As the 10-year to T-bill yield curve chart makes clear, we are not in Kansas anymore. We are in Wonderland and as you can see, in Wonderland interest rates and their interrelationships are at the center of events.
Last week the bullish case reasserted itself across financial markets, but to argue that policy makers are doing anything better than pumping future distortions into the system is crazy talk along the lines of 'the world is flat' or… ‘the above chart is flat’.
Last week Ben Bernanke clarified for people that yes indeed the Fed will eventually taper its QE bond buying operation while making clear that Zero Interest Rate Policy (ZIRP) will remain as is. I think that the average market participant is starting to settle in and get comfortable with the terms of our 'Taper to Carry'(T2C) plan, which sees the banks benefiting from borrowing short and lending longer. Continue reading "Rates of Interest"
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Perry J. Kaufman is a market strategist known for his knowledge and experience in computer-based trading systems applied to world futures and financial markets. His publication, The New Commodity Trading Systems and Methods (John Wiley & Sons, 1987), has become the technician’s required reference. In 1984, he published the comprehensive Handbook of Futures Markets (Wiley). An earlier book of research papers, Technical Analysis in Commodities (Wiley, 1980), has been translated into Japanese. Perry founded the Journal of Futures Markets (Columbia University and John Wiley & Sons), a vehicle for gathering academic research on market analysis. He is series editor of Wiley’s Trader’s Advantage, and his latest book, Smarter Trading, was released by McGraw-Hill in 1995. Perry specializes in the application of technical and fundamental (statistical) analysis to the development of trading and risk management programs for both commercial and private investors. Much of this work is based on price theories and techniques he has researched and developed since 1971. He combines the ability to integrate computer technology and strategic allocation with traditional investment approaches in order to achieve realistic objectives. Perry is particularly interested in closing the gap between theoretical and actual results, concentrating on the world’s stock index, foreign exchange, interest rates, and energy markets. Perry is director of research for Kaufman, Diamond, and Yeong, a consulting firm serving the financial industry in the United States and Singapore. In addition to providing risk management, education, and training, the firm publishes Kaufman on Market Analysis, a periodic report on the applications and development of trading strategies. In Singapore, the company provides market-related educational services and is developing trading strategies using new technologies (such as neural nets and artificial intelligence) under a grant from the Singapore government.
