Archive - Aug 20, 2009

"We should probably add here that even though the moves by the Fed have provided ample liquidity, they have not stopped the underlying fundamentals from deteriorating — see Corporate Bond Defaults Hit Record on page 19 of the FT. (S&P just reported that 201 companies with $453 billion of debt have defaulted this year, exceeding the entire tally of 126 defaults covering $433bln in ALL of 2008). The 12-month speculative-grade corporate default rate has risen to 8.58%, as of July, from 8.25% in June (the rating agency is forecasting that the default rate will rise to 14.3% by the first quarter of 2010, taking out the prior record of 12.54% set in July 1991)." David Rosenberg

Courtesy of Finviz, the ratio of insider buying to selling transactions is 18 to 131. Total transaction value: Buys: $29.7 million; Sells: $889 million. This compares with last week's buys for $60.1 million and sells for $1.15 billion. $3 Billion in insider sales in three weeks.

Just don't tell that to delinquent loans: now at 9.24% of all loans.

The trend of polls beating expectations continues, while actual results indicate no real improvement. The latest indication of this comes from the Philly Fed current activity diffusion index, which skyrocketed from -7.5% to 4.2% as the market kept on ramping higher, while more employees were let go, and margins declined yet again.

After several consecutive weeks of equity market mimicking and rerisking, the CDS market finally saw a net derisking in the week ended August 14, across virtually sectors, with the biggest action concentrated in the financials arena. Total net notional change was substantially higher than last week's -$14.5 billion, increasing to $66.1 billion, with a marked derisking in financials at $62.6 billion. Other notable derisking spaces were Consumer Services at $27.6 billion (again) and Utilities at $20 billion.

• Jobless claims rise by 15,000 to 576,000 (Bloomberg), even "as the economy stabilizes"
• SEC plays keep-up in high-tech race (WSJ)
• Germany braces for second wave of credit crunch (Telegraph, h/t Jake)
• Andy Xie: New bubble threatens a V-shaped recovery (Caijing, h/t Yaser)
• Jonathan Weil: Insurers' biggest writedowns may be yet to come (Bloomberg)

• Appliance makers counting on "cash for clunkers"-type rebate program to revive sales.
• Asian stock markets were mixed on Thursday. Shanghai's index rebounds 2.1%.
• China's first-half current-account surplus reported down 32%.
• Crude oil futures hit 2-month high as US inventories fell unexpectedly by 8.4M barrels.
• Democrats prepare to go it alone on health care overhaul without GOP support.
• GDP in OECD countries stabilized in Q2, with support from exporters Germany, Japan.
• Obama administration to cut 2009 budget-deficit estimate to $1.58 trillion.
• Obama administration developing plans to wind down clunker rebates program.