Overnight Futures were down considerably at one point as Japan's GDP came in on the, shall we say, "lite" side (.04 vs 2.3 expected)... So "carry trade" unwinds may be the flavor of the day...
Naturally, here in the US, we don't worry about such things because we have a bunch of "_ _ _ _ bunnies" (adjective withheld) in all the important positions... And they're here to HELP, remember?
Obama "Wins" Low Yields as Markets Shrink, Aiding Deficit
Excerpt:
"Less competition for bondholders’ funds may make it easier for Obama to finance future stimulus needed to boost the economy after the Federal Reserve said Aug. 10 that the pace of the “recovery is likely to be more modest in the near term than had been anticipated.”
“It would seem there’s room for the federal government to raise more debt,” said John Lonski, the chief economist at Moody’s Capital Markets Group in New York."
Hear that people? Your POTUS is out there "winning" you low yields (and that's just in his spare time between vacations & rounds of golf)...
It doesn't get much more entertaining than that... But if you STILL haven't gotten your fill of entertainment, just head off to the local movie house... This weekends BOX OFFICE selections featured a PREVIEW of the November elections...
“The Expendables” topped “Eat Pray Love” for first place at U.S. and Canadian theaters this weekend, earning $35 million for Lions Gate Entertainment Corp."
And remember, it's OPEX week... So get yourself ready for that "surprise FED announcement" come Thursday afternoon at 3:55PM...
So, "InvestTools" are fleeing equities and heading into bonds:
ReplyDeletehttp://noir.bloomberg.com/apps/news?pid=20601103&sid=aRooQ_CS052M
How can the crowd be wrong this time? Will they be wrong because:
(a) the sentiment will shift back into stocks or
(b) bonds collapse (either because there's not enough cash to chase all those bonds or because sentiment moves from bonds to cash)?
@wunsacon
ReplyDeleteyes
a very good guest post at TBP-
ReplyDeletehttp://www.ritholtz.com/blog/2010/08/appraisal-institutes-16th-annual-summer-conference/
@ahab
ReplyDeleteIt just occurred to me...
In "emoticon-ese"... As you look at TBP, it comes off as...
THE --- BIG --- tongue wagging out of side of mouth...
morning! tbt anyone? dollar down despite the bond buying..
ReplyDeletezerohedge -TIC out: flows of 44.4 billion compared to 25.4 billion prior
tbt would seem to be a mainstream call at this point, people are really blowing the whole bond discussion out of proportion imo.
ReplyDeleteBen, remember my call was not to buy it until it legged down again.. which it has.. i'm afraid we may yet see lower yields, however..
ReplyDeleteAhab.. that article just confirms what we've been thinking and it infuriates me..
@McF @karen
ReplyDeletegood morning...
I agree...
Everyone is trying to play "follow the FED" here (like they did on QE1)...
Trouble is, in this moment, everyone FOLLOWED THE FED too fast...
Who knew bernanke was so popular?
CV-
ReplyDeleteI think the observation (something we already knew but couldn't prove)that the borrowers have stopped paying their mortgage for two years and still have not received a default notice- because the banks can't afford to take the write downs- speaks volumes-
I don't know how folks can put one dime in any bank stock-
Doug Kass is saying banks are a winner trade right now
karen,
ReplyDeleteI do remember you saying that and I agree. I always have some level of worry over every single position, but with bonds, in the bigger picture I'm still a bull. There are some critical levels that could change this and I'd start to exit all my holdings but we aren't anywhere near them right now.
totally anecdotal I realize but my wife and I went to the mall yesterday to use some gift cards that we had.
ReplyDeleteNo joke it was like christmas in there. Important to keep in mind everything is tax free in DE so we get a lot of folks from NJ and MD coming to shop but still, it was really busy yesterday, so back to school would seem to be in full swing in my area.
Karen @ 9:08
ReplyDeleteI know - right? We all know its going on but how do you quantify it? The banks aren't going to say
ahab,
ReplyDeletere: banks.
I'm gonna go with Meredith Whitney's rec on those stocks and whether or not they should be in a portfolio right now.
A Note on Sentiment (The Bullish Case for Stocks Part 1) (August 16, 2010) by Charles Hugh Smith
ReplyDelete@ahab
ReplyDeleteI think the observation (something we already knew but couldn't prove)...
Peggy Joseph knew it all along...
A modern day Nostadamus, she is...
@ahab,
ReplyDeletewhat do you even call a prime borrower anymore? What is the FICO for a prime borrower?
I'm sure everyone has seen the data point about how many people are below 600, so that would seem to make this data set for that area pretty scary:
23% of prime borrowers are not making payments
• 47% of non-prime borrowers are not making payments
• 90% of properties are upside down on value-to-loan (60% owe more than
150% of value)
karen,
ReplyDeleteI beg you to stop reading that link, one of the first lines:
"The only problem with being Bearish on the stock market now is that everyone else is Bearish, too."
is so off base it is not even funny, this statement couldn't be more innacurate.
who's peggy joseph?
ReplyDeletetnx at 26.05 rignt now.. tbt, 33.06
ReplyDelete@ahab (9:19)
ReplyDeletehttp://justfuckinggoogleit.com/
Ben.. no worries.. i immediately stopped reading that link!! LOL..
ReplyDeleteC's been talking about AH moves several times the last few weeks, futures might have completed five down....so maybe a decent pop to start the week and get everyone breathing a little easier, also makes it fitting the dollar is down, I can almost taste the all the same markets theme slowly coming back into place.
ReplyDeleteCV.. now I'm really laughing.. PJ is a regular around here, Ahab!
ReplyDelete@McF
ReplyDeleteThe AH moves that I saw this weekend (and this morning - for that matter), look like they're on the EDGE of completion...
But I think there will be some lower prints in the cash...
We'll see...
mrtopstep
ReplyDeleteSPU has 1065.25 as next support then 1050.50**, 1029.50*. W/ minor sup along way
CV-
ReplyDeletehey- I checked out your link- and here is what it says-
Someone thinks you are an idiot because you were too stupid to check Google before asking a question. They gave you a link to this site as a joke. The fact that you followed it pretty much proves the point.
Hope that helps.
Have a nice day.
anyway- nothing on peggy joseph
I don't think you're an idiot AHAB (you know that)...
ReplyDeleteLazy, perhaps :-)
I would love to see the 1065.25 get busted hard.
ReplyDeleteback in an hour.
look at JNK! still sitting pretty!
ReplyDeleteTBP has a Mercedes banner ad-
ReplyDeletereminded me- have any of you seen that Mercedes television ad where the kid is standing in a showroom next to a Mercedes and says when he grows up he wants to be able to drive his Mercedes into his reserved parking space-
I really wanted to smack that stupid little kid- who thinks like that at 10 anyway
FXP and BZQ down..
ReplyDeleteone gap filled and another created.
ReplyDeleteCV-
ReplyDeleteit was funny- I tried the link to see if it was real-
and I googled the afore mentioned Peggy Joseph-
Haitian-American Peggy Joseph who said “Obama is gonna pay my mortgage and put gas in my car.
I remember seeing that clip a time or two
confession.. i tried for TBT at 32.80 but didn't get filled : )
ReplyDeletelooking at CAGC for a day trade..
my drv is still a point underwater! that makes me grit my teeth.
@karen
ReplyDeletethat comment ought to bring out LB
I still think we're going a little lower today...
ReplyDeleteMaybe around 1063...
me too.. just can't get excited about this level.. still no man's land.
ReplyDeleteA break of 1056 would do alot to ease my mind. I can still see this going higher.
ReplyDeleteThat first move down was just to make it LOOK LIKE the gap from a few weeks ago at that level was filled...
ReplyDeleteand OH LOOK, see? the market bounced hard off that... BUYERS, right?
IMO - That level is going to end up to be the left shoulder of a REVERSE H&S (with 1060-ish as the "head" level)...
Then, of course, when it looks like resistance, it will be taken out to the upside...
OPEX week people... Lotsa Yosemite Sam's out there...
office beckons-
ReplyDeleteall have a good day
mrtopstep [08:53:25 AM]: SPU GS scale seller total now abot 1k
ReplyDelete1056-1129 possible wave i of c of C
ReplyDelete.786 is 1070.
Karen was right about TLT, and McFearless too. Good calls, people.
ReplyDeleteGold at 1225 is catching my attention.
Did someone say 2.5% on the 10yr? Going to get there sooner than they thought.
ReplyDeleteLB's trade for the week is still "Short the Havens".
ReplyDeleteJPY, TLT and gold are all coming to the end of a strong run, IMO.
Gold first, then the yen, and Ts will follow.
We might see regime change here, on any positive US data, we could see BUCKY stronger and stocks up, with the yen going back to being the funding currency. After all, Japanese data was weak.
"Did someone say 2.5% on the 10yr? Going to get there sooner than they thought."
ReplyDeleteYes, that would be LB. Note, LB is only short-term bearish on long T-bonds and not on fixed income in general, b/c of the opportunity for yield seekers to get higher yield and be backed by the Fed on rate risk. Yes?
Treasury filling a void in the fixed income market?
ReplyDeleteCan someone explain this to me?
ReplyDelete"The National Association of Home Builders/Wells Fargo Housing Market Index fell by one point to 13, its worst reading since March 2009. Economists polled by MarketWatch had anticipated a rise to 15."
Yet, as MarketWatch proclaims, "Stocks pare losses after home-builder index"
Home builders are just as down as they were in March 2009 when the markets were in the dumps. Now they are just as down but the markets are 400 points higher.
I guess this is the new normal.
McH
ReplyDeleteWhen the market starts to go up on bad news, it is a sign we reached a short-term sentiment extreme.
Remember this is thin trading here...
zerohedge
ReplyDeleteNew post: Matterhorn Asset Management There Will Be No Double Dip... It Will Be A Lot Worse http://tinyurl.com/2byut6b
I'm RE shopping for a friend that wants to downsize.. I'm in shock at all the beach cottages on the market.. lots of foreclosures and short sales..
ReplyDeletePlenty of time for a two week rally here before Labor Day, folks.
ReplyDeleteSold my last batch of long bonds this morning, what a run it has been. Fixed income in general will continue to be very very strong.
One wonders how much of the recent Fed move was a way of backstopping bondholders in view of the upcoming problems in munis and of course the Alt-A and jumbo resets in 2011. With 10y in the sub 3.00% range the latter problem is eliminated, although the underwater mortgage problem is not going away.
Thanks, LB.
ReplyDelete"When the market starts to go up on bad news, it is a sign we reached a short-term sentiment extreme.
Remember this is thin trading here... "
This is probably a dumb question but I can interpret it both ways, an extreme to positive or negative short-term sentiment extreme?
LQD was up 0.85% this morning, the 30y hit 3.75% so the primary dealers will be ahead now since the Thursday auction and will be unloading to hapless late-entering punters.
ReplyDelete- there is a bit of flow out of IG and into HY now.
McH what it means is there are no more people to get bearish just here, b/c a lot of big players are not involved.
Would the last person to buy the long bond please turn out the lights?
Karen,
ReplyDeleteWhat if LB bought one of those little beach cottages? All your worries would be over.
Left,
ReplyDeletefwiw, I did sell some clients out of TLT this morning, too big of a gain too fast for these folks not to take something off the table.
watching JJC as well as HYG:LQD ratio..
ReplyDelete$spx is off about 70 pts where it should be comparable to $tyx..
ReplyDeleteLEFTBACK's Yield Watchers Anonymous ™ :
ReplyDeleteYield on SPY is 1.96%, on DIA is 2.48%.
5y is 1.42% and the 10y is 2.60%.
JNK 10.66% and HYG 8.94%.
The yen yielding 0.00% and gold 0.00%.
Guess what LB likes and doesn't like?
maybe gold has to have a blow-off top before really trending down....not sure.
ReplyDeletea market bounce that sends CAT back to $70 and I'm shorting it.
ReplyDeletethis goldbug is trying for some dzz..
ReplyDeleteIt would be easier to answer what you DIDN'T like...
ReplyDeleteBen,
ReplyDeleteI am completely out of TLT now, but have a large AGG position in case I am wrong. Have added to risk positions in credit for now. As you know, LB is nimble enough to backtrack if he has this completely wrong.
LB's position here is: mild deflation is now priced in, Armageddon is not. If we get New Normal, then Treasuries may be rich here.
my main reason for not going crazy about the long bond is because it seems to be pricing for deflation...which I clearly don't disagree with.
ReplyDeleteKaren,
ReplyDeleteI am already short gold.
agg looks like as big a sell as tlt..
ReplyDeleteSharp, extreme, fulminant deflation is almost priced in at these levels. Just not sure that we are going to get it, just a very sloppy soft winter.
ReplyDeleteThe little bits of money pumping may just keep the big one away. We will know by late September.
AGG moves little. It can be a core holding and can be hedged with TBT and higher yielding bonds. If we turn Japanese then the bond market is going to be solid.
ReplyDeleteI finally closed one of my rental property sales. Market has really cooled off in my area much like other areas of Canada. Combination of insane prices and interest rates going up .5% and fear of higher has surely had an impact. I did not get as much as I was hoping for but still did o.k. Bought the rental in 2008 for $197,500 just sold for $270K. In 2007 these same houses were going for $160-$170. Nooooo, there is no bubble in Canada.
ReplyDeletelb at 11:12, and probably hating yourself for it! laughing.
ReplyDeletethis market is not making sense right now.. indices should be much lower as compared to yields.. bzq at low of day..
ReplyDeleteI'd put money on the idea that a new banking crisis will emerge out of Europe within one month, the turn in the euro and the dollar as dictated by social mood seems to be indicating as much. Stay tuned.
ReplyDeleteK,
ReplyDeleteLB doesn't do hate, and certainly not self-loathing.
imo.. gold/crude/equities/real estate are all overpriced right now.. and those with $ don't want to spend and those without can't.. so something's gotta give.
ReplyDeleteMcF
ReplyDeleteI agree that Euro problems will re-emerge in the Fall. The problem for everyone is this competition between the weak USD, weak EUR and the unfathomably strong JPY.
Commenter on TV this morning says FED should raise to 1%, reward savers and get banks to invest instead of just buying short term Ts. In fact, LB agrees. You could do this while stabilizing the long end.
"this market is not making sense right now."
ReplyDeleteSince when did the market ever make sense?
Oh, brother, LB.. you are too much! I won't bother to dig up some of your "hate" posts..
ReplyDeleteMarket "prices in" HOPE... Not reality... (and everyone gets screwed in the end)
ReplyDeleteSo do elections, for that matter... (&EGSITE)
An announcement of a partial continuation of Bush tax cuts or a postponement of the roll-back would send this market skywards.
ReplyDelete@LB
ReplyDeleteWhy should the banks bother having to do any work involving themselves with those pesky RISKY borrowers when they can coin money by buying gov debt?
@LB (11:31)
ReplyDeleteThat's the "surprise announcement"...
It's a card that won't be played until the S&P is threatening to crack 1000
mrtopstep - keep in mind these r mrkt tendencies Aug expiry over last 26yrs midly bullish knowing thes stats which side of market you want to b on???
ReplyDeleteThey need to grease the wheels for small business or big corporations will suck the life blood out of this country, as in Japan.
ReplyDeleteCV
ReplyDeleteYou and I have little in common, but for our age, and a cynic's insight into the Machiavellian nature of economic policy as it relates to US politics.
can someone decipher this for me? mrtopstep
ReplyDeletethursday lo was 1070.50= wk lo today 1066.60=risk = now... also, freakishly coincidental?? lst time i remember 666 was march 09 odd..
btw.. last week i said gld above 119 would be a buy.. today it turned its trend chart up as well.. the reason i've gone short is cuz i'm
ReplyDelete(a) an idiot
(b) a contrarian
(c) spying a bull trap
A little push in to 1083 range would be nice. A failure to get through 1083 would be nicer.
ReplyDeleted) bored
ReplyDeleteI mean, CV, you are actually GOOD at GOLF.... :-)
ReplyDeleted) bored
ReplyDeletee) dying to get into bed with LEFTBACK
[in a trading sense, obviously, Karen...]
@AmenRa
ReplyDeleteHey Amen... Take TUESDAY night off... I'll do the wrap for you now...
$SPX ("Bullish harami not confirmed")...
CV.. what else do you know about me? laughing.. am i that transparent? sighing now. i've gone from buying dzz at 10.94 to lingerie shopping.. or looking.. i should say.
ReplyDelete¿Qué? Unas vacaciones?
ReplyDelete@LB
ReplyDeleteYesterday at the PGA Championship, the media tried to make Dustin Johnson look like a victim because of the two shot penalty, but the "rules committee" made the right call...
What "irked me", slightly, was that although it was unfortunate, when it was called to DJ's attention, they spent all that time reviewing video to see if he grounded his club or not...
As a golfer (a TOURNAMENT golfer), you know what you're doing at all times...
Hell, I can remember shots from 10 years ago and whether there was a twig on my ball or not...
So that tells me that he was trying to get away with it... He shouldn't be proud of that if that's the case...
Average fans don't understand the RULES OF GOLF... It sucks sometimes (to the point of being unfair)... But that's why I like the sport so much...
@Amen
ReplyDeletejk - I'm just saying that todays candle is looking to end up, MAYBE, like a bullish harami...
But I get a feeling that it won't be confirmed come tomorrow...
Turnaround Tuesdays on OPEX week...
They're trying to get the SPY110 August call holders to have one more day of HOPE...
ReplyDeleteTomorrow they lower the boom, scare them out, then the market reverses by Wed...
I just lost all my streaming market data...
ReplyDeleteThe SPX is forming a hammer today right at the 1078.87 (the 1.618 fibo using low). "Reel him in slowly or he may try to get away. I'll get the net."
ReplyDelete.."i've gone from buying dzz at 10.94 to lingerie shopping.. "
ReplyDeleteNeed any help, Karen?
NLY lastest is a bit out there: "Money, whether gold or fiat currency, is at its essence a belief system. And like anything based on beliefs, certain events over time can call those systems into question. The seeming capriciousness of cancer or Alzheimer’s can test some people’s faith in religion, and the events of the last three years certainly tested our belief in this system of money. Nevertheless, there is a natural tendency in human society towards the use of money. It makes things easier, greases the wheels of everyday life." http://www.annaly.com/blog/
ReplyDeleteThe writer failed to mention the second certainty in life, taxes..
LQD = 111.676
ReplyDeleteChange 1.036
% Change 0.936
This is the first step of risk taking. IGs picking up buyers from USTs.
mrtopstep - by Dave W. 10 Year Yield has 2.458% as downside target and potential reversal
ReplyDelete12 minutes ago via web
Reply Retweet
PIMCO- Gross: The low 2-year Treasury yield signals that credit markets believe the Fed won’t begin to raise interest rates for at least 2 years
"BENIGN STOCKS & ACTIVE FX. I made the observation on Friday that despite directionless trading in equity indices, USD had rallied across the board as yen pulled lower following talk of a possible action from Tokyo against the yen. Were seeing the same thing today, whereby, stocks (S&P500, Dow-30) drift around neutral territory meaninglessly while the YEN (not USD) and CHF push higher against all major FX. This leads me to conclude that FX remains in risk-aversion mode without any notable losses in equities because the major indices are already in red-flag territory.."
ReplyDeletehttp://www.ashraflaidi.com/forex-news/
@karen
ReplyDeleteThe "rich" need to feel the pain before the next downturn occurs in EARNEST...
They're still shopping for apartments in Manhattan, and buying yachts in the Hamptons at the moment to worry very much...
C,
ReplyDeleteI think we are in TWO NATIONS mode.
NYC, DC, boomtowns, happy daze.
Michigan, Ohio, Nevada, East of SF, depression.
The 30s was a lot like this, apparently.
Yes, there are two Americas
ReplyDeleteTwo Nations...
ReplyDeleteNation One = 1
Nation Two = 99
Very "dangerous" to be the ONE, when NINETY NINE start deciding they're not getting their fair share...
PIMCO - Devlin: Expect volatile markets & a period of low growth in Europe, where we still have concerns about sovereign debt & the banking systems
ReplyDeleteKaren:
ReplyDeleteIf the Greeks are going even further into debt and recession, shouldn't everyone have even more concerns about their sovereign debt?
mrtopstep - Aug $ViX expires in 1 1/2 days watch Sonar report here http://www.youtube.com/watch?v=KGOESQYV1GI
ReplyDeletemrtopstep - Hindenberg Omen on CNBC now
Bruce,
ReplyDeleteWe'll just bail 'em out again.
eyeing bzq.. i could buy it back!
ReplyDeleteeuro and aussie having similar oversold bounces today.. won't last. $xsf up dbl % of the others..
ReplyDeleteThat Matterhorn talk has reached excessive levels.. "The only reason that the US could build up such a major debt is that the US dollar has been the reserve currency of the world and therefore the US has been able to finance its debts and deficits internationally. The US has now reached a point when debts have to increase dramatically for the country just to standstill. Like all Ponzi schemes this one will also come to an end – and this very soon. The US dollar will decline dramatically and lose its reserve status and the US government will be unable to finance its deficit in any market. This process will lead to endless money printing, collapsing treasury bonds (substantially higher interest rates) and the dollar becoming worthless in a hyperinflationary black hole."
ReplyDeleteThis will be fun to watch as the dollar continues RISING now.
I don't mean NOW as in THIS MINUTE.. but in the coming months..
ReplyDeleteYour dollah vill bekum e-ssentially vurthlezz...
ReplyDelete“The US has now reached a point when debts have to increase dramatically for the country just to stand still”.
ReplyDeleteI’m more opposed to the debt than most people.
But Japan has shown us that we can put off the day of reckoning a while longer.
@Matterhorn
ReplyDeleteYou wanna buy gold here...
Enjoy your ride!
http://www.youtube.com/watch?v=3PE0ovNH1V4
Here in the salt mine, my partners' thinking about investments has slowly but surely been in the taking less risk camp for the last year. I had one 2 years ago invest a large sum (>6 figures) in a truck stop idea that let you plug into AC and other amenities are was sure to take off. I looked at it by his request and told him much too risker for me..and they went BK and he lost all of that trial balloon. Now I don't hear a peep out of any of them about taking on risk...quiet as churchmice.
ReplyDeletetyping skills on hold this am...
ReplyDeleteB in T,
ReplyDeleteI bet Leftback would be happy to manage a bond portfolio for one of your partners.
I have never seen Lefty and Bill Gross at the same place at the same time...
ReplyDelete...maybe we could...
B in T:
ReplyDeleteYour part of the world has been whacked in this recession. Don't see that changing any time soon. August 2008 not a good time to get long risk.
DL, B in T:
ReplyDelete2 and 20, baby !!!
Actually these days, 1.5 and 15 would be ok.
Mock the fixed income portfolio of LB as you wish....
ReplyDeleteWe are up handily on the year.
Maybe not just my part Lefty...I am seeing more and more of this kind of thing the last month...
ReplyDeletehttp://www.housingwire.com/2010/08/16/what-a-modern-depression-looks-like?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+housingwire%2FuOVI+%28HousingWire%29
What a Modern Depression Looks Like
Lefty:
ReplyDeleteYou also need to understand...I am not mocking anyone's investment in fixed income...I have mentioned plenty of times in the past about investing in CD's...and that has let me sleep very well at night the last few years..
Going dark for awhile...
ReplyDeleteJust need to step back.
Catch up with yall after Labor Day.
Dont worry, its not you, its me.
:)
Cool runnings,
-I
B/T Ah, right !!
ReplyDeleteJust mocking LB... pompous Brit....
well, we are good with that....
I-Man,
ReplyDeletePeace. We'll be here in two weeks, and Mr Market too.
LB,
ReplyDeleteIt did seem that, back in 2008, you didn't realize that bonds have more fun.
And LB...I will admit I don't think you are pompous..well, not much anyway.
ReplyDeleteIf you are good at whatever you do, you feel pretty confident you are going to do it better than anyone else you know.
Not uncommon. Certainly not in my profession, and not, I imagine, in yours...
Aug. 16 (Bloomberg) -- Investors are moving more money than ever before out of stocks and into bonds, widening a valuation gap and convincing JPMorgan Chase & Co. and BlackRock Inc. that now is the time to buy equities.
ReplyDeletehttp://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aCU.A0Rai2H4
more propaganda if you ask me..
DL
ReplyDeleteHad a big pile of 5y Ts into the Crash, sold some of them too early....
I will admit I was astonished at the 2% 10y in late 2008. But I have always had a fondness for bonds.
... and Karen, of course !
Yes, never sell Karen short.
ReplyDeleteHYG and JNK have been creeping up all day. That's an LB rally, it's the rally you can't see b/c everyone is watching the SILLY YAPPY MARKET.
ReplyDeleteReach for yield, baby... unload the cash and grab some trash...!
OK you know I'm bored when I start doing fantasy football drafts in the middle of the day...
ReplyDeleteDespite the fact that I think we're going to print LOWER than 1069.49 (by Wednesday)... It would have been a good trade to cover some "shorts" at 1069.54 (which was exactly .009 fibo from Friday's close)...
Leaving money on the table again... :-(
NEW YORK (CNNMoney.com) -- The global economy is clearly cooling. But is this just a minor hiccup on the path to a sustained recovery or a slide back to the dark days of 2008 and early 2009?
ReplyDeleteUnfortunately, bond investors appear to be betting on the latter. The yield on the benchmark 10-year Treasury note fell to about 2.59% early Monday morning. That's the lowest level since March 2009.
Brian Battle, director with Performance Trust Capital Partners. a fixed-income trading firm in Chicago, said there is one simple reason why bond yields could fall a lot lower. The Federal Reserve.
http://money.cnn.com/2010/08/16/markets/thebuzz/index.htm
The action in RUT suggests that there might be a little tiny bit of COLD STEEL being applied to the nether regions of those who have been shorting the small caps...
ReplyDeleteBRIAN the BROKER.... he must be long Ts....!!!
ReplyDeletemarty chenard on short term oversold banking index..
ReplyDeletehttp://www.safehaven.com/article/17849/an-unusual-oversold-pattern
Karen,
ReplyDelete"The global economy is clearly cooling."
Maybe.
But rest assured, LB's ARDOUR remains SIZZLING hot.
only some ninny retailer that got short Friday is feeling cold steel on RUT, in which case they made a horrible trade and deserve to lose, just look at that chart
ReplyDelete"..LB's ARDOUR remains..."
ReplyDeleteWhy do you Brits have to use that funny spelling?
A short post that makes sense and features Betty Liu's email address!
ReplyDeletehttp://noir.bloomberg.com/apps/news?pid=20601087&sid=aaOA0qJqV1zE&pos=4
McF: Harsh. JOHNNY was probably just in a rut.
picked off from KD today:
ReplyDeleteAug. 16 (Bloomberg) -- State insurance regulators, under pressure to improve disclosure of death-benefit payment options, issued a consumer alert about the industry practice of retaining funds rather than paying them in a lump sum.
http://www.bloomberg.com/news/2010-08-16/state-insurance-regulators-issue-consumer-alert-on-retained-death-benefits.html
If people havent' already started to review their life insurance and annuities you still have some time.
Oh the things deflation reveals, it's like a daily magic show.
"Why do you Brits have to use that funny spelling?"
ReplyDeleteNo idea, me old china.
lots of mixed signals in there today, good day to watch and do nothing
ReplyDeleteBen,
ReplyDeleteWhat is you general guesstamation on how long investors pay more attention to paying down debt than to taking risk? Or do you belong to the camp that says there is just to much debt this time to escape?
"..lots of mixed signals in there today"
ReplyDeleteAgreed. Short-term turn coming... if you look at credit it is healthy. Getting close to a risk-on reversal in the bond market at least.
You all know I like Doug Noland: Market pundits pointed to the Federal Reserve's downbeat economic assessment as the main reason behind the equity sell-off, although the currency markets continue to be the driving force behind wildly volatile global markets. Perhaps the Fed's downbeat assessment and announcement of Treasury purchases was somehow behind the dollar's rally; or perhaps it was instead that traders had become sufficiently bearish on the dollar to ensure that Mr. Market did an about face - with a "rip their faces off!" rally.
ReplyDeletehttp://www.safehaven.com/article/17830/so-much-for-the-exit-strategy
Bruce,
ReplyDeleteI'll go with the latter. There will always be someone in the other camp, taking risk, but the net is shifting the way of deleverging. I'm not really sure this is my opinion either, I've yet to see someone present me with a shred of fundamental evidence contrary to this outcome.
We would need China, India and Brazil to plug the massive hole and leverage to high heaven, but this is simply a hope.
As for those that think the Fed can get us out of this, I have a one word question this belief;
Still?
Bruce,
ReplyDeleteI assume that you're aware of the user groups on Flickr. Here are some for people who photograph scenes in Tennessee:
http://www.flickr.com/search/groups/?q=tennessee
Thanks, DL....I'll check it out...about to leave the mine for the day...
ReplyDeletefinally some cooler weather....maybe I need a hike or a canoe today..
Thanks, ben. That's kinda what I imagined...
I just think the big boys will use option expy as another chance at distribution, which is about half of each week anymore it seems.
ReplyDeleteJohnny will not be short of bags just in time for the big dump.
this month will be bad enough, tons of people were long 115 SPY calls.
Bruce,
ReplyDeleteI haven't really changed my view on the economy in years, I just change my mind about the market from time to time. A bearish overview has been the right one for a decade now, sometimes we just need to set that opinion aside and go long....like last year.
The September $70 CAT puts sell for $3 and change today, down about 15%. Color me very interested if that can come down some more this week.
ReplyDeleteMON Sept $60 puts could be of interest as well.
LB is long LABOR DAY and short THANKSGIVING.
ReplyDeleteBut the tax cuts thing may change the picture a little bit.
B in T: You are so lucky to work near to the countryside.
CAT puts or DOG calls?
ReplyDeleteThat is the question.
"You are so lucky to work near to the countryside"
ReplyDeleteBut he doesn't get to experience the joy of riding a 3rd world subway through the crime and the grime.
OK, I know you don't believe me about Treasuries.
ReplyDeleteBut here is the Yahoo TREND list:
TRENDING NOW
1. Craigslist Killer
2. Tila Tequila
3. Jesse James
4. Treasury Bonds
5. Zsa Zsa Gabor
6. Aarti Sequeira
7. Liger
8. Medicare
9. Mustang Boss 302
10. Parkinson's Di...
SHORT TERM TOP !!!!
C'mon, Jesse James and Tila Tequila....
@DL
ReplyDeleteWhat about CAT CALLS... or WOLF WHISTLES?
I've got a way different take on the tax cuts left.
ReplyDeleteThere aren't any significant amount of households sitting on capital gains that are going to greatly benefit from the extension of a 15% LTCG rate. Outside of the implementation of the 10% marginal bracket, which when considered offers only a very minor benefit for any household 25% and above, the current tax laws did very little for most households, not to mention, some things that lots of people want, like a pack of smokes, or soda in downtown philly, are full of new taxes. the people that get the most out of the 10% bracket dont' have stocks anyway.
It's entirely possible and perhaps probable that the extension of the unfunded Bush tax cuts would be met with massive selling, knowing full well the long term damange it will do to the already nightmarish US Monetary ledger. From a political strategy perspective the extension of the BUSH tax cuts don't win any points for Dem's prior to the election either, it's simply..."more of the same" rather than the every popular "change"
From what I see, Obama is fulfilling his promises...
ReplyDeleteHe talked about HOPE...
Well - People are still HOPING... Call it a "win"
McF @ 2:24
ReplyDeleteI’m not sure that I fully understand the politics of the situation in the Senate. Obama wants to raise the top bracket and leave the other brackets unchanged. I assume that he would need 60 votes in the Senate to do that. Given that Kent Conrad, Ben Nelson, and a few other Dems have declared their opposition to raising the top bracket, I’m not sure that Obama can get the tax structure that he wants.
. . . . . . . .
Another issue is that Obama probably won’t collect much tax from the “fat cats” before the 2012 election. They’ll move income from 2011 to 2010 to avoid the 2011 tax increases (if any); and they’ll move income from 2012 to 2013 in the hope that Obama loses the election.
DL,
ReplyDeleteyes, good points, and there are lots of others, like the shrinking tax base due to unemployment, the pressure RRE puts on taxes not to mention, I think there is a precedent being set with this tax evasion case due to the fact that the guy that blew the whistle on it may end up in jail. It's like a green light to go ahead and do more of it if that's the case, if employee's know the end result is they go to jail then nobody will say a peep.
No matter what they do though, the wealthiest people won't pay any more in taxes. Too many holes in the code.
CGasparino - Some potentially explosive news on Lehman Bros. the SEC could be getting ready to bring down charges to certain fmr executives.
ReplyDeletekeep an eye on the IPO market, it's getting more comical as we go along here, and I'm having deja vu:
ReplyDeletehttp://money.cnn.com/2010/08/16/technology/hulu_ipo/
"the service has barely been profitable for a few quarters"
BUY BUY BUY!
YESSSSS..... DICKY FULD..... On the way to RIKERS.
ReplyDeleteThen his wife will take all his dough while he is in the pen.
Nice.
http://www.businessinsider.com/10-bubbles-now-in-the-making-2010-8#student-loans-1%23ixzz0wnOrcQ32
ReplyDeleteStudent loan debt now exceeds revolving credit facilities as Consumer Enemy Number One. That's right -- Americans now spend $3.285 billion more to fund their education than to buy five-bucks-a-pop coffees at Starbucks. The massive loan market and the quiet web of underwriters and collection agencies doing their best to reel in cash-strapped young adults now boasts an average default rate of 17.9% (for-profit institution attendees) and an average of 40% for 2-year college graduates who received their diploma in 1995.
@Amen
ReplyDeleteLOL - Gap down at 1078...
we need a simpler tax code, YESTERDAY.
ReplyDeleteEliminate all deductions, and adjust tax rates to ramp up, but from a tiny base so that everyone employed pays at least a little, and BLANKFIEND pays a lot.
GASBAGarino
ReplyDelete@Karen (2:49) " default rate of 40% for 2-year college graduates..".
ReplyDeleteBankruptcy matters in America? Who hires these people anyway? No background checks? No ethics?
From Canada
Yeah, I'm glad that Gas-Bag-Arino isn't on CNBC anymore.
ReplyDeleteCG was a boxer and he will kick your ass.
ReplyDelete@McF
ReplyDeleteI'm pretty sure he could "interrupt" me to death...
no doubt C, he's one of the bigger tools of business soaps.
ReplyDeleteMcF @ 3:02
ReplyDeleteI never knew that about CG. Him and Blagojevich.
He he he... the high end.... or even the middle end.... look at this:
ReplyDeletehttp://www.sdlookup.com/MLS-100020829-612_Glorietta_Blvd_Coronado_CA_92118
I mean, $3M come on. You know where this is K, it's across the street from #13 (unlucky for some) on the Coronado course. No view. Do you really have to pay $3M to watch lumpy guys play on the local muni?
Mind you, if LB was playing, K would be laying out by the pool in the teeny bikini and I suspect she would have the binoculars out.....
here's Charlie showing a little leg on the Today Show:
ReplyDeletehttp://www.youtube.com/watch?v=1FByE68r9Wk&p=498B0784BD203C7D&playnext=1&index=12
and here he is, thinking about ripping someone's face off:
http://dealbreaker.com/2010/05/charlie-gasparino-is-not-faking-it-on-tv/
LB was perusing the So Cal Real estate discussions at TBP....
ReplyDeletemrtopstep
ReplyDelete[02:07:56 PM]: next set of sml stops under 1072.50 area bigger under open range 1069.50 area on to new daily lows then???
If this isn't a blow off top in the long bond, then my name's not Gary Shilling.... OOPS...!!!
ReplyDeleteIt's going to be a thrilling REPORT tonight. 4.25-ish, and it's going to be a cheeky one, LB has to run to football.
ReplyDeletethe only problem of course is that Gary Shilling is looking for a 10 year below 2%.
ReplyDeletehttp://www.distressedvolatility.com/2010/07/gary-shilling-30-year-treasury-to-hit-3.html
ReplyDeleteAgreed with the distinguished Mr Shilling.
ReplyDelete... but not now, eh, Gazza?
DISTRESSED VOLATILITY.com ???
ReplyDeletewonderful.... sounds like my life....
@Amen
ReplyDeleteMUST... PUSH... BACK... OVER... 1078
Fun ZH commentary on bond market action.
ReplyDeletehttp://www.zerohedge.com/article/10-year-yield-plunges-257-bond-market-goes-full-retard
You will have realized by now that something a bit odd is going on and that usually means someone is being taken outside and absolutely spanked with wooden paddles that have nails embedded in them.
Chatter is that the exponential move we are seeing reflects the almost simultaneous implosions of two large prop trades.
The one trade is at MS (the infamous 2s10s steepener, ridiculed so often here by yours truly). GUFFAW, GUFFAW....
- and another over at BOFA (apparently a 10s30s flattener, with which the 10y has not been co-operating).
"someone is being taken outside and absolutely spanked with wooden paddles that have nails embedded in them"
ReplyDeleteKinky.
BTW, the risk sector of the fixed income market is blissfully unaffected by this, it's all in Treasuries. Some of the action was initiated by holders of MBS who had to hedge themselves against early pay-off risk.
ReplyDeleteLQD is absolutely crushing today. LB has a lot of LQD and AGG.
ReplyDeleteMark LB's words, you will see a monster JNK/HYG day very soon.
Lovin' me some fixed income....
Finally they are going after mortgage originator's compensation:
ReplyDeletehttp://noir.bloomberg.com/apps/news?pid=20601087&sid=aQ_eAjDfWOvM&pos=5
If they had done this in 2005, we wouldn't be in this mess !!!
3:46 PM ET 8/16/10 | Marketwatch
ReplyDeleteWASHINGTON (MarketWatch) - The Securities and Exchange Commission had no comment on a report Monday that the agency is near to charging some Lehman Brothers executives, in part related to an effort by the now-collapsed investment bank to raise capital in March 2008. Fox Business Network's Charlie Gasparino reported Monday, citing sources, that the charges could come as soon as this week, although he added that it was not certain and he expects the situation to be resolved soon. SEC spokesman John Heine declined to comment on the report.
Another wild one....
ReplyDeleteMish's take on Bonds:
ReplyDeleteFor about a month the long bond yield was on a shelf of support at or near 4%. It has been on a tear since then, with yields dropping the most of any spot on the curve.
This is not bullish for equities, nor is it a "deflation scare".
This IS deflation at work. After a respite in 2009, the US is back in deflation. Those pointing at prices, the CPI, and other such things do not understand what deflation is, nor do they understand what is important.
http://globaleconomicanalysis.blogspot.com/2010/08/china-net-seller-of-treasuries-yield.html
The Bond Report 8.16.10
ReplyDeleteJust another average day in the fixed income markets, as one or more prop desks had their heads ripped off and inserted in places that were anatomically entirely less appropriate, except perhaps in a Cubist representation. Morgan Stanley meets Picasso.
The 10y and 30y ripped skyward, buying reportedly initiated by MBS holders hedging against early payoff risk, and then amplified by short covering from the aforementioned distressed desk which has had a certain degree of difficulty unwinding a 2s10s steepener, well from about 90 bps back. Oooh, that smarts...! Do it again !! We love being spanked every day !!!
Even more fun followed as the word spread that BOFA was playing a flattener in 10s30s and some wags then started to buy the 10y faster than the 30y, with the result that it all became rather frenetic at the end, and some traders may have ended up tired and emotional.
Overall it was a banner day for bonds across the board, with IG crushing and HY also performing well, especially at the shorter end, where spreads narrowed in the 5y window, although actions at the long end was a bit more distorted. Even TIPS rallied, as confused punters hedged against deflation, inflation, reflation, stagflation and there was a lot of plain old hyperventilation.
Corpies: LQD 1.10%; AGG 0.33%; JNK 0.52%; HYG 0.13%;
Govies: TLT 2.50%; IEI 0.32%; TIP 0.33%
We sold the last of our long T-bonds and laughed our socks off at the carnage that was occurring in certain corners. Hedges are on here for us, we still have a lot of F/I exposure and a snap back in yields can't be ruled out, and that would be nasty. But the most likely play is a reach for yield, and a move out along the risk curve seems imminent, so a "spread tightener" is our guess for the next trend.