Archive - Sep 15, 2009 - Story

It was just yesterday that Tim Geithner was pleading that banks are increasing consumer lending. Well, yet another lie refuted. Banks, and not just any banks, but those receiving government bail outs and subsidies, continued constricting lending in July, with total average loan balance outstanding declining by $54 billion from $4,295 billion to $4,241 billion, a 1.3% decline, following a 1.1% decline in June. The Truth: the consumer, the one followed by the ABC Confidence Report, not the manipulated, CNBC-friendly one, has retrenched to a point where he has no desire to even approach the bank lending window.

"The question we face now is: how has the playing field for our economy changed and how will those changes affect our future? The answer to these questions will determine the future of the world’s economies."

The ABC Consumer Confidence Index declines from the prior week, as UMich indicator continues to spread rose-colored glasses propaganda and the expected closed-loop market uptrend.

In print yesterday, today we present, in all its HD glory, the video of Senator Kaufman discussing irregularities in market structure and a proper holistic approach to financial regulation.

Spreads were mixed in the US with most indices tighter (reaching 2009 tights) as ExHVOL underperformed as high beta compression smashed low beta names. IG trades 15.2bps tight (rich) to its 50d moving average, which is a Z-Score of -1.5s.d.. At 104.25bps, IG has not closed tighter this year (184 trading days) and is back to mid June on-the-run levels for IG. The last five days have seen IG diverging from its 50d moving average.

Even more mainstream media starting to focus not just on flawed Wall Street practices, and crony DC efforts, but Goldman Sachs in particular.

Obama was on the stoop once again, and to avoid embarrassment, he ordered the Goldman Prop Desk to show "who 'da boss" by cranking up the Spoos to get the greyhounds moving. Hi-Fi traders and junk chasers had another field day.

71: here we come.

"The deal was actually structured to give Barclays an immediate and enormous windfall profit. Certain Lehman executives agreed to give Barclays an undisclosed $5 billion discount off the book value of securities transferred to Barclays, and later agreed to give billions more in so-called "additional value" that Barclays demanded, but the Court never approved. This immediate windfall to Barclays (i) was not disclosed to the boards of LBHI and LBI, (ii) was not revealed in the agreement the Court was asked to approve, and (iii) was never disclosed to the Court until now."

"Market considered stronger technically from recent period of consolidation, move upward on higher volume; declines of June and early August are seen as having shaken out weak hands, as indicated by shrinkage in brokers' loans. Recent economic news has also been encouraging, including steel production, retail and mail order sales. Roger Babson's switch to bullish stance has also attracted attention. All indications point to good sized gains in stocks in the near future, though third-quarter earnings reports in a few weeks may change the trend."

Oh, source: 1930

In today's rehearsal of what efficient markets should look like: the VIX and the SPY will correlate with an R2 of 0.999 while the dollar will get the usual royal beatdown as the Yen-Euro trade goes parabolic. If that doesn't work out, we will try a different script tomorrow.

No news here really. Market starts dropping: volume immediately picks up to 10 million above average. Then stocks retrace all their losses and add gains as volume flatlines, or actually decreases during the day. In the past week shorters will not short, sellers will not sell, aside from the first 30 minutes of market trading, when market volume ramps. In the meantime someone (fund managers with career risk as disclosed yesterday) is accumulating all those lifted offers as the market ploughs into the parabolic phase.

Today $2 billion was used up by the Fed to purchase several off the run 2021-2026 maturities and to goose up equity market liquidity just that little more. With today's action there is exactly $16.7 billion left remaining in the QE treasury basket.

Massachusetts investigators say James S. McDonald, president and chief executive of investment management firm Rockefeller & Co., has died of an apparently self-inflicted gunshot wound.

There was a time when FINRA did some good things. It did mostly useless things, and was glaringly incompetent in even those, but on occasion it would do something proper, at least when moderating analyst conflicts of interest. Then the crash came, and all bets were off. Interestingly, in October 2008, a month after the bottom came off the market, and when the kitchen sink was being thrown at stocks in order to prevent further collapse, FINRA lost the last shred of interventionist integrity it had when it decided to abolish the so-called quiet period for research actions subsequent to a follow-on offering. Yesterday, JP Morgan was more than happy to take advantage of this last shred of regulatory decency collapsing by the wayside, as more and more synergies of the SEC-Wall Street merger become effectuated.