Friday, September 30, 2011

Gold Remains in Price Channel

From Chart of the Day:
Today's chart provides some long-term perspective in regards to the gold market. As today's chart illustrates, gold has been in an extremely strong bull market since 2001 with the pace of its uptrend increasing over time. Recently, however, the price of an ounce of the shiny metal has dropped significantly after bumping up against resistance (red line) and is now down $300 in a little under six weeks. This sharp pullback has brought gold back down to long-standing support (green line) of what has been a nearly three-year accelerated uptrend.




Monday, September 26, 2011

Market Data: Week Ending September 23, 2011


Market Index 12/31  Close 9/23    Close Week Change Simple YTD %
Dow Industrials Avg 11,577.50 10,697.00 -6.54% -7.61%
S&P 500 1,257.64 1,129.80 -6.77% -10.17%
Fed Funds Rate 0.10% 0.10% -0.02% 0.00%
10 yr T-note Yld 3.29% 1.83% -0.22% -44.38%
5 yr T-note Yld 2.01% 0.87% -0.04% -56.72%
5 yr TIPS - 'Real' Yld -0.06% -0.63% 0.30% -950.00%
Implied 5 yr Inflation % 2.07% 1.50% -0.34% -27.54%
2 yr T-note Yld 0.59% 0.22% 0.05% -62.71%
2-10 Yr Slope 2.70% 1.61% -0.27% -40.37%
90 day T-bill Yld 0.12% 0.01% 0.01% -91.67%
Gold ($/oz) $1,421.40 $1,639.80 -$174.90 15.37%
WTI Oil ($/brl) $91.38 $79.85 -$8.11 -12.62%
VIX "Worry Index" 17.75 41.25 10.27 132.39%





Credit Spreads 12/31  Close 9/23    Close Week Change Simple YTD %
Inv Grade Credit Idx 4.78% 4.69% 0.04% -1.88%
Low Grade Credit Idx 8.32% 8.20% 0.36% -1.44%
Markit CDX Inv Grd Idx 85 146 16.80% 71.76%
Markit CDX Mid Grd Idx 131 225 0.45% 71.76%
Low Grade to 10 yr T-Note Spread 503 637 58 26.64%

Friday, September 23, 2011

Nasdaq Nears Technical Support

From Chart of the Day:
The Nasdaq is currently down 14.5% (2483) since putting in a secondary peak 11 weeks ago. For some perspective on the current state of the stock market, today's chart presents the prevailing trend of the Nasdaq. As today's chart illustrates, the Nasdaq has been and continues to trade within its 17-month trend channel. However, the recent selloff has brought the Nasdaq down near support (green line) which is currently being tested.

Wednesday, September 21, 2011

Bank Credit Ratings Reviewed by Moody's

Bloomberg is reporting today that Moody's has lowered its credit ratings for both Bank of America and Well's Fargo debt.

On BofA: "The government is “more likely now than during the financial crisis to allow a large bank to fail should it become financially troubled, as the risks of contagion become less acute,” Moody’s analysts wrote in a report today on the Charlotte, North Carolina-based lender.
The ratings were cut to Baa1 from A2 for long-term senior debt and to Prime-2 from Prime-1 for short-term debt. The outlook on long-term senior ratings remains negative."

On WF: "Moody’s downgraded the long-term ratings of the holding company’s senior debt to A2 from A1, according to a statement today. The outlook remains negative on the senior long-term ratings, indicating another cut may be ahead for the San Francisco-based lender."

There was also a Citigroup rating review at Moody's released today. Here is Moody's comment: "Moody's Investors Service confirmed the A3 long-term rating of Citigroup and the A1 long-term and Prime-1 short-term ratings of Citibank N.A. At the same time, Moody's downgraded the short-term rating of Citigroup (the holding company) to Prime-2 from Prime-1. The actions conclude a review for possible downgrade announced on June 2, 2011. The outlook on the long-term senior ratings remains negative."

All of these banks have seen their 'too big to fail' status enable them to take on excessive risk and transfer their losses to taxpayers, while also shielding bondholders and preventing shareholders from appropriate losses. The low credit ratings issued by Moody's is, they said, a reflection of "a decrease in the probability that the US government would support the bank, if needed".

Moody's further explains that "Moody's continues to see the probability of support for highly interconnected, systemically important institutions in the United States to be very high, although that probability is lower than it was during the financial crisis. During the crisis, the risk of contagion to the US and global financial system from a major bank failure was viewed as too great to allow such a failure to occur -- a view borne out in the aftermath of the Lehman failure. This led the government to extend an unusual level of support to weakened financial institutions and Moody's to incorporate the expectations of such support in its ratings. Now, having moved beyond the depths of the crisis, Moody's believes there is an increased possibility that the government might allow a large financial institution to fail, taking the view that contagion could be limited."

I personally believe that there is a political story behind this move. Maybe there is now a degree of separation between the interconnected banks that would retard a spread of a crisis within the banking system. The level of concern about this possibility is still so high globally that, IMHO, it seems silly to place confidence in the existence of any new protection from a bank/credit crisis.

Saturday, September 17, 2011

Market Data: Week Ending September 16, 2011


Market Index 12/31  Close 9/16    Close Week Change Simple YTD %
Dow Industrials Avg 11,577.50 11,446.00 4.13% -1.14%
S&P 500 1,257.64 1,211.80 4.99% -3.64%
Fed Funds Rate 0.10% 0.12% 0.00% 20.00%
10 yr T-note Yld 3.29% 2.05% 0.13% -37.69%
5 yr T-note Yld 2.01% 0.91% 0.11% -54.73%
5 yr TIPS - 'Real' Yld -0.06% -0.93% 0.00% -1450.00%
Implied 5 yr Inflation % 2.07% 1.84% 0.11% -11.11%
2 yr T-note Yld 0.59% 0.17% 0.00% -71.19%
2-10 Yr Slope 2.70% 1.88% 0.13% -30.37%
90 day T-bill Yld 0.12% 0.00% -0.01% -100.00%
Gold ($/oz) $1,421.40 $1,814.70 -$44.80 27.67%
WTI Oil ($/brl) $91.38 $87.96 $0.72 -3.74%
VIX "Worry Index" 17.75 30.98 -7.54 74.54%





Credit Spreads 12/31  Close 9/16    Close Week Change Simple YTD %
Inv Grade Credit Idx 4.78% 4.65% 0.11% -2.72%
Low Grade Credit Idx 8.32% 7.84% 0.02% -5.77%
Markit CDX Inv Grd Idx 85 125 0.00% 47.06%
Markit CDX Mid Grd Idx 131 224 6.16% 70.99%
Low Grade to 10 yr T-Note Spread 503 579 -11 15.11%

Monday, September 12, 2011

Market Data: Week Ending September 9, 2011


Market Index 12/31  Close 9/09    Close Week Change Simple YTD %
Dow Industrials Avg 11,577.50 10,992.10 -2.21% -5.06%
S&P 500 1,257.64 1,154.23 -1.68% -8.22%
Fed Funds Rate 0.10% 0.12% 0.00% 20.00%
10 yr T-note Yld 3.29% 1.92% -0.07% -41.64%
5 yr T-note Yld 2.01% 0.80% -0.06% -60.20%
5 yr TIPS - 'Real' Yld -0.06% -0.93% 0.02% -1450.00%
Implied 5 yr Inflation % 2.07% 1.73% -0.08% -16.43%
2 yr T-note Yld 0.59% 0.17% -0.03% -71.19%
2-10 Yr Slope 2.70% 1.75% -0.04% -35.19%
90 day T-bill Yld 0.12% 0.01% -0.01% -91.67%
Gold ($/oz) $1,421.40 $1,859.50 -$23.90 30.82%
WTI Oil ($/brl) $91.38 $87.24 $1.46 -4.53%
VIX "Worry Index" 17.75 38.52 4.6 117.01%





Credit Spreads 12/31  Close 9/09    Close Week Change Simple YTD %
Inv Grade Credit Idx 4.78% 4.54% 0.00% -5.02%
Low Grade Credit Idx 8.32% 7.82% 0.13% -6.01%
Markit CDX Inv Grd Idx 85 125 6.84% 47.06%
Markit CDX Mid Grd Idx 131 211 1.93% 61.07%
Low Grade to 10 yr T-Note Spread 503 590 20 17.30%

Monday, September 5, 2011

Market Data & Graphs: Week Ending September 2, 2011


Market Index 12/31  Close 9/02    Close Week Change Simple YTD %
Dow Industrials Avg 11,577.50 11,240.30 -0.39% -2.91%
S&P 500 1,257.64 1,173.97 -0.24% -6.65%
Fed Funds Rate 0.10% 0.12% 0.00% 20.00%
10 yr T-note Yld 3.29% 1.99% -0.20% -39.51%
5 yr T-note Yld 2.01% 0.86% -0.08% -57.21%
5 yr TIPS - 'Real' Yld -0.06% -0.95% -0.14% -1483.33%
Implied 5 yr Inflation % 2.07% 1.81% 0.06% -12.56%
2 yr T-note Yld 0.59% 0.20% 0.01% -66.10%
2-10 Yr Slope 2.70% 1.79% -0.21% -33.70%
90 day T-bill Yld 0.12% 0.02% 0.03% -83.33%
Gold ($/oz) $1,421.40 $1,883.40 $86.10 32.50%
WTI Oil ($/brl) $91.38 $85.78 $0.41 -6.13%
VIX "Worry Index" 17.75 33.92 -1.67 91.10%





Credit Spreads 12/31  Close 9/02    Close Week Change Simple YTD %
Inv Grade Credit Idx 4.78% 4.54% -0.14% -5.02%
Low Grade Credit Idx 8.32% 7.69% -0.38% -7.57%
Markit CDX Inv Grd Idx 85 117 -7.14% 37.65%
Markit CDX Mid Grd Idx 131 207 0.00% 58.02%
Low Grade to 10 yr T-Note Spread 503 570 -18 13.32%