From Peter Tchir of TF Market Advisors
It's Official: QE 2 And The Tax Cut Have Been A Failure
Well it looks like the rich have taken the tax cuts and used the money to buy 'necessities' at Tiffany's rather than hiring people. Weren't the tax cut extensions necessary for hiring? It really looks like that money went straight to little blue boxes. Does Kraft Mac'n Cheeses still come in dark blue boxes? Maybe we aren't separated into rich and poor, just which shade of blue box you can afford?
It is hard to find anything encouraging about the numbers out today. For the past 4 months now, the NFP has added 752k jobs. 610k of those have been birth/death jobs. If you do year to date, it's not as bad since January saw a large negative birth/death adjustment. I am concerned about the validity of the birth/death model. We have gone through such unprecedented changes in the economy I find it hard to believe that the model is calibrated well.
I still like being short IYR, SPG, VNO on the back of the move in CMBX. I am digging deeper into corporate credit, but 2 worrying signals are there. Recent new issues seem to be struggling. Even GOOG is wider. The indices are also starting to trade fairly cheap to fair value. This combination is rarely good so selling LQD (on spread basis) and HYG while collecting more details for this analysis.