Archive - Sep 2009 - Story

Two key charts this morning for EURUSD: weekly and daily. The weekly chart shows how the market is testing as resistance the old support line of the bullish channel, and last time it attempted to reintegrate the channel last December it rejected it strongly on the close. On the daily chart, we see that the slow stochastic is basically at the same level that corresponds to all the previous significant highs, and we have run all the stops over the past few days after we broke out of the ending diagonal which sets up for a perfect capitulation.

• Pearlstein: What kind of judge stands up for truth and justice? (WaPo)
• Treasury announces it will reduce one of its rescue programs from $200 billion to $15 billion (AP) - we now have six weeks before the US defaults under current debt ceiling regime
• Foreign trade keeps stalling: current account deficit at 2.8% of GDP hits lowest since 1991 (AP)
• Gold keeps climbing higher (FT)
• The SEC gets neutered again (CNNMoney)

• Americans Back Obama's health goals even as they doubt chances for success.
• Asian stocks were higher Wednesday after Wall Street closed at its best levels for '09.
• Bank of England is still considering a reduction in the bank's deposit rate.
• Bernanke says US recession 'very likely' has ended, economy still weak.
• China shares fall on liquidity doubts.

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.