Bernanke Press Conference/Market

scott

Market all over the place (positive one minute, -80 the next), but interest rates pushing noticeably higher. Fed muppet Steve Leisman of course asking the first question and Fed mouthpiece Jon Hilsenrath asking the second question. Third question comes from the Financial Times reporter whose Fed piece upset markets a couple of days ago...

Edited to add: 10 year really moving, now passing 2.3% at 2.32%.

Edited to add: Woof! Market no likey Bernanke press conference. -160 on the Dow. 10yr @ 2.31 still.

Edited to add: Rate sensitive stocks (telecom, reits, etc etc) leading lower. EM also noticeably lower and looking yet more interesting. Market -180 at one point. 10yr back to 2.32%.

Edited to add: Market firming a bit, but still not happy -150. 10yr 2.325% - will be interesting to see where the 10 year yield goes over the coming days if 10 yr closes at 2.3% or higher.

Edited to add: Market ran up into FOMC one year ago and then lost the run-up in the days after. Happening again? Bernanke refusing to answer any questions about his future plans. (?)

Edited to add: 10 yr 2.35% (dang, quite a move in a day), mkt -190.

Edited to add: 10yr ends at about 2.33%, mkt ends -205.

catch22

Pretty much sucks everywhere from a list of various etf's I checked at 3:30pm.

One may suspect that the Asian markets will have a fun time this evening (our time) when they open.

Perhaps the month of May begins with June 19.

If the trend is nasty with Asia, Europe and U.S. on Thursday; this house will likely head to the cash hills and await the correction to resolve the profit taking that is likely overdue.

All types of any bond fund is down as much as the broad equity sectors. Tis not a good indicator.

The algo trading machines have extra cooling fans placed upon them at this time.

Old_Joe

Well, this is exactly what I was worried about with respect to the Fed. Until we see some certainty from that direction (who's in charge/what will they push for?), I expect very choppy waters. It's just inevitable. Bernanke (in my opinion) prevented a rerun of 1929/30, but there is no way to ease back out without some kind of pain. I'm guessing an initial period of unpredictable turmoil as the world markets adjust, followed by a decent buying opportunity, followed by a long slow crawl upwards. Not at all bad for younger folks with a longer investment horizon.

scott

Uh, 5 year treasury yield +16.63% in one day.

http://finance.yahoo.com/echarts?s=^FVX+Interactive#symbol=^fvx;range=1d;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

Continuing to look for opportunities, although priority to EM given how far many EMs are down.

"Not at all bad for younger folks with a longer investment horizon."

Anyone buying much at this point in time should have at least a pretty decent time horizon and dividends - getting paid to wait - is a plus. Dividend stocks going definitely lower should (I think) be viewed as a buying opportunity (dollar cost averaging.)

Old_Joe

Yep. Slowly does it. "Bring her to 1/2 impulse, Mr. La Forge!"

PRESSmUP

Today's action really pointed to a recent post by Barry Ritholtz, specifically focusing on "taking yourself out of the minute-to-minute, day-to-day time frame and rethinking your investing parameters in terms of years and decades."

http://www.ritholtz.com/blog/2013/06/time-is-on-your-side/

scott

Reply to @scott:

1. Favorite ZH comments section post: "2:00PM - Ben Bernanke, "The economy has picked up enough steam that we can begin to withdraw excess liquidity from the system, which is no longer needed to support the stock market"

2:10PM - Ben Bernanke - "Hey, why is the stock market tanking"?"

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2. As for what I mentioned about the 5 year treasuries going nuts (in negative fashion for those holding them) above, Bill Gross tweeted yesterday: "Gross: All’s quiet on the Eastern Front. #Bernanke must be careful to keep it so. Buy 5 yr Treasuries."

Woof! Hope not many followed that recommended trade.

hank

Bernanke's toast. One theory holds he wanted to get the bad news out on his watch (today) to spare his successor getting blamed. I don't know. Suppose it's possible. Couple guests on CNBC this morning thought the Pres's remarks ill-advised. "Unfortunate" as one termed it. Link to story http://www.cnbc.com/id/100827957

As for bonds .. gotta be the most over-anticipated market move in history.

Charles

Reply to @hank: For sure. What I'm not sure about is correlation with stocks. Given poor return on stocks over last decade, I see recent advance more correction than over extension. But the bears seem convinced ZIRP and bond buyback have fueled equity advance unjustifiably. I for one certainly hope they are wrong. Real answer should start to be known in next few months, if not weeks.

hank

Reply to @Charles: Thanks. I think you've put it very well.

JoeNoEskimo

Whether induced by today's Fed conference or not, would a 10% correction in equities not be a healthy move (longer-term) for the stock market?

The salad days might finally be over for bonds - we knew it couldn't last forever.

"Cash is King" as the Bernanke put expires.

Old_Joe

With respect to our equity funds, today saw a 1.1% decline in our (primarily) US based funds, and a very close 0.98% decline in our world/EM funds. No significant difference in the reaction of the two groups.. it will be interesting to see how long that keeps up.

With respect to our remaining bond fund exposure, 0.25% decline for US stuff, and 0.29% for world/EM. Today, at least, the bonds did better than the equity.

Old_Joe

Reply to @JoeNoEskimo: I agree that a correction wouldn't hurt in the long run. Maybe we'd be getting a little closer to a market that relies on fundamentals rather than drugs.