What makes this sell off unique compared to others, over the past 3 months?
Well, for one, this decline is coinciding with higher rates. Previous to this decline, all small dips were being ignored in the bond markets, as rates pressed lower. Today is especially unique, considering munis are getting hit, yet Treasuries are doing well. This is a classic flight to safety trade. California munis may be rebounding today. However, overall, the municipal bond market is lower to the tune of 1%. There is a pecking order here. First, weak countries, like PiiGS, get smashed. Then, the infection permeates the US, but on a local level first. The big warning sign of U.S. instability will be found first at the state level, then government. So, do not be surprised to see Treasuries trade up, as munis die.
What if this is simply a pit stop to higher prices?
Entirely possible.
I am not convinced, after one short trading week that the market is “on the other side of the mountain.” Nevertheless, I think you would be an ignorant jackass to ignore the quiet under currents of this tape, which may be speaking in volumes.
Over the past week, I’ve taken a lot of losses, in a number of stocks. The big picture is my main concern, not the cost basis of ABC vs. XYZ. I have no problem selling everything, in order to protect gains. That’s exactly what I am doing here. Ultimately, FTK trades higher, so I’m sticking with it. My biggest hedge is SCO, mainly because oil is fantastically overvalued.
[youtube:http://www.youtube.com/watch?v=sgdK3WVUEgg 616 500]NOTE: According to The PPT‘s real time breadth analyzer for industries, Movie Production and Home Improvement stores were the only sectors with 50% or more green.
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I’d say that Oil is “Fabulously Overvalued”
http://www.marketwatch.com/story/api-reports-surprise-decline-in-crude-oil-supplies-2010-11-16
this report is not bullish enough to have shorts cover IMO. distillate build was big. tmrw’s report may be interesting though. i still say 80 will hold for now as support even though as fly says it’s “Fabulously Overvalued” – so very true.
You are correct in that OPEC has made public that $80 bbl is it’s target price…
It’s not overvalued if you consider in what specie it is priced.
The Towel Enclosed Desert Dwelling Semitic Types do not like paper to begin with (they prefer gold) and they certainly will not stand for Bernanke paying for their Texas Tea (Arabian Acquavit?) with Kleenex.
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its really connect the dots time…PIGS go down…Portugal, Spain, and oh..Italy ( Greece is already done..no one has told them)..then its game on in the individual states here….this spreads…at its own pace..not trying to say I know when…but sometimes it can go quickly…Ireland is really irrelevant..not to forget…Derivatives….
buy the dip
Indeud!
Sell everything but FTK? Everything?
I think the long end of the curve has been indicating an oversupply/lack of sufficient demand since mid-August. These are the bonds the Fed is not touching, but instead is slapping fake tits on and dimming the lights. Since the TLT mimics the long end (or use /ZB futures), if you look at the 30-yr auctions that occurred from August 2010 you’ll notice a trend:
8/12/10: Results are mixed for the monthly 30-year bond auction. Coverage was no better than average at 2.77 while the auction tailed by nearly one basis point, posting a high yield of 3.954 percent vs. a 1:00 bid of 3.948 percent. Strong buyside participation was a plus with dealers taking only 35 percent of the auction vs. a 46 percent average.
9/9/10: Results are very weak for the monthly 30-year bond auction which tailed by two basis points. The auction stopped out at 3.820 percent vs. a 1:00 ET bid of 3.798 percent. Coverage wasn’t bad at 2.73 but dealers got stuck holding a 55 percent share of the $13 billion offering, the largest share in nearly a year. Given the recent run of less downbeat economic news, today’s results point to investor expectations that rates at the very long end may begin to rise.
10/14/10: Coverage of 2.49 was soft for today’s $13 billion reopening of the August 3.875 percent 30-year bond. The auction shows a larger than usual two-basis-point tail, stopping out at 3.852 percent vs. a 1:00 p.m. ET bid of 3.834. Buyside interest was soft with dealers taking down an outsized 59 percent of the auction, more than 10 points above average. Demand for Treasuries is slipping following the results which wind up a heavy week of uneven auctions.
11/10/10: Inflation talk isn’t healthy for long bonds. Today’s $16 billion 30-year auction went poorly. Coverage of 2.31 is the lowest since the November auction last year. The auction shows a long four basis-point tail, stopping out at 4.320 percent vs. a 1:00 ET bid of 4.282 percent. Non-dealer participation is respectable with the group taking down a slightly below average 49 percent of the offering.
If you compare this to shorter term bonds, you’ll notice that those of shorter duration have been consistently stronger. I think the long end and the TIPS should remain somewhat volatile as supply enters the market and non-core CPI and PPI wildly fluctuate. Given the PPI has tempered a little (today’s report), long term yields should inch higher and there should be less risk of margin compression for commodity reliant corporations on the near term horizon. From what I’ve read, costs are mostly being passed onto customers for the metals (thanks to iron ore) and the chemicals industry.
I can vouch for “costs are mostly being passed onto customers for the metals”…. fuck yeh they are.
yea, and take at milled lumber! shit,you might as well stick it all into tips.hey,its commin,stealthy,but comming.
sorry,should say take a look at
sorry, you shoulda spelled ‘coming’ correctly. what are you, a programmer? 🙂
TIPs are another gov’t engineered rip-off.
You are going to trust the guys who just told the wrinklies that there is no inflation for the second year in a row to price you “inflation bonds” properly for you?
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the breadthalyzer, if you will.
fly boy.they are “attempting to show” both
I warned you days ago. Next time heed my warning, oh filthy pest amongst imsects. Covered some shorts today on a short term oversold basis. I will sell into any rally to short more. Currently 50% short 50% cash. But trust me, my cost basis is basically highs of the markets you stinking maggots.
The Dow futures made highs on November 4th near 11400. First time you sent a short post was around 11200, on Thursday afternoon. But, I guess that’s where the “trust me” part comes in.
http://www.youtube.com/watch?v=cY_oKve-bH0
One of my friend’s rates people’s intelligence by how much they like South Park. I think the idea has merit. Kudos pany.
Never trust anyone who says, “trust me.”
Very very few exceptions: Standing on the ledge of a burning building and the someone below says “I can catch you.”
You are a stock market god posting on this message board for all to see! Tell me more about your ways!
Bernanke’s “egg management fee” is the operative principal in this here mahkit.
you took my egg!
Say what you will. If I indeed called a short 200 points off the high of the markets, you will bow before me to either praise me as a god or blow me (whatever your pleasure). And, I will bet you dollars to donoghts that you will not see a new high in that dow foe years ans years to come… And by then your pastry shop will be well bankrupt….. TRUST ME!