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One of the big things on my mind in recent days is setting up for a short play in US Treasury Bonds. The basic idea is that once the uncertainty and other issues we’ve got going on now settle down, US interest rates are going to to be heading higher, and in a serious way. One of my colleagues actually pointed out that 10-year T-Notes have actually gone sideways since the stock market peak in August. That suggests there aren’t many buyers on the long end of the yield curve. Given the potential for some serious inflationary pressures thanks to all the money sloshing around the world right now, I can’t blame those long-term investors.
Of course the question is always one of timing. Making a play on a cyclical change in the direction of long-term interest rates is tricky. Short-term oscillations can cause problems. That makes taking a position in futures potentially challenging. With that in mind, I thought to go the ETF route. To that end I found the UltraShort Lehman 20+ Year Treasury (TBT).
The chart is really interesting. Looks like an inverse head-and-shoulders type of set up to me. The projection off a break would be a $10 gain - and that’s just a daily chart set-up. I’m of course thinking much longer-term than that.
I was very surprised this morning when I did one of my periodic checks of my bank account balance. There was more money in there than should have been the case. Like most people, most of the time the only money going into my checking account is from my paycheck. Those transactions aside, generally the flow is one way - out. The non-paycheck inflows are relatively rare and generally either intentional deposits or ones that are expect (tax refund, etc.). The one that hit today was rather unexpected.
Now you might be wondering why I would be surprised to receive a royalty payment, but you see it’s the first one I’ve ever gotten. That’s right, two and a half years after it was published I have finally seen my first royalties (not that we’re talking big bucks here, mind you). Are you surprised to hear that?
Publishers generally pay authors an advance for their book. Being a new author in a genre that isn’t prone to generating blockbuster type of sales, my advance wasn’t anything dazzling (think 4 figures). Before the author starts receiving any payments the royalties first have to make back that advance. On top of that, the author gets charged for a number of things like indexing and review copies, which also have to be paid for out of the royalties before the author gets a penny.
The bottom line is that I’ve sold thousands of books and have now had the book published in German and Chinese (or at least the agreements put in place), and have only just now reached the point where my royalties have made back the advance and costs.
But the economics profession for the past thirty years instead focused on producing stochastic calculus porn to satisfy young men’s urge for mathematical masturbation.
It was written by Arnold Kling in his Economists with Pseudo-Knowledge blog post. His basic premise is that economists don’t really have a clue how to sort out what’s going on these days. Highly controversial, of course.
Now we really know how bad things are. The British have begun cutting back on the pints. According to this CNN story, pubs in Jolly Old sold about 1.8 million fewer pints per day in the last quarter.
This would seem to go contrary to the idea that in bad times people drink.
The level of USD/JPY is bringing me to recall the early years of my life as a professional forex analyst. Back in those days was the first time the 100 level had been broken to the downside, which was obviously a big deal. It was a fun time to be analyst because things were just flying. I remember actually wanting to go into the office on Sunday evening to see how Asia was going to start the new week.
Interestingly, in the end the selling ran out of steam and right about when it did the Bank of Japan came in a bought USD, driving the market right back up. It was about the most well-timed intervention I can remember seeing.
I’ve been hearing all week about the Anna Schwartz piece in the Wall Street Journal and how good it was. I finally got around to reading it today. Definitely very interesting. Check it out for yourself here.
Actually, the article is mentioned a number of times somewhat indirectly by Jim Rogers in a recent CNBC appearance where he gets rather uppitty.
Here’s some more interesting online media. It’s a joint interview of Nassim Taleb and Benoit Mandebrot done by PBS. It runs about 10 minutes. Listen here (thanks to Paul Kedrosky). Alternately, you can watch the video or read the transcript from here.
If you’re looking for a bottom in the housing market sometime soon, you won’t want to look at the charts from The Bonddag Blog today. Housing inventory hasn’t been coming down at the same time as unemployment is rising. It’s ugly.
The real estate sector has not been recovering with the rest of the market of late, no doubt because of exactly the supply and economic considerations Bonddag points out. The IYR real estate ETF has lost nearly 60% since the start of 2007 and isn’t really showing signs of turning.
I suppose I can’t really complain too much today. It’s been a grind, to be sure. I had to write earnings previews on for stocks and will be listening in on a conference call later this afternoon. You know how much that thrills me. Here’s where the nice part comes in, though. This morning I suggested to readers of the product I work on that NILE was a good short play. At this writing it’s down 8%. I also indicated that in the mid-950s the S&P was a really nice risk/reward long play. It’s been up 25 points from there.
Call it a silver lining on an otherwise drudge work filled day.
I read something interesting on a note that came out this morning from the head of my Thomson Reuters group. He was commenting on how things are going and pointing out some of the better performers in our business. The market volatility has been a boon to the transactional elements of what we do. In particular, he said September was the best month ever for forex. I presume that’s speaking of the Reuters dealing system. Interesting.
