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The dress rehearsal of the Kondratieff Winter
Let examine more carefully the relationship between stocks and treasury bonds. The StockCharts start from 1980. The first decade: It’s pretty clear that stocks and bonds are generally moving in the...
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The bullish case
I was in vacations and now back to posting. I’ve got a great comment from Don, which is worth a discussion: theroxylandr, Please don’t take this personally but I think you are pissing into the wind....
View ArticleIs the ABCP bailout a success?
I’ve heard a lot of critics recently from various blogs and comments that the now widely discussed $100 billion “superconduit” that will purchase various junk paper from participating banks SIVs and...
View ArticleRed alert
Today we had a first grade panic in credit default swaps ABX-HE-AAA 07-2, ABX-HE-AAA 07-1 and second grade panic in CMBX-NA-AAA 3. In the past two occasions that kind of panic was a very reliable...
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The energy turnaround
We all know from the sector rotation theory that the energy sector is the last sector to grow in every economic expansion and the energy/staples ratio turns around to decline when economy starts...
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Red alert still in force
I’ve posted a “red alert” warning on possible market decline back at October 26. Since then S&P lost only 1.7%, but I believe that the real decline is to come this month. The main reason is the...
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Economy is in early contraction phase. Officially
It is known from the sector rotation textbooks that the late economic expansion is usually attributed by the energy sector outperforming the rest of the market. The same textbooks are also saying that...
View ArticleFeds will cut
Libor (which is publicly available here with 1 day delay) is on the run. Something horrible just happened with 1-month rate, which went from 4.82% to 5.22% in one day. That could be an all-time record...
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Pattern recognition exercise
This is a chart of 1-month Libor (interest the banks are charging each other) and 2-year Treasury bill: The blue curve is an interest for risk-free investment into Treasuries, i.e. price of money minus...
View ArticleCredit crunch is entering the dull phase
If you remember the August panic all the credit indicators were declining in sync at the alarming pace. You remember, the credit-default swaps collapsed, Libor exploded, junk bonds sold off,...
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Yield curve
Very beautiful chart: First point is that Greenspan in 2001 and Bernanke in 2007 had cut the rates at the exactly same point in the yield curve. Second, the chart doesn’t show that recession is ahead...
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Happy new year!
Oh, what a year it will be, even compared with all the turbulences of 2007! Before going into the forecast let me wish you from all my heart to be surrounded by love and friendship that will help you...
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Bear market officially started
First of all, this is another victory for the “Dow Theory”. Formulated 105 years ago it says the bear market is triggered when Dow Jones and Transports are making simultaneous lower low on a daily...
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Which way Hang Seng will break?
Look at the Hong Kong index: It is painting a monstrous triangle that has to be broken one way or another and lead into sizable move. Which way it will go? As far as I know Hong Kong is heavy in...
View ArticleSector rotation
Today we’ve got the final (third) confirmation of bear market – DJ closed below intraday low made back in August. No signs of an intermediate bottom so far, which I expect 2-4 weeks from now. We are at...
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Can financials bottom?
I don’t think the last decline was final bottom of the financials, but let put this into prospective. If any talking head on TV will try to fool you into the stock market because financials are doing...
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Both eyes on treasuries, third eye on rice
While the fabrics of the world financial system is too complicated for anyone to understand it is sometimes possible to track several bold moves that are likely to lead into equally bold consequences....
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Where is my recession?
1. The expectations are running high The week of April 28 Barron’s ran a cover story “The Bulls are Back”. AND NOW, FOR SOME GOOD NEWS: THE OTHER SHOE isn’t going to drop. After a winter of discontent...
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Kiss this rally goodbye II or Bernanke call
At April 30 I’ve posted “Kiss this rally goodbye“. Well, I was wrong by 2 days and 18 points in the S&P. I’ve said that the peak will be 1404 at April 30 but now it looks like the real peak was...
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