The New York Times Article regarding the change in accounting rules cannot be found on their website because they block their content.

Here is the essence of the article:

“Giving the market momentum was a change to accounting rules that could make some banks look more profitable on paper (emphasis mine). The Financial Accounting Standards Board voted to ease mark-to-market standards, giving companies more leeway in valuing mortgage-backed securities.”

Conclusion : Just because something looks better “on paper” doesn’t mean that it’s any better. Suspending this rule will, of course, backfire.

Peace

So you thought the overnight fed funds rate was the only rate that the federal reserve has authority over?  Today, the fed announced what is the equivalent of printing dollars.  The Federal Reserve is going to buy US Treasurys.   They increase the amount of dollars in circulation, which dilutes the US dollar.  They then take the diluted dollar and buy US Treasurys.  The dollar sold off hard on this news.  Harder than it has since the year 2000.   US equities rallied.   I wrote recently that if the dollar did not find support, it would add fuel to the equity rally.  The drop in the dollar did just that, added fuel to the recent equity rally.

The Bond was up a massive four points.  There must have been blood all over the the bond pits today.  In my view, this move was scripted.  It shouldn’t have caught anyone off guard.  In fact, if you are reading these pages, you may be long Treasury calls.  The move in Treasurys is just getting started and the calls that I spoke of should expand in value to many many times their cost.  The price of the bond and it’s rate have an inverse relationship.  As the bond trades higher, rates go lower.  So the fed has used another tool in its arsenal to ease monetary policy EVEN MORE.

All of this easing will lead to a massive inflationary cycle, which is why Gold and Silver were so strong today.  The move in the metals could not have been scripted better as they sold off hard early in the day,  stopping many out, only to rise from the basement and zoom to the top floor and close near the highs.

My positions remain, bearish REITs, (RIMM) and Visa (V).  Bullish metals and Treasurys.

No matter how bullish the move becomes in US equities, I will remain bearish on the REITs.  They are special situations for a couple of reasons.  First, some of them are using fraudulent accounting.  Second, FFO is a fallacy.  I will write more on the REITs in a later post, but I am going to own puts in many of these names until they trade below $2.  Why?  Becuase they will trade below $2.  How do I know?  Becuase the math cannot lie.  The mathematics will be forced to face their implications.

Peace

The Ten Year

The Rate on the Ten Year

The US Dollar

Silver

S&P 500 has now pulled back to the Golden Ratio

The reality is that there is always a reason to be bullish and bearish–that’s what makes markets. What we must discern is where the best probabilities lie.
-Todd Harrison

Today, the equity markets staged a less than stellar attempt at displaying some sort of buying interest. Looking at a shorter term 60 minute chart of the S&P Futures, it is easy to see that we rallied in the context of a downtrend. Trends don’t move in straight lines. They ebb and they flow. I’d use today’s high as a stop with a target at about 622.

SP H9 60 Minute

———————————————————————————————————————————

Silver is a bullish market.

The daily chart presents us with a great entry. Stop below Monday’s low. Small risks, big rewards. Stay Tuned. Trade the picture.

Peace

Silver

At The Tinker Factory, we view American Campus Communities (ACC) as one of many candidates that will trade to zero. Yesterday, ACC rallied along with the rest of the market. It rallied right to the resistance level I have my eye on.
For more detailed research on this name, see Stripnomics.

Peace

The Mathematics will be forced to face their implications

In Today’s viewing, I’ll present the second in my series on the Ten Year Bond. I own calls in the Ten Year.

Peace

Trader Art 2/^%