It was late on a Tuesday night, in the middle of last week, Christmas week of all weeks, with most people already checked out. Having finally obtained Congressional support and approval, the $900 billion plus “stimulus” (read: stipend) was on its way to becoming reality after months of politically-motivated uncertainty. Not one to sit idly by while everyone else had [...]
Since we highlighted the action in T-bills yesterday and the day before, it’s worth at least mentioning what TIC had to say about the instruments. Foreigners had been reducing their holdings of them not out of growing distaste but rather the opposite. There’s not nearly as many of them, not enough for what’s demanded, the Treasury Department quite purposefully (and [...]
When people accuse the Federal Reserve of anything when it comes to inflation, they say the central bank is cooking the books to hide it. Back in 2000, for example, monetary observers were aflutter as policymakers shifted away from the CPI and to the PCE Deflator as their ultimate standard for broad consumer price behavior. The bastards, the latter widely [...]
Foreigners are dumping their Treasuries! The Fed is monetizing the debt! The federal government has gone insane! Mass fiscal hysteria!Yet, yields on these things are comfortably within sight of their record lows as prices have never been higher. Supply is very obviously off-the-charts, but so, too, must be demand. Every time we hear about “too many” Treasuries the market yet [...]
I am lowering our risk budget this month based on several factors. For the moderate risk investor, the allocation between risk assets and bonds moves to a defensive 40/60 versus the benchmark of 60/40 and last month's 50/50. Credit spreads have resumed widening as crude oil prices have resumed their downtrend. The downtrend in high yield credit prices may be [...]
2015 has started with a bang with the Dow trading in a roughly 700 point range through the first six trading days. The increase in volatility started in the 4th quarter and appears to have entered the new year with a new - higher - range. The source of the volatility appears to be angst about the health of the [...]
co·nun·drum - noun: A confusing or difficult problem; a question or problem having only a conjectural answer Merriam-Webster Back in the last Fed tightening cycle, Alan Greenspan described the refusal of long term rates to follow short rates higher a conundrum, something he couldn't really explain. Unlike past periods of tightening, long term rates refused to budge higher as the [...]
Stocks fell last week for the fourth week in a row and there was the whiff of panic mid-week. Despite that losing streak the S&P 500 is only 6% from its all time high but the pain for the leveraged investing crowd (the misnamed "hedge" funds) appeared to hit a crescendo last week - at least for now. Wednesday last [...]
What is a "widowmaker"? Merriam Webster defines it as "something dangerous to a worker's life or health". More specifically the term comes from the logging industry and describes a loose limb hanging high in a tree that falls on and kills a logger. On Wall Street for the last 25 years or so, it has had a somewhat different meaning. [...]
To spare any suspense, the answer is the New York Branch of the Federal Reserve. There has been a clear and obvious shift in the target for the POMO end of QE purchasing. This happened the week of November 20; that same date that I highlighted yesterday as important systemically. This adds to that picture. Before getting too far ahead, [...]
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