Global rates heading higher likely to Fed’s dismay

Following the selloff in US Treasuries yesterday, European bonds are taking it on the chin and it’s not just in Ireland, Greece and Portugal. UK Gilts are down sharply sending the 10 yr yield to the highest since mid Aug after the BoE said this in their quarterly inflation report, “there are significant uncertainties around the outlook for inflation…the near term overshoot of the target may be more pronounced, particularly if there is continued strength in commodity price inflation.” In response to the rise in US interest rates over the past few days and to the likely dismay of the Fed, Bankrate.com said the average 30 yr mortgage rate had its biggest % increase last night since Sept, rising to 4.37% from 4.20%, the highest since Oct 15th. Ahead of the G20 meeting and after a bigger than expected Oct trade surplus, the Chinese Yuan moved to a record high vs the US$.

On the heels of a good earnings season, Fed induced market giddiness and a move closer to the center in DC, II said bulls rose to 48.4 from 46.7 to the highest since early May while bears fell to 23.1 from 24.4 (got as low as 22 a few weeks ago). Following yesterday’s stock market reversal on the heels of the spike in US yields and rally in the US$, this sentiment backdrop may need to see some lower stock prices in order to tame the spirits in the short term. Hopefully after this gets worked off, some tax news out of DC may then set the stage for a rally into yr end. Either way and looking past the yr end activity, the questions surrounding the actions of the Fed will only intensify I believe and after talking with many smart people at a good friend’s party last night only convinces me so.

Initial Jobless Claims totaled 435k, 15k below expectations and down from 459k last week. It’s the 2nd time in the last 3 weeks below 440k and is definitely encouraging to see. The 4 week average, smoothing out the bumpy readings over the past few weeks, fell to 447k from 457k, the lowest since Sept 12th ’08, just days before the infamous Lehman news. Continuing Claims, delayed by one week, fell by 86k to the lowest since Nov ’08 and Extended Benefits, delayed by two weeks, fell a net 285k. Bottom line, the trend in the level of firings is finally moving in the right direction with the pace of hiring improving but not to the degree it should. The key thing to watch next with claims is what happens after the Nov 30th expiration of the last extension of unemployment benefits.

Category: MacroNotes

The Uncertainty Myth

One of the more annoying clichés of the past year has been ““The markets hate uncertainty.” You can always tell when you are listening to an empty-headed pundit when they trot out that old saw. This morning, I have a Bloomberg column on that exact subject, titled “Kiss Your Assets Goodbye When Certainty Reigns.” (or,…Read More

Category: Investing, Markets, Really, really bad calls

Will There Be A Wealth Effect?

 The Wall Street Journal – Ben Bernanke’s Impossible Dream Federal Reserve Chairman Ben Bernanke may be an excellent economist, but he is not a very good bond salesman. Since his Aug. 27 speech at an annual Fed symposium in Jackson Hole, Wyo., he’s been telling us that he thinks inflation is too low and…Read More

Category: Think Tank

Might “Fiduciary Standard” = A Blow to CEFs?

There’s still great uncertainty about what direction financial regulation is going to take, particularly in view of Republicans’ newfound control of the House of Representatives.  Back in July, headlines like this one, trumpeting replacing a “suitability” standard with a fiduciary standard, were a dime a dozen.  (I won’t go into the differences between the two…Read More

Category: Apprenticed Investor, Investing, Legal, Regulation

AEI: Continually, Unrepentently, Embarrassingly Wrong

I’ve given up reading anything from the AEI. They are idiot savants, minus the savant part. Its a bore reading the same discredited, data-free memes: The CRA caused the crisis, Fannie Mae caused the crisis, the FHA caused the crisis. Its become embarrassing to read. Their latest release combines all three memes in one giant…Read More

Category: Bailouts, Really, really bad calls

Sarah Palin, Fed Historian ?

“We shouldn’t be playing around with inflation. It’s not for nothing Reagan called it “as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man.” The Fed’s pump priming addiction has got our small businesses running scared, and our allies worried. The German finance minister called the Fed’s…Read More

Category: Markets

Will There Be A Wealth Effect? (Video)

Category: Video

Percentage of Stocks Over an Index’ Moving Average as an Oscillator

I was discussing with a group of traders the other day how to use various oscillators with a moving average. Percentage of NYSE stocks over the 200 day MA, percent of SPX stocks over 50 day, etc. Someone complained that when they didn’t have access to their Bloomberg terminal, they could not pull up those…Read More

Category: Apprenticed Investor, Technical Analysis

Oil Slickonomics-Part 13-Idle Iron

David R. Kotok Chairman and Chief Investment Officer Oil Slickonomics-Part 13-Idle Iron November 8, 2010 > In our recent comment entitled “Oil Slickonomics – Part 12” we discussed how the federal government is implementing a policy that functions as a de facto moratorium, even though the Obama administration has formally lifted the de jure oil…Read More

Category: Energy, Think Tank

Late to the Party: Giving Stocks a Green Light

Look, we are still mostly long, but geez — after a 27% move, THATS when you jump in?

Category: Investing, Video