Archive - Aug 2009

Since the beginning of July, the most prominent feature of the market has been the divergence in volume between financials and "all other" stocks. While overall stock market volume has been flat if not down over the past two months, and a continuation of a long-term downward trend since the March ramp up, the volume in financial stocks has staged an unprecedented pick up.

ZH under assault again. This fight is getting interesting. My thoughts.

I heard an incredible thing yesterday. Apparently, mutual funds are being stolen from by algorithmic traders.

Late in the day "The Narrator," one of our dedicated public relations gurus, spoke for almost an hour with a reporter who called in to talk about high frequency trading, dark pools and topics of similar ilk. I talked with The Narrator for a couple of hours after the encounter. I paraphrase: What, the reporter asked, do we make of the argument that "predatory algos" (a brand of algorithmic trading) cost large mutual funds billions a year by sniffing out "iceberging" (the practice of breaking up of large orders into smaller blocks to avoid swinging the price significantly in response to a large block of demand or supply)? What did we make of the TABB Group's estimate that $20+ billion in profits stem from certain algorithmic trading strategies. Are algorithms evil?

In a word: no.

The Dollar Index continues to trend lower, and it is at real risk of seeing accelerating losses.

Fresh from the FDIC

And, especially for the new purchasers, here is a question and answer guide En Español.

The highly incredulous cost to the FDIC: $3 billion.

Two days ago the market ripped a few hundred points after yapping heads couldn't shut up about how next year's budget deficit was going to be revised down by $260 billion, after a stellar financial system managed to ramp up 100% ever since State Street refused to lend any stocks for shorting... ever... and after the FDIC has somehow managed to maintain the bank failure rate at a stellar +/- 10 banks per week. Well, as is usually the case with CNBC, they jumped the shark early in keeping with the overall propaganda directive. The full report that will be released on August 25 will demonstrate that the budget deficit for the next ten years will be worse... by $2 trillion dollars.

..but get your facts straight. It's going to take more than sloppy recursive citation to "out" Tyler Durden. Radio Zero(th Amendment) is easy to out, however. Just check back here earlier than usual for the URL. Let's call it 6:30 ET?

Listen here: http://cdo.zerohedge.com:8000/listen.pls

Chat up the DJ here: radiozh.

Spreads ended this tempestuous week mixed with breadth generally weak (wideners outpacing tighteners by over two-to-one) and curves flattening more than steepening in single-names. HY outperformed IG as both IG and HY managed gains on the week (Friday-to-Friday close) and even more so from Monday's gap wider openings as the intraday ranges increased as the week progressed.

The SP500 is reaching towards its point 23 high off the March 6 low on the intraday charts. The point 23 dome is usually formed through some sort of stop run like we are seeing right now. We note on the chart below that even the Fibonacci external ratios target 1033 to 1042 for a potential dome high. Yes, there may be some upside overthrow, but on balance we should see little if any trade above the 1030-1050 price band without help from a higher power than our policymakers. This is going to be the place to look to adopt shorting strategies on proven reversal signals such as false auction highs that leave “tails” on the candlesticks. More on proven reversal signals in upcoming reports.

Per conversations with the NYSE, expect disclosure in early September on who, if any, new entrants into the SLP program are. Based on continuing principal PT data, Goldman can be safe in that it will be picking rebates, and being a "voluntary" market market, with unspecificed balance sheet and risk tolerance requirements, for years to come.

All eyes on Jackson Hole today, as the world's Plutocrats assemble to "discuss issues" related to the safety and stability of the global financial system. When in reality, they were high-fiving, partying, enjoying booze, escorts, and fine food.

And people thought the parabolic market from late 2007 on no news would never come back...

The FDIC keeps auctioning off its busted CRE loan portfolio, most of it remnants collected from failed banks which it had to pick up. With the recent additions of Colonial and Guaranty, look for this list to explode. In the meantime, in June, Sheila's agency saw only 45 CRE loans auctioned off, for a total of $234 million at a $163 million purchase price, a 30.4% average discount, which has been declining over the past 5 months in line with the overall market.

Equity Capital Markets - Redefining "sideways" ever since SkyNet took over.

Friday being a slow news day, stories going around today purport to identity one of Zero Hedge's contributors. Ironically, each piece seems to reference another media outlet as a source in an interlocking circle of recursive reference that boggles the mind.

This, by our very rough count, is the fourth widespread rumor floating around purporting to identify a Zero Hedge contributor or staff member. As a matter of policy, Zero Hedge does not comment on the identity of the nearly 40 contributors of staff members that constitute our little family.