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Gary Tanashian
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Gary Tanashian is proprietor of Biiwii.com. Actionable, hype-free technical, macro economic and sentiment analysis is provided in the premium market report 'Notes From the Rabbit Hole' (http://biiwii.com/wordpress/about-nftrh/). Complimentary analysis and commentary is available at the public... More
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  • This Is Not Good... 10 comments
    Nov 20, 2009 8:39 AM | about stocks: SHV, SHY, IEI, DIA, SPY, QQQ
    Stock promoters do not want you to look at this chart... the government does not want you to look at this chart... As risk rises, the t-bill generally rises (its yield declines) and well, there ain't no 'less than zero' involved and if there was, it would seek it out. You know, frightened money might actually pay for perceived safety.



    Each time the Fed has met (and pretended to have a decision to make) during the supposed recovery, I have posted an updating chart of the t-bill yield ($IRX) with its implications stating that there is no decision to make. There is no real recovery either.

    Unfortunately, all too many just go with the flow. They are the dumb money and that money is dumb for a reason.

    I would like to know who, in this grand rally and economic recovery environment, is so scared they have just got to get themselves more t-bills? The lower panel is the TED spread, between t-bills and eurodollars which NFTRH used as a bullish indicator back in Q4, 08. Now, it is turning up and that squares with the message of the nominal t-bill.
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Comments (10)
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  • doubleguns
    , contributor
    Comments (7891) | Send Message
     
    Fear is back.
    20 Nov 2009, 10:36 AM Reply Like
  • yellowhoard
    , contributor
    Comments (1507) | Send Message
     
    Nothing to see here!
    Nothing to see here!
    Move along!
    Move along!
    20 Nov 2009, 10:42 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (5805) | Send Message
     
    Hair on fire!
    20 Nov 2009, 10:47 AM Reply Like
  • Swashbuckler
    , contributor
    Comments (715) | Send Message
     
    If the TED spread continues to widen, doom for the stock market.
    20 Nov 2009, 11:01 AM Reply Like
  • H. T. Love
    , contributor
    Comments (17246) | Send Message
     
    Comments on Comedy NBC from several talking heads say it is not a flight to safety. They say the hedgies, money managers et al have had a decent gain this year, their jobs are now secure and they say why risk losing it all by leaving it in equities. So they rotate to various shorter term T-bills. They note that the large volume is in bills that expire /after/ the end of the year.

     

    So their profits are locked in, they get a small yield for the duration, they sit back and eat candy bars for the rest of this year. When next year starts, they have the sugar high to energize them as they begin the struggle anew.

     

    Credible? I'm too ignorant to know. But I do like the sound of it. Nobody is going to go for long-term bills with inflation /expected/ by most down the road and nobody with a job on the line would want to risk the /expected/ and /anticipated/ correction killing their performance review in the last 7 weeks of the year.

     

    It's like being a government employee in a way - do at least good enough to not be fired.

     

    HardToLove
    20 Nov 2009, 11:14 AM Reply Like
  • Freya
    , contributor
    Comments (2265) | Send Message
     
    HTL: Profit Taking/Tax loss selling and redemptions/dividends. Keep it in cash equivalents for ready use. Another attempt to sensationalize a normal occurance.

     

    If It actually were to forecast Doom, money would not be flowing here. It would be going into Shorts.

     

    This is about as Bullish as it gets.
    20 Nov 2009, 11:23 AM Reply Like
  • H. T. Love
    , contributor
    Comments (17246) | Send Message
     
    Thanks Freya! Added a bit to my growing store of tidbits learned!

     

    HardToLove

     

    On Nov 20 11:23 AM Freya wrote:

     

    > HTL: Profit Taking/Tax loss selling and redemptions/dividends. Keep
    > it in cash equivalents for ready use. Another attempt to sensationalize
    > a normal occurance.
    >
    > If It actually were to forecast Doom, money would not be flowing
    > here. It would be going into Shorts.
    >
    > This is about as Bullish as it gets.
    20 Nov 2009, 11:45 AM Reply Like
  • acttang
    , contributor
    Comments (176) | Send Message
     
    On top of all factors mentioned by the commentators here, there is also lots of balance sheet unwinding from dealers. That t-bill chart posted here is very sensational, simply because the absolute level of rate is near zero. In almost all other rate environments the same pattern held: t-bill rates traded well bellow the generally collateralized (GC) borrowing rates when times approached year end.
    21 Nov 2009, 01:27 AM Reply Like
  • Gary Tanashian
    , contributor
    Comments (86) | Send Message
     
    Author’s reply » This bullish argument has some logic I suppose. But it sounds to me more like rationalization. A good story for year end compliments of financial news.

     

    Yes, this bull has been feeding off of bearish sentiment all the way up. That is a sign of the over done extreme of last year's downside. But if the underlying fundamentals were so good, why then has the t-bill yield been in effect, zero all year? As someone mentioned, the chart is sensational. We are just a teeny closer to zero then we were last month... and the month before that... and the month before that...
    21 Nov 2009, 07:46 AM Reply Like
  • Freya
    , contributor
    Comments (2265) | Send Message
     
    I wonder if it has anything to do with a Fed Funds rate varying between 0.0% and 0.25%?

     

    3 month LIBOR has been going down all year and is approaching 0.25 as well which is probably why we are:

     

    "We are just a teeny closer to zero then we were last month... and the month before that... and the month before that"
    22 Nov 2009, 01:53 AM Reply Like
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