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Treasuries Poised For Breakout As Key Technicals Taken Out

Tyler Durden's picture


By now everyone and their dog knows Treasuries are on the move. The move, however, is sizable as 10Y yields break above their 200DMA for the first time in almost five months. This is the second largest two-day jump in yields in 16 months as the market wonders whether this is the breakout where 's##t gets real' or a test of resistance at the October 2011 spike highs. Only AAPL time will tell.

Unsurprisingly, given the anchored short-end, this also means the term structure is its steepest in 5months (2s10s) though we note that the butterfly 2s10s30s is only back (for now) to two month highs) - well below the Oct 2011 levels the absolute yields are closing in on.

Chart: Bloomberg


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Wed, 03/14/2012 - 10:54 | 2254161 GeneMarchbanks
GeneMarchbanks's picture

Transfer will soon be complete as Apple will simply takes over.

Wed, 03/14/2012 - 10:57 | 2254177 SheepDog-One
SheepDog-One's picture

US Treasuries now obsolete, we've got the Apples. All anyone really needs.

Wed, 03/14/2012 - 11:13 | 2254273 trav7777
trav7777's picture

wtf the Fed expect when it is trying to extract liquidity and chase from bonds?

The other post says Bernank thinks the "recovery" is "frustratingly slow"...that's because it's NOT a fuckin recovery, it's a New Age of Contraction and all his dumbass presuppositions are false!

Wed, 03/14/2012 - 11:16 | 2254283 Jason T
Jason T's picture

I.E. See gasoline consumption.. miles driven .. food stamp usage.. food and beverage volume sold ..5 year low

Wed, 03/14/2012 - 11:24 | 2254335 CrashisOptimistic
CrashisOptimistic's picture

Beverage volume low?  Do you have a link for that?

I'd been under the impression that the soft drink companies were the surprise of the whole event -- that soft drinks were immune to recession.

Wed, 03/14/2012 - 11:33 | 2254373 Xkwisetly Paneful
Xkwisetly Paneful's picture

Basically a 25yr bond rally and yet I read about the dollars relevance and the need to save the petro dollar. It is preposterously farcical.

Wed, 03/14/2012 - 12:03 | 2254512 Manthong
Manthong's picture

Solid and strong investment in the USA.

Kind of like investing in the U.S.S. Enterprise.


Wed, 03/14/2012 - 13:35 | 2255012 Xkwisetly Paneful
Xkwisetly Paneful's picture

DEC 2008 yields went negative incl transaction costs, the world paid the US to hold it's money when shit hit fan.

Can keep pretending otherwise but it seems foolish.

Wed, 03/14/2012 - 11:25 | 2254339 SheepDog-One
SheepDog-One's picture

Youve got it all wrong Trav, Bernank is not a 'dumbass' nor a 'good hearted but 3 Stooges-like repairman' flailing about trying to fix anything at all, he's MONETIZING THE DEBT and thats all.

Wed, 03/14/2012 - 13:48 | 2255061 Troll Magnet
Troll Magnet's picture

How fucking dare you compare the Bernank to the esteemed Three Stooges?  I LOVE LARRY, MOE & CURLY!  Shemp not so much.  He sucked.

Wed, 03/14/2012 - 17:04 | 2255799 VanceEva1
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my classmate's sister makes $82 hourly on the internet. She has been out of work for 10 months but last month her income was $17192 just working on the internet for a few hours. Read more on this site ....

Wed, 03/14/2012 - 11:00 | 2254193 Dr. Richard Head
Wed, 03/14/2012 - 11:55 | 2254465 Ahwooga
Ahwooga's picture

Wow. Any chance they are hoping no-one remembers that? Apple to buy youtube and delete all opposing content.

Wed, 03/14/2012 - 10:54 | 2254162 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Rates will rise over Bernanke's dead body, so you know what I'm hoping for.

Wed, 03/14/2012 - 11:05 | 2254222 SHEEPFUKKER

Rates to rise??

Wed, 03/14/2012 - 22:34 | 2256589 LongBalls
LongBalls's picture

absolutley NO way. Rates might rise but only modestly. In the face of 1.2T deficits? Not a chance.

Wed, 03/14/2012 - 10:54 | 2254163 Cdad
Cdad's picture

Well, it is a good thing that the US does not currently have all time high record Ponzi debt...and a need for more world record issuance.

Wed, 03/14/2012 - 11:26 | 2254350 spine001
spine001's picture

In mathematics when we want to understand a complex sytem we always start by looking at the extremes. Here that would mean, NO FED owned treasuries (the zero limit) and the FED owns ALL treasuries (the infinite limit). Just assume that at the next FOMC meeting Bernanke announces that the FED is buying ALL outstanding treasuries. What will happen? Got that? It is possible, and inside the FOMC perview. Once you finish digesting tnat scenario, you can start to guess where we are. Just in the middle of these two, but getting closer to the infinite one...


Untiil next time,



Wed, 03/14/2012 - 15:08 | 2255355 gmrpeabody
gmrpeabody's picture

I thought they just said as much....

They are buying an unlimited number of longs, sterilized by selling new shorts. Well, nobody else is going to buy them.

Wed, 03/14/2012 - 10:55 | 2254166 SheepDog-One
SheepDog-One's picture

Bonds break out, stocks break out, dollar breaks out, PM's break it sure is Springtime for ObaMao huh!

Wed, 03/14/2012 - 11:08 | 2254243 WonderDawg
WonderDawg's picture

Insanity, but it is what it is. Take advantage of it. Gold's on sale! But I don't think we've seen the final sale price yet, maybe down around $1300? But why take chances, buy on the way down. I'm holding off on silver, I think it makes its way back to the mid to low 20's. But what do I know? A country boy can go nuts trying to figure this shit out.

Wed, 03/14/2012 - 11:12 | 2254266 CvlDobd
CvlDobd's picture

Bonds are breaking down not out.

I think the retard market will reward stocks for this at first then say "oh shit" high yields on monster debt is bad not good.

I'm probably giving the market too much credit though.

Today I'm reading analysts say the yield breakout means good things for the economy. Debt will eventually break most markets.

Wed, 03/14/2012 - 11:39 | 2254402 spine001
spine001's picture

Let me make it simple for you:

1) Income is limited worldwide (call it yields, dividends, etc.)

2) Fiat money is unlimited, you just priint it out :) (or worse you eprint it out, at least before printing presses did set a limit, now there is none)

From 1) and 2) it shoiuld be obvious that income will get more expensive to get

That creates 3) to 8) as  corollary,

3) Equities will go up in fiat money terms (since income will be more expensive)

And 4) Bonds will go down in price due to increase in fiat money, but the increase will be delayed due to the large availability of capital due to increase in fiat money

5) Money in bonds will steadily loose its real value (value to acquire actual constant value income)

6) People (Muppets?) will realize this after years of loosing capital and will have NOWHERE to go except to start a company themselves or to invest in equities

7) The move triggered by 6) will reinforce the increse in the apparent value of equities.

8) The average P/E ratio will steadily go down

The only offset to this sequence is a major even to derail its progression, WW3, Bernanke dying, Republicans winning the white house in November, the FOMC stopping their continuous rounds of easing, etc.

Until next time,


Wed, 03/14/2012 - 13:32 | 2255000 Currency is Debt
Currency is Debt's picture

Due to the phenomenon that the CB's print the money and require interest on that money there is a shortfall. Ie they print 1 million but demand back 1 million plus 50k interest. Where is the 50k?

This is why 'we need' asset bubbles. As long as asset values are growing this can cover this defiency. In a contracting economy all the shit hits the fan as we have seen the last few years. IT appears that the short fall is a black hole. The only solution is to expand the money supply further and boost asset and price levels to cover the previous shortfall. This in conjunction with an asset bubble- a wealth effect creator leads to 'further growth'(inflation). Ie real estate last time, maybe equities and commodities this time. There needs to be a bubble wealth effect created to have a economic 'bull market'. 

Even though the whole thing is a Ponzi scheme - you had better believe that these people wield the power over all these pieces of the puzzle and they will find a way to periodically prop and boost things up. Obviously this occurs via an inflationary scenario thus far and more than likely in the future also.

Wed, 03/14/2012 - 10:57 | 2254173 Ted Baker
Ted Baker's picture


Wed, 03/14/2012 - 11:02 | 2254204 CrashisOptimistic
CrashisOptimistic's picture

Uh, except that the dollar is up today.

Wed, 03/14/2012 - 11:16 | 2254289 Awakened Sheeple
Awakened Sheeple's picture

My day is now

Wed, 03/14/2012 - 11:41 | 2254409 spine001
spine001's picture

And Gold down...

Wed, 03/14/2012 - 10:57 | 2254175 Corn1945
Corn1945's picture

Wouldn't buy US Treasuries unless they yielded double digits.

Wed, 03/14/2012 - 10:58 | 2254181 rumblefish
rumblefish's picture

so does this mean equities should go down?

Wed, 03/14/2012 - 11:01 | 2254197 SheepDog-One
SheepDog-One's picture

Yea but now apparently stocks are not allowed to be any less than up 1% daily.

Wed, 03/14/2012 - 11:06 | 2254231 The trend is yo...
The trend is your friend's picture

The Banking cartel are now in the technology business, aerospace technology actually.  They have had massive breakthrough in anti gravity technology.  They can keep things, in their case Markets, suspended in mid air with no support infinately.  Einstein would be proud.

Wed, 03/14/2012 - 11:22 | 2254296 CrashisOptimistic
CrashisOptimistic's picture

One other thing in the "should" category.


Treasuries were down sharply all last night.  Nothing happened in NY early this morning to compel selling Treasuries.  It started as soon as futures opened after yesterday's close.

Stocks were up 1% night before last.  The bullshit headlines of "stocks are up AS (always the AS word) retail sales grow solidly for XXX consecutive months)" were silly.  It also had nothing to do with Bernanke's statement and not much to do with JPM.  Stocks were up 1% before that report ever came out.  They were up 1% before the market even opened.  They were up 1% a few hours after Monday's close.  The futures dictated it, as they frequenly do for Tuesday morning of late.

There is a huge amount of bullshit going on in this low volume equity market.  Pretty much none of it has to do with fundamentals.

Wed, 03/14/2012 - 11:43 | 2254419 spine001
spine001's picture

No, but read my comment above explaining what is happening and will happen

See you next time,


Wed, 03/14/2012 - 12:00 | 2254190 Sophist Economicus
Sophist Economicus's picture

Need suckers to start shorting so that the take down will be risk-free

Wed, 03/14/2012 - 11:00 | 2254192 CrashisOptimistic
CrashisOptimistic's picture

Pretty much incomprehensible.

Gold being smashed as Treasuries also are being smashed, while oil is flat.  What can possibly make sense about this?  Booming economic growth would be inflationary AND would boom oil consumption.  So bond yields would go up, but so would gold and oil.  Not happening.

If economic growth were underperforming, bond yields would be falling.

Bernanke cannot allow yields up.  Simply that.  At 16 Trillion in debt, a 1% rate uptick is a 160 billion dollar fiscal budget smash when we've already seen that Congress cannot even tolerate a $4 billion spending cut.

If this is vigilantes, we'd see other effects.  We'd see dollar weakness, not strength, because the vigilantes would sell so aggressively that they'd damage the economy.

Overall, incomprehensible, as so much is nowadays.

Wed, 03/14/2012 - 11:04 | 2254218 SDRII
SDRII's picture


Wed, 03/14/2012 - 11:10 | 2254254 SheepDog-One
SheepDog-One's picture

Well theres a good answer to the 'So now what' question.

Wed, 03/14/2012 - 11:05 | 2254219 SheepDog-One
SheepDog-One's picture

I guess its the effects of the plan where they flooded the world with so many trillions that nothing can go down.

So they got all markets manipulated 100%, and so much free fiat sloshing around that it negates any normal market effects....but you got to ask the question 'Ok, but now what'? 

Someones got to pay the piper at some point...we've just been marching in place and living a fantasy for 4 years.

Wed, 03/14/2012 - 11:13 | 2254257 CrashisOptimistic
CrashisOptimistic's picture

Well, I am not a signer on to the whole concept of "oh no!  all this horrible printing of money!" flailing.

Real estate collapse and defaulted mortgages erased trillions of dollars and euros from the universe.  Trillions upon trillions.  All money gets printed at some point.  All of it.  That's how it works.  The printing of money was not excessive additional.  it was replacement.  The money was eradicated from the universe by real estate collapse.  They replaced it.

Simply that.

What is offensive is the loss of mark to market accounting.  The putting of all that bad paper in vaults and pretending the money DIDN'T disappear for purely accounting purposes . . . that's what is corruptive.  Not printing.

Underlying all this is oil scarcity, of course.  It is the source of all disintegration we see, but unlike those other factors, nothing can be done about it.

Wed, 03/14/2012 - 11:16 | 2254287 SheepDog-One
SheepDog-One's picture

No one took any losses. The idea that they 'replaced' lost money with new fake money simply proves that someone somewhere is going to have to take the real loss.

That of course will be you and me, and mom and pop and their pensions and 401K' that hardly anyone can see it but oh well. The mechanism for doing that in my opinion will be the start of WW3, after all its always been the perfect time for the banks to wipe clean the accounting books.

No ones trying to figure out how to fix anything here, all the 'money printing' has just been the phase where the CB's buy up every asset under the sun for free for themselves, thats all. Theyll seize the pensions and 401K's one overnite when theres a 'terrible and totaly unforeseen event' and everyone will look around and say 'Huh? Hey what happened to all my funds!' Game over.

Wed, 03/14/2012 - 11:35 | 2254386 Xkwisetly Paneful
Xkwisetly Paneful's picture

Anyone collecting the 2/10ths of 1% on their savings has and will continue to take the real loss.

Wed, 03/14/2012 - 12:10 | 2254548 CrashisOptimistic
CrashisOptimistic's picture

Of course they will.

And they're happy to do so to avoid risk.  They'll remain happy to do so when nominal yields go negative within a year or so.

Wed, 03/14/2012 - 11:21 | 2254316 SheepDog-One
SheepDog-One's picture

You say the amount of printing was not excessive, just replacement? On one hand, way more than replacement, on the other hand, not even close to the derivatives loss of $250 trillion, or so. And doesnt even touch $1.2 Quadrillion real funny money out there traded by banks out of thin air. 

Anyway the whole argument is irrelvant, the way I see it all the money printing theyve done was just to buy every bit of debt out there, theyre MONETIZING THE DEBT, for ownership, when they finally pull the rug out. Really no more complicated than that.

Wed, 03/14/2012 - 11:29 | 2254356 CrashisOptimistic
CrashisOptimistic's picture

A great deal more money was lost to the universe in defaulted mortgages than was printed.  QE2 was "only" $600 billion.  Trillions upon trillions of mortgages have been defaulted (and worldwide, not just US).  TARP was only 700B.  The QEs have not been trillions.  

In that context we can make a case for inadequate printing.

You are correct about irrelevance, though.  Oil's scarcity changes all of it.  The flailing about and focusing on swollen lymph glands and even surgical removal of them has no effect on the core cause -- infection with bubonic plague.

Wed, 03/14/2012 - 12:03 | 2254501 Xkwisetly Paneful
Xkwisetly Paneful's picture

ftr there is only $12trillion in total residential mortgage debt in the US. Since Europe is of similar economic size but less homeownership maybe there is $8trillion in Europe, so how much of that defaulted? Not trillions and trillions and trillions.

I may agree with you if the banks had actually deleveraged but I see no evidence of that.

Peak oil has fuck all to do with anything.

Wed, 03/14/2012 - 12:13 | 2254565 CrashisOptimistic
CrashisOptimistic's picture

Your numbers sound like 20 trillion in global mortgages.  Just a 10% default rate would be trillions, plural.

2 trillion is more than total Fed QE + LTRO, as best I recall.

This is not an oil thread so I won't argue the scarcity issue here.

Wed, 03/14/2012 - 16:53 | 2255744 ffart
ffart's picture

It seems like raising yields on a debt that the U.S. government can't make whole without monetizing wouldn't lend itself to a stronger dollar. Then again, I'm just a simpleton who also doesn't think peak oil has anything to do with why it's gone up exponentially over the last few years.

Wed, 03/14/2012 - 11:30 | 2254361 kraschenbern
kraschenbern's picture

Like the way think SheepDog-One.  You must have read "The Road to Serfdom", that's how it ends.

Wed, 03/14/2012 - 13:06 | 2254842 roccman
roccman's picture

"Underlying all this is oil scarcity, of course."


Bingo - the blue ribbon goes to you!!

Wed, 03/14/2012 - 11:46 | 2254431 spine001
spine001's picture

Not incomprehensible, read my previous comment

We won't have growth, we will have stagflation with very slow growth Japanese style but with Argentina's style inflation due to uncontrollable deficits (1970s-2001).

Growth will only pick up when the echo boomer population gets to their 40s

Provided that none of the events I mention before occur


See you next time,


Wed, 03/14/2012 - 11:01 | 2254196 withnmeans
withnmeans's picture

Hmm, "long pause inserted here". Could it be that nobody is wanting to buy up some of or debt besides the FED. Like in the Serengeti "the migration maybe making the end push to get out".

Wed, 03/14/2012 - 11:05 | 2254224 CrashisOptimistic
CrashisOptimistic's picture

If it was, the dollar would be down, not up.

Wed, 03/14/2012 - 11:49 | 2254442 spine001
spine001's picture

Remember and everybody seems to be missing this point, the dollar up or down is only a relative judgement of the issuer's economic and military capabilities to survive what is coming and to be able to keep on issuing and supporting the currency, it has nothing to do with the absolute value of the currency in future terms...

Meaning that the dollar could be up simply because the Euro looks a lot worse in the near future (Greece repeat, Portugal, Spain, Italy, etc.) and the Yen also looks worse, etc.

Wed, 03/14/2012 - 11:05 | 2254228 SheepDog-One
SheepDog-One's picture

Of course the FED is the only one who HAS been buying for probably 2 years.

Wed, 03/14/2012 - 11:01 | 2254198 rufusbird
rufusbird's picture

here is what I have been watching...the 30 year...

Wed, 03/14/2012 - 11:01 | 2254201 Lost Wages
Lost Wages's picture

Seems temporary.

Wed, 03/14/2012 - 11:05 | 2254226 rufusbird
rufusbird's picture

look at it as an indicator of what is to come later. Right now only a few are doing it. There will come a time when a LOT of people are going to be doing it. Patience. It is like fishing with a bobber. Just getting a nibble right now...

Wed, 03/14/2012 - 11:52 | 2254451 spine001
spine001's picture

You are completely correct I have been folowwing its minute by minute value for years. A great indicator of where real money is going...

Wed, 03/14/2012 - 11:14 | 2254279 Bluntly Put
Bluntly Put's picture

The thing is most people want to believe in the infallibility of human planning and ingenuity. They want to believe that collectively we can overcome individual flaws and failures. This apparently gives hope to the hopeless for failures executed while simultaneously relieving one's conscience from previously committed sins and atrocities.

In sum, the individual, whose freedom is ironically linked to responsibility or reaping from they have sown, is thrown under the bus for the collective "good". No one seems to question if a collective good is even acheivable. Further irony is demonstrated that the majority of the collective unquestionably accepts the destination of the bus as some concensus without ever wondering who the real driver [individual(s)] is(are). An individual, a true individual would say it is all temporary. A collectivist would say it needs be permanent. 

Wed, 03/14/2012 - 11:06 | 2254233 359766
359766's picture

back to correlation! yields up and stock DOWN! and the world would be a litte bit more normal ...

Wed, 03/14/2012 - 11:54 | 2254461 spine001
spine001's picture

With trillions of dollars in extra debt every year, the world will never go back to "normal". If it does, then be sure taht it is only temporary aberrant or speculative behavior...

Wed, 03/14/2012 - 11:08 | 2254245 Cognitive Dissonance
Cognitive Dissonance's picture

"Only AAPL time will tell."

I think you had it right Tyler. Only 'Apple' time will tell. It's all right here on my iPhone4.

Wed, 03/14/2012 - 11:18 | 2254295 sablya
sablya's picture

You mean Quicktime?

Wed, 03/14/2012 - 11:16 | 2254288 sablya
sablya's picture

Is anyone paying attention to India and what the CB there is doing?  It sounds to me like they're heading for serious problems.  What impact would that have on China and the rest of the world?

Wed, 03/14/2012 - 11:38 | 2254395 whatsinaname
whatsinaname's picture

Yes they have lowered the RR twice by big amounts (50 and 75 basis points) but kept the interest rates near their ultra high levels. Thats not expected to stimulate the demand but just keep the banks liquid. Inflation is BOOMING in India and Brent is killing them right now. The real estate bubble is now a frenzy. The RBI is doing the right thing kind of along the lines of China.

Wed, 03/14/2012 - 12:10 | 2254541 sablya
sablya's picture

It seems as if they're caught between a rock and a hard place.  They have to relax monetary policy to keep banks liquid but that pushes more money into circulation which exacerbates the inflation problem leading to an increases in time preference which puts pressure on bank liquidity.  It seems like an unstable feedback loop is being set up there.  Am I understanding it correctly?

Wed, 03/14/2012 - 11:18 | 2254300 vote_libertaria...
vote_libertarian_party's picture

supply and and demand

US Treasury needs to find $120B in new buyers EVERY MONTH


Oh, and everybody forgets that in the fall of 2010 Greece had a 10 yr yield of 6.ish%.  1 year later it was > 40% even with a lot of gvt buying.


The world struggled to delay disaster by scrounging up $200B for Greece.  How hard is it going to get when the trillions in US debt start banging around?

Wed, 03/14/2012 - 12:00 | 2254491 spine001
spine001's picture

Hahaha, very good, but incorrect. The reason is that the USA can print and Greece couldn't. The USA will just keep on printing money, see my comment before for as long as it needs to. Yes, I know the consequences will be hyperinflation, but the debt will be washed over, diluted in a way. And by that time the echo boomers generation will be in full swing. Savers will be screwed and those in bonds will loose it all.This has already happened many times over in our history, not in the USA though, so people don't have the antibodies. Read about the 1970-2000 Argentina history of printing and stagflation and then growth... It is the only applicable modern example... (not exact but a good guideline)

Wed, 03/14/2012 - 11:22 | 2254322 resurger
resurger's picture

Treasuries and Equities move togther, the higher the interest/yield the higher the stocks..

welcome to Ponzi Markets

Wed, 03/14/2012 - 11:29 | 2254355 dr.charlemagne
dr.charlemagne's picture

If everyone is selling US Treasuries, that means that they are asking for dollars in return. Treasuries bidding for dollars. Thus, Treasuries down, dollar up. Right?

Wed, 03/14/2012 - 11:34 | 2254378 CrashisOptimistic
CrashisOptimistic's picture

Except that everyone isn't.

Treasuries were showing this yield hit yesterday afternoon when futures opened after the close.  Very little happens in NY now.  Everything decisive is overnight.

Wed, 03/14/2012 - 11:35 | 2254384 pickle
pickle's picture

This all smells of recovery. I blame the olympics.

Wed, 03/14/2012 - 11:40 | 2254404 XitSam
XitSam's picture

What I have learned in the last few years about economics and finance in this manipulated market, partly from reading Zero Hedge, is that technical analysis and it's associated terms (breakout, resistance, etc.) is total shit.

Wed, 03/14/2012 - 12:03 | 2254514 CvlDobd
CvlDobd's picture

Don't believe everything Tyler says. They shit talk TA then post charts like these and then the daily post close context charts (which I love btw).

Think of it this way. ZH bashes both Apple and the US government. They want the US Government to be run just like Apple. No debt, high cash, visionary leaders, solid growth. And still we hate Apple here?

Most readers are just as dense as the sheeple they claim to hate as the Apple way is what most countries and companies need. But since Tyler says Apple is bad they swallow hook line and sinker.

I used TA to trade SLV for big gains in 2010 and TLT last year. It ain't what it use to be I give you that but do you have a better idea to navigate these markets?

Wed, 03/14/2012 - 12:14 | 2254569 Vince Clortho
Vince Clortho's picture

They are not markets.  Its a Casino.  The best move is not to play.

Wed, 03/14/2012 - 12:05 | 2254522 spine001
spine001's picture

What you are told about it may be shit. But the analysis attempts to discover the patterns of actual  behaviour of the big money movers and is better than any fundamental type analysis due to the elemental "MANIPULATED" nature of the markets we operate in today. The problem for you is that you need to develop your own "TECHNICAL" analysis, which I have found to be extremely difficult due to lack of access to the raw "PUBLIC" information without paying for a Bloomberg terminal and moving to Manhattan to get fast enough access to the data. But doing retrospective analysis I can tell you that the moves of the market are very predictable using tick by tick technical analysis. Too predictable, what this means in my mind is that if I can do it, a lot of people can do it to.


Until next time,


Wed, 03/14/2012 - 16:27 | 2255668 falun bong
falun bong's picture

People think "technicals" is some kind of astrology or something. It's not. Price action reflects the underlying sentiment of market participants (even if they are algos sometimes). And plenty of participants follow the charts too. Just a way of looking at what's happening.

Wed, 03/14/2012 - 11:43 | 2254424 bugs_
bugs_'s picture

those with adjustable mortgages take note and do the right thing for yourself soonest.

Wed, 03/14/2012 - 11:47 | 2254434 Everybodys All ...
Everybodys All American's picture

the canary is getting weak ...

Wed, 03/14/2012 - 11:49 | 2254439 MunX
MunX's picture

Rates and treasuries up? Did the Fed have a bad auction or something?

Wed, 03/14/2012 - 12:10 | 2254547 spine001
spine001's picture

It won't happen that way. Everybody with finance 101 knows that sooner or later the excess cash available and the trillion dollars deficit we have will trigger a large increase in interest rates at the long end of the curve. The challenge for them is when to get out of a very successful trade up to now. They have been long for years and it has been extremely profitable for them. Therefore nobody wants to be the last one out just to squeeze a little bit more profit out of the trade. When is that time? Now? A very expensive mistake to make if you wait to much, the numbers with yields at ~2% for the 10 year are stucked against you. If they were to jump to 4% you'd loose 50% of your capital or be stuck for 10 years with 50% of the income you could get in another comparable investment... No fund manager wants to risk having to explain why he waited too long to exit this trade...

Treasury bond funds will bear the brunt of the losses...

Wed, 03/14/2012 - 11:55 | 2254463 mayhem_korner
mayhem_korner's picture



Is today's monkey-hammering down of PMs (coordinated CB action) intended to provide some head-room for the next round of liquification? 

Are the usual suspect "banks" too filled to the hilt with Hellenic default overspill to do their part in the stealth buydown of the US Treasury yield curve?

Is Ben staring at the Print button with drool running down his chin, praying for the will power not to push it?

Inquiring minds want to know...

Wed, 03/14/2012 - 12:11 | 2254549 Vince Clortho
Vince Clortho's picture

I think the Print Button is hard-wired in the permanent "On" position.

Wed, 03/14/2012 - 12:13 | 2254563 spine001
spine001's picture

No evil intention, quite the contrary, he believes that by printing he will preserve our social system intact and working, and he has not taken his finger from that button for a second since the first round of QE, if you think otherwise you don't understand how the system works...

See you next time,


Note: I don't agree with him or his decisions or his thesis, which I found many flaws in, but it doesn't matter, I am only an observer and commentator

Wed, 03/14/2012 - 11:55 | 2254466 PaperBear
PaperBear's picture

The next gap up for gold/silver must be just around the corner, what with the paper whacking they're getting.

Wed, 03/14/2012 - 11:55 | 2254468 MiniCooper
MiniCooper's picture

I believe Art Cashin spoke about the 1987 Stockmarket Crash a little while ago.

I too am old enough (just) to remember the 1987 Crash. It happened after the bond market blew up because Japanese buyers stayed away. The Japanese in those days were regarded in the same way as China is now - saviour of the World. We even had the phrase Japanese Wall of Money. The money never arrived.

Agree with the previous poster who said the stockmarket will go up at first until it suddenly gets how bad a massive spike in bonds yields is - then it will fall. The fall out from declaring a trade war on China is only just beginning and running a perpetual trade and fiscal deficit eventually has consequences.

This from Wiki:

"Some technical analysts claim that the cause was the collapse of the US and European bond markets, which caused interest-sensitive stock groups like savings & loans and money center banks to plunge as well. This is a well documented inter-market relationship: turns in bond markets affect interest-rate-sensitive stocks, which in turn lead the general stock market turns."

Wed, 03/14/2012 - 12:20 | 2254597 spine001
spine001's picture

Sir, you are correct, but for 1987, where the deficit was not over a trillion a year, and the Fed's balance sheet was a small fraction of what it is now, and foreigners didn't provide more than 50 cents for every cent we spend in the USA. With the current wall of fiat money things will be different, you will see the bond crash but the market will not crash in fiat money terms, but it will crash in real value terms. But everybody will be confused.

The best analogy that I can give you is that this will be as confusing as the relativity theory, since velocity of money will be involved too, and I haven't even attempted to get at that. No economic model or theory is prepared for what is coming. Every number that you see is relative to a whole set of other numbers and everything is being changed on you simulatneously so that you can't understand what is happening. And it is being done in this way on purpose to lie to common people, now baptized as Muggets by Goldman


See you next time,


Wed, 03/14/2012 - 11:59 | 2254483 jjsilver
jjsilver's picture

This is more theater and distraction. The fed can make treasuries do whatever it wants.

Greenspan-We can always print money

Wed, 03/14/2012 - 12:22 | 2254604 spine001
spine001's picture

And that is the point. With ONLY ONE CAVIAT. They need to be able to lie to the Muggets (us) so that we don't create a political uproar when we realize that they are screwing us big time....


Up to now, they have succeeded! Kudos to them.


Until next time,



Wed, 03/14/2012 - 11:59 | 2254490 MiniCooper
MiniCooper's picture

Incidentally, people also partly blamed the magnitude of the crash on 'programme traidng' which in those days was similarly out of control as out modern day HFT.

Wed, 03/14/2012 - 12:05 | 2254520 Yen Cross
Yen Cross's picture

 I can't believe this market is up on cad (new vehicle sales). /sarc Every other piece of economic news overnight and this morning was complete shit. (bright red)

Wed, 03/14/2012 - 13:19 | 2254926 Currency is Debt
Currency is Debt's picture

The Fed prints the money and loans it out into the economy via governement, banks and corporations. These fuckers have the benefit of the gettin the money while it is still hot. They buy up depressed assets and benefit in the meantime growing the wealth gap but retaining the illusion of GDP growth. The Fed and other central banks in the meantime do not give a fuck about the money they loan out it is fictional/printed. The money supply which all originates from the CB's continually expands - the more it expands the more interest payments / yield they earn on the increasing supply of printed and loaned out money. 

Would you like to to print and lend 1 trillion dollars at 3% or would you prefer to print and lend 50 trillion at 2-3%. Over the course of time their book grows and so does their interest received on thin air.

Wed, 03/14/2012 - 13:34 | 2255004 Currency is Debt
Currency is Debt's picture

Due to the phenomenon that the CB's print the money and require interest on that money there is a shortfall. Ie they print 1 million but demand back 1 million plus 50k interest. Where is the 50k?

This is why we need asset bubbles. As long as asset values are growing this can cover this defiency. In a contracting economy all the shit hits the fan as we have seen the last few years. The only solution is to expand the money supply further to cover the previous shortfall in conjunction with an asset bubble- a wealth effect creator. Ie real estate last time, maybe equities and commodities this time. There needs to be a bubble wealth effect created to have a economic 'bull market'. 

Even though the whole thing is a Ponzi scheme - you had better believe that these people wield the power over all these pieces of the puzzle and they will find a way to periodically prop and boost things up.

Wed, 03/14/2012 - 14:04 | 2255122 MunX
MunX's picture

So with rates and treasuries rising does that mean next bubble about to burst?

Wed, 03/14/2012 - 14:20 | 2255171 Currency is Debt
Currency is Debt's picture

The next bubble has yet to really begin. We are laying the foundations. Unless this is the end.

The thing is you can sit down and conclude how messed up things are and how the pieces dont fit together and there is now way the economy will grow etc. The problem is that this true and if it were down to the ingenuity of our leaders to create healthy economic growth then we'de be really screwed. Luckily for the continuation of the system that they are still able enough to run the printing presses. So thus far in this system every time you turn around every few years you are most likely to see higher prices all around you. Everytime it seems they are too high. But then the stock of money expands and consequently so do most prices. Abra Cadabra.

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