The Weekend Wrapup 11.26.11

Belated Happy Thanksgiving monkeys! Here’s what went on while you were drunk and face deep in turkey.

Americas:

• Punching in one of the worst Thanksgiving weeks in history, the DOW fell 4.8%, the NASDAQ 5.1%, while the S&P slipped another 4.7%. Canada’s TSX also dropped to a 2 month low (down over 6% MTD), while Brazil and Mexico are also in the red, falling 3.3% (down 6% MTD) and 4% respectively.

• Gold purchases by Central banks have risen three-fold since 2010 while ETFs have also been ramping up their holdings over the year, peaking the day before Turkey Day. Bullish yes, but considering CB’s like Mexico haven’t even seen their own holdings and with repatriations already starting, should we be looking into the old paper/physical gold arb trade again?

• Q3 profits, savings rates, and income growth are all looking good. Manufacturing seems poised for more growth while the agri sector looks to bounce back as well. Q3 GDP however will be revised lower and housing still sucks. And how could we forget the “supercommittee?”

Europe:

• As expected, general suckiness was prevalent in EU indices with the FTSE down 3.7%, the CAC down 4.7%, and the DAX 5.3% deep in the red. Italy, Spain, and Sweden fared far worse, falling 8.5%, 6.6%, and 5.5% respectively.

• Bright idea of the week goes to the eurocrats for this wonderful gem: “Euro zone states may ditch plans to impose losses on private bondholders should countries need to restructure their debt under a new bailout fund due to launch in mid-2013, four EU officials told Reuters on Friday… …The concern is that forcing the private sector bondholders to take losses if a country restructures its debt is undermining confidence in euro zone sovereign bonds. If those stipulations are removed, most countries in the euro zone argue, market sentiment might improve." Thoughts?

• Bond yields are increasingly inverting as bank rescues and assorted other bailouts are falling apart. Belgian, Portuguese, and Hungarian debt have been downgraded (Hungary to junk), while the rest of the world are dumping bunds for gilts. This will not end well.

Asia:

• Things weren't so different in Asia as the Nikkei fell 3.8%, the Hang Seng 4.3%, the ASX 4.6%, while China and Singapore shed 1.4% and 4% respectively. The Kospi down over 6% MTD.

• Japan sinks into deflation once again and might be next on the S&P’s downgrade list.

• A soft landing for China practically guaranteed according to the IMF. The surprise drop in PMI however has raised a lot of concerns over the future growth for their industry.

That’s it monkeys, here’s my clip of the week:

Love him or hate him, Hugh Hendry is always fun to watch.

Enjoy the rest of the weekend WSO.

 
Best Response
16rl:
Anybody know a broker where I can short bonds ? whether physically or synthetically via ETF's or whatever other product ?? im dead serious.

ps: Hugh Hendry is a beast !

If you mean treasuries then there are several ETFs (e.g. TLT, TBT). Here's a list of bond ETFs: http://etf.stock-encyclopedia.com/category/bond-etfs.html. I think it's somewhat outdated so you'll find tickers that no longer trade. Some of these ETFs have no volume/liquidity either. Also, http://barchart.com/etf/sector.php?page=FINNTX and http://barchart.com/etf/sector.php?page=FINTAX. Obviously you have to use only limit orders on the ultra-thin ones. I have no idea how they're priced so expect shitty fills (even on limit orders).

You can also consider bond futures. If you're generally bearish/bullish on the entire market you can look into interest rate futures: http://barchart.com/commodityfutures/Financials. Not sure how you would structure a short-side trade for corporate's. Would probably have to do so OTC and need to be a financial institution.

 

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