“Mandated Econ in the Schools” Mascot, 2010
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With some sense seeming to come into the market, the dollar is doing it’s flight to safety thing and breaking up over $81.00 mark with “gusto.” But somehow, investors aren’t seeing Prime, Grade-A American Securities of the longer variety as such the flight to safety instrument they used to be. [[TLT]] is case in point.
What’s going on, ovah heah?
Here’s my take, for what it’s worth. The markets still see the dollar, as the most liquid reserve currency, and the short part of the curve, as the safest port in a storm. Therefore, any kind of international unrest is going to drive dollar strength, no matter how undeserved.
In the past, this also led to good things for our longer duration U.S. bonds as well. That was before, however, the rest of the world started wising up to our gargantuan debt situation, made even more limpid this weekend with the addition of a seemingly suicidal third massive bureaucratic entitlement program.
As a result, with the markets needing a pullback (for whatever excuse they’ve decided on today, I believe it’s Greek Somali Pirates off the shorts of Delaware*), investors are soaking up zero-return dollars and dumping longer bonds. This is one reason we recommend you keep a large trunk’s worth of [[TBT]] on hand, for just such exigencies.
Another important point — thanks to this surprise breakdown in the longer US Bonds, it seems the 10-year swap spread just went negative for the first time in history. This may seem mind boggling, but it indicates that the market is more happy with owning higher grade corporate securities than it is the 10-year U.S. Treasury Bond.
God bless Barack’s America, right?
For equity investors, however, this can actually be foretelling greater gains, believe it or not. The article I’ve linked above indicates private equity will heat up as a result (because of the non-existent debt spreads), but I contend more liquid equities will as well, as investors seek safe yield that’s going to fight incipient inflation.
Keep an eye on physical gold and silver here folks, this may be the last time you see it this cheap (and gold may get as much as $50-70 cheaper) in a long while. As soon as this dollar peaking is done, we should be heading back down with a vengeance.
I’m looking at the usual suspects in the PM markets on pullbacks — Allied Nevada Gold Corp. [[ANV]] , Eldorado Gold Corporation (USA) [[EGO]] , IAMGOLD Corporation (USA) [[IAG]] , Silver Wheaton Corp. (USA) [[SLW]] , [[EXK]] and [[SVM]] for a start — but also keeping an eye on my LED babies, Cree, Inc. [[CREE]] and Veeco Instruments Inc. [[VECO]] .
Veeco is an exciting company with it’s hand in many sweet honey pots. I shall develop more on it in future postings. For now, I will be adding slowly on dips. Keep an eye on Monsanto Company [[MON]] as well. Ags will be heroes again soon.
All the best, Jake.
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I think Bill Gross comments moved it, not your crazy eyed theory. lol
It’s a “theory” that long swaps have gone negative (before Gross’s self serving comments I might add)?
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Jake, time for you to smoke a menthol….
markets word of the year = “disconnect”
Couldn’t the 10-yr swap spread be going negative because of the historically low mortgage and car loan rates causing massive hedging by loan issuers doing refis, new loans, etc.? Just saying it would be a convoluted way of betting against US credit risk. I thought that was why we created….
Possibly, save all those loans are priced w. a spread well above T-bonds. These swaps are priced below….
US T-bonds may be in trouble, but I don’t think auto loans will be cheaper than them any time soon… 😉
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With how f’d this market is lately the Dollar will probably go to 100
Full Court Pressure Baby!
I would say “horsefeathers” save that I’m benefitting from it too.
Nothing like T-bonds down, banks up, eh?
It’s a crazee woild.
I may have to put the nutty salamander up again soon.
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“Keep an eye on physical gold….” I am having trouble decyphering what you mean……perhaps I am at maximum density this am. but perhaps you might elucidate…..very important since I hang on your every word…….thanks! (that entire paragraph)
I think we may get a pullback in POG and POS, which will give you an opportunity to either add to, or begin a bullion holding.
I just don’t think it’s going to be very long lived.
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I have to think with all of the bearishness on Europe and the massive short Euro positions out there that any news that is in the least bit positive will give us a reversal. The Euro summit is tomorrow. We’ll see if these clods can come up with a plan.
Gold BTW is showing an almost identical chart pattern to what it did just prior to the breakout last September. That is, we are nudged right against the very same uptrend line, with a descending downtrend line above, and even the past few ups and downs of the last couple of weeks look almost identical – including this drop.
A ‘Close’ above 81.40 that can ‘stick’ for 48 hrs, may see 83 level.
‘Further work/Consolidation’ before PM’s embark on the next leg of the primary trend, which remains, Higher!
Indeed.
That sounds like what Savage is saying… I’m not sure we get to 83, but I’ve been surprised before.
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Believe his time horizon for resumption of trend is shorter (weeks), whereas our thinking is more in line with months (additional 3-4) of chop-and-churn (grind) before resumption.
That being said, pm shares (most/many) are holding-up rather well with the exception of a handful that ‘appear’ vulnerable to further weakness.
Should we witness further ‘slippage’ , fresh powder at disposal ready to employ!
Patience is warranted here.
Indeed.
LOL – what happened to your end of the world theory?
stick to the artwork, son.
DMG
If you believe (certainly entitled) that the worst is in the rear-view mirror, you child, are surely mistaken and have not a clue.
You would be wise in heeding the words of Toptick, who’s presence on this thread should be bowed upon.
He’s sat on desks moving ten (10) figures when you were in the schoolyard with your Alligator shirt collar turned up and your Air Nike’ untied pondering which laddette’ school books to carry home.
BTW, this is one of many of Toptick’ assistant’. You child, are not worthy of his words.
Capiche
Arteest –
The only thinng you’ve ever been right about in these comments is your after-the-fact updates
such as ‘hey henry, your ‘x,y,z’ is really taking off!”
So, keep your trap shut, lest you continue to prove your ignorance.
btw,
“when you were in the schoolyard with your Alligator shirt collar turned up and your Air Nike’ untied pondering which laddette’ school books to carry home.”
– trying just a little too hard there, fellah. stick to the paints an’ such.
DMG
Whom is this Henry that you speak of? Never, has there been a response to such individual.
I would suggest you return to previous rants that you are describing and do a little “Homework” before responding.
Perhaps you have me confused with someone else?
You should try to read/listen/HEAR before responding, particularly, when you have no clue as to whom you’re responding to.
It has become Painfully obvious why you have chosen DMG as your moniker.
Duuuuuuuuuhhhhhrrrrrrrrr Mentally Challenged.
Take a couple of aspirins and Seek a Therapist.
My Apologies… i thought you were the same guy who goes by ‘The Artist’.
the D stands for disgruntled so…
however, that alligator shirt shit was still very weak.
best,
DMG
Jake, or anyone else. DO you guys have opinion on XRA and the making of two independent companies? Thanks
I think it’s probably a good thing, given the secular bull.
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Don’t you mean cyclical bull and secular bear… professor?
One of your best posts
I have had my eye on all the ags this week, they really look like they want to go
And VECO(and CREE) is just a huge winner
This action in treasuries is puzzling. Why are people concerned about supply and U.S. sovereign debt all of a sudden? What changed overnight?
Not to worry. It will ALL be in Default in due time.
The $USD/Treasuries are Worthless and not worth the Ink/ Paper it is printed on.
72——————–> 62————————> 52/55
Good Day!
Indeed.
TIM has the GDX in that dreaded diamond formation again
I’d better sell that IAG I bought today and the core holding too
You have been warned
lol.
Thank him for me, if you haven’t been banned yet.
Guy is a better “tell” than a poker player with Tourette’s Syndrome.
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Sorry no go, he banned me over 8 months ago
Wow, that’s even longer than me.
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Let’s say t-bills go negative real yield and stay there…for an undetermined period of time. What would you rather have then: Federal Reserve Notes, which, as structured, cannot go negative, or short-term t-bills, which can?
You mean dollar bills? Yeah, that would be deflationary, for sure.
But I was talking about talking about negative SPREADS not yields, above.
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Ah, I see your point, I was thinking more about the subject line. As for the spread issue, I’d say that the inflation mania continues. No more individual bubbles, now as soon as one asset class gets bubbly, it’s on to the next. What happens when they are all filled to capacity? Get rich or die tryin’ !
Hey Jake,
I have a home a block from the beach. I am not going to give details here. You said you wanted to travel with your wife and children. I often host travelers. You have a keg, all the beach supplies, a room to your own…. a personal travel agent. You can even just use the house and I can go to Orlando. Believe it or not, I am very laid back. Ur family might enjoy it. Ha! I could take the kids to kid activities and you and the wife can go have a romantic night out. I will send my heard of dogs to my mothers. Just an offer. 🙂
That is a very nice offer, and I will consider for my next year’s trip. We just got back from Florida about two weeks ago.
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Norman,
That’s a very nice (if strange) offer. Things kinda lonely at the Bates – eh?
“Ha! I could take the kids” ……. hmmm
“NORMAN!!!!”
Mother’s calling …..
Another one bites the dust …. #5 on the list (CXG) taken back in:
http://www.ibankcoin.com/peanut_gallery/index.php/2010/02/16/the-mad-rush-for-marcellus/
PETD and ATLS holding up while the others consolidating …. Still like RRC & UPL as takeover candidates and ECA & SWN as merger bait for the bigs.
DMG,
Regardless of the mistaken identity, who are you to call anyone out?
Have you ever had a worthwhile piece of insight? “Skype is really cool.” and “Treasuries are down this morning.” don’t count.
DMG’s sole purpose is to agree with Jake, e.g., “true dat Jake.” IBC needs an ignore feature.
Ig-nooooooo-wit!
Nice alias, Artist.
Now go get yer shinebox!
In the last 5 seconds, i’ve forgotten more than you’ll ever know.
Not an alias son. I simply choose not to participate often but I’m finding it more and more difficult to ignore your drivel. However, maybe I’ve misunderstood you. What’s your investing philosophy? What are your thoughts on the short term outlook for PMs?
Fuck off piker. I don’t do charity.
You’ll get nothing from me.
Unless of course, you keep it up with the lip – and then you’ll get “Bisping’d”.
That’s what I thought. Hatchet city.
Lol – alright, ill throw you a bone since you like the dead and you used my favorite word (and there’s a break in tje action of the gangly white boys sneaking up on ky)
– buy low, sell high, muppet.
I don’t want to sell anything, buy anything, or process anything…. I don’t want to sell anything bought or processed, or buy anything sold or processed, or process anything sold, bought, or processed…I don’t want to do that.
BTW this is your former customer from Milton, MA. Just effing w/ you. Heading to Disney with the whole fam tomorrow. Send me an email if you have any tips.
I thought that ‘hatchet city’ might be san francisco boy – but there were no spelling errors, lol.
Disney with two kids under 5? Easy, handoff to grandparents.
(btw – customer for LIFE, biznotch)
Bakayaro!
Milton MA??
My roommate from college is from there and lives there now.
And this other degenerate I know, but he’s clueless about computers and his wife won’t let him on the internet, so I know its not him….
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Milton, MA, originally from AB, NY (lynbrook actually)
disney didn’t give it away?
You need to spray another can of “Sarcasm ALERT!” up your nose.
That first one didn’t take, obviously.
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perhaps the zicam has done more damage than i thought.