Category Archives: Blog

A Funny Thing Happened..

on the way to the crisis…. boring stability.

Way back, oh 2 or 3 business cycles and a week ago, the promoted meme (started by-with all due respect- Art Cashin) was that the yield on the 10 year Note was falling and thus a harbinger of impending doom. My screen showed a Note that had quivered slightly above and below the same rate since Feb. I wondered if my data feed was down.

Trading now on a second day of unchanged value with a host of straddle and strangle selling in the options pit, perhaps Wed will bring some movement. For now, the dealer has played 125-122 and everyone is back to betting “inside.” The economic risk is stability that atrophies to stagnation rather than traction. We still tilt toward traction, for now.

The community of bubble pointer-outers is growing rapidly. We had steered clear of the crowd until yesterday. The cluster of insignificance that is renting your house (room, couch) out hit the market yesterday. Air B and B had a ton of silly money thrown at it that put its valuation at 10B. Now valued at more than Hyatt, Penny Pritzker was seen spitting her martini out at the bar at Gibson’s when the news came across the wire. I don’t subscribe to the view that this means the Fed should tighten BUT “halting” should replace tapering if this activity is now “risk on.”

Classical Tuesday


30 minute atr

daily pivots

weekly pivots

upside retracements

downside retracments

forming a falg

regression channels

price support and resistance
On the economic calendar:-
 
07:45 ICSC-Goldman Store Sales
08:55 Redbook
09:00 FHFA House Price Index (Consensus 0.3% v Prior 0.5%)
10:00 Existing Home Sales (Consensus 4.56 M v Prior 4.60 M)
          Richmond Fed Manufacturing Index (Consensus 0 v Prior -7)
11:30 4 Week Bill AUction
13:00 2 Year Note Auction
POMO:-
 
10:15 – 11:00 Outright Treasury Coupon Purchases between $0.90 – $1.15 billion

 

Classical Monday


30 minute atr

daily pivots

weekly pivots

upside retracements

downside retracements

regression channels

price support and resistance levels
On the economic calendar:-
 
08:30 Chicago Fed National Activity Index (Consensus 0.20 v Prior 0.14)
10:00 Leading Indicators (Consensus 0.7% v Prior 0.5%)
11:00 4 Week Bill Announcement
11:30 3 Month Bill Auction
          6 Month Bill Auction
POMO:-
 
10:15 – 11:00 Outright Treasury Coupon Purchases between $3.25 – $4.00 billion

 

420 Bob

The rates space has foiled the promulgated narrative of the media crowd. Monday, and for a few hectic hours Tuesday morning, the ridiculous idea that falling 10 year rates “were telling us something (that was leading to stock selling)” was the meme du jour. As we pointed out, this gross misunderstanding of, flows, low rates and macro economics is a convenient retro-fit for unexpected or knee knocking equity drops.

The fairly stable and attenuated range in the term structure is providing support to the economy. Corporations are utilizing the extended exit concept to lock in financing into 2020. Consumer balance sheets continue to heal and the Siren Song of borrowing is faintly tickling their ears from far away shores. As the annual smoke-in known as 420 Day approaches, the markets have inhaled a big toke of reality …and chilled.