Archive - Nov 2009

• Wave of debt payments facing U.S. government (NYT)
• Jamie Dimon seen as good fit for Treasury (NYPost)
• Goldman's response to questions about AIG (NYT)
• Deficits and loose money should lead to higher gold (MarketWatch)
• Gold hits record as dollar slips (Reuters)
• Geithner's crisis sleepwalk is reason he must go (Bloomberg)

• Asian stocks, Aussie gain on economy outlook; gold hits record.
• British Prime Minister Gordon Brown calls for Chinese investment.
• Consumer Spending, Home Sales probably rose as US recovery takes root.
• Crude rises from 1-wk low on speculation demand will increase as global economy recovers.
• Electricity sales remained weak in Q3, raising speculation of sluggishness persisting even after the U.S. economy rebounds.
• Europe’s services and manufacturing industries accelerate at the fastest pace in two years in November.
• For the first time in 7 decades, Treasury bills are paying no interest while stocks rise.

An updated snapshot that highlights how the six primary US equity indices have performed relative to each other since their March lows via a percent change chart in addition to a weekly, daily and hourly technical outlook

The current debate in just about every financial and economic circle surrounds the fate of the dollar. Some argue that a weak dollar is great for US exports and thus investors should not worry about the recent decline. Others contend that a weak dollar will eventually be inflationary and drive up the price of necessities such as oil. Which side are you on?

Peter Boockvar, equity strategist at Miller Tabak. recently appeared on Tech Ticker claiming "it's dangerous to short this market".

And somehow declaring that a bankrupt state is, gasp, bankrupt is expected to be surprising? At least that is the read of Bloomberg's piece highlighting that the idiots over at Moody's may cut New York's Aa3 rating. What next: a $10 trillion deficit financed exclusively with new debt may force an upgrade of America's AAA rating? Quote Moody's: "The next three months will be critical to the state's credit rating. The rating and outlook reflect the state's current-year projected gap of approximately $3 billion and the deteriorating liquidity in the state's General Fund, and also reflects our expectation that legislature will enact solutions to the budget gap and that revenue collections based on bonus payouts will exceed the state's conservative projections. If there is no action taken by the state to close the gap, or if action is taken but is largely-one-time in nature (therefore increasing the structural imbalance in the outyears), and revenue collections in January are close to or below state projections, the state's situation at that time would likely not be consistent with a Aa3 rating and stable outlook." Which is why NY State comptroller's earlier released report "New York State’s Cash Flow Crunch" will likely do little to improve Moody's skepticism that New York can escape the fiscal abyss so well shown by Arnold to be inescapable. "[B]borrowing to address the State’s deficit would be irresponsible, incurring additional costs and adding to the State’s already high debt burden. As more time goes by without meaningful effort to address the State’s budget problem, the cost of inaction will grow and the consequences will be significantly more severe." So sooner or later New York will also likely end up bankrupt, but at least Goldman et al. have massive NOL carryforwards that will prevent them from paying any state taxes for a considerable amount of time. That and one-way private jet tickets to any non-extradition venue of their choosing.

Early spot gold action indicates something is afoot in the gold market. Hitting an absolute record of $1,164 mere minutes ago, the momentum chasing algo funds are now in the picture, set to do to gold what they have been doing to the S&P futures and the SPY day after day for months now: if little volume will cause a move, look for the momentum chasers to crawl out of the woodwork. Yet the key factor determining today's gold price: Comex gold option expiration later today. Over the past several weeks, speculators have accumulated a 3 million ounce option position with a $1,200 strike. With gold flying on the tiniest gust of speculative mania, the possibility that we may see a 1,200 handle on gold seems less and less improbable.

In this holiday shortened week, there won't be much to gleam from market action.

A reader submits the following disclosure released by Ocean Reef Club, a country club, which very much unlike America's 35 million food-stamp recipients, has roughly a $35 million net worth cutoff for members, who enjoy such amenities as 100 foot yachts, a private airport, and two golf courses. It is precisely in connection with golf that we see these very needy multi-millionaires follow in Wall Street's footsteps and proceed to redistribute wealth away from those who actually work for their money, to those who merely use the dollar as a temporary (or otherwise) replacement for one-ply Cottonelle.

With volume in equities on collision course with singularity, courtesy of HFT's vol lim->0 series, Zero Hedge is launching a new daily segment which will indicate the volume and number of trades per any given issue according to TRACE. As we believe the vast majority of human traders have largely shunned equities, the impact of credit trading will only get larger and larger. And while CDS has yet to get the "TRACE" treatment, the availability of this data in cash bonds is the main reason why we will bring it to public scrutiny. Furthermore, we will commence correlating this data with which desk has the most active axes in any given name, and implicitly determining whose Fixed Income division is making the most money on the bid/ask spreads and on traded cash volumes.

Broad capital spending cuts, and curtailed production have landed machinery companies in the pits but mining equipment makers will likely be among the first to emerge from under the recessionary rubble. The reason is that commodity prices are up substantially from their recent lows, at a time when the world is running out of all those precious natural resources.

In September, foreigners purchased $55.7 billion of domestic securities, offset by $15 billion of foreign purchases by US residents, for a net capital inflow of $40.7 billion. The bulk of foreign purchases was conducted by private investors ($44.8 billion) and the balance of $10.9 billion was by foreign official institutions. Segregated by product, foreigners purchased $44.7 billion in Treasurys ($19 billion official, 25.7 billion private), sold $1.7 billion in MBS/Agencies ($6.5 billion purchased by privates and $8.3 billion sold by banks), sold $2.9 billion in corporate bonds (entirely at the behest of private entities), and purchased $15.7 billion in stocks, once again almost entirely by private entities.

"In light of the SIGTARP report, I withdraw my earlier apology to Goldman. Public commitments to AIG are currently around $182 billion. If you wonder what Goldman CEO Lloyd Blankfein meant when he said: “[Goldman Sachs] participated in things that were clearly wrong and we have reason to regret and we apologize for them,” think of Goldman’s role in AIG’s crisis, Goldman’s bailout, and Goldman’s ongoing heavy taxpayer subsidies. That way, one of you will be genuinely sorry about it." - Janet Tavakoli

The FDIC sold 187 homes in Georgia recently. This was a public auction, but the results will not be released. The FDIC has put a lid on that information. Why?

Radio Zero Returns.  A little falsified data.  A bit of stretched graphic.  Some selective time series start points.  It must be Global Cooling Saturday!

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