Archive - Sep 2009

A big monthly deficit for the Trust Fund. This was supposed to be a 2037 problem. Not any longer.

The fight against HFT, and intraday speculation just got serious. According to the WSJ, Warren Buffett, together with John Bogle and 25 others, have endorsed a petition that focusing on speculative stock gains "hurts the economy and may require regulation."

"We are at this stage in our investigation in which we are making charging decisions with respect to Bank of America and its executives."

How poetic would it be if Madoff and Ken share a jailcell?

To recap our earlier prognostications:

"Another day in which the market was driven by the ongoing dollar cataclysm, the EUR-JPY carry trade, and some speculation on what gold will do. Also, another day in which stock direction was absolutely not based on fundamentals, and momos gunned every move higher on micro volume and every reversal was meet with a huge volume ramp."

Once again, the Perpetual Motion Machine is working to perfection.
Another round of Treasuries sold off at absurd yields as the GS Prop Desk engineered a "Gap and Crap" with the SPY, sending Grandma, Fidelity, and the Bank of Japan fleeing to the safety of T-Bonds.

A record plunge in consumer credit, and the American middle class has just given the new and improved Obama-endorsed "spend spend spend" recovery and confidence plan the middle finger.

As the dollar picks up steam intraday, HFTs take over market action (it is a low volume day after all) after the two trading in lockstep early in the morning. The complete lack of market logic is somehow completely not surprising.

If fear is gone you would expect primary bond dealers to reduce considerably the current holdings of bonds. However that it is not the case and hoarding in treasuries continue. The latest uptick shows a net long position at over $16 billion. A very rare and unusual behavior from bond dealers. We look for long term treasury prices to go unusually higher.

In an odd intraday development, stocks are now largely ignoring any attempts to gun the market higher via the recent mechanism of choice for market push: the EUR-JPY carry trade. With the Yen repeatedly hitting intraday lows, courtesy of its brand new yet old and familiar carry role redux, the stock market seems poised to take out day's lows.

David Bianco, CFA, has solidifed his status as the anti-Rosenberg with yet another pump piece issued by TARP recipient extraordinaire BofA/Merrill Lynch. The Chief US Equity Strategist and Rosie replacement sees an S&P earnings of approximately $70, or roughly a Div/0 compared to the most recent negative trailing EPS for S&P companies. How Bianco sees earnings growth on limited cost extraction and a persistently declining top line is just slightly beyond our meager calculating skills.

Developing Story per Bloomberg. HFTs promptly moving to provide liquidity in PMC, taking away from the permabid in 1000x beta stocks.

• Yield 1.487% vs. Exp. 1.50%
• Bid To Cover 3.02 vs. Avg. 2.68 (Prev. 2.89)
• Indicrects 54.2% vs. Avg. 47.31% (Prev. 62.67%)
• Allotted at high 54.60% (BBG)
• 1.52 Bid-to-cover on indirects accepted to tendered

With the IMF bailing out every failed European country (click the link for a useful map), it has now set a useful precedent of how to obtain full clarity into the operations of Central Banks of "organization wards." Latvia's most recent near death experience has translated into a requirement by the country to provide the IMF with daily data on virtually every action that the country's central bankers perform. Since the US, absent Bernanke's printing press, would be in far more dire financial shape than even the small Baltic country, could Congressmen pass a vote to shut down the press, and have the IMF bail out Bernanke as well, thus forcing him to provide the same kind of disclosure that every "developing country" is now forced to give to its bankster overlords?

With such criminal masterminds as 62 year old couples from North Caroline daring to promise "extraordinarily high" returns, why on earth would Mary Schapiro have any incentive to look for the petty thieves of trillions in taxpayer money on Wall Street.

Here is why everyone can dump their E-Trade accounts and just get an F/X trading terminal. Just don't pay your monthly fee in Euros.