New measures by Chinese authorities to curb bank lending reversed a rally in energy prices early in the week, bringing West Texas Intermediate futures down more than 4% in the second half of the week to below $75 a barrel by Friday. China continued its efforts to slow down its economy and prevent overheating, and told some banks to stop making certain kinds of loans. The Chinese move on Wednesday hit all commodities across the board, from gold to lead, with the prospect of slower economic growth in the country.
Whether this week was THE turning point or A turning point we will not know for a while (though we have our suspicions) but it was the largest week-over-week widening since JUN09 in absolute and relative terms for IG credit. IG has not closed a week above 95bps since 12/4 and HY still has some room to go to revert empirically back to same date levels of risk.
As the attached chart indicates, the primary support trendline is here. The robots that have been pushing the market higher on diminishing volume need to reverse the massive volume surge that has wiped out over 3 week of profits in 2 days (yes, that's why we show those VWAPs over and over). Even more troubling is that the support line and the 100 DMA intersect, and we are right on top of it. Should we drop below current levels on higher volume, the next major resistance is over 80 points below.
All my pre-hybrid sketchy experiences with NYSE have left me with a sour taste. If you were to sit at my desk, you would hear how I’d pay higher ECN fees to EDGX or get worse fills rather than to give any business to NYSE. I refuse to send any orders through them. And it is not like my 50Mln shares a year would really make a huge difference. Call me loco but I just don’t give them my business.
Just in case you needed a good analogy to the Predator recommending an acid-dripping Alien as your next house pet, here comes the one and only Maestro saying Bernanke is doing a swell Job. In the meantime James Inhofe (R.OK) is the latest vote against Bernanke. Most recently updated table below. In the meantime, and much more importantly than what some discredited, incompetent fossil says, Tennessee's Lamar Alexander is a Yes. That bring the "nays" to 14.
This was at 17 last on Tuesday, a 60% rise in one week.
9 months of "who wants to be short over the weekend?" Time to flip that one around. This has now been the fastest correction in the bear market rally. Where are the HiFTers providing the bids and liquidity? But the biggest question: why are treasuries unchanged? The Fed's biggest nightmare is slowly materializing...
Bernanke is one vote closer to retirement. Fox Business reports that Alabama Sentor Jeff Sessions has said that he will not vote to reconfirm Ben Bernanke.
Recently Goldman Sachs has been attempting to downplay the impact of prop trading on its operations, with various executives, among them both Lloyd Blankfein and David Viniar, claiming that proprietary trading accounts for a mere 10% of total revenue. This is likely a major misrepresentation and a substantial underestimation of the true impact of prop trading to the firm if an earlier analysis by third party credit analysis firm CreditSights is correct. According to CS analysts, Goldman's true prop exposure is at least 30% and probably inbetween 30% and 40%. This would imply that the proposed ban will have a truly material impact on Goldman, much more so than Goldman's executives claim.
A recent Senate poll of Bernanke support indicates the following (partial) results: of 34 senators polled, 5 (all democrats) are still undecided, 17 support Bernanke (13 Democrats, 4 Republicans), while 12 support the Pink Slip (7 Republicans, 5 Democrats/Indeps). 41 are needed for Bernanke to take a hike.
Here Comes Today's Fire And Brimstone Speech To Facilitate The Bernanke Vote, Courtesy Of Political Corpse Chris DoddSubmitted by Tyler Durden on 01/22/2010 - 14:36
"I think if you wanted to send the worst signal to the markets right now in the country and send us in a tailspin, it would be to reject this nomination. This is not naming someone to be an assistant secretary to something. This is the most important central banker in the world. Rejecting the president's choice for the Fed chairman would have huge economic implications, and people need to think about that." - Chris Dodd
There is no stopping the debt juggernaut: according to Dow Jones the stop-gap increase to the debt ceiling which pushed it to $12.4 trillion from $12.1 Tr, will last only through March. And even if Democrats pass their much maligned $1.9 trillion hike in the total debt to $14.3 trillion, it would only last through early 2011. There is no politically correct way to describe the shitshow America's economy has become. And as an indication of the panic gripping the political system, the Treasury has asked Primary Dealers to comment on the impact that the end of MBS purchase program will have in March. We can't wait to find out what they have to say.
An interesting letter posted today by a reader on Jesse's Cafe Americain caught our attention. As the reader proposes, on many occasions during the UST period of Q.E. between March and November, the Fed may have well been front-run by one or more "players" casting serious doubt on not only the integrity and propriety of the Q.E. process, but on just how much potential "leakage" may be occurring from the 33 Liberty office on a daily basis. If this occurs in Treasuries, one can be confident that it is also prevalent in equities, MBS and all other asset classes. Is it hightime for the SEC to take a long, hard look at the primary source of market manipulation- the Federal Reserve Board Of New York? If not, can Mary Schapiro please approach the public with a referendum vote on whether or not she should be entitled to continue collecting hundreds of thousands of dollars in taxpayer money for continuing to do nothing.
The BLS today released yet another data point confirming the double-dip is finally here: in December 44 states reported a statistically sginficiant decline in employment. "Over the year, 44 states experienced statistically significant changes in employment, all of which were decreases. The largest statistically significant job losses occurred in California (-579,400), Texas (-276,000), Illinois (-237,300), Florida (-232,400), and Michigan (-207,100). The smallest statistically significant decreases in employ- ment occurred in South Dakota (-10,900), Delaware (-12,100), and Montana (-13,700)."