It was a mere two weeks ago that we were predicting a collapse in the September auto SAAR, not only with the push-forward effect of Cash for Clunkers expiring, but after Chrysler and GM reported even August sales that were below forecast. Yet based on a speech by Chrysler boss Sergio Marcchione at the Frankfurt Auto Show, even the "conservative" 9.5 million SAAR that we estimated for September, after the 14.1 million number in August, is going to be an optimistic number. The Fiat/Chrysler boss warned that "we are going to see harsh reality in September."
An amusing reminder of just how different opinions can be among (conflicted) finance professionals, was today's disclosure by risk evaluator Audit Integrity, which has put together a list of the twenty companies with a market cap over $1 billion most likely to file for bankruptcy. Among them: none other than Goldman Conviction Buy candidate, Textron Inc.
In a rare example of testicular fortitude, Barney Frank has "banished" Goldman's Michael Pease from communicating with the U.S. House of Representatives Financial Services Committee. According to Reuters, the Goldmanite, and former committee staffer, has been "asked" not to interfere with the Congressional panel for a period of 12 months.
Spreads were tighter in all the major indices today as new 2009/contract tights were seen everywhere with the high beta compression, roll compression, and curve steepening trend continuing - although HY and IG both ended well off their best levels of the day (even as stocks closed at their highs). IG12 moved back above Par and HY12 was below 600bps intraday. The drop in dispersion among single-names seems to signal traders are unwilling to step in to the high beta screamers pre-roll and we feel stringly that the steepening/roll compression has moved index curves in the off-the-runs way rich and way steep compared to intrinsics and offer some pretty cheap options for those who are not buying the recovery in refi risk.
With HR 1207 passage now guaranteed in the House, it is time to focus attention on the Senate. As of last count, there were 25 co-sponsors for Sen. Bernie Sanders' S 604 Bill: The Federal Reserve Sunshine Act of 2009.
The problem with competing views is that the bond market looks out to the medium and long term horizon while stocks today are mostly concerned with the day to day fluctuations.If you were confused , you were not alone. Investors needing to be protected are pushing managers and advisers to invest at all costs if not beware. The fast move up in equities makes you react the same way as when a drop occurs.You behave out of fear. There is no doubt that a bull market of regrets will ensue.
Smells like 1999 all over again, especially with the sectors which have the worst prospects rocketing the hardest. WSJ today reported record trading volumes by retail daytraders in August, proof positive that Gambling Fever has once again gripped the unemployed and the elderly.
In a critical development for the future of the Federal Reserve, Ron Paul has confirmed that today HR 1207 has garnered the elusive one vote to bring it to a total of 290, or a two-thirds congressional majority. At this point passage of the bill is guaranteed, and hopefully some long, long overdue transparency into the Wall Street-pandering machinations that occur every day within the Fed's four walls at the expense of the American middle class and unmitigated destruction of the US Dollar will finally become a fact.
The VIX is now green for the day, even as equities are stuck in a continuing 2009 high breakout channel. It appears dispersion traders are aggressively buying index vol as they sell single name vol ahead of option expiration. Furthermore, the persistent bid for treasuries is there. As the money market guarantee is set to expire in the next few days, is this merely a last minute push by advisors telling their clients to get out of MMs and into the "safety" of any and all other asset classes? And speaking of money market accounts:we are now back to the pre-Lehman levels. All the "money on the sidelines" that moved out of equities as a result of the events since the Lehman collapse is now back in.
The Daily Mail recently made waves with a photo exposing what it called the "ghost fleet of the recession" where hundreds of ships were shown on anchor off the straits of Singapore, doing nothing except rusting: a tribute to the unprecedented collapse in world trade and the huge amount of excess slack in shipping. Yet a further analysis demonstrates that such "islands of disuse" have become prevalent globally, with virtually every part of the world now impacted by the unprecedented drop in seaborn traffic. We present the results.