Archive - Sep 29, 2009 - Story

"[FDIC] staff estimates that both the Fund balance and the reserve ratio as of September 30, 2009, will be negative. This reflects, in part, an increase in provisioning for anticipated failures. In contrast, cash and marketable securities available to resolve failed institutions remain positive." - FDIC, September 28

"This inventory has yet to hit the market, but it will. So pundits that get excited about two or three months of Case-Shiller data are spending too much time looking out the back window. More deflation is coming in residential real estate — this bear market in housing ain’t over yet. Remember, homes that are foreclosed typically go on to the market at discounts ranging between 10% and 50%." - David Rosenberg

Big surprise in the Conf Board consumer confidence index, which posted a September reading of 53, down from 54.5 in August, and an expected reading by "economists" of 57. The market, which trades solely on macro headlines these days, takes a brief dive. Expect this not to last as window dressing time promptly regains a foothold, and bad news continues to be good news.

Irrational exuberance in High Yield shows no sign of abating: the loan-HY bond spread is down to 2009 tights: a mere 326 bps for the represented universe of credits. Last week HY bonds averaged 710 bps, while loans were are 383 bps. For rational types, now is the time to consider some long loan-short bond basis packages, at a 1.0x:1.85x ratio. Also the negative loan-HY basis in Sealy continues, now at about 500 bps: either the data there is really faulty or somehow that relationship makes sense... in some parallel universe.

• SEC weighs new rules for lending of securities (WSJ)
• GE's Immelt warns US recovery slowest in decades (AP)
• Fed may wait too long to raise rates, says Steve Hanke (Bloomberg) as if there was any doubt
• Is Paulson considering merging CIT and IndyMac, or is he still just accumulating C (NY Post)... Yes, the NY Post
• FDIC seeking to pocket years of bank advances to pretend it is not insolvent (FT)

• Asian stocks rise from two-week low; led by oil and technology companies.
• China will support mergers among `able' companies: Stocks Regulator says.
• FDIC expected to propose banking industry to prepay assessments for the next 3 years.
• The Federal Reserve decided to keep pumping $1.25 trillion of new money into the mortgage market.
• Japan consumer prices fall record 2.4%; deflation return threatens economy.
• Obama admin close to committing $35B to help state and local housing agencies.

One of Zero Hedge's recurring concerns with market abuse has been the concept of manipulated natural Indications of Interest, or IOIs, a topic which readers can catch up on here and here. And yes, absent feedback from regulators this could have added to the ever increasing list of conspiracy theories broached by Zero Hedge. Yet ironically shortly after Zero Hedge first posted on this, FINRA came out with the following regulatory notice 09-28 from May 2009, in which the regulator "reminded firms of their obligation to provide accurate information in disseminating indications of interest."