Thursday, August 25, 2011

Bernanke's Hole Punch?


Click to enlarge.

This chart shows the spread between the 20 year treasury and the 3 month treasury bill.

What will Bernanke do on Friday? I could be wrong, but put me in the all bark and no bite camp.

When QE2 was announced in November 2010 the spread was widening at a fast pace. Long-term interest rates were rising.

The spread is currently contracting at a fast pace. Long-term interest rates have been falling.

I just don't believe that Bernanke will stick his neck out. The market is doing his job for him. I was one of them (although I chose long-term TIPS).

August 24, 2011

Bernanke Jackson Hole speech could rattle markets

(Reuters) - Whether the Federal Reserve likes it or not, its unprecedented monetary polices over the last few years have conditioned the financial markets to expect a helping hand when the going gets tough.

It remains to be seen how much more hole punching the stock market can take.

Single hole punches are often used to punch tickets, which indicates its credit has been used, and to make confetti when creating scrapbooks and other paper crafts.

I love it when a good pun comes together like that!

In the United States, single hole punches are often used to punch holes through playing cards, rendering them "used." This helps cut down on cheating by eliminating any cards that may have been tainted by players.

And that!

A similar tool, generally known as a holing pincer, is used in animal husbandry. A common application is to attach an ear tag to a livestock animal.

And even that! You know what they say, if one must fight-or-flight the Fed, then at least fight-or-flight early. Based on the performance of the S&P 500, that would have been about 15% ago. Yeah, last month.

I could be wrong of course. It's just an opinion.


Source Data:
St. Louis Fed: Custom Chart

5 comments:

getyourselfconnected said...

Great post!! Bracing for the hurricane this weekend, I am well stocked for SPAM and toilet paper. Thank you financial crisis.

getyourselfconnected said...

this will be on the friday post in a bit:
http://pictureisunrelated.memebase.com/2011/08/25/wtf-photos-videos-the-origins-of-unicorns/

Jazzbumpa said...

Bernanke Jackson Hole speech could rattle markets

And the graph looks like a rattle snake.

Cheer!
JzB

Stagflationary Mark said...

GYSC,

Thank you financial crisis.

It is the gift that keeps on giving!

this will be on the friday post in a bit

I see the symbolism. First the markets got @#$%ed, then the markets enjoyed some love. Hahaha! ;)

Stagflationary Mark said...

Jazzbumpa,

The graph does look like that.

Rorschach Markets!