ATHENS, Greece (AP) -- Greek Prime Minister George Papandreou called for the activation of a joint eurozone-International Monetary Fund financial rescue to pull his country out of a major debt crisis.
Saying financial-market pressure threatened to derail Greece's economy with high borrowing costs, Papandreou said Friday he had asked Finance Minister George Papaconstantinou to make a formal request for the plan's activation.
"The moment has come," Papandreou said, speaking from the remote Aegean island of Kastelorizo.
...Not news, really,and the question becomes Now What? Portugal? Italy? What are the costs to Germany and will the population go along with this? If it is IMF money, how much of this bailout will CV be responsible for????
Can we put in a call to the IMF to drop a screwdriver into our printing press?
April 23 (Bloomberg) -- China’s home prices may fall by as much as 20 percent in the second half, as government measures to curb credit, increase land supply and a potential property holding tax cool speculation, according to BNP Paribas.
“The State Council and political leadership have demonstrated a strong political will, at least at a central level, to curb the property bubble,” BNP analysts Chen Xingdong and Isaac Meng said in a report today. The cabinet “considers elevated property prices and further rises as not only economic- financial risks but also as undermining social stability"
...Although what I read about housing in China makes me think it has little similarity to our housing bust, still if they have a 20% decline in one year, I would think this would unsettle the Chinese economy.
@Bruce, you can insert Canada, Australia, India, Brazil(BRIC), in place of China. Bubble mania. Because of globalization, everone pays for bubbles. Commodity prices are incresed for all consumers on Earth.
The question is will Greeks make necessary changes in their life styles to make this bailout one time thing. It will not be unions, or elites who will end up paying the price. It will be people who are not organised or big enough to matter during the voting time.
Not a total Ritholtz fan boy, but Barry's post on GS today is FIRST CLASS.
"Commodity prices are incresed for all consumers on Earth."
This is a good point I would like to visit in depth one day. Basically, LB believes that the crisis revealed true commodity prices - IOW, where things would trade in a real free market without the extra "add-on" created by leveraged hot money and banker-driven speculation.
morning! got my coffee but not that excited about facing this day for a variety of unmentionable reasons.. briefly saw some new GS news.. the new insider charge against Rupta (?) anyway.. aapl in the 270s.. the call is for 305-330, i coulda bot that under $200 recently (my friend did.)
Whether or not Goldman is guilty, the transaction in question clearly had no social benefit. It involved a complex synthetic security derived from existing mortgage-backed securities by cloning them into imaginary units that mimicked the originals. This synthetic collateralised debt obligation did not finance the ownership of any additional homes or allocate capital more efficiently; it merely swelled the volume of mortgage-backed securities that lost value when the housing bubble burst. The primary purpose of the transaction was to generate fees and commissions.
"the transaction in question clearly had no social benefit"
Morning, K. The above statement is true these days of the majority of I-bank activity. Change is coming this time. The small boutiques that focus on M&A and asset management are in the sweet spot for survival. (Think Lazard, etc..)
McF: A whole lot of people have tried to tell me that crude $125 was free market supply and demand, but those people aren't traders (Krugman) or simply don't understand the effects of leverage on futures markets (DL).
Some traders might want to work on KFT, there are a huge amount of puts trading on KFT right now, if we are going to new highs there could be a short squeeze there so perhaps worth a look for a trade.
@ben: Not sure I want to know? Or maybe that's a new line of work for Mannwich? Would seem far more peaceful than this shite. Or maybe I-Man wants to take a stab.
Could it be that investors who are running away from all things European right now due to the PIGS contagion fears are buying US stocks to drive the market higher?
Just a simple surgeon, and I have today off and my daughter is coming tonight to stay,(YEA!) so my wife has me working, BUT...it appears to me that at this point, although I do dearly love the benefit Mish has with his point of view to keep us all out of trouble, that inflation will be my next worry, and I will invest accordingly.
just hanging around waiting for these roofers to get done-
anyway- new home sales up- but is that shocking- or even a surprise considering the expiration of the tax incentive and the increase in FHA MIP? Everyone trying to beat the clock-
next months figures could be and may well be the complete inverse as contracts for new homes fizzle- builders unable to complete homes by the delivery date of 6/30 to qualify for the incentives-
so all demand was brought into the timeline where a person would qualify for the credit and lower FHA MIP-
that's my read anyway- but the market knows best I guess
Let me rephrase. 1209.07 was the open and high on 9/29/09 and was the first vote on the bailout (which didn't pass). For the Lehman filing the open and high was 1250.92. Had to get that straight in my head.
pretty close, mine makes about 58k, with the back pay it'll be over 70k. Full work week is 36 hours. Decent vacation time, matching on her 457k, pension, medical. Not too shabby for a no thought job, she says the exact same thing to me so I don't feel bad about saying this.
@Bruce,
Not sure buddy, I see deflation ahead, not the other type of flation. Don't look at prices, watch money supply + credit. But hell, even the 3 month annualized change in CPI is negative for the first time since 1960.
and, as for this:
"Largest rise since April 1963"
that's interesting, that's near the END of a great bull market.
"Could it be that investors who are running away from all things European right now due to the PIGS contagion fears are buying US stocks to drive the market higher?"
I think that's possible sure. I believe equity inflows to US Equity funds turned positive last week. You've also got guys like JG out saying to own the super companies like KO and MSFT.
@ahab: Still quite a few homes on the market here from what I can tell. I wonder how long they'll languish on the market after the tax credit expires? I mean, if someone didn't buy them now with the free cheese, why would they buy next month or when the summer hits and things slow down anyway?
and I have to mention- as LB has already observed-
that post by BR today on GS was great- dude get's my respect if only for many of his posts that use his "skill sets" to dig into and lay out the "real deal"
"Shutting down the futures markets won't bring down the price of crude oil. "
Of course not, but you are totally missing the effect of leverage, which creates outsize profits for those who are able to store or lay off commodities. Of course this manipulation of the markets also creates large swings in price, and profit for traders.
Thank you, Jeff! Oh, boy, did that make me feel better.. It is crazy reliving 2007 so soon! (I was undone living thru 2007 just 7 years after 2000.) It is exactly what Grantham was saying, too, in that video I posted yesterday--the number of crises has increased over the last ten years.. the bubbles are closer and closer together.
Banking crises are quite normal and if properly executed can serve to facilitate the normal process of daily rape and pillage of the citizenry. I try to have at least one every day, usually between meals.
karen, much like that aleph blog you posted in the thread below the one you linked to, when performance is all about the short term. There are no investors today, only speculators, creating an unstable market.
everyone is going to buy that dip LB, the sentiment toward stocks right now is enough to blow your mind. To see what we've done in 13 months is basically amazing. This is why P3 will just keep going and going, you can't have a P3 without decades of optimism building up like this, and that also helps reinforce the belief in completely false economic and market theories/strategies.
@ahab: I think it wasn't just this one thing that Ben did. He also was accused of rape in Tahoe at that golf tourney a couple of summers ago. The case is being taken to civil court. I think he's shown a pattern of egregious behaviors off the field. The NFL has to protect its image. I don't blame them one bit.
BTW - that golf tourney in Tahoe is a lot of fun. My bro goes to watch every year beachside at the 17th hole. I went in '07 and had a blast.
I think Big Ben's got a problem Ahab, this isn't the first time he's had an issue with this, sounds like he "exposed himself" whatever that means. I think the suspension was warranted.
Manny,
yeah, how about Tebow in Denver. Not sure how that's going to work, you know Denver has always been famous for running, but the option doesn't work in the NFL.... lots of Wildcat maybe?
LB did hit them pretty straight for the most part. Chipping and putting were lousy. His playing partners had tremendous difficulty walking the LONG and very hilly course, and LB's quads and hamstrings are screaming for mercy today.
Living in the NY area meant the trip involved 2-3 hour drives in each direction due to traffic, traffic and more traffic around the Hudson River crossings. Don't ever move here if you like golf.
@lb: Funny mention that. I never golfed in NYC when I lived there. I golf all the time here. Decent, easy to get to public courses everywhere in MN. A lot more than you'd think for a place that has such a short golf season.
I am so over this Greece nonsense. Is the market really hanging on these ministers every words when they don't even agree or barely speak to each other. This was the fifth "Greece is rescued" rally
guys, I've done some biz in the past with GS. There is a full fledged campaign from these guys right now. I got a huge email from them yesterday basically saying they didn't do anything wrong, now today I've gotten two phone calls from them just making sure I got the email and that they believe the charges are "unfounded"
Greece has learned from the US regarding EXTEND AND PRETEND. One day we will wake up and all the pretending will be over.
Then we will see who the counter-parties are - and who sold the CDS. NO way on earth a sovereign default doesn't create contagion. There are several european banks that are about to have a margin call.
“Small futures markets are subject to distortion by high leverage”
I suppose this is true, although I would note that there are as many “shorts” as “longs” in the futures markets, and the “shorts” can use leverage also. So I’m not sure that raising margin requirements would have much long-term or intermediate-term effect on price.
But whether this is true or not, the broader question is what the effect of the crude oil futures market is on the spot price of crude.
I continue to believe that while the futures market can affect the behavior of the producers (and “storers”) of crude, so too do the actions of the producers (and those storing oil) influence the behavior of the futures market participants.
"I suppose this is true, although I would note that there are as many “shorts” as “longs” in the futures markets, and the “shorts” can use leverage also."
But not as much, and not as often, therein lies the asymmetry....
There is one point that I might have to concede, which is that there might be points in time when the futures market participants are more bullish than the producers/storers.
Then perhaps the futures traders can push up the price above where it would be otherwise.
I just don't know how often this situation occurs.
SC put up a chart the other day of S&P vs. ORNAX. I'll tell you, the MF wholesalers are really pounding the table on buying muni's or HY muni's.
I get this from Eaton Vance every week, I have to imagine that this is the strategy for tons of FA's:
As tax rates increase, demand for municipal bonds increases, because more people wish to reduce the tax they pay. Similarly, as tax rates rise, the effective interest rate on municipal bonds increases. For instance, a municipal bond paying 3% interest pays a tax-equivalent yield of 4.6% in a 35% tax rate environment. But if tax rates rise to 40%, the tax-equivalent yield on the same bond rises to 5%. In short, all other things being equal, rising tax rates can signal rising municipal bond values.
We know very well what happened to the price of crude in the summer of '08. But how does one determine the relative influence of the futures traders, of the producers, and of those with the capacity to store oil?
I don't know exactly how one would prove one's view on this.
In any case, I think that the benefits of a futures market FAR outweigh any costs, and for a variety of reasons, not the least of which is that we would see high levels of hoarding among the producers in the absence of a futures market.
Crude oil was traded long before there was a futures market, and I think the situation is much better now than before the futures market came into existence.
Friday, April 23rd, 2010, 11:03 am Redwood Trust (RWT: 16.89 +0.78%) filed a prospectus on the first residential mortgage-backed security (RMBS) since 2008 — the forthcoming Sequoia Mortgage Trust 2010-H1.
Redwood Trust is named as the seller and sponsor, while Sequoia Residential Funding is the depositor in the filing with the Securities and Exchange Commission (SEC) Thursday. CitiMortgage acts as the originator and servicer, while Wells Fargo Bank is listed as the trustee on the deal.
The issuer is planning to issue four classes of senior certificates, including one class of interest-only certificates and two classes of residual certificates, according to the prospectus. The issuer also plans four classes of subordinate securities.
Deja vu. This is the area (on a Friday no less) the SPX was in before the first bailout vote. There's a banking regulation vote on Monday. Twilight zone perhaps?
When Bucky goes down 0.15%, SPX goes up 1.5%, crude, copper and gold go up 1.5%. We have all observed this repeatedly - including you. The amount of oil supply has NOTHING to do with it. It's simply a speculative TRADE by the desks and HFs, over and above the base price, with a leverage of about 10. Which oddly enough is the leverage currently reported by the banks.
This trade will unwind at least once more in our lifetimes.
Not saying futures markets are a bad thing, just this: the banks are GAMING the system with money given them by the FED with the express purpose of MANUFACTURING INFLATION BY RAISING THE PRICE OF OIL.
Imagine.... banks gaming the system.... !!!!????!!!!!!
@ LB 12:45 The French and German banks sold the CDS - France is on the hook for 75bln, German banks 45bln. That's why they don't want a default event but they don't want to bail them out either. Why they just don't ban naked CDS is beyond me.
@ LB 1:37 we sit around while the ministers (from how many countries now?) try and agree how to get out of this without a) actually handing any money over to Greece b) actually guaranteeing any debt (same thing as a) c) triggering a default event because there is NO grace period on Soveriegn CDS
Hence the jawboning and hoping the market believes it.
I dont' have a specific proposal. But unless you support an outright ban on CDS contracts, perhaps you would be willing to concede that there is benefit to having liquidity. For one thing, there is no pricing and no transparency in the absence of liquidity.
DL I don't support an outright ban and I don't support bailouts either. I believe in less regulation and real capitalism. LB is right, if we don't bail them out then we won't have to regulate them. The role of governments is to organise a market structure so that participants can trade transparently and participants meet capital requirements. What we have now is the worst of both worlds.
I also think that one has to draw a distinction between CDS contracts on sovereign debt, and CDS contracts on mortgage-backed securities. It would seem to be a simple matter to develop uniformity and transparency in the case of sovereign debt; but in the case of MBS, the situation is much more complicated.
CV IS VERY HAPPY that the Ravens traded down 9basically I watched 3 hours without my team picking AT ALL)... But it was a smart move...
Ozzie Newsome is one smart cat...
I'm unhappy to see some good "corners" go off the board... But Brandon Ghee (Wake Forest) is still on the board and may fall to the Ravens with Denvers #43 pick... Then, the Ravens pick at #70 and I'd love to see them either get Golden Tate, or Damian Williams... A. Benn (from Illinois) would also work, but he kinda has Braylon Edwards butterfingers sometimes...
Jimmy Graham (TE-"The U") would probably be a good fit as well...
The Ravens have A LOT of players from "The U" (Ray Lewis, Ed Reed, Willis McGahee), so that always helps in the clubhouse...
I'm back! Was taking a sun shower : ) Need to be out of here at the bell. Not sure that I missed much but will catch up.. GS still red, thank goodness.
@cv: But they have FAR deeper pockets than I do, so it is I that is scared shitless of shorting a rigged market. No thanks.
There's too much at stake for them to not do everything in their power to pump a new bubble. They'll do EVERYTHING and anything to keep the party going.
"Why they just don't ban naked CDS is beyond me." Me, too.. way beyond..
"I had a rose named after me and I was very flattered. But I was not pleased to read the description in the catalog: 'No good in a bed, but fine against a wall.'"
Well today is 8 weeks up in a row on the Dow for the third time in the last 10 years. Before was the peak at the end of 03 and before that was peak at the high at end of 02.
Nic, this addresses your question.. blogspot doesn't like the length i'll split it up!
Bonds decline after strong U.S. data, Fed concerns 3:37 PM ET 4/23/10 NEW YORK (MarketWatch) -- Treasurys fell for a second day on Friday, pushing 10-year yields up from the lowest in a month, after a pair of government reports added to evidence the economy is recovering and reducing the appeal of the relative safety of U.S. debt.
Treasurys were under pressure earlier though, which analysts attributed to media reports that more Federal Reserve officials would like to sell some of the government and mortgage-related assets it bought during the credit crisis.
Yields on 10-year Treasury notes (UST10Y) rose 4 basis points to 3.82%. Bond yields move inversely to prices and a basis point is 0.01%. Yields closed at 3.74% on Wednesday, the lowest close since March 23.
Ten-year yields have risen from 3.77% a week ago, marking the fourth weekly increase in five weeks.
Yields on 2-year notes (UST2YR) increased 4 basis points to 1.07%. Two-year yields have increased from 0.96% last Friday, marking the sixth weekly increase in eight.
U.S. orders of durable goods dropped 1.3% in March, the Commerce Department said. Orders for core capital equipment goods -- the kinds of equipment businesses invest in to maintain or expand their productive capacity -- rose 4%, the largest increase since June. Read about durable-goods orders.
"Such a gain, which follows February's 2.1% jump, continues to suggest that businesses are reinvesting as the economy continue to turn," said Dan Greenhaus, chief economic strategist at Miller Tabak.
A separate report said sales of new homes, surged to a 411,000 pace last month. Economists surveyed by MarketWatch expected an improvement to a 335,000 pace. See more on new home sales.
Treasury prices were under pressure earlier after reports that indicated at least six members of the policy-setting board favor selling assets to reduce the Fed's bloated balance sheet, according to news outlets citing CNBC.
Analysts at CRT Capital Group said near-term sales are unlikely.
They note that markets know that some Fed officials favor near-term asset sales, and have said so publicly. But Fed Chairman Ben Bernanke "and the balance of the voters are opposed to the concept, so we're cautious of making too much from the CNBC chatter," they wrote in an email.
The Federal Open Market Committee meets next week, and is expected to keep interest rates steady at a range of zero or 0.25%.
As if the market needed another weight on Treasury demand, Greece formally requested a financial assistance package from the European Union and the International Monetary Fund after its borrowing costs soared, which had fueled investor interest in the relative safety of U.S. debt. Read about Greek aid request.
Auctions may shrink, but not next week
Next week also brings a quartet of bond auctions, after a two-week hiatus for the market from having to absorb additional debt supply. Read more on auction plans.
While the auctions amounts for next week remain mostly unchanged, analysts note that the Treasury Department is likely to begin shrinking auction sizes soon.
On Friday, the department asked primary dealers -- firms required to bid at Treasury auctions -- how it should accomplish a reduction is coupon auction sizes as the fiscal outlook improves.
"This is a perfect time to inoculate the market for the coming cuts in issuance, which we think come as soon as the May refunding," said strategist at primary dealer RBS Securities.
Before each quarterly debt refunding, the department meets with its primary dealers to discuss supply issues and anything else affecting the markets. The request came in its survey of dealers before that meeting.
Next week, the Treasury Department will auction $129 billion in notes and inflation-indexed debt TIPS, $1 billion more than analysts anticipated due to an increase in the size of the inflation-linked sale.
The government also asked dealers Friday how it could increase the number of auctions of Treasury Inflation Protected Securities, known as TIPS.
Yes, today is a risk-on day in US bonds, with HY being bid. In addition, we are beginning the pre-auction roll off. The B/Ds buy at a high yield, ride the yields down a few bps and then dump 'em lowering the prices into the next auction... voila! So expect the selling to be quite strong in 2s and 5s from now into Tu and W.
If Greece really BLOWS there will be a flight to Ts.
Hasta luego.. must dash to make good on my avoidance policy of the week. Will check AR's wrap later with a glass of wine to ease the horror of it all, LOL.
Well, you've only gone and SPOILED the BOND REPORT by BLATANTLY pre-discussing the market above.... so now you already know it was a "risk-on" and "pre-auction" kind of day, with HY > IG > TIPS > Ts. We are sulking now.
Lefty, Any thoughts on the failed German bond auction yesterday? No big deal? Forgive me if this has already been mentioned. I would think this would have some bearing not just on Greece, but on the next supplicant at the EU bailout trough too...
I think the first one got eated... Was wondering if there were any thoughts on the failed German bond auction yesterday. How come nobody seems that worried about it? I would think this has implications for the PIIGs yet to belly up to the EU bailout trough, no?
One failed auction doesn't make a meltdown. I know that this was quite a surprising event for market participants. Perhaps dealers were busy "snapping up bargains" in the sovereign debt space... there was also chatter about a GS boycott. Don't know what to make of this for now.
Good gossip: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7626096/Goldman-Sachss-Buffett-deal-drawn-into-Galleon-insider-trading-inquiry.html
Can't see any issues at all with German creditworthiness. I mean, odd things happen, we had a near fail a few weeks ago, then a record demand after that - at any rate, watching US bond auctions is more my bag at this juncture.
Warren just bought a liquor distributor called empire. They were the only game in town until they stepped into southern's territory. Southern then crushed them.
Warren also has Mclain(sp?), he could be stopping by the liquor and gun store as we speak.
LB, I would not mind being a contrarian indicator. Came awfully close to my stop on FAZ and FXP is crawling ahead since I joined in - but still in on both. I was looking for a close over 1215 - we got it.
mcHAPPY is still very much a bear. Looking for a final leg up before all hell breaks lose for DL. I do not think the highs will extend too far beyond previous highs. Just a long grind higher to get more Johnny's onboard and inflate DL a little more - don't get me wrong, you haven't been wrong so pat on the back for you.
Here is my music for Friday night, appropriate for anyone tired of waiting for P3:
I'm a skittish bull who believes that a 10-12% correction can erupt at any time. I've had some winning trades (on the long side) over the last few weeks, but I feel like I'm just "picking up nickels in front of a steamroller".
ATHENS, Greece (AP) -- Greek Prime Minister George Papandreou called for the activation of a joint eurozone-International Monetary Fund financial rescue to pull his country out of a major debt crisis.
ReplyDeleteSaying financial-market pressure threatened to derail Greece's economy with high borrowing costs, Papandreou said Friday he had asked Finance Minister George Papaconstantinou to make a formal request for the plan's activation.
"The moment has come," Papandreou said, speaking from the remote Aegean island of Kastelorizo.
...Not news, really,and the question becomes Now What? Portugal? Italy? What are the costs to Germany and will the population go along with this? If it is IMF money, how much of this bailout will CV be responsible for????
Can we put in a call to the IMF to drop a screwdriver into our printing press?
http://www.bloomberg.com/apps/news?pid=20601089&sid=acTyAGjAM.24
ReplyDeleteApril 23 (Bloomberg) -- China’s home prices may fall by as much as 20 percent in the second half, as government measures to curb credit, increase land supply and a potential property holding tax cool speculation, according to BNP Paribas.
“The State Council and political leadership have demonstrated a strong political will, at least at a central level, to curb the property bubble,” BNP analysts Chen Xingdong and Isaac Meng said in a report today. The cabinet “considers elevated property prices and further rises as not only economic- financial risks but also as undermining social stability"
...Although what I read about housing in China makes me think it has little similarity to our housing bust, still if they have a 20% decline in one year, I would think this would unsettle the Chinese economy.
LB's wedges were a little inconsistent yesterday, but he did hole out with a flop shot on the 12th.
ReplyDeleteGratified to see in the absence of LB no-one could WRAP the BOND MARKET. Makes LB feel useful.
The GREEK COMEDY continues I see...
@Bruce, you can insert Canada, Australia, India, Brazil(BRIC), in place of China. Bubble mania. Because of globalization, everone pays for bubbles. Commodity prices are incresed for all consumers on Earth.
ReplyDeleteThe question is will Greeks make necessary changes in their life styles to make this bailout one time thing. It will not be unions, or elites who will end up paying the price. It will be people who are not organised or big enough to matter during the voting time.
Survival of the fittest-never fails.
Not a total Ritholtz fan boy, but Barry's post on GS today is FIRST CLASS.
ReplyDelete"Commodity prices are incresed for all consumers on Earth."
This is a good point I would like to visit in depth one day. Basically, LB believes that the crisis revealed true commodity prices - IOW, where things would trade in a real free market without the extra "add-on" created by leveraged hot money and banker-driven speculation.
morning! got my coffee but not that excited about facing this day for a variety of unmentionable reasons.. briefly saw some new GS news.. the new insider charge against Rupta (?) anyway.. aapl in the 270s.. the call is for 305-330, i coulda bot that under $200 recently (my friend did.)
ReplyDeleteSoros in the FT:
ReplyDeleteWhether or not Goldman is guilty, the transaction in question clearly had no social benefit. It involved a complex synthetic security derived from existing mortgage-backed securities by cloning them into imaginary units that mimicked the originals. This synthetic collateralised debt obligation did not finance the ownership of any additional homes or allocate capital more efficiently; it merely swelled the volume of mortgage-backed securities that lost value when the housing bubble burst. The primary purpose of the transaction was to generate fees and commissions.
My political action post of the day if you would still like to be able to order and receive wines direct from the producer or reseller to your home:
ReplyDeletehttp://www.capwiz.com/freegrapes/issues/alert/?alertid=14948676
Can we ban lobbyists from Washington?
LB, 9;46, I agree with that idea completely on commodities.
ReplyDelete"the transaction in question clearly had no social benefit"
ReplyDeleteMorning, K. The above statement is true these days of the majority of I-bank activity. Change is coming this time. The small boutiques that focus on M&A and asset management are in the sweet spot for survival. (Think Lazard, etc..)
Whaddya know? Going green again. Zzzzzzzzzzzzz.....
ReplyDeleteCall me when this thing is no longer rigged to go higher every day.
McF: A whole lot of people have tried to tell me that crude $125 was free market supply and demand, but those people aren't traders (Krugman) or simply don't understand the effects of leverage on futures markets (DL).
ReplyDeleteI am disconnecting myself from this.
ReplyDeleteStop kicking me when I'm down!!!
ReplyDelete@lb: Speaking of "rigged". On cue.....
ReplyDeleteLB, that's a bunch of nonsense, if oil were trading on supply and demand what pray tell is it doing now?
ReplyDelete@Manny,
waves point to new highs I think, painful as it is man. Ugh. I'm hunting for puts.
I think I'm going to take up quilting instead.
ReplyDeleteSo I had an interesting meeting last night, client of mine is a union member and works for the Public Library of Philly. She tells me last night:
ReplyDelete"based on our contract negotiation I think I should recieve about $15,000 in back pay at some point this year."
Anyone want to take a guess at the gross income of a city librarian?
1213.27 is the 9/26/09 close (Friday pre Dow -777)
ReplyDeleteNew highs it is.. I submitted my music preferences to CV a few days ago in this event.. and it is friday so if he doesn't post them later, i will..
ReplyDeleteSome traders might want to work on KFT, there are a huge amount of puts trading on KFT right now, if we are going to new highs there could be a short squeeze there so perhaps worth a look for a trade.
ReplyDelete@ben: Not sure I want to know? Or maybe that's a new line of work for Mannwich? Would seem far more peaceful than this shite. Or maybe I-Man wants to take a stab.
ReplyDeleteMcF
ReplyDelete49k
Hello!!
ReplyDeleteUS home sales increase 26.9%. Largest rise since April 1963. Go figure ...
Could it be that investors who are running away from all things European right now due to the PIGS contagion fears are buying US stocks to drive the market higher?
ReplyDeleteAnd not T's and the dollar?
ReplyDeleteSugerHoneyIceTea Lehman is now a forgotten memory...
ReplyDeleteNic and Ben:
ReplyDeleteJust a simple surgeon, and I have today off and my daughter is coming tonight to stay,(YEA!) so my wife has me working, BUT...it appears to me that at this point, although I do dearly love the benefit Mish has with his point of view to keep us all out of trouble, that inflation will be my next worry, and I will invest accordingly.
Beautiful day here in East Tennessee
I see someone turned the algos on. For the first 15 min F and BAC had more volume than C.
ReplyDeleteYup. 411,000 new homes we don't need.
ReplyDeleteWhat a country.
Good day to be hedged, TBT will go on a run here. Manny, they are afraid of the FLATION. Don't you ever listen to MSM?
@lb: Actually, no, I don't. The TV is only to be used for sports, films, and assorted targeted programs that Mannwich can stomach.
ReplyDeleteHave a lovely day in the sun BinT
ReplyDeletejust hanging around waiting for these roofers to get done-
ReplyDeleteanyway- new home sales up- but is that shocking- or even a surprise considering the expiration of the tax incentive and the increase in FHA MIP? Everyone trying to beat the clock-
next months figures could be and may well be the complete inverse as contracts for new homes fizzle- builders unable to complete homes by the delivery date of 6/30 to qualify for the incentives-
so all demand was brought into the timeline where a person would qualify for the credit and lower FHA MIP-
that's my read anyway- but the market knows best I guess
Let me rephrase. 1209.07 was the open and high on 9/29/09 and was the first vote on the bailout (which didn't pass). For the Lehman filing the open and high was 1250.92. Had to get that straight in my head.
ReplyDelete@Ra,
ReplyDeletepretty close, mine makes about 58k, with the back pay it'll be over 70k. Full work week is 36 hours. Decent vacation time, matching on her 457k, pension, medical. Not too shabby for a no thought job, she says the exact same thing to me so I don't feel bad about saying this.
@Bruce,
Not sure buddy, I see deflation ahead, not the other type of flation. Don't look at prices, watch money supply + credit. But hell, even the 3 month annualized change in CPI is negative for the first time since 1960.
and, as for this:
"Largest rise since April 1963"
that's interesting, that's near the END of a great bull market.
LB @ 9:59
ReplyDeleteFutures are not the "tail that wags the dog".
Shutting down the futures markets won't bring down the price of crude oil.
I bet Nic would agree.
"Could it be that investors who are running away from all things European right now due to the PIGS contagion fears are buying US stocks to drive the market higher?"
ReplyDeleteI think that's possible sure. I believe equity inflows to US Equity funds turned positive last week. You've also got guys like JG out saying to own the super companies like KO and MSFT.
@ahab: Still quite a few homes on the market here from what I can tell. I wonder how long they'll languish on the market after the tax credit expires? I mean, if someone didn't buy them now with the free cheese, why would they buy next month or when the summer hits and things slow down anyway?
ReplyDeletemanny-
ReplyDeleteI am looking at the new home sector- but yes- resales will be impacted-
b22 offers a good point- in that we get that last shot up at the tail end of a "good thing"-
remains to be seen if Congress will extend the tax credits or resurrect them if home sales go off the cliff-
the FHA MIP is a done deal though- so any rush to get in at the lower premium is over
A GREAT read over at NC:
ReplyDeletehttp://www.nakedcapitalism.com/2010/04/e-mails-from-mordor.html
Market had to close that gap from the new home sales report. I was wondering how long it would take.
ReplyDeleteand I have to mention- as LB has already observed-
ReplyDeletethat post by BR today on GS was great- dude get's my respect if only for many of his posts that use his "skill sets" to dig into and lay out the "real deal"
"Shutting down the futures markets won't bring down the price of crude oil. "
ReplyDeleteOf course not, but you are totally missing the effect of leverage, which creates outsize profits for those who are able to store or lay off commodities. Of course this manipulation of the markets also creates large swings in price, and profit for traders.
Thank you, Jeff! Oh, boy, did that make me feel better.. It is crazy reliving 2007 so soon! (I was undone living thru 2007 just 7 years after 2000.) It is exactly what Grantham was saying, too, in that video I posted yesterday--the number of crises has increased over the last ten years.. the bubbles are closer and closer together.
ReplyDeleteBanking crises are quite normal and if properly executed can serve to facilitate the normal process of daily rape and pillage of the citizenry. I try to have at least one every day, usually between meals.
ReplyDeletekaren, much like that aleph blog you posted in the thread below the one you linked to, when performance is all about the short term. There are no investors today, only speculators, creating an unstable market.
ReplyDeleteLB @ 10:41
ReplyDeleteI shall have more comments on this in due course.
"There are no investors today, only speculators..."
ReplyDeleteExactly the dynamic that eventually leads to P3. Once a 15% correction sets in there will be no bottom.
Bubbles are all we have left, karen, IMO. A continual treadmill of bubbles.
ReplyDelete@lb: Or the Fed will end up the owner of the entire stock market.
ReplyDeleteDL,
ReplyDeleteFutures markets are a good thing, when limited to commodity users.
Small futures markets are subject to distortion by high leverage.
Please accept the possibility that this is true...?
everyone is going to buy that dip LB, the sentiment toward stocks right now is enough to blow your mind. To see what we've done in 13 months is basically amazing. This is why P3 will just keep going and going, you can't have a P3 without decades of optimism building up like this, and that also helps reinforce the belief in completely false economic and market theories/strategies.
ReplyDeleteBuy and Hold
News drives markets, etc. etc.
just for you manny-
ReplyDeletehttp://www.youtube.com/watch?v=_MXgc8wzfC4
@ahab: Oh no! I might be singing that tune all day now.
ReplyDeleteHow'd you hit 'em yesterday, lb? Straight?
ReplyDeleteAgree with LB and DL re Crude :)
ReplyDeletemarket pretty boring eh, any thoughts on the draft?
ReplyDeletewhat did we all think of the Roethlisberger six game suspension-
ReplyDeleteLeftwhich then?
I haven't read up on the news regarding this- does it appear Roethlisberger was "out of line"?
@ahab: I think it wasn't just this one thing that Ben did. He also was accused of rape in Tahoe at that golf tourney a couple of summers ago. The case is being taken to civil court. I think he's shown a pattern of egregious behaviors off the field. The NFL has to protect its image. I don't blame them one bit.
ReplyDeleteBTW - that golf tourney in Tahoe is a lot of fun. My bro goes to watch every year beachside at the 17th hole. I went in '07 and had a blast.
@ben: What in the world does Denver have planned for Tebow? Clausen and McCoy can't be happy they're still waiting.
ReplyDeleteI think Big Ben's got a problem Ahab, this isn't the first time he's had an issue with this, sounds like he "exposed himself" whatever that means. I think the suspension was warranted.
ReplyDeleteManny,
yeah, how about Tebow in Denver. Not sure how that's going to work, you know Denver has always been famous for running, but the option doesn't work in the NFL.... lots of Wildcat maybe?
This looks to be worth a read.
ReplyDeletehttp://www.nakedcapitalism.com/2010/04/the-greek-crisis-has-me-thinking-about-1931.html
alright-
ReplyDeletegotta roll- going to take a bike ride- then off to the "the salt mine" (as far as I know- BinT has not TM'd that yet)-
all have a most "wunderbar" day
http://www.youtube.com/watch?v=AMCl2J9xGOg
hmm, is this another ending diagonal. I've seen this movie before.
ReplyDeleteLB did hit them pretty straight for the most part. Chipping and putting were lousy. His playing partners had tremendous difficulty walking the LONG and very hilly course, and LB's quads and hamstrings are screaming for mercy today.
ReplyDeleteLiving in the NY area meant the trip involved 2-3 hour drives in each direction due to traffic, traffic and more traffic around the Hudson River crossings. Don't ever move here if you like golf.
The "other site" sometimes lacks market content and on occasion devolves into Smartphone Techys Anonymous.
ReplyDeletecheck out the chart on AMZN
ReplyDeleteben, the weekly is even better! it did better the nov 2009 high, tho.. or is that a, dare i infer, a dbl top?
ReplyDeleteWe still prefer the KAREN TOP...
ReplyDeleteMarket not really going up on GOOD NEWS (durables and new homes).
ReplyDeleteThings that make you go...hmm...
@lb: Funny mention that. I never golfed in NYC when I lived there. I golf all the time here. Decent, easy to get to public courses everywhere in MN. A lot more than you'd think for a place that has such a short golf season.
ReplyDeleteI am so over this Greece nonsense. Is the market really hanging on these ministers every words when they don't even agree or barely speak to each other.
ReplyDeleteThis was the fifth "Greece is rescued" rally
@ Nic
ReplyDeleteX Infinity!
guys, I've done some biz in the past with GS. There is a full fledged campaign from these guys right now. I got a huge email from them yesterday basically saying they didn't do anything wrong, now today I've gotten two phone calls from them just making sure I got the email and that they believe the charges are "unfounded"
ReplyDeleteGreece has learned from the US regarding EXTEND AND PRETEND.
ReplyDeleteOne day we will wake up and all the pretending will be over.
Then we will see who the counter-parties are - and who sold the CDS.
NO way on earth a sovereign default doesn't create contagion.
There are several european banks that are about to have a margin call.
again, look at AMZN if you hadn't before, that's ugly.
ReplyDeletenic,
totally agree, I'm already annoyed we'll end up doing it all over again with Portugal.
oh, to be fair, they said that they took them 'very seriously' but that they believed them to be unfounded.
ReplyDeleteLB @ 11:02
ReplyDelete“Small futures markets are subject to distortion by high leverage”
I suppose this is true, although I would note that there are as many “shorts” as “longs” in the futures markets, and the “shorts” can use leverage also. So I’m not sure that raising margin requirements would have much long-term or intermediate-term effect on price.
But whether this is true or not, the broader question is what the effect of the crude oil futures market is on the spot price of crude.
I continue to believe that while the futures market can affect the behavior of the producers (and “storers”) of crude, so too do the actions of the producers (and those storing oil) influence the behavior of the futures market participants.
Each feeds off the other.
"I suppose this is true, although I would note that there are as many “shorts” as “longs” in the futures markets, and the “shorts” can use leverage also."
ReplyDeleteBut not as much, and not as often, therein lies the asymmetry....
LB,
ReplyDeleteThere is one point that I might have to concede, which is that there might be points in time when the futures market participants are more bullish than the producers/storers.
Then perhaps the futures traders can push up the price above where it would be otherwise.
I just don't know how often this situation occurs.
SC put up a chart the other day of S&P vs. ORNAX. I'll tell you, the MF wholesalers are really pounding the table on buying muni's or HY muni's.
ReplyDeleteI get this from Eaton Vance every week, I have to imagine that this is the strategy for tons of FA's:
As tax rates increase, demand for municipal bonds increases, because more people wish to reduce the tax they pay. Similarly, as tax rates rise, the effective interest rate on municipal bonds increases. For instance, a municipal bond paying 3% interest pays a tax-equivalent yield of 4.6% in a 35% tax rate environment. But if tax rates rise to 40%, the tax-equivalent yield on the same bond rises to 5%. In short, all other things being equal, rising tax rates can signal rising municipal bond values.
DL,
ReplyDeleteI'm not so sure it happens often, but when it does happen, like I think it did in summer of 08, seems it happens in a big way.
off to state college, saloon tonight if peeps are around.
ReplyDeleteheop everyone has a good weekend.
happy trading.
McF @ 1:01
ReplyDeleteWe know very well what happened to the price of crude in the summer of '08. But how does one determine the relative influence of the futures traders, of the producers, and of those with the capacity to store oil?
I don't know exactly how one would prove one's view on this.
In any case, I think that the benefits of a futures market FAR outweigh any costs, and for a variety of reasons, not the least of which is that we would see high levels of hoarding among the producers in the absence of a futures market.
Crude oil was traded long before there was a futures market, and I think the situation is much better now than before the futures market came into existence.
A link from TBP that I missed:
ReplyDeleteMichael Lews, The Bond Market Will Never Be the Same after GS
Reposting something that seems to have been lost:
ReplyDeletehttp://www.housingwire.com/2010/04/23/more-details-emerge-on-222m-redwood-rmbs/
Friday, April 23rd, 2010, 11:03 am
Redwood Trust (RWT: 16.89 +0.78%) filed a prospectus on the first residential mortgage-backed security (RMBS) since 2008 — the forthcoming Sequoia Mortgage Trust 2010-H1.
Redwood Trust is named as the seller and sponsor, while Sequoia Residential Funding is the depositor in the filing with the Securities and Exchange Commission (SEC) Thursday. CitiMortgage acts as the originator and servicer, while Wells Fargo Bank is listed as the trustee on the deal.
The issuer is planning to issue four classes of senior certificates, including one class of interest-only certificates and two classes of residual certificates, according to the prospectus. The issuer also plans four classes of subordinate securities.
Well, BAMInvestor got the bounce to 1.338 correct. I wonder if we'll get the end of the prediction:
ReplyDelete$EURUSD--bounce coming short-term (1.338-1.34) but that 1.29 target should be seen on 4-26/4-28 according to model.
9:14 AM Apr 22nd via web
I hope I do not get stopped out by the close today.
"there might be points in time when the futures market participants are more bullish than the producers/storers."
ReplyDeletefor example when the hot money spigot is OPEN. it's liquidity driven.
Deja vu. This is the area (on a Friday no less) the SPX was in before the first bailout vote. There's a banking regulation vote on Monday. Twilight zone perhaps?
ReplyDeleteThis is pretty good. Taibbi decodes the NFL draft.
ReplyDeletehttp://www.mensjournal.com/the-nfl-draft-decoded
LB @ 1:20
ReplyDeleteMaybe, maybe not.
Everyone's looking at the same data/economic forces/political forces. Hard to say who's more bullish than the other.
Listen, DL.
ReplyDeleteWhen Bucky goes down 0.15%, SPX goes up 1.5%, crude, copper and gold go up 1.5%. We have all observed this repeatedly - including you. The amount of oil supply has NOTHING to do with it. It's simply a speculative TRADE by the desks and HFs, over and above the base price, with a leverage of about 10. Which oddly enough is the leverage currently reported by the banks.
This trade will unwind at least once more in our lifetimes.
Anything I'm missing here?
ReplyDelete(still kinda outta pocket)
CV
Not saying futures markets are a bad thing, just this: the banks are GAMING the system with money given them by the FED with the express purpose of MANUFACTURING INFLATION BY RAISING THE PRICE OF OIL.
ReplyDeleteImagine.... banks gaming the system.... !!!!????!!!!!!
@ LB 12:45
ReplyDeleteThe French and German banks sold the CDS - France is on the hook for 75bln, German banks 45bln.
That's why they don't want a default event but they don't want to bail them out either.
Why they just don't ban naked CDS is beyond me.
LB v DL. Mano à Mano. Cage match.
ReplyDelete"France is on the hook for 75bln, German banks 45bln. That's why they don't want a default event but they don't want to bail them out either."
ReplyDeleteSo basically we are going to sit around until someone blows up.
CV, you aint missing shit.
ReplyDeleteLB @ 1:33
ReplyDeleteI agree that "speculators" play a huge role.
But it's speculators among the producers, the storers, the currency traders, and the futures traders.
The relative contribution of each is difficult to quantify.
Manny
ReplyDeleteThat Matt Taibbi article was pretty good.
Nic @ 1:35
ReplyDeleteOne argument against banning naked CDS is that liquidity would dry up.
(I do think they have to be regulated like insurance products.... big margin requirements).
@ LB 1:37
ReplyDeletewe sit around while the ministers (from how many countries now?) try and agree how to get out of this without
a) actually handing any money over to Greece
b) actually guaranteeing any debt (same thing as a)
c) triggering a default event because there is NO grace period on Soveriegn CDS
Hence the jawboning and hoping the market believes it.
@ DL
ReplyDeleteLiquidity in the CDS market? And that would be bad because? They might actually price them correctly next time?
CDS will be written for as long as the writers of CDS are bailed out.
ReplyDeleteYes. In the meantime no one in London property is complaining:
ReplyDeletehttp://www.guardian.co.uk/business/2010/apr/13/greek-debt-crisis-capital-outflow
Nic,
ReplyDeleteI dont' have a specific proposal. But unless you support an outright ban on CDS contracts, perhaps you would be willing to concede that there is benefit to having liquidity. For one thing, there is no pricing and no transparency in the absence of liquidity.
DL
ReplyDeleteI don't support an outright ban and I don't support bailouts either.
I believe in less regulation and real capitalism.
LB is right, if we don't bail them out then we won't have to regulate them.
The role of governments is to organise a market structure so that participants can trade transparently and participants meet capital requirements.
What we have now is the worst of both worlds.
I also think that one has to draw a distinction between CDS contracts on sovereign debt, and CDS contracts on mortgage-backed securities. It would seem to be a simple matter to develop uniformity and transparency in the case of sovereign debt; but in the case of MBS, the situation is much more complicated.
ReplyDelete@I-Man
ReplyDeleteCool :-)
I'll get back to work (other work)...
Draft was "interesting" yesterday (1st round)...
CV IS VERY HAPPY that the Ravens traded down 9basically I watched 3 hours without my team picking AT ALL)... But it was a smart move...
Ozzie Newsome is one smart cat...
I'm unhappy to see some good "corners" go off the board... But Brandon Ghee (Wake Forest) is still on the board and may fall to the Ravens with Denvers #43 pick... Then, the Ravens pick at #70 and I'd love to see them either get Golden Tate, or Damian Williams... A. Benn (from Illinois) would also work, but he kinda has Braylon Edwards butterfingers sometimes...
Jimmy Graham (TE-"The U") would probably be a good fit as well...
The Ravens have A LOT of players from "The U" (Ray Lewis, Ed Reed, Willis McGahee), so that always helps in the clubhouse...
CV
Sex is apparently the answer:
ReplyDeleteHot Dates Are Better Than A Bigger Bonus -
http://www.bloomberg.com/apps/news?pid=20601039&sid=aqvCdMXV1Ee0
“Love and work are the cornerstones of our humanness”
ReplyDeleteSigmund Freud
http://www.brainyquote.com/quotes/quotes/s/sigmundfre165464.html
BUT, BUT, I have an ENORMOUS bonus....
ReplyDeleteKrafty Krugman is switching sides again to manipulate public opinion:
ReplyDeleteKrugman Now Supports Anti-Banker Reforms
Ooh is that a new 2010 high on the SPX?
ReplyDeleteMy fave analyst Ashraf Laidi on CNBS 15:15 EST
I think I have altitude sickness ...
ReplyDeleteJust call a top, Nic. We need something new to talk about.
ReplyDelete...MUST...GET...TO...61.8% RETRACE...BEFORE...BOTTOM..FALLS...OUT
ReplyDeleteInvestors are putting some more JNK in the trunk.
ReplyDelete1225 by Monday?
ReplyDeleteMONDAY is MAGIC, so why not?
ReplyDeleteGreece apparently doesn't matter. Until it matters...
I am crap at calling tops. Where is Karen?
ReplyDeleteI will say the bottom is in for today in the June dollar index ...
This is going to be a chart-free weekend at the I-Man household...
ReplyDeleteSo sick of this shit.
A one-day bottom in the June dollar index.
ReplyDeleteWe'll take what we can get.
More highs on more 60 minute DIVERGENCE
ReplyDeleteThat's 4 "lower" peaks... Isn't there some kind of LAW against that...
Or are laws in the process of being re-written?
Everyone better start wearing LEAD boots (or you risk floating up and spinning off into the atmosphere...
CV
test
ReplyDeleteHaha I am selling more EURUSD, 61fib and trendline resistance. I do put my money where my mouth is.
ReplyDeleteOne thing I CAN say is this...
ReplyDeleteIt is quite obvious, by now, that the Fed, the Administration, and ESPECIALLY the banks are SCARED SHITLESS that this market might ever roll over...
I MEAN SERIOUSLY SCARED SHITLESS...
Keep that in mind ;-)...
A good psychology is always a handy thing to have at a gunfight...
It means, in truth, THEY'RE the one's staring down the "business end" of an AK-47 with a full metal jacket clip... NOT YOU!
CV
Nic
ReplyDeleteI heard someone say that the trade is to sell EURUSD overnight and cover. Then buy the EURUSD during the day and cover at close. Rinse, wash, repeat.
I'm back! Was taking a sun shower : ) Need to be out of here at the bell.
ReplyDeleteNot sure that I missed much but will catch up.. GS still red, thank goodness.
@Nic
ReplyDeleteLPWM - (lyrics to follow, someday)... answer to your (3:07)
Ra that works even better on AUD ;)
ReplyDeleteNic
ReplyDeleteNo wonder you can't get any sleep. LMAO.
@Amen
ReplyDeleteI heard (from someone - one time - I think it was that "Channeling Stocks.com" guy)...
See - what you do is... you BUY LOW... & you SELL HIGH...
Got that!
Now GET IN THERE and start trading!
The DXY wants to reject the 233 SMA at 81.47.
ReplyDelete@cv: But they have FAR deeper pockets than I do, so it is I that is scared shitless of shorting a rigged market. No thanks.
ReplyDeleteThere's too much at stake for them to not do everything in their power to pump a new bubble. They'll do EVERYTHING and anything to keep the party going.
"Why they just don't ban naked CDS is beyond me." Me, too.. way beyond..
ReplyDelete"I had a rose named after me and I was very flattered. But I was not pleased to read the description in the catalog: 'No good in a bed, but fine against a wall.'"
Eleanor Roosevelt
Karen, what is a sun shower? Does it involve tops or bottoms? - or is it more like a naked KDS?
ReplyDeleteHave faith Ra-Man
ReplyDeleteLB
ReplyDeletePenalty. Unabated to the quarterback. 10 yards.
If BUCKY dips below this level it would only be for Momo Monday. We are definitely not seeing any more 79 handles...
ReplyDeleteLB what is going on with bonds? Why are US treasuries doing worse than Greece today? Prices down / yields up?
ReplyDeleteEleanor Roosevelt had some great quotes-
ReplyDeleteIf you don't have anything nice to say about anyone, come sit next to me.
FWIW, the top two dow most actives (BAC and MSFT) are red..
ReplyDeleteNic,
ReplyDeleteI'll take a guess, rate lock friday as John Jensen used to call it, auctions next week.
Well today is 8 weeks up in a row on the Dow for the third time in the last 10 years. Before was the peak at the end of 03 and before that was peak at the high at end of 02.
ReplyDeleteNic, this addresses your question.. blogspot doesn't like the length i'll split it up!
ReplyDeleteBonds decline after strong U.S. data, Fed concerns
3:37 PM ET 4/23/10 NEW YORK (MarketWatch) -- Treasurys fell for a second day on Friday, pushing 10-year yields up from the lowest in a month, after a pair of government reports added to evidence the economy is recovering and reducing the appeal of the relative safety of U.S. debt.
Treasurys were under pressure earlier though, which analysts attributed to media reports that more Federal Reserve officials would like to sell some of the government and mortgage-related assets it bought during the credit crisis.
Yields on 10-year Treasury notes (UST10Y) rose 4 basis points to 3.82%. Bond yields move inversely to prices and a basis point is 0.01%. Yields closed at 3.74% on Wednesday, the lowest close since March 23.
Ten-year yields have risen from 3.77% a week ago, marking the fourth weekly increase in five weeks.
Yields on 2-year notes (UST2YR) increased 4 basis points to 1.07%. Two-year yields have increased from 0.96% last Friday, marking the sixth weekly increase in eight.
U.S. orders of durable goods dropped 1.3% in March, the Commerce Department said. Orders for core capital equipment goods -- the kinds of equipment businesses invest in to maintain or expand their productive capacity -- rose 4%, the largest increase since June. Read about durable-goods orders.
"Such a gain, which follows February's 2.1% jump, continues to suggest that businesses are reinvesting as the economy continue to turn," said Dan Greenhaus, chief economic strategist at Miller Tabak.
A separate report said sales of new homes, surged to a 411,000 pace last month. Economists surveyed by MarketWatch expected an improvement to a 335,000 pace. See more on new home sales.
The Fed's assets
ReplyDeleteTreasury prices were under pressure earlier after reports that indicated at least six members of the policy-setting board favor selling assets to reduce the Fed's bloated balance sheet, according to news outlets citing CNBC.
Analysts at CRT Capital Group said near-term sales are unlikely.
They note that markets know that some Fed officials favor near-term asset sales, and have said so publicly. But Fed Chairman Ben Bernanke "and the balance of the voters are opposed to the concept, so we're cautious of making too much from the CNBC chatter," they wrote in an email.
The Federal Open Market Committee meets next week, and is expected to keep interest rates steady at a range of zero or 0.25%.
As if the market needed another weight on Treasury demand, Greece formally requested a financial assistance package from the European Union and the International Monetary Fund after its borrowing costs soared, which had fueled investor interest in the relative safety of U.S. debt. Read about Greek aid request.
Auctions may shrink, but not next week
Next week also brings a quartet of bond auctions, after a two-week hiatus for the market from having to absorb additional debt supply. Read more on auction plans.
While the auctions amounts for next week remain mostly unchanged, analysts note that the Treasury Department is likely to begin shrinking auction sizes soon.
On Friday, the department asked primary dealers -- firms required to bid at Treasury auctions -- how it should accomplish a reduction is coupon auction sizes as the fiscal outlook improves.
"This is a perfect time to inoculate the market for the coming cuts in issuance, which we think come as soon as the May refunding," said strategist at primary dealer RBS Securities.
Before each quarterly debt refunding, the department meets with its primary dealers to discuss supply issues and anything else affecting the markets. The request came in its survey of dealers before that meeting.
Next week, the Treasury Department will auction $129 billion in notes and inflation-indexed debt TIPS, $1 billion more than analysts anticipated due to an increase in the size of the inflation-linked sale.
The government also asked dealers Friday how it could increase the number of auctions of Treasury Inflation Protected Securities, known as TIPS.
Yes, today is a risk-on day in US bonds, with HY being bid. In addition, we are beginning the pre-auction roll off. The B/Ds buy at a high yield, ride the yields down a few bps and then dump 'em lowering the prices into the next auction... voila! So expect the selling to be quite strong in 2s and 5s from now into Tu and W.
ReplyDeleteIf Greece really BLOWS there will be a flight to Ts.
Thx!
ReplyDeleteFriday Music Link to take you HIGHER
ReplyDeletehttp://www.youtube.com/watch?v=6Z66wVo7uNw
ReplyDeleteWe need to play this week out...
Karen,
ReplyDeleteLove it when you talk assets...
And in tribute to C, Dance..
ReplyDelete11200.50 !!! love that number.. that is a NEW TOP for me. : )
ReplyDeletewhich was exceeded as I typed, LOL.
ReplyDeleteBoom shakalaka ... up we go
ReplyDeletethe $spx:$usd is also at a new high..
ReplyDeleteCV
ReplyDeletehow are peoples high and lows (well the lows don't need to be addressed now) for the year holding up? any predictions close right now?
"the $spx:$usd is also at a new high.."
ReplyDeleteWow. Good spot.
Karen, we have liked all your tops. Keep them coming...
I think the trend has shifted on the SP500. Looking for new highs.
ReplyDeleteMcHappy --> McBear --> McBull.
ReplyDeleteHasta luego.. must dash to make good on my avoidance policy of the week. Will check AR's wrap later with a glass of wine to ease the horror of it all, LOL.
ReplyDeleteDL - Have you been on happy pills?
ReplyDeleteMcHappy --> McBear --> McBull
ReplyDeleteCONTRARIAN INDICATOR ALERT...!!!
It's OK, it's either McBull or McGiant McInsect...
Nic @ 4:07,
ReplyDeleteI'm not sure how to interpret that.
However, my level of "cheerfulness" is close to baseline.
The Bond Report 4.23.10
ReplyDeleteWell, you've only gone and SPOILED the BOND REPORT by BLATANTLY pre-discussing the market above.... so now you already know it was a "risk-on" and "pre-auction" kind of day, with HY > IG > TIPS > Ts. We are sulking now.
Corpies: LQD -0.02%; AGG -0.13%; JNK 0.75%; HYG 0.65%;
Govies: TLT -0.35%; IEI -0.16%; TIP 0.01%
On the other hand, we were hedged going in so we had a decent day. Stayed hedged (neutral) into the MOMO MOMENT of MAGIC MONDAY.
@karen
ReplyDeleteThanks for the music link... Obviously, I'm going to have to make a THEME out of it this weekend...
Let's start with some simple lyrics...
"Don't you know the crime rate is going UP UP UP UP UUUUUUUUUUUUP!
To live in this town you must be TOUGH TOUGH TOUGH TOUGH TOUGH!"
(Shattered - The Rolling Stones)
CV
Lefty,
ReplyDeleteAny thoughts on the failed German bond auction yesterday? No big deal? Forgive me if this has already been mentioned. I would think this would have some bearing not just on Greece, but on the next supplicant at the EU bailout trough too...
I think the first one got eated...
ReplyDeleteWas wondering if there were any thoughts on the failed German bond auction yesterday. How come nobody seems that worried about it? I would think this has implications for the PIIGs yet to belly up to the EU bailout trough, no?
perfect...
ReplyDeleteOne failed auction doesn't make a meltdown. I know that this was quite a surprising event for market participants. Perhaps dealers were busy "snapping up bargains" in the sovereign debt space... there was also chatter about a GS boycott. Don't know what to make of this for now.
ReplyDeletehuh, ok. Thanks. Anything you are keeping an eye on besides the headlines to know if this turns out to be a bigger deal?
ReplyDeleteGood gossip:
ReplyDeletehttp://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7626096/Goldman-Sachss-Buffett-deal-drawn-into-Galleon-insider-trading-inquiry.html
Can't see any issues at all with German creditworthiness. I mean, odd things happen, we had a near fail a few weeks ago, then a record demand after that - at any rate, watching US bond auctions is more my bag at this juncture.
ReplyDeleteUncle Warren's avuncularity tainted.. shurely shome mishtake?
Warren just bought a liquor distributor called empire. They were the only game in town until they stepped into southern's territory. Southern then crushed them.
ReplyDeleteWarren also has Mclain(sp?), he could be stopping by the liquor and gun store as we speak.
LB, I would not mind being a contrarian indicator. Came awfully close to my stop on FAZ and FXP is crawling ahead since I joined in - but still in on both. I was looking for a close over 1215 - we got it.
ReplyDeletemcHAPPY is still very much a bear. Looking for a final leg up before all hell breaks lose for DL. I do not think the highs will extend too far beyond previous highs. Just a long grind higher to get more Johnny's onboard and inflate DL a little more - don't get me wrong, you haven't been wrong so pat on the back for you.
Here is my music for Friday night, appropriate for anyone tired of waiting for P3:
http://www.youtube.com/watch?v=DR8plv3q7p0
(video starts around 0:30)
http://www.zerohedge.com/article/mutual-fund-monday-update-18-out-19-ytd-market-down-ex-mondays?
ReplyDeleteMcHappy @ 4:58
ReplyDeleteI'm a skittish bull who believes that a 10-12% correction can erupt at any time. I've had some winning trades (on the long side) over the last few weeks, but I feel like I'm just "picking up nickels in front of a steamroller".