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“We are literally running out of superlatives to describe how much we hate bonds.” – Jeremy Grantham, GMO Advisors As of this writing, the 30-year treasury yield is a shade above 3%. Who wants to lend to Uncle Sam for three decades at that rate? Apparently lots of folks. The trouble with USTs, of course, [...] The old cliches stick around for a reason. “Don’t fight the Fed” is back on traders’ lips after yesterday’s policy driven rally. On Wednesday the Fed revealed plans to keep interest rates near zero well into 2014, and refused to rule out more bond purchases. (Einstein once defined insanity as doing the same thing over [...] “Ugg” – That’s the sound of Deckers investors checking their account balance today… The stock is down 8% in early morning trading after a downgrade by Sterne Agee. The boutique research firm noted that its channel checks indicate a weak environment for Deckers Outdoor (DECK) UGG boots. According to the report, individual retailers are seeing [...] Buckle up for a wild ride… Today, Amazon.com Inc. (AMZN) dropped nearly 5% as traders reacted to disappointing November retail sales figures. For the month, retail sales rose 0.2% – short of the 0.6% forecasts. The weakness was particularly attributed to falling demand for autos, apparel, and electronics… Although today’s data wasn’t particularly encouraging, the [...] Remarkable action in forex this morning – the Aussie dollar in particular is getting crushed (AUDUSD), down nearly 2.5% as of this note. This goes hand in hand with the bloodbath in copper — carry traders are being taken out and shot. Having cashed out our short NFLX around $130 yesterday, our three strongest positions [...] When it comes to swing trading entries, there are two rules of thumb that do not always apply, but act as helpful guidlines much of the time: Enter in mild times / exit in wild times. Volatility is cyclical. It expands and contracts like an accordion over time. Tight consolidations and coiled ranges are low [...] Among other positions, we are short the euro (EURUSD) from September 2nd and the British pound (GBPUSD) from Monday’s overnight session. (All trades documented in the Live Feed.) Last week the euro broke down from a multi-month congested range (after a slight headfake higher), and the pound cratered hard on Europe’s rough start to the [...] Waiting for the euro is like waiting for Godot — or maybe like waiting for U.S. treasury bonds to break. There are powerful macro cases for both short euros and short t-bonds — yet similarly powerful forces opposing. One of the wild cards here is China, a big factor in both markets. In his recent [...] 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 [...] On Tuesday’s Fed announcement at 2:15 EST, markets cratered. S&P futures dropped 30 handles in less than 30 minutes, carving out new lows on the day. Then, major reversal of the reversal. Explosive move higher to overcome Monday’s losses. The initial market response was vintage Bill Paxton from Aliens. “No QE3? Game over man!” Then [...] My quick and dirty .02 via the Correction, Bounce or Crash – What Now? thread on Barry Ritholtz’ blog. Feel free to challenge, comment or elaborate: The government is embracing a 1937 style mentality via obstructionist veto, even as it becomes painfully clear the Federal Reserve has run out of bullets. What are they going [...] The latest Economist cover is amusingly timely for the current environment (click to enlarge). On Tuesday the S&P both sliced through 200 day EMA support and violated a trendline that had been in place for nearly a year. The major indices, including transports, appear to have confirmed large rolling top formations of 4 to 6 [...] The economic recovery is stalling… Unemployment stats are no longer declining and actually ticked higher in June. Consumer sentiment is dropping. And retailers are resorting to aggressive discounting and promotions to move inventory off their shelves… But don’t tell that to Harley-Davidson (HOG) – whose shares hit a new recovery high this week. The company [...] The Economist has an interesting piece out asking “which emerging economies are at greatest risk of overheating.” They explain the six factors that go into their “overheating” index: inflation GDP growth unemployment credit growth real interest rates change in current-account balance With 100 representing “maximum risk,” Argentina tops the charts. But the other members of [...] As we wait for Europe’s big weekend to unfold, here is an interesting thought, as generated by back and forth comments on recent pieces. In The Eurozone’s Wacky Plan, we noted the latest hail Mary hope of a “non-default default” — a way to roll over Greece without triggering a credit event, with attending invalidation [...] |
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