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Weak Economic Data Looks Positive for Treasuries, Negative for Risk Assets
From the Buzz & Banter: The pop in stocks is overdone and based on the false premise that QE was here to stay.
Peter Tchir    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO.

For the inside scoop on the bond market, along with a complete fixed income investment plan, take a FREE 14-day trial to Peter Tchir's Fixed Income Report.

Economic data was weak globally.

China missed on PMI.

Japan continues to grow its imports faster than its exports. Who would have thought that a country that is light on natural resources would have to import more when it devalues.

This morning's US data is in line with expectations. YOY CPI comes in at 1.6%. No matter how you calculate CPI (and many believe it understates real inflation) it doesn't matter because the Fed only looks at PCE. But I think the consumer faces a much higher rate of inflation than the Fed sees, and it seems likely to get worse with rising commodity prices. Michael Ashton pointed out that the rise in natural gas prices might actually reduce inflation because the rent that is used assumes it includes utilities. If utilities go up and rent paid remains the same, the rent used for CPI is de facto lower.

In the meantime, Wal-Mart (NYSE:WMT) came in with a miss and lower guidance and chose to blame smaller government payments to its shoppers rather than the weather.

I dislike all risk assets here. As I mentioned yesterday on the Buzz [subscription required] shortly after the FOMC, the post-Yellen testimony pop in stocks is overdone, and based on a false premise -- that QE was here to stay. QE is not the Fed's tool of choice anymore, and many are wondering if it isn't distorting markets more than the benefit it provides to the economy.

Look for that to trigger selling.

In this first stage (which we saw yesterday, and so far today) we will get a "taper" trade where Treasuries are also sold along with risk assets. At some point that will become a buying opportunity in Treasuries as we shift to a "risk off" trade from a "taper" trade.

Editor's Note: For more from Peter Tchir, check out TF Market Advisors.

Twitter: @TFMkts
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No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Weak Economic Data Looks Positive for Treasuries, Negative for Risk Assets
From the Buzz & Banter: The pop in stocks is overdone and based on the false premise that QE was here to stay.
Peter Tchir    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO.

For the inside scoop on the bond market, along with a complete fixed income investment plan, take a FREE 14-day trial to Peter Tchir's Fixed Income Report.

Economic data was weak globally.

China missed on PMI.

Japan continues to grow its imports faster than its exports. Who would have thought that a country that is light on natural resources would have to import more when it devalues.

This morning's US data is in line with expectations. YOY CPI comes in at 1.6%. No matter how you calculate CPI (and many believe it understates real inflation) it doesn't matter because the Fed only looks at PCE. But I think the consumer faces a much higher rate of inflation than the Fed sees, and it seems likely to get worse with rising commodity prices. Michael Ashton pointed out that the rise in natural gas prices might actually reduce inflation because the rent that is used assumes it includes utilities. If utilities go up and rent paid remains the same, the rent used for CPI is de facto lower.

In the meantime, Wal-Mart (NYSE:WMT) came in with a miss and lower guidance and chose to blame smaller government payments to its shoppers rather than the weather.

I dislike all risk assets here. As I mentioned yesterday on the Buzz [subscription required] shortly after the FOMC, the post-Yellen testimony pop in stocks is overdone, and based on a false premise -- that QE was here to stay. QE is not the Fed's tool of choice anymore, and many are wondering if it isn't distorting markets more than the benefit it provides to the economy.

Look for that to trigger selling.

In this first stage (which we saw yesterday, and so far today) we will get a "taper" trade where Treasuries are also sold along with risk assets. At some point that will become a buying opportunity in Treasuries as we shift to a "risk off" trade from a "taper" trade.

Editor's Note: For more from Peter Tchir, check out TF Market Advisors.

Twitter: @TFMkts
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

More From Peter Tchir
Weak Economic Data Looks Positive for Treasuries, Negative for Risk Assets
From the Buzz & Banter: The pop in stocks is overdone and based on the false premise that QE was here to stay.
Peter Tchir    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO.

For the inside scoop on the bond market, along with a complete fixed income investment plan, take a FREE 14-day trial to Peter Tchir's Fixed Income Report.

Economic data was weak globally.

China missed on PMI.

Japan continues to grow its imports faster than its exports. Who would have thought that a country that is light on natural resources would have to import more when it devalues.

This morning's US data is in line with expectations. YOY CPI comes in at 1.6%. No matter how you calculate CPI (and many believe it understates real inflation) it doesn't matter because the Fed only looks at PCE. But I think the consumer faces a much higher rate of inflation than the Fed sees, and it seems likely to get worse with rising commodity prices. Michael Ashton pointed out that the rise in natural gas prices might actually reduce inflation because the rent that is used assumes it includes utilities. If utilities go up and rent paid remains the same, the rent used for CPI is de facto lower.

In the meantime, Wal-Mart (NYSE:WMT) came in with a miss and lower guidance and chose to blame smaller government payments to its shoppers rather than the weather.

I dislike all risk assets here. As I mentioned yesterday on the Buzz [subscription required] shortly after the FOMC, the post-Yellen testimony pop in stocks is overdone, and based on a false premise -- that QE was here to stay. QE is not the Fed's tool of choice anymore, and many are wondering if it isn't distorting markets more than the benefit it provides to the economy.

Look for that to trigger selling.

In this first stage (which we saw yesterday, and so far today) we will get a "taper" trade where Treasuries are also sold along with risk assets. At some point that will become a buying opportunity in Treasuries as we shift to a "risk off" trade from a "taper" trade.

Editor's Note: For more from Peter Tchir, check out TF Market Advisors.

Twitter: @TFMkts
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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