tag:blogger.com,1999:blog-8084606426992105990.post2020763024079912400..comments2023-10-29T06:32:19.009-04:00Comments on The Keystone Speculator™: Keystone's Trading Week in Review and Path Ahead for Markets 7/6/13Keystone Speculatorhttp://www.blogger.com/profile/15343512310307344717noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-8084606426992105990.post-47672042044141634442013-07-07T08:24:48.601-04:002013-07-07T08:24:48.601-04:00Things are in a state of flux for the last couple ...Things are in a state of flux for the last couple months. Signals, indicators, asset relationships, all are mixed these days due to the central banker intervention. The CB's have twisted markets into a knot and currencies, commodities, bonds and equities are all sorting the mess out. In February, Dr. Copper failed along with commodities and nine times out of ten markets should sell off. Instead, the BOJ pumped the markets with easy money creating the new all-time highs in the SPX, Dow and other indexes and also creating faux calm in Europe since the easy money pumped the European bond and equity markets.<br /><br />For a long time the relationship was euro up = dollar down = copper, oil, commodities up = equities up = yields up (Treasury prices down). And conversely, euro down = dollar up = copper, oil, commodities down = equities down = yields down (Treasury prices up), deflationary and disinflationary type behavior. With the BOJ intervention, the dollar/yen is now a major player and dollar/yen higher = equities higher and dollar/yen lower = equities lower. This relationship is in flux now as well since it depends if the yen, or the dollar, is the main component causing the movement in the dollar/yen currency pair. For the most part, you can see from last week that the stronger dollar is continuing to apply pressure on commodities with copper, gold and silver slapped hard late week. The commodity/equity relationship has to return in sync, either commodities recover to reinforce higher equity markets forward, or, the 3 or 4 month of commodity weakness finally overtakes the central banker pumping and equity markets reverse.<br /><br />Typically, when money leaves the stock market it goes to notes and bonds so the Treasury prices rise on the demand and yields fall. When money leaves Treasuries, like now, the price drops and yields rise, and stocks rise, which is reflective on an economy recovering. Once the 10-year yield moves above 3 or 4%, however, this will create a lag on equities but we are not there yet.<br /><br />Traders are buying banks based on the 2-10 spread widening but they are likely premature since Keystone uses a 255 number for this spread and the 10-year will need to move above 3% to guarantee the banks juicy profits. So the interest in banks right now may be unwarranted. The short answer is that the relationships are all skewed now and markets are sorting things out. With a different Fed head commenting daily, and the other CB's such as BOJ, BOE and ECB, and China, all stirring the pot as well, it is a mess. Keystone is way behind in charts but perhaps if the storms come back in today there will be more time to catch up and identify the path ahead.Keystone Speculatorhttps://www.blogger.com/profile/15343512310307344717noreply@blogger.comtag:blogger.com,1999:blog-8084606426992105990.post-32365515046930507042013-07-07T04:07:23.522-04:002013-07-07T04:07:23.522-04:00KS,
10-yr treasury is 2.74 on Friday, I thought as...KS,<br />10-yr treasury is 2.74 on Friday, I thought as 10-yr yield moves higher, market will be lower?Anonymousnoreply@blogger.com