Yield Curve, etc.

The tiny little bounce continues as the curve rises again today, with all maturities declining.  A little risk off’y here.

10.5.2

10, 5 & 2 year yields from Bloomberg

May as well throw in a couple other indicators while we’re at it.  TIP vs. TLT indicates that a little counter trend support could be setting for a bounce in precious metals, commodities, etc.  Depending on what USD does with its over bought status.  Junk bonds are weak but still showing a bullish hint vs. Treasury (and Investment Grade) bonds.

tip.tlt

A Closer Look at the USD

Excerpted from NFTRH 308’s opening segment…

A Closer Look at the US Dollar

Using the standard weekly currency chart we followed along for months as the Euro found resistance at the long-term downtrend line as expected, the commodity currencies long ago lost major support and non-confirmed the commodity complex and the US dollar moved from a hold of critical support, to a trend line breakout, to its current impulsive and over bought status.  It is time now for a closer look at Uncle Buck since this reserve currency is key to so many asset markets the world over.

As the charts below show, USD is over bought on both daily and weekly time frames.  But the monthly is interesting because its big picture view is that of a basing/bottoming pattern, and it is bullish.  That is a long-term director, so regardless of what happens in the short-term, a process of unwinding the hyper-inflationist ‘Dollar Collapse’ cult is ongoing.  Signs point to disinflation toward deflation.

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Scotland vs Quebec: United We Stand or Divided We Fall

Guest (OT) Post by Jakob Richardson

As a Canadian of English birth I have been watching the Scottish independence vote with a confusing mixture of amusement and disgust. Many people don’t even know that what the United Kingdom faces now is identical to what Canada faced about twenty years ago. And so as a battle hardened veteran of unity I bring my experience to this almost identical showdown of “nationhood.” A lot similarities exist between the two regions trying to separate, eh? Both have a disgusting traditional dish – Quebec has poutine (French fries, cheese curds and gravy if you must know) and Scotland has haggis (pig entrails stuffed into a stocking). Both have flags with the same color scheme, blue and white. Additionally, both regions have unleashed on the world absolute embarrassments of performing “artists” with Quebec being responsible for Celine Dion and Scotland for Susan Boyle. As well, both areas have enjoyed living under the yoke of English colonialism. Yes, sad historical events mark both Quebec and Scotland’s relationship with the evil empire over the centuries, but from this I’d like to think something special has developed. Much like a bullying older sibling growing up England has matured and the truth about the origins of our relationship has been acknowledged. In other words, the union has evolved just as most relationships often do.

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NFTRH 308 Out Now

This was one satisfying report to write.  That is because we are back in the ‘100 tops spinning on a table’ market and to those who do the work will come the rewards (and/or the preservation of capital).  Seriously, markets are setting up to bring some definitive answers promptly.  Do the work.

nftrh308

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OT: Naivete & Shame

[edit] my wife thinks I am soft serving it with the word “naivete.”  Ignorance is more appropriate she says.  We’ll go with that.

[edit 2] to be filed under extreme ignorance, I neglected to verify this as not being a hoax.  The email it turns out had a strange link that clicked through to what purported to be the Campaign for Liberty website.  I did a separate search for the site and found that they were only selling T shirts and other promotional materials in their online store.  ‘Oops, I had been taken’ thought I.  Then I searched for ‘campaign for liberty ar-15′ and found a direct link to their site with a blog post and a similar giveaway from back in April.  Hence, the post goes back up with the disclaimer that this is on the C4L website and unless they’ve been hacked, it must be valid. 

[edit 3] the only other point I’d make is that I am assuming Ron Paul endorses this or I would think Campaign for Liberty would have some legal problems in putting his signature or a representation of his signature on the gun giveaway.  If by some small chance this website has been doing this without his knowledge and/or consent please consider everything written below as invalid.  Jeez, writing a whole new post with the edits.

I am generally not a political sort partly because I don’t don’t think either major party will do better than manage to its own interests and because in the markets there is no place for bias.  The market is my full time gig these days.

But I did get rather into Ron Paul over a decade ago and promoted him at one time fairly enthusiastically.  I guess with my makeup and negative view of the two party system I was a natural for the message.  Libertarian precepts seemed about right to me, with a few ‘out there’ exceptions.  What mostly got me was the anti-war message, which if there is one thing I am politically motivated about it would be that.

Over the years that impulse had moderated and then evaporated as I started to see the Paul message as kind of silly, much I suppose as I started to see the foremost gold bugs as kind of silly.  Saying the same things over and over again in denial of what was actually going on.  Ron Paul:  ‘The government this, gold that… honest money… take our country back…’ blah blah blah.

I had a market to manage and too much dogma all around.  Simplify, simplify… simplify!

Then yesterday I get the stupidest email I’ve ever seen.  It came from the Campaign for Liberty.  I don’t know how I suddenly popped up on their list but they informed me that they are “giving away another AR-15″.  Uh oh I thought, they are either giving away jet fighters or a gun of some kind.

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Yield Curve Today

The yield curve rises today as nominal yields rise as well.  Implication, when taking into account the TIP-TLT ratio in the previous post is that risk is still ‘ON’ (also see junk vs. T bond spread below) and that a new squall of market bullishness – if it materializes – can include a commodities/precious metals bounce. *

10.5.2

10, 5 & 2 year yields from Bloomberg

Here’s the HYG-TLT ratio.

hyg.tlt

This post brought to you by your friendly play-by-play callers at biiwii.com.

* Look guys, I realize that many precious metals and even commodity/inflation players are enthusiastic sorts, to say the least.  So when someone speculates about something short-term bullish amid a growing pervasive bearishness please filter it with the other more moderating language in these posts and with the fact that intermediate picture technicals are bearish.  Okay?

Silver’s 4th Support Test

We have been noting consistently in NFTRH that the more times something tests support the more it is likely to fail.  That’s just the way it usually goes.  In spite of that I bought ‘bounce’ Calls yesterday and felt the sector has a good chance of bouncing.  Then I got a Hammer in the evening and proceeded to taunt the shorts with it.  Today?  Right back to Palookaville.

They sure don’t make it easy.  Hammers can be followed up with an iffy or bearish day and manifest bullish the next day.  Or they can just crap out and fail.  But as of now I am still on the trade even as SLV makes a 4th support test I never wanted to see in the first place.

slv