Monthly Archives: April 2012

Twisting and Floating

Operation Twist is entering the twilight of its 15 minutes of fame. Never a fan of the scheme, I'm happy to see it go.  The stock and flow effects of Fed activities will shift in importance post Twist, as the Chairman attempted to point out at the presser. A realization of year old stresses in the Eurozone did more for  "twisting"  than the Fed in our opinion.

On the other side of the magic trick that is QE, the TBAC is ready to give us more information on Treasury Floaters. Let us all agree from the start that, in another place and time, issuing securities with maturities greater than 40 years would be optimal. Treasury was, in fact, extending debt maturity before Twist was activated. Unfortunately, we are in this place and time. Recall that it did not take long in the crisis for T-Bill issuance to soar into the trillions. Issuing floaters of 2 to 3 year maturity allow the Treasury to reduce extreme roll over risk and move beyond 1 year (and conveniently inside the Fed forecast) by offering the variable rate. The GSEs have essentially been government floating issuers for some time. As LIBOR remains catatonic, repo or OIS based anchors seem likely. This could play into a RONIA based reconstruction of the money market. We expect a host of "should" based criticisms to splash the media soon. The commitment to TIPS seems at least equally risky to us.

S&P Trading Levels 30 Apr

Support & Resistance Levels for multiple time-frames on the Cash Index on the annotated charts below. (Click on graphs to enlarge. May need to click a few times to get to full size)

Technical Trading Charts & Levels for S&P, Euro, 10 Year Note & 30 Year Bond are in  Hooper’s subscription portion of contrariancorner.com

S&P Globex  Jun ’12

30 Year Treasury Trading Levels 30 Apr

Support & Resistance Levels for multiple time-frames on the Cash Index on the annotated charts below. (Click on graphs to enlarge. May need to click a few times to get to full size)

Technical Trading Charts & Levels for S&P, Euro, 10 Year Note & 30 Year Bond are in  Hooper’s subscription portion of contrariancorner.com

30 Year Treasury Bond Jun ’12

M.A.D.

http://news.xinhuanet.com/english/china/2012-04/28/c_131557611.htm

A little over a year ago, the head of CIC suggested that America needed to "Be more respectful to the people that were lending it money." Negative rates, F-16s and Chen may be bringing our relationship closer to M.A.D.D. The Fed has provided a way for the Chinese to better manage their massive US debt holdings. Secretaries Clinton and Geithner will have their hands full this week as tensions are bubbling up on many fronts. The Syrian situation is reflected in the smiling handshake from the link.

The hoarding of "risk free" collateral and constant promulgation of panic have driven US and German yields into the floor. China represents the ultimate in an exit from quality. "Diversifying" exposure is the culturally polite term for "yours".  Moving the Renminbi band out before the visit turns the discussion to speed from action, a weaker hand for the US. The Black Swan event on the radar here could highlight the obvious that Bonds are not T-Bills.

One of my early mentors taught me that the difference between a correction and a bear market is that in a bear market "Everything Goes Wrong." (just as in a bull, everything goes right). This metric has been difficult to apply in the current cycle. We still see M.A.D. keeping the wipe out at bay. The present Super Power tensions and European gyrations show how close to "E.G.W" we are living.

S&P Trading Levels 27 Apr

Support & Resistance Levels for multiple time-frames on the Cash Index on the annotated charts below. (Click on graphs to enlarge. May need to click a few times to get to full size)

Technical Trading Charts & Levels for S&P, Euro, 10 Year Note & 30 Year Bond are in  Hooper’s subscription portion of contrariancorner.com

S&P Globex  Jun ’12

30 Year Treasury Trading Levels 27 Apr

Support & Resistance Levels for multiple time-frames on the Cash Index on the annotated charts below. (Click on graphs to enlarge. May need to click a few times to get to full size)

Technical Trading Charts & Levels for S&P, Euro, 10 Year Note & 30 Year Bond are in  Hooper’s subscription portion of contrariancorner.com

30 Year Treasury Bond Jun ’12

Germany DAX Trading Levels 27 Apr

Support & Resistance Levels for multiple time-frames on the Cash Index on the annotated charts below. (Click on graphs to enlarge. May need to click a few times to get to full size) Current Hooper Levels for the DAX.

Technical Trading Charts & Levels for S&P, Euro, 10 Year Note & 30 Year Bond are in  Hooper’s subscription portion of contrariancorner.com

Germany DAX (Cash) 10:10  GMT

S&P Trading Levels 26 Apr

Support & Resistance Levels for multiple time-frames on the Cash Index on the annotated charts below. (Click on graphs to enlarge. May need to click a few times to get to full size)

Technical Trading Charts & Levels for S&P, Euro, 10 Year Note & 30 Year Bond are in  Hooper’s subscription portion of contrariancorner.com

S&P Globex  Jun ’12

Germany DAX Trading Levels 26 Apr

Support & Resistance Levels for multiple time-frames on the Cash Index on the annotated charts below. (Click on graphs to enlarge. May need to click a few times to get to full size) Current Hooper Levels for the DAX.

Technical Trading Charts & Levels for S&P, Euro, 10 Year Note & 30 Year Bond are in  Hooper’s subscription portion of contrariancorner.com

Germany DAX (Cash)

Go Ask Alice

In the through the looking glass world of monetary madness, everything-and nothing- is as it seems. At today's Fed press conference the Chairman did his best to obfuscate some answers to virtually all the wrong questions. Hidden among the "data dependents" and forecasts, I found 2 (to me) important nuggets. One makes you bigger, one makes you small.

First: The Fed bar chart of their hypothetical Fed Funds moves tilted sooner. I had felt there was a risk of 2016-ers joining the 2015-ers and extending the consensus pretending. After all, this would carry little harmful consequence but help offset possible negative action of "no more QE" which for some reason continues to circulate wildly. As readers know, we believe QE2 was stock level induced (confirmed by Ben today) and QE-lite and Twist were active policy because many other nations were on hold and the ECB was on drugs (tightening). The new imaginary tightening horizon came witha BIG tell, however. The message today was clearly, extreme accommodation does not only take place at ZIRP. This truism was set forth to confirm the reactionary bias to policy. The Fed is saying they will follow the market out (no real choice there) and let you know if your too far ahead.

Second: The Fed appeared to support a view that the curve could re-steepen. Thus rendering Operation Twist to a temporary hallucination and silly sterile game with PDs that it really is/was. The curving of the curve also could have a positive consequence in markets by interpretation. The reality is, who knows? We are in uncharted water and the world's a dicey place. A shorter Bernank presser would have fielded 1 question like this: Go ask Alice.