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  • Deflation, Indeed!  [View article]
    As always, excellent post, Mike.
    May 16, 2014. 05:54 PM | 1 Like Like |Link to Comment
  • Patience Is A Pain  [View article]
    Good timing, Mike.

    Today's 30-year auction was weaker than expected with non-dealers demand dropping significantly, which resulted in a considerable divergence in bonds: 30Y +3bps, 5Y -3bps. So the curve is steepening modestly.

    In spite of Yellen's testimony, did we just witness the start of the long bonds' turnaround and the steepening of the curve today?
    May 8, 2014. 05:59 PM | Likes Like |Link to Comment
  • Evaluating The New Kid  [View article]
    What are the real, tangible effects of the Fed's policies in the market place? A complete disconnect between the markets and underlaying assets.

    "Simply put, warns Matt King - as the taper continues - "markets stopped following fundamentals about two years ago." Leaving the question... when does that change?"


    At some point the Fed's smoke and mirrors policy will stop having the desired effect, and when that happens the markets will face the precipice with no one there to artificially prop them up.
    May 8, 2014. 12:25 PM | 2 Likes Like |Link to Comment
  • Patience Is A Pain  [View article]
    Nice post and discussion, Mike. Good to have you back.

    Given the conversation, what do you make of the flattening of the curve and what do you expect will happen in the near future?
    May 6, 2014. 05:35 PM | 1 Like Like |Link to Comment
  • Forecasting Cold To Continue Into Summer  [View article]
    Nice post, Mike. Thanks.
    Jan 8, 2014. 03:45 PM | 1 Like Like |Link to Comment
  • Artful Dodger  [View article]
    Once again, thank you, Mike.
    Dec 20, 2013. 11:06 PM | Likes Like |Link to Comment
  • Artful Dodger  [View article]
    Thank you, Mike.

    I should have written: the 'yield' of the ten year has very briefly rallied..., but then has proceeded to drop. I think you understood that's what I meant.

    I am, and have been for quite some time, short 20+ year treasuries. It has been a bumpy ride but I have maintained the position because I believe it should serve as necessary hedge, especially under current circumstances. Nevertheless, it is a bit unnerving to see yields briefly spike to then collapse, time and again, once the Fed's stimulus programs end. Seeing yields fall again this morning, in spite of good economic news and equities moving higher, I started to wonder if we would see the patterned repeat itself again.

    I still think that being long 20+ year treasuries would be dangerous and being short, instead, is the right position. I am wrong? It is fine to have doubts and I keep on telling myself that I should never be more invested in being right than in making money. But I am wondering whether this could prove to be one of those times.
    Dec 20, 2013. 04:35 PM | Likes Like |Link to Comment
  • Artful Dodger  [View article]

    Excluding Operation Twist, which didn't expand the FED's balance sheet, the last two times the FED's stimulus programs -QE1 and QE2- have ended, the ten year has very briefly rallied (3 days and 1 day, respectively), as it would be expected, but then have proceeded to drop (150bps over 6 months and 155bps over 3 months, respectively) which, I believe, is the opposite of what conventional doctrine would indicate.

    I would like to know why do you think this has been the case and, more importantly, whether you think it will happen again this time around. Finally, do you see any difference between the 10 year and the longer dated bonds? Thanks.
    Dec 20, 2013. 12:38 PM | Likes Like |Link to Comment
  • Artful Dodger  [View article]
    Great article, Mike. Happy holidays!
    Dec 20, 2013. 11:54 AM | 1 Like Like |Link to Comment
  • Defensive  [View article]
    Yes, writing a public blog can be difficult. But keep it up, Mike, we need serious people writing intelligent pieces. The only advice I can offer, one which, I confess, is almost impossible to follow sometimes, is to have the outmost restrain and simply ignore the unreasonable posters and only address the reasonable ones. Unreasonable people, when ignored, tend to get furiously mad, but eventually, just give up and leave.

    The other option, which I found worked better for me was the following: I used to use a very short prewritten statement that I would post as a reply to those types of posters every single time, without exception. Something along the lines of "I will be happy to reply to you and address your concerns if you post in a civil and respectful way. See you next time".
    Dec 10, 2013. 06:54 PM | 2 Likes Like |Link to Comment
  • Moving Goalposts  [View article]
    The market is a zero-sum game as much as the market is efficient. The market is neither.

    Theoretically and from a purely monetary point of view the market only becomes a zero-sum game if it were to go down (and in some case up) all the way to the various IPO prices of the stocks. In other words, only it the market were to revert back to its starting point. Otherwise, it is theoretically possible for all to actually make money in it. As long as there is wealth creation, the market is not a zero-sum game.

    Let's disregard inflation (and any other external factors) and imagine a market of only one stock with an starting trading price of 100, which goes up, and then up and and down, but never back down to 100. Some will win, some will lose, but as a group there is wealth creation and hence, the market (which is the group) is not a zero-sum game. The market is up and the market participants, as a group are up more than they were when the market started. There is new wealth were there was none before.

    Now, repeat that process thousands of times, for the thousands of stocks, add them up together, and you will see that the market is not a zero-sum game.

    From a more practical point of view, though, what is most likely to happen this time around is that the market will, at some point, reverse from its all-time highs, institutional and professional investors will get out first and retail investors will take the brunt of the losses. This is, naturally, what usually happens and it may be, to a degree, unavoidable. Unfortunately, though, the Fed is compounding the problem and the future losses for the retail investors.

    PS: "for every winner (buyer, these days) there's a loser (seller, these days)."

    Actually, no. I know it sounds obvious, but the seller only truly loses if it sells below his original price. If it sells above it, it may be leaving potential profits on the table, but it isn't actually losing any money. So, if there ever was a market that would, inexorably, go up, the losses would come from short sellers (if there were any). Long, investors, as a group, would always make money.
    Nov 15, 2013. 05:29 PM | Likes Like |Link to Comment
  • Moving Goalposts  [View article]
    Very good post, Mike.

    One should be happy with the market going up and up, but not like this. Does it matter? It may not, but it should. What happens when it stops working? I am guessing the Fed is betting they can engineer a soft pull back and won't mind a 10% correction if they have pushed the markets up close to 30%. They will see it as a success. And, perhaps, it would be. If they manage to pull it off.

    I doubt it.

    One problem people don't even consider, but will prove costly, sooner or later, is that the Fed is taking the parameters and intelligence away from the markets, and that's terribly harmful. Intelligence and knowledge should be compensated in the market place but the Fed takes that away by indiscriminately melting up the markets, which diminishes the hard earned advantages of the best traders and institutions.

    Yes, I would like everyone to make money, but at the end of the 90s we learned what happens when you have everyone drive a Formula 1 car at full speed, allowing them to think they are in total control, and then take away the automatic pilot.

    The crash will happen again, and this time around, the Fed is providing the high-octane fuel and the blinders to the pilots. That seems suicidal to me.
    Nov 15, 2013. 09:52 AM | 2 Likes Like |Link to Comment
  • The Solar Revolution: Part 3  [View article]
    Smaller in terms of area, but The Netherlands it is an important European country, which influences European policy, and it has a large economy that punches way about its weight. Is Alaska more important than NY because it is so much bigger?
    Nov 12, 2013. 04:24 PM | 1 Like Like |Link to Comment
  • The Solar Revolution: Part 3  [View article]

    We already own many renewable ETFs such as: PBD, PBW, PUW, PZD, QCLN, ICLN, FAN, GEX, TAN and KWT. In your opinion, which ETF or ETFs better represent the future of solar. Any preference from an investment point of view? Thanks.
    Nov 12, 2013. 08:23 AM | Likes Like |Link to Comment
  • The Solar Revolution: Part 3  [View article]
    Nice series of articles, Jonathan.

    Some posters have written about the increasing cost of solar installations at home. In The Netherlands municipalities are promoting the use of solar by, amongst others, paying for the installation at homes. They also promote the use of electric cars by building an electric plugging post in front of your home if you buy an electric car. Similar schemes are being implemented in other European countries. As you may imagine, as a result of these policies, the use of these technologies will, most probably, be higher in Europe than in other places.

    This is to say that scalability, installed capacity and costs depend on many factors, which change from country to country and region to region. Make no mistake about it, in Europe, though, the trend towards renewables is crystal clear.
    Nov 12, 2013. 08:19 AM | 1 Like Like |Link to Comment