Archive - Aug 2009 - Story

Billions were made and lost in half an hour.

Peter Orszag justifies an insane cumulative budget deficit by 2019 by underscoring "the dire fiscal situation that was inherited." And while the $9 trillion is likely a very gentle underestimation of what will happen if the Bernanke policies kick in and trillion is really quadrillion, it is a sad state of affairs when every administration going forward will simply blame the previous one for its unprecedented fiscal and monetary blunders. Oh and here is an item for future revisionists: by 2019, interest expense will account for more than 80% of the projected deficit of $917 billion. We are now officially a vassal state of China.

Consumers now taking their unemployment benefits (which are increasingly running out) and investing all the proceeds into FNM and C. Market rips, confidence goes even higher. Facts and $9 trillion upcoming budget deficit ignored.

"I want a comprehensive approach instead of a piecemeal approach"

• Bernanke to print dollars for seven more years, as Obama is set to announce a $2 trillion increase to budget deficit (FT)
• BofA denies misleading its investors on bonuses (WSJ), in other news its CRE loans are all fairly reserved at par
• Ball in Shanghai stock market roulette falls on red today (MarketWatch)
• Goldman's town hall (MarketWatch)
• Futures up presumably as massaged Case-Shiller data leaked; market attention span drops to sub-minute levels (Bloomberg)

• Asian stocks fell, Treasuries advanced on lower profit at Chinese cos, evidence of increasing loan losses in the U.S.
• Cash for clunkers filing time extended until noon ET Tuesday.
• China’s stocks fell for the first time in four days, led by commodities suppliers and banks.
• FDIC to ease entry for private-equity firms buying failed banks.
• Former Chair Volcker says money-market funds weaken U.S. Financial system.

A recent increase of 25bps by the Bank of Israel is a potentially bullish indicator.

"Examiners at the Financial Regulatory Authority, the industry self-regulatory body known as Finra, and the Securities and Exchange Commission intend to ask Goldman for more information on the firm's weekly [huddles], people familiar with the matter said." - WSJ

Score another one for the little guys.

A comprehensive market profile chart for the SPY since August 3.

S&P REVISES NATL RURAL COOP OUTLOOK TO NEG, AFFIRMS 'A/A-1' CCR

We believe that CFC's continued high exposure to short-term wholesale funding, increased leverage, potential credit quality problems with its limited existing loan loss reserves, and potential exposure to interest rate movements could lead us to lower the ratings. The outlook could be reviewed for a revision to stable if management succeeds in reducing leverage and the company's dependence on short-term funding.

While in the past VWAP was the traditional strange attractor for intraday price convergence, today marked a stark difference, indicating that either i) whoever was trading did not use any VWAP algos to accumulate/dispose of block positions, or that, ii) [and in keeping with i)], most orders were routed to dark pools. However, take away FNM, FRE, and Citi, and there were basically no large blocks. One wonders just how much trading in the fab five f*@&#d financials occured in dark pools over the course of not just today, but the past week: if one were to add dark pool volume to what we know accounted for 25% of the total NYSE volume, the result would likely be a shock.

Spreads were mixed in the US with IG unch, HVOL improving, ExHVOL weaker, XO stronger, and HY rallying (as we note all the indices ended well off their tights and did not partake of the swings we saw in equity land today). Indices typically underperformed single-names with skews widening in general (although we do note a significant tendency for off-the-run IG-HY decompression relative to IG12-HY12 compression and roll compression in ExHVOL's curve) as IG underperformed but narrowed the skew, HVOL outperformed but widened the skew, ExHVOL intrinsics beat and narrowed the skew, XO's skew increased as the index outperformed, and HY's skew widened as it underperformed.

The stunningly quick collapse of mortgage lender Taylor, Bean & Whittaker is over, with the only logical and possible conclusion: bankruptcy. The Florida mortgage lender, which in the January - June period was the 12th largest mortgage lender filed for bankruptcy in Middle District of Florida (case 09-07047). Neil Luria of Navigant, who was named as CRO, had this to say: "This is a very complicated business, and the speed of its collapse has been stunning. Much remains to be done, but we are committed to creating and realizing the value of the company’s assets."

No commentary on JP Morgan's ETF desk moonlighting as Cape Canaveral