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Whitehawk

Whitehawk
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  • The finally tally on Treasury yields finds the 10-year a whopping 22 bps higher on the session to 2.73%, and TLT -3.4%. The 5-year gains 19 bps to 1.60% - a pretty tasty yield if the Fed truly isn't hiking rates for another 2 years. IEI - an ETF targeting 3-7 year maturity, -0.8%[View news story]
    Expect 10yr to hit 3% interim.
    Jul 5 05:11 PM | 1 Like Like |Link to Comment
  • Panicky selling grips the mortgage REITs (REM -3.5%) as Treasury yields soar following the payroll report. American Capital (AGNC -6.9%), (MTGE -5%), Annaly (NLY -6.9%) Chimera (CIM -4.9%), Armour (ARR -3.9%), Invesco (IVR -2.7%), CYS Investments (CYS -3%). CYS' Kevin Grant was public a month ago about being a happy buyer as yields rose - a bit early on that call. [View news story]
    mREITs have similar sentiment and price action to gold and gold miners as rates surge. Expect 10yr to reach 3% interim.
    Jul 5 05:08 PM | Likes Like |Link to Comment
  • Draghi Breaks New Ground, Euro Breaks A Cent [View article]
    This forced the EUR sharply lower and the dollar higher, and rallied U.S. equity futures. Unless there is a selloff overnight, the open will be high, and without OMO a potential for an intraday selloff. Depends on the sentiment from the jobs report, due out an hour before open. Treasurys and commodities flat to down.

    Regardless of "extended low rates," not much real economic and bank loan growth (except for the ECB OMT).
    Jul 5 12:40 AM | Likes Like |Link to Comment
  • BOE Surprises In Word, Not Deed [View article]
    Fairly dovish start from Carney. Perhaps Canada was glad to see him go. Expect the BoE to continue its Funding for Lending Scheme (http://bit.ly/11jYdcL).
    Jul 4 11:20 AM | Likes Like |Link to Comment
  • Weirdness Strikes The Crude Oil Market [View article]
    Paulo, I would add that even if we don't have a CB with easy money policies, there will be speculation. There will also be cartels that attempt to price fix floors, and players that attempt to corner. Good amount of history to support these behaviors, or should we say, animal spirits. Yes, it may not be as pronounced or lead to such acute market instabilities without the easy money sloshing around, allowing high leverage, but it exists nonetheless to some degree, always. The issue is that it is not the role of a CB to help throttle these behaviors. There are plenty of rational shorts out here (yourself included) who also make the market, shall we say. Plenty of oppty!
    Jul 3 07:38 PM | Likes Like |Link to Comment
  • Weirdness Strikes The Crude Oil Market [View article]
    There is always a speculative component to help a surge in one direction or the other. I suggest actually trading the futures live to get the flavor of this. I do this daily. Reaction to drawdowns (regardless of reason) can lead to spikes, rational or not - as do global risk events, like that happening in Egypt, rational or not. I am usually the rational short, and have made money recently continuing to short into strength, but if you are caught on the wrong side of the spike, that can be painful. So is fire.
    Jul 3 07:00 PM | Likes Like |Link to Comment
  • Weirdness Strikes The Crude Oil Market [View article]
    Price transparency is an issue - though Brent and WTI get priced differently, both involve convoluted/complex pricing and plenty of padding for bottleneck and global risk factors (Brent much more so than WTI). WTI is overpriced, but the fact that Brent is high perhaps allows the WTI market to get away with it. OPEC prefers Brent pricing for its convolutions so it can get a paddedly higher price. Cartels can be useful, but cannot always stem the tide of the market - Platinum is currently showing this to be truth.
    Jul 3 04:52 PM | Likes Like |Link to Comment
  • Weirdness Strikes The Crude Oil Market [View article]
    The surge past 100 in the WTI futures happened early in the session, around 7:20pm EST yesterday - so if the report leaked, it was an early leak. I have no doubt these leaks happen, and like the price transparency and infrastructure issue itself, it won't get solved anytime soon. I do recommend caution at this level - trade the futures vol long/short and use futures options for the longer-timed swing lower, which I also expect to occur.
    Jul 3 04:36 PM | Likes Like |Link to Comment
  • 8 Market Observations [View article]
    Excellent observations. I am less sanguine over Europe and the EUR. Though it looks like there has been stabilization, there are still issues impeding growth, just as there are issues here in the U.S. impeding growth. EMs (esp. Brazil and China) will see growth expectations moderated, and the markets will continue to adjust to this - this is very well reflected in the disinflation of the base metals markets. Japan was proactive in the currency and QE war, but then again, their currency had strengthened to an outlier compared to historical norms, and they are addicted to those carry trades.
    Jul 3 03:15 PM | Likes Like |Link to Comment
  • It's shaping up as another difficult day for Linn Energy (LINE -9.3%) and LinnCo (LNCO -8%) after yesterday's selloff. After a round of downgrades, Stifel Nicolaus today cut its price target on both to $33 from $48. Selling the put portfolio would not be a wise option, the firm says; Linn would shed some controversy but sacrifice possible future cash flow. Baird cautions broadly on upstream MLPs; BBEP -9%, ARP -7.1%, VNR -6.3%, QRE -6.2%, EVEP -3.2%[View news story]
    Energy MLPs have been overbought, driving some of this selloff, LINE notwithstanding.
    Jul 3 01:00 PM | 2 Likes Like |Link to Comment
  • June ISM Non-Manufacturing Index:  52.2 vs. 54.5 expected and 53.7 prior (>50 denotes expansion). [View news story]
    No OMO/QE on Friday. Net highest OMO/QE day on July Calendar is Thurs July 25: $4.25-$5.25B. OMO/QE every day next week, total $9.25-$16.25B...
    Jul 3 12:31 PM | Likes Like |Link to Comment
  • June ISM Non-Manufacturing Index:  52.2 vs. 54.5 expected and 53.7 prior (>50 denotes expansion). [View news story]
    Indeed, that is the effect.
    Jul 3 11:58 AM | Likes Like |Link to Comment
  • MBA Mortgage Applications: -11.7% vs. -3.0% last week. [View news story]
    Keynesian dependency, old and young.
    Jul 3 11:43 AM | 1 Like Like |Link to Comment
  • June ADP Jobs Report: +188K vs. +165K consensus, 135K prior. [View news story]
    The individual mandate is still in effect - large businesses just had a better lobby than small businesses that leave owners/employees to buy their own health insurance. ACA has done/will do little to reduce costs, and in all likelihood insurance premiums are going up for the healthier, less risky. As stated by the Treasury: "shared responsibility payments." Great euphemism for socialism.
    Jul 3 11:25 AM | 2 Likes Like |Link to Comment
  • The Latest On The Brent / WTI Spread [View article]
    I only day trade the futures, and yes, it requires keen attention or you acquire steep losses. When I wrote the above WTI was trading below the 99.18 interim top and I was able to short that down but as soon as there was a turn I exited. Shortly after that it shot up to 99.87. I suspected it might do so. This is precisely why one wants to play a longer short through futures options, and time that with the strength. The sentiment suggests the strength will continue, but this could turn quickly with global events. Happy trading.
    Jul 2 05:33 PM | Likes Like |Link to Comment
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