| Kidder Reports Archive, Tuesday, Dec 29 |
|
|
Latest Posts, News & Opinions
Euro: 1.4351 vs 1.4381 at 15:00 Dollar-Yen: 91.939 vs 91.609 Oil is $78.81 vs $78.77 Gold at $1,098.07 DJIA is +18 Treasuries broke a string of six consecutive lower closes today after the 5yr results were proclaimed good. Not all participants agree with this viewpoint however, pointing out that the strong direct bid, may have seriously taken away demand for the difficult 7yr maturity slot. \\ Tuesday's upside price action has some participants talking about a near term bottom being formed. However, most techies view this rather small bounce as just an oversold correction, leaving the market more vulnerable to downside movement if something goes wrong or surprises. Courtesy of JK Today's Recap Archives Net long dollar positions in the week ending Dec. 22 were +$700M vs -$1.98B -CFTC Nikkei closed up +3 at 10,638 on 20th year anniversary of all-time high at 38,876 US/Japan 10 year bond spread widened to a 2 year high Spanish and Swedish retail sales data weaker than expectations ICSC/Goldman Sachs Chain Store Sales up +0.4% from prior week; up +2.3 y/y Redbook up +1.9% Y/Y; November-to-December spending down -4.5% S&P Case-Shiller Home Price Index: 0% M/M and -7.3% Y/Y Consumer confidence climbs to 52.9vs expected 53.0 and previous 50.6r Credit card chargeoffs rose 0.5% to 10.56%; Moody's sees peak at 12-13% in mid-2010 European markets rose for 6th day; mining stocks rallied Copper prices jumped to their highest level since September 08 Treasury sells 5Y at 2.665%; cover 2.59; indirects 44% 17:00 ABC Consumer Comfort Index (previous -42) 07:00 MBA mortgage applications 09:45 Chicago PMI 10:30 Oil inventory data 11:00 KC Fed index 13:00 7Y note auction
Analysis Abnormal BCA Big Pic CalcRisk CW Econoday EconPic MFGR Mish MS Roubini
Six Factors In Play * If there is a spike, it is far more likely earlier in the year than later * Treasuries are in unfavorable period that lasts all the way through May * Unemployment is unlikely to dip and could easily rise to 11% * The global recovery can easily falter in the second half of 2010 - Mish From the peak in the second quarter of 2006 through the trough in April 2009, the 10-City Composite is down 33.5% and the 20-City Composite is down 32.6%. With the relative improvement of the past few months, the peak-to-date figures through October 2009 are -29.8% and -29.0%, respectively. -Calculated Risk Fannie Mae reported Monday that the rate of serious delinquencies - at least 90 days behind - for conventional loans in its single-family guarantee business increased to 4.98% in October, up from 4.72% in September - and up from 1.89% in October 2008. - Calculated Risk
Bond Market Briefing Bloomberg Bloomberg Tsys SMRA Reuters Spread Dec10 Wrightson
Tuesday close: The 2Y/10Y is flatter by -3.9bp to 270.6 10Y yield is -3.1bp to 3.809% 10yr Tips is -3.7bp is 1.401% 2Y yield is +0.8bp to 1.103% Pimco says corporate bonds - especially bank bonds - will be big winners in 2010, benefiting from a combination of stronger balance sheets, growing demand and shrinking debt issuance. "As the corporate sector de-levers while the federal government re-levers, bond market technicals should increasingly turn positive for corporate bonds and negative for Treasurys." - Seeking Alpha in News
Columnists Asia Times Beat Bloomberg Crane Econ View David Goldman Plessis Pritchard RealClear
Commentary Aleph Baseline Hutchinson Kid Dynamite Mauldin Naked Noland Oracle Roseman
Will The Tens Be Another Bear Decade? -Hutchinson Foreseeable and Unforeseeable Risks ~ The Room For Policy Error is Enormous - Naked
Commodities List Bloom Energy Kitco Drum Reuters CLG Gold G Soy H Wheat NGG HGG CRB
Crude oil traded near a five-week high as unrest in Iran raised concerns about the security of Middle East supplies, while plunging temperatures in the Northern Hemisphere boosted fuel demand.
Currencies Bloomberg BBH USD Index Greg Mike Laidi AL Twitter Reuters Spot
USDJPY: We are on alert for a break out. On the topside, the 91.76/86 area has been a ceiling over the last 5 trading days. Back in July the low reached 91.72 (see daily chart below). The market is using the area as a level to pause the move higher which has seen the price move from a low of 84.80 on November 27th to the high of 91.86 reached last week. A move above this level would next target the 92.32 level which is the high from October 2009. -Greg Mike Monday oil gained for the 4th consecutive session to close at $78.77, facing 80.81 as the key resistance, which coincides with the 100-week MA. Oil has not broken above its 100-week MA since October 2008. Yen weakness is increasingly seen as the preferred funding currency for these risk trades, especially after Tokyo unveiled its biggest budget ever at Yen 92 trillion. USDJPY is still expected to retest 92.25, followed by 93.00 - Laidi For the first time since May speculators went long the dollar, according to CFTC data released Monday. Net long dollar positions in the week ending Dec. 22 were +$700M, up from -$1.98B in the prior week, and a peak short position of $20.7B. The shift comes in a month that has seen the dollar rally sharply after spending most of 2009 under pressure. - Seeking Alpha in News
Current Events Atlantic Buchanan Common Counter Harpers Huff Global Salon Slate Time
A decade of self-delusion - About the first decade of what was to be the Second American Century, the pessimists have been proven right. According to the International Monetary Fund, the United States began the century producing 32 percent of the world's gross domestic product. We ended the decade producing 24 percent. No nation in modern history, save for the late Soviet Union, has seen so precipitous a decline in relative power in a single decade. -Pat Buchanan
Grumpy Guys Cluster FA GW G's Mess Jesse Kadrosky Michaelson Ticker Taibbi Zero
Each year Americans spend $7,290 per person on health care. What does all that money buy? A 78 year life-span. That'd be $568,620 in lifetime medical costs. In Spain they get to live 3.2 years longer for $351,7135 less. And in Portugal, where folks live to be 79 on average, they only spend $169,850 on healthcare. That's $2,150 per person per year. How is it they get to pay 70% less and live even longer? Ah, perhaps its their single-payer universal health care system. Shame on them. -Michaelson
South America Merco Ambito AP FT Bloom Independent Economist Strat
All foreign visitors arriving in Argentina’s international airport of Ezeiza and who live in countries that charge the Argentines before they enter, will have to pay a reciprocity tax. ($131 for US) - Merco
Stock Market Briefing Futia BW Pragmatic Nikkei Schaeffer St Smart 24/7 Wall St Yahoo
Tuesday Close DJIA closed at 10,545.41 -1.67 -0.02% S&P closed at 1,126.19 -1.59 -0.14%
Bond Market Briefing Bloomberg Bloomberg Tsys SMRA Reuters Spread Dec10 Wrightson
Tuesday close: The 2Y/10Y is flatter by -3.9bp to 270.6 10Y yield is -3.1bp to 3.809% 10yr Tips is -3.7bp is 1.401% 2Y yield is +0.8bp to 1.103% Tips CPI inflation gauge is cooler by -4.9bp to 2.408% - YTD high is 2.447% on Dec 28 * Gauge was 0.135% on Dec 31; decade average is about 2.70% * All-time low is 0.010% on Nov 20; recent low is 1.55% in July * The 2008 high was 2.613%; gauge was 1.94% just before Lehman bankruptcy On Monday, the spread between Dec 2010 euribor and eurodollars closed at 22.0, narrower by -31.0 from 53.0 on Dec 11. The Dec 2010 Euribor-Eurodollar spread has been narrowing below its 18-day average (last at 44.5) for most of December. This narrowing of the EU/US interest-rate differential probably means traders are losing faith in 'an extended period' of zero US interest rates. The spread provided an early warning to exit the dollar carry trade.
Currencies Bloomberg Brown Bros USD Index Laidi AL Twitter Reuters Spot
Tuesday closes at 15:00 Euro: 1.4351 vs 1.4381 Dollar-Yen: 91.939 vs 91.609 Euro-Yen: 131.96 vs 131.76 Canadian dollar: 1.0431 vs 1.0429 Aussie dollar: 89.44 vs 88.71
Calendar Econoday SMRA Wrightson Barchart Any Date
Wednesday, 12/30 07:00 MBA mortgage applications 09:45 Chicago PMI 10:30 Oil inventory data 11:00 KC Fed index 13:00 7Y note auction Thursday, 12/31 08:30 Jobless claims 08:30 Continuing claims 10:00 Milwaukee PMI 13:00 Early close in Chicago ahead of New Year's Day Holiday Duration extension for Tsys is estimated at 0.06 years, US Aggregate extension at 0.07 years and US Government/Credit at 0.06 years. - Courtesy of JK Monday, Jan 4, 2010 10:00 ISM factory report 10:00 Construction spending Tuesday, 1/5 07:45 Weekly chain store sales 10:00 Factory orders 10:00 Pending home sales 11:30 4-week bill auction 12:00 Auto sales 17:00 ABC Consumer Comfort Index
Baltic Dry Index - - - Bloomberg - - - Google
The Baltic Dry Index fell -18 to 3,005 Thursday, its 14th consecutive decline. BDI is closed for the year. The index range in 2009 was 772 to 4,661. The BDI is down 1,656 points from its 14-month high on Nov 19 at 4,661. The multi-month low is 2,163 on Sept 25 and its 2008 high was 11,793. The 20 year average is near 2,300.
2Y Yield Spread: Germany Over US - - - Tsys Yields
At 12:08 Tuesday, the spread of Germany 2Y over US 2Y is +18 vs +54 on Dec 7 German Dec 2Y is 1.29% US Dec 2Y yld is 1.11% On Dec 7, Mar euro contract was 1.4815 vs 1.4347 today
Nikkei Forecast- - - Nikkei - - - NKH0 - - - DJH0 - - - NKH vs DJH
The Nikkei is expected to open up +38 Tuesday in Tokyo. The NK/DJ spread is +200 and trading well above -245, the 21-day average. Accordingly, NKH is quite rich at 445 above to DJH.
Archives and All Links - - - Archives
Keep In Mind
Either currencies or debt markets will blowup in next financial dislocation Public finances of the major Western countries are going to become unmanageable Four troubled giants are on life support and need continuing infusions Banks face huge rollovers of their corporate debt in next few years Consumer spending remains persistly weak Unfavorable conditions in residential real estate Commercial real estate foreclosures will have “catastrophic effects” Continued policy reflation should see trade weighted index fall to fresh lows (BCA) Core inflation is nearly impossible (statistically, anyway) Stocks represent valuable enterprises which are inflation and dollar hedges Either currencies or debt markets will blowup in next financial dislocation -- Dollar, gold and the VIX are likely to produce the biggest gains -- Australian Dollar and Brazilian Real appear particularly overvalued -- China and Hong Kong have ‘dangerous’ bubbles in the real estate market -- Global economy could down dramatically if China slows growth because if inflation Public finances of the major Western countries are going to become unmanageable -- Bond market pressures on the PIIGS: Portugal, Italy, Ireland, Greece and Spain -- Credit-rating agencies are on collision courses with Spain, Portugal and Greece -- Social security systems likely to be raided and social unrest is probable -- Many state/local/provincial/regional governments face a funding crisis Four troubled giants are on life support and need continuing infusions -- AIG, Fannie Mae, Freddie Mac and GMAC are long-term wards of the state -- Total risk they pose to the taxpayer far exceeds that of the big banks Banks face huge rollovers of their corporate debt in next few years -- More bank failures: 140 failures ytd and 545 banks on so-called problem list -- S&P has warned that nearly all of the world's big banks lack sufficient capital Consumer spending remains persistly weak -- Unemployment likely to move above 10.0% again after Nov drop from 10.2% -- To get a 5% unemployment rate within 7 years, US needs 300,000 new jobs a month -- Gasoline prices are higher than year ago and a cash flow drain on consumers Unfavorable conditions in residential real estate -- Residential investment is best leading indicator; huge overhang of vacant units -- Higher mortgage rates likely when the Fed stops buying GSE MBS on Mar 31 -- The bulk of the Option Arm resets trigger in 2010-2011 -- Second wave of defaults likely as a result of resets and strategic defaults -- At least 23% of all homeowners with mortgages are underwater Commercial real estate foreclosures will have “catastrophic effects” * Fitch warns of huge CRE losses for life insurance carriers on mortgages * $1.4 trl in commercial loans are due in next 5 years; much will not be renewed Continued policy reflation should see trade weighted index fall to fresh lows (BCA) -- Yen may become the funding currency to short to fund the carry trade -- Dollar in bear market until Fed signals confidence in growth and hints of exit! -- Capital controls to curb hot money flows if dollar weakens again -- But watch trade deficit -- if it continues to narrow, the dollar may do better Core inflation is nearly impossible (statistically, anyway) -- Owners' equivalent rent is largest single component of the core CPI at 24%. -- Rental vacancies remain high, landlords have virtually no pricing power -- CapU is 71.3%, up from post-war low of 67.6%; but still curbs inflation and wages Stocks represent valuable enterprises which are inflation and dollar hedges -- Inventories and staff are very lean; operating leverage gives earnings much upside -- Dollar devaluation is huge positive for firms with int'l revenues; and visa versa -- Emerging economies with reserves, high productivity growth, low debt are valuable Six Factors In Play - Mish in Analysis * If there is a spike, it is far more likely earlier in the year than later and we are headed into 2010 currently at 3.84%. Another 75 basis points certainly seems possible with the "hate treasury trade" back in vogue. * Treasuries are in an unseasonably favorable period right now, and that lasts all the way through May. * If there is a chain of favorable data such as a surprise to the upside in GDP for the 4th quarter of 2009 or 1st quarter of 2010, that too can contribute to a spike in yields. But all the way to 5.5%? Sustained? I'll put the odds of that at 15%. * Most analysts seem cock-sure the bottom in the stock is in and we are off to the races. The bottom may be in, but even if so the odds of a hard correction are very high in my opinion. Should that happen, there can easily be another flight to safety trade. * Unemployment is unlikely to dip substantially below 10% in 2010 and could easily rise to 11%+. That would kill a sustained rise in consumer spending, put a damper on earnings, and lead to higher chargeoffs on credit cards. Such events would be favorable for treasuries. * The global recovery can easily falter in the second half of 2010. That too would be favorable for government bonds in general.
28 December 12PM
Eurobondonline - Fixed Income - Euro$ - Eurex - Euribor - EquityIndex - SFE - Ratios EquityIndex We are long ESH0, NQH0, DJH0 We have stop reversals, opposite the trendspotter.We are long Feb Vix CBT we are short ZBH0, ZNH0, ZFH0, ZTH0 We have stop reversals, opposite the trendspotter . we are long TBT and PST Fixed Income ETF's CBTSpreads We have flatners & steepners on. ZBH0 - ZTH0 trades 3.02 ; We are long 2 ZBH0/short 7 ZTH0 from 3.02 bp's; ZFH0 - ZTH0 trades 1.04 bp's . We are short 5 ZFH0/long 6 ZTH0 from .96 based on daily moving average cross. Eurex we are short Bund , Bobl , short Schatz & long Gilt .We have stop reversals , opposite the moving averages. Eurex Curve We have steepners on Mar10 Bund/Schatz trades 1.54. We are short 2 Mar0 Bund / long 9 Schatz at 1.335 bp's ;Bobl/Schatz trades .65 bp's; We are short 5 Mar0 BOBL/long 12 Shaz at .53 bp's Mar10 Bond/BUND trades 1.356 We are long 2 ZBH0/short 3 Mar10Bunds 1.38 bp's; based on daily moving average cross. EURO$ We are short GEH1 GEH0 - GEH1 trades 1.49 . We are long GEH0/short GEH1 at 1.38 Euribor We are short IH1 IH0 - IH1 trades 1.20 . We are long IH0/short IH1 at 1.14 Short Sterling We are long LH1. LH0 - LH1 trades 1.66. We are short LH0/long LH1 at 1.64 LU0/LU1 - IU0/IU1 We sell 10 LU0 / buy 10 LU1 at 1.64 and buy 6 IU10/sell 6 IU11 at .91 = .73;Dec 3 we exit at .66.LU10/LU11 Sterling - IU10/IU11 Euribor trades .75 Dec 21 - short 10 LU0 /long 10 LU1 at 1.67, long 6 IU0 /short 6 IU1 at .91 = .76 SFE we are short SFE 10yr, 3yr & IRU0 . We have stop reversals , opposite the moving averages. SFECurve We are long 5 IRH0/short 5 IRZ0
BONDS Briefing USH TYH 5-min 10-min 10Y 2Y/30Y TU/US Bund/TY
STOCKS Briefing DJIA NKH0 NK/DJH S&P Nikkei Yahoo DJ Mini USD/FX SpotFX USD Euro Yen Aussie Loonie BL Cur Laidi Twitter BL Cur BBH Barchart OIL GOLD Oil CLG Gold G Soy H Wheat H CRB Metals BL Commodities NGG Energy BOND MARKET Across the Curve Briefing Bonds Bloomberg Tsys SMRA Wrightson COMMODITIES Barchart List Bloomberg Energy Report Kitco Oil Z Gold Z Soy F Copper Z CRB Gas Z CURRENCIES Ashraf Laidi Laidi Twitter Bloomberg Brown Bros Spot FX STOCK MARKET Briefing Carl Futia Pragmatic Capitalist Nikkei Street Smart S&P Chart Yahoo ANALYSIS BCA Big Pic Beat CalcRisk CW Econoday EconPic MFGR Mish MS Oracle COLUMNISTS Asia TImes Bloomberg Crane Econ View David Goldman Pritchard RealClear COMMENTARY Aleph Baseline Hutchinson Mauldin Naked Noland Roseman GRUMPY GUYS Bail Cluster FA GW G's Mess Jesse Kedrosky Michaelson Ticker Martenson Ninja Zero
|