Posts Tagged ‘U.S. Treasuries’

Notes From Underground: Central Bank Palooza

July 30, 2018

Coming on the heels of my first Kenny Chesney concert I am viewing the synchronicity of central banks as a reflection of the rhythms of global financial repression. Last Thursday, the ECB issued its last statement before the summer recess, while this week we have the Bank of Japan tonight, the FED on Wednesday and the Bank of England on Thursday.

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Notes From Underground: If Gross, Gundlach and Even Buffet Are Correct, Then THE FED IS WRONG

May 5, 2015

The last seven weeks has brought out the bond bears in the forms of Bill Gross, Jeff Gundlach and also well-known stock picker and financial wizard, Warren Buffett. While Gundlach and Gross were very bearish on the European sovereign debt markets, the Omaha denizen opined on how stocks may be rich but bonds offer a terrible risk/reward return. Large bond investors are nervous that they have possibly bought an overvalued asset and may experience sizable losses on a quarter-to-quarter to basis. The problem for pensions, insurance companies and those saddled with a defined payout obligation, the FED and other central banks have broken the bond market as a value barometer so it is very difficult to match assets with potential liabilities.

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Notes From Underground: Thursday, January 22 … “The Day The Earth Stood Still”

January 21, 2015

In the famous 1951 sci-fi movie, an alien with a ROBOT has the power to threaten the entire Earth and bring human civilization to an end. The only words that can prevent the ROBOT (algorithms) from the total destruction of the world  are: KLAATU BARADA NIKTO. Let’s hope that tomorrow ECB PRESIDENT MARIO DRAGHI has those same words at his command. There is so much riding on tomorrow’s ECB decision and the press conference that Mr. Draghi can bring financial ruin to the global money system. In all prior press conferences Draghi has been able to calm markets with mere promises of future actions. The game of securing time in an effort for improved economic performance is over.

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Notes From Underground: The Germans Were the Target of IMF, G-20 Animosity

October 13, 2014

Germany was the issue at the IMF and G-20 meetings as all nations suffering economic headwinds delivered harsh criticism of Angela Merkel, Wolfgang Schaueble and, of course, Bundesbank President Jens Weidmann. It was Germany’s continued emphasis on budget restructuring and fiscal soundness that was holding back Europe and resulting in global economic challenges. France can’t grow because the Germans insists on the French authorities bringing their budget down to the prescribed 3 percent of the Maastricht Treaty. The peripheral nations are saddled with private and public sector debt that is not serviceable during times of economic stagnation.

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Notes From Underground: Good Trading Advances One Funeral At A Time (Thanks, Max Planck)

July 23, 2013

When Max Planck opined that “Science Advances One Funeral At A Time” it is believed that he meant that when proponents of long-held theories die, science is allowed to advance. In terms of trading I have applied this to mean that long-held losing trades have died a death due to lack of liquidity to support a flawed analysis. The BOND MARKET is going to provide the opportunity to put the wit of Planck to work as we try to examine the ways in which the FED will deal with the vast amount of reserves with which it has flooded the financial system. As traders and investors, the FED‘s decisions will impact the entire spectrum of the GLOBAL MACRO WORLD. Therefore, it is time to embark on thinking about ways the FED can remove reserves in the least disruptive and to anticipate what plans the central bank may have.

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Notes From Underground: A Dog Day of Summer

July 9, 2013

The news was sparse and the rally was easy: DOLLAR UP, SPOOS UP, TREASURIES STEADY … HO HUM. It won’t stay that way tomorrow as we will have the 10-year note auction, followed by the release of the June FOMC Minutes an hour later. At 3:10 p.m. CST, Ben Bernanke will take center stage at the National Bureau of Economic Research (NBER) and it will be about monetary policy as the FED “basks in the light” of its 100-year anniversary. The speech takes place in Cambridge, Mass. and a Q&A follows the prepared text. Markets will be on edge to see if Chairman Bernanke pulls back some of the talk on tapering or at least responds to the recent volatility of rate rises in the long-end of the market.

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Notes From Underground: What’s Bernanke Afraid Of? (CNBC)

June 23, 2013

yra6-21-13-tiff

 

Click on the image to watch Yra discuss what Bernanke fears.

Notes From Underground: A Day of Disconnects In Global Markets, Or a Ball of Confusion

April 22, 2013

First, I need to clear the air on an issue that is cited over and over, of which causes me great discomfort. In last Thursday’s Financial Times, Robert Pollin and Michael Ash, the two professors who sponsored graduate student Thomas Herndon of UMass-Amherst–and of recent fame for finding the flaws in Rogoff/Reinhart–published the article heard round the world: “Why Reinhart and Rogoff are wrong about austerity.” I am not disputing the results of their work but I am questioning a causal relationship that they note:

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Notes From Underground: As I PONDER WEAK AND WEARY

May 17, 2012

The market action has rendered this trader/analyst very weak and weary … quoth the trader nevermore. When FUNDAMENTALS MEET A DELEVERAGING SET IN MOTION IT IS ENOUGH TO LEAVE ONE WEAK AND WEARY. Every conversation I have had for three days is: What is wrong with the GOLD and how can it not rally with all the problems that the global financial system is facing? The corollary to the GOLD IS OF COURSE THE GLOBAL BOND MARKETS. Today, the SCHATZ traded down to three basis points. The U.S. 2/10 yield curve is undergoing a severe flattening as the curve closed at around 143 BASIS POINTS TODAY. The buying of high quality DEBT is indicative of a movement to havens coupled with the need for QUALITY COLLATERAL FOR THE REPO MARKET.

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Notes From Underground: It’s March and We Hear the Wind Blowing

March 4, 2012

Do you have to be a weatherman to hear the wind blow? There are many cross currents alive in the investment world as the LTRO is behind us, ISDA defaulted on its role as a referee on global financial issues in the face of political threats from the EUROCRATS, and the Bernanke FED looks to be waiting for a new crisis to erupt before undertaking another further easing. March is always a difficult month for trading YEN as the JAPANESE CALENDAR YEAR ENDS MARCH 31 so repatriation of corporate profits is always a wildcard for any short YEN positions.

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