Archive - Nov 10, 2009 - Story

"The economy’s return to growth after a year and a half of recession marks a major turn and it looks like more than a flash in the pan. It seems to me that the economy has entered a sustained period of expansion. We’ve seen meaningful upturns in areas as diverse as housing, consumer spending, industrial production, and foreign trade. And, a number of factors bode well for the future, including a better functioning financial system, low mortgage interest rates, a resurgent stock market, a stabilization of house prices, and stronger growth abroad." - Janet Yellen

Not much optimism from one of CNBC's favorite bulls. Yet even Costa is wrong about today's market direction as 7 shares of SPY move the market up by almost half a percent. In the meantime, the gold creep higher continues.

Some observations into the trading desk that runs the free world, as well as a modest proposal for Chairman Ben.

Last week saw a moderate widening in both bonds and loans, with the broad universe of tracked credits pushing wider to 427 bps and 665 bps forloans and bonds, respectively . This represents a change of 21bps and 8 bps for the two products, with loans curiously widening by a much bigger beta adjusted margin. The bubble bid for risky is still alive and kicking. We anticipate next week's update to bring both of these metric to new YTD tights. Some of the biggest movers were Sungard loans, tighter by almost 150 bps sequentially, and Graham Packaging wider by 100 bps. In bonds, the biggest mover was Neiman Marcus which widened by over 100 bps, and TRW moved out by about 75 bps.

"During AIG’s bailout, Goldman had influence over the decision to use public funds to pay 100 cents on the dollar for these CDOs (the underlying risk of the credit derivatives), but none of the information about the volume of Goldman’s trades with AIG—or the Goldman CDOs hedged by AIG’s other counterparties—was made public. Goldman’s public disclosures in September 2008 obscured its contribution to AIG’s near bankruptcy and the need to bailout Goldman’s trading partners in AIG related transactions. Goldman’s trading activities played a starring role in the near collapse of the global markets." - Janet Tavakoli

• SAC said to tell clients a review found no suspicious trading (Bloomberg)
• John Crudele destroys the fabricated data coming out of the BLS: real unemployment at 22% (Post)
• The Mishkin galatic stupidity trifecta:
  • After destroying Iceland, finance "guru" Fred Mishkin says asset bubbles are a good thing (FT) - Where does the Fed find these sociopaths?
  • And even more toxic filth out of the Iceland destructor: The Fed is Already Transparent (WSJ)
  • As a reminder, Fred Mishkin, was left the Fed in disgrace in 2008, has credibility boredring on negative infinity (Zero Hedge)
• Charlie Gasparino on mollusks and purported credibility: Goldman Sachs doing god's work (HuffPo)

• Asian stocks, currencies climb as reports show demand spurred by stimulus.
• China to overlook calls for stronger yuan as exports fall, researchers say.
• China's house prices rise at fastest pace in 14 months, government says.
• EU objects to Oracle's takeover of Sun.
• Japan's government is set to reach a decision on a rescue package for Japan Airlines.
• OPEC sees signs of oil demand in the U.S.
• Advanta Corp. files for bankruptcy, may turn over its banking unit to regulators.