DrStool Posted July 12, 2023 Report Share Posted July 12, 2023 As a prognosticator, I know all too well that saying, "I told you so," is a sign of hubris that will come back to haunt you. Because the feeling usually sets in right around the time that the market is about to bite you in the ass. Why am I writing this now? No reason. I'm now in an apartment in Malmo, Sweden because Bruce Springsteen drove hotel room prices to the equivalent of his concert tickets just across the Oresund in Copenhagen. I arrived in Copenhagen by ferry from Oslo this morning. And, as forecast, it was smooth sailing. Now that I am safely off the boat and on dry land... well, not dry, but land... Where was I? Oh right, smooth sailing. See, I told you it would be. Great big ship cuts through choppy waves like a hot knife through soft buddah. So now, the ES 24 S&P fucutures are sitting on the verge of another base breakout on the hourly chart. If it clears 4460, the conventional measured move target would be 4540. The current 5 day cycle wave has a projection of 4460. That makes the idea of a breakout a maybe, maybe not on this move. But even if it fails, if the index sticks around 4435 or more over the next couple of days, then more upside would become likely. Wait. WTF, just happened? Buyback Schmieback. 12 hours ago, potatohead said: Lee, What is your opinion on the Treasury buyback program in 2024? https://www.marketwatch.com/story/treasurys-2024-regular-buyback-plan-faces-extreme-skepticism-at-jefferies-c7967d02 It's a joke. They're buying back with one hand and issuing with the other. They're simply flipping maturities. Doesn't change the amount of money in the system one iota. It's another name for Operation Twist. But why? They'll exchange low cost debt for high cost? I have no idea what they hope to achieve. Maybe it's a back door insurance and pension fund industry bailout. I don't know. For moron the markets, see: One Small Step For Gold, One Giant Leap for Goldkind July 11, 2023 July Starts Ugly After Fabulous June July 10, 2023 Stocks Are Scraping the Ceiling July 9, 2023 Withholding Tax Rebound Sets Up a Bearish Fed Catch 22July 6, 2023 Golden 13 Week Cycle Turn and Other Hopeful Signs 7/5/23July 5, 2023 It’s Not Your Daddy’s Liquidity Anymore July 5, 2023 We Now Know What is Driving the Rally June 20, 2023 The Fed’s Slush Fund is Working June 16, 2023 If you are a new visitor to the Stool, please register and join in! To post your observations and charts, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam folder. My travel photo blog Link to comment Share on other sites More sharing options...
fxfox Posted July 12, 2023 Report Share Posted July 12, 2023 … and at 4800 bears will scream:“Double top!“ Link to comment Share on other sites More sharing options...
SiP Posted July 12, 2023 Report Share Posted July 12, 2023 Weak CPI, including core bodes well for gold, stocks and bonds. everyone should be happy. maybe only dollar bulls will be not. Link to comment Share on other sites More sharing options...
DrStool Posted July 12, 2023 Author Report Share Posted July 12, 2023 CPI ey ey. Link to comment Share on other sites More sharing options...
DrStool Posted July 12, 2023 Author Report Share Posted July 12, 2023 QT works, QT is good. One Small Step For Gold, One Giant Leap for Goldkind Link to comment Share on other sites More sharing options...
DrStool Posted July 12, 2023 Author Report Share Posted July 12, 2023 Corrected chart. Link to comment Share on other sites More sharing options...
fxfox Posted July 12, 2023 Report Share Posted July 12, 2023 14 minutes ago, DrStool said: QT works, QT is good. One Small Step For Gold, One Giant Leap for Goldkind Nice chart. Send it to the FED. They would cut rates immediately. Link to comment Share on other sites More sharing options...
potatohead Posted July 12, 2023 Report Share Posted July 12, 2023 I think the buyback is a sign they want to keep long rates from rising higher and offering short term debt allows this debt to be collateral for financing to buy more assets. Does it make sense....no. However if one is trying to extend the life of leverage, they can only offer what institutions are will to buy or better yet...lend against. This is not our father's markets anymore. Link to comment Share on other sites More sharing options...
DrStool Posted July 12, 2023 Author Report Share Posted July 12, 2023 Needless to say, they're buying the bonds on this news, including shorts covering. 10 year yield falling. But watch out if they don't break 3.84 in the next couple of days. It’s Not Your Daddy’s Liquidity Anymore Link to comment Share on other sites More sharing options...
DrStool Posted July 12, 2023 Author Report Share Posted July 12, 2023 5 minutes ago, potatohead said: I think the buyback is a sign they want to keep long rates from rising higher and offering short term debt allows this debt to be collateral for financing to buy more assets. Does it make sense....no. However if one is trying to extend the life of leverage, they can only offer what institutions are will to buy or better yet...lend against. This is not our father's markets anymore. Swapping lower yielding debt for higher yielding debt doesn't change the quality of the collateral. Institutions will buy anything at the market price if they have the cash. But what institutions hold cash? Insurers? Pension funds? Banks have less and less of it because of QT. So from the standpoint of monetary trends, this gambit won't work for as long as the Fed remains in the QT business. Link to comment Share on other sites More sharing options...
potatohead Posted July 12, 2023 Report Share Posted July 12, 2023 2 minutes ago, DrStool said: Swapping lower yielding debt for higher yielding debt doesn't change the quality of the collateral. Institutions will buy anything at the market price if they have the cash. But what institutions hold cash? Insurers? Pension funds? Banks have less and less of it because of QT. So from the standpoint of monetary trends, this gambit won't work for as long as the Fed remains in the QT business. Very strange. One would think if yields hit a generational bottom, a borrower would want to lock in their borrowing costs for as long as possible. Not shorten it. Link to comment Share on other sites More sharing options...
DrStool Posted July 12, 2023 Author Report Share Posted July 12, 2023 It would matter if they take supply out of the market. But as long as the USG runs a deficit, that ain't happening. Link to comment Share on other sites More sharing options...
DrStool Posted July 12, 2023 Author Report Share Posted July 12, 2023 Corrected again chart. Link to comment Share on other sites More sharing options...
DrStool Posted July 12, 2023 Author Report Share Posted July 12, 2023 Anything that neither adds nor subtracts money from the system, I ignore. Link to comment Share on other sites More sharing options...
potatohead Posted July 12, 2023 Report Share Posted July 12, 2023 4 minutes ago, DrStool said: It would matter if they take supply out of the market. But as long as the USG runs a deficit, that ain't happening. seems to me there is either an issue with liquidity/demand for longer term dated Treasuries, want to keep mortgage rates down by influencing the longer rates, or institutions (pensions) are saying we need short term paper because they see redemptions coming from the baby boomers in retirement years. The Treasury seems to have taken on a monetary policy role once reserved for the Fed. Link to comment Share on other sites More sharing options...
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