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Post by brosin on Aug 10, 2010 9:55:55 GMT -5
Thanks Dual - PIMCO always fascinates me.
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Post by Dualism on Aug 10, 2010 9:58:36 GMT -5
And - why would PIMCO want to relay a sense of cautiousness and for the FOMC to relay that as well? They are only one of the biggest bondholders in the world. Precisely. The more the Fed talks down the economy, the more the corporate decision makers retrench. If the Fed keeps talking this 'deflation story' to death, the sooner we will find ourselves in 'stagflation', which I believe it is even worse than deflation.
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Post by ccash04 on Aug 10, 2010 10:32:48 GMT -5
And - why would PIMCO want to relay a sense of cautiousness and for the FOMC to relay that as well? They are only one of the biggest bondholders in the world. Precisely. The more the Fed talks down the economy, the more the corporate decision makers retrench. If the Fed keeps talking this 'deflation story' to death, the sooner we will find ourselves in 'stagflation', which I believe it is even worse than deflation. I think stagflation is a more likely outcome than deflation as commodity costs will be rising. And IMO it is worse than deflation but I think we are just in for slow growth. I know its not as doomy and dramatic but still lots of deleveraging to be done by everyone (credit cards, banks, excess housing supply). That being I still no reason to buy bonds at lofty levels despite what the media says. Only trade the bonds.
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Post by brosin on Aug 10, 2010 10:35:12 GMT -5
Not sure anything is worse than a deflationary spiral (we were in the middle stages of one), but yeah stagflation is probably not far behind.
Greenspan's comments yesterday worried me in that he sounded like it even shorter term of a problem than I had thought - what I envisioned as being a problem a few years out appears to him to be one of the next 1-2 years.
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Post by brosin on Aug 10, 2010 10:37:15 GMT -5
Precisely. The more the Fed talks down the economy, the more the corporate decision makers retrench. If the Fed keeps talking this 'deflation story' to death, the sooner we will find ourselves in 'stagflation', which I believe it is even worse than deflation. I think stagflation is a more likely outcome than deflation as commodity costs will be rising. And IMO it is worse than deflation but I think we are just in for slow growth. I know its not as doomy and dramatic but still lots of deleveraging to be done by everyone (credit cards, banks, excess housing supply). That being I still no reason to buy bonds at lofty levels despite what the media says. Only trade the bonds. Good points Cash - the few people I know who predicted the 2008 housing market collapse see Credit Cards as being next, but I'm not well versed in that area much to know how credible the threat is.
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Post by ccash04 on Aug 10, 2010 10:37:53 GMT -5
Spy closing in on 112 as europe comes to a close.
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Post by ccash04 on Aug 10, 2010 10:40:37 GMT -5
However recent pop coincided with a pop in TLT.. and GOOG wants to go higher
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Post by Dualism on Aug 10, 2010 10:41:37 GMT -5
I am in full agreement that the economy is in a 'slow growth' phase and will perhaps stay on this track for quite some time.
But when the Fed scares the bejesus out of business and investors by talking this bs deflation mantra that they are on now, they may very well change the natural course of the economy.
And I think Brosin is voicing the same by saying, what the Fed says and does influences the economy, and at times in a deleterious direction.
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Post by abdogman on Aug 10, 2010 10:46:26 GMT -5
guess i'll go early with Dogs and lunch...........see ya in a while ......GL
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Post by ask2lern on Aug 10, 2010 10:49:39 GMT -5
If the Fed keeps talking this 'deflation story' to death, the sooner we will find ourselves in 'stagflation', which I believe it is even worse than deflation. Stagflation is the worst fear I have...................I would prefer a good bout of inflation but would settle for deflation over stagflation...............Stagflation would be the absolute worst outcome possible IMO....................GLTA
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Post by Dualism on Aug 10, 2010 10:52:54 GMT -5
If the Fed keeps talking this 'deflation story' to death, the sooner we will find ourselves in 'stagflation', which I believe it is even worse than deflation. Stagflation is the worst fear I have...................I would prefer a good bout of inflation but would settle for deflation over stagflation...............Stagflation would be the absolute worst outcome possible IMO....................GLTA Agreed. Stagflation is far worse than deflation. During deflation, the consumer still eyes discretionary products to buy. During stagflation, the consumer won't have the money to even keep up with the basic needs.
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Post by brosin on Aug 10, 2010 10:58:18 GMT -5
Stagflation is the worst fear I have...................I would prefer a good bout of inflation but would settle for deflation over stagflation...............Stagflation would be the absolute worst outcome possible IMO....................GLTA Agreed. Stagflation is far worse than deflation. During deflation, the consumer still eyes discretionary products to buy. During stagflation, the consumer won't have the money to even keep up with the basic needs. Ah now I see what you are getting at. That does seem to make a whole lot of sense. I think you sold me! Haha
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Post by ccash04 on Aug 10, 2010 11:01:43 GMT -5
some bigger negative ticks showing up
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Post by deadmoney95 on Aug 10, 2010 11:09:10 GMT -5
From Rosenbloom at afraidtotrade.com.
My executive summary: market internals look like crap, but who the hell knows what's going to happen after FOMC.
What are market internals saying about the strength or weakness of the market ahead of Tuesday afternoon’s Fed Decision?
Let’s take a look:
It’s important to compare price swings and extreme highs and lows – or short term trends – with those of the corresponding market internal. Vertical lines or highlighted regions help.
On the broader scale, the S&P 500 has been consolidating tightly between 1,130 and 1,120 – as I drew with the horizontal trendlines.
During that time, what were market internals doing? Declining steadily – all three of them.
We had an initial price breakdown as expected Friday on the “Jobs Report,” but then traders/investors decided that the bad Jobs Report was actually GOOD news because it increased the chances the Federal Reserve – in their meeting today – would announce more Quantitative Easing measures.
On a related note, there was a really good article this morning from Scott Lanman at Bloomberg that argues than any sort of announcement today by the Fed was more likely to be designed to boost the stock market (confidence) rather than the actual economy – in other words, tell traders what they want to hear, but that in the long-run, the policy won’t really benefit the economy as much as expected.
Anyway, we did have a pick-up in Market Internals yesterday, but as price made new highs at the end of yesterday, all internals were lower than prior days when price was at a lower respective high (look closely).
So, no one can predict with absolute certainty what the Fed is going to say today, and beyond that, how the market is going to react to it, so take any sort of analysis with a grain of salt ahead of the 2:15 EST announcement – and subsequent market reaction into the close.
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Post by ccash04 on Aug 10, 2010 11:11:40 GMT -5
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Post by brosin on Aug 10, 2010 11:14:52 GMT -5
On a related note, there was a really good article this morning from Scott Lanman at Bloomberg that argues than any sort of announcement today by the Fed was more likely to be designed to boost the stock market (confidence) rather than the actual economy – in other words, tell traders what they want to hear, but that in the long-run, the policy won’t really benefit the economy as much as expected.Thanks DM - I focused on this part of it because I think a lot of people think this way. The economy doesn't act in a bubble. It is made up of consumers and businesses whose demand is correlated with confidence. If businesses are confident, they hire, people get more confident in their and the country's outlook, the process is self-reinforcing, and we have a boom. On the contrary if there is fear, which is also self-reinforcing. Rosenbloom is one of the more respectable analysts, even if BAC didn't want him around after they bought Merrill. He's just too gloomy for them to sell their customers lol. He had called the 666 spx, even though when it hit he lowered his target. But I still think he - along with many - are missing the boat, perhaps out of choice or personal bias.
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Post by brosin on Aug 10, 2010 11:15:51 GMT -5
Did not know that either. The steepness of the curve we saw in April has dissappeared quickly. Good find Cash.
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Post by ccash04 on Aug 10, 2010 11:22:03 GMT -5
From some random guy on twitter:
August 10, 2010 12:06 ET: BEARISH STOCHASTIC DIVERGENCE in AUDJPY as the cross stands vulnerable to prolonging losses on deepening risk aversion, especially after Chinas July imports were slower than expected. The daily AUDUSD chart shows a rare bearish divergence in slow stochastics, whereby the price action remains consolidative despite a decline in stochastics. In such cases, price have often turned into the direction of the oscillator (stochastic). With AUDJPY currently testing the July 6 trend line support (78.10), it risks retesting 77.30-35 support, a break of which would spell a retreat to 76.20s. Upside seen capped at 78.50s.
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Post by ask2lern on Aug 10, 2010 11:23:19 GMT -5
I copied this from theses comments on the ZH article made by KevinH
................I felt it was a good explanation.........................GL
"Take a look at the normal yield curve from 1 month T-bills to 30 Yr Bonds. The yield curve is generally upward sloping, meaning longer term bonds have a higher yield; this makes sense logically as you are compensated more for holding them longer (and with inflation, you need this higher yield farther out onto the curve so your money doesn't lose value).
The 2s10s is simply the difference in yield between the 2 yr and the 10 yr bonds. 2s10s flattening simply means that the yield between the 2 yr and 10 yr are getting closer to each other. If the 10 yr yield = the 2 yr yield, or worse, the 10 yr yield < 2 yr yield (inverted yield curve), then the market/economy is in trouble. Remeber that yield is simply (bond's coupon)/(bond price). The 2s10s will flatten only when demand for the 10 yr bond is so high, that the price is driven up, thus increasing the denominator in the yield formula, and drive down yield.
Now, ask yourself, in what situations would you be willing to accept a 3% return on a 10 yr bond when there is a 4% return on a 2 yr (the inverted yield curve situation)? Go with the extreme situation of an inverted yield curve and you will see why a flattening 2s10s signals recession, and deflationary scenarios."
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Post by brosin on Aug 10, 2010 11:26:54 GMT -5
If Yield Curve goes inverted, I think it's within 6-12 months that the next recession is supposed to come. Sure wouldn't be fun if we got a double dip this quickly with rates still at zero.
Not to mention it seems implausible that we could get one with rates this low. Money is being flooded into the system daily. *Get rid of the Interest Rates on Excess Reserves!!!!* That will make the banks lend it.
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Post by brosin on Aug 10, 2010 11:32:03 GMT -5
www.federalreserve.gov/monetarypolicy/ior_faqs.htm#1Under what authority do the Federal Reserve Banks pay interest on balances maintained at Reserve Banks? The Financial Services Regulatory Relief Act of 2006 authorized the Federal Reserve Banks to pay interest on balances held by or on behalf of depository institutions at Reserve Banks, subject to regulations of the Board of Governors, effective October 1, 2011. The effective date of this authority was advanced to October 1, 2008 by the Emergency Economic Stabilization Act of 2008. The money is being put in, it is just not being lent. So additional money is not being created. Get it out of there. The Fed needs to stop paying interest on this money - that'd be the DrainO we need. Unintended Consequences. Fed is holding us back.
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Post by Dualism on Aug 10, 2010 11:34:34 GMT -5
I think something more sinister is going on than just an innocent less steep yield curve. Investors didn't make any money in stocks in the last decade and in fact lost money in real terms. Now they are being scared out of risk assets into so-called 'safe assets' by talk of deflation. They will likely be fleeced again. _________________________________- Aug. 9 (Bloomberg) -- Wall Street banks are creating the “next investment bubble” by selling opaque and unregulated structured notes to investors hunting for yield, according to Christopher Whalen, managing director of Institutional Risk Analytics. Using the same “loophole” that allowed over-the-counter sales of collateralized debt obligations and auction-rate securities, firms are pitching illiquid structured notes whose value is partly derived from bets on interest rates, Whalen wrote today in a report. ... Structured notes, which are derivatives packaged with bonds, are sold to accredited buyers in private deals and to the public in trades reported to the Securities and Exchange Commission. Sales of the securities to individual investors in the U.S. rose 72 percent from a year ago to $29.6 billion through July, according to StructuredRetailProducts.com, a database used by the industry. ... “We already know of two hedge funds that are being established specifically to buy this crap from distressed retail investors as and when rates start to rise,” said Whalen, a former Federal Reserve Bank of New York official and co-founder of the Torrance, California-based research firm. noir.bloomberg.com/apps/news?pid=newsarchive&sid=ahoMeQPlaOy8
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Post by crumbdon on Aug 10, 2010 11:58:06 GMT -5
Stopped out of long trade. You are all now safe to buy....
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Post by ask2lern on Aug 10, 2010 12:26:12 GMT -5
www.federalreserve.gov/monetarypolicy/ior_faqs.htm#1Under what authority do the Federal Reserve Banks pay interest on balances maintained at Reserve Banks? The Financial Services Regulatory Relief Act of 2006 authorized the Federal Reserve Banks to pay interest on balances held by or on behalf of depository institutions at Reserve Banks, subject to regulations of the Board of Governors, effective October 1, 2011. The effective date of this authority was advanced to October 1, 2008 by the Emergency Economic Stabilization Act of 2008. The money is being put in, it is just not being lent. So additional money is not being created. Get it out of there. The Fed needs to stop paying interest on this money - that'd be the DrainO we need. Unintended Consequences. Fed is holding us back. I am sure they will do it like they always do......change the rules....kinda like the xmas eve removal of the cap on aid to Fannie and Freddie........oh and then there is the federal reserve act that was also passed on DEC 23rd 1913 most of the voting members had left for the holiday.......................hmmm..............any holidays coming up........LOL.pointless i know but just could not resist.................GLTA
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Post by ask2lern on Aug 10, 2010 12:34:07 GMT -5
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Post by ask2lern on Aug 10, 2010 12:43:40 GMT -5
Just hod TICK +866...........GL
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Post by brosin on Aug 10, 2010 12:45:59 GMT -5
Quite the interesting big spread on FAS right now. Anybody else noticing it looking irregular?
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Post by Dualism on Aug 10, 2010 12:46:37 GMT -5
A simplistic interpretation of the put/call ratio page shows option players have been buying individual equity calls today and hedging by buying index puts. www.cboe.com/data/IntraDayVol.aspx
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Post by ask2lern on Aug 10, 2010 12:49:11 GMT -5
A simplistic interpretation of the put/call ratio page shows option players have been buying individual equity calls today and hedging by buying index puts. www.cboe.com/data/IntraDayVol.aspxSupports the case for a stock pickers market but overall bearish?..............that is how I would see it.....................GL
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Post by brosin on Aug 10, 2010 12:56:17 GMT -5
I hate stock picker's markets. I am great at picking, just usually the wrong ones. And in the short term, I'm especially bad.
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