Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
|
Last |
Change |
Percent |
|
|
S&P Futures |
1277.0 |
3.1 |
0.24% |
|
Eurostoxx Index |
2088.7 |
20.0 |
0.97% |
|
Oil (WTI) |
82.46 |
-0.8 |
-0.93% |
|
LIBOR |
0.468 |
0.001 |
0.21% |
|
US Dollar Index (DXY) |
82.74 |
-0.152 |
-0.18% |
|
10 Year Govt Bond Yield |
1.50% |
0.05% |
|
|
RPX Composite Real Estate Index |
177.6 |
0.3 |
|
S&P futures are up 3 points after having been down 12 points in the overnight session. A drop in Euro sovereign yields seems to account for the better tone. China’s non-manufacturing PMI dropped to 55.2 in May from 56.1 in April, indicating that their economy is decelerating. The 10-year yield has increased to 1.5% and mortgage backed securities are down a tick.
This week will be a relatively data-light week, in contrast to last week (especially Friday). However, there will be lots of Fed-speak all week and investors will be parsing each statement for further clues regarding QE. It may turn out that the Fed conducts Operation Twist by purchasing MBS instead of Treasuries.
One of the reasons why this recovery has proven to be so unsatisfying has been the lack of construction activity, which usually leads the economy out of a recession. The Atlantic has a chart that shows construction jobs as a percent of total jobs is at levels not seen since 1946.
Laurie Goodman of Amherst Securities weighs in on how regulators are creating a credit crunch.
Chart: Construction jobs as a percent of total jobs:
Filed under: Morning Report |
All Things in Moderation 
We’re at $82 and change on WTI right now. The post recession low is $77 flat.
If we break through that barrier it means anitcipated worldwide demand is falling off and/or the dollar rising so fast that most of the US gains in blalance of trade over the last few years will be lost and it will be time to consider the possibility of a double dip recession.
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“Shock! Faber, Siegel Agree: Buy Stocks Instead of Bonds”
http://www.cnbc.com/id/47671563
Pretty good piece, mainly because it agrees with my thoughts! Buying US bonds now seems to be terrible timing, as long as your outlook is at least a year out or more.
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Banned, do you think Aussie currency/bonds make sense as a “hedge” for the small investor?
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I don’t think that small investors should ever mess with currency. As for the bonds, scott, and brent might give you better insight
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The actual yield of Aussie bonds is maybe a point better than Treasuries, which is significant, but it all depends on currency exchange beyond that. So it is a bet on Aussie currency, and you are saying that is not for the small investor [moi].
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mark:
So it is a bet on Aussie currency,
You corked me.
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mark:
do you think Aussie currency/bonds make sense as a “hedge” for the small investor?
Buying Aussie bonds would ultimately be largely a bet on the currency. I’ll show you why.
Since last September, AUD has been as weak as 1.08 and as strong as .945. It is currently at .973. So imagine that last September you bought AUD 1,000 worth of 2yr government bonds, with a coupon of 6.5%. At the time, the price on those bonds was 106.68, which means you would have to come up with AUD 1,066.80 in order to purchase the bonds. At an FX rate of .945, it would have cost you $1,128.89 to buy those bonds. 6 months later, in March, the price of those same bonds was 106.99, meaning they were worth AUD 1,069.90. With a half a year’s accrued interest, about AUD 32.5, the bonds would have been net worth AUD 1,102.40. But the FX rate had moved to 1.08, so if you sold your bonds and converted them back into USD, you would have received $1,020.28. So for your six month investment you would have actually lost about $100, or about 9.6% of your original investment.
Flash forward to today. Now you have 9 months worth of accrued interest, about AUD 48.75, so with a current price of 108.27 on the notes, your net value is AUD 1,131.45. With a current FX rate of .975, you could sell your bonds, convert them to $, and receive, $1,160.462, for a net gain of 2.80%.
As you can see, the FX rate plays a huge part in whether and how much you will make/lose on your investment. And of course, as a retail investor, you will be paying a huge bid/offer spread on your currency conversions, so any move against you will be magnified and any move in your favor will be minimized.
I’m with banned. Unless you have some kind of FX exposure that you want to hedge, or you want to roll the dice on the value of the $, stay away from currencies and hence non-$ denominated bonds.
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Mark:
“hedge” as in a hedge against Europe imploding?
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No – hedge as in hedge against inflation. Treasuries pay less than the inflation rate. I know the standard answer is “equities” but I am almost 69 and got really burned in 2008-09. I do have some significant annuities, now.
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I would look at some of the MLPs. You have to do your homework, but they have good yields and will be correlate reasonably well to commodity prices which is your inflation hedge.
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Thanx, Brent.
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mark:
I never recommned individual stocks, but if you look at the standard big names that have yields of over 3% now you can reasonalby ask if you think they are likely to still be here paying those dividends 10 years from now. If you answer yes, then that might comprise a percentage of your portfolio.
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As a pure play inflation hedge, I would look at some of the commodities that are down right now, but for which the demand is essentially unchanged or greater over a 5-10 year stretch.
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I was outside most of the weekend, so I missed the whole creationism versus science debate
I am neither a scientist nor theologian, so I would not be chosen to lead the debate team for either side. However one point I never see brought up would seem to tilt the scales.
If you read scientists from any nation or culture in the world, they tend to support evolution as scientifically valid to the extent that it comports most closely with the current accumulated evidence.
Creationists seem to believe that it’s either the Judaeo-Christian creation myth or science. Non-evolutionists all over the world would however have a wealth of creation models to choose from, not just now but throughout history, that have the exact same basis in evidentiary fact as the Bible, which is to say none at all.
So if you choose not to support evolution in schools, then logic would dictate that you teach the Hindu and Native American myths etc on an equal footing and that the world would then dissolve into competing stories told by pre-literate people vying for marketing.
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banned, you do not even have to go that far. Genesis tells two separate creation narratives that are not conveniently coherent and two separate flood narratives that are also contradictory. In the Hebrew, the female is not created from the male; rather the Earthling is divided in two. The myths are many, they suffer in translation, and the true believers have chosen which myths to adhere to. I wrote earlier the essence of what you have said here: whenever the theory of evolution “evolves”, the change is based on better observation and more experimentation, not on mythology.
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Mark/banned:
At least from my end, the evolution discussion was not about what should or should not be taught in schools, or the merits of evolution vs creationism, but rather what conclusions can be drawn about people who answer a poll question about which they believe.
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I’m a BIG fan of polls, as you know!
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Fed meeting coming up, or as they are alternately known
The Last Best Hope Of Mankind!
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Via Krugman’s blog, George Soros is worth a read:
http://www.georgesoros.com/interviews-speeches/entry/remarks_at_the_festival_of_economics_trento_italy/
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Felix Salmon on the Soros piece:
http://blogs.reuters.com/felix-salmon/2012/06/04/george-soros-and-the-two-choices-facing-europe/
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Jnc:
Now I’ve got Soros on my side, which means I need to hide my wallet.
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He’s the original master currency speculator.
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So far the Obama campaign is off to a disastrous start for a variety of reasons. First and foremost is the decision to run what is essentially a “he’s worse” campaign about Romney.
Nobody outside the Romney family and the Mormon church is voting FOR Romney. They’re voting for or against Obama. Plus there’s only a relatively small part of the electorate that isn’t already committed one way or the other by now. Since we’ve known both of these men for at least 5 years and with the gay marriage card finally played, there are no undecided social issues left. If you haven’t decided whom to vote for yet, it can only be because of the economy.
Nobody who is worried about the economy cares what Romney did 10 or 20 years ago. They care about what Obama is doing now, and whether the economy will get better. After all, in 2008 there was no reason whatsoever to believe that Obama knew anything about the economy or how to fix it. It was a subject that he had no knowledge or experience of. People voted for Obama as a change, and they will vote against him for the same reason.
Finally this blame everything on Republican obstructionism idea will fail miserably for two obvious reasons. The “dumb” people will ask how can it be that the Republicans, the minority party both in the US and government are so strong and the Democrats, the majority party in both are so weak? Then the “smart” people will ask, even if the Republicans ARE obstructionist, why should I vote for a Democrat president when we’ll just continue more of the same for 4 years? If you’ve shouted from the rooftops that you can do nothing without the Republicans consent, some voters might start to believe you and work on that end of the problem. As they say in sports, it’s easier to eliminate one coach than 40 players
Finally get Axelrod out of the public eye. He’s a polarizing figure like Rove and has no business taking such a high profile. Trot out somebody besides he and Biden, even if just to prove that the President isn’t becoming persona non grata in his own party as the election moves closer.
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Mark, Morning Report seems to be the catch-all thread. Here’s what I posted on the NBA Playoffs thread, in which only you and I seem to be interested (LMAO):
“Game 5: End of 1st quarter and I thought it was a really good quarter for Thunder. Will it last??? Lots of game to go.
Mark, your comments prove ever more prescient. But, ahem, did I not mention that Collson is underrated? He’s having an outstanding game tonight. And he’s no spring chicken either; does he want a ring more than Duncan?”
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Okie, I was watching last night, not ‘puting. OKC is now the team of the present. They withstood the Spurs’ comeback and they played as a team. Great basketball.
Spurs must hope for Westbrook to over-dribble and play out of control. They cannot win in OKC tomorrow against the team that beat them tonight in San Antonio without Westbrook’s inadvertent help.
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