Year-to-Date
SPY +3.831%
TLT +9.935%
Verrrrry interesting.....
Igy
Year-to-Date
SPY +3.831%
TLT +9.935%
Verrrrry interesting.....
Igy
agip wrote:
econ: more evidence of a developing labor shortage:
job openings at record #s. But hiring not great. Which means stupid Americans don't want to work. or maybe there is some regional problem - the open jobs aren't were the people are. Also, the layoff rate is very very low.
Quarterly service report: +5.7% growth. wow.
JOLTS data out today (at
http://www.bls.gov/jlt/data.htmif you can't see the linked chart below)..
Openings has recovered back to the previous high from last July (but NOT at a new record:
http://data.bls.gov/generated_files/graphics/JTS00000000JOR_125793_1465410133965.gifHiring WAS up until last month:
http://data.bls.gov/generated_files/graphics/JTS00000000HIR_125899_1465410239616.gifBUT--
Separations also up:
http://data.bls.gov/generated_files/graphics/JTS00000000TSR_125836_1465410189143.gifSo some confirmation today that the last employment was NOT a statistical blip.
As far as what REALLY matters if you're an investor/trader:
If the declining employment is the recent new normal, does the market go down because it shows weakness in the economy, OR does the market go up because odds of Fed hike(s) are now much lower? My impression is that it's the latter, but it's also important to note that the market is still in a trading range until there are closes above the present all-time high.
coach d wrote:
If the declining employment is the recent new normal, ...
Employment is not declining. It is growing albeit at a slower rate than previously.
I think the stock market really wants interest rates to stay low. I think that trumps econ growth at this point.
higher interest rates are a mystery, a surprise - we don't know what troubles they may cause. I think short term guys would rather not deal with that.
Of course if the stock market, in it's infinite wisdom, is the institutional traders, of course they want low interest rates. It supports the fiction that it levitates equity prices. Of course if you think about it for more than a minutes, or look at market history, you know that story is not true.
John Hussman tweeted this earlier in the day:
“The forgotten lesson of the mortgage bubble and global financial collapse is that when every speculation seems safe, nothing is safe.â€
Igy
agip wrote:
I think the stock market really wants interest rates to stay low. I think that trumps econ growth at this point.
higher interest rates are a mystery, a surprise - we don't know what troubles they may cause. I think short term guys would rather not deal with that.
That's what I think. But we do know the troubles that higher interest rates may cause. We only have to look back to 1999-2000 and 2004-2007.
coach d wrote:
agip wrote:I think the stock market really wants interest rates to stay low. I think that trumps econ growth at this point.
higher interest rates are a mystery, a surprise - we don't know what troubles they may cause. I think short term guys would rather not deal with that.
That's what I think. But we do know the troubles that higher interest rates may cause. We only have to look back to 1999-2000 and 2004-2007.
ehhh.......things rarely repeat exactly.
the major difference now is that we are starting at such a low base with rates and there is such massive, ungodly demand for bonds. I don't think anyone would expect years of steady rate increases - it would be a couple rises each year.
I'd expect less weirdness this time, but who knows.
One weird thing would be this:
The Fed raises its rate but long term rates don't budge. The yield curve flattens. We'd have to decide if this flattening is different than other flattening.
"What we should fear is Fed policy that has encouraged a yield-seeking bubble in equities, debt-financed stock repurchases, and covenant-lite junk debt; that has carried capitalization-weighted valuations to the second greatest extreme in history other than the 2000 peak, and median equity valuations to the highest level ever recorded. That’s exactly what the Fed has done in recent years, and the cost of that unwinding is still ahead."
--John Hussman, 2/8/2016
The insanity of Draghi and Kuroda. Draghi and the ECB doubling down into buying corporates because they have run out of sovereign debt. Kuroda and the JCB buying equities in addition to corporate and government debt. German ten-year Bunds traded at 0.40%, or the five year JGB at 0.20%. If it continues US Treasury yields will follow.
Bizarre, and if one thinks there is a benign ending to this.....well....
Igy
agip wrote:
ehhh.......things rarely repeat exactly.
the major difference now is that we are starting at such a low base with rates and there is such massive, ungodly demand for bonds. I don't think anyone would expect years of steady rate increases - it would be a couple rises each year.
I'd expect less weirdness this time, but who knows.
One weird thing would be this:
The Fed raises its rate but long term rates don't budge. The yield curve flattens. We'd have to decide if this flattening is different than other flattening.
The four most dangerous words in investing:
"It's different this time"
In 2004, we started at a base of 1 percent. I can link a video from Peter Schiff saying exactly what Igy is saying now. I think we had four 1/4 hikes in the second half of 2004, and the homebuilder industry died in July 2005. You can argue that the pace is going to be slower this time, but I can argue that they triggered a liquidity crisis this year with ONE 1/4 point hike last December.
I seriously doubt that the world economic carnage would have been what it was (and still is in Europe and South America) if Bernanke had sat on his hands and done nothing.
What IS different this time is Donald Trump. If he hasn't unnerved CEOs and CFOs to pull back on investment plans yet, I think he will.
with the demand for bonds very high and inflation low, we're unlikely to get many rate rises from the fed. That's the point really. Sure, raising rates a lot will cause many blowups like in 2005...raising rates a little...probably won't.
in 2004 the 10 year was in the mid 4s...now it is in the high 1s...different kettle of fish. Less dangerous.
coach d and agip,
The difference is quite a bit more distorted than what you are admitting to. For example, pensions and insurance companies depend on bonds to moderate their portfolio risk and to maintain a targeted return. That is very difficult to do with an interest rate environment that continues to fall. That is probably one reason that high yield debt, which is in a sense "chicken equity," has stabilized and some sense recovered since the Fed rate hike.
For investors, high quality bonds, like the 4% yield that was quoted in last decade, provided return when the Fed cut interest rates during the last two recessions. A ten year Treasury has less room to provide that return when trading at a 1.7% yield. If anything moves the Fed it will be to provide ammunition for a future interest rate cut.
For the record I have said that Bernanke was a real asset during the financial crisis. Without him, Paulson, Geithner, and others, my firm may not have survived. I do believe he should have move the other direction and tightened several years ago. It doesn't really matter, we are where we are. The Fed is painted in a corner, as well as other central banks. Paint is on the shoe and it will be a mess to clean up this mess.
Igy
Maserati,
While S&P 500, Treasuries, Oil and Gold were up today Deutsche Bank was down 1.22%. I am in agreement something cooking there.
Igy
agip and coach d, thank you for your insites. I'm learning a lot.
agip, are bond demands high because investors are looking for safe havens for their money? Are they afraid of stocks?
Zzzzzzzzzzzzzzzzzzzz
well the question is how much has the fed distorted intemediate and long term interest rates.
no one knows, but I'd be surprised if QE had much affect. And if I am right...then long term rates are market determined and unlikely to be far off where they should be.
idiot investor wrote:
agip and coach d, thank you for your insites. I'm learning a lot.
agip, are bond demands high because investors are looking for safe havens for their money? Are they afraid of stocks?
well it's obviously a very large amount of people with many different motivations.
some are pension programs that must buy US treasuries.
much of the demand is from newly middle class people in Asia - they aren't comfy with stocks yet so they buy bonds. billions of dollars of them.
europe is aging...they want more bonds than stocks, out of safety.
the federal reserve has bought billions of bonds. as have many central banks around the world.
I think the biggest factor is simply the newly middle class people of the world - that is enormous amounts of new wealth that finds its way into bonds.
U.S. stock futures tilted lower on Thursday, as a recent rally that pushed the Dow average above the key 18,000 level ran out of steam after oil prices eased back from their 2016 highs.
Futures for the Dow Jones Industrial Average fell 52 points, or 0.3%, to 17,943, while those for the S&P 500 index lost 7.85 points, or 0.4%, to 2,110.25. Futures for the Nasdaq 100 index gave up 14 points, or 0.3%, to 4,505.
The pullback comes after both the Dow and S&P logged a three-day winning streak on Wednesday, driven largely by a rally in oil prices to an 11-month high. Oil prices initially continued their march higher on Thursday, but turned lower early in European trade. Crude fell 0.8% to $50.80 a barrel, while Brent dropped 1% to $51.99.
Meanwhile, investors were also showing some caution ahead of the Fed rate decision next week, although very few market observers now expect a rate hike in June after dovish comments from Chairwoman Janet Yellen earlier this week. The dollar has been falling sharply on lower expectations of a rate increase, but took a breather from the selloff on Thursday, with the ICE dollar index up 0.1% to 93.662. However, "aside from retail sales next Tuesday, there is nothing that can really happen to change the negative trend," said Richard Perry, market analyst at Hantec Markets.
There will be no Fed speakers on Thursday, as the central bank is in its blackout period ahead of the June 14-15 meeting.
As for data, the latest on weekly jobless claims is due at 8:30 a.m. Eastern Time, while a reading on wholesale inventories is on tap at 10 a.m. Eastern.