Jumat, 20 November 2009

The inverted T-bill curve - an anomaly or a signal for another downturn?

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The 3-month T-bill consent has collapsed to newborn lows, yielding half a foundation point.




That effectuation if you locomote a meg dollars into 3-month bills correct now, in 3 months you module walk away with your meg nonnegative about 13 dollars. After inflation is taken into account, you are downbound about $3,000 (depending on the assumptions). Why would anybody do this?

Trading desks everyplace are told - we are done for the year. We've made out money for the year; let's alter it home. Unwind as such venture as you crapper before year-end. And every that cash is flowing into T-bills. Except that grouping don't poverty the 1-month bill because it module mature before year-end. There is such less liquidity at the 2-month point. That effectuation the 3-month bills are the only game in town for short-term liquid safe paper, even if the consent is set (negative real rates).

That bid for the 3-month essay has created an turned T-bill consent curve.



It's a strange phenomena because this flex implies perverse nervy rates (so such for the so-called "arbitrage-free" interest evaluate models). This effectuation the market sees short term yields going perverse before the end of the assemblage (this happened in Nihon a few years ago). One artefact to interpret this is the market is anticipating the frugalness to get worsened before it gets better - possibly anaemic holiday sales. Another is only a sudden modify in venture appetite finished year-end.


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Gold and the SP 500 Charts

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The SP is looking a little 'heavy' feat into a holiday brief weekend in the States. This is where the bulls requirement to stop the trend. Here is where we find out if the Fed and Treasury effort to reflate the financial quality facet will 'stick' or not. Their approach was a semipolitical policy nonachievement of the first order, nearly shockingly naive to see from an Administration headed by skilled be Sure you bookmark this page. Thanks...
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Kamis, 19 November 2009

Steve Meyers: A Rolling Top in US Stocks

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Equities are floating on thin volumes and fat liquidity. It may move further, and await any event to modify this rolling crowning and flash selling. Here is Steve Meyers view. be Sure you bookmark this page. Thanks...
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Short Term T Bills Go Negative

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Too some dollars chasing too few opportunities because of mispriced risk, so they are piling into brief Term Treasuries again.Grab something solid and stop on tight. Could be wrinkled seas ahead.Three Month T Bill Rates Go Negative On Concern Risk Rally OverdoneBy Cordell EddingsNov. 19 (Bloomberg) -- Treasury three-month calculate rates overturned negative for the first instance since business markets froze be Sure you bookmark this page. Thanks...
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GAZ and UNG: A Classical Gas

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An intriguing divergence for two funds that are supposed to have a .99 correlation and are chase essentially the same thing.Right now, for example, UNG is down .67% for the day and GAZ is up .61%.UNG is substantially more 'liquid' as they feature on the Street. Does that make it a more efficient price discovery mechanism?Or more compliant for recreation the retail markets? be Sure you bookmark this page. Thanks...
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The Partnership Between Wall Street and the Government Will Continue Until the System Collapses

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Hindsight is a wonderful thing, said Timothy W. Long, the honcho bankexaminer for the Office of the Comptroller of the Currency. At the peak ofthe scheme boom, to verify an aggressive supervisory move and tell people tostop disposition is hard to do. Post Mortems Reveal Obvious Risks at Banks, NY TimesWell what most now?The underway originative continuance of derivatives on US advertizement banks be Sure you bookmark this page. Thanks...
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SP 500 Daily Chart: Pete and Repeat Were on a Boat...

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Just added period doing God's work on earth..."Hello Lloyd? Yeah, Larry and I were talking, and we would like to see the market go up, not likewise fast, but on a pleasant upgrade slope, within a range. Whatever you attain doing this is yours to keep. Ben module cater the liquidity. We requirement to attain it countenance like the Administration's policies are working.And most Americans module conceive they are if the stock be Sure you bookmark this page. Thanks...
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Rabu, 18 November 2009

The exciting new world of ETFs

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The ETF concern is decent more packed and competitive every day. ETFs have become an extremely popular creation with both the individualist investors as substantially as different institutionalised players. The reasons are plentiful - from fast admittance to finger exposure, to an easy artefact to start markets much as China, to a ultimate artefact to verify a macro analyse (for warning in commodities), or to simply obtain leverage. One of the key reasons institutions fuck ETFs is liquidity. SPY (S&P DEP RECEIPTS) for warning has a trading volume of 100-300 meg shares a day, making it one of the most liquefied mercantilism traded instruments in the world. In oppositeness for example, IBM volume is under 10 meg shares a day.

With every this demand, institutions are cranking out newborn ETF at what seems to be a weekly basis. And apiece tries to add their bells an whistles to intend rubbing in this competitive landscape. Schwab for warning meet created a bunch of newborn justness finger ETFs (such as the Schwab U.S. Large-Cap, Small-Cap, etc.), and hunting at the ETf universe, one strength feature zzzzzzzz.... But the spice here is that if you have a Schwab trading account, you crapper trade these things comission-free -supposedly forever. So if someone allocates a whatever cardinal bucks a month to this strategy, this zero comission substance definitely helps.

But how farther are money companies going to near these products? Well, here is the stylish ETF modify iShares: ticker symbol ALT. "ALT" stands for deciding investments. That's right, this ETF is a inclose fund. Don't have a whatever mil to locomote into a inclose fund, here is what you crapper intend with the mercantilism traded ALT:

The objective of the Trust is to tap unconditional returns from investments with historically low reciprocity to traditional quality classes while hunt to curb the risks and volatility inherent in futures and nervy contracts by attractive daylong and brief positions in historically correlated assets.

Feels, sounds, and strength behave same a inclose fund. Here are the 3 strategies ALT manager module trade:

The Trust utilizes assets strategies relating to qualifying value. Relative continuance strategies essay to acquire from the mispricing of financial instruments, capturing spreads between assets and quality categories that deviate from the clean continuance or arts norms. The following three generalized strategies are thoughtful as sources of return:

1. Yield and Futures Curve Arbitrage Strategies
Seek to verify plus of interest evaluate and futures lessen toll differentials by simultaneously incoming into daylong and brief positions in different bond futures contracts, interest rates futures contracts, artefact futures contracts and/or currency nervy contracts that the Trust determines to be mispriced qualifying to one another. The Trust module start into daylong positions in contracts whose underlying assets are deemed relatively inexpensive and module start into brief positions on contracts whose underlying assets are deemed relatively expensive.

2. Technical Strategies Momentum/Reversal
Seek to verify plus of a comparability between assets' arts returns and their past performance. Technical strategies are based on the theory that past toll history haw be prophetic of quality value, and so technical strategies haw be used to capture returns arising from toll changes over time. For example, if past action of an quality exceeds arts performance, then a daylong "momentum" trade possibleness to acquire haw arise. If the arts action of an quality exceeds past performance, then a brief "reversal" trade possibleness haw arise.

3. Fundamental Relative Value Strategies
Seek returns by attempting to identify instances where there are discrepancies between the mart and basic values of an asset. Comparing current toll to basic continuance haw wage a measure of mispricing, or opportunity, which crapper be compared across markets to wage a amount of qualifying misevaluation. The Trust's qualifying continuance strategies tend to acquire in markets that appear inexpensive on a qualifying basis, and delude in markets that appear expensive, trading daylong or brief positions in the germane assets.

So if you intend bored with US justness finger ETFs, or BRIC ETFs, or metallic ETFs, of modify 3x investment ETFs, ALT is here to add whatever inclose money excitement. But don't look on this ETF as ever being uncorrelated to the justness markets. As we discussed before, reciprocity crapper exhibit up in a stressed mart with lowercase warning.


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Alternative View: Housing Prices Have Fallen Significantly Towards the Trend

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Here is the graph related with a analyse of the deflating structure bubble that shows we have appreciably fallen, boost than the 25% in the blog entry from yesterday.For the details on this analyse feature here.I have not yet reconciled the digit views, as I am 'under the weather.' be Sure you bookmark this page. Thanks...
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Selasa, 17 November 2009

Have Home Prices Only Fallen 1/4 of the Way to Trend?

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Interesting chart to feature the least.Ben is pumping the money buttons so hornlike that the trend haw be realized a taste higher in minimal terms erst inflation kicks in.But it haw not still be the prizewinning time to acquire that new home, unless it is finished for a direct residence, and with great care.New Observations.netValues Have Fallen Only 25% of the Fall Needed to Reach TrendBy archangel WhiteNovember 11, be Sure you bookmark this page. Thanks...
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Long Term Gold Chart Updated (And An Addendum Showing Detail)

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The case of this move of the gaolbreak will tell us how far gold will correct when it hits an grey top and consolidates or corrects. Gold is in a Samson market. One never gives up all their function in a Samson market. Rather, you stop it patch the Samson is running. If you are an aggressive 'trader' you crapper acquire on support and sell at resistance around a steady function to improve your be Sure you bookmark this page. Thanks...
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Reflections on the crisis

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Here is an engrossing verify on the business crisis - a essay from William Sahlman titled Management and the Financial Crisis (We hit met the adversary and he is us ). It's a broad overview with whatever unique perspectives. It points discover for warning how everyone is a "Monday farewell quarterback" when it comes to the business crisis (apologies to our non-US readers for this US call jargon - it meet fits).

There hit been mythologic newborn articles about why, for example, ratings on mortgagebacked securities were flawed. These articles strength hit been more multipurpose before the crisis rather than after. Academics hit also poked holes in various widely acknowledged measures same ValueatRisk. Again, a lowercase providence would hit been helpful.

This of instruction is not entirely true, as there were whatever who measured the warning bells. This article from the WSJ spinous discover how reciprocity models broke downbound in 2005 when GM got downgraded. This brought discover the dangers in the distributed certainty on models, portion when it comes to organic credit. A publication by Ed Grebeck in Euromoney in 2006 titled "Why should Institutions Invest in CDOs at all?" was another warning sign. But the rest - both academia and practitioners like - were meet along for a ride.

William Sahlman points to the fact that regulatory proposals, modify conscious ones are not needs feat to solve the problem in the daylong run.

Take a ultimate warning of a constructive improvement in regulatory policy that would refer imposing higher permanent top minimums on systemically essential business firms. Those requirements strength modify be contracyclical higher reserves required when quality prices are high and modify when nowadays are tough. Increasing the buffer between an inherent Federal indorse and private responsibility is a good intent it haw modify the probability of a fright and of forcing the polity to travel in. History reveals, however, that crescendo the buffer module not stop adroit people from figuring discover structure to bypass thermostated structures and, in the end, place the grouping backwards at risk. The rules and regulations become a point of feat for uncovering untied structure to make money and ingest leverage.

A sort of other engrossing observations are in this employed essay - whatever a bit controversial. Enjoy.

WASSSRN-id1496526

Hat counsel Ed, Bill

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NAV of Certain Precious Metal Funds and ETFs

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Longer term discount window financing not needed

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Bloomberg: The agent Reserve said it module turn the maximum maturity on discount-window loans to 28 life from 90 life as it moves to displace whatever of the emergency measures introduced to fight the credit crisis.

The FRS Board cited continued improvement in financial market conditions in todays declaration and said the modify module verify gist Jan. 14.

The constituent discount window had been extended in 2007 to specifically address constituent resource issues (funding beyond overnight) banks were experiencing as a termination of the founder in the ABCP market. As banks like Citi and RBS started taking CP conduit and SIV assets onto their balance sheet, their resource needs spiked and the FRS stepped in. The resource evidenced to be insufficient, as investment banks like Bear didn't hit admittance to the discount window. For a reminder of the escalation of events in the summer of 2007, wager this today famous Cramer freak-out:





We've become a daylong artefact since then as demonstrated by the LIBOR constituent structure. In particular the 3-month LIBOR drop is unprecedented, demonstrating availability of interbank constituent lending.





Term interbank resource is today functional substantially enough for the FRS to turn the discount window as substantially as another lending programs.



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Buiter Still Obsessing Fitfully on Gold: What Time is the Next Currency Crisis?

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Mr. Buiter, authority to bicentric banks and to Godless Sachs, is at it again, scrutiny gold to Yap Island stone money, ranting against those who would change valuable slope essay for something that he does not like, (but has endured as a accumulation of riches nonetheless for thousands of years).Once is a phenomenon, but twice is a trend. What can be dismissed as a crank rave must now be seen as a symptom be Sure you bookmark this page. Thanks...
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Senin, 16 November 2009

What is a "Nominal" Stock Market Chart Versus a "Deflated" View?

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Lots of interesting questions in the email bag over the weekend.A reverend asks 'What exactly is a minimal or artificial have market feat as you use the terms?'Nominal is utilised to stingy "being such in study only; so-called; putative." This is an warning of a nominal, or artificial have market feat that someone had posted over at Alphaville early this year. (Hat tip to starets of WSB for be Sure you bookmark this page. Thanks...
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Buiter Still Obsessing Fitfully on Gold: What Time is the Next Currency Crisis?

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Mr. Buiter, authority to central banks and to Godless Sachs, is at it again, comparing metallic to Yap Island pericarp money, ranting against those who would trade valuable paper for something that he does not like, but has endured for thousands of years.Once is a phenomenon, but twice is a trend. What crapper be dismissed as a crank rave staleness today be seen as a symptom of a man caught in a contract error.We give be Sure you bookmark this page. Thanks...
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What is a "Nominal" Stock Market Chart Versus a "Deflated" View?

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Lots of engrossing questions in the email bag over the weekend.A reader asks 'What just is a minimal or artificial have mart feat as you ingest the terms?'Nominal is utilised to mean "being such in study only; so-called; putative." This is an warning of a nominal, or artificial have mart feat that someone had posted over at Alphaville earlier this year.The Zimbabwe Industrial IndexI would be Sure you bookmark this page. Thanks...
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Minggu, 15 November 2009

Long Term Gold Chart Updated

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The character of this move of the breakout module verify us how far metallic module precise when it hits an intermediate crowning and consolidates or corrects. Gold is in a bull market. One never gives up every their position in a bull market. Rather, you hold it while the bull is running, and can trade on capableness and imperfectness around a stable position to meliorate your outlay basis, attractive some of your money 'off be Sure you bookmark this page. Thanks...
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