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HiddenLevers is the premier portfolio stress testing platform for financial advisors everywhere. Advisors use the correlations engine and easy user interface to help clients understand risk in portfolios, showcase hedging strategies, and compare portfolios in context of several macro­economic... More
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  • Treasury auctions strong - what does it mean kids?

    The auctions this week have been a mixed bag. Demand was tepid for the shorter term Treasuries earlier in the week. But demand for the 10y and 30y bonds was pretty aggressive, with bid-to-cover ratios above 2.7. Anything above 2.0 is considered a smashing success.

    10y Treasuries crossing over as Gold slammed -

    Foreign investors contributed to 49% of today’s 30y US bond sales. Could this represent international confidence in the US government? Not necessarily, but even with concerns of a ballooning deficit, it looks like Uncle Sam is still the tallest midget at the party. Between commodities being top-heavy and the PIIGS on their last legs in Europe, this was the most promising opportunity for the foreign investors. Based on current yields this auction was just one of the many Holiday sales out there. The WSJ blog had a nice take on Treasury yields in context of other economic levers, like Gold and the USD index, that made screamed our name:

    “Triangulating today’s 10-year move with other market moves suggest that investors aren’t staying away from U.S. debt because of any great concerns about the creditworthiness of the country… For one thing, CDS — or insurance on bond defaults — for U.S. debt is up a mere 1 basis point on the day. Not exactly a panic. Also up: The U.S. dollar. You’d be a loath to hold greenbacks if you were worried about Fed trying to monetize away giant debts. Other gauges of inflation worry are also down. Gold is getting slapped, down 1.9%.”  - Matt Phillips, WSJ (Bless your heart).

    So in the end, maybe US sovereign debt is just a winner by breaking even, said Phillips. Higher mortgage rates are good for banks. I used HiddenLevers screener and found Intervest Bancshares Corp (IBCA),  Beverly Hills Bancorp Inc. (BHBC) and Pacific State Bancorp CA (PSBC), among other banking stocks that look good should the upward trend in rates persist.


    HiddenLevers can help you find stocks based on where you see Interest rates headed, among dozens of other economic trends. Or, if you are concerned with how your current portfolio would be affected by rising interest rates, HiddenLevers can help you understand how your investments would be affected in such a scenario. (subscription required)

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Dec 09 5:34 PM | Link | Comment!
  • Unemployment tied to Budget Deficit?

    Most economists are expecting a drop in unemployment figures this Friday. As of now the retail industry is on pace for one of the strongest holiday seasons in history. October saw a spike in seasonal hiring as retailers added approximately 151,000 jobs. Our mighty consumer economy could be opening up its stride. But that will not be enough if we don’t do something big and consistent to affect the Unemployment numbers. Let’s face it, this global recovery has been sputtering primarily due to the US job market.  However, there is something that few have been discussing— Would austerity measures for the US budget reign in Unemployment?

    Congress... it's time to get our house in order -

    Look at that high correlation since the early 2000s. Obama’s debt reduction commission is a good first step, but we have to take decisive action before things gets any worse.  Americans have been getting their personal finances in order throughout this recession, now it is time for the government to follow suit. Military + Social Security + Medicare + Medicaid = 66% of the budget. Looking at this chart makes me wonder whether we couldn’t improve the jobs situation if the US government reigned in military expenditures and restructured social welfare programs.

    In uncertain times, economic analysis becomes more important than the fundamentals of any one company. You can try HiddenLevers free, to research economic indicators, and discover stocks based on your view of macro trends.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Dec 09 12:37 PM | Link | Comment!
  • Big Box poised to beat Cyber Retailers

    The holiday season has been a booming success so far and we still have 23 days until Christmas. Why is that? Well, retailers need to clear their bulging inventories. The natural response of retailers to break through those backlogs has been through offering larger discounts at a much earlier time in the year.  Based on all the advertising and the spam in my email account, the holiday shopping season started back in the first week of November, not on Black Friday. It is still early for November retail figures to come out, but based on early sales estimates, things are looking up for Retail Sales. If you long this lever and are expecting a Santa rally, here's some plays that should do well:

    Macys and Williams-Sonoma beat Amazon and Ebay -

    Cyber Monday was a bigger hit than we all expected, and the online giants had all the eyeballs. I'd look for Amazon and Ebay to reap the benefits, but as the charts show, big box retailers like Macy’s and Williams-Sonoma will outpace even the Cyber retailers.

    Check out HiddenLevers screener to find further insights into retail plays, and search for investments based on dozens of economic trends. (subscription required)

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Dec 09 12:34 PM | Link | Comment!
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