Market Miscellany

April 15th, 2014 12:05 pm | by John Jansen |

Greed and fear dominate markets and it appears that greed is morphing into fear today. The Long Bond has enjoyed a significant rally and trades at its lowest level since July 2013 when we were in the midst of the oh my God they are going to taper soon swoon. A confluence of factors has forced buyers into the market today. The situation in the Ukraine is heating up and that has sparked a flight to quality. The ruble last time I looked had traded above 36 and I have not recorded it there since March 24. The Bund is screaming lower and trades at 1.475 percent for 10 years. Other emerging market currencies while not in free fall are weakening today,too. The Nasdaq fuel on the fire as it has made a new low for this move and a new low for the year today. I worry that at some point there will be a collective there but for the grace of God go I epiphany and happy holders in other sectors may decide that the equity bull is long in the tooth and some reduction in equity exposure is necessary and appropriate. If you are an equity holder the reign of Barack Obama has been a virtual financial Nirvana or maybe a Periclean Golden Age. On the glorious day in November  2012 when the vox populi clamored for  four more years the S and P was trading around 1430. The index dropped to about 1350 over the next week or so and then has hardly ever looked back and indeed every dip was a buying opportunity. Sister Mary Consolata taught me quite well and a very quick reckoning demonstrates that is a gain of about 35 percent in that time period. At some time the Nasdaq will cease to decline by itself and other indices will join the fray as other equity holders get risk religion. Finally, the JPMorgan weekly survey was very short this morning. The active portion of that survey had no longs this morning and the largest net short position since May 2013. That is a flammable mix which can only feed the fire in the market place.

I have heard of chunky buying at the 5 year point by hedge funds and macro based traders. I have heard of long term portfolio types selling off the run 3 year through 5 yer paper and fast money sellers of bonds.

In swaps the 2 year spread is 1/4 basis point wider and 5 7s and 5s 10s and 30s are unchanged. I have heard of fast money paying in the 2 year sector.

 

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