months. I think it may have broken out of the range today. The closing
price on the bond contract today was 118.99. The low set back on 12/14
was 119.05.
It didn’t take much for the contract to stumble to this foul smelling
level. The last 50bp came thanks to Bernanke. At one PM the minutes of
his speech came out. Essentially Ben commits himself to continuing QE. We take another step down in bond land. Maybe an important one.
The day chart:
Knee jerk reactions and hourly market trends don’t mean much in the
scheme of things. What consequence Ben had today will be lost in the
noise a few days from now. That said, it's interesting to watch the
market’s reaction. When Ben said, “We’re going to continue with the QE” bonds traded cheaper.
Ben’s not going to quit. QE2 will run its full course. Long bond yields
are going up as a result. It must kill Ben to see how the market now
trades him and his policies. Ben is an academic, no market experience to
speak of. Maybe he his clueless how the boys in the futures pits are
pricing him these days. If so, he should ask his partner in QE crime,
Brian Sack. He runs the NY Fed desk and does understand market sentiment. Brian would tell Ben the markets are fading him. And making money in the process.
I lived through this once before when William Miller was running the
Fed. The markets beat this poor guy to death. He couldn’t say a word
with out stocks, bonds or the dollar falling out of bed. I was one of
many who would just short things ahead of any of his scheduled comments.
Ducks in a barrel.
Miller came in March of 1978. He was out by August the following year. The markets crushed him. They did him in.
Thank you again Bruce, these are my absolute favorite ZH threads (then Reggie). Take care of your back mate (Valerian Root is excellent for keeping it from getting bound up...it's not just for sleepy time.) February is New Englands roughest month but its also short. I think everyone who has ever lived in an old New England farmhouse has had to dig up the poop pipe in a whirling snow storm - somehow it's just written in under "dues". Good Cheer :-) HEZ
BB record is good to go .....bust
hey bruce,
you know, one of the things i learned along the way was that meaning comes from context.
got a face to put on who is the bond market?
i bet a lot of people reading here at ZH don't know.........double down and bet you have the talent to inform.
My guess is the TBTF banks are the bond market and now increasingly BB owns the turf !!
http://chart.ly/7g3yn8n Feb 4 Futures charts..
The writing is on the wall. Friday Nonfarm Payrolls expectation in 150K and no matter what..the Bond Market will be mighty volatile at the minimum as Helicopter Ben has single handedly succeeded in exporting inflation througout the world even though there is 'no inflation' back home.
The 100% confident Ben Bernanke and his amazing track record:
Bernanke speaking on October 27, 2005: There's No Housing Bubble to Go Bust - washingtonpost.com
btw BK.........dumped the short GBP/USD on the first pullback to 1.6155 entry so a b/e trade.
the shit is getting tricky........look what AUD did today, and the RBA Quarterly Monetary Policy Stmt upped 2011 estimate for GDP from 3.75% to 4.25% overiding ec devastation of the natural disaster QL floods.
One thing the Bernanke said that jumped out was the reference to the dire consequences of burgeoning US debt.
And?
Just got another sell signal on GBPUSD and I don't think they are going to usurp it this time.
Ever notice when you get a sell signal, the thing jumps off the line like an alley-cat after a field mouse? Can't even correct. In fact, pop it to the stratosphere. Well, they didn't do that this time. I think they have completed this two-year pump of the GBP- for the Queen's sake, of course.
Sell the hell out of it. Eventually, it settles at ~1.21.
:D
We are looking at the S&P RMBS credit report for Australia, they got prime defaults forecasted for 2011. Aust bonds down last week or so,
Bet against Australia, 2 major natural disasters, a housing bubble and a mining sector that could slow hard on China. RBA are dreaming.
It all sounds like it makes sense until the central banks keep pulling the dog's chain.
FEDecBbOeBoJpbOcBOcRBNZrBA
btw.......saying it is 1 thing, Calling it at aprice is another. What is your price to short?.......and, feel free to throw in some position sizing.
sellstop said:
"Bernanke is playing chicken with Asia". I agree - but The Bernank works for somebody - - -
Starving/rioting people don't put up much of a fight when it comes to war and domination.
So those uppity ChiComs and their 1.3 billion "cheeple" think their gonna run this world? I don't think so. They been runnin' "the debt con" for what, almost 2 or 3 decades now. The Anglo banking cartel has been at it for how many centuries?
What we are witnessing is economic warfare for keeps. We're just turning the heat up in Asia and the MidEast so things start to boil a little. Let 'em roast a while and see if that doesn't take some of the starch out of 'em.
The tell is: USA - 10% on food; developing world 40% on food.
It's pretty obvious who's gonna win this one - - -
Ah, my liberal ego is awash in a sinfully luscious compote of chauvinist posturing. Long live the West, and all who sustain it. Those myriad Chinese are all unique individuals living their lives, yet when taken as a single entity we must have no mercy in maintaining dominance in the eternal struggle for hegemony.
I agree this is likely their intent, but the Bernank is playing with a flamethrower (thinking it is only matches) which will torch the whole system.
That is exactly what is going on...
Bruce,
Thsi economy is different from 1970s. Back then, the market was relatively free and the Fed was an importnant player, but nothing like it is now.
This market is no longer free, it's largely centrally managed. The Fed and the US Governemnt are 2 predominant forces that are in play here. When the Fed's ablance sheet if 3X of what it was 3 years ago, when the stock market falls daily from 9:30 to 10:30, and rallies after the "heroin" (cash) injection administered by Brian Sack, when US Gov't for all intents and purposes is the mortgage market - whn things liek this exist, The Chairman doesn't need to understand the market sentiment. The Fed IS the market. The Fed's influence is so huge that everyhting else is marginalized. The market crushed William Miller? Well, this time it's different. This Chairman wil not get crushed by some bond traders. Not so quickly, anyway. He will be crushed ONLY by the popular uprising which will happen after the currency crisis and collapse.
"He will be crushed ONLY by the popular uprising which will happen after the currency crisis and collapse."
Word, but you are giving the sheep too much credit. The chances of the real culprit being correctly identified by the frothing adolescents post collapse are virtually nil.
It will be the Fed's enemies that are scapegoated as the last vestiges of an open society crumble.
You are 100% correct. The real Dr "Evil" Ben B. will not be specifically targeted. But, when *it* hits the fan, the Fed will not be left standing, just like any other major institution
Fed 'nut' Kocherlakota says not concered with runaway inflation, on the wires now!
This is getting out of hand!
Another clueless academic (apparently they grow em stupid at Northwestern):
http://www.marketwatch.com/story/kocherlakota-fed-didnt-cause-housing-bu...
http://www.reuters.com/article/2011/02/04/usa-fed-kocherlakota-idUSNLL3D...
They KNOW that QE won't create job one any time before the next election, but they're going to do it anyway, regardless of the ensuing stagflation. These fucking assclowns are the most powerful incompetents in America (and I'm including Dimon and Blankfein in that estimation).
It's all UST's, amazes me how distracted the share market is at the moment with QE printing glories. Bond market is pricing inflation, and that idiot Bernanke can't see it....???
But, China comes off it's holiday and will awaken to a total FUBAR inflation trade going on, Banana's, rice, sugar, oil, wheat...
Force the US into interest rate squeeze, dump some (or a lot of) treasuries, either that they will force deflation upon themselves and sink their own property market.
Knock out some hedge funds going long commidities.
with the duration of the s&p about half a century, it should be a big show when the rising yields finally make themselves felt in equities. we're up a quarter on the long bond since late august so far. 5.4% would be half (about what it took in '87, but that was a secular bull market and the equity market's duration was far shorter).
I fail to see how Bernanke keeps his job. Are the masses that ignorant when it comes to this dollar/bond destruction?
http://news.yahoo.com/s/afp/20110204/hl_afp/healthscienceobesity_2011020...
Do the masses get to vote on his (re)confirmation?
Why don't you ask a few of the fat-assed, toothless hicks in the checkout lane at your local Walmart. Let us know the results of your survey.
LOL! The masses just want their cable tv, beer and smack. They do not know who the bernank is. You won't see a reaction from the masses until they start having a hard time getting their beer and smack.
Bought more leaps on TBT today.
I thought that levered ETF had significsnt tracking error over time (making leaps a poor choice)? Wouldn't it be better to short calls on TLT?
Seriously, isn't that like buying double the Theta for the fun of it?
Then again if Vega is your game TBT leaps would seem to be the right table.
One or two years out on these instruments is just crazy to me.
He's got a crystal ball. Maybe two. Big ones.
Now that's hard-core, yo.
Is there any good market anywhere?
No more smoking outside of Times Square, parks or beaches. How much longer for this revolution to hit home?
http://www.guardian.co.uk/world/2011/feb/03/new-york-smoking-ban-outdoors
This is OT, but here's a good legal question for everyone here: Why doesn't NYC extend the smoking ban to all public areas in city limits?
If you know the answer to this question, the correct answer, you have a secret few people know, even most lawyers.
But its the will of the majority, the God Democracy has spoken, you did it to yourself serf...mumbling something about we the people...services...
the legalization of marijuana and the prohibition of tobacco will meet in manhattan.
Thanks Bruce, more fine writing.
IMHO, Bernanke is playing chicken with asia. Years of pleading to get China to abandon the currency peg came to nought. Now the Bernank, with the USD strapped to his back, is sounding to the depths of the ocean. Inflation for all. At the present time the Asian and emerging markets are the most vulnerable to inflation. It will hurt them more than us. I suppose he believes that when the world abandons their pegs the markets will rule once again. In the meantime we will endure stagflation while time is the equalizer.....
gh
Scariest part of this is that Ben and Timmay are Obeyme's chief finance guys....with Daley for a kicker. All the Great One knows about the machine is what the mechanics tell him. Recipe for a good fukkin, I say,...we smurfs the fukees.
Chumba would say this is "crotch sniffing" but hell yeah I'm glad to see ya around.
You get my VOTE to write as a Contributor, Rainman.
The word according to rick santelli, father of the tea party and ranter extraordinaire........is this a bond back up? Yes. Is this the bond back up? No. I had student loans at 9% My first house had a 9.5% mortgage in 1995. Times were pretty good in 1995 for just about everyone. If this increase in yields goes slow enough we will be ok. Keep us posted.
Damn..kudlow just mentioned 2000 gold and cramer was spanking the gold monkey this morning. I may have to buy back in!
thats wasnt the gold monkey he was spanking
Thanks, Bruce. Your last photo is an excellent use of graphics to demonstrate cause and effect.
The 10-year note is essentially trading sideways and has been for several days. If prices are dropping on the 30-year and remaining flat on the 10-year, doesn't that steepen the yield curve more and make it more profitable for banks than ever.
Isn't that his goal? I can't imagine that the Fed hasn't taken into account the reaction of bond traders. I would imagine that there is a threshhold beyond which the Fed wil call the ball on Treasury declines. I'd give a dollar to know what that level is...
:D
Yes
Yes but not necessarily a goal just a milestone on this journey
Yes
Me too
I do hope you're not snowed in again, Bruce...
:D
Tues/Weds. it snows. Now 19. Everything is ice. More this weekend so they say. I'll take that one last one standing up. After that if another big one comes, I'll just burn the fucking place down....
Oh snap!
Bruce, your reporting is priceless. That you continue to churn actionable detail is astounding.
Merci. :-)
Jeffrey Skillings son in news for the wrong reasons...
http://www.reuters.com/article/2011/02/03/us-enron-skilling-son-idUSTRE7129HO20110203