Archive - Oct 30, 2009

In what would could pass for Cohen & Steers' worst nightmare, Wilbur Ross today said that he anticipates essentially an Armageddon for US commercial real estate. What we fail to see is how this is news... What we fail to see even more is how the hell REITs are still trading where they are? It must be all those non-cash dividends, the staggering debt loads and the exploding cap rates which make them such an attractive proposition. As Ross points out: "All of the components of real estate value are going in the wrong direction simultaneously. Occupancy rates are going down. Rent rates are going down and the capitalization rate -- the return that investors are demanding to buy a property -- are going up." Which begs the question: just because everyone knows the potential fall out associated with CRE, yet no proactive steps are taken to moderate these adverse developments, save a hope that the Fed will inflate debt sufficiently before 2012 when the refi crunch hits in earnest, does this make REITs a strong buy as BAC/ML has been claiming for months on end?

The sense of market urgency can be seen when comparing yesterday's and today's market volume. All of yesterday's SPY volume was surpassed by 1:30pm. Today's key support level is 105.59 which is the September 31 closing price, and which has already been taken out: the next support is 104 (which was tested once already), with 102 next below it.

I guess that the lack of any volume in the market for the last 7 and a half months has finally made an impact on the financial performance of the market operator NYSE Euronext. Read more about it in this article.

"If leadership won’t add such language [reigning in the TBTFs], call your elected official and ask how much they actually receive when they agree to put on the kneepads."

The implied correlation reading between all asset classes has hit a 6 month high at 65.50, a jump which mimics the surge in the VIX. High implied correlation readings are indicative of crash risk expectations.

The declining market volume as computers have taken over day trading, has been no surprise to anyone. What should come as a surprise is that October is the first month in which there is a volume pick up sequentially. With the end of the fiscal year for many market participants, is the time to look for greater fools finally here?

Pent up demand anyone? It may be time for Bernanke to do another POMO... oh wait...oops

This is better than Six Flags, and less bankrupt (for now). For the time being, all is good on the NYSE. Following that closely.

Among Dylan's musings on the sham regulatory overhaul proposal, and the behind the scenes political bickering, is this question "Why is it legal for the US banking system to take infinite risk in a financial gambling parlor in secret and use taxpayer assets." We hope readers can provide the answer because unfortunately nobody else seems to be able to.

The real source of America's angst is a sense that something is terribly wrong.

About 200 people on NYSE update call and rising by the second.

UPDATE: NYSE claims it is now "functionally normal"

With the Fed’s $300 billion gift card to PD’s Treasure Island maxed out, one wonders who will support the vendors chomping at the bit to offload Uncle Timmy’s 3 to 7 year wares. But with the sun setting, the Japanese tourists trickling out, and the kids tired from a hard day of play on the S&P 500 Coaster and the SPY IOI Whack-a-Mole, it would be easy to settle into a semi-euphoric complacency, thinking ahead to a frolic-filled night on Pleasure Island...

BREAKING: All NYSE symbol ranges going down for three minutes.

After several recent IPOs had seen a less than stellar reception by the equity market, banks have decided it is time to pull IPOs entirely and wait for a better window of opportunity. The most recent casualty: energy company AEI. Per the company: "We have decided not to proceed with an initial public offering of our shares at this time due to market conditions."

Ah, the fall. A perfect time to spend weekends looking at the fall foliage, going apple picking... Antique shopping in quaint, little towns... And attending a Philadelphia auction with what may just be a few tokens of Lehman's, um... Fall. It's art collection. Everyone loves a no-reserve sale.