Monthly Archives: October 2015

Planet Money

NPR's Planet Money has a fun podcast on making 3 trillion dollars disappear. The conversation is simple enough for John Q to understand, even if a few "technical" mistakes are included. The hosts make a sort-of apology at the end for not talking about the Death Star that is kinda cute.

The big truth coming out of the discussion is something we have enjoyed highlighting throughout our 8 year journey on the other side of the looking glass - NO ONE has EVER come back ! Before the likes of Cullen Roche can snipe the reporters for implying that "banks lend excess reserves"- we all know the actuality Cullen; the other interesting nugget was an estimated IOER rate of 1% next year. Wow.

Glen Hubbard makes a fun appearance toward the end of this discussion. I cut a fast paste to his hit in Inside Job as soon as the podcast ended. His confidence that all will work out fine might as well come from L. Ron. Anyway, another year is almost over and most of it has been wasted wondering if the Fed would finally do a bit of tweaking to the $3T hoard they're talking about. There's 11 months you'll never get back. Hit the NPR Planet Money site and take 15 minutes to enjoy the show. Then ask yourself, "How do you make $3T disappear?" And then ask, "How can that NOT be bad?"

 

Classical Friday

30 minute atr

240 minute atr

daily atr
yesterday's coiling chart

daily pivots

weekly pivots

monthly pivots

upside retracements

downside retracements

downside extensions

regression channels

support and resistance

On the economic calendar:-

08:30 am Personal Income (Consensus 0.2% v Prior 0.3%)
Consumer Spending (Consensus 0.2% v Prior 0.4%)
Employment Cost Index (Consensus 0.6% v Prior 0.2%)
09:45 am Chicago PMI (Consensus 49.2 v Prior 48.7)
10:00 am Consumer Sentiment (Consensus 92.5 v Prior 92.1)
1:00 pm Baker-Hughes Rig Count

Speaking today:-

10:00 am John Williams
1:00 pm Esther George

No Comment, They Said

63% of all US Treasury bond trading is handled by 5 Chicago HFT firms, according to Bloomberg. Given the rise in futures open interest, I feel the number is low. Unlike Solomon Brothers of old, these firms combine speedy technology with a post- crisis "franchising" of the product. The "liquidity cartel", as I call them, are comprised of DRW, Jump, Teza, Citadel and XR Trading-Securities-Technology..whatever the suffix.

Interestingly, only the head of FI for Citadel would even make a basic comment to Bloomberg on the groups rising control of the treasury market. "Spokespeople" for DRW, Teza and Jump are earning big bucks answering inquiries with a pat, "No comment." I fully support the idea of privacy behind these non-public firms. The fact that the majority of trading in the most important security in the world is controlled by 5 private algorithms, I'm a little less supportive of.

Markets evolve and technology has fundamentally changed how individuals and institutions interact with price. My anecdotal observation is a consequence of that evolution has been a reduction in engagement when prices "get loose." A characteristic of the charcoal on cave wall days of open outcry was the increase in engagement in times of trouble and a larger pool of participants.

Treasuries remain the envy of the world. Their paltry positive yields are a glaring anomaly to the negative mess in Europe. Someday, prices will decline. The taper tantrum was a tremor, not "the big one" as they say out here on the Left Coast. All we can do is hope the Liquidity Cartel shows up for work that day. When they don't, and everyone wants an explanation for the carnage, "No comment" isn't going to cut it.

Classical Thursday

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daily atr

bonds coiling

daily pivots

weekly pivots

monthly pivots

upside retracements

downside retracements

regression channels

support and resistance
On the economic calendar:-
  8:30 am GDP (Consensus 1.7% v Prior 3.9%)
                Jobless Claims (Consensus 265 K v Prior 259 K)
  9:45 am Bloomberg Consumer Comfort Index
10:00 am Pending Home Sales Index (Consensus 1.0% v Prior -1.4%)
10:30 am EIA Natural Gas Report
11:00 am 3 Month Bill Announcement
                6 Month Bill Announcement
  1:00 pm 7 Year Note Auction
  3:00 pm Farm Prices
  4:30 pm Fed Balance Sheet
               Money Supply
Speaking today:-
 9:10 Dennis Lockhart

 

Classical Wednesday

30 minute atr

240 minute atr

daily atr

daily pivots

weekly pivots

monthly pivots

upside retracements

downside retracements

regression channels

support and resistance
On the economic calendar:-
  7:00 am MBA Mortgage Applications
  8:30 am Goods Trade Balance (Consensus $-64.9 B v Prior $-67.2 B)
10:30 am Crude Oil Inventories (Consensus 3.7 M v Prior 8.0 M)
11:30 am 2 Year FRN Note Auction
  1:00 pm 5 Year Note Auction
  2:00 pm FOMC Statement
               Federal Funds Rate (Consensus <0.25% v Prior <0.25%)

 

Classical Tuesday

30 minute atr
240 minute atr
daily atr
daily pivots
weekly pivots
monthly pivots
upside retracements
downside retracements
regression channels
support and resistance
On the economic calendar:-
FOMC Meeting begins
08:30 Durable Goods Orders (Consensus -1.0 v Prior -2.0)
08:55 Redbook
09:00 S&P Case-Shiller HPI (Consensus 0.1% v Prior -0.2%)
09:45 PMI Services Flash (Consensus 55.3 v Prior 55.6)
10:00 Consumer Confidence (Consensus 102.5 v Prior 103.0)
          Richmond Fed Manufacturing Index (Consensus -2 v Prior -5)
          State Street Investor Confidence Index
11:30 4 Week Bill Auction

Classical Monday

30 minute atr

240 minute atr

daily atr

daily pivots

weekly pivots

monthly pivots

upside retracements

downside retracements

\
regression channels

support and resistance
On the economic calendar:-
10:00 New Home Sales (Consensus 549 K v Prior 552 K)
10:30 Dallsas Fed Manufacturing Survey (Consensus -6.0 v Prior -9.5)
11:00 4 Week Bill Announcement
11:30 3 Month Bill Auction
          6 Month Bill Auction

 

Debt Shortage Redux

OR, How I thought I'd hit my head on the debt ceiling but ended up stubbing my toe on low rates.

The Treasury Dept. surprised most of us willing to tell the truth with a "delay" in the issuance of 2 year notes. The yield on current 2s slid a couple basis points on the news. That T Bills for Nov. had slipped away on spooky default apparitions went unnoticed save the few somber practitioners still charged with that segment of the curve. In a moment of Zen for timing, CS announced it would shutter its PD operations. Hey, no debt no need to be a PD !

The Treasury Dept. explained their move by a concern that the Note would not settle. I would agree with MS "govvie guru" David Greenlaw, this move smells like political pressure from the Administration via Jack Lew. For all the now regular hyperventilating over debts (too much or too few depending on who's yelling louder) , cash management and ceilings; Treasury has avoided messing with issuance.

The debt ceiling is nothing more than a Congressional tool to improve the optics that those you've sent to DC are watching the purse. The Administration, and others, have spun the sound bite that, "This is just to pay for what we've already spent." A half truth, at best. The fear of non-payment in Bills coupled with hoarding short supply in 2s -simultaneously - shows the Sybil-esque responses to the same issue.

The US "refunds" itself. The paltry yields Tea Party-ers say are "ripping off savers" reflect the risklessness of the paper. The interest is paid by the issuance of a like obligation. Quarterly, at one time, bi-monthly, monthly and weekly; the demand is only tenuously attached to supply . When deficits evaporate, or small thinkers balance the budget (or God forbid run a surplus) the running supply must decline. This does NOT constitute a shortage. Treasury messing with issues is hardly a "soft default" or a "reschedule", the latter purgatory the realm of governments with warmer climes like ARG and Greece.

If there is not enough debt in the market, then surely the Fed could off load some of its hoard without a problem. Since the Treasury Dept. gets the "profit" transfer from the Fed account, just don't pay it if you have a cash management problem. This is all circus accounting and carnival barking. The focus needs to come back to growing the economy faster. That's been done in times of big deficits AND marginal surpluses - the debt is not the problem.

Classical Thursday

30 minute atr

240 minute atr

daily atr

daily pivots

weekly pivots

monthly pivots

upside retracements

downside retracements

regression channels

support and resistance
On the economic calendar:-
08:30 Jobless Claims (Consensus 256 K v Prior 255 K)
          Chicago Fed National Activity Index (Consensus -0.05 v Prior -0.41)
09:00 FHFA House Price Index (Consensus 0.5% v Prior 0.6%)
09:45 Bloomberg Consumer Comfort Index
10:00 Existing Home Sales (Consensus 5.35 M v Prior 5.31 M)
          Leading Indicators (Consensus 0.0% v Prior 0.1%)
10:30 EIA Natural Gas Report
11:00 Kansas City Fed Manufacturing Index
          3 Month Bill Announcement
          6 Month Bill Announcement
          2 Year Note Announcement
          2 Year FRN Note Announcement
          5 Year Note Announcement
          7 Year Note Announcement
13:00 30 Year TIPS Auction
16:30 Fed Balance Sheet
          Money Supply