Monthly Archives: November 2009

TED Target reached: Increasing short positions.

Posted by K on November 19, 2009
Market Analysis / Comments Off on TED Target reached: Increasing short positions.

Here we go again.
On September 28 I stated the following:

The TED Spread which measures the general risk in the economy has been rising the last couple of weeks. today alone it rose 5.42% which means interbank loans are now riskier.  This is still not significant enough and I would like to see another 33% increase in the TED before I really put a lot of my sidelined money on the short side.

On the 28th TED was at around 0.195  so a 33% move would put the TED at around 0.26 and today TED closed at 0.262 which satisfies my reasoning for going short.

On October 27th TED was in an Ascending Channel and also stated that a higher TED spread would mean that a major market correction is underway as banks are raising loan rates between eachother. Rising rates means there will be some major trouble in at least the financial sector which allocates 15% of the S&P Index.

Here is the latest Chart of the TED showing the channel that has been broken.  (Click To Enlarge)

ted-11192009

Another Blogger has picked up on the TED and here is Daneric’s TED Chart.
Finally keep in mind that the current TED is still far below the average TED which is at around 0.50 (50 basis points).  We’re halfway there and its good to catch onto this risk indicator before CNBC does.

I will add shorts via options and inverse ETF’s very soon but always use my opinions as a viewpoint and not investment advice. Everyone has different risk tolerances.

Happy Trading,  K

 

Share

Tags: , , , , , ,

A few words on the Economy from Christopher Probyn of SSGA

Posted by K on November 02, 2009
General / Comments Off on A few words on the Economy from Christopher Probyn of SSGA

I was fortunate to attend a presentation by Christopher Probyn of SSGA

“The Financial Crisis: Causes, Consequences and the Prospects for Recovery.”

I spent more time listening than writing things down so pardon me for just providing an outline of what he mentioned that interested me.

  • Headwinds to the economy: Weakness Abroad, Deteriorating Commercial Real Estate Markets.
  • V Shaped recoveries usually follow deep recessions, Mr. Probyn is looking for a U shaped recovery to play out.
  • Unemployment will reach at least 10% (It’s close enough now and we shall see Friday if it happens already)
  • Inflation will come way down from the current 1.5% due to the higher unemployment rate.
  • There is a good chance CPI will break below 0% (It already has in Japan and Europe) Deflation Alert!
  • Do need to worry about inflation until capacity utilization rate goes to at least 80% (Currently in the 60’s)

That’s all Folks. I hope you found it interesting to say the least.

-K

Share

Tags: , , , , , , , ,