Tuesday, February 16, 2010

Who Falls for This Stuff Anyway?

A late night for me so just a few thoughts to throw out.

Bond Auction Complete = Market Rally
The recent weakness in the market indices which was jumped on by technical traders as "the break" below double headed over the shoulder boulder holder trendline was erased very fast. The culprit? US Bond Auction calendar coincides with market weakness (and dollar strength) and then as soon as the paper is sold a low volume ramp up begins in earnest once again. Almost like the whole thing is rigged, almost.

Who Falls for This Stuff Anyway?
One of the most puzzling things about economics that I could never square with being a rational type thinker was the ability of words to influence Billions in dollars of money. What's in a word? Action speaks louder than words, but not in economics.

Case in point, the following headline:
STRATFOR: China's Treasury Dumping Is The Equivalent Of A Nuclear Weapons Test
One of many early stories on both Japan and China getting lighter on US debt.

Not long after we were treated to this double header:
Hoenig Says Fed’s Objectives Threatened by U.S. Debt

Minneapolis Fed President Kocherlakota Warns Massive Debt Load Can Only Be Paid By Tax Collections Or Debt Monetization
I am sure this was all just a coincidence in timing.

Now why does the US and China bother to play these games? Boring really.

The US will curb spending bla bla bla but let's see how things are seen by even non Too Big to Fail institutions going forward (from Mish's article):
Facing a deficit of over $200 million this fiscal year, Jackson Chief Executive Eneida Roldan said she needs to cut 20 to 25 percent of the budget.

Local 1991 President Martha Baker said she was willing to work with Roldan and had offered a partnership to get between $50 million and $70 million in new money out of Washington.
Think government spending is going down? It about to explode higher. What's to talk about?

Have a good night.


Dave in Denver said...

Better yet, who falls for that "good cop/bad cop" bad cop rhetoric from Hoenig every time? I dunno 'bout the Minneapolis guy, but Hoenig always bears his draconian fangs right before the Fed goes on another drunken printing binge...

getyourselfconnected said...

seriously this is absurd.

Dave in Denver said...

Dave in Denver and jrmfl aka 2003: "we'll eventually see events and corruption that will blow out minds"

gyc, we're seeing them.

jrmfl was the guy who originally pulled me into the gold arena in late 2001

sedentary state said...

>Almost like the whole thing is rigged.

Yeah, this is becoming clear. The fed is buying the market. I wonder if there's an exit strategy for that, or if this is the new normal.