Archive - Feb 2010

Just flashing headlines for now:

SCHAPIRO:IN COMING WKS,WILL PROPOSE SHRT SELLING RESTRICTIONS

SCHAPIRO:REPEATS CONSIDERING MORE MEASURES ON MONEY MKT FNDS

SCHAPIRO:REPEATS STAFF TO EXAMINE MERITS OF FLOATING NAV

The dead cat bounce in the most shorted names is taking some of the recent peripheral high fliers tighter, at the expense of increased widening at the "risk-free" core. We expect much more of this risk transfer from the zone of perceived risk to the heart of Europein the weeks/months to come. Some key levels: HY 600, IG 101, SovX 110., Greece 415, Portugal 225, UK 99.50

The January NFP number came in at -20,000, a mere 5k away from Goldman's -25,000 estimate. Consensus was for +15,000. December, as all prior months, saw an expected major downward revision to -150,000 from -85,000. The January Birth/Death adjustment was for -427K from +25K in December. Despite a deterioration in every metric, the unemployment rate dropped from 10.% to 9.7%, even with a consensus at 10.0%. A glitch in the excel model is further corroborated when one considers that the civilian labor force participation rate actually rose in January from 64.6 to 64.7. Yet a number that avoids some of the constant fudging by the BLS, the Non-Seasonally Adjusted number, hit a new recent record: instead of 9.7%, this number was 10.6%, a 0.9% increase from December! The same can be seen in the U-6 data. NSA U-6 is now at a record 18%, even as the seasonally adjusted number declined to 16.5%.

If you’ve hear of peak oil, peak gold will be much worse. Investors are so scared from the events of the financial crisis that it will influence their investment decisions for decades. Did I mention there is an emerging market central bank bidding was for the barbaric relic? Buy when there’s blood on the street, preferably not your own. $2,300, here we come. (GOLD), (GLD), (ABX)

We have speculated that the Federal Reserve or the U.S. Treasury could be allowing a "buyer" to accumulate stock index futures to boost stock prices. Perhaps the "buyer" has stopped buying. We know that the S&P 500 has dropped 6.6% since the close on January 20, the day before President Obama announced a plan to restrict proprietary trading by banks. Moreover, the S&P 500 fell on seven of those 11 trading days.

We saw almost to the tick the downside targets mentioned last night in S&P futures and EURUSD as per the hourly and 3-hour charts. However we see more downside potential on the Dax as we have not yet reached the target at 5,396. Also we do not have much hourly divergence in S&P and EURUSD's RSI low coincides with the lows which would suggest we can push a bit lower while remaining in the downtrend channel. S&P futures should bounce (maybe as high as 1070 here) but a break of 1051 on the downside could take us to 1,038.50 as the last leg started yesterday seems to be missing a 5th wave lower (caveat is that catching wave 5 of 5 is a tricky game as it can sometimes be so protracted you hardly see it on a chart!). - Nic Lenoir, ICAP

• Asian stocks fall most in 10 weeks on US jobless claims.
• Australian central bank raises outlook, sees 3.25%-3.5% growth ahead.
• Bank of England voted against extending its bond buying program.
• China announces anti-dumping steps on US chicken amid trade disputes.
• China's stocks drop for 3rd week on global recovery concern.
• Gold saw its biggest slide in 16 months, joining other metals in a broad sell-off.
• Hong Kong stocks fall, headed for longest run of weekly losses since 2008.

RANsquawk 5th February Morning Briefing - Stocks, Bonds, FX etc.

Bloomberg has an excellent interactive analysis on the potential for a near one million count revision upwards of the unemployment numbers. This combined with the work my team and I have put together should lead subscribers to believe that medium term, unemployment can (and probably will) exacerbate the global equity market decline.

7 technical profiles / daily charts of the S&P 500 Futures (ES), DJIA Futures (YM), NASDAQ-100 Futures (NQ), VIX (CBOE Volatility Index), US Bank Index (BKX), Gold Futures (GC) & Silver Futures (SI). Get your TA on & start mapping out a strategy / plan of attack for Friday's trading session.

RANsquawk 5th February Morning Briefing - Stocks, Bonds, FX etc.

Consensus is expecting US payrolls to rise by 15,000 in January. I wouldn't be surprised if the actual print comes in at ten times that amount...

The five pics below (5-minute, daily & weekly) illustrate [1] a near perfect, positive correlation (R-squared ~ 1) between Gold Futures (GC), Silver Futures (SI) and Crude Oil Futures (CL), [2] a nearly perfect, inverse correlation between precious metals & the US Dollar Index (DXY), and [3] an interesting relationship between the S&P 500 (INX) & the VIX (CBOE Volatility Index). (1) 5-minute Gold Futures (GC) v. Silver Futures (SI), (2) 5-minute Gold Futures (GC) v. Crude Oil Futures (CL), (3) 5-minute Gold Futures (GC) v. US Dollar Index (DXY), (4) daily S&P 500 Cash (INX) v. VIX (CBOE Volatility Index) daily chart & (5) Weekly S&P 500 Cash (INX) v. VIX

Bruce was right. Yet it's one thing to feverishly speculate. Seeing it in action twice in one week is oddly anticlimatic... and getting downright tiresome.

A few days ago we made some observations on the just-announced nearly $4 trillion 2011 budget. The key point was that while the ugly numbers already looked like a superglued Frankenstein monster without a Kardasian botox treatment, or even simple lipstick, it would have been truly disastrous had the administration done what Peter Orzsag threatened he would do 2 years ago, namely bring the GSEs, Freddie and Fannie, on the government's balance sheet. How this is not the case yet is simply stunning: the GSEs enjoy not only the constant "bid of first refusal" courtesy of the Fed's MBS QE program, but an explicit Treasury guarantee that has no ceiling as of last Christmas eve. Bloomberg's Jonathan Weil today came to the same conclusion, although being a Bloomberg employee he was characteristically much more crass, uncouth and downright cynical than the paragon of respected journalistic patois that is the establishmentarian concept known as Zero Hedge. In an attempt to awake the morts out of their stupor, a pandering Weil uses such cheap tricks as hyperventilating allegory, sarcasm, and hyperbole when saying that  "[b]y all outward appearances, it seems
Obama and his budget wizards decided that including the
liabilities at Fannie and Freddie would be too much reality for
the world to handle. So they left the companies out, in a trick
worthy of Enron’s playbook, except not quite so hidden." Obviously, Bloomberg has an uphill struggle if its ever wishes to reach profitability (in the trillions of dollars that is... billions is so fin de pre-bailout siecle). We also fear for Weil's job prospects should he ever wish to find an occupation at such a highly respected place, where not only is there a 4 syllable word minimum but no sentences ever end in prepositions, as the Reuters blogosphere. Ironically, Bloomberg did redeem themselves somewhat later today, when in a Tom Keene interview, Goldman policy advisor Arthur Levitt is caught on tape performing more of the same hyperventilating, and in doing so blasting the administration, using the same Enron-esque analogy, when analyzing the paradox of the GSEs and the sovereign balance sheet.