By my math, Federal Reserve balance sheet currently sports leverage of 54:1. That's higher than Fannie, Freddie, Bear, Lehman prior to the 2008 credit implosion.
Indicator of how risk has been socialized, meaning that risk has been transferred from private to public balance sheets.
position in SPX
Monday, January 30, 2012
Portugal Debt Hammered Again
Portugal credit spreads are widening significantly this am. Ten yr CDS now pricing in over 70% chance of default.
For better or worse, I kicked much of my long exposure (mostly precious metals) last Friday and entered today's session about 10% net short via equity index ETFs.
position in silver, SPX
For better or worse, I kicked much of my long exposure (mostly precious metals) last Friday and entered today's session about 10% net short via equity index ETFs.
position in silver, SPX
Friday, January 27, 2012
Debt Ceiling Quietly Increases $1.2T
And just like that, the debt ceiling goes up by $1.2 trillion. The new upper bound is now $16.4 trillion. Rick Santelli is correct. Not much noise from the media this time around.
Wednesday, January 25, 2012
Low Fed Rates till 2014 Sparks Gold
In today's FOMC announcement, the Fed signaled that they will be keeping rates ultra low thru most of 2014. That even raised my eyebrow...
This news put some giddy-up into gold, which vaulted about $50 this afternoon on the FOMC news.
I used this leap to sell my GLD position. It's up about 10% from its lows, price is now filling the gap, and stochastics are getting twisty in the overbought zone.
Am also concerned about the re-hypothecation issues surrounding these metal ETFs on the back of the MF Global situation last fall.
Selling this position puts me just about 0% net long (long metal and ag commodities against short equity index). Feels about right given the current field position of various asset classes.
position in commodities, SPX
This news put some giddy-up into gold, which vaulted about $50 this afternoon on the FOMC news.
I used this leap to sell my GLD position. It's up about 10% from its lows, price is now filling the gap, and stochastics are getting twisty in the overbought zone.
Am also concerned about the re-hypothecation issues surrounding these metal ETFs on the back of the MF Global situation last fall.
Selling this position puts me just about 0% net long (long metal and ag commodities against short equity index). Feels about right given the current field position of various asset classes.
position in commodities, SPX
Friday, January 20, 2012
Silver Gaining Strength
The technical picture for silver continues to improve.
With today's +5% jump, white lightning knifed thru its 50 day moving average and left little doubt that it has officially left behind its multi-month downtrend line.
One would think that further upside progress from here will be more difficult--given the damage done on the way down late last year. Using SLV as a proxy, 34ish should serve as significant resistance.
That said, silver is quietly up about 20% from its late December lows.
position in SLV
With today's +5% jump, white lightning knifed thru its 50 day moving average and left little doubt that it has officially left behind its multi-month downtrend line.
One would think that further upside progress from here will be more difficult--given the damage done on the way down late last year. Using SLV as a proxy, 34ish should serve as significant resistance.
That said, silver is quietly up about 20% from its late December lows.
position in SLV
Thursday, January 19, 2012
Bullish Sentiment Approaching Extremes
Wanted to record that Jason's sentiment indicators are getting pretty stretched toward bullish extremes--both near term and long term.
When sentiment gets lopsided, then a trend reversal often approaches.
Couple that with Demark indicators signifying trend exhaustion on multiple timeframes, and it seems time to get cautious.
Personally, I added a bit to my index short positions today.
position in SPX
When sentiment gets lopsided, then a trend reversal often approaches.
Couple that with Demark indicators signifying trend exhaustion on multiple timeframes, and it seems time to get cautious.
Personally, I added a bit to my index short positions today.
position in SPX
Tuesday, January 17, 2012
Treasury Yields Not Following Stocks
Usually, when market participants are ready to take on risk, they sell bonds and buy stocks. When bonds get sold, their yields go higher. Thus, higher stock prices and bond yields are often positively correlated.
Not this time--at least so far.
As stocks have lifted over the past few weeks, bond yields have not done the same. Ten yr Treasury yields are approaching mid December lows at ~1.8%.
This suggests that there is still lots of deleveraging behind the scenes--investors are swapping risky assets (perhaps assets grounded in Europe) for the safety in US Treasuries.
Stock bulls will argue that this is a positive. "Imagine what will happen to stocks when this pocket of 'de-risking' is past. Demand for stocks will swamp supply!"
Stock bears will argue that this is a negative. "Imagine what will happen to equities when this pocket of stock buying is past. Supply of stocks will swamp demand!"
And so it goes...
position in SPX
Not this time--at least so far.
As stocks have lifted over the past few weeks, bond yields have not done the same. Ten yr Treasury yields are approaching mid December lows at ~1.8%.
This suggests that there is still lots of deleveraging behind the scenes--investors are swapping risky assets (perhaps assets grounded in Europe) for the safety in US Treasuries.
Stock bulls will argue that this is a positive. "Imagine what will happen to stocks when this pocket of 'de-risking' is past. Demand for stocks will swamp supply!"
Stock bears will argue that this is a negative. "Imagine what will happen to equities when this pocket of stock buying is past. Supply of stocks will swamp demand!"
And so it goes...
position in SPX
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