To Pause or not to Pause

How bored am I waiting for the next Fed Statement?

This bored:

To Pause or not to
Pause, that is the question:
Whether ’tis nobler in the mind to suffer
The slings and arrows of outrageous commodity prices,
Or to take arms against a sea of rising yield troubles,
And by opposing inflationary trends, end them?
To halt: to stop
tightening; No more; and by a tightening to say we end
The heart-ache and the thousand natural shocks of incremental rate increases
That Treasuries are heir to, ’tis a consummation
Devoutly to be wish’d by equity traders. To halt, to cease;
perchance to dream of the end of the rate cycle: ay, there’s the rub;
For in that sleep of death what dreams may come of runaway inflation
and gold priced over $700 an ounce.
When we have shuffled
off this mortal coil *(and into the private sector),
This must give us pause: there’s the respect of bond ghouls,
That makes calamity of markets domestic and foreign;
For who would bear the whips and scorns of said ghouls verging on madness
The oppressor’s short selling, the proud man’s margin calls,
The pangs of despised Sarbox, the law’s delay,
The insolence of regulators and the spurn of taxes
That patient value investors merit of the unworthy day trader takes,
When he himself might his quietus FOMC make
With a bare bodkin? Who
would fade the bull and buy the bear?
To grunt and sweat under a trader’s life,
But that the dread of something after Spitzer,
The undiscover’d buy side from whose bourn
No broker returns, puzzles the will
And makes us rather bear those deficit ills we have
Than fly to slowing economic growth that we know not of?
Thus conscience does make cowards of us all in the wake of worsening inflation
And thus the native hue of resolution at FOMC meeting
Is sicklied o’er with the pale cast of the steeper yield curve and greater TIPS
And enterprises of great pith and Crude Oil
With this regard their
currents turn awry from the weaker dollar,
And lose the name of action. – Softer rates you now say!
The fair Ophelia! Nymph, in thy orisons and increased demand for
inflation-protected securities,
Be all my sins remember’d.

To be, or not to be (from Hamlet 3/1)

With my deepest apologies to William Shakespeare 

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What's been said:

Discussions found on the web:
  1. Ned commented on May 10

    Good night sweet TIPs and flights of Angells sing thee to thy rest.

    well done Bard of the Blogs!

  2. B commented on May 10

    That’s pretty damn bored. Something’s gotta give. The commodity driven NYSE cannot keep going up without the Naz for very long.

    The semis are a mess. And as a highly sensitive cyclical indicator……I actually do some research that shows we’ve had more negative volume in the tech sector than we had in the 1Q 2005 correction yet the Naz hasn’t corrected. I guess they could mount a rally since theyv’e held the indices but………..I tend to look at it that they are distributing shares to ma and pa investor.

    So the $64 question is does it really matter what the Fed does or is the outcome already taking place? And, if long term inflation is a mess, why hasn’t the long bond responded as I expected? Because Wall Street’s fascination with commodities and/or the faling dollar is going to crater the global economy? Hence…………..a tame long bond? I think those prognosticating about global growth being very high might be mistaken.


  3. Bynocerus commented on May 10

    I too was bored, so I borrowed from the Greatest American Poet:

    How many times must a man raise rates
    Before you call him a man?
    Yes ‘n’ how many points must the Composite lose
    Before he starts lowerin’ again?
    Yes ‘n’ how many bills must the printing press print
    Before M3’s forever banned?
    The answer my friend, is comin’ from Big Ben
    The answer is comin’ from Big Ben

    Looks like the market doesn’t know what to do with this just yet.

  4. Mark commented on May 10

    And our winner of The Big Picture’s “Tony Montana Trader Award for 2006” is! (Drumroll please.)

    B! In a landslide! Your prize will be all commodities selling off by 40% over the next 3 weeks. Congratulations!

    Post your accepatance rant, complete with expletives, below. Congrats again!

  5. Bynocerus commented on May 10

    And to rip off one of my favorite Neil Young songs:

    Once I bought some tech shares
    On a crowded crazy day,
    Up 10 points at dinner
    Another 100 on the way.
    Far above peak earnings
    Hard-earned profits never stay
    Cashing in my winnings before
    The green bars melt away.

    Big Ben’s like a hurricane
    There’s fear in his eye.
    And I’m cashin’ out
    To somewhere safer
    where the profits stay.
    I want to be long but
    Ben’s blowing me away.

  6. royce commented on May 10

    “And, if long term inflation is a mess, why hasn’t the long bond responded as I expected?”

    An interesting question. Assuming that inflation is very high right now out but the government refuses to recognize it, why haven’t private actors- the sophisticated bond folks with money on the line- begun to shout for much higher rates?

  7. B commented on May 10

    Wow, so many artistic types on here. You guys missed your calling. You should have been frustrated high school english teachers. lol.

    Mark, I’ll respond graciously rather than spew my favorite four letter word. I don’t want to sound too “American” but I’m not terribly thrilled with the prize. I’d rather have

    Now, I chose this with some consideration in mind. It was either a S65, an M5 or an STS-V. I did pick the cheapest one. If cost is no consideration, I’ll take the S65.

  8. Bynocerus commented on May 10

    Well, my wife is a frustrated, nearly burnt out elementary school teacher, so I guess that’s close enough. Oddly, the whole reason I kept a job I didn’t exactly like every day was to pay the bills while she fulfilled her true calling. Years later, she can’t wait to retire.

  9. Emmanuel commented on May 10

    Bynocerus, isn’t there “harm” in Ben’s eye?

    Nothing on “Cisco plummeteth,” gents?

  10. David Silb commented on May 10

    (Clearing my Throat.) HemmAhemmm,

    “Well, I don’t care if it rains or freezes,
    Long as I have my plastic Jesus
    Riding on the dashboard of my car
    Through all trials and tribulations,
    We will travel every nation,
    With my plastic Jesus I’ll go far.

    Plastic Jesus, plastic Jesus
    Riding on the dashboard of my car
    Through my trials and tribulations,
    And my travels thru the nations,
    With my plastic Jesus I’ll go far.

    I don’t care if it rains or freezes
    As long as I’ve got my Plastic Jesus
    Glued to the dashboard of my car,
    You can buy Him phosphorescent
    Glows in the dark, He’s Pink and Pleasant,
    Take Him with you when you’re travelling far

    I don’t care if it’s dark or scary
    Long as I have magnetic Mary
    Ridin’ on the dashboard of my car
    I feel I’m protected amply
    I’ve got the whole damn Holy Family
    Riding on the dashboard of my car”

    In times like these ‘Ole Timey Spirituals’ bring me comfort.

  11. AD commented on May 10

    “why haven’t private actors- the sophisticated bond folks with money on the line- begun to shout for much higher rates?”

    Look at the official positions in the TIC data (and some believe a portion of the private positions are really official, but hard to track), foreign CBs are in a sense gaming the market pricing system. The outer realm of the yield curve is a hostage of the “dollar zone” and the monetary policies of CBs. A world flooded with liquidity makes everything expensive (except borrowing!) Read the April rant of Bill Gross if you want the private actor take on rates.

  12. commented on May 10

    Slings and Arrows

    Only a few more minutes until today’s big interest rate announcement. And not a moment to soon. Some folks out there are clearly losing it while waiting around to hear what the Fed says. The Big Picture, for instance, has…

  13. Bynocerus commented on May 10

    One more and I promise I’ll stop. Borrowing from Ezra Pound:

    Sell in May a comin’ soon
    Loudly sing Goddamn!
    Market drop and Feddeth stop
    Our currency a sham
    Sing goddamn!

  14. B commented on May 10

    Bill Gross is never right. Might as well throw him in the same pot as Alan Greenspan. Or Ed Yardeni. Or the majority of the goofs. Wrong Way Gross.

    Gross is not an unbiased player and nor are his musings. He runs a big bond fund and has a bias in his beliefs and wishes.

    The bond market is enormous. And it is not showing alot of fear of long term inflation at this point. Could change but right now the facts is the facts.

  15. vf commented on May 10

    when did Kudlow turn hawkish? listening to him this afternoon seems to be a new tone from him. worried that the commodity spike and dollar meltdown is forecasting inflation is he?
    really seems to be worried about the dollar….

  16. Cherry commented on May 10

    The Fed means less and less since we have a growing need for foreign capital as Bonds yields become more dependent on foreign interest rates rather than the FFR. This confused Alan Greenspan. But it kept US yields low and muted the last recession.

    But now that Japan and Europe are growing faster and some developing nations(aka China) are moving toward less savings and more consumption, we may be at the end of this “artificially” low interest rate and strong dollar which will soar inflation and lead to a weaker times economically(no doomsday here, normal corrections). We aren’t at that point yet, but the peek trough of the “good times” has been reached and the things are starting to take care of themselves(aka rising interest rates and a weakening dollar).

  17. C commented on May 10

    Cherry, what do you mean by “the peek trough of the ‘good times'”? Isn’t a “peak” the opposite of a “trough”?

  18. jcf commented on May 10

    …the peak of the “good times” has been reached, but the far-sighted can now steal a peek of the coming trough. Anytime, Cherry.

  19. john commented on May 10

    I couldn’t help but notice how this latest interest rate rise caused the price of just about everything to stabilize this afternoon.

    And now that inflation is beaten once and for all we probably won’t need any more interest rate raises. Or in the words of that great inflation fighter Benny SittingBS, “I raise interest rates no more forever.”

    Please someone explain to me exactly how 16 quarter point interest rate increases beat inflation in our time.

    You can’t – don’t bother. You can’t because it didn’t. The Federal Reserve ceased being relevant to anything about a quadrillion billion dollars of debt ago. Debt that is owed by a rapidly aging population who will never ever pay it back.

    And that my friends is the real secret associated with the fact that the baby boom is approaching retirement. Eventually they are all going to want to sell their house – all at the same time.

    I feel for the President in 2015 – he/she is in for a real bad time.

  20. trader75 commented on May 10

    Here’s the ultimate… didn’t even have to change the lyrics. “Oily sea” is an especially nice touch.

    Pink Floyd — Sorrow

    The sweet smell of a great sorrow lies over the land
    Plumes of smoke rise and merge into the leaden sky:
    A man lies and dreams of green fields and rivers,
    But awakes to a morning with no reason for waking

    He’s haunted by the memory of a lost paradise
    In his youth or a dream, he can’t be precise
    He’s chained forever to a world that’s departed
    It’s not enough, it’s not enough

    His blood has frozen & curdled with fright
    His knees have trembled & given way in the night
    His hand has weakened at the moment of truth
    His step has faltered

    One world, one soul
    Time pass, the river roll

    And he talks to the river of lost love and dedication
    And silent replies that swirl invitation
    Flow dark and troubled to an oily sea
    A grim intimation of what is to be

    There’s an unceasing wind that blows through this night

    And there’s dust in my eyes, that blinds my sight

    And silence that speaks so much louder than words,
    Of promises broken

  21. Mark commented on May 11

    The gold market was REAL impressed by yesterday’s tough actions. Aftermarket took it up another percent and hit 713 on the spot. No matter, I am long GLD and have been for awhile but am am beginning to get more than a tad bit concerned about the long term picture here folks.

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