Bernanke Stayed Longer Then He Wanted (Updated)

Or far longer than many wanted, deserved, or needed. In an interview, President Obama essentially stated that Bernanke is leaving the Fed when his term is up next year. The headline should read that Bernanke does not want to be at the helm when the assured volatility to economy comes to pass.



(Update)

With the above in mind, I thought the piece written by GS' Jim O'Neill for Bloomberg on June 11 carries some water. The piece reads....

A return to normality eventually implies a benchmark 10-year Treasury yield of 4 percent or more. It won’t happen all at once, but that’s where we’re heading. With yields at roughly 2.2 percent, there’s a long way to go. This transition will mark a recovery of the equity culture and the cooling of investors’ protracted love affair with bonds.




Because of this prospect, markets are sensitive to the merest whiff that Fed Chairman Ben S. Bernanke might be forced by colleagues on the Federal Open Market Committee to reduce the scale of quantitative easing. This nervousness has affected asset prices across the maturity spectrum, not just at the short end of the money market as you might expect.

Do you think Bernanke is trying to be opportunistic? 

Dividends Still in Recessionary Territory

This is from Political Calculations....

....the number of U.S. companies acting to reduce their dividends has gone back to being a pretty solid indicator of general economic conditions in the U.S. We define "recessionary conditions" as being present whenever there are more than 10 public U.S. companies announcing reductions in their dividend payments to shareholders in a month.


 The rest can be read here.

If you do a quick search of this blog, you will find that I track a longer-dated data series that shows that same dynamics as in the above chart. I have not updated it publicly in a month or so now, but lets just say it is showing the same 'elevated' trend. 

How You Can Change Your Decision Making

Barry Ritholtz always finds the great pieces...... a thought piece by Michael Mauboussin. Dovetails nicely with my post on making more accurate predictions.

1. Raise your awareness: Incomplete information and lots of uncertainty leads to poor outcomes
2. Put yourself in the shoes of others: Consider the point of view or experience of other people
3. Recognise the role of skill and luck: Sorting skill from luck is essential for evaluating outcomes
4. Get feedback: Maintaining a decision-making journal allows you to audit your decisions
5. Create a checklist: It will alert you to think clearly about what you might advertently overlook
6. Perform a premortem: Assume that the decision has failed; look for reasons why
7. Know what you can’t know: In decisions that involve systems with many interacting parts, causal links are frequently unclear

Source: Think Twice

S&P 500 Price/Volume Heat Map for 6/17 Trading Day

To my own detriment, having a short exposure in my portfolios, the S&P 500's value climbed by nearly 80 basis points in yesterday's trading. The gains were largely across the boards, except for telecom, with the financial and energy sectors leading the gains.

Looking at the price/volume heat map, the strength in financials and energy was confirmed by the price/volume movement in yesterday's trading. Healthcare, gaining about 20 basis points, was stronger on price/volume basis than was reflected in just the price move, albeit pulled down by some larger negative changes. Ditto for industrials, as the sector also showed bifurcated changes in the sector components despite the overall price gain.

6/17 Trading Day Edition of High Volume High

a few names here for Monday's trading day...........

6/17 Trading Dau Edition of Volume Off the High

Just a handful of names here including Terex, who on commented on earlier and the implications there of for the construction industry/contraction in lumber prices.

All that Glitters- Timing Models Turning Less Bullish But....

Just  a quick update here. The timing models I employ are turning less bullish. That said, the culprit behind the change is largely due to time, as the primary inputs have largely remained unchanged from the prior week. Additionally, the models remain in a 'buy-zone', but less so versus previous weeks. Does this mean I am changing my stance on gold/precious metal stocks? No, I am not. But I would also be more cautious considering Bernanke and the rest of alchemists at the Fed at set to talk later this seek.

In any event, here are latest timing model runs. Just one note, M2 continues to follow seasonal trends.

6- month model, -1.4


1-year model, -2


2-year Model, -2.4