Archive - Nov 6, 2009 - Story

Wherein we present one of our favorite recurring charts.

Focus on the downside on 1,026/29 for the S&P future, the 100-dma for the Dax, and a close below 1,650 on the Nasdaq. A break below this level would confirm our favored scenario at the moment of further downside. We see 10% to 12% before the next support from here if the move is confirmed, which would mean for the Nasdaq to test the 1,510/1,565 zone at the minimum.

The push to extend maturities begins: next week we are seeing 3, 10 and 30 year coupons. No 5 and 7's, which should make the bond bulls nervous.

• November 9, $40 Billion 3 Year
• November 10, $25 Billion 10 Year
• November 12, $16 Billion 30 Year

Get your damn dollar destroying house in order Ben (at least you got that invisible bid on the worst employment day in recent, and not so recent history, down pat). At least for now stocks are acting as if they haven't realized DXY is almost flat, and the JPY-EUR trade is diverging aggressively from whatever passes for a stock market these days.

Answer: Negative One Hundred Billion Dollars.

Turnberry and Tepper are toastin' while Horseman, and, of course, Jimbo Simons, are getting their teeth kicked in.

After the dollar is down 20%, suddenly the administration is worried about the middle class. Look for them to be even more worried when it hits 0. The answer: quadrillions more in artificial, one-time (yet perpetual) stimuli, to keep reflating the housing bubble, funded by Chinese purchases of infinite amounts of US debt as America slowly but surely approaches its terminal debt-for-equity swap.

Also, won't somebody please think of the Goldman?

Just deserts for everyone, when even the giant squid will finally join the ghosts of Lehman and Bear... But not yet... Not yet.

After digging around and sifting through the things both said and not said, I have come to the conclusion that what we are seeing are the likely effects of a rescue operation.

By this I mean a large injection of stabilizing cash to one or more parties, possibly related to the recent large bankruptcies. Two of my friends who have been actively trading for more than 20 years between them threw in the towel this week as their patterns and methods are no longer working.

Their conclusion is the same as mine; this market is not trading like it used to. It is trading chaotically, counter intuitively, and as if there's some sort of distorting influence involved.

First we might just wonder if this isn't the impact of a rogue firm with entirely too much power moving the market for its own benefit.

When we examine the results of Goldman's latest quarterly trading results, obviously we have a strong suspect.

Courtesy of "sales strategists" at the real Octopussy (the one marinating in brine at One New York Plaza). As always quadruple reverse cephalopod psychology is critical to survive these salty waters

As more and more tentacles of the insider trading octopus get exposed, thanks to an SEC seeking to make up for decades if not centuries of miserable inactivity, many more firms are sure to feel the wrath of the Feds. The latest one is Jefferies, whose former money manager for its Paragon Fund Joseph Contortinis is the most recent person snagged in the insider trader scandal, after he was indicted earlier by a grand jury for orchestrating a $7.2 million insider trading ring.

Mixed CDS action yesterday, with credit predominantly flat even as equities melted (molted?)-up. Discussions with fixed income traders indicate a predominantly bearish posture yet nobody is willing to stand against the Fed and the Druckmaschinen imports. Where is a man with Soros-size balls when you need him? Alas, that "man" just may end up being China, which would either buy the balance of the IMF gold package (and damn soon) or leave the indirect bid hanging.

The melt up in stocks on no volume was fully expected after the worst possible employment news to come in over 20 years: the market-economy disconnect is now complete, and all stocks are freeriding purely on Bernanke's printing press. At least gold vigilantes are beginning to whisper in Bernanke's ear he can go fornicate himself and his dollar destruction deathwish: let's see what happens when gold melts up ala the S&P to 1,200, 1,300 and maybe 1,500 in a few weeks. Look for some old-fashioned massive panic at the Federal Reserve.

Another credit fund has given up the ghost and the fight over the spoils begins. Oddly, with leveraged loans returning over 40% YTD, and these guys obviously believe that diversification away from Term Loan B's is a waste of time, somehow they managed to still shoot themselves in the foot. Well, we wish them well on their way to padding the BLS' U-6 number, and in the meantime here is a listing of their holdings: top five holdings consist of Regal Cinemas, Penn National, Neiman Marcus, CHS and Dollarama. By their holdings it seems that this was a rather diversified loan fund with holdings in virtually every sector, implying that the PMs would buy whatever their prime broker/sales coverage would pitch them: always a very sound and stable money management strategy.

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