Archive - Mar 10, 2010 - Story

In his piece today, Rosenberg analyzes the increasing lumpiness of volatility in the secular market, observing an increasing performance variation as the duration of major market moves is reduced, while the delta from the flatline keeps growing. Ironically this is happening even as implied correlation drifts lower over time. And even as all eagerly await to see just what the financial regulation overhaul will look like, Rosie observes that the market is now experiencing "intense volatility that has been and continues to be nurtured by government policy." As we shift to a market which is backstopped by taxpayers holdings of assets on which even the FASB encouraged informational opacity, one wonders just what is the real value of information that prices now convey?

The BLS has released the January state unemployment update: the unemployment rate increased in 30 states, while somehow nonfarm payrolls increased in 31 states. Presumably this is due to an increase in the total labor pool. As reported, "Michigan again recorded the highest unemployment rate among the states, 14.3 percent in January. The states with the next highest rates were Nevada, 13.0 percent; Rhode Island, 12.7 percent; South Carolina, 12.6 percent; and California, 12.5 percent. North Dakota continued to register the lowest jobless rate, 4.2 percent in January, followed by Nebraska and South Dakota, 4.6 and 4.8 percent, respectively. The rates in California and South Carolina set new series highs, as did the rates in three other states: Florida (11.9 percent), Georgia (10.4 percent), and North Carolina (11.1 percent). The rate in the District of Columbia (12.0 percent) also set a new series high. In total, 25 states posted jobless rates significantly lower than the U.S. figure of 9.7 percent, 11 states and the District of Columbia had measurably higher rates, and 14 states had rates that were not appreciably different from that of the nation."

Remember G-Pap's statement, repeated roughly once for every dollar of US sovereign debt, that Greece is not looking for financial aid? One could say the man knows a lost cause when he sees one (nobody can say they refused to help you if you didn't actually need help), which is why Greece has just become the biggest sovereign debt panhandler, begging its own people for a bailout. The Greek situation is now so bad that as of a few days ago there is a newly opened account titled "Solidarity Account for Repayment of Public Debt" at the Bank of Greece, which is now redirecting public donations straight for the "repayment of Greece's public debt." We hope these are tax deductible. This account has appeared about at the same time as California has started asking retail investors to directly invest in its critical $2 billion bond offering. In the sovereign crises of the future, will paypal donations play a critical role? All signs point to yes.

For much of the early going the Industrials looked like they might have a go at a run toward new highs. Part of the thrust came from a series of rumors that spurred trading in the likes of Fannie, Freddie, AIG and Citi. The rumor that seemed to help them all was a zany thesis that the U.S. might ban shorting of the companies that it had a large stake in. While the rumor seemed whacky and unfounded, a rumor is not responsible for who believes in it. That became evident as buyers surged into the above-named stocks, probably on the theory that a shorting ban could cause a massive short covering rally. Citi benefitted from a couple of other rumors. Charlie Gasparino reported on Fox that the U.S. government was looking to sell its Citi stake. That might free the company up. The stock spiked 7%. Also helping was the strong demand for some preferred shares the company was issuing. The rumor driven frenzy in those stocks swelled the volume sharply. Monday looked like the slowest day of year, followed by the highest volume in a month. All thanks to a couple of rumors. - Art Cashin

• Regulators tell US banks to hold money (FT)
• Even as Italy is expected to go bust next, Italy's Romano Prodi Says "Greek Crisis Is Over, Rest of Region Safe" (Bloomberg)
• Race to the bottom with G4 currency rhetoric (Reuters)
• Finance: an exposed position (FT)
• Todd Harrison: The witch hunt widens on Wall Street (MarketWatch)
• Simon Johnson reviews Hank Paulson's memoir (The New Republic)

• Asian stocks fluctuated as shipping lines and oil companies declined.
• British banks face increased bonus disclosure as Myners plans to lower bar
• China's trade surplus shrinks to smallest in a year as imports surge 44.7% in Feb.
• Chinese banks lend about $102.6B in February, around half the loans issued in Jan.
• EU is considering a ban on speculative derivative trades, including credit default swaps.
• Japan's Jan machinery orders fall 3.7%; business spending revival may be slow.
• Manufacturing in U.K. unexpectedly plunges as it sees `fragile' economy

RANsquawk 10th March Morning Briefing - Stocks, Bonds, FX etc.

RANsquawk 10th March Morning Briefing - Stocks, Bonds, FX etc.