Managing Owner and CIO, Predictive Analytic Models (PAM)
Robert P. Balan runs Predictive Analytic Models, #1-rated trading unit at Seeking Alpha. PAM trades Swiss HF funds using Federal Reserve, US Treasury, and term (money) market liquidity data flows as basis for trading decisions. He is domiciled in Zurich, Switzerland. Robert Balan 5 decades of ...more


A Tsunami Of Take-Ups In The Fed's O/N Reverse Repo Facility Nullifies QE, Tightens Systemic Liquidity
A tsunami of cash that was headed, and is still heading, for the Federal Reserves' Overnight (O/N) Reserve Repo facility (O/N RRP) to find a non-negative rate place to park. This is Quantitative Tightening at its core.
Further GameStop Momentum Makes Russell Outperform, But Now Look Out For A Major Market Peak
If a GME resolution happens within the next two weeks, it will coincide with the peak in liquidity flows, and the subsequent, seasonal liquidity drought will weaken equities and long bond yields until late March.
2021 Outlook For The Long Bond Yield, Equities And The VIX
Bond yields may rise during the first half of January 2021, equities should rise, and the VIX may decline. There's a recurring seasonal decline in liquidity flows after January 15 which persists until middle of March. Yields and equities may fall.
Verdict Of The OpEx: Consolidation Ends Soon; We Sell Dow, Russell, And Gold If Bond Yields Fall Further
The bond market is the real indicator which we learned to trust in 5 decades. This is the market that's attuned to the real fundamentals. And right now the bond market is telling us a readjustment will be happening soon in the stock markets.
The Equity Market Outlook Until The First Half Of December 2020 Is Not A Pretty Sight, Liquidity-Wise
Unfavorable seasonal liquidity patterns are teaming up with weak Q4 2020 GDP outlook and a new COVID-19 wave, to undercut the current bullish sentiment in the equity markets.
The Burden Of The Bullish-Bearish Meme: Unleash The Total Power Of Compounding And Large Numbers Laws, Instead
Forget about being bullish or bearish in your investments. Trade according to the seasonality of systemic liquidity flows instead, especially during an era when the primary driver of risk asset prices is largess from the Fed/Treasury.


Latest Comments
2021 Outlook For The Long Bond Yield, Equities And The VIX
2 years ago

Thanks a lot for kind sentiments. Bill

The Equity Market Outlook Until The First Half Of December 2020 Is Not A Pretty Sight, Liquidity-Wise
2 years ago

Yes, I was told that Carl. Busy making money, but will write more.

'We Have Lift-Off': Yields Lead The Charge Higher; Load Up On Equities, Exit Gold Longs, And Sell US Dollars
3 years ago

Repo rates go up when bank reserves fall because the reserves are being used as collateral in inter-bank lending. See the chart provided above. The reserves are not being lent out. Having little collateral is just like raising rates, and usually that is what happens with the dearth of collateral.

That depends on the context of what Dimon was saying, Rising rates USUALLY steepen the yield curve, and that helps the loan portfolios of banks, not hurt them. You understand of course that banks borrow short and the lend long, so rising rates improves their Bet Interest Margin income.

#What if treasuries, the collateral of choice in derivatives markets, lose too much value too quickly#

Just what hypothetical case of how much yield rise are you talking about and in what time frame? Of course for your fears to be realized the rise in yields, to be disastrous, have to really very high and very rapid. The 10 yr yield fell from the 8 November top of 3.3 to a low of 1.47 in less than a year, but the stock market went to new highs. One can always invoke hypothetical cases. but how realistic is your scenario? Its hard to argue against hypothetical cases because they have never happened. Give me a concrete situation, instead of a hypothetical question, otherwise we will be debating this issue for some time.

In this article: SPX, BITCOMP, ETH-X, UGAZ
'We Have Lift-Off': Yields Lead The Charge Higher; Load Up On Equities, Exit Gold Longs, And Sell US Dollars
3 years ago

Thanks for the comments Gary. In this case, rising yields are associated with rising bank reserves, so that means funding costs (term market rates, e,g, repo) will still be falling. It is easy and cheap enough to get funding from the term (money) market without resorting to margin calls.

In this article: SPX, BITCOMP, ETH-X, UGAZ
What The Fed Did Do At Its Last Meeting On April 30 - May 1, 2019
4 years ago

Fantastic article, Alan. Thanks for sharing.

PAM Sells The DXY And Buy EUR, AUD; Sells Gasoline And Refiners - Opportunistic Trades
4 years ago

Maybe you start with the primers Adam.

In this article: UGA, UUP
Equity Counter-Trend Rally In Place; Yields Bottoming Out; DXY Resumes The Uptrend
4 years ago

Hey Alan,

Thanks for steering me to TalkMarkets. You were on holiday?s?

In this article: QQQ, GLD, SLV, TLT, UUP, SPX, CRAK, DRIP
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Latest Posts
Impressive Decline In Yields, But Allow For Yield Recovery From Slightly Lower Levels Still; NQ And ES Not Responding Higher Yet, But Will Likely Do It Later In The Day
It looks like we are having a deeper correction, one of joshweir's "guy with the long mullet" types. We should expect a rebound in yield starting sometime within the next 24 hours. We can clearly see that tendency for a yield rebound as depicted by our quick-and-lazy (num decomp) of the TGA model.
The 10Yr Yield Has Bottomed; YM And RTY Should Now Lead Equity Futures Higher
The 10Yr yield has bottomed. The next move higher in yields colors the way the indexes would move from here. If so, we look for 10Yr yield rally back to just below 1.40 handles again.. Yield rise gives YM and RTY a kick-in-the-pants, and this duo should lead the rest of the equity futures higher.
PAM Offloads Equity Longs As The Lagged Effect Of Liquidity Outflows Set-In; 10Yr Yield Also Due To Resume Declines, Which Should Tip Equities Over, Downside
Our short-term outlook of 10Yr yield ratcheting up to 1.33 taking place. Watch the behavior of the Yield at 1.33--it determines behavior of equity index futures, short term. We've bet long equities on assumption that the Yield will ratchet higher, thru 1.33-- equities should follow through higher.
(July 2, 2021): The SKEW Index Does Something Slightly Off-Beat; We Should Pay Attention To It
I explained the mechanics of how PAM uses the first derivative of the SKEW Index as a leading sentiment indicator, when used in conjunction with liquidity flows. Here is the June 16 post which dissected the procedure.
July 1, 2021: Looking For A Short-Term Top, Before Markets Blast-Off Again: 10Yr Yield Looking For A Near- Term Top
The Yield is rising, and coincided with the rise in ALL the index futures -- are we now back to POSITIVE covariance? This is a very interesting, new development. Are we now rotating back into the historical, positive covariance between yields and equities?
(June 22, 2021): The Stock Market Apocalypse Has Been Postponed Until Mid-July
This postpones the Apocalypse that linear (ruler and pen) technical analysts have been proudly broadcasting at TWTR, until yesterday, that is -- when markets regained all that have been lost the previous day (plus a little more). THAT was not part of their narrative of a straight Highway To Hell
(June 11, 2021, Post-Europe Open): Scalping Long Equities First Thing In Europe Trade; We're Now On Lookout For A Top In Equities
How long can Equities and VIX defy the downward lead of the 10Yr Yield? Not for very long IMO. We're now on watch for typical peak behavior in equities, so we make LABD the canary in the coal mine. If/when LABD reacts violently to the downside
Finally, Redemption; We Will Reset Exited Longs Monday, Looking For Another 2 To 3 More Up-Days
That was a hard-fought $1,872,000 loot for the first trades days of the June month. We alternated between anxiety and boredom in the past 3 days, but we got redemption today.

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