Archive - Jan 27, 2010 - Story

We keep harping on the lack of volume to the upside, and inversely the massive flushes on every down draft. This is due to basically no real money buying, but very real money selling on any appropriate catalysts. So who does the buying? And how does vapor volume manage to push the market by nearly 1%, usually higher? Simple - there is no liquidity left at the margin for the entire market! Market neutrals lost the war... And the results will be forthcoming soon. Some terrific insight from Art Cashin.

The one month T-Bill is now trading negative (-0.01%). Year end window dressing is either woefully early or late. Flight to safety is woefully right on time. Lehman redux.

December new homes sales come in at 342,000, down 7.6% from in November, and a resounding miss of expectations of 366,000. The double dip is here.

With Bernanke at the FOMC meeting, one wonders where the Chairman finds all the time to deal with these assorted "distractions." In other news, Bernanke claims he was not directly involved in counterparty talks... So Geither was not, Paulson was not, Bernanke was not...Uh, did anyone at all authorize the biggest bailout in American history? Or was Goldman Sachs given a proxy exclusion on this one "very rare" occasion? To wit:

"I was not directly involved in the negotiations with the counterparties."

"I was not directly involved in the discussions with AIG related to this decision."

"I was not involved in discussions with the SEC about any disclosure issues involving AIG."

RANsquawk 27th January US Morning Briefing - Stocks, Bonds, FX etc.

Remember how that "massively" oversubscribed Greek bond deal (at HY spreads) was supposed to bring peace and prosperity to the gyro makers? Well, oops... Today, the spread between Greek 10 Years and Bunds just hit a record wide of 406 bps, as CDS also hit another all time wide at 370 bps. The chart below shows how Bund spread has moved over time: basically the funding problem in Greece just got worse despite of the bond sale, and now the Greek finance ministry has entered desperation mode. Just how desperate? The latest development which is precipitating this move (which of course involved Goldman Sachs), is the rumor that Greece has hired GS to sell €25 billion of Greek bonds to... Beijing. Welcome to the new lender of last resort: China has just become the world's Federal Reserve.

Readers seeking a live webcast (interrupted by an occasional Goldman Sachs commercial) of the Committee on Oversight and Government Default can find it at the Committee's website here.

The link also includes the full schedule and opening statements from all participants.

As a reminder, here is the lineup for today's grilling

More death and destruction, this time from Hank Paulson: "The decision to rescue AIG was correct, and I strongly supported it. An AIG failure would have been devastating to the financial system and the economy. We could not have anticipated the magnitude of AIG’s problems; and we had no way of letting it fail without disastrous collateral consequences" but "I was not involved in any of the decisions made with respect to those payments, nor was I involved in any of the decisions about AIG’s public disclosure of those payments. Those matters were handled by the Federal Reserve Bank of New York and the Federal Reserve Board." And Tim wasn't in charge... So who the hell was it?

• Main Street vs Wall Street battle lines getting clearer: Bankers unite against Barack Obama and Gordon Brown in call for world regulation (Evening Standard)
• Geithner AIG recusal was "After the fact" Issa says (Bloomberg)
• Throw Bernanke and Congress overboard (Portfolio)
• Blocking Bernanke is smart economics, smart politics for democrats (The Nation)
• Split in the UK: Mervyn King rubbishes Gordon Brown's Tobin plan, allies himself with Obama (Telegraph)
• As long expected, sovereign CDS trading is the new black (and FX): Swap trading surges as national deficits rise (Bloomberg)

• CBO pegged the 2010 US budget deficit at $1.35 trillion.
• China’s stocks fell, sending Shanghai Composite Index briefly below 3,000 - first time since Oct. 30
• Commodities stocks, metal prices drop as China curbs growth.
• Japan exports rise for first time in 15 months, beating estimates on China.
• Oil falls to near $74 a barrel in Asia amid concerns over weak recovery in oil demand.
• Several Chinese banks have ordered some branches to suspend lending for this month.

RANsquawk 27th January US Morning Briefing - Stocks, Bonds, FX etc.

Toyota just announced that it's suspending the sale of its most popular model, the Camry, along with seven other models.