TNX Transgression
The TNX dropped 4% today and fell through the lower trend line that has been in place since October 6th (click chart to enlarge):
It didn’t matter for stocks today, but it likely will soon. Maybe after the put-writers are done fleecing the suckers.
In case you don’t know, the TNX is the 10-year bond yield and usually goes in the same direction as stocks. Why is that? Because portfolio managers have two big buttons on their desks. One is labeled “sell stocks, buy bonds” and the other is “buy stocks, sell bonds.” Trained monkeys press the buttons all day long. So, if the yield is falling, that means the monkeys are selling stocks.
Notice that the TNX turned up on October 6th before stocks did so on October 10th. The TNX gave us the heads-up.
November 18th, 2008 at 10:19 pm
Excellent Matt. I will bookmark that.
3 mth t-bills at 0.11%. Good cheap funding for USG and Obama here.
Surprise, surprise. Corporate buybacks down 90% yoy. Will corporations start bottom-buying soon, like they have tried 10 times already? Or are they busy repairing balance sheets? I suspect the latter.
http://www.reuters.com/article/hotStocksNews/idUSTRE4AH99R20081118
100% Cash
November 19th, 2008 at 3:02 am
“Maybe after the put-writers are done fleecing the suckers.”
If this is the reason (and I’m with you in that boat) the drop next week should be substantial. TIPS derived inflation expectations have a ‘-’ sign for the next two years, ppi and cpi coming down…
November 19th, 2008 at 4:39 am
Yerk, the Call/Put ratio is close to 1. Why are we so afraid of this options-expiry week?