Tuesday, June 22, 2010
1090
1090 is the downward target on this push down. Maybe we dont get there before the close but we will hit it overnight
Monday, June 21, 2010
Closer look
On a closer look today, great note must be taken of the divergences that appeared at the highs of the day. This tells me directionally on the hourly chart more than any other we are due for some downward movement. Tomorrow is tuesday and we might find a turn around tuesday in effect but personally I was disappointed in the lackluster move today off the news in China.
Sunday, June 20, 2010
Friday, June 18, 2010
Greenspan saying US could be next Greece
Former Fed Chair Alan Greenspan has an op-ed in the WSJ arguing that the runaway Federal Deficit threatens to turn the US into the next Greece.
He doesn't actually think that the US debt bears any credit risk, due to our ability to print at will, but that there is a substantial risk that borrowing costs will soar.
Of course, market participants are aware of our towering deficit, and yet yields continue their long march lower, so that's kind of problematic to his world view.
Says Greenspan: "This is regrettable, because it is fostering a sense of complacency that can have dire consequences."
Yet, he argues, not all market signals are so benign:
In the wake of recent massive budget deficits, the difference between the 10-year swap rate and 10-year Treasury note yield (the swap spread) declined to an unprecedented negative 13 basis points this March from a positive 77 basis points in September 2008. This indicated that investors were requiring the U.S. Treasury to pay an interest rate higher than rates that prevailed on comparable maturity private swaps.
The negative swap rate garnered a fair amount of attention back during March, which was actually when the markets were hottest. At the time, just as many folks seemed to think that it had more to do with aggressive risk appetite on the part of investors, than it did some lack of confidence in the US system.
Greenspan could actually be correct in his interpretation, but it's by no means definitive, and on its face it seems absurd that if folks were seriously concerned about inflation or US credit risk, that private swaps would somehow be more preferable.
It may serve us well to listen to the deficit Cassandras, but for now the "regrettable" markets show that investors rush into the debt and currency of the world's two gigantic debtor nations -- the US and Japan -- at the first signs of trouble.
He doesn't actually think that the US debt bears any credit risk, due to our ability to print at will, but that there is a substantial risk that borrowing costs will soar.
Of course, market participants are aware of our towering deficit, and yet yields continue their long march lower, so that's kind of problematic to his world view.
Says Greenspan: "This is regrettable, because it is fostering a sense of complacency that can have dire consequences."
Yet, he argues, not all market signals are so benign:
In the wake of recent massive budget deficits, the difference between the 10-year swap rate and 10-year Treasury note yield (the swap spread) declined to an unprecedented negative 13 basis points this March from a positive 77 basis points in September 2008. This indicated that investors were requiring the U.S. Treasury to pay an interest rate higher than rates that prevailed on comparable maturity private swaps.
The negative swap rate garnered a fair amount of attention back during March, which was actually when the markets were hottest. At the time, just as many folks seemed to think that it had more to do with aggressive risk appetite on the part of investors, than it did some lack of confidence in the US system.
Greenspan could actually be correct in his interpretation, but it's by no means definitive, and on its face it seems absurd that if folks were seriously concerned about inflation or US credit risk, that private swaps would somehow be more preferable.
It may serve us well to listen to the deficit Cassandras, but for now the "regrettable" markets show that investors rush into the debt and currency of the world's two gigantic debtor nations -- the US and Japan -- at the first signs of trouble.
Options Expiration today
Remember today is options expiration and it is the one day of every month I don't watch the markets. Too much pin action and false readings.
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