tag:blogger.com,1999:blog-1708908742323002823.post7670970219052635861..comments2024-02-10T02:18:27.240-08:00Comments on Trader Dan's Market Views: Are we Witnessing a Shift in Investor Sentiment?Trader Danhttp://www.blogger.com/profile/05484363461047659198noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-1708908742323002823.post-79996628213115453622012-08-16T10:10:13.782-07:002012-08-16T10:10:13.782-07:00Dan,
Interesting thoughts as usual. Thank you fo...Dan,<br /><br />Interesting thoughts as usual. Thank you for emphasizing the importance of interest rates.<br /><br />The problem is, the market for US Treasuries essentially sets the stage for the entire bond market, and the market for US debt happens to be the most manipulated market probably in world history--thanks to the Fed. I like thinking about markets because they give me some glimpse of reality. I just don't know how well the bond market reflects reality with the NY Fed's traders in there every day.<br /><br />At any rate, I've been long GDX since Monday on the expectation that the dollar will trend lower until Jackson Hole:<br /><br />http://wp.me/p2CT0a-36Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-10802351866016143102012-08-15T21:05:22.993-07:002012-08-15T21:05:22.993-07:00BTW, speaking of rising yields (not to mention 8:3...BTW, speaking of rising yields (not to mention 8:30am ET tomorrow), recall my <a href="http://www.traderdannorcini.blogspot.com/2012/07/investors-attitude-what-me-worry-why.html#comment-form" rel="nofollow"><b>comments</b></a> almost a month ago on complacency in the markets:<br /><br /><b>"The market is right, VIX included. You will be finding out why in the near future, possibly starting tomorrow."</b><br /><br />Dan's pickup of rising yields in this article today is related to his observation on market complacency a month ago. The markets are slowly beginning to sense doomsday isn't going to arrive any time soon.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-51597228798558685322012-08-15T20:51:56.909-07:002012-08-15T20:51:56.909-07:00People forget that the yield on the 10-year reache...People forget that the yield on the 10-year reached nearly 4% in the spring of 2010, and I hardly recall hearing about the federal government having difficulties servicing its debt at the time. While the debt has also gotten bigger since then, so has the economy.<br /><br />If markets push the yield on the 10-year back up to 4% again any time soon, it will be because they're seeing much stronger economic growth (and likely inflation too). If the economy is growing more rapidly, tax receipts will also go up. We could even see the deficit go down due to stronger growth. High interest rates don't necessarily mean difficulties for the federal government. They might even regard it as a good sign (I sure do).<br /><br />BTW, don't be surprised if the 10-year yield reaches 1.9% tomorrow, or Friday at the latest. Maybe even 2%. If I'm right, it should shoot up, oh, just after 8:30am eastern time.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-71190614032171610122012-08-15T18:23:17.135-07:002012-08-15T18:23:17.135-07:00> the cost of servicing the gargantuan US feder...> the cost of servicing the gargantuan US federal debt<br /><br />Actually, this cost is still not too big... remember, that the FRS repays the interest received on the treasuries and other securities back to the Treasury (as an income to the government! ;)<br /><br />In fact, the ratio of the servicing cost to the government income even did decline since Sept 2011. Here is a nice graph showing servicing cost/income ratio (yellow) vs. federal debt (red) since Sept 2001.<br />Note that the cost/income ratio never get higher than 10% (even in 1980s when 10-year note yield jumped up to 14%):<br /><br />http://spydell.livejournal.com/453904.html<br />http://ic.pics.livejournal.com/spydell/22074195/567535/600.pngbearcalahttps://www.blogger.com/profile/16385314948644926751noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-49581563558470379372012-08-15T18:21:42.443-07:002012-08-15T18:21:42.443-07:00This comment has been removed by the author.bearcalahttps://www.blogger.com/profile/16385314948644926751noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-18861856520007045392012-08-15T17:24:41.414-07:002012-08-15T17:24:41.414-07:00This post was way over my head. I'll take Dan&...This post was way over my head. I'll take Dan's word for it. richieboyhttps://www.blogger.com/profile/11209355809368422543noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-12042127696750171572012-08-15T13:43:01.290-07:002012-08-15T13:43:01.290-07:00what do you think Dan means in his writings above....what do you think Dan means in his writings above...<br />with respect to silver it sounds like a good thing but I was not sure with respect to Gold.<br /><br />thanks for your time.Anonymoushttps://www.blogger.com/profile/11912647974921184210noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-67723779137690883812012-08-15T13:30:13.566-07:002012-08-15T13:30:13.566-07:00@Lisa:
Quickly, depends on the rate of inflation ...@Lisa:<br /><br />Quickly, depends on the rate of inflation (and how you calculate that). The Real Rate of Interest (RRI) is the important thing. The RRI is approximately the nominal interest rate minus the inflation rate. <br /><br />Negative real rates are good for gold, because holding your money in cash is actually losing you value. Better to hold gold then.<br /><br />So a rise in interest rate could mean something, little, or nothing at all for gold, depending on other factors (inflation).jjscraphttps://www.blogger.com/profile/04729884032590722776noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-82936206991031329862012-08-15T12:39:19.094-07:002012-08-15T12:39:19.094-07:00sorry to be a knucklehead but
are rising rates go...sorry to be a knucklehead but<br /><br />are rising rates good for Gold and silver or bad?<br /><br />thanksAnonymoushttps://www.blogger.com/profile/11912647974921184210noreply@blogger.com