Thursday, February 18, 2010

Quirks of the Calendar

You know I think it is not just chance that right at the point in time that I step up my workouts and step away from my computer time things happen in bunches! It's just not fair! Oh well, I have to stick with the plan! As is I will try and do a worthy post tonight.

That said, I have the night off tomorrow from punching stuff so get your Friday night entertainment requests in! Anything goes and I have a muscle car related item to share that promises to stir up some real debate!

Level of Discourse
While this blog is centered on economic items (unless it's football season!) it also serves as a sort of running real time diary for me. I wanted to say a few words about the Austin Texas event today but after seeing truly disgusting discussions going on at some sites as I made the rounds I am going to just say the following;
-Nothing has changed for me. I think that I am taxed too much, I am against the banking bailouts, I am against the transfer of private losses to the public balance sheet, I think government is too big. Tomorrow or by Monday you will see that anyone against taxes etc is a "nut", a "crazy", or a "terrorist". That's bullshit.
-Nothing has changed for me. Anyone using violence against innocent workers in a building is a killer or an attempted killer as it seems at this time that by some thankful luck no one was killed, or I should say murdered. By Monday some may "understand the motives" or "see the pressures" this particular killer thought he was under. That's bullshit.
If I see any comments going off on tangents or trying to make political points I am going to delete them.

Smile - You are Now a Proud Owner of 1.6 Trillion in MBS Securities!
As the FIRST iteration of the Federal Reserve mortgage backed securities (MBS) comes to an end you should have a visual for the process, made by Tim Iacono over at The Mess That Greenspan Made:

Now understand that the FED is just ending this program and not trying to dump these securities back on the market (which it is obligated to do, but whatever). Sink or swim time for the mortgage market in April? I think the spring selling season will be bust and a weak start to the summer will cause the FED to step back into this arena. Does this mean that if your next door neighbor has a FED backed mortgage you can use his shed to store YOUR tools? At least that would be some return!

Quirks of the Calendar
And now the BIG news of the day!

Tomorrow is the Tiger Woods press conference.....

Kidding!

The FED raised the discount window rate from a whopping 0.5% to an unheard of (at least recently) killer rate of, are you sitting down?, 0.75%! While somewhat expected at some point we are dealing with Wall Street that has to be spoon fed soft foods as they have yet to learn to use utensils so this was a mini shocker.

In Tuesday's post I noted the kinds of games the FED likes to play with words and dollar ramps and it seems the calendar may have been at work here as well.

Tomorrow is Option Expiration day and thus the change will affect market moves during this busy time. Market Ticker notes:
FED Changes Terms in Front of OpEx Again
BTW, I shorted the close on the technicals in the futures (which if this reverses I can hedge and of course can't lose on now) - the market was heavy and it looked overbought, so you'd think I'd be happy.
I'm not - this sort of action, whether I personally make money or lose money, is not the point. The point is that this release was intentionally timed to hurt people, just as was the August 2007 one.
Bernanke and his pals ought to be run out of town on a rail for this sort of repeated abuse. They seem to think that the markets are their plaything, and all they're doing is destroying confidence with each and every move of this sort.
It is not what you do, it is how you do it, and this sort of thing is just yet another reason why The Fed must be audited. The timing on this is too damn suspicious - never mind that someone sold a metric ton of SPY right in front of the announcement - literally by seconds, 2 million shares were unloaded.
I will return to Karl's short play that seems like a good one in a bit.

Let me say that I am 100% sure some FED watcher out there can give some long winded reason why the FED had to do this at this time and it may even make sense. Too bad it makes no difference. The FED for 2 years has done whatever they want whenever they want so I am sure they could have done this next week or last week so do not even bother with the explanation.

Jesse's Cafe Americain notes bullion options expire next week as well:
Or was this mainly to provide another opportunity for the bullion banks to take the prices down ahead of their option expiration next week?
First a margin increase for gold, then the IMF sale that was already in the books and now this? No way it's all related. No way.

While here on gold, you have to love Clusterstock headlines (though today they have gone off the deep end for page hits with the Austin event which is making me sick to my stomach). Try this one:
Of Course This Rate Hike Is Meaningful, Just Look At The Markets
They only use gold as their scary chart, but gold is down about 1.2% right now which is hardly terrifying.

Bloomberg Futures right now show:
Dow -62
S&P 500 -8.6
Not quite circuit breaker time I think. This could change of course by the morning.

So does this mean anything? Again on Tuesday I talked about how words mean more than action and the timing issue comes in yet again.

Next weeks bond auctions are set to unload 118 Billion in paper on the markets in 2 year, 5 year, and 7 year sales. After a very poor 30 year auction result on the last go around and the word that China may be dumping US debt (I mean buying it via the UK) maybe the FED felt some minor action would soothe buyers, and a dollar busting over 81 on the index would help perception as well.

Those unpleasant calendar coincidences aside, is this a big deal? Is the era of easy money now over?

Uh, No.

First off this is the discount window rate which at this point is only used by GMAC I think (kidding, I have no idea, no one does they don't publish data!) so it's a small pond.

Second, real FED rate hikes are not happening in 2010 (I am serious, and don't call me shirley!) so stop with the hyperventilating that the FED rate may reach a crippling 3% or so (still ALL TIME LOWS if you ignore the last 7 years of easy money). Don't believe me, ask the FED who are working overtime to make sure nobody panics about the superficial rate move (via Zero Hedge) Bloomberg feed:
-DUKE: DON'T EXPECT THURS DECISN TO LEAD TO TIGHTER FIN CONDTNS
-DUKE: DISC WINDOW CHANGES ONLY A REVERSAL OF SPREAD REDUCTN
-DUKE: EXPECT BNKS TO USE PRIV SOURCES FOR NORML FUNDNG
and
-LOCKHART: MON POL REMAINS ACCOMMODATVE;NEEDED FOR RECOV
-LOCKHART: DISC RATE HIKE NOT MEAN TIGHTENING IMMINENT
So there you have it.

Now earlier I noted Market Ticker's and Clusterstock's feeling that the markets are going to tank (some what) tomorrow. Maybe they will and a lot can happen overnight. For my money if the DOW is not down over 200 points and the S&P 500 is not down by 15 points come 12 noon then the close is going green on the whole "things must be stronger than expected, rock on!" mentality. Just my 2 cents.

Bonus Graph
For loyal reader Watchtower, yet another graph to mull over, lifted from Mish's site:

Enjoy!

Have a good night.

23 comments:

watchtower said...

I just ran across this chart about 15 minutes ago, you have got to see this, it's been updated:

http://tinyurl.com/ycj4ncu

It's went negative, about 5 years before it was forecasted to do so from what I gather.

Providing of course that the chart isn't BS.

The above link and below came from this article at Financial Sense.

Desperate Times and Desperate Measures
by Adam Brochert


"New debt is now a drag on the economy rather than a boost. This is a bizarre concept. Piling more debt on top of the old, rickety, sky-high debt pile currently in the economy now actually makes things worse. This is a deflationary trap that will require new approaches to stoke up true inflation in the economy."

http://tinyurl.com/y9sp6q6


P.S.
GYSC, I did enjoy your post tonight, it's just that I found that chart and I'm trying to digest it (which for me, may not be able to be done).

Stagflationary Mark said...

GYSC,

Now earlier I noted Market Ticker's and Clusterstock's feeling that the markets are going to tank (some what) tomorrow. Maybe they will and a lot can happen overnight. For my money if the DOW is not down over 200 points and the S&P 500 is not down by 15 points come 12 noon then the close is going green on the whole "things must be stronger than expected, rock on!" mentality. Just my 2 cents.

If the market does indeed crash then I have an alternate reason.

It's Cramer's New and Improved Winners of the New World!

Tech can break the linkage logjam
http://articles.moneycentral.msn.com/Investing/top-stocks/blog.aspx?post=1639924&_blg=1,1639924

I think that tech is the trump card to break today's logjam between the futures complex and the fundies. I am taking tech over the dollar/gold/oil complex and buying. I would not hesitate to pick up last night's winners, which are below where they should be because of the macro absurdity. And Wal-Mart does not change my mind on this judgment.

That's right. Tech never loses. This is all just "macro absurdity". ;)

For those who don't get the joke, here's what Cramer wrote in 2000.

Winners of the New World
http://www.thestreet.com/story/891820/the-winners-of-the-new-world.html

I'd quote some of it, but let's face it... it's all priceless!

Take Exodus. It's extremely priceless these days.

http://www.crn.com/it-channel/18827460;jsessionid=JHNXR3AO0BQWDQE1GHPSKH4ATMY32JVN

Exodus Communications Monday said it expects shares of its common stock to be worthless, even if it is acquired or finds investors.

Merrill Lynch & Co., Inc. : Exodus Communications, Inc.

http://securities.stanford.edu/1025/EXDS02-01/

The complaint alleges that defendants urged investors to purchase Exodus stock when defendants knew or recklessly disregarded that such purchases were not a good investment. The complaint alleges that defendants: issued "Buy" recommendations about Exodus without any rational economic basis...

Damn those macro absurdities!! ;)

getyourselfconnected said...

Watchtower,
That graph to me just shows an expanding "service based" economy which utilizes debt for financing consumption slowly finding out that you have to actually do stuff that is not eating to have growth. They will never stop trying though.

Mark,
LOL, you always find the best stuff!

I don't have the time right now but Cramer was also full bore behind "vendor financing" ie Cisco lending money to small start ups that bought their crap, as a growth model.

CSCO, $80 to $24 and still going nowhere. Buy and hold, your breathe!!!!

Anonymous said...

For Friday nite, please play "My Sharona" by The Knack. The lead singer passed away this week from cancer. He was 57. Thanks.

getyourselfconnected said...

Anon,
I read that and indeed a little shout out is in order.

Anonymous said...

It's obvious you're trying to shove the Austin event under the rug.

In my book you lose alot of points for that evasion.

Do you or any readers really think e-mails and letters to congressmen will change anything?
Will it stop Goldman & JPM? Will it stop a corrupt Congress or (a thoroughly Wall St owned) Pres?
Will it stop a (god knows who) owned Fed?

Like it or not, ultimately, the only thing criminals and psychopaths understand is force.

But go ahead, it's your blog after all, do blather on about football,videos,movies.

And to think, I had such high regard for you before this dicklessness.

getyourselfconnected said...

Anon,
your comment was the kind I had wanted to avoid.

If I have swept anything under the rug, and blather on about football, movies and other crap please feel free to never visit this site again.

getyourselfconnected said...

I left that comment standing as an example. If I have to lock down (with comment approval) I am going to be very not happy.

getyourselfconnected said...

All,
I need to go to bed for the 5am wake up call; I will leave things as is and if I need to remove crap tomorrow I will. Loyals have no fear but the mood today on all fronts was sickening.

watchtower said...

Hang in there GYSC.

Lisa said...

Hey G! That little announcement today made me some nice bucks on my currency trade :) Sometimes when you put your quarter in the slot, you win. Hope all is well with you.

Anonymous said...

As you wish, I won't visit again.

Your site becomes a gathering place for your groupies.

Enjoy the group-think

Stagflationary Mark said...

Anonymous,

Do you really want to go down this path?

http://www.mcafee.cc/Bin/sb.html

Come on, give us a group hug!

Stagflationary Mark said...

Anonymous,

You are sliding further into it now.

http://www.mcafee.cc/Bin/sb.html

"Has no problem lying coolly and easily and it is almost impossible for them to be truthful on a consistent basis. Can create, and get caught up in, a complex belief about their own powers and abilities. Extremely convincing and even able to pass lie detector tests."

You said you would not visit again and yet here you are visiting again.

GawainsGhost said...

I'm with GYC on this one. There is no justification for this lunatic's murderous rage, and even less for trying to rationalize or politicize such behavior. Jerks who do so only expose their own classlessness.

I got my own problem with the IRS, mainly that the 16th amendment was never ratified by the states, as required by the Constitution, and so the income tax and the agency which collects it are extra-constitutional and in fact illegal. But that doesn't mean I'm going to go out and kill people because of it. Nor am I about to tolerate some classless jerk, who hides behind the anonymity of the internet to mouth off trying to justify, rationalize or politicize what is really cheap lunacy.

Bye, bye, Anonymous--what a clever screen name, by the way--see ya, wouldn't want to be ya.

Anyway, let's get back to real America. For Friday Night Entertainment, I recommend Hank Williams Jr., "That's How They Do It In Dixie."

http://www.youtube.com/watch?v=e9mI0nWFn6E

Southern women, God's gift to the world. They make life worth living.

Or how about Gretchen Wilson's "Redneck Woman."

http://www.youtube.com/watch?v=82dDnv9zeLs

Now that girl is totally hot.

watchtower said...

GYSC I wouldn't mind seeing this from Pulp Fiction, one of my favorite scenes:

http://tinyurl.com/dmmpw3

getyourselfconnected said...

Wow, things kept pretty well in hand. Thanks Mark for the assistance!

Lisa,
hope you banked those gains in the forex market! I hope things are going well for you, drop me a line if you have time!

Gawains,
Southern, Northern, Antartican, all women make the world go round!!

sedentary state said...

I'm convinced that most people are incapable of thinking in anything but strictly black and white terms.

Crashing planes into buildings is terrible, so everything about the guy is bad.

This sort of approach makes the thinking process easier.

Lisa said...

@sedentary: nothing else about the idiot really deserves mention. Black and white? Yep. Attempting to take the innocent lives of others pretty much makes one scum.

getyourselfconnected said...

Sedentary,
I think I made the two points pretty clear. Say My favorite economic writer did the same thing, just because I agree with his philosophy or thinking on things economic that does not in some way minimize the action. See what I mean?

Lisa,
Any requests for Friday night? Great to see you as always.

Lisa said...

No requests, sweetie. I'm going to bed :( Still under the weather, but beginning to see some improvement :)

getyourselfconnected said...

Hope you feel better!

S. Gompers said...

Did you ever check out the monetary allegory of the Wizard of Oz?

How about Meatloaf, Paradise by the dashboard lights?