Monday, July 26, 2010

Good ole TED

I remember back in the salad days of 2008 when you would turn on Bloomberg radio and ever other word out of Tom Keene's mouth was TED spread...I remember the first time I heard it thinking...what a great idea for Senator Kennedy to be pushing a butter substitute on Bloomberg every morning...I remember eating the English muffin Erin was so wonderful to prepare for me every morning thinking about how much money I was loosing those days and wondering how much better my life would be if I just went to Costco and loaded up on buckets of Ted Spread....

OK I digress...The TED spread is little understood (including by yours truly)...but it is basically a measure of trust in the system. Since 2008 nobody seems to even say those words together anymore...Maybe it's because Senator Kennedy died...and Ted just isn't a sexy name anymore?

Well I keep tabs on it and one thing that alerted me to the summer shitstorm was the Ted Spread...during April it got way low...and then it started a rapid trajectory much so that it crossed the 200 day MA decisively in Mid April...that was signal #1...then it kept going higher and in early said by bye to the 50 day MA.
In any case...all the while people were talking about the sovreign debt issues...the TED spread was signaling its own hatred way before Souvlaki was on the minds of Wall Street and the press.

Now we had the next big thing which was the stress tests in Europe...and everyone was worried...all but the Ted mid-June it cam back under the 200 day MA...and of course the Stock Market has been rallying ever since.

A nightly thing for me is to bring up the chart of the TED and you all can do it by going to and typing in $TED.

It is by far one of the best market timing indicators out there.

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