Kudos to MMs

"FV" ~ 895.

News: Goldman store sales, Redbook, S&P Case Shiller HPI, Chicago PMI, Cosumer Confidence, State street investor, Bullard speaks, Hoenig and Yellen speak after hours.

IRs: several settlements.

Oil futures had a big day up yesterday. Let's see if it has any follow through. Imo it overreacted to the news, but oil seems to find any excuse to go higher. The dollar was benign, so can't be causative it to that. Oil is exceptional at gap fills, and there is one at ~69.375 to ~70.50. Recently, it rarely takes more than two days to fill.

Gold did nothing and is doing nothing.

The weakness in NQ yesterday towards EOD was a bit strange, but cross currents like that often happen on opts ex or EOQ/EOH. Given the light volume, it may exacerbate it. I would be cautious today and look for the same effect. You don't want to be long weak NQ, and I _didn't_ say imo.

Mind seasonals. S/R as in previous posts.
 
"FV" ~905

News: Employment index, Car sales, MBA purchase applications, challenger job-cut report, ADP employment report, ISM mfg index, construction spending, pending home sales, Oil inventories.

IRs: Bank reserve settlement.

Oil futures extremely volatile the last few days. If there was a "VIX" for oil it would be interesting to watch.

Gold futures similar characteristics as oil but on a muted scale.

I hear lots of talk of a market correction. Well, I have yet to see a market where being short feels so wrong. I don't like short in the very near term. I think we see 1000 before we see 872.

Mind seasonals. We know where S/R is.
 
"FV" ~900.

News: Employment, Jobless claims, Factory orders, Gas inventories.

IRs: Tons of announcements, some settlements.

Oil futures had a big reversal yesterday with continued volatility. It is an n-body system being pushed and pulled by the dollar, overseas demand, and general speculation tied to equities. As I write this it is down big again % wise, and with equities taking the employment news poorly it is likely to continue to be under pressure. Still, everything said, this is range trading on higher time frame.

Gold futures have found themselves a range, with a next leg down to 900 65:35 likely.

S/R as in previous posts. Mind seasonals and holiday effect.
 
"FV" ~875

News: ISM Mfg index

IRs: 10-Yr Tip auction, lots of announcements.

Oil futures getting blasted pre-market. This doesn't bode well for SIFs and we have strong odds of hitting 878 and perhaps even 872 today.

Gold futures at the mercy of the rest of the market. I have been reading about some very interesting potential uses for gold - after all, the only place in the universe where you can create it free is in supernovae, but at $900 an ounce, it's commercial use seems extremely unlikely to me except in the smallest ammounts.

It is interesting if you think about IRs in the following manner. Generally the difference between the long end of the curve and the short end can be mostly accounted for by GDP. So, at 30-year interest rates less than 4%, the markets are predicting that we won't have 4% GDP over the next 30 years!! That just seems inane to me. But apparently it is _reaaally_ hard to get the long end of the curve to move.

SIFs strong odds of seeing 872 today. It we break that, we are in grave danger of seeing just about any number to the downside.

I was wrong. It seemed so likely we would see 1000 before 872. Now obviously that is 5:1 against. We are still range trading though...
 
Quote from nitro:


Generally the difference between the long end of the curve and the short end can be mostly accounted for by GDP. So, at 30-year interest rates less than 4%, the markets are predicting that we won't have 4% GDP over the next 30 years!!
More...

Are you referring to Nominal GDP?I'd say Real GDP seems quite likely not to avg 4% over that period, nominal GDP will probably, but only because it can be raised by the central bank
 
Quote from Daal:

Are you referring to Nominal GDP?I'd say Real GDP seems quite likely not to avg 4% over that period, nominal GDP will probably, but only because it can be raised by the central bank
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http://www.duke.edu/~charvey/Classes/ba350/term/term.htm

Although he is considering short term rates, same idea applies, perhaps even more strongly, of 30YrBond - 3MonthT-Bill.

To me all these notions of low IRs are ridiculous on the scale of 30 years. Look, human beings can't work any harder than they already do unless we go to a six day work week, which would be the other direction that the world is heading. Therefore, the only input to productivity that can raise GDP is technology (from shocks, e.g., email). So, you are telling me that technology in modern times won't find ways to make people more productive over the span of 30 years?

Zero delta. 30Yr IRs are terribly undervalued. Sell the bonds.
 
Quote from nitro:

http://www.duke.edu/~charvey/Classes/ba350/term/term.htm

Although he is considering short term rates, same idea applies, perhaps even more strongly, of 30YrBond - 3MonthT-Bill.

To me all these notions of low IRs are ridiculous on the scale of 30 years. Look, human beings can't work any harder than they already do unless we go to a six day work week, which would be the other direction that the world is heading. Therefore, the only input to productivity that can raise GDP is technology (from shocks, e.g., email). So, you are telling me that technology in modern times won't find ways to make people more productive over the span of 30 years?

Zero delta. 30Yr IRs are terribly undervalued. Sell the bonds.
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I agree that rates will rise but for different reasons. Productivity is likely to do what has done in the last 200 years, as measured by output per hour it goes up about 3% on average consistently. I'd be skeptical of joining some 'brave new world' of hope that productivity will do what it hasn't done in the last 200 years, if you look historically people are always polianish about technology and think amazing stuff is coming
 
Quote from Daal:

I agree that rates will rise but for different reasons. Productivity is likely to do what has done in the last 200 years, as measured by output per hour it goes up about 3% on average consistently. I'd be skeptical of joining some 'brave new world' of hope that productivity will do what it hasn't done in the last 200 years, if you look historically people are always polianish about technology and think amazing stuff is coming
More...
If someone that lived two hundred years ago suddenly woke up in any major city today, they would probably have a heart attack from the shock.

Imo, the next fifty years will compress the technological advancements of those two hundred years and then some. E.G., I would expect Mars to have human beings living on it without space suits by 2060. Does that tell you how excited I am about it? :D
 
Quote from nitro:

If someone that lived two hundred years ago suddenly woke up in any major city today, they would probably have a heart attack from the shock.

Imo, the next fifty years will compress the technological advancements of those two hundred years and then some. E.G., I would expect Mars to have human beings living on it without space suits by 2060. Does that tell you how excited I am about it? :D
More...

Very possible, I'm just not convinced yet output per hour will deviate much from its historical rate. After all someone in 1930 could been optimistic about a moon landing and a number of other major things and still that didnt change much. One thing that could change things for good in a huge way would be artificial inteligence, but maybe our bots will nuke us before they do us any good :D
 
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