After 8 days filled with visiting family, including 2 teenage grand daughters, and visits to the Florida Beaches, St. Augustine and of course burgers at The Breakers, I am on the keyboard. This is a lot easier!
Most interesting news over the weekend was the report at Zerohedge that Bill Gross and PIMCO, the worlds largest bond fund had completely eliminated all U.S. Treasury positions and had in fact established a net Short Position of 7.2 Billion equal to 3% of asserts. In addition, it is also reported the funds largest position is Cash at $73 Billion, equal to 31% of all assets. Due to the cost-to-carry of the short position, it is being seen as a political statement. A speculative negative cash flow investment by an income driven safety-of-principle mega bond fund should certainly send a message.. not sure who the message is directed at but it really should be heard by the BTFD crowd.
It was also reported on Friday that the White House and the Congress had reached a deal that cut about $38 Billion from largely Discretionary Spending. This is likely only the first battle in what is certain to become a War over the shape of the Federal Budget. The outlines of the coming War are being reported everywhere on the Web, so I won't bother you with lots of opinion and links. I do however have an observation.
As long as Republicans insist on protecting Corporate bene's like Oil Depletion allowances and refuse to consider Corporate Tax reform and Military budgets, and Democrats refuse to consider Social Security and Medicare reform and both parties refuse to look at Federal programs like Farm Subsidy and Ethanol Subsidy, all we will end up with is tinkering at the margins of the Federal Budget, attacking those programs without well funded support, and passionate debate over social issues that have no impact on the Federal Budget yet can become major obstacles to reaching a resolution of the budget crises.
The Republican Representative Paul Ryan has become a spokesman for the Conservative majority in the House. Yet his proposal for the Fiscal crises included slashing Discretionary spending by $80 Billion while adding $28 Billion to Defense, while ignoring the revenue side by protecting tax loopholes for Oil companies and other multinational Corporations does not consider tax increases that most economist, even conservative economists, think are necessary. In other words, an Ideological approach designed to comfort the base, (about 30% of the population) while ignoring the larger national good.
The market are up this morning after being higher in over night trading, with the Dow up 40 and the SPX up 2.25. The other major indexes are mixed. Oil is still the big story, with Brent trading at 122.5 and are near record levels priced in Euros. WTI is trading off a little at 112.03. Gold made a new high over night, and Silver approached 42, before backing off and currently trading 41.13 The rest of the commodity complex is mixed.
The Euro is at 1.445, after trading at 1.45, and the Dollar is up a little, trading 74.97 and briefly interrupting its dive into irrelevancy. The 10 year Note is off at 3.825% and the long Bond is off at 4.645%. The 10 year/30 year spread is now down to 82 basis points..... not good for the banks, and maybe telling us not good for investors.
Momentum Change indicators are still Bullish, although some of the indexes are moving toward neutral. All of the recommended trades have now been stopped out, with gains in every trade but the copper (JJC) trade. I will be looking for an opportunity to re-enter on the long side if an opportunity presents its self. But volume and advance/decline numbers are not acting well, and Bullish sentiment is at near-record levels. This whole project is beginning to look like late Summer, 2007. The next Momentum Change Sell signal will be very critical, as I expect it to reflect market top for this Bull rally in the Secular Bear Market.
Best To Your Trading!
Bill
No comments:
Post a Comment