Bill Gross's Dreadful Analysis Of The U.S. Economy's 'Wounded Heart' [View article]
Sounds like Mr. Gross has some grumpy fixed-income clients he needs to commiserate with. I've thought about this whole carry phenominon a good bit, and arrived at conclusions similar to your own. It is an interesting ecomomic situation when you consider the circumstances of the savers, and their priorities. If goods are services are less readily available in the economy than money is, it is the aim of the central banker to incentivize a certain amount of savings. Conversely, as is the case right now, if there is an abundance of liquidity, the monetarist should aim to have that money put to use in some way. I liked your point about these titanic companies not actually needing the money, and ultimately, I don't think it seeds capitalism as originally intended. I'd be refreshed to see a generation of baby boomers all turn into small-time venture capitalists, rather than idly chasing easy (safe) money!
Calling A Bottom In Long Bond Yields [View article]
Ya, these recommendations have been mixed. If you were shorting the 20 or 30 year, you would have never been down a day playing from the day I posted. Coal hasn't done as well, but I'm not sure my opinion has changed a ton there. I'd measure the mREIT call ultimately by how many of them go under, I heard some are venturing into physical real estate, which could be more interesting in my opinion. I do think real estate prices is bound to cool partially because of a rising-rate trade off impacting amortized total value and muddle along relative to the past 12 months, and some housing markets I would completely avoid.
Default Risk For Major U.S. Banks And Brokers [View article]
I could have guessed this exact order on almost 0 additional knowledge aside from ticker symbol and their reputation coming out of the last lending crisis. Would that be the correct assessment of credit risk? I think almost certainly not. It goes to show predisposed pricing biases and opacity in lending as trumping factors, aside obviously from the government put option skew on the whole market.
Monsanto (MON -3.3%) calls the genetically modified wheat found in Oregon an isolated occurrence, likely the result of an accident or deliberate mixing of seeds. MON says tests of 600 samples of each of two wheat varieties planted by an Oregon farmer show no presence of the experimental Roundup Ready wheat, and tests of 30K wheat samples in Oregon and Washington also show no contamination. [View news story]
Can anyone even tell me why this whole story is such a big deal?
Exxon's (XOM -0.4%) arrival as a tentative partner gives InterOil's (IOC +6.9%) Elk/Antelope resource a blue chip "stamp of approval," Raymond James writes, but "the market's enthusiasm will be tempered by the fact that a deal has yet to be finalized." Still unknown: how much of the resource will be monetized; the timing of a final deal; and "most importantly," the purchase price. [View news story]
One of those supposed frauds, going wayy back too I think in 2009 plenty of whistle blowers. Shareholders Unite scores again here.
Serious overcapacity in China's steel industry is unlikely to ease in 2013, which could continue to hamper steel prices (SLX), analysts say at Platts Steel Market Europe conference. China is set to produce ~750M metric tons of crude steel in 2013 while capacity will rise to 950M, putting heavy pressure on steel prices in Europe and in the world steel industry as a whole. [View news story]
You raise steel production capacity by mining and burning a lot of coal. I guess we will have to wait for the next contradictory headline in the morning, so a rally in this commodity can be sufficiently muted.
Agency MBS fail to bounce from the "massive liquidation" following Bernanke's testimony yesterday, according to CIBC's Tom Tucci. Suggestions of a tapering of Fed purchases sent Fannie Mae MBS with 3% coupons to their lowest levels of the year. "Right now it seems the only source of demand is the Fed," says BAML's Brad Scott. Unsurprisingly, pure agency mREITs like AGNC and ARR hit 52-week lows today. Annaly (NLY) - now diversified into the commercial space with the CXS purchase - outperforms. [View news story]
Agency MBS fail to bounce from the "massive liquidation" following Bernanke's testimony yesterday, according to CIBC's Tom Tucci. Suggestions of a tapering of Fed purchases sent Fannie Mae MBS with 3% coupons to their lowest levels of the year. "Right now it seems the only source of demand is the Fed," says BAML's Brad Scott. Unsurprisingly, pure agency mREITs like AGNC and ARR hit 52-week lows today. Annaly (NLY) - now diversified into the commercial space with the CXS purchase - outperforms. [View news story]
This is interesting for a few reasons -- without readily available price info I am left to speculate. If the spread of MBS is rising relative to treasuries, this is not only indicative of future fed involvement, but of the status of loan quality and of future yield assumptions. If your pool of loans is expected to be of higher credit risk, MBS would command a higher spread, but also if the security imputation yield is lower (implying lower long term yields in the future). The latter feature results in a higher yield spread given that a portion of the cash flow is impulse-path dependent, and yield needs to compensate for the chances of this future step-down in cash flow for the investor.
The rise in yields is not particularly surprising to me, in that I noted these distortions in one of my 3 articles in the last 8 months. The amazing part, I think, is that this is all cocurrent to the circumstances, in which Europe faced a mini meltdown and Japan a veritable one increasing the favoritism for US denominated assets. Where even though external biases are aiding money flow into the US, you see the fed still acting, and interest rates STILL rising. To me this speaks to a risk preference shift to equities and blunt xenophobia of other credit and currency markets in general. I don't know. This has certainly been quite a rally.
JGB volatility seems miniscule compared to movements of the underlying, seems like there must have been some sort of arb there. CHF falling against any of the major floating currencies is tough for me to fathom -- most of their central bank assets are in foriegn currency and gold, and their trade/growth stats are much better than virtually any in the EZ.
Consumer prices rise 2.4% in China during April, up from 2.1% in March and slightly above economists' estimates. Producer prices fell 2.6% during the month, a steeper decline than expected. [View news story]
Who cares though right?
I'm sure some official just picked this number out of the air, you think?
Green Mountain Coffee Roasters (GMCR): FQ2 EPS of $0.93 beats by $0.20. Revenue of $1.00B (+14% Y/Y) in-line. Shares halted AH on news of a 5-year agreement with Starbucks. (PR) [View news story]
Yawn. Some static-removed instrument moving for absolutely no reason again. Difference was you could get a 50% value change for some half-news item on GMCR in the motive days.
Magic Trees: The Performance Of Equities Vs. Commodities [View article]
I would layoff all of my workers, close up shop, sit on my reserves, and pay down my debt with cash on hand before I sold a 2016 barrel of oil for $85.
It doesn't make any sense, Brendan. Why would you engineer a cash flow when you can (in)directly impact its price with your own actions???
Further, it doesn't even happen to much of an extent -- just look at how tepid the volume and open interest is in these contracts. This is an illustration of market maker and HFT interests -- concentrating volumes to near-dated deliveries.
Magic Trees: The Performance Of Equities Vs. Commodities [View article]
Maybe I'm NOT the only person mystified by 2016ish WTI futures trading around $85.
Then again, when (as an example) the airlines go bust at the hands of "evil speculators" option/warrant holders will be glad they repaid that money as (investor-friendly) dividends rather than insurance for their future. Compensation is time sensitive after all.
Hedging demand even at these prices is non-existent; seems like no one has forgotten about looming government put options.
Why A Stock Market Bubble Is Forming Right Now [View article]
I think velocity is declining structurally so strongly because of how the money is distributed. The savers/high earners find themselves in a situation where their habits leave themselves holding a larger denomination of these assets. Ironically these same habits slow down the total turnover of money by definition.
I think spending among the tiers of the population remains about the same, in all likelihood. You just see an "asset-purpose" switch, where more money is counted in a particular category. Obvious when money is put forth as a housing down-payment it still was an asset, but just not counted into the velocity measure.
Or if the person is invested in a fixed-income product, this doesn't count as M2 either. So when the risk/return on bonds is razor sharp (I mean that in all senses), the attractiveness of cash increases as well.
Then you also have an increase in dividend yields which I hypothesize also slow velocity. Rather than re-investing into jobs, R&D, etc., companies pay back shareholders. The shareholders love it, but even if the money is re-invested, this type of churn can't act positively on a companies bottom line, without increasing credit that is. This all on top of the aforementioned. Keep an eye on M2, and just realize the economy seems pretty well engineered to post 2-3% growth FOR NOW.
Bill Gross's Dreadful Analysis Of The U.S. Economy's 'Wounded Heart' [View article]
Calling A Bottom In Long Bond Yields [View article]
Default Risk For Major U.S. Banks And Brokers [View article]
Monsanto (MON -3.3%) calls the genetically modified wheat found in Oregon an isolated occurrence, likely the result of an accident or deliberate mixing of seeds. MON says tests of 600 samples of each of two wheat varieties planted by an Oregon farmer show no presence of the experimental Roundup Ready wheat, and tests of 30K wheat samples in Oregon and Washington also show no contamination. [View news story]
Exxon's (XOM -0.4%) arrival as a tentative partner gives InterOil's (IOC +6.9%) Elk/Antelope resource a blue chip "stamp of approval," Raymond James writes, but "the market's enthusiasm will be tempered by the fact that a deal has yet to be finalized." Still unknown: how much of the resource will be monetized; the timing of a final deal; and "most importantly," the purchase price. [View news story]
Serious overcapacity in China's steel industry is unlikely to ease in 2013, which could continue to hamper steel prices (SLX), analysts say at Platts Steel Market Europe conference. China is set to produce ~750M metric tons of crude steel in 2013 while capacity will rise to 950M, putting heavy pressure on steel prices in Europe and in the world steel industry as a whole. [View news story]
Yawn.
Agency MBS fail to bounce from the "massive liquidation" following Bernanke's testimony yesterday, according to CIBC's Tom Tucci. Suggestions of a tapering of Fed purchases sent Fannie Mae MBS with 3% coupons to their lowest levels of the year. "Right now it seems the only source of demand is the Fed," says BAML's Brad Scott. Unsurprisingly, pure agency mREITs like AGNC and ARR hit 52-week lows today. Annaly (NLY) - now diversified into the commercial space with the CXS purchase - outperforms. [View news story]
Agency MBS fail to bounce from the "massive liquidation" following Bernanke's testimony yesterday, according to CIBC's Tom Tucci. Suggestions of a tapering of Fed purchases sent Fannie Mae MBS with 3% coupons to their lowest levels of the year. "Right now it seems the only source of demand is the Fed," says BAML's Brad Scott. Unsurprisingly, pure agency mREITs like AGNC and ARR hit 52-week lows today. Annaly (NLY) - now diversified into the commercial space with the CXS purchase - outperforms. [View news story]
The rise in yields is not particularly surprising to me, in that I noted these distortions in one of my 3 articles in the last 8 months. The amazing part, I think, is that this is all cocurrent to the circumstances, in which Europe faced a mini meltdown and Japan a veritable one increasing the favoritism for US denominated assets. Where even though external biases are aiding money flow into the US, you see the fed still acting, and interest rates STILL rising. To me this speaks to a risk preference shift to equities and blunt xenophobia of other credit and currency markets in general. I don't know. This has certainly been quite a rally.
Central Bankers' Day [View article]
Consumer prices rise 2.4% in China during April, up from 2.1% in March and slightly above economists' estimates. Producer prices fell 2.6% during the month, a steeper decline than expected. [View news story]
I'm sure some official just picked this number out of the air, you think?
Green Mountain Coffee Roasters (GMCR): FQ2 EPS of $0.93 beats by $0.20. Revenue of $1.00B (+14% Y/Y) in-line. Shares halted AH on news of a 5-year agreement with Starbucks. (PR) [View news story]
Magic Trees: The Performance Of Equities Vs. Commodities [View article]
It doesn't make any sense, Brendan. Why would you engineer a cash flow when you can (in)directly impact its price with your own actions???
Further, it doesn't even happen to much of an extent -- just look at how tepid the volume and open interest is in these contracts. This is an illustration of market maker and HFT interests -- concentrating volumes to near-dated deliveries.
Magic Trees: The Performance Of Equities Vs. Commodities [View article]
Then again, when (as an example) the airlines go bust at the hands of "evil speculators" option/warrant holders will be glad they repaid that money as (investor-friendly) dividends rather than insurance for their future. Compensation is time sensitive after all.
Hedging demand even at these prices is non-existent; seems like no one has forgotten about looming government put options.
Why A Stock Market Bubble Is Forming Right Now [View article]
I think spending among the tiers of the population remains about the same, in all likelihood. You just see an "asset-purpose" switch, where more money is counted in a particular category. Obvious when money is put forth as a housing down-payment it still was an asset, but just not counted into the velocity measure.
Or if the person is invested in a fixed-income product, this doesn't count as M2 either. So when the risk/return on bonds is razor sharp (I mean that in all senses), the attractiveness of cash increases as well.
Then you also have an increase in dividend yields which I hypothesize also slow velocity. Rather than re-investing into jobs, R&D, etc., companies pay back shareholders. The shareholders love it, but even if the money is re-invested, this type of churn can't act positively on a companies bottom line, without increasing credit that is.
This all on top of the aforementioned. Keep an eye on M2, and just realize the economy seems pretty well engineered to post 2-3% growth FOR NOW.
Why A Stock Market Bubble Is Forming Right Now [View article]