Posts filed under “Think Tank”

morning note/green shoots vs higher interest rates

Asian stocks powered higher overnight, especially in Taiwan which rose
almost 7% after their govt said they will allow China to invest in their
mfr’g co’s. Japan rose about 4% after March IP rose twice what was
expected. The rally spilled over into Europe after some good earnings
reports and UK consumer confidence rose to a one year high. Germany’s
April unemployment rate rose to the highest since Dec ’07 but the # of
unemployed rose less than expected. With the S&P futures following the
rise, global bond markets are trading lower and specifically the 10 yr
bond yield is rising above 3.10%, the highest since Nov 25th. The
question for the US economy and the equity market is at what level does
the rise in yields begin to hurt and snuf out any hope of recovery since
higher interest rates are kryptonite to an overleveraged economy. It
also highlights the risk the FOMC has taken by their decision to pick a
fight with the bond market.


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Category: MacroNotes


Good Evening: U.S. stocks broke out of their mid April doldrums with authority today. With almost every major average setting post-March 6 highs, many investors are hoping this move signals stocks are trying to break out to the upside. The reasons behind today’s leap in equities are numerous enough to change the format of tonight’s…Read More

Category: Markets, Think Tank

FOMC/Battle Royale

With respect to quantitative easing, the FOMC decided to sit on their hands and let the purchase plan of $1.25 trillion MBS, agency debt of $200b and longer term treasuries of $300b stand as is and will continue the programs over the next few months. As a result, bond yields have busted out to the…Read More

Category: MacroNotes

7 year auction

After a 16 year lull, the Treasury auctioned off its 3rd 7 year note auction of the year, a total of $26b, $2b higher than March and $4b above Feb. With only two auctions to compare today’s to, the auction was ordinary as the yield was a touch above expectations, the bid to cover at…Read More

Category: MacroNotes

Speeches & Testimony Remarks by FDIC Chairman Sheila Bair to The Economic Club of New York; New York, New York April 27, 2009 Good afternoon everybody. I’m honored to be here this afternoon. I’m told it’s the first time in your distinguished, 102-year history that you’ve invited an FDIC chairman to speak. You’ve had presidents,…Read More

Category: Regulation, Think Tank

Creeping rise in inflation expectations

Implied inflation expectations continue to rise today in the 10 year TIPS and are now up 40 bps from the day before the March FOMC meeting. While it’s still at a relatively low level at 1.55% as we should be thankful for just 1.55% inflation over the next 10 years, it is the highest level…Read More

Category: MacroNotes


Real Q1 GDP contracted by a greater than expected 6.1% vs forecasts of -4.7% but the components were very mixed. Personal spending rose 2.2%, greater than estimates of .9% but Inventories subtracted 2.8% off GDP, falling by $103.7b and Govt spending took off an uncharacteristic .8% from GDP. Trade added about 2% points. Taking out…Read More

Category: MacroNotes

King Report: Bonds Are Tanking

> Stocks rallied early and bonds sank on Tuesday on expectation that the release of GDP today would show a better than consensus number. The peculiarity of trade accounting mandates that GDP will be revised higher due to declining imports, which actually indicate economic ebbing. Stocks tried to conform to the pattern of rallying into…Read More

Category: Think Tank

Fed’s headed for a showdown with the bond market

As the FOMC meets for a 2nd day, they will likely take comfort in what has occurred since their last meeting where they took the daring move of deciding to buy treasuries to manipulate the level of longer term interest rates. After rallying $70 the day of that meeting, gold has given it all back,…Read More

Category: MacroNotes

Banks and Economic Data Wrestle to a Draw

Good Evening: Multiple crosscurrents prevented stocks from making much headway in either direction today, with the major averages finishing appropriately mixed on light volume. Negative stories about the banks and their impending need to raise capital clashed with positive surprises from today’s economic data releases. Given that the banks have been the leaders in both…Read More

Category: BP Cafe, Markets, Think Tank