Larry Livingstone

Market Outlook: Bill Gross Has It Exactly Right

Based on data from the flow of funds report (table L.209) www.federalreserve.gov.../
Total treasury securities held by banks at the end of Q2 is only $125.4B...how do you explain this large difference?

Low Short Rate Trend: Don't Blame China or Anticipated Fed QE

Hi, Where do you get the info on China specific buying by maturity?

Thx much

Expect Oil's 'Crack Spread' to Widen

Reason why the crack is widening today, in my opinion ($2 up to $12.35 for the front month) is that front month WTI is undervalued...you can infer it from the WTI-Brent spread hitting a low of -$2.35 (versus a normal average of positive $0.7) and the contangon widening again to around $3.00...every time this has happened in the ast few months it switched back with WTI increasing (look at WTI at $35 on 1/15 as a perfect example...the crack hit $13.9 then)

Bond Expert: Wednesday Outlook

Hi John,

Great stuff every day, thank you!
How do you explain the 30 year swap still being so negative? I thought that the move in Yen was a driver behind the move lower in spreads but obviously this has not proved out...
Do you think that the change in how insurance companies discount their obligations based on the swap and not the treasury rate has something to do with this?

Thx much!

Bond Expert: Tuesday Wrap

Hi John,

Great stuff every day, thank you!
How do you explain the 30 year swap still being so negative? I thought that the move in Yen was a driver behind the move lower in spreads but obviously this has not proved out...
Do you think that the change in how insurance companies discount their obligations based on the swap and not the treasury rate has something to do with this?

Thx much!

Don't Short the Fed Yet

Think about it this way...total supply will increase by around 30% this year...total demand from foreigners will have to go down by a minimum of 15% (think shrinking trade surpluses) this means that domestic investors or the fed will have to pick up the slack just to keep them where they are...the risk/reward ratio of shorting them is quite favorable...

Why China Can't Dump U.S. Treasuries

The point that everone seems to be missing is that for Treasuries to stay where they are it will require China, and other Foreign buyers, to increase their rate of purchase by ~30% to match the forecasted increase in funding needs...simply buying what they bought last year (when their trade surpluses were higher) is not going to be enough.....

U.S. Dealing with a Boatload of Debt - Moody's

The biggest issues with u.s. debt are twofold...1. The debt owed to foreigners as a % of GDP is the highest by far that it has ever been (currently around 20% of GDP) and the highest of the tripple A countries (for example in Japan it is only around 4%) 2. The duration of the debt is the shortest its ever been declining from 5.27 years average duration in 1997 to 4.13 years duration this year...Japan is at around 7 years and climbing...more and more debt at shorter and shorter maturity is the textbook case of bankrupt company...

Fed Monetizes Debt Leading Investors to Embrace Gold

Where can I find the link to this info?

Thx


On Feb 02 04:04 PM Skeptik wrote:

> Yes, the Fed increased their Holdings of US Treasury Bonds and Notes
> by $2.423 billion during the week, with $921 million of net new purchases
> of Treasury Notes within the 5-Year, and 10-Year, ‘maturity distribution’.
>

Fed Monetizes Debt Leading Investors to Embrace Gold

Boris, I don't see any purchases on treasuries in the last report...only a deduction of $181 mil versus last week...in fact, over the last year, treasury holdings by the fed have been going down...with the fed I have learned that it is more important to watch what they do rather than what they say...(note how they are only purchasing MBSs at a rate of $50B a year versus a $500B commitment....)
www.federalreserve.gov.../

Winter Heating Oil, Nat. Gas and Crude Oil Preview

Hi Tim, good article. Isn't the crack spread for gasoling also interesting here? December is currently at $3.27 which is more than a dollar below the cash operting cost to refine...why would the refiners work at a loss?
Also, do you know if there is an exchange out there that lists a spread between Natural Gas and heating oil? That ratio is around 45% lower than the hostroical norm and with 85% historic correlation, should revert to the mean over time...

Tracking Crack Spreads

Hi,

Great article. With the crack spread on gasoline for Oct trading at around $0.33...wouldn't you say this is a good time to buy the spread? P.S. you said that buying the spread entails buying crude and selling gasoline but in essence you want to sell crude and buy gas to bet that either crude price will fall or gas price will rise or both right? or am i missing something here?