Archive - Aug 17, 2009

Call it a pure coincidence, but the second the OMO closed at 11am, someone(s) sold a boatload of dollars. Stocks looking so much prettier since.

Graphs of rolling correlations between a pick of a few instruments.

I will not bore you with a long post; I just want to point out that the VIX setup mentioned recently is working out perfectly. From an intermediate term perspective, it looks like we hit a wall on that move above 1000.

Due to popular demand, we present a chart overlaying the S&P500 and the Fed's Treasury OMO actions (not accounting for agency and MBS purchases).

As part of today's $7 Billion Treasury OMO by the Fed, $5.9 billion of recently auctioned off 5 Years were purchased... And not a moment too soon - the liquidity is muchly needed.

RJ analyst Paul Puryear creates new words to describe his enthusiasm. Objectivity and OED butchering ensues, and even Mark Haynes is confused.

The author of Structure Finance And Collateralized Debt Obligations, and one of the few who actually understood the CDO problem and predicted it, has gone all cash.

CIT has averted bankruptcy by succeeding to get just above the requisite minimum of acceptances for its tender offer. The Offer expired at 12:00 midnight, New York City time, at the end of August 14, 2009. CIT is paying $875 for every $1,000 tendered as part of the offer.

Capital One just released its charge off data: the improvement that some had seen in the June data has promptly been erased and metrics are trending negative again. The net annualized charge-off rate increased to 9.83% in July from 9/73% in June. The 30 days + delinquency rate also went up to 4.83% from 4.77%. However, the worst deterioration was in Auto Finance Metrics, the annualized charge off rate increasing by over a third percent to 4.26% from 3.89%, and the 30 Days + delinquency rate moved north of 9 to 9.22% from 8.89%.

The Empire Manufacturing Index screamed higher to 12.1, much higher than the estimate of 3, yet the simple reason for this was margin pressure increased. As the chart below demonstrates The Prices Paid - Prices Received delta increased yet again, this time hitting 26.60, indicating manufacturers are losing on margin, which will impact the bottom line. And the future does not look much better: Prices Paid is expected to increase to +31.91 and Received to pick up to +5.32, meaning the margin pressure is here to stay.

• Administration backs away from public health insurance plan.
• Asian stocks decline on lower than expected Japanese GDP.
• China sends envoy to Washington to lobby against tire tariffs.
• Housing, Factory slowdowns in US probably eased, hinting at a recovery.
• Japan's economy grew for the first time since early last year; Q2 GDP up 0.9%.

• Pension funds pare stocks, ignoring economic rebound (Bloomberg) - so who actually benefited from this rally?
• U.S. pay czar says he can "claw back" exec compensation (Reuters)
• Citigroup may shift Phibro's Andrew Hall pay to stock from cash (Bloomberg)
• France seeking bank on guaranteed bonuses for G-20 (Bloomberg)
• The Lehman bankruptcy fee awards: and the winner is (WSJ)
• Joliet remembers the 1930's (Joliet Pub Lib, h/t CreditTrader)

Gets it right...

A flush in the SPUs is a victory for the bulls.

UK and Europe highlights for 17th Aug 2009. Lots of things to cover this Monday morning especially the house price report out of Rightmove UK and other noteworthy news and articles. The negativity continues...