Somehow in the heat of the battle, we might have neglected to pass along a short video clip from CNBC early on in the month. Charles Nenner, market-rocket-scientist extraordinaire, talks about a couple of very specific times when stocks would be BID. IF you have a look/listen, the one he mentioned early happened (to the tune of a couple hundred Dow points – like the next day). Reason we bring it up and give him password honors is that the next stock mkt bid is coming – Feb 27th – March 19th. Get yer orders in early and often. WE can’t help but think some short-covering is at the very least A PRUDENT THING TO DO. We’d HATE leaving profits on the table, especially in this day and age! Nuff said. Moving on then, we have 5yr auction process today which leads us to thinking about the ‘rolling concession’ in order to get supply ‘done’. That in mind, we offer an UPdated look @ the curve (2s/10s) in order to try and cont to make sense of things AND we offer a MUST SEE video clip from Jon Stewart (The Daily Show!). Have at the PDF and have a great start to the middle of the week!
Here’s an excerpt of OUR rant:
Trust us when we say that you really don’t wanna KNOW what’s on our minds at the moment. Suffice it to say that we KNOW that one of the only viable solutions ‘out there’ at the moment that we might add is NOT being given ANY ‘face-time’ is so simple it’s beautiful. TIME AT A PRICE. Said another way, time heals all wounds. IF we’re wrong, then surely all the trillions of dollars being thrown AT the various problems aren’t gonna hurt either! The Fed’s ramping UP it’s balance sheet and keeping it there to provide liquidity. The Treasury is issuing gobs and gobs of Treasuries (at what are STILL relatively LOW rates – thankfully!) in order to help pay for all these shorter-term fixes. And yep, yers truly are helping to find places to PUT all of these Treasuries. Have to say this is getting more interesting by the moment and for THAT we’re thankful! With more supply ‘out there’ we’re tasked with more and more to think and talk about.
This in mind, we’re struck by what WE see as the conundrum of the week. With all of the supply being issued, this week brings about an absolutely giNORMOUS month-end index extension trade. In normal times, we could talk and think about this very simply. We’d plan on some sort of BID in the Treasury market into the last moments of the month. Couple of things come to mind, though, creating the conundrum. Firstly, the firm that created The Indices is now GONE. Yes, they’ve been swallowed up by Barclays, who’s ALSO terrific. But seriously, though … Jack Malvey was thrown under the bus. WTF? Anyone care about the month-end index extension trade at the moment? Surely there are those still tasked with keeping up with the ‘Jones’ but now, there are gonna be all sorts of opportunities to do so, given the auction schedule. What’s the rush? Thankfully it appears that we’re the ONLY ones out there thinking about this … if we had company rates might be lots higher. Do NOT get us wrong. We’re NOT bearish of rates. We’re just pointing out the conundrum that is this week, in our opinion.
As always, we prefer to look at a visual in effort to help us understand what’s going on. With front-end supply this week (2s are trading hands @ 1.00%’ish, 5s @ 1.92%’ish now) and a large month end extension, one might expect the yield curve to flatten, as Mr. Market offers some sort of concession. That is precisely what’s going on and we’re always and forever fans of logic and common sense! Here’s a look @ 2s/10s:
Speaking of logic and common sense, we wouldn’t feel right NOT commenting at all about last nights speech and yesterday’s turn of events. Two things are on our minds, at the top of a short list of things that really disturb us. First, WTF is with Barney Frank and his axe about Northern Trust? If they can’t use marketing to grow their biz withOUT his friggin approval, then I wanna know how HE travels and what first class hotels HE stays at. And oh yeah, while we’re at it, we wanna know WHY Pelosi travels in military transport (not unlike Airforce One that the prez uses)? Right. Wanna go there? Be careful …
Second thing that’s curious to US is what is the deal with the republican governors dissin’ stimulus … ? Jon Stewart of The Daily Show put THAT one into perspective for us – Clusterf#@k to the Poor House – GOP Govs at Odds Republicans are against the stimulus bill, but that doesn’t mean they won’t take the money.