Archive - Sep 19, 2009 - Story

Is a major political scandal brewing in New York? A year and a half after taking over for a disgraced Spitzer, Paterson is now at war with everyone, but most notable the New York State Budget, and now, the President. The motive, one can speculate, is to get Cuomo into the governor's post immediately if not sooner, so the AG never files any criminal charges against Ken Lewis.

We'll be taking the service offline for a little while in the near future so I can do some maintenance. It shouldn't take long, but we'll miss you. Promise.



UPDATE 9:35



We're back online, and everything is working smoothly.

The most recent weapon in the Fed's arsenal to pump liquidity into the market, which has for weeks now been groaning higher on liquidity fumes and on algorithmic speculation, is presented in the calendar below. Market bears would be well advised to familiarize themselves with it, because if history is any indication, these are the days when Primary Dealers will go berserk, funneling generous Fed liquidity from one asset class (70 Days CMB T-Bills) into another (equities).

After spending much time in the Middle East I have come to appreciate the politics of the region as well as its geography. I am taking some analysis done by Project Mayhem a bit further to offer my interpretation of the events to come as I believe we have only scratched the surface of what I believe is coming. I would also like to include ZH’s ship report as further evidence that my analysis may not be too far off.

Trying to sell this market has been a recipe for disaster, but one of my favorite indicators does not believe the creep up in stocks. Here comes the VIX again.

On September 25, 2007, the President's Working Group on Financial Markets, better known as the Plunge Protection Team, announced the formation of two private sector committees, one comprising of Asset Managers and the other, of Investors. It is the first one that is more interesting, as the committee is chaired by one Eric Mindich, best known for his Goldman Sachs wunderkind status, who at 27, was the youngest Goldmanite ever to be promoted to partner. In 2004, Eric split off from Goldman, nonetheless maintaining a favorable relationship with the mothership through its "Fund of Funds" division (we jest), and its various Prime Brokerage client platforms, by starting Eton Park, which with its starting capital of $3 billion, is still likely a record of highest AUM at a fund's inception.

According to the BBC, the issue of the Tobin Tax, which as we reported previously, had garnered some vocal proponents recently, but was never expected to be anything than mere discussion points, has gotten a firm G-20 supporter in the face of French president Nicolas Sasrkozy. And while the opposition of the US is a certainty, the recent overtures by FSA Chairman Adair Turner in which he announced he would consider a Tobin tax implementation, means the US could be all alone in its disapproval of this form of taxation.

The Fed now has $15 billion in purchasing power left under the Treasury component of QE. Of the $1,250 billion in MBS projected to be bought by the end of the year, the Fed was already purchased $840 billion, leaving $410 billion in budgeted purchases over the next three and a half months: about $125 billion per month.

Troubled rating agency Moody's, in its most recent Resi Landscape publication, has provided some very brutal projections for the housing market turnaround, which, if true, will promptly make any V-shaped recovery conversation moot. And for all homeowners who are holding on to underwater mortgages hoping for a quick bubble #2 inspired turnaround, you may want to reevaluate: quote Moody's "It will take more than a decade to completely recover from the 40% peak-to-trough decline in national home prices."