Asset Diversification Theory Fail
Submitted by Tyler Durden on 07/15/2009 - 15:38
For people who have forgotten what asset diversification looks like, do not look at this chart to be reminded. All asset classes over the past three days have ploughed higher, contrary to any possible logical argument. But such is our market.Cash out of bonds into everything else... inverse... rinse... repeat. One wonders just how much excess liquidity is trapped in the market.
Daily Credit Summary: July 15 - VIX Vacillation
Submitted by Tyler Durden on 07/15/2009 - 15:31Spreads were tighter in the US as all the indices improved (with HY outperforming IG even as IG saw its best close-to-close and open-to-close performance in over six weeks). Indices generally outperformed intrinsics with skews mostly narrower as IG's skew decompressed as the index beat intrinsics, HVOL underperformed but narrowed the skew, ExHVOL outperformed pushing the skew wider, XO underperformed but compressed the skew, and HY outperformed but narrowed the skew.
RateLab Shares Analyses With Zero Hedge
Submitted by Tyler Durden on 07/15/2009 - 14:21Harley Bassman of Merrill's RateLab has been generous enough to share some of his most recent analytical work with Zero Hedge and its readers (attached). This is required reading for all who want to catch up with Harley's thoughts, culminating with the piece that Zero Hedge commented on over the weekend.
Hank Paulson's Prepared Testimony Ahead Of Tomorrow's Hearings
Submitted by Tyler Durden on 07/15/2009 - 13:33Hank Paulson: "Although attention has recently focused on brief moments of stress during the events of December 2008, those moments are not foremost in my recollection."
The Fed Sees Increasing Unemployment As A Positive For GDP
Submitted by Tyler Durden on 07/15/2009 - 13:10
The economic mavens in DC have totally lost it. Now an increase in unemployment will allegedly lead to a rebound in GDP??? And just who is supposed to buy this garbage any more?
These Are The People Who Do Not Want The Fed's Veil Lifted
Submitted by Tyler Durden on 07/15/2009 - 12:53The following individuals whose primary goal in life is getting tenure and publishing a textbook, yet believe they have a voice in deciding whether over 300 million American people should know just whose interests the Fed so staunchly protects, have issued an open letter to Congress and The Executive Branch, demanding that no one ever dare tinker or have audit powers over the private institution that is the Federal Reserve. Those who run hedge funds, operate semi-failed companies, work for an Investment Bank, especially taxpayer bailed out ones, or are otherwise conflicted, are highlighted in bold.
This Is A Fair And Efficient Market
Submitted by Tyler Durden on 07/15/2009 - 12:27
In some parallel universe far, far away this makes all the sense in the world. Probably in the same one where stocks are cheap. And if it is not obvious, the chart overlays the SPY and the VIX. The only way the VIX will retrace back to indicate the current broken market levels, is when the S&P hits 1,000... sometime in the next hour.
Robert Rodriguez: "There Is No God Given Right To An Easy Retirement."
Submitted by Tyler Durden on 07/15/2009 - 10:49Bob Rodriguez of First Pacific Advisors provides a very gloomy outlook of what awaits the misguided American middle class.
Today's Signal-To-Noise Reduction From Rosenberg
Submitted by Tyler Durden on 07/15/2009 - 10:33Always helpful to hear Rosie's perspective as he ferrets out the important data from the noise.
Another Confidence Inflection Point
Submitted by Tyler Durden on 07/15/2009 - 10:04
Another confidence peak reached (and breached).
Morning Bond Charts
Submitted by Tyler Durden on 07/15/2009 - 09:55
The flip flop between equity and credit accelerates. Just as the administration managed to lower mortgage rates enough to get a moderate pick up in refi applications, bonds are starting to get out of control.
Guest Post: High Frequency Trading Alert - AIG
Submitted by Tyler Durden on 07/15/2009 - 09:34There has been alot of talk over the past few weeks about high frequency trading. We have argued that the volume these high frequency traders are creating is not beneficial to the market. Lets take a closer look at what a high frequency favorite stock looks like. The poster boy for HFT this week is none other than 80% U.S. government owned, AIG. AIG recently underwent a 1 for 20 reverse split since the “issuer” wanted to make their stock look more attractive to institutional clients. You would have expected volume in this stock to be reduced by 20x. Instead, volume has remained at a consistent pre split level of 75 million shares/day. How could this be? Did something change to attract more institutional buyers? Did the black hole of AIG liabilities somehow close? No, the answer here is that the High Frequency traders found a new stock to play in.
Wells Covertly Offloading Subprime Loans
Submitted by Tyler Durden on 07/15/2009 - 09:26A relatively obscure piece in the Triangle Business Journal, referring to a piece in the National Mortgage News, demonstrates how some of the larger banks are bypassing the PPIP and going direct to willing toxic buyers in a very "under the radar" fashion. In this particular case, Wells Fargo has apparently offloaded $600 million in subprime loans to Arch Bay Capital at 35 cents, or double what other hedge funds had offered. While the price discrepancy alone is worth a follow up, the TBJ had this interesting tidbit to note about the transaction:
No one involved in the recent sale is talking on the record, which may
be a key reason lenders will look to private transactions to unload bad
assets rather than turn to a government-sponsored program.
