Pussy, gets everyone.. No one is spared!! - William K. Woodruff.
I came to my senses after a big gap.. Thanks to Dada, Bumchik, and my parents. :) ..
Thursday, January 29, 2009
Wednesday, January 21, 2009
All of a sudden things have turned better again..
In light of IBM positive earnings release and the hope of Obama's magic wand, the indices gained back the losses they had yesterday. Dow rallied 279 points (3.5%), S&P 35 (4.3%) and NASDAQ 66 points (4.6%).
IBM posted better-than-expected Q4 earnings and, unlike many of its high-tech rivals, forecasts a rosy 2009. Acknowledging the extremely difficult economic environment,' IBM expects continued benefits from growing profitability on its software and services businesses. IBM said customers are continuing to sign up for outsourcing and other services contracts despite the global slowdown. IBM reported fourth quarter earnings of $3.28 per share, up from $2.80 per share in the same quarter last year and above analyst estimates of $3.03 per share. IBM also surprised analysts by forecasting full year 2009 earnings of at least $9.20 per share, well above analyst estimates of $8.75 per share.
Even though there are no news on Financial firms, most of the financial stocks settled over and above the losses that they had in yday trading. C cuts its dividend to 0.01 from 0.16 cents to shore up much needed cash. This dividend cut would save C around 817M per quarter. C, JPM, BAC, MS each posted about 30% gain in todays trading. (I am happy I didnt sell my C shares Yday).
Best part of today was AAPL's earnigs release. Earnings rose a modest 2% from last year, as higher costs and expenses dented a 6% sales growth. However, the company's quarterly earnings per share breezed past analysts' expectations as did its quarterly sales. AAPL reported a top line of 10.2 Bn in revenues, and 1.78 in earnings per share. Alaysts expetected revenues of 9.2Bn and 1.39 in earnigs. Though the guidance is below the street estimates, I dont thin it will have any significant impact. AAPL is known for its conservative guidance.
AMR Corp. (AMR) and UAL Corp. (UAUA) both reported steep fourth quarter loses. Airlines today came under a selling pressure with AMR losing about 2.48 (24%) and UAL losing about 6%. AMR trading at 7.95 is a BUY.
EBAY Q4 earnigs decline from the same quarter last year but barely beat the estimates, and worse guides much lower for Q1 09. Non-GAAP net income was $524 million or $0.41 per share, compared to estimates of 0.39. Looking forward, for the first quarter of 2009, the company expected earnings in the range of $0.32 to $0.34. Analysts expecting about 40 cents for the same period.
Economic data is likely to attract some attention on Thursday, with the Labor Department due to release its weekly jobless claims report, while the Commerce Department is due to release its report on housing starts in the month of December.
Germany is expecting the economy to shrink by 2.25% in 2009, whihc is the worst performance since WW II. This forecast is much lower than its previous prediction for the year 2009 (0.2% growth) made in mid-October.
Interesting pic off FT. http://alphaville.ftdata.co.uk/lib/inc/getfile/4156.jpg
The Singapore economy shrank 16.9% in the fourth quarter, far exceeding forecasts of a 12.5% contraction. The government said it now expected Singapore’s economy to contract 2 to 5% percent this year, slashing its forecast further from an already downgraded outlook of a range of minus 2% to plus 1% published just three weeks ago.
From Aleph blog:
Consider the similarities between the US and Britain in the current crisis:
* Accommodative monetary policies.
* Generally free-ish with respect to financial regulation and credit.
* Overleveraged housing markets after a bubble.
* Banks that felt they could hedge risks and enhance returns through structured finance and derivatives.
* Aggressive approaches to bail out financial institutions.
Yet, Sterling took a beating and the Dollar is making new highs againist most of the currencies but Yen.
Reaosn being "the US Dollar is the global reserve currency and the British Pound is not. Thus Britain, as it tries to reflate, runs up against borrowing constraints faster than the US does."
And why are they not many alternatives to USD?
"The Yen? Japan has its own problems, and their economy is not large enough to deal with all of the financial flows entailed.
The Yuan? Banking system too immature.
The Euro? Too young. Tha current danger of the Euro is not that it will be weak, but that it might be too strong, leading to hard adjustments in Ireland, Spain, Greece, Portugal, and tangential European economies with weak fiscal policy positions. I’ve said it before; I’ll say it again: the Euro is a noble experiment, but currency unions that are not political unions don’t typically work. Then again, most fiat currencies eventually fail.
External commodity-based currencies? None that I know of; few governments want to limit their power by tying their hands on monetary policy."
----
and this GUY is the worst pessimist I have ever known, but the sad part is he got it right thus far.. His prediction - "Assuming a further 20% fall in house prices and unemployment peaking at 9%, we project total loan losses to amount to $1.6T out of $12.4T loans outstanding. Of these $1.6T loan losses, about $1.1T accrue to U.S. banks and brokers." And the bank Capitalization of FDIC banks being 1.4T, US financial system is Effed!!
IBM posted better-than-expected Q4 earnings and, unlike many of its high-tech rivals, forecasts a rosy 2009. Acknowledging the extremely difficult economic environment,' IBM expects continued benefits from growing profitability on its software and services businesses. IBM said customers are continuing to sign up for outsourcing and other services contracts despite the global slowdown. IBM reported fourth quarter earnings of $3.28 per share, up from $2.80 per share in the same quarter last year and above analyst estimates of $3.03 per share. IBM also surprised analysts by forecasting full year 2009 earnings of at least $9.20 per share, well above analyst estimates of $8.75 per share.
Even though there are no news on Financial firms, most of the financial stocks settled over and above the losses that they had in yday trading. C cuts its dividend to 0.01 from 0.16 cents to shore up much needed cash. This dividend cut would save C around 817M per quarter. C, JPM, BAC, MS each posted about 30% gain in todays trading. (I am happy I didnt sell my C shares Yday).
Best part of today was AAPL's earnigs release. Earnings rose a modest 2% from last year, as higher costs and expenses dented a 6% sales growth. However, the company's quarterly earnings per share breezed past analysts' expectations as did its quarterly sales. AAPL reported a top line of 10.2 Bn in revenues, and 1.78 in earnings per share. Alaysts expetected revenues of 9.2Bn and 1.39 in earnigs. Though the guidance is below the street estimates, I dont thin it will have any significant impact. AAPL is known for its conservative guidance.
AMR Corp. (AMR) and UAL Corp. (UAUA) both reported steep fourth quarter loses. Airlines today came under a selling pressure with AMR losing about 2.48 (24%) and UAL losing about 6%. AMR trading at 7.95 is a BUY.
EBAY Q4 earnigs decline from the same quarter last year but barely beat the estimates, and worse guides much lower for Q1 09. Non-GAAP net income was $524 million or $0.41 per share, compared to estimates of 0.39. Looking forward, for the first quarter of 2009, the company expected earnings in the range of $0.32 to $0.34. Analysts expecting about 40 cents for the same period.
Economic data is likely to attract some attention on Thursday, with the Labor Department due to release its weekly jobless claims report, while the Commerce Department is due to release its report on housing starts in the month of December.
Germany is expecting the economy to shrink by 2.25% in 2009, whihc is the worst performance since WW II. This forecast is much lower than its previous prediction for the year 2009 (0.2% growth) made in mid-October.
Interesting pic off FT. http://alphaville.ftdata.co.uk/lib/inc/getfile/4156.jpg
The Singapore economy shrank 16.9% in the fourth quarter, far exceeding forecasts of a 12.5% contraction. The government said it now expected Singapore’s economy to contract 2 to 5% percent this year, slashing its forecast further from an already downgraded outlook of a range of minus 2% to plus 1% published just three weeks ago.
From Aleph blog:
Consider the similarities between the US and Britain in the current crisis:
* Accommodative monetary policies.
* Generally free-ish with respect to financial regulation and credit.
* Overleveraged housing markets after a bubble.
* Banks that felt they could hedge risks and enhance returns through structured finance and derivatives.
* Aggressive approaches to bail out financial institutions.
Yet, Sterling took a beating and the Dollar is making new highs againist most of the currencies but Yen.
Reaosn being "the US Dollar is the global reserve currency and the British Pound is not. Thus Britain, as it tries to reflate, runs up against borrowing constraints faster than the US does."
And why are they not many alternatives to USD?
"The Yen? Japan has its own problems, and their economy is not large enough to deal with all of the financial flows entailed.
The Yuan? Banking system too immature.
The Euro? Too young. Tha current danger of the Euro is not that it will be weak, but that it might be too strong, leading to hard adjustments in Ireland, Spain, Greece, Portugal, and tangential European economies with weak fiscal policy positions. I’ve said it before; I’ll say it again: the Euro is a noble experiment, but currency unions that are not political unions don’t typically work. Then again, most fiat currencies eventually fail.
External commodity-based currencies? None that I know of; few governments want to limit their power by tying their hands on monetary policy."
----
and this GUY is the worst pessimist I have ever known, but the sad part is he got it right thus far.. His prediction - "Assuming a further 20% fall in house prices and unemployment peaking at 9%, we project total loan losses to amount to $1.6T out of $12.4T loans outstanding. Of these $1.6T loan losses, about $1.1T accrue to U.S. banks and brokers." And the bank Capitalization of FDIC banks being 1.4T, US financial system is Effed!!
Tuesday, January 20, 2009
Congratulations, President Barack Hussein Obama
Let me start with a bright note on the things.. The credit markets definitely seemed to have given in quite considerably from its all time highs made in the last quarter..
1) LIBOR has fallen dramatically worldwide.
2) Commercial paper issuance has increased substantially and commercial paper rates have fallen substantially.
3) The mortgage-backed securities market has rallied substantially, pushing mortgage-rates to all-time lows. Moreover, the yield spread between agency securities and Treasuries has fallen substantially.
4) Corporate and municipal bond yields have fallen sharply of late, including junk bond yields.
5) Corporate bond issuance is rebounding.
New support for the U.S. economy will arrive within weeks when the Federal Reserve initiates its Term Asset-Backed Securities Loan Facility (TALF), which will provide up to $200 billion for the asset-backed market.
The 3-month Libor-OIS spread fell below 100 basis points for the first time since September.
In this back drop I did expect that Obama Presidency would bring a rally (short-term) in this bear market. but --- What Obama Rally???
Barack Obama was sworn in as the 44th President of the United States, taking office at a time when the U.S. economy is in its worst shape since World War II. The Indexes continued their downtrend with growing concerns about banks around the world and the possibility of more surprises in the balance sheets. C down 18%, RBS down about 11% followed by a 67% ddown yday, JPM down about 23%. I guess C abd BofA would face a smiliar fate of RBS .. A huge governement intervention in the banks operations and a huge injection of capital into the bank.. But, this would come at a cost to the shareholders as it causes a dilution and literally wipe the shareholder value to 0. Though the Fed and Tresaury have been injecting money into the banking system and waiting for teh second leg of TARP money to be injected, Banks still do not have any incentive to lend the money. The next set of capital injections would tag along with a set of regulations and rules. In line with that Khakhari has demanded the banks which recived the TARP injections to provide a monthly report on the balances, loans etc.
State Street (STT) turned in one of the banking sector's worst performances after reporting sharply lower fourth quarter earnings and forecasting flat results for full year 2009. Shares of State Street fell 59 percent to a twelve-year closing low. Significant weakness was also visible among real estate and housing stocks, as traders expressed concerns about the impact of a continuation of the financial crisis. Electronic storage, steel, oil service, and semiconductor stocks posted notable losses.
Even with a strong U.S. dollar, February gold closed up $15.30 at $855.20 with concerns about several large banks and expectations that 2009 will produce negative growth in several countries.
The day has ended with Dow down 332 points and settled at a level seen before Dec 1st.
In a conference at Dubai Roubini commented:
U.S. financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is “effectively insolvent,”
“I’ve found that credit losses could peak at a level of 3.6 trillion for U.S. institutions, half of them by banks and broker dealers, If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis.”
“The problems of Citi, Bank of America and others suggest the system is bankrupt,”
Oil prices will trade between $30 and $40 a barrel all year
“I see commodities falling overall another 15-20 percent,”
Guess, we are not even close to calling it a bottom. Welcome to the second session of wild swings in the market ... yet again..
1) LIBOR has fallen dramatically worldwide.
2) Commercial paper issuance has increased substantially and commercial paper rates have fallen substantially.
3) The mortgage-backed securities market has rallied substantially, pushing mortgage-rates to all-time lows. Moreover, the yield spread between agency securities and Treasuries has fallen substantially.
4) Corporate and municipal bond yields have fallen sharply of late, including junk bond yields.
5) Corporate bond issuance is rebounding.
New support for the U.S. economy will arrive within weeks when the Federal Reserve initiates its Term Asset-Backed Securities Loan Facility (TALF), which will provide up to $200 billion for the asset-backed market.
The 3-month Libor-OIS spread fell below 100 basis points for the first time since September.
In this back drop I did expect that Obama Presidency would bring a rally (short-term) in this bear market. but --- What Obama Rally???
Barack Obama was sworn in as the 44th President of the United States, taking office at a time when the U.S. economy is in its worst shape since World War II. The Indexes continued their downtrend with growing concerns about banks around the world and the possibility of more surprises in the balance sheets. C down 18%, RBS down about 11% followed by a 67% ddown yday, JPM down about 23%. I guess C abd BofA would face a smiliar fate of RBS .. A huge governement intervention in the banks operations and a huge injection of capital into the bank.. But, this would come at a cost to the shareholders as it causes a dilution and literally wipe the shareholder value to 0. Though the Fed and Tresaury have been injecting money into the banking system and waiting for teh second leg of TARP money to be injected, Banks still do not have any incentive to lend the money. The next set of capital injections would tag along with a set of regulations and rules. In line with that Khakhari has demanded the banks which recived the TARP injections to provide a monthly report on the balances, loans etc.
State Street (STT) turned in one of the banking sector's worst performances after reporting sharply lower fourth quarter earnings and forecasting flat results for full year 2009. Shares of State Street fell 59 percent to a twelve-year closing low. Significant weakness was also visible among real estate and housing stocks, as traders expressed concerns about the impact of a continuation of the financial crisis. Electronic storage, steel, oil service, and semiconductor stocks posted notable losses.
Even with a strong U.S. dollar, February gold closed up $15.30 at $855.20 with concerns about several large banks and expectations that 2009 will produce negative growth in several countries.
The day has ended with Dow down 332 points and settled at a level seen before Dec 1st.
In a conference at Dubai Roubini commented:
U.S. financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is “effectively insolvent,”
“I’ve found that credit losses could peak at a level of 3.6 trillion for U.S. institutions, half of them by banks and broker dealers, If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis.”
“The problems of Citi, Bank of America and others suggest the system is bankrupt,”
Oil prices will trade between $30 and $40 a barrel all year
“I see commodities falling overall another 15-20 percent,”
Guess, we are not even close to calling it a bottom. Welcome to the second session of wild swings in the market ... yet again..
Tuesday, January 13, 2009
Monday, January 12, 2009
Markets finally crak ahead of a week of economic data.
The unfolding week's economic calendar is heavily loaded, with a few key economic reports slated for release during the week. The Commerce Department's retail sales report for December, the Fed's Beige Book, the Labor Department's consumer and producer prices reports, the results of the manufacturing surveys of the New York Federal Reserve and the Philadelphia Federal Reserve, the December industrial production report and the University of Michigan's January preliminary consumer sentiment report are among the key economic reports that could help drive trading.
Today, the market, especially the materials, commodities have come under pressure from Deutsche Bank lowering estimates on AA, and the USDA crop prodiction estimates. Deutsche Bank said Alcoa's net debt position of about $9 billion and near-term negative free cash flow makes a rebound unlikely in the near future.
Mid way through the day, financials came under tremendous pressure lead by C. Citigroup also suffered a notable loss amid reports that the financial services giant is weighing a sale of a stake in its Smith Barney brokerage business to Morgan Stanley (MS). Though Citi would boost its equity base by about 5Bn through this sale, this actio is percieved as bad by the analysts, as Smith Barney is one of the cash generating business (worth 10Bn) for C. Also, C analysts cut down the estimates for BofA and expected a 3.6Bn operating loss estimate for BofA this quarter, where as C itself is expected to report $10 Bn operating loss for the upcoming quarter. But, C and BofA, i guess, are cutting down their diversified operations and trying to concentrate on their core business, ie. retail and Commercial banking. C market cap less than US Bancorp.. No way.. I would buy in C at the current level as a long term investment.
Commodities were lower across th board today as the USDA crop data is out, and the report screams a falling demand and increasing stocks (inventory) of all commodities globally.
Corn was increased from 1.474 to 1.790 million bushels.
Soybeans was increased from 205 to 225 million bushels.
Wheat was increased from 623 to 655 million bushels.
As of December 1st, the USDA said that there were:
10.1 billion bushels of corn stocks, up 2% from a year ago.
2.28 billion bushels of soybean stocks, down 4% from a year ago.
1.42 billion bushels of wheat stocks, up 26% from a year ago.
Most of the fertilizer stocks came under a selling pressure, with POT down about 12% ($74), MOS down 11% (34.6), AGU down 10% (31). I do believe that the commodities at these levels are oversold and the prices are consolidating at these levels. I would own the general Ag Stocks ( ETF - MOO) at these levels,, and add as the price falls down.
Wednesday, January 7, 2009
YTD - 0% .. :)
The selling pressure that started early in the session continued through out the day,ending the session with dow down 245 points. This weakness came as investors sold off their gains in response to the weak economic data.
Morning started with weak ADP employment data (private sector). the data showed that non-farm private employment fell by 693,000 jobs following a revised decrease of 476,000 jobs in November. Economists had been expecting the report to show a somewhat more modest decrease of about 450,000 jobs.
On corporate front, INTC announced a downward revision to their revenue guidance. It now expects fourth-quarter revenue to be about $8.2 billion, down 20 percent sequentially. Earlier, the company expected fourth quarter revenue to be $9 billion, plus or minus $300 million. The fact that INTC revised their guidance twice in two months weighed heavily on tech stocks and the stock market in general.
EIA inventory data contributed to the weakness in oil and gas sector. Crude oil lost about $5.95 and ended at 42.63 after the report showed that crude oil inventories increased by 6.7 million barrels last week. The increase was much larger than the expected build of around 1 million barrels.
Bad news came from the metals sector as well. AA said Tuesday evening that it is cutting 13,500 jobs, or about 13 percent of its global workforce, in an attempt to curtail costs in the face of the global economic downturn.
Tomorrow jobless claims data and Consumer Credit data should be out. Friday is the actual test for market as the much anticipated Employment Situation data is out. Well, in light of ADP employment data, these reports are not going to be any different but worse. So hang on for yet another wild ride.
----
Oppenheimer’s Meredith Whitney has a note out today. "We now believe that, at a minimum, capital ratios will be meaningfully lower in the fourth quarter versus post TARP pro forma levels. Aside from the greater than $40 billion in writedowns and provisions we expect for the group of bank stocks under our coverage, and earnings pressure related to chronic negative operating leverage, we also expect capital strains to become apparent from ratings change pressures. Accordingly, we maintain our cautious stance on our group." The effect of those Q4 downgrades, estimates Whitney, will be to more or less drain all TARP money pumped into the system so far. Well, its a speculation to buy into financials in near future.
Here’s some bad news for all those governments around the world looking to raise large amounts of cash to pay for their stimulus programmes. Today, the first Eurozone bond auction (German bond) of the year has failed to attract enough bids to reach the money the govt wanted to raise. Well, even the most developded economies' governements are not spared from the credit crunch. This bodes as a even worse news for countries that are planning to raise large amounts of debt to pay for their stimulus packages. I guess, treasuries would continue to be the safest haven to park the money, and the dollar would remain strong. Well, though this is completely in contrary to my ydays trade recommendation, I am still confortable long in TBT and PST. But, gold would face selling pressure in short term, may be for the next 2-3 weeks.
ISRG preannounced and well, the ernings were not good. This long time overvalued stock had to come down, and it fell back to the 2007 beginging levels. Tomorrow this would put pressure on the health care technology firms. (JnJ, Medtronic MDT comes to my mind)..
Lenovo Group, China's largest and the world's fourth largest personal computer manufacturer, will cut 2,500 positions equivalent to 11 percent of its total workforce.
---
Song: Apocalyptica - I don't care.
Mood: Wildly confused..
Morning started with weak ADP employment data (private sector). the data showed that non-farm private employment fell by 693,000 jobs following a revised decrease of 476,000 jobs in November. Economists had been expecting the report to show a somewhat more modest decrease of about 450,000 jobs.
On corporate front, INTC announced a downward revision to their revenue guidance. It now expects fourth-quarter revenue to be about $8.2 billion, down 20 percent sequentially. Earlier, the company expected fourth quarter revenue to be $9 billion, plus or minus $300 million. The fact that INTC revised their guidance twice in two months weighed heavily on tech stocks and the stock market in general.
EIA inventory data contributed to the weakness in oil and gas sector. Crude oil lost about $5.95 and ended at 42.63 after the report showed that crude oil inventories increased by 6.7 million barrels last week. The increase was much larger than the expected build of around 1 million barrels.
Bad news came from the metals sector as well. AA said Tuesday evening that it is cutting 13,500 jobs, or about 13 percent of its global workforce, in an attempt to curtail costs in the face of the global economic downturn.
Tomorrow jobless claims data and Consumer Credit data should be out. Friday is the actual test for market as the much anticipated Employment Situation data is out. Well, in light of ADP employment data, these reports are not going to be any different but worse. So hang on for yet another wild ride.
----
Oppenheimer’s Meredith Whitney has a note out today. "We now believe that, at a minimum, capital ratios will be meaningfully lower in the fourth quarter versus post TARP pro forma levels. Aside from the greater than $40 billion in writedowns and provisions we expect for the group of bank stocks under our coverage, and earnings pressure related to chronic negative operating leverage, we also expect capital strains to become apparent from ratings change pressures. Accordingly, we maintain our cautious stance on our group." The effect of those Q4 downgrades, estimates Whitney, will be to more or less drain all TARP money pumped into the system so far. Well, its a speculation to buy into financials in near future.
Here’s some bad news for all those governments around the world looking to raise large amounts of cash to pay for their stimulus programmes. Today, the first Eurozone bond auction (German bond) of the year has failed to attract enough bids to reach the money the govt wanted to raise. Well, even the most developded economies' governements are not spared from the credit crunch. This bodes as a even worse news for countries that are planning to raise large amounts of debt to pay for their stimulus packages. I guess, treasuries would continue to be the safest haven to park the money, and the dollar would remain strong. Well, though this is completely in contrary to my ydays trade recommendation, I am still confortable long in TBT and PST. But, gold would face selling pressure in short term, may be for the next 2-3 weeks.
ISRG preannounced and well, the ernings were not good. This long time overvalued stock had to come down, and it fell back to the 2007 beginging levels. Tomorrow this would put pressure on the health care technology firms. (JnJ, Medtronic MDT comes to my mind)..
Lenovo Group, China's largest and the world's fourth largest personal computer manufacturer, will cut 2,500 positions equivalent to 11 percent of its total workforce.
---
Song: Apocalyptica - I don't care.
Mood: Wildly confused..
Tuesday, January 6, 2009
Back from vacation..
Investors begin the first full week of 2009 trading on Monday with one question in mind: Is the worst over?
2009 is likely to be another volatile year for stocks. There is, meanwhile, little optimism when it comes to the global economy. The year has already started with gloomy signs of recession, including dismal U.S. manufacturing data.
Manufacturing in the euro zone was also bad, hitting a record low in December, according to data released at the end of last week. Factories in China, India and Russia slashed output and jobs at a record pace in the month.
This week’s big data report will come on Friday, when the United States issues its latest monthly jobs data. Economists are looking for job losses in the region of 475,000, which would be hefty, albeit an improvement on the month before.
The jobs report is crucial because it reflects everything from business activity to likely consumer spending patterns. The more people out of work, the less spending, the less chance of recovery and so on.
considering this, I am still bearish on the broad market,, though for the longer term I would like to own stocks that are bettered, and yet have good porspects going forward. i would compile a list of stock I would like to own for this year, and track the performance of the same through out. (WOrk for the weekend). .
Though 2008 is marked with the bursting of many bubbles, anew bubble is brewing to be burst in this year.. Treasuries.. Lately, the yields on the treasuries are pushed to near all-time lows, as investors rushed to park their money in govt backed debt. As a result, the benchmark 10-year Treasury note yields just 2.40%, down from 3.85% as recently as mid-November. The 30-year T-bond stands at 2.82%, and three-month Treasury bills were sold last week for a yield of just 0.05%. The chief risk for treasuries stems from two reaons. 1. inflationary impact of both the Federal Reserve's super-accommodative monetary policy, which has dropped short rates close to zero, and 2. the enormous looming fiscal stimulus from the federal government. Goldman Sachs Group Inc. puts the amount the U.S. government needs to raise at about $2 trillion, including new issuance and rolled-over securities. To raise this kind of amount, US should attract the investors by increasing the yields on the treasuries.
However, withe the level of fed intervention the yields can continue to be at their current levels for sometime from now. Reason being, Ben and Co would not mind buying the long term treasuries to keep the yields low.. also, China, would be a likely buyer of treasuries to artificially keep the Yuan weak and the Dollar strong..
The market faces its first supply test of the new year this week, with the Treasury expected to auction some $50 billion in three- and 10-year Treasury notes and 10-year Treasury Inflation-Protected Securities, on top of billions of dollars in Treasury bills.
I am short the dollar ( though for the first half of the year Dollar would remain strong, but eventually it should give in), and short the treasuries ( Own TBT and PST - both ultra short treasuries).
-----
I still could not get my head around the rally that has tsarted in mid Dec and still continuing in this new year, though there are no signs of any recovery or a positive economic data.. Well, the only news that is pushing the equities is the stimulus plan of Obama. He seems to have a touch of the god. He spoke about the Infrastructure and the infra stocks fly, including housing stocks. Spoke about health care spending and the health care stocks fly. mentioned tax rebates, the general market rallied thinking that the consumers would spend the saved tax monies on th economy.. Well, when the consumer is not at all willing to spend $1.60 on a gallon of gas, why would they be willing to buy cars, homes, restaurants.. Obama is a saviour is not an investing idea.. period.. but is the short term this is what would drive the markets.. atleast till the end of Jan. I would not be surprised if S&P touches 1000 and Dow 10000 but the end of Jan.
New year resolution: I intend to post more regularly this year.. hopefully with a market analysis at the end of each day.. build a portfolio and track the daily/monthly performance.
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