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.....
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 AgainI will return to Karl's short play that seems like a good one in a bit.
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.
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:
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?
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 CONDTNSSo there you have it.
-DUKE: DISC WINDOW CHANGES ONLY A REVERSAL OF SPREAD REDUCTN
-DUKE: EXPECT BNKS TO USE PRIV SOURCES FOR NORML FUNDNG
-LOCKHART: MON POL REMAINS ACCOMMODATVE;NEEDED FOR RECOV
-LOCKHART: DISC RATE HIKE NOT MEAN TIGHTENING IMMINENT
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.
For loyal reader Watchtower, yet another graph to mull over, lifted from Mish's site:
Have a good night.