Stress chart: Fred St. Louis FRB has not raisen

[bimetalaupt]

Now Frank.. How does this agree with our lack of passing the Debt increase Bill??

Well Greek bonds are the worst of any Sovereign bonds in the world.. Germany is set at giving Greek bonds a hair cut.. Sounds like Axel Weber will have the last word...

Thoughts on the bonds.. Buy USA T-Bonds.. Yield are the same as last year June 2010.. Germany and USA GDP are still growing.. But Germany is wasting money on Greece and the USA is not..Well bonds yield are falling again and their is a shortage of t-Bond 30 years for retirement plans for the 30 year old + age group that do not buy stocks as 100% retirement plan to the 60/40% or 50/50% plan .. there will be Black Swan events for the next 30 years.

May the Force of the Bell Bar be with you!!( 80% bonds 20 very high risk)

Just a thought,
Bi Metal Au Pt

Attachments:

[bimetalaupt]

NationalEconomicTrends
January 2010
Appendix
The St. Louis Fed’s Financial Stress Index (STLFSI) is constructed using principal components analysis, which is
similar to the construction of the Kansas City Fed’s FSI (KCFSI). Briefly, principal components analysis is a statistical
method of extracting factors responsible for the comovement of a group of variables. We assume that financial stress is
the primary factor influencing this comovement, and by extracting this factor (the first principal component) we are able
to create an index with a useful economic interpretation. We construct the STLFSI using 18 weekly data series over the
sample period December 31, 1993, to December 11, 2009. The series are listed below.
Interest Rates:
• Effective federal funds rate
• 2-year Treasury
• 10-year Treasury
• 30-year Treasury
• Baa-rated corporate
• Merrill Lynch High-Yield Corporate Master II Index
• Merrill Lynch Asset-Backed Master BBB-rated
Yield Spreads:
• Yield curve: 10-year Treasury minus 3-month Treasury
• Corporate Baa-rated bond minus 10-year Treasury
• Merrill Lynch High-Yield Corporate Master II Index minus 10-year Treasury
• 3-month London Interbank Offering Rate–Overnight Index Swap (LIBOR-OIS) spread
• 3-month Treasury-Eurodollar (TED) spread
• 3-month commercial paper minus 3-month Treasury bill
Other Indicators:
• J.P. Morgan Emerging Markets Bond Index Plus
• Chicago Board Options Exchange Market Volatility Index (VIX)
• Merrill Lynch Bond Market Volatility Index (1-month)
• 10-year nominal Treasury yield minus 10-year Treasury Inflation Protected Security yield (breakeven inflation rate)
• Vanguard Financials Exchange-Traded Fund (equities);
accessed on Yahoo! Finance at finance.yahoo.com/q?s=vfh&.yficrumb=CgCsdHP9jeG
Each of these variables captures some aspect of financial stress. Accordingly, as the level of financial stress in the
economy changes, the above data series are likely to move together. We assume that financial stress is the most important
factor in explaining the comovement of the 18 variables. Using principal components analysis, we identify this factor
(the first principal component). The following steps are taken to construct the index:
First, each of the data series is de-meaned. The de-meaned series are then divided by their respective sample standard
deviations (SDs). With the variables now expressed in the same units, we use the method of principal components to cal-
culate the coefficients of the variables in the financial stress index (FSI). We then scale these coefficients so that the SD
of the index is 1. Finally, each data series is multiplied by its respective adjusted coefficient, and the observation of the
FSI for time t is the sum of each series multiplied by its respective adjusted coefficient. Higher values of the FSI indicate
a greater degree of financial stress in the economy.
The adjusted coefficients are listed in the table. Because each variable was standardized, the coefficient of a variable
represents the influence of a 1 SD change in that variable on the FSI. However, it is important to be cautious when inter-
research.stlouisfed.org
NationalEconomicTrends
Federal Reserve Bank of St. Louis
2
preting the sign of a coefficient. For instance, the de-meaned, standardized data series can (and will) take on negative
values, so a negative coefficient does not imply that the variable always contributes to a decline in financial stress. A nega-
tive coefficient multiplied by a negative data value will result in a positive contribution to financial stress. In other words,
although the effective federal funds rate cannot dip below zero, the de-meaned, standardized effective funds rate data series
can take on a negative value when a federal funds rate observation is less than the federal funds rate sample average. Thus,
since the federal funds rate variable has a negative coefficient, federal funds rate data points below the sample average
contribute to an increase in the FSI, while observations greater than the sample average contribute to a decrease in the FSI.
The last row in the table indicates the percentage of the total variation in the 18 variables over the sample period that is
explained by the index.
When the sample changes (i.e., a new week of data is added), the values of the FSI in the original sample can be changed.
This alteration can occur either through a change in the coefficients of the variables in the index or by a change in the
actual values of the variables in the original sample. The overall magnitude of the coefficients, as well as their relative
magnitudes, can change. Because the data are de-meaned and standardized, the value of a variable in the original sample
will change as the sample mean and sample SD of the variable changes.
Adjusted Coefficients (12/31/1993 to 12/11/2009)
Variable
Coefficient
Effective federal funds rate –0.083
2-year Treasury –0.093
10-year Treasury –0.092
30-year Treasury -0.086
BAA-rated corporate
0.035
Merrill Lynch High-Yield Corporate Master II Index 0.108
Merrill Lynch Asset-Backed Master BBB-rated 0.105
Yield curve: 10-year Treasury minus 3-month Treasury 0.060
Corporate credit risk spread 0.125
High-yield credit risk spread –0.116
3-month LIBOR-OIS spread 0.122
TED spread 0.074
Commercial paper spread (3-month) 0.061
J.P. Morgan Emerging Markets Bond Index Plus 0.050
Chicago Board Options Exchange Volatility Index (VIX) 0.110
Merrill Lynch Bond Market Volatility Index (1-month)
0.098
Breakeven inflation rate (10-year)
–0.125
Vanguard Financials Exchange-Traded Fund (equities) –0.008
Percent of total variation explained by the FSI* 44.3
NOTE: FSI, financial stress index; LIBOR-OIS, London Interbank Offering Rate–Overnight
Index Swap; TED, Treasury-Eurodollar.
*This is the percent of the total variation in the 18 variables over the sample period
that is explained by the index. This number is 1 – SSE/SST, where SST is the total sum
(
2
)
2
of squares, ∑ ∑ X Nt , and SSE is the sum of squared errors, ∑ ∑ X Nt − a n FSI t .
N t
N t
XNt is the value of the nth standardized variable in month t, and aN is the set of
coefficients chosen.
research.stlouisfed.org

[jarhead1976]

Ill wager they raise it 2-4 trillion. I do not think the Black Swan will last 30 years. Respects

[bimetalaupt]

Jun 13, 2011 21:20:10 GMT -5 @jarhead1976 said:

Ill wager they raise it 2-4 trillion. I do not think the Black Swan will last 30 years. Respects

Now are you talking about raising the holdings in bonds from 2 T to 4 Trillion ( New York Fed runs the books).. The Norway Sovereign Fund has reduced it holding in Greek bond and are investing for the next 30 years in capital assets in GREEN...Like Wind Turbines!!!

We are talking about the EU going tight money like the Fed did from 2003 to 2008. Love the PIIGS,, Esp Hog spare ribs with Texas Dry Rub!! SEE main Meals for system.. Real Butter Wipped

Just a thought,
Bi

Attachments:

[Aman A.K.A. Ahamburger]

May the Force of the Bell Bar we with you!!( 80% bonds 20 very high risk)

;D I think I am the only guy in Canada that wants intrests rates to go up. Sure I'll buy some 8% 30yr CDN govt bond on the open makret when rates are still going up for .88 on the dollar.


Bruce is talking about Norway putting wind turbines in the middle of the ocean. Not a good place for humans, but a great place for turbines.

Luv the captions on the chart B, basically the banks are sitting on pile of cash wait for interests rates...

[usaone]

80%-20% Bruce?

Only a matter of time before the banks..corporations and the consumer...6% saving rate over the last 4 years....unleash Trillions.

Dow 20K!!

[jarhead1976]

Good Morning bimetalaupt , I was referring to the raising the American debt limit and its effect on t bonds. 'Gross confirmed a report Friday that Pimco has marginally increased its Treasurys allotment—from 4 percent to 5 percent—but still has little interest in US debt and its low yields that are in place despite an ugly national balance sheet.

"Why wouldn't an investor buy Canada with a better balance sheet or Australia with a better balance sheet with interest rates at 1 or 2 or 3 percent higher?" he said. "It simply doesn't make any sense."

Should the debt problem in Greece explode into a full-blown crisis—an International Monetary Fund bailout has prevented a full-scale meltdown so far—Gross predicted that German debt, not that of the US, would be the safe-haven of choice for global investors." Respects.

[usaone]

Jun 14, 2011 9:00:35 GMT -5 @jarhead1976 said:

Good Morning bimetalaupt , I was referring to the raising the American debt limit and its effect on t bonds. 'Gross confirmed a report Friday that Pimco has marginally increased its Treasurys allotment—from 4 percent to 5 percent—but still has little interest in US debt and its low yields that are in place despite an ugly national balance sheet.

"Why wouldn't an investor buy Canada with a better balance sheet or Australia with a better balance sheet with interest rates at 1 or 2 or 3 percent higher?" he said. "It simply doesn't make any sense."

Should the debt problem in Greece explode into a full-blown crisis—an International Monetary Fund bailout has prevented a full-scale meltdown so far—Gross predicted that German debt, not that of the US, would be the safe-haven of choice for global investors." Respects.

Gross has had a bad year. Not sure how good his prediction is.

[bimetalaupt]

Jun 14, 2011 7:56:08 GMT -5 usaone said:

80%-20% Bruce?

Only a matter of time before the banks..corporations and the consumer...6% saving rate over the last 4 years....unleash Trillions.

Dow 20K!!

USA Won,
The 80 bonds with 20% very high risk active /day high frequency or high risk was about cash management of risk.. like 20 puts or calls etc... or High Risk management.. reserves for losses..

I got that from some wild trading system..not my tea.. but there is a low risk for of this also.M3 is growing so we could start seeing more growth with a phase delay of 12 to 24 months with the banking recapitulation programs reducing loan volume...that would increase value of the DJIA..Long term exp as the Shadow banking system like IBM or GE take command of long term CAPITAL!! Bonds anyone .. Like Texas Farm Credit Banking system with an AAA rating.


Bi Metal Au Pt

Attachments:

[bimetalaupt]

What do you mean Sovergn bonds could go Chapter 13 or Chapter11.. this is still Chapter 1 of the Last Greek Tragedy.. How to kill the Goose that layed the "Debt EGG"..

Open of the Play.. The Monti Carlo Debt POWER Play.. At the Crap tables!!!Staring .. reading the for interest!!!! to German hard working . now for the of heart and beware..

Greek yields soar to new high, no sign of consensus on aid

* Portugal, Irish bond yields and CDS also hit new highs

* Weakened demand at Schatz sale, valuations seen stretched

By William James

LONDON, June 15 (Reuters) - Edgy investors ditched lower-rated euro zone government debt on Wednesday, sending Greek bond yields soaring to new highs after officials showed little sign of progress on a new deal to tackle Greece's crisis. Differences of opinion between policymakers on how to involve private holders of Greece's debt in a new bailout package have heightened uncertainty in financial markets, pushing Greek, Irish and Portuguese bond yields to euro-lifetime highs.

"Hopes get dashed more and more that we won't get a waterproof solution by the end of next week," said Commerzbank rate strategist David Schnautz.

"This is placing another big layer of uncertainty over everything and it sounds like you don't want to be that much invested in the periphery at the moment,"

Ten-year Greek bond yields GR10YT=TWEB rose above 18 percent for the first time since the launch of the euro -- a yield around 15 percentage points higher than that on the region's benchmark German Bund.

Equivalent Portuguese and Irish spreads versus Bunds also widened to euro era record levels and credit default swap monitor Markit said the cost of insuring debt from all three bailed-out countries had hit new highs. [ID:nLDE75E0V7]

Greek bank shares fell by 4 percent .FTATBNK and the Thomson Reuters Peripheral Banking Index .TRXFLDPIPUBANK was down 3.23 percent, sharply underperforming the European FTSEurofirst 300 index .FTEU3.

The latest rise in already sky-high peripheral bond yields came after an informal meeting of euro zone finance ministers reached no consensus on how to structure a fresh aid package for Greece.

That pushed the focus onto Friday's meeting between euro zone heavyweights France and Germany as investors continue to search for sign that policymakers are nearing an agreement.

Though market confidence was rattled, expectations remained that a summit of European leaders on June 23-24 would bring an announcement.

"If they do come up with a package we'll see a knee-jerk re-tightening, but I don't think it will be that sizeable and I don't think it will be that long lived, such is the erosion in confidence we've seen," said Lloyds Bank strategist Charles Diebel.

Ultimately a failure to reach a deal may lead to Greece defaulting on its obligations in coming months -- an outcome that would have a more pronounced impact on some the bloc's larger economies which are currently fending off investor concerns over their debt levels.

"The ones that have the most to lose from a default are the ones that aren't actually defaulting ... Spain and Italy would probably suffer proportionally the most," Diebel said.

German Bund futures FGBLc1 rose by as much as 35 ticks to 125.76 in early trading, but a more pronounced rally failed to materialise. The contract was last 24 ticks up at 125.65.

Technical charts showed mixed signals over how much further Bunds had to rise, prompting Commerzbank to recommend a neutral exposure for the day's session.

SCHATZ VALUATIONS STRETCHED

The prolonged flight to quality has pushed Bund futures up by nearly six full points in the last two months, causing investors to bid more cautiously at Germany's two-year Schatz auction.

The bid-cover ratio came in at the lowest this year as analysts said valuations were becoming stretched, especially with the European Central Bank looking set to raise its benchmark interest rate again next month.

"People are not bidding that much as probably more people are expecting yields to rise in the weeks ahead," DZ Bank strategist Glenn Marci said.

Two-year German yields DE2YT=TWEB in the cash market were last at 1.58 percent, down 1 bp on the day. Ten-year yields DE10YT=TWEB were also down 1 bp at 3.008 percent.

[usaone]

The end is near.

Nobody procrastinates like the Europeans.

[usaone]

Jun 14, 2011 16:57:25 GMT -5 bimetalaupt said:

Jun 14, 2011 7:56:08 GMT -5 usaone said:

80%-20% Bruce?

Only a matter of time before the banks..corporations and the consumer...6% saving rate over the last 4 years....unleash Trillions.

Dow 20K!!

USA Won,
The 80 bonds with 20% very high risk active /day high frequency or high risk was about cash management of risk.. like 20 puts or calls etc... or High Risk management.. reserves for losses..

I got that from some wild trading system..not my tea.. but there is a low risk for of this also.M3 is growing so we could start seeing more growth with a phase delay of 12 to 24 months with the banking recapitulation programs reducing loan volume...that would increase value of the DJIA..Long term exp as the Shadow banking system like IBM or GE take command of long term CAPITAL!! Bonds anyone .. Like Texas Farm Credit Banking system with an AAA rating.


Bi Metal Au Pt

I'm 80% 20% with 80% risk on....but I'm 30 years from retirement.

[bimetalaupt]

I'm 80% 20% with 80% risk on....but I'm 30 years from retirement.
USA WON
USDA for Ribs and Bonds. Well if you make 18% or more on your bonds you do not need stocks.or any other at very high risk Crap shooting assets. We laught at the the Professor of Economics from London School of Economics in 1999 said bond return over the next 10 years could excede stocks.. They did..

Just a thought,
Bi Metal Au Pt

. ....

[usaone]

Jun 15, 2011 14:33:16 GMT -5 bimetalaupt said:

I'm 80% 20% with 80% risk on....but I'm 30 years from retirement.
USA WON
USDA for Ribs and Bonds. Well if you make 18% or more on your bonds you do not need stocks.or any other at very high risk Crap shooting assets. We laught at the the Professor of Economics from London School of Economics in 1999 said bond return over the next 10 years could excede stocks.. They did..

Just a thought,
Bi Metal Au Pt

. ....

Do you think the next 10 years will be the same with Bonds?

[bimetalaupt]

Jun 15, 2011 14:43:38 GMT -5 usaone said:

Jun 15, 2011 14:33:16 GMT -5 bimetalaupt said:

I'm 80% 20% with 80% risk on....but I'm 30 years from retirement.
USA WON
USDA for Ribs and Bonds. Well if you make 18% or more on your bonds you do not need stocks.or any other at very high risk Crap shooting assets. We laught at the the Professor of Economics from London School of Economics in 1999 said bond return over the next 10 years could excede stocks.. They did..

Just a thought,
Bi Metal Au Pt

. ....

Do you think the next 10 years will be the same with Bonds?

USAWON,
Short answer.. NO but that is from the fact that bonds pay less then inflation. I also thought the same then but the end of my 30's we were making 15% on Zero's that have now retired. I still like Oil and Gas and other assets that improve with inflation rather then cash but you need enough liquid asset to carry you thought the tough times. 20 % T-Bond will do that as they are also about 18% cash at the loan window of your local bank.

You know Frank, yourself and myself are most likely the only one here that own bonds.. My father-in-law had worked at a large Dallas based Mutual insurance firm during the 1930's as an Actuator. You know how conservative he was. My late wife would cringe a the thought of us borrowing money to drill oil and gas wells when prices were cheap. The Same wells are still pumping and had held down leases for 30 years.. Now we can drill to fill out the water flow on the cash flow. It is all about statistics and study non-parametric events.. aka Black Swans.. One of these events favours Old and Gas. It is like the REIT action of the last two years.. Who else can buy Real Estate if the banks are not lending.. REIT that can sell bonds on it own credit rating. GE bought a REIT about four years ago. ( now that is a call.. lend money to yourself) Just tell your fine wife, " Bi said it is only MONEY:HONEY." I have less stock now then in 1999.. most of it is higher yielding stock like DUK or SE.. Remember, Utilities (IE DJUA) has out performed the DJIA over the same 11 years as BONDS!! It also charted buy and sells with MACD to the tee..When the market is down and VIX up, the odds fever high Beta on the recovery.. Like Russell 2000.. my goal is 25% small caps by Sept 2011 or so..


Well I agree with you on one thing.. I plan to retire in about 30 years or so .. That will make me 97.

Just a thought,
Bi Metal Au Pt

[usaone]

My parents were big into Bonds thats why I have some....nostalgia.
I like to work so I may work until 97 too!

[usaone]

Bruce

My Dad worked at Alexander & Alexander in the 1970's and Marsh in the 1980's and 1990's in Philadelphia.

VP of the Property and Casualty Division...VERY conservative.

[Aman A.K.A. Ahamburger]

Well if you make 18% or more on your bonds you do not need stocks

Come on, even a 8-10% coupon for 30 years will outperform the yield of most stocks.. Even at .98 on the dollar that's not bad.
I know I guy that is almost doubling his money on Greek bonds so if you like risk, who says bonds can't be risky?

Of course if we were drilling and fracking WTO&G we would all be a little more liquid.. ;D

[bimetalaupt]

Jun 16, 2011 0:42:30 GMT -5 Aman A.K.A. Ahamburger said:

Well if you make 18% or more on your bonds you do not need stocks

Come on, even a 8-10% coupon for 30 years will outperform the yield of most stocks.. Even at .98 on the dollar that's not bad.
I know I guy that is almost doubling his money on Greek bonds so if you like risk, who says bonds can't be risky?

Of course if we were drilling and fracking WTO&G we would all be a little more liquid.. ;D

A++
You never know when "Black Swan" events will improve the value of the T-Bonds!!! and decrease the price of stocks..Picture is of the Narwhal.. at Pearl.. Even then she was an old ship and the Japanese Air missed her.. She has credit of dropping two dive Japanese Dive-bombing.. then Six ships.. two with those huge 6 inch 53 Cal at some 10,000 yards.Long term T-Bonds went to 1% with price control and the Federal Reserve buying huge amounts of 30 year bonds to support long end. The new system of Barbells remind me of the Japanese Navy.. Fixed on what worked in the last war.. Sinking Battle ships and missing the greatest Sub base in the world. OK Looks at 80% bonds/ 20% Risk.. ODDS are you will not go under.. Like the average life company of the 1930's high quality bonds first to pay off obligations.. match maturity to payout.. Good Call..

Frank and I have had about a two year interaction on what relationship is best from Bond/stock/Shorts/ other(Art,wine,GOLD ,oil, Pt or derivatives.) I keep getting asked when to rebalance... .. Well.. Before the beer runs out..then you have to drink Texas Red Wine( LaNoir)

Just a thought,
Bi metal Au Pt

Attachments:

[bimetalaupt]

Jun 15, 2011 15:56:30 GMT -5 usaone said:

Bruce

My Dad worked at Alexander & Alexander in the 1970's and Marsh in the 1980's and 1990's in Philadelphia.

VP of the Property and Casualty Division...VERY conservative.

USA WON,
Did your go to Wharton? My mother worked for Mr. Agee (President of AHP).. He Graduated with his MBA in 32 ( I think).. She keep comparing me to him as we both KEEP coming up with UNIQUE Ideas.. I used to drive George W. Nuts with details. My brother also.. It is the MBA thing according to my cousin Bo.

Just a thought,
Bruce

[Aman A.K.A. Ahamburger]

80/20 is a heavy split, I have enjoyed the battle between the Impalers kinda reminds me of a 50/50 split. Like you said 1% on short term t-bill. No thanks, Ill take some , but you start showing me 7-8% on a 30 year hold at .90 less or the dollar. I'm all the way to the banks..

Take it from a guy that has only known black swans, it's about being nimble and putting that liquid where your going to maximize and KEEP that money your making with the and . ;D

That way if you want to through a grand at a cowboy play because it's very high risk, you don't feel bad if it turns into a ... eh Ty?

Oh ya B, I think it is the MBA thing, George B would know..

[usaone]

Jun 16, 2011 1:56:16 GMT -5 bimetalaupt said:

Jun 15, 2011 15:56:30 GMT -5 usaone said:

Bruce

My Dad worked at Alexander & Alexander in the 1970's and Marsh in the 1980's and 1990's in Philadelphia.

VP of the Property and Casualty Division...VERY conservative.

USA WON,
Did your go to Wharton? My mother worked for Mr. Agee (President of AHP).. He Graduated with his MBA in 32 ( I think).. She keep comparing me to him as we both KEEP coming up with UNIQUE Ideas.. I used to drive George W. Nuts with details. My brother also.. It is the MBA thing according to my cousin Bo.

Just a thought,
Bruce

I did not. My Dad would have been very happy if I did though.

[usaone]

Jun 16, 2011 2:10:11 GMT -5 Aman A.K.A. Ahamburger said:

80/20 is a heavy split, I have enjoyed the battle between the Impalers kinda reminds me of a 50/50 split. Like you said 1% on short term t-bill. No thanks, Ill take some , but you start showing me 7-8% on a 30 year hold at .90 less or the dollar. I'm all the way to the banks..

Take it from a guy that has only known black swans, it's about being nimble and putting that liquid where your going to maximize and KEEP that money your making with the and . ;D

That way if you want to through a grand at a cowboy play because it's very high risk, you don't feel bad if it turns into a ... eh Ty?

Oh ya B, I think it is the MBA thing, George B would know..

A I think that is what the Chinese are doing.

[usaone]

Happy Birthday to

International Business Machines....100 today!!


We need a few more companies like them.