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Thursday, April 10, 2014

Yesterday the Market Loved the Fed Minutes, but That Was Then This is Now

     It  sure didn't take long. The market seemed to be reading the minutes the Fed released yesterday as meaning that interest rates will not be going up so soon after all-Yellen's statement on March 19 had been read exactly that way. Yesterday the market rallied on the minutes. 

     However, it was clear it wouldn't take all that long for the market to change its mind. 
  
      "Now the bond market is saying: 'We get it. You're not going to raise rates quickly in the future, so over a five-year time period, rates shouldn't be this high," said George Goncalves, head of rate strategy at Nomura Americas. The 10-year yield barely budged after the minutes, trading at 2.69 percent, just slightly lower but in the middle of a range it was in all day."

      "But LaVorgna said the Fed may be too negative, and policy will be dictated by the economy's strength. He expects second-quarter growth of 4.2 percent, up from 2 percent in the first quarter."

    "The Fed has over-engineered monetary policy. The message is getting garbled, and we're one big employment report away, as we've been for a while, from the market totally throwing this minutes out the door and the Fed changing its tune, at least on the margin," he said.

     http://diaryofarepublicanhater.blogspot.com/2014/04/today-market-seemed-to-like-what-fed.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DiaryOfARepublicanHater+%28Diary+of+a+Republican+Hater%29

     One bad report away indeed, In fact today we had a good report on jobless claims-the fewest in 7 years. 

     "Fewer Americans filed applications forunemployment benefits last week than at any time since before the last recession, indicating bigger gains in hiring will soon follow."

     "Jobless claims decreased by 32,000 to 300,000 in the week ended April 5, the least since May 2007, seven months before the worst economic slump in the post-World War II era began, a Labor Department report showed today inWashington. Another report showed rising gasoline prices were hurting consumer sentiment."
     "A drop in firings signal employers are optimistic sales will pick up following a weather-related slowdown at the start of the year, which will pave the way for bigger increases in employment as demand rebounds. More jobs and growing incomes would help lift confidence and provide a spark for consumer spending, which makes up the largest part of the economy."
     http://www.bloomberg.com/news/2014-04-10/jobless-claims-in-u-s-decline-to-lowest-level-since-may-2007.html

      However, the market sold this big time:

       "After a spectacular rally Wednesday, stocks were pummeled Thursday, in a selloff that started in the momentum names—first biotechs and then techs on the Nasdaq. The biggest casualty was the Nasdaq itself, which was down 3.1 percent to 4,054, its biggest one-day wipeout since November, 2011.
The S&P 500 fell 2 percent to 1,833, a key threshold after it broke below its 50-day moving average of 1,843. The Dow lost 1.6 percent to 16,170. 
     "The selloff came after a higher opening and even with a surprisingly good jobless claims number of 300,000, the best weekly number since 2007."
     http://www.bloomberg.com/news/2014-04-10/jobless-claims-in-u-s-decline-to-lowest-level-since-may-2007.html
     So bad day for the market-but, yes, a rather good day for me as those $44.50 May 2 puts in Citi accrued in value. In a position that inititally cost me $1,388-50 puts-I now have $2500. Of course, I want to hold on more. I think C will easily have a $45 hnadle on it soon. Then it will truly be worth the kind of price I want to see. With that I will get out-so help me God. I say this because this is always the part I'm bad at-ringing the register and 'not being a pig' as Jim Cramer would put it. 

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