Michigan

The propaganda crew is out in full force today, as virtually the entire growth in the confidence number was in expectations. We expect a presidential address on how Americans are delighted that Europe is disintegrating, that Ireland is on the verge of civil disobedience, that jobless benefits are expiring and that one can barter a roll of toiler paper for a house.

Home prices, Chicago purchasing managers’ index, and the Conference Board’s confidence index, plus Chairman Bernanke in an informal Q&A setting. POMO today buys $6-8 billion. Two regional Fed presidents are also scheduled to speak (Kocherlakota at 12:30; Lacker at 19:00).….

The upcoming week will be dominated by the same key themes as last week. News on the European sovereign debt crisis, China tightening, the Korean conflict and macro data will remain in the limelight. However, with key US releases including Chigaco PMI, ISM and payrolls data watching may become relatively more important in the coming week. Then again, there is always the trust old FRBNY, which kicks off the reflation trade with not one but two POMOs tomorrow: altogether $39 billion in monetizations coming up in the next week.

US consumers are confident that their imminent bail out of an austere Europe will boost their living conditions, as austerity is now certain to never come to the US, thanks to the "wealth effect or bust" mandate of the Federal Reserve. Confidence came at 71.6 on expectations of 69.5. Since this number is a catch 22 which follows the respondents response to the stock market ramp it is nothing but a coincident indicator to stocks. Yet an actually relevant economic number, new home sales, came at 283k, on expectations of 312k and compared to the previous print of 308k. This was a 8.1% decline compared to expectations of a rise of 1.6%. The mood of the manic depressive market is now spilling over to virtually every economic category.

The Mortgage Bankers Association’s index of mortgage applications is reported to have risen 2.1% in the week ended November 19. At this writing, we have no further details. Market wise, there will be no POMO today.

A summary of the day's key events in equities, vol, FX, rates, commodities, credit, insider trading, corruption, monetary manipulation, racketeering, prostitution, and a forecast of tomorrow's market travesty.

I swear to you that I may be a cynic but I am NOT a pessimist - this is just a crappy market to invest in and I call them as I see them. Did you know that newsletter revenues go down significantly when the outlook is pessimistic? People don't want to hear bad news...

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The city of Hamtramck, desperate for cash, has asked the state for permission to take an unprecedented step: filing for bankruptcy. City Manager Bill Cooper said the city of roughly 20,000 people is staring at a $3 million deficit, fueled by a dispute with Detroit. Unless Hamtramck files for bankruptcy, it won't be able to pay its nearly 100 employees or 153 retirees, he said

The city sent a letter to the state Department of Treasury last week asking for approval to seek bankruptcy protection. It has not received a reply, Cooper said. "I'm going to run out of money Jan. 31," Cooper said. Bankruptcy would allow the city wants to stave off creditors and force its unions to consider concessions.

After watching the total pandemonium and maelstrom of lies out of Europe today, some may have forgotten that our own rulers are among some of the most incompetent, corrupt, and stupid people on earth. Luckily, here is Dick Durbin to remind us that nothing compares quite to the chaos emanating from D.C. - it appears the extension of the Bush tax cuts which until early this week was taken for granted, until yesterday when Moody's implied a permanent extension of such cuts would lead to a rating cut, may have been all but killed after preliminary discussions between Senate Majority Leader Harry Reid, and Mitch McConnell, the chamber’s top Republican, “did not go well.” Bloomberg reports that not only is the Senate's #2 Democrat "not very optimistic" about the option of extensions, but nobody even has a clue what is going on: "I don’t even know what the options are at this moment,” said Washington Senator Maria Cantwell, a Democrat who serves on the tax-writing Finance Committee." Tangentially, the question of how this economy continues to chug along courtesy of central planning by an administration and a monetary institution, both of which are beyond clueless, will some day be the topic of extended Ph.D. papers (of course, by then having a Ph.D. will be perceived as the vilest form of socio-educational stigmata).

I pity the fool!

The latest number from RealtyTrac is out, and it confirms that while there has been a modest dip in October foreclosure activity, it is hardly material, leaving many to wonder if banks truly did halt any of their foreclosure activity as most had indicated (seemingly dishonestly). In October 332,172 properties received a default notice, were the subject of a scheduled auction or an REO (repossession), which are all the events which RealtyTrac defines as a foreclosure, a number just 4% lower compared to September's 347K, and higher than the 325K foreclosures recorded in July rate. Yet sifting through the numbers indicates that there is a pronounced shift within the strata: in the REO category there was a 9% drop as banks repossessed only 93.2K properties, compared to 102.1K last month, which also was an all time record. It appears the REO category is the one which is seeing the biggest bang for the robosigning buck. RealtyTrac's commentary is not surprising: "October marks the 20th consecutive month where over 300,000 U.S. homeowners received a foreclosure notice,” said James J. Saccacio, chief executive officer at RealtyTrac. “The numbers probably would have been higher except for the fallout from the recent 'robo-signing' controversy — which is the most likely reason for the 9 percent monthly drop in REOs we saw from September to October and which may result in further decreases in November." And as usual, Nevada, Florida and Arizona continue to be the states with the highest foreclosure rates.

This week brings the China trade balance for October, where a widening in the trade surplus is expected. Given the G-20 summit this week and the discussion over indicative target ranges for current account surplus countries, this number will be widely watched. We also get the usual activity and inflation indicators (per GS). Most importantly for market participants, tomorrow is the last POMO of the year at about $6.5 billion, and November 10th will see the first QE2 POMO schedule released.

This is just too ironic: after possibly sinking the entire mortgage-backed industry in a moronic attempt to maximize fees and minimize expenses, and hiring any carbon based lifeform that knows 5 words of English to engage in rampant robosigning, the banks are finally seeking to recruit foreclosure experts. Um, isn't that about five years too late? And isn't it also an acknowledgement that banks were in essence lying when they testified under oath that they were sufficiently well equipped to handle millions of foreclosures? The FT reports: "Recent job postings on Monster.com and other employment websites indicate that banks are recruiting “foreclosure specialists” and “bankruptcy documentation” experts. Adecco, the world’s largest temporary staffing company, said the number of such job openings was 25 per cent higher than a year ago. Monster.com says it has seen a 16 per cent rise in recruitment for such positions in the past two months." We would be most amused to discover just how many such job postings the seemingly error-proof Wells Fargo has submitted in the past month. Luckily for Wells, the new recruits will fit right at home: "Most of these jobs are lower level and require no more than high school
diploma, according to advertised listings." In other words, few if any will notice the new additions.