Archive - Dec 11, 2009 - Story

A chart of the past two days' cumulative trading volume speaks...well, volumes. At this point it is safe to say that even machines no longer derive any binary pleasure in scalping humans, and are off to spend the spoils of having run up markets to such heights that nobody will either buy or sell any longer, but merely stare with disbelief.

Capturing energy from the earth’s heat is pretty easy pickin’s for geologically-active areas of the world like Iceland, Indonesia, and Chile. In some locations, hot fluids are so near the earth’s surface that heat from naturally-occurring hot fluids can be directly circulated through buildings for heating. Iceland, in particular, takes advantage of this low-hanging energy fruit. However, in most areas of the world where geothermal energy is captured, the heat is used to generate electricity.

Dark pool operators, who have quietly been redirecting shady order flow via dark pools of "liquidity" with minimal supervision and below the radar for many years, are getting spooked by a proposed SEC rule which would have these same dark pools identifying their trades in real time, thus removing the benefits associated with what is effectively an OTC equities market. Their response: blame it all on the HFT guys, who use the information that would leak to front-run the crap out of the "long-onlies." Yet weren't these same HFTs claiming just yesterday that all they do is provide liquidity and tighten spreads? ... Someone is lying.

"Leaders in Great Britain and France have recently announced proposals to tax the bonuses of financial executives--if the United States remains silent on the issue, we will in effect be leading the world in a ‘race to the bottom’ of international efforts to regulate the financial services industry." - D-OH Dennis Kucinich

"While the rest of the country suffers, this stock market is booming." Note the not-so-High Frequency Trader counting the trade tickets.

Stock trading is getting more boring each day, unless you want to buy a Dow stock that goes up $1 to a new high for the move. However, for the Forex Megadroid Gridbot junkies, things seem to be spiraling out of control, unpredictable moves everywhere. Why didn't stocks tank when the dollar took off today? Many questions for the weekend.

"Quick comment: I was wrong about what the program is called. Rick is right: It's emergency unemployment claims. I've reported on this number several times before (even making the same point that it's been higher than the topline continuing claims number.)

But I stand by my read of the data and disagreement with Rick, who said, "all the non-seasonally adjust numbers were much, much higher than the headlines." That's just not true."

- Steve Liesman

"The legislation will send a message that we’re trying to respond to what got us into this economic meltdown and trying to set up mechanisms to prevent future economic meltdowns” - Barney Frank

We will revisit this quote in 12-18 months

With gold having dropped nearly $100 in a very brief period, as the Fed is doing all it can to prevent an all out gold rout (hey it worked the other way around too, and stopped the intended dollar free fall), spot is now a mere $13 away from the 50 DMA. Will this prove a material support level or will it be breached, leading to a cascade all the way down to the 950 previous support. For the latter to happen one can see the DXY going back all the way to 80 which the banks will certainly not be too happy to see. Alternatively, a collapse in spot will present a great accumulation level (at a cost basis below that of India, and other fringe CB accumulators) as Bernanke is still dead set on inflating trillions of toxic mortgages (the ones he is unable to collateralize the dollar with).

Developing from Dow Jones: US Treasury - No Plans For One-off 2009 Bank Bonuses Tax; Bankers can sleep well.

You didn't think all those massive stock market gains would come free of charge? The cost: about $1.9 trillion in new debt allowance according to Steny Hoyer, almost $500 billion higher than previous estimates by Senate Budget Committee Chairman Kent Conrad. It took a mere 4 days for Conrad's optimistic estimate of the future cost of today's carefree living to go up by 30%. And who will bear the brunt of this ludicrous leverage: the U.S. soldier. Dow Jones reports that the debt ceiling increase provision will be added to legislation setting forth the Pentagon's budget for 2010. "It is unconscionable for the Democratic majority to pile the debt limit increase on the backs of the American soldier." In ironic retrospect, it will not be so "unconscionable" when the same soldier is sent for some preliminary diligence work west of the Pacific, just in case America's partner in the most crucial prisoners' dilemma game of all time, China, decides to finally defect, and tell the Fed it can monetize its own debt without Beijing's cooption. But that's a topic for late 2010/early 2011.

Because you know JPM is completely unconflicted and unaxed from pushing a Chinese growth model in the US. Justifcation: "GDP growth is being revised upward reflecting this week's upside surprises in monthly reports on inventories, net exports and retail sales." Somehow JPM managed to have an embargo on this report, likely prepared days, ago until 11:51 am. In other news: the government has no bias to presenting overinflated data.

CB Richard Ellis has a brand new client: the bankrupt state of California, which is now attempting to sell what is the largest office portfolio currently marketed nationwide, at 8.7 million square feet. The California Department of GeneralServices has announced CBG has been retained to sell 17 office buildings. The state is hoping the sale will generate more than $660 million in proceeds to offset cuts in the state budget. With a budgetary hole in the billions, California willlikely need to throw in quite a bit of beachfront property in order to make it seem like it has the fiscal catastrophe under control.

For the last two decades the trend of inflation has been easing. The same as applied to the general trend of the percentage growth in the GDP. One big problem for managers is to drive looking forward rather than manage backward. Oil as an echo bubble will quickly fade away and will bring better prospect at anchoring inflation expectations.

To the dismay of some CNBC pundits who are presenting a "strong dollar" decoupling case for equities, the key thing that they constantly forget are the numerous constituents of the DXY. Aslightly more granular analysis of FX pairs indicated that everything is still as expected, with the JPY-EUR leading the way as usual. And that particular "micro leading" indicator just snapped.