10 years Yield still in channel(click on chart for larger version)... but...

Final chart of the days.... (This is new Friday event - I will post these on close on Fridays if at work otherwise over the weekend)

Comment:

• Clear sideways channel which needs to be respected for now
• 50 SMA has now turned from down-to-up in cycle terms (see chart)
• 282/85 bps is key, key level.. 270 today
• This is major surprise - QE2 (POMO) is in full mode today and yields continues higher ??  I'm really surprised

Gold

Gold still solidly inside bullish channel - two levels important 1360 ish 23.6% and long-term trend support at 1340. I do not think any of those two wil be violated but US rates going higher clearly a bad sign - plus the fact that Gold is lower POST POMO / and with EURUSD rallying is not good sign for Gold and metals overall.

 

Nice week-end

 

 

Quick medium term S&P update..

The chart shows some issues, but we are far from being confirmed in negative view.

 

The overall strategic view should be:  Long RISK as long as S&P holds above 1190/1180 - two day close below 1180.00 could indicate MAJOR TOP in place, but

we got POMO POMO article from Zerohedge.

 

The best advice: Keep the trading tight-and-flexbile - we have had a few warning  signal this week, but whether POMO helps or not, and if or/not the bail-out of Ireland wil be in place for EU Summit on Teuesday the key event risk.

 

The market itself - technical- is pointing to offset risk but not to go short, yet.

 

Nice week-end

 

 

Risk of - major moves in China - our new Global Leader...

Playing the QE2 card Bernanke et al confirmed that we now need to look at China for ALL future directions. The US has no further tools to use but are at the mercy of the international lenders and capital markets.

The reaction post QE2 must be major disappointment for FOMC and Obama, but the importance now is the "reaction" function of firstly China, then Europe(Euro crisis) and then back to the US.....We know the reaction function of policy makers:  1. It's not what they say but what the do which is important 2. They will always delay any decision to last minute 3. The response is ALWAYS creating more debt and mini-max solutions.

In this lights the REACTION FUNCTION should theoretically be:

1. QE2 ==> China and EMG will hike rates aggressively - it has already started note these comments from Goldman Sach this morning on RISK OFF: Chart on QE2 reaction

KRW: Renewed speculation that concrete capital controls will be announced on Monday (1mnth high 1129.5)
PBOC asking more local banks to hike RRR.
Chatter of Chinese state-entity selling commodity futures in Shanghai (Bloomberg reporting that China sold almost all zinc on offer from state reserves at below-market prices in the latest auctions, although this was out a few days ago)
Onshore Chinese traders and brokers speculating about another interest rate hike tonight.
Lack of concrete resolutions from G20 meeting in Korea

                                                                             
2. Euro-debt story gets back into the headlines

Germany will use their VETO leverage to negosiate even tougher hair-cut rules effectively setting up the division of EUROPE into to a two-tier system by 2013/14. The ones who wants to live by the stability rules, and the 2. division for those who needs time to get their finances in order.....

Expect Ireland to tap EFSF very shortly - the risk being there is contagion spread to other PIIGS - so maybe a longer than expected delay in using EFST but more countries than Ireland tapping EFSF from the start.

3. G-20  Communique or the Ministry of Propaganda - what is farce!

In other new the G-20 communique is a total joke! The old Polit-bureau in Russia would have been proud to issue this statement: It's all BS - big time BS... using words like: comprehensive, commitment, unprecedented coooperation, concrete steps - but... there is not a single modus operandi except for including the ever useless IMF in all things possible. There are now more working groups under G-20 than there are sand in Sahara! G-20 communique - by the Ministry of Propaganda for the Politbureau of G20


Strategy:

Seems yesterday chart-book has played out for now, but remember there is now POMO for a full month - the risk will be if POMO does not help the market then we have a real issue on the downside - watch the US action tonigt if 1190-00 breaks on close, then we have top in place - and more importantly the QE2 was REAL MACRO TREND event....

Nice week-end

Important Chart update... Click on chart for larger version

QE2 did't... so far give the CLEAN markets results one should expect - below is my daily chart packages with comments. I'm no chartist but the next 24 hours could dictate if this market will continue or not higher..

Post FOMC conclusions?

Click on chart for larger version

Click on chart for larger version

Click on chart for larger version

Click on chart for larger version

It was a classic Bernanke trick - delivered slightly less in terms of per month buying (75 vs 100 bln) but extended the period from six to eight month in total 600 bln. USD - actually smaller than the GS market consensus of 1.000 but big enough to "confirm" the game of currency war, inflating of commodities, and support for the stockmarket.

Bernanke then wrote terrible op-ed in Wash Post defending his line of thinking - let me make one prediction: His Wash Post op-ed will be hybris similar to his comments on "no spill-over effect from housing" back in 2007!  (Link to Bernanke Op-ed)

This is very dangerous game - and if anyone believes Fed and the FOMC will be able to take their hands of the printing press in due time to stop the incoming inflation they know zero about history, zero about policy functions!

This is GUARANTEE for high inflation in Q2 2011 - it's also GUARANTEE that their will be major social tension not only in the US but also btw major industrial nations. (notice: how Russia fights Japan over small island, and China fights Japan over another set of islands) - this is the next step towards TARIFFS and imperfect markets but for now we need to accept there is one major buyers of all assets: FED - and that the NOMINAL DEVALUATION(the US consumer is left with impression his asset rises but their purchasing power disappear as it buys less commodities, gold, houses, travels etc) continues ...........we are now in the 8th inning... enjoy it while it last.

Stategic note:

As can be seen from the four major asset classes - my model is now long ALL ASSETS... ALL, the one risk being with QE2 out of the way we could again focus on Europe - the HISTORIC high spreads in Ireland, Portugal and how Europe with weaker US dollar is falling apart - slowly..

Major event risk: Local election in Greece this coming Sunday...

The Greek government has made this Sundays local election an issue of:  pro or con the EU plan - it's very likely PASOK - the ruling party will loose big - and then the Premierminister will can a general election stirring the whole IMF/EU plan back-up again.

 

Also note the package and "terrror threath" in Greece seems related to the extreme left-wing domestically - (hence: the package to Merkel)...... playing a role........something to watch a few links:

 

http://www.guardian.co.uk/business/2010/oct/27/greek-bonds-hit-by-election-jitters

 

http://www.athensnews.gr/category/8    Excellent english newssite on Greece