Mercury Rising 鳯女

Politics, life, and other things that matter

Archive for July 29th, 2011

Nouriel lays his marker

Posted by Charles II on July 29, 2011

No link.

* Need to narrow deficit by 5.4% of GDP ($800B)
* Should raise taxes by 2.4%, cut expenditures by 3%
* Spending cuts must include military and entitlements
* Should backload austerity
* Plans on the table are exactly opposite of optimal
* If there is no course change, there will be a double dip recession no later than the end of 2013

I will tell you: the market is behaving very weirdly. While VIX (a measure of volatility) is spiking, VIXY (a fund designed to mirror the VIX) is falling. The following chart (which doesn’t show the full extent of the recent spike in VIX or today’s decline in VIXY) shows the three month trend. This could mean that the fund is simply poorly designed. But a look at on-balance volume looks to me as if people are selling VIXY, i.e., betting on market stabilization and a rise in the market and have been doing so all year, and doing so at such a considerable rate that the fund is unable to compensate for it.

Furthermore, we are going into weekend with no resolution of the crisis and on a day when GDP growth was worse than expected. Also, the European bank crisis is far from settled. One expects a last-hour selloff. It did not happen.

And then there’s the yen, which suddenly strengthened by a full percent. That means dollars (not euros, which also strengthened) are being sold for yen.

Something strange is happening.

Posted in economy | 4 Comments »

Friday Cat Blogging

Posted by MEC on July 29, 2011

Alexander sleeps very cute.

Posted in Alexander the Great, Friday Cat Blogging, Uncategorized | 6 Comments »

%d bloggers like this: