American International Group
A new page in the fight between HFTs and everyone else was turned recently, after Adair Turner, Chairman of Britain's Financial Services Authority, said that he would consider the implementation of a "Tobin tax" on banking transactions. As a reminder, James Tobin introduced the idea of the Tobin tax in 1971, as a tax on cross-border currency trade, which at its core was meant to moderate short-term speculation in currency trading. Its latest incarnation, however, would strike at the heart of the speculative bubble that has gripped global markets.
So the conclusion is that it always has and always will be about the US consumer. And any concerns that China may stop purchasing US securities are, unfortunately, groundless - China can ill afford to push the US middle class into a greater savings mode, and thus will cooperate as much as it can with the Federal Reserve in keeping both mortgages (for the illusory net wealth effect) and interest rates as low as possible for as long as it can. However, this being simply another fiat-funded bubble, and due to its Ponzi nature, a much more vicious one, the second this symbiosis ends for whatever unforeseen reason, the impact on China, and by implication on the US, will reverberate throughout monetary and fiscal policies and likely result in civil unrest both in the US and China, once Walmart can no longer provide cheap garbage to satisfy the American demand for constant credit-financed unneeded products, and once the China GDP illusion of minimum 8% growth is popped, resulting in an end to the Communist-Capitalist hybrid experiment.
- Spending increases in July thanks to CfC subsidies on less than expected consumer income (AP)
- AIG in no rush to sell stuff (WSJ, h/t Aditya)
- AIG rises and many ask why (NYT)
- AIG's swap blunder now replaying on Wall Street (Bloomberg)
- Hulbert: Rally since March has been extraordinarily speculative (MarketWacth)
- Asian stocks advance on higher commodity Prices, Dell earnings.
- Banks on the FDIC's sick list top 400.
- China’s stocks retreat, Index heads for fourth weekly decline.
- Consumer Spending in US probably climbed in July on `Cash for Clunkers'.
- Euro heads for second monthly gain versus the dollar on recovery optimism.
Spreads were mixed in US credit today with most of the major indices as good as unch by the close but modestly nearer their tights than wides, much like the equity market. Less than 30% of single-names moved more than 3bps as liquidity was very low there although we did hear some 'more normal' two-way flow in IG and HY but certainly not in size as credit stuck in tight trading ranges in both. Breadth was negative in credit though as wideners outpaced tighteners and more curves flattened that steepened. As a side note, IG12 has closed within a 1.5bps range for the last 5 days and intraday peak-to-trough has been 4.5bps in the last four days!
"One might argue there was no Fed bailout involved with Bank of America’s purchase of Merrill Lynch, but I am not the one to make that argument. Merrill’s purchase by Bank of America at a premium price seems to only make sense with the huge assist of the Fed’s largesse in suddenly agreeing to accept lower quality collateral for its loans."
"The main beneficiaries are the insiders who have Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke on speed dial. The Fed has undertaken a massive bailout using U.S. taxpayer dollars."
- Janet Tavakoli
Hilarious. Unemployed bums now becoming expert "daytraders". Two days in a row, during my lunch break at Starbucks, I found young, slacker, unemployeds huddled around a table with their laptops daytrading stocks.
Ladies and Gentlemen, I present to you: AIG
All you ever wanted to know about one of the top High Frequency Trading firms.
My ramblings on how the banking system is broken and what to do about it.
In what can only be attributed to a rogue computer blowing a vacuum tube, virtually all the names in the credit universe were wider over the past week, despite an equity market ripping, or, more specifically, AIG, FNM and FRE ripping and everyone piggybacking for the ride in a few bankrupt companies. In the meantime, loans were wider on average 5 bps while bonds saw their firsts widening in over 2 months at 58 bps.
The Federal Reserve's and Treasury's actions have become the new catalysts for market movement, as they flood and drain the system with liquidity. An analysis of their options looking forward, particularly in the realm of the high interest rates that QE and the constant equity market bid have left us with, may be a better indicator than any in regards to future market direction.
After some interesting disclosures over the past week -- including the fact that a large percentage of the U.S. market volume is comprised of just five financial stocks -- let us review new information and take a look at the week ahead, in order to make some sense of the train wreck already in progress.
- Argentina to offer swap for $2.3B of inflation-linked debt, as export revenues slump.
- Asian stocks advance on recovery hopes, strong earnings lend support.
- Auto worker retirees may get help from $10 billion in U.S. Health Proposal
- Average price of regular gasoline at filling stations slipped to $2.6417 a gallon
- China commercial-property sales in H1 worth more than US, UK deals combined.
- Crude oil futures in Asia continued to consolidate on Friday's gains