Samba & Blackouts

NSUC: Samba and Blackouts from USFA Inc. on Vimeo.

Keep Me In A Daydream

Stevie Wonder - Superstition (Soul Train)

The Fucking Moon, Over.

NEAT-O

This is today's chart of the 30 year. Ben Bernanke is tasting it. Ben Bernanke does not like the taste. The taste is no good. I can't find a chart of the 10 year but it would look very similar. The yield curve (the difference between the 2 year and 10 year) is now at record levels. Bernanke thinks he can keep rates low. The bond market is beginning to disagree.

Suffice it to say that there will be no real recovery until housing bottoms. Rising interest rates will be one of many housing headwinds.

When the bond market speaks, you'd better fucking listen. The bond market is shouting at you.

Tinkering With The Plumbing

Source:
Wall Street Journal
For Fed, Big Test Will Be When to Turn Off the Money Pump
By JON HILSENRATH

"We have a number of tools we can use to absorb [cash in the financial system] and raise interest rates when the time comes," Fed Vice Chairman Donald Kohn said in a speech over the weekend.

One part of the Fed's strategy is that many of its programs were designed to run off naturally as the markets they are meant to assist improve. For example, its holdings of short-term commercial paper have declined to $250 billion from $350 billion in January as the private market has come back to life.

Programs like the Fed's commercial-paper-lending effort were designed to have unattractive terms as markets heal, giving investors an incentive to wean themselves off the central bank.

The central bank also could someday sell some of its longer-term holdings, such as Treasury bonds or mortgage-backed securities. The act would pull cash out of the financial system and push up interest rates in those markets, which could help the Fed temper growth if the economy begins to overheat. It also could lend its holdings of long-term securities to private investors and take cash in return -- something known as a "reverse repo" -- which would pull cash out of the financial system.

It has other approaches for both draining cash from the financial system and pushing up interest rates as needed. It pays banks interest on the cash they keep on reserve at the central bank. The Fed could push up those rates -- now near zero -- when the time is right. That would give banks a disincentive to lend the money in other ways.

You And Us

Citi Never Sleeps