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The Economist had an interesting note last week on M2 (bold emphasis mine): In monetarism’s heyday, central banks tried to steer the economy by controlling the money supply, which has a loose relationship with spending and inflation. Indicators like M2, which includes notes and coins and some deposits, then fell out of fashion. But central [...] In a historic move — and some would say a total ambush — S&P chose to downgrade the U.S. credit rating Friday night. (We should perhaps send them a thank-you note, having maintained significant short positions in the Live Feed, after partial profit scale-outs last week.) What does the downgrade mean for the coming days, [...] Lots of folks are tweaked at the Tea Party — like joltin’ Joe Biden and the House Democrats. From Politico: Vice President Joe Biden joined House Democrats in lashing tea party Republicans Monday, accusing them of having “acted like terrorists” in the fight over raising the nation’s debt limit. Biden was agreeing with a line [...] Bill Gross (aka the bond king) is starting to get a little desperate. Three months ago we asked, Did PIMCO call a bottom in Treasuries? Since then USTs have gone up — and yields have fallen substantially. This made the bond king look bad — especially when it came out that PIMCO had a net [...] Stock market bulls were rocked by global slowdown fears this week. But for a true bearish wake-up call, consider this — stock market historian Russell Napier thinks the “real bear market in the S&P is yet to come,” and that the ultimate target could be S&P 400. As in, roughly 70% off current levels. Napier [...] It had recently been argued there is a $20 per barrel “speculative premium” built into the price of oil. (Via Niels Jensen, citing Frank Veneroso of Veneroso Associates.) If so, nearly half that premium was evaporated in a single trading session, via Thursday’s commodity complex carnage. (Will cinco de mayo be remembered as a day [...] In a zero interest rate environment, we can think about market participants in two groups: Those who are taking risk because they can. Those who are taking risk because they have to. These are not the traditional buckets. Normally the dividing lines run retail versus institutional… investor versus trader… value versus growth or what have [...] How to describe this market? Vin Diesel in the new “Fast Five” trailer has as good a line as any: “Chances are, sooner or later, we’re going to wind up behind bars or buried in a ditch somewhere. But not today…” On Wednesday the bottom dropped out of the dollar. The VIX (as tracked by [...] On Monday April 11th, the following commentary was posted in the Mercenary Live Feed: Some will argue any oil decline is a “buy the dip” opportunity before flare-up rages further. This may be true, but it is not a lock by any means. As the speculative vanguard, small caps are a tell that this decline [...] In a very news-heavy week, a notable item was PIMCO’s decision to purge U.S. government debt from its flagship fund. As Bloomberg reports, Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., eliminated government-related debt from his flagship fund last month as the U.S. projected record budget deficits. Pimco’s $237 [...] Mechanical systems trader Larry Hite has a great quote in Market Wizards: “Risk is a no-fooling around game; it does not allow for mistakes. If you do not manage the risk, eventually they will carry you out.” In one of the greatest rock and roll songs of all time, Led Zeppelin puts it another way: [...] Where is all the spending coming from? We know where the liquidity and the “animal spirits” are coming from. Those are courtesy of Ben S. Bernanke, the golden god of stocks. But from whence the spending – specifically, the consumer spending (circa 70% of the U.S. economy) that powers earnings and recovery stats and makes [...] Thanks to the many narratives and themes competing for dominance, Mr. Market often behaves like a child with ADD (Attention Deficit Disorder). Some breaking piece of news or shiny data point will grab his attention for the pulse of a few trading sessions — then the focus switches elsewhere. So it seems, as of this [...] Let’s begin with an interesting observation. From the time QE2 was initiated, the $USD is actually higher, not lower. This is especially curious given that the euro — the major forex counterweight in the $USD index — has not collapsed. Dial back the clock to November, when many were predicting QE2 as a watershed event. [...] Next to guaranteed reelection, what is a politicians’ fondest wish? Perhaps benign economic conditions — the ability to enjoy upturned economic indicators, positive sentiment, and increased feelings of voter satisfaction all at the same time. “A chicken in every pot.” When fortunes are tied to the ballot box, this is what Washington wants. And it [...] |
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