however, it's just another form of describing efficient markets which despite a mountain of evidence to the contrary, people still deeply believe they exist.
I guess it doesn't really matter what I think but I have to ask you, if you believe that, then surely you have to agree that QE "creates certainty
---
I know your comment wasn't directed at me, but just for fun, I'll jump and and give CV's official opinion on the subject (since I talk about QE a lot)...
I would DISAGREE that "QE creates certainty"...
NOTHING, IMO creates certainty...
Instead... "QE creates QE", plain & simple... It's liquidity, pure & simple, OR, probably more precisely, it's the antithesis of TIGHTNESS...
Where that flow goes, or how it's put to work, levered, hedged, etc. is anybody's guess...
But then... When someone starts to apply the 'articulated logic' of what the central banking establishment wants to achieve (which is to SUPPORT asset prices - & hopefully suppress certain 'physical' asset prices), well then, therein lies what might construe as a marginally higher probability candidate as to potential outcomes...
Especially when you consider the recent indoctrination of the HERD towards that outcome...
Who the hell knows? When the FINAL, FINAL QE is rolled out (whether that be QE3 or QE18), that liquidity may actually be unleashed AGAINST the equity markets in order to bring them to a swift end...
I'd imagine that the banking cartels would have, by then, already assembled all the pieces they felt they needed to withstand the purging of the former fiat system (and emerge with a 'new & improved' system as the only viable alternative)...
HOPE & CHANGE II
---
My gut feeling is that at some point, if the plan is to try to keep asset prices from collapsing (which, I'd assume that that large banks want to do, as they are basically just 'tolltakers' or 'skimmers' from the flow of transactions [glorified bookies])... Then they will, in fact, try to keep the stock market alive and kicking...
Why? Well, What's the value of all 401k holdings invested in the stock market??? Something around $10 trillion?
I can't see much reason in 'haircutting' that down to $6 trillion before it is taken custody of in the name of national security...
Then again, my logic may be skewed... I'm not a lying, theiving, banker/politician... I just play one on TV...
CV,
Of note imo is the fact that in everyone's assessment of QE they are all convinced "liquidity must go somewhere", a basic fundamental economic and market idea if there ever was one
what model factors in the liquidity that goes nowhere?...I wonder
Liquidity models would seem to need to change based on the amount of overall debt in the system, but I'm not a programmer, so this is just my speculation, I have been able to yet wrap markets up into a nice ball of physics like many others have already.
A model that doesn't at least attempt that denies the FACT that in 2008 during "unlimited credit" globally
it all went up in smoke
probably a 1 in 75-80 year event, so no way that can happen again is what seems to be consensus to me....so yeah, herding indeed, I suppose we've found the golden goose in our newfound understanding of liquidity as the cure of all troubles.
And again, not directed specifically at you as I'm observing a lot of common ideas, but the transitions in how folks describe the banks the last four years is an awesome sight to see imo: in 2007 they were "the best" according to most folks, super strong business, and C was on it's way to $70 (no splits required), in 08 they were all clueless, making "shitty deals" to serve themselves but still blindsided by their own arrogance and greed, in 2009 they were said to be "the market" they controlled it all again, same in 2010, now in 2011 it's become more evident banks are still a mess and now they are being described as skimmers, not just by you, by lots of people. See Rolling Stone for starters. We even get the pleasure of seeing someone spend time working up charts that show, boy, if financials weren't around we'd be at all time new highs! I sort of remember Steve Liesman in 2008 "well, if you strip out financials earnings/ p/e's...it's a buy baby, this market is going up"
I suppose the truth is somewhere in between, that banks herd just like all the rest of us, they just do it smarter than most.
10 biggest money wasters
I do some of these :/
I suppose we've found the golden goose in our newfound understanding of liquidity as the cure of all troubles.
You're 'seeding' ideas that I did not express... I've stated clearly that I DO NOT believe that liquidity is the cure of all troubles (& whether 'other' people believe that or not is not my concern)...
---
I will say that I believe in ENTROPY... So, with this statement...
"Of note imo is the fact that in everyone's assessment of QE they are all convinced "liquidity must go somewhere", a basic fundamental economic and market idea if there ever was one
what model factors in the liquidity that goes nowhere"
I'd say that the physical universe has many examples that support the law of entropy... Whereas I've found NONE, so far, that disproved it... My guess is that when something, ANYTHING, is put into existence, it's going to "do something", not just sit there doing nothing...
So, gambling man that I am, I'll take what I consider to be the 'bird in hand', and forego the unseeable...
THERE MAY BE NO SPOON (Matrix) afterall, but for now, I find spoons handy to eat my bowl of cereal in the morning...
---
Lastly
"A model that doesn't at least attempt that denies the FACT that in 2008 during "unlimited credit" globally
it all went up in smoke
That's a valid observation on your part... But my reasoning/wrangling mind, in looking for explanations, may come up with some answers (whether they are true or not)...
That was, what I'd call, the first REAL purge of leverage (the first good crap after a long constipation)... I'd guess that the degrees of what was unwound were both JUST & ABNORMAL at the same time... I'll explain...
If the MARKETS had been allowed to perform their usual function, I think the result would have been WORSE ('worse' only by those whose standards are that high stock & asset prices are a 'good' thing)... so, 'JUST' in this case, means that there was a pretty deep & severe crash, that adequately reflected something...
ABNORMAL means that, in response to the crisis, the Fed & Washington unleashed an unprecedented arsenal of...
- QE
- accounting rules changes
- propaganda
- stimulus
- etc.
I doubt anyone in their right minds would have expected something like that BEFORE 2008...
IOW - The 2008 crash started out pricing in Armageddon... Before it really completed it's task, the system was hijacked & corrupted... So all we are able to see now are FALSE indicators...
Bets ARE NOT being made on any kind of REALITY (not that they really ever were during the last 40 years), but let's just up that a little and say that bets ARE being made on SURREALITY (these days)...
IMO - The only 'honest' pricing mechanism on the planet right now is probably the price of PHYSICAL GOLD... I'd have to confirm this, but it would appear to be the LEAST volatile of anything smoothed out over the past decade...
I laud your attempts to remind everyone about the inherent risks involved in predicting outcomes based on 'herd' mentality... I'd fully stand by you in that effort...
But it seems to be that the precipice that we're standing on at the moment (and what's at stake in the minds of most of the grossly unprepared people on this planet), will INCREASINGLY lead them to fight harder AGAINST the bulldozer that's trying to push them off a cliff...
The bulldozer is going to win eventually, but probably not without a few calories burned in the process...
@Q's
Bank fees on ATM's?
Doesn't everyone get paid back by their bank on this. I've done personal banking with PNC since I was 18 years old, if I take money from a WSFS, Chase, whatever ATM, they credit my account for the $2.50 fee or whatever it is.
The company I work at has an account we can set up for direct deposit/bill pay/ATM, etc.
We will credit clients accounts up to $20 per month if they are pulling from other ATM's and getting hit with a fee, I'd love to meet people that are paying all this money each month like that and not switching banks....that's strange.
I don't play the lottery or smoke, and I don't drink coffee, but do I buy lots of Chips a'Hoy and turn my nose up at other brands....
Yes I admit it, I can do lines of those things like Rick James did lines of blow.
CV,
those responses weren't directed at yours in particular, just stuff in my mind is all
here's something I did want to throw at you that I thought about last night though
I can't deny that gold has been the real "money" for 5,000 years, however, I think it's a fair observation that in one form or another, paper currency has dominiated the landscapes for a few hundred, with gold only becoming "money" at intermediate degrees of trend along the way.
Is that the slow march to global currency?
I still suspect/speculate that's where we are headed.
CV,
another thing, it's not that the liquidity didn't exist (there is no spoon), it's that it went "up in smoke" because the amount the Fed is "printing" is a rounding error when measured against outstanding debts, that's the point, none of the liquidity models account for the debts, they all seem to assume they don't matter as long as we can print (see buffetts comments all over the papers yesterday)
Also, not to be bringing him up all the time but Prechter pretty much nailed all the big steps in the first CTC book that have been taken so far, 10 years ago he was talking about how if they went far enough the Fed would do exactly what they are doing now and he laid it out step by step in that book, it's a good book. So, it's not accurate to say nobody could have imagined it, several people did and Bernanke laid the whole plan out in his deflation speech as well, they are pretty much following the script there it seems, the only time they didn't was the scramble in 2008 with TARP, but QE was very much a part of Bernankes not letting deflation happen. He (bob) certainly didn't predict the price of everything afterward, their calls have been effing terrible for about 18 months now, but the general action steps by the actors he's gotten all right, better social predictor than market predictor it would seem.
Last, one could calculate the NAV on GLD or SLV during the day to see that paper and physical in that space really have no difference at all in terms of how "the market" is pricing them, they trade extremely tight all day long every day. Maybe that changes in the future but it most certainly not different now.
CV,
One more thing, the accounting rules changes and propaganda has been amazing however, it started in earnest in 1999.
Recall that the watchdog for earnings, S&P, changed how earnings were reported in 2000, the reason I always laugh at folks talking about "historical p/e's" and to a recent point prechter made about earnings in Q3, 2008, when they went negative, p/e's were technically infinite, that's one hell of an indicator eh? Fluctuates between 4-5 x earnings and infinity...good luck with that.
piont it, accounting changes and propaganda have always been part of the game it seems, progaganda especially talked about at length in stock operator, early 1900's, or I wonder if "information" was supplied to public about how great tulips were....back in the day.
I'm an awesome speller, btw.
alright, good luck today all.
qqqq dude
Enjoyed the charts and comments last night.
LB also sitting on very large amounts of cash although I haven't given up on the Sitting in Yield idea, holding on to about 27% of divvy stocks.
Still don't see shorting this market as a good idea, but long SPY short EEM probably still works until it doesn't.
Macro Man call for a 2.9% in 10s before we hit bottom.
The Bond Report™ will return later this month, when a really irritating series of 4pm meetings ends...
this S&P 500 looks headed back to 1350.....
Arnold's baby momma....
http://egotastic.com/2011/05/arnold-schwarzenegger-love-baby-mama-revealed/
Not good....
Ben22,
>> if you believe that, then surely you have to agree that QE "creates certainty"....yes?
Yes, I believe it "increases" certainty. ("Creates" could be synonymous here. But, "create certainty" could also imply I'm saying "100% probability", which I am not.)
>> And to take that a step further, that if there is QE then "it is certain what direction markets will go"....and I'm guessing you think that direction can only be up.
In case of more QE, I would expect:
- commodities to rise
- stocks to rise until the point of margin compression
- bonds to either rise (because Ben's buying more) or fall (because no one else wants to buy)
>> That is quite an interesting statement sir.
Why, thank you! "They" -- I can't say -- pay me to cause trouble! ;-)
>> One question that might arise here is to ask what kind of certainty you think the implementation of QE provides to all the people using dollars, which represent some 80+% of ALL global transactions.
It means "savers (including foreign central banks) will be punished". It might lead to them spending more of their dollars on our goods -- maybe that's why commodities rise! -- or companies (well, that is, *if* we allow them to buy any of them that produce something useful).
>> I suppose I shouldn't be surprised at the idea however, it's just another form of describing efficient markets which despite a mountain of evidence to the contrary, people still deeply believe they exist.
I do *not* believe in EMH! Or, wait, maybe I do -- *BUT* I believe in a completely farcical form of EMH where most of Wall Street and investors only look forward about a *week* at a time! They ignore the "bridge out" signs and speed along thinking "maybe the sign is wrong and, if not, I'll bail just before the cliff".
Ben,
Three other points:
- In case of "no more QE", I'm less confident what will happen. I'm probably not alone. That's why I say "QE increases certainty". (Or, well, perhaps I should say "confidence" here instead of "certainty".)
- Volcker says he thinks the debate about QE is a bit overdone, because the Fed throughout its history has often bought bonds, in order to keep yields low.
- I dislike QE and this "certainty", because our "status quo" is corrupt to the core. I wish it would collapse again, in order to clear out the rot (if we would just let it happen).
Andy, those are some pics... Yeesh. But, maybe she was cute many years ago?? Heh.
Hasta la vista, folks. Going to work...
@ben22
I don't expect a rebuttal to this (because I'm sure you're busy), but I'm just continuimg to 'frame' the various perspectives...
the amount the Fed is "printing" is a rounding error when measured against outstanding debts, that's the point, none of the liquidity models account for the debts, they all seem to assume they don't matter as long as we can print
I agree with you... That is blatantly obvious... However, this is why I used the term SURREAL earlier... Meaning: OF COURSE it is ridiculous to think that CB's can 'paper over' the aggregate debt... I doubt that's what their even trying to make happen... So, any 'papering over' episodes are only designed to carry the MONTHLY NUT a little farther into the future... I suppose if they can forestall it, even for 6-9 month bouts at a time, that gives them adequate time to fill up their suitcases and pack the parachutes...
lastly...
"accounting changes and propaganda have always been part of the game it seems"
True, but I think you have to take it a step farther and understand it's achieved a new dynamic...
To use your reference (S&P p/e's circa 2000, or, tulips, as the case may be)...
The difference?
Speed & ubiquitous information... Granted, there was "the internet" in 2000, but there were not a lot of blogs that I recall... If you wanted to get REAL information, you had to do a lot of your own research & homework (stuff that most people have time for)... I don't recall if THE INTERNET existed during the tulip craze, but I don't think so because I don't think Al Gore was around back then...
Anyway, what I'm mainly trying to point out is that the DIFFERENCE between now and then, the DYNAMIC/ACTIONABLE difference, is that most people (in 2000, or the tulip bubble), didn't realize they were being 'lied' to in real time...
Nowadays, they're starting to get the clue that they're being lied to...
But the Rabbit Hole doesn't stop there...
First of all, they're starting to realize that they're being lied to by the very people they have been indoctrinated to TRUST for generations...
Second (and far worse), is that EVEN WITH THE DAWNING KNOWLEDGE that they are being lied to, other than being slightly 'ticked off' about it, they're more likely taking the 'abused spouse' approach to the whole thing... They'd rather take beating after beating, rather than do the right thing and end the abusive relationship...
So at this point, the POWER still rests with the abusers...
Damn!
I had a whole long thing on...
Is that the slow march to global currency?
I still suspect/speculate that's where we are headed.
but blogger ate it... grrr!
One question that might arise here is to ask what kind of certainty you think the implementation of QE provides to all the people using dollars, which represent some 80+% of ALL global transactions.
I'll use the TUBE OF TOOTHPASTE metaphor...
Give someone a big fat unused tube of toothpase, and how much of a glop do you think they're going to glop onto their toothbrush...
When the tube is at the end, and you're using whatever tool or device you have handy to get the last of the stuff out, how much do you put onto the toothbrush and still feel 'satisfactory' in comparison to the amount of paste you used when the tube was full...
Thus explains, the likely dynamic of QE phaseology...
Damn, the woman DSK assaulted may have HIV/AIDS or at least be a carrier: http://www.zerohedge.com/article/why-dsk-housed-ward-inmates-infectious-diseases
a bad use of what DSK considered his MAJIC JOHNSON
Well...
Not to be too harsh here...but if you sexually assault a woman, maybe a tough disease is a fitting punishment.
I do find it interesting that even the greatest manufacturing power in the known universe has problems,too.
http://online.wsj.com/article/SB10001424052748704281504576328900613529080.html?mod=ITP_pageone_2
China Limits Manufacturers' Power Use
As Yangtze Runs Low, Tone of Officials Turns Shrill; Factories Feel the Pinch.
...I guess they could always import Honda generators when the power goes out...
@wunsacon,
thanks for that man, appreciate the thoughts, but you most certainly do subscribe to EMH, that's not a bad thing by itself, most people do.
Wish I had more time to respond, busy day today, busy week.
http://money.cnn.com/2011/05/18/news/companies/mcdonalds_retire_ronald/index.htm?hpt=T2
Love stories like this....people trying to take out Ronald McDonald because he encourages small children to eat unhealthy food.
WTF?!?
Where are the parent in this equation?
Do the fat kids drive themselves to McDs?
Do the fat kids have their own ATM cards they're dropping at the counter?
I mean, "C'mon Man."
"Granted, there was "the internet" in 2000, but there were not a lot of blogs that I recall"
CV, I'll type more tonight, but this idea is sold by me that technology makes us all wiser faster, lots of folks fall back on the internet excuses, it was the rational for the 90's mania in fact.
I'd argue 95% of the financial blogs that exist are full of MISinformation and shit analysis.
see ZERO HEDGE for starters
so their millions of followers that think they "know" something are no better off at all, in fact, now they are certain about things that aren't even true.
and CV,
one more while I'm scarfing some noodles
if people realize in the net they are being lied to in real time then your thesis can't play out
it wouldn't go both ways
but the reason yours might play out imo, is that "most" people have no idea they are being lied to, they are completely clueless
I consider Jay-Z to be a pretty smart business-man, read Decoded and you'll see how blinded he is by Obama
You don't get to $450 million in assets being an idiot but you can still be in the dark about things.
also, I hate clowns, so if anything Ronald McDonald scared the crap out of me when I was a kid.
I'm closer to 60 than 50...and Ronald McDonald still scares the crap out of me. But apparently not 600 lb mom.
Which may go further to explain Lulu's infinite expansion than nascent yoga enthusiasm. I mean, whatever happened to the mu-mu? The cure-all to an ever higher grocery bill can be found in the behemoth in front of me at the check out line...every epidermal nook, cranny, and mountain range writ large for the world to ponder. I suspect an ob/gyn employing a well digger couldn't find the wet spot on some of these people. Sheesh.
And there's my rant for today.
"I suspect an ob/gyn employing a well digger couldn't find the wet spot on some of these people. "
Bwahahahhahahaha
"You don't get to $450 million in assets being an idiot but you can still be in the dark about things."
Tru Dat.
http://www.washingtonpost.com/business/economy/in-rust-belt-manufacturers-add-jobs-but-factory-pay-isnt-what-it-used-to-be/2011/05/17/AFDmL55G_story.html
"The nation’s factories have added 250,000 jobs since the beginning of last year — about 13 percent of what was lost during the recent recession — marking the first sustained increase in manufacturing employment since 1997.
But the new hiring also reflects another emerging reality of U.S. manufacturing: Many of the jobs don’t pay anything close to what they used to. Assembly-line workers who will be making the EdenPure products under the auspices of Suarez Corp. Industries will start at $7.50 an hour.
That’s a far cry from the $20 an hour that most workers made with Hoover, which shifted its century-old production lines to Mexico and El Paso in 2007 after concluding that it was too expensive...."
Another wacky wacky day.
Was this the turn in bonds? We think so.
LB
The bullish engulfing on the 10yr yield was interesting. The 10yr yield tested yesterdays low and never looked back.
-----------------------
new thread up
Ben22,
>> I'd argue 95% of the financial blogs that exist are full of MISinformation and shit analysis.
>> see ZERO HEDGE for starters
Are you saying ZH is shit or that ZH exposes the shit of other sites/MSM?
(I love ZH...)
Wunsacon,
I'm saying ZH misinterprets a lot of data and especially charts to the detriment of many of the readers there as they are not involved in markets enough to understand what they are looking at.
ZH has some awesome posts from time to time, I've read great stuff there, but lots of trash too, the point of this was to say that I do not observe blogs as enabling a more informed public investor better equipped to navigate markets. For the vast majority of people that read internet blogs markets are only a hobby for them. In fact I'd posit that the concept that more information, even if it was accurate, is going to make more informed investors out of everyone is to deny what is going on internally when people get involved in markets and have money on the line, and therefore that idea is DOA.
>> I'm saying ZH misinterprets a lot of data ... lots of trash too,
Dang! I'm not knowledgeable enough to pick it up, unfortunately.
Well, thanks for the tip.
wunsacon,
I'm sure you can tell a lot of stuff there is on the sensational side, there are a ton of posts so that's no shock, but a lot of the charts they put up involve some commentary that is just wrong. Same thing with mechanics of ETF's and several other topics.
>> I'm sure you can tell a lot of stuff there is on the sensational side.
Yes, at least, enough to make me get into the habit of asking myself "is this news perhaps not as bad as Tyler's interpreting it?"
...but, then again, I must say we view ZH quite differently. You think it's in the "95%" group (of crap), whereas I count it in the "5%" of stuff worth reading.
Ben,
My prior comment merits no reply. But, I'm wondering about this though: Since I believe the market horribly misprices items (like Lehman and all the banks during 2005-?) all the time, I'm not sure how you figure I believe in EMH.
I think the market has gotten spoiled on $100B in new money per month and doesn't know what's going to happen at the end of June, meaning uncertainty is rising. How does that mean I believe in EMH?
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