Archive - Oct 1, 2009

Goldman revises Non Farm Payroll expectations from -200,000 to -250,000 one day ahead of the number. Go long here at your peril.

"The S&P 500 future has broken the overlap around 1,037/38 and is now well established below the trendline joining the lows. After attempting to retest the 1.6165 break out of the H&S neckline 2 days ago at 1.6125 and failing, GBPUSD is back down below 1.60. The Nikkei, after a failing to breakout higher out the wedge around the tops and also failing to fill the gap left open in October, is plunging quite abruptly. The Nasdaq future fell short of challenging the overlap with the lows of July 2008 at 1762, and came back to test 1670 this morning. This last level is quite pivotal, and we would use that as a good guidance for further acceleration lower or conversely a hold could mean we reached downside potential. Personally I remain convinced that medium term we are going a lot lower in equities, a break of 1670 would only make my view nearer term than I originally thought." - Nic Lenoir

While no one is drinking around the Cash for Clunkers punch bowl anymore, even the fittest and healthiest of domestic players are slumped, hungover.

Developing story: David Faber reports Comcast would end up owning 51% of NBC Universal. Ironically, this may finally make CNBC somewhat objective. More importantly, over/under on Dennis Kneale contract extension?

The always informative Warren Pollock has put together a very useful clip on former Fed Chairman Paul Volcker (who, as we discussed recently, had some scathing words for not only the existing TBTF infrastructure, but for Goldman Sachs itself). Recommended watching.

You stare down into the solid gold basin in the second floor executive washroom on C Street, chuckling lowly to yourself. The memory of the impertinent Congressman asking the location of the Fed’s gold—your gold—fades. You catch a glimpse of your perfectly coiffed beard and immediately sober, then smile wryly at your reflection.

The shorts are feeding again at the S&P trough, feeling confident. Let them be confident.

Correlation algorithms were working overtime in Q3, when both the S&P and the DJIA returned exactly 14.98% each.

"In reference to behavior, it’s become clear that investors attitude are changing and the new normal is not to invest one’s savings in stocks rather that money is flowing to bonds. Recent data points to exactly this type of behavior and perhaps getting trounced once is enough for a certain legion of investors but not all. As we had seen in 2000 in every drop of stocks, we are slowly loosing participants to join in this exuberant party. Investors who miss out this time are also assured of not feeling any party hangover." Yves Lamoureux

The Fed may be well advised to consider expanding QE, especially in light of today's just issued announcement of another $138 billion in Treasuries. That $7 billion in dry powder isn't going to do much good at this point.

Another chart for idiot day traders who think that having a snapshot of a developing market is sometimes relevant. Indeed, we do forget that every data point is always continuously priced in, and need to be violently reminded of that fact: thank you Efficient Market Hypothesis.

Just because the market believes it can run on government subsidy fumes in perpetuity does not make it necessarily so.

"One of the key lessons from Japan’s lost decade is that investors’ confidence that the authorities are in control of events will ultimately drain away. In a balance sheet recession, one should expect frequent downturns as the authorities balk at additional stimulus. Only then will zombie investors, sucked dry of confidence, squeeze the remaining puss from equity market valuations. Only then will the 20 year boil of equity market over-valuation be properly lanced." - SocGen's Albert Edwards who apparently is unaware that being a realist is unpatriotic

Even we didn't realize HFT was so funny. A very insulted yet douchy Hal9000 may just skip gunning SPY at 9:35 am today.

• Shocker: Euro falls after Trichet says "sharp currency moves have
  an adverse effect" - Bernanke seen buying a carton of Midol Lights (Bloomberg)
• Jobless claims rise more than expected (Bloomberg) as Americans spend more of their soon to run out unemplopyment checks (Bloomberg)
• Weil: Banks have us flying blind on depth of losses (Bloomberg)
• CIT may pit bondholders against each other with debt swap offer (Bloomberg)
• BAE Systems faces corruption charges over weapon sales to Africa and Eastern Europe (NYT)
• IMF just can't hide its optimism (Bloomberg)

• ADP said the U.S. lost 254,000 private-sector jobs in September.
• Asian stock markets were mixed Thursday in cautious trade after mild losses on Wall Street.
• Bank of Japan holds key interest rate unchanged, upgrades economic assessment.
• Baucus health overhaul would spare insurers gov't competition, cost less for others.
• British retail sales unexpectedly flat in August, annual rate of increase moderates.
• Chicago Purchasing Managers' Index unexpectedly fell to 46.1 in September.