Archive - Aug 2009 - Story

So the conclusion is that it always has and always will be about the US consumer. And any concerns that China may stop purchasing US securities are, unfortunately, groundless - China can ill afford to push the US middle class into a greater savings mode, and thus will cooperate as much as it can with the Federal Reserve in keeping both mortgages (for the illusory net wealth effect) and interest rates as low as possible for as long as it can. However, this being simply another fiat-funded bubble, and due to its Ponzi nature, a much more vicious one, the second this symbiosis ends for whatever unforeseen reason, the impact on China, and by implication on the US, will reverberate throughout monetary and fiscal policies and likely result in civil unrest both in the US and China, once Walmart can no longer provide cheap garbage to satisfy the American demand for constant credit-financed unneeded products, and once the China GDP illusion of minimum 8% growth is popped, resulting in an end to the Communist-Capitalist hybrid experiment.

Total Federal Reserve balance sheet assets for the week of August 26 of $2,049 billion

• Spending increases in July thanks to CfC subsidies on less than expected consumer income (AP)
• AIG in no rush to sell stuff (WSJ, h/t Aditya)
• AIG rises and many ask why (NYT)
• AIG's swap blunder now replaying on Wall Street (Bloomberg)
• Hulbert: Rally since March has been extraordinarily speculative (MarketWacth)

• Asian stocks advance on higher commodity Prices, Dell earnings.
• Banks on the FDIC's sick list top 400.
• China’s stocks retreat, Index heads for fourth weekly decline.
• Consumer Spending in US probably climbed in July on `Cash for Clunkers'.
• Euro heads for second monthly gain versus the dollar on recovery optimism.

Each year, generally in May, the Energy Information Administration publishes a less-than-eagerly-anticipated tome called the International Energy Outlook, 250+ pages of mind-numbing text, charts, graphs, and tables. No one reads it. The mainstream media ignore it. It’s the product of the best prognosticators in the Department of Energy. Okay, that may be what puts most people off. But if you’re patient enough to dig into it, it will cough up some fascinating nuggets of information.

Dear bankers of The Clearinghouse Association: it may be time to send in a few more ultimatums.

Spreads were mixed in US credit today with most of the major indices as good as unch by the close but modestly nearer their tights than wides, much like the equity market. Less than 30% of single-names moved more than 3bps as liquidity was very low there although we did hear some 'more normal' two-way flow in IG and HY but certainly not in size as credit stuck in tight trading ranges in both. Breadth was negative in credit though as wideners outpaced tighteners and more curves flattened that steepened. As a side note, IG12 has closed within a 1.5bps range for the last 5 days and intraday peak-to-trough has been 4.5bps in the last four days!

"One might argue there was no Fed bailout involved with Bank of America’s purchase of Merrill Lynch, but I am not the one to make that argument. Merrill’s purchase by Bank of America at a premium price seems to only make sense with the huge assist of the Fed’s largesse in suddenly agreeing to accept lower quality collateral for its loans."

"The main beneficiaries are the insiders who have Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke on speed dial. The Fed has undertaken a massive bailout using U.S. taxpayer dollars."

- Janet Tavakoli

"The purpose of the meetings is to facilitate controlled, supervised dialogue between client-focused professionals about investment ideas, news flow and market events so we can better serve [TD: some of] our clients. A "huddle" is not a forum for sharing stock or sector "tips."

"We offer some of our clients customized services..."

- Goldman Sachs

Force them to open the kimono and, like the vagabond winos they are, the fumes will so overwhelm passers by that the United States will devolve into chaos and ruin.  How about a bit of early Radio Zero to help you choke down the stink?

5:15 ET back here for the URL.  Till then, chat up the DJ / send .mp3 files (to which you own the rights, of course): via AIM here.

Update: Pull our bits off the interweb: http://cdo.zerohedge.com:8000/listen.pls

Hilarious. Unemployed bums now becoming expert "daytraders". Two days in a row, during my lunch break at Starbucks, I found young, slacker, unemployeds huddled around a table with their laptops daytrading stocks.

The CFTC has earned its stripes by allowing speculators to take the oil to natty relationship to unprecedented arb levels. Represented in energy content equivalents, where oil traditionally has been in the 6x-12x range for gas, the most recent reading is 26.36! This is, as the chart indicates, your six sigma event for the day.

Back in early July, the FDIC submitted a policy statement proposal to establish guidelines for private equity investment in failed financial institutions. At the time we wondered if the proposal wasn't designed to exclude private equity entirely, as the ownership structure and capital requirements (in addition to She Bear's attitude) seemed to rule out the participation of any sane entity that could reasonably consider itself engaged in "private equity."

Congratulation Ben - thanks to you those ZH t-shirts just got more expensive. Dollar carry traders everywhere rejoice.

"Not withstanding, of course, a tapped out private sector, lingering high levels of unemployment, capacity utilisation levels which never rally sufficiently to raise industry profitability, a speculative orgy in China which is likely to burst at some indeterminate moment and the complete uselessness of fundamentals in determining turning points."