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Stocks Nervously Eyeing Soaring Bond Yields
While this morning's explosion higher in Treasury bond yields (the largest in 9 months) was 'evidence' for many of the 'great rotation' as stocks rallied; it seems that now the 'crowd' is selling everything. Stocks, commodities, bonds, and credit are all offered (while the USD and precious metals are bid). The end of POMO appears to have stalled the exuberance and cracked the JPY collapse of the day (for now - since it is Tuesday). With the 10Y yield now well above the S&P 500 yield, we wonder what 'measure of cheapness' will be wheeled out next to justify buying stocks again.
S&P 500 futures have dropped back perfevtly to unch with the open and VWAP - nothing unusual there at all.
10Y yield is now well above the S&P 500's dividend yield...
Charts: Bloomberg
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BTFD!
Yeah,
Beautiful -
Terrified
Fraudsters
Die
think about the reverential devotion your average schlong-only investor gives to the DCF model. higher UST rates, means higher discount rates, means lower stocks... you can't have surging stocks against a backdrop of surging yields for very long...
So is this the reason why the markets when full tard up this morning? Makes no sense...
Unless this is like every other Tuesday for the past several weeks where the markets only go up up up... bs...
With the markets so high, how difficult would it be with someone with TONS of cash to crash it and cash in on shorts? Why has no one tried this? Seems like some people the world over have tons of cash and can move the markets...
LOL!!
I was hoping we would let this slide today...
Shhh, let it go..
No more free money to cycle into dividends to bring in return-starved suckers so management can cash out at astronomical prices!
Ratchet up the accounting fraud boys!
Bond rates up? Ooops!
So today CNBC is confuzzled about why Tuesday has been stock ramp day 20 times in a row.
They are asking for answers on their Twitter feed. "Why oh why is Tuesday ramp day for stawks!?!?"
Their guests saying it is a coincidence, it is the recovery, it is not Monday, it's the second trading day of the week, etc.
Not a one has mentioned POMO!
Ugh.
Are they that stupid, that naive or that paid off ? Maybe all 3 ?
it is most definately the later of your reasons...
I'll take Convexity for 800 Alex.
BK says 2.25% is the magic number. Not too far away.
Majik number for what?
The point where they sell the hell out of bonds to hedge their mortgage backed securities. Duration extends on MBS as rates rise, you sell the 10 year to hedge it.
PSSST, its the pomo
In Japanese the word Tuesday means 'fire day' in reference to the fire star Mars. May be a good day to get fiery with that POMO and stock appreciation
Gonzalo Lira’s perspective used to be posted here once in a while…
Quick question to veteran ZH’ers: Has anyone herd of him lately?
probably because he "closed his shop" to paying customers only - I'm curious, too, but can't be bothered to have another subscription
I watch that too. He had 2 posts in jan. After that, i've seen nothing on his blog.
Heard he got droned.
Oh My!
Implosion in 3 ... 2 ... 1 ...
I guess they let it go down a little before bringing on the 3:30 ramp. Looks better that way.
Reminds me of the scene in "Tommy Boy", when Tommy does a(drunk) face plant into the coffee table. He gets up and says, "That's gonna leave a mark"...
http://www.reuters.com/article/2013/05/28/us-markets-global-idUSBRE88901C20130528
Global stocks rally, yen falls on central bank promises
(Reuters) - World stock markets rallied sharply on Tuesday, seizing on clear pledges of monetary policy support from Japanese and European central banks, sending the yen lower and pushing benchmark U.S. bond yields to levels not seen in more than a year.
Wall Street jumped in morning trading, with major averages gaining more than 1 percent, as U.S. investors also responded positively to strong figures on consumer confidence and housing prices. Oil prices rose, while gold fell modestly.
Heightened expectations the U.S. central bank could soon taper its stimulus program last week had caused turbulence across markets, leaving it to central banks in Japan and Europe to reassure investors their accommodative monetary policies would remain in place.
On Monday, when U.S. markets were closed for the Memorial Day holiday, ECB Executive Board member Joerg Asmussen said the policy would stay as long as necessary. On Tuesday, BOJ board member Ryuzo Miyao said it was vital to keep long- and short-term interest rates stable.
"Investors want to make sure that everyone is in the same boat, since monetary policy has been the mother's milk of the rally so far this year and there was some concern that policy would be changed or amended," said Paul Nolte, managing director at Dearborn Partners in Chicago.
from BTFD to SELL THE FUCKING HIGH !!!!!!
does this mean ann margret is not coming?
http://www.youtube.com/watch?v=FpO0OV4mfvo
I think this is more like it...
http://www.youtube.com/watch?v=Roayx-79cAs
Fed uses Ponzi-counter-FIAT money to by Wall Street's bad bonds; Wall Street then sells bad bonds buys and buys blue chip stocks.
Conclusion: If A=B and B=C, then A=C. The commutative properties of Ponzi-Pomo = HIGHER STOCK PRICES all due to counter-fiat printing.
High yielding treasuries simply increase the cost of government debt servicing. Don't get fooled into thinking the Fed wants high interest rates/inflation. All the talk of deficit reduction is overblown as it is shortterm and nowhere near the point where the debt is decreasing.....it's just instead of running a 1.2 T deficit, we are running on a 800 B deficit pace which continues to add to the debt burden. And it's only temporary as expenditures are set to accelerate again. I'm not saying run out to buy treasuries now, but you will find opportunities to do so that will likeliy pay off handsomely when Japan reaches it's endgame etc. I believe Bass and others who say 10-yr will go to zero yield eventually.
Actually, according to Karl Denninger, we're running the same $1.2 Trillion pace as usual. He put the numbers up a week or so back and they already had something like $760 billion of deficit spending through 7 months of the fiscal year.
Thanks....and doesn't suprise me as the math used by the burearocrats is always self serving ahead of any truth. While MSM focuses on temporary relief at state and federal levels they train people to ignore big picture. As I posted last week, the liability per taxpayer for unfunded liabilities (social security, medicare etc) is over 1,000,000 each. This number doesn't include the per taxpayer debt for national debt etc. The central banks are turning the equity bubbles into Hindenberg's
Awesome, I'm glad to see the world economy is fixed. I was worried there for a while. Now all I have to do is decide when I get my third mortgage on my house, should I spend the money on Apple stock, or should I buy bonds from Spain, Japn, and Italy. </end sarc>
Sadly, that may be the only way you'd have of protecting your wealth from what is coming. See, when so many people are making so much money, 7x leverage on most investment funds on this rally and practically nobody hedging. Therefore, it can only mean that the wealth they are acquiring is coming from somebody else, since wealth can't be printed. And its coming from you and me. Your only chance is to go full in, take the risk and hedge using something that would go to infinity and beyond if there is a crash, there is no chance for a controlled crash, if they stop printing all hell breaks loose. Those who don't do as you sarcastically point out will loose nearly everything they have...
Until next time,
Engineer
CNBC is reporting that Thurs is report date for EI claims, and are 'very concerned' that a strong jobs report will lead to possibility of QE tapering (thus a selloff).. Knowing the report is bullshit rigged anyways I could not figure out which way this was gonna play.. however seeing the market jump today I know now a sell off is far more likely this Thurs. I'm planning on possibly shorting Tommorrow at close.. Still studying may 'phantom trade it' and see the result of my 'what if?' without doing so
Something is 'very smelly' here if T.Bill yields are spiking it means that money is getting prepositioned for something to come, which means the 'jobs report' number is already on the street, and their getting ready to probably short the market, however their ramping it just prior just like Japan I bet.. something is in the play.. where can we see short positions for the Dow are they increasing?