Archive - Nov 17, 2009 - Story

As a reminder, the hearing examining the BofA-Merrill Lynch merger before the House Oversight Committee is now streaming live, and can be seen here.

We have gotten to a point where each country is trying to talk down its own economy in a pursuit of having the worst (DXY constituent) currency. Yesterday it was Bernanke warning about future growth prospects, last night it was Japan, and today it is Goldman Sachs, which is claiming that the economy is really worse than expected. What is the point of all this rhetoric: simple. In the current stock market bubble where the only driving force is the strength, or rather, weakness, of any given underlying currency (read- dollar), and where inflation and deflation pressures are inverted, such that a weak dollar would cause a market melt up, and thus, inflation spillover from overpriced stocks into commodities and other products, the only way to stimulate inflation is to posture having the weakest economy. Whether that is in fact "weakest" or merely most debt-laden, with worthless CRE, housing and other 'assets' serving as collateral on bank balance sheets, we leave to much smarter analysts such as Dick Bove and Meredith Whitney.

"The Report addresses the value of transparency, which we share. We have taken a number of significant steps with the objective of increasing the information publicly available about the Federal Reserve and its lending programs so that the Congress and the public can more effectively assess our efforts in pursuit of [making Goldman Sachs the overlord of the Milky Way Galaxy, as the earth has long been taken over] financial stability and monetary policy objectives. Among these steps is regular publication on our website of comprehensive information about ML III and other Federal Reserve facilities. Altogether, we now provide more information about the operations of the Federal Reserve than ever before, and we continue to explore whether additional information can be provided without jeopardizing the effectiveness of our efforts." - Federal Reserve Board of New York

The following clip from Tabb Group (and accompanying report which we hope to post shortly), provides some much needed color on what has been the source of some serious head-scratching lately: completely irreconcilable action between spot and futures trading, especially in some core market ETF and corresponding futures (see PragCap's recent post on this). As Tabb's Adam Sussman points out "Automation is not just a way to capture alpha anymore, but in some cases is a source of alpha itself." In other words, if you can't join in, and you really cant, the best you can hope for is to ride the occasional beta wave here and there. Just make sure you fall off the board first when the wave is about to crash.

• Geithner singled out in TARP watchdog Neil Barofsky's scathing report on AIG bailout (HuffPo)
• Deflation ex fuel and energy pervasive (AP)
• Ken Jacobs chosen to replace Bruce Wasserstein, Caruso-Cabrera ex-boyfriend Gary Parr strikes out (Bloomberg)
• China questions cost of US healthcare reform (Reuters)
• Bankrupt CIT loss triples to $1.07 billion, provision for credit losses skyrockets from $210.3 million in Q3 2008 to $701.8 million currently (AP)
• High-frequency firms make inroads into US futures (FT, h/t Sean)

• Asian stocks fell, commodities declined after Fed voices concern over revival.
• Bernanke signals 'extended' low-rate period may become longer as joblessness rises.
• China shares rise for 3rd day to 14-week high on economic recovery outlook, led by banks.
• Corruption watchdog rules Somalia still worst; Singapore, Denmark, New Zealand best.
• IMF chief urges China to let yuan rise; says weak currency distorting Chinese economy.
• Mauritius buys 2 tons of gold from IMF, following India, as gold nears record as dollar slumps.

We understand that other government entangled entities have been losing money with such enthusiastic abandon and glee that a few billion a quarter from that traditional cash disposal unit, the United States Postal Service, seems a mere annoyance. Be this as it may, we cannot help but wonder what possible service the Postal Service serves any longer. Ironically, the Wall Street Journal penned a rather penetrating review two months ago noting, among other things, that even while pushing rates up at a pace that significantly outpaced the CPI, the Service has continued to clip routes, attenuate service and generally serve as a model of inefficient graft. All this in the face of a 20% reduction in mail volume since 2000.

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