Friday, August 26, 2011
Wall St Loves Bernanke's Non-Answer
GDP Weakness Edges U.S. Closer to Recession
Here from Zero Hedge on US GDP:
The first revision to Q1 GDP printed at 1.0%, down from the preliminary Q2 GDP print of 1.3%, and as expected was worse than Wall Street consensus of -1.1%, although it was certainly not as bad as the miss to the preliminary number.
Stocks have dipped into the red as a result, but only moderately.
Next up: Ben Bernanke's Jackson Hole speech in just over an hour.
Thursday, August 25, 2011
Bears Win Today!
TED Spread Forebodes Ill Market Winds
By Simon Constable at WSJ
- FactSet
Why? Because the so-called TED-spread is spiking.
It measures stresses in the banking system. The higher it is the more stress there is in banking system.
Be warned stress never just stays between the banks. It usually reaches the so-called real economy in fairly short order. That’s where you and I live.
Over the past month the TED-spread has risen steadily to 32 yesterday from 16 at the end of July, levels not seen in way more than a year. That’s still well short of the extreme levels seen in 2008-2009 when it reached 463.
Be warned though, it can expand quickly so keep a close eye on it.
This somewhat obscure metric is easily calculated. Take the 3-month LIBOR rate (the rate at which banks lend to each other) and subtract the 3-month t-bill rate (the rate at which the government funds its short term borrowings.)
Choppy Market Searches for a Bottom
Classic Head Fake
Wednesday, August 24, 2011
Tuesday, August 23, 2011
Fed Rumor Sparks Powerful Rally
More Bad News
But stocks are rallying now!
from Zero Hedge:
And so the double dip confirmation resumes, with the Richmond Fed printing at -10, the lowest since June 2009, well below consensus of -5, a collapse from June's -1, and the lowest since June 2009. From the report: "In August, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — declined nine points to -10 from July's reading of -1. Among the index's components, shipments lost sixteen points to -17, and new orders dropped six points to finish at -11, while the jobs index inched down three points to 1." And more: "Other indicators also suggested additional softening. The index for capacity utilization declined eight points to -14 and the backlogs of orders fell seven points to end at -25. Additionally, the delivery times index moved down twelve points to end at -4, while our gauges for inventories were virtually unchanged in August. The finished goods inventory index held steady at 17 in August, while the raw materials inventories index added one point to finish at 19." And the final nail in the economic coffin was New Home Sales which came at 298K, down from 312K upward revised prior, and missing the consensus of 310k: the lowest in 5 months. "Housing data over the past three months indicates that there is little appetite in the consumer sector to take on the risk of purchasing a home at a time when prices are likely to decline further,’’ says Bloomberg economist Joseph Brusuelas. As Bank Of America (RIP) said yesterday, one false word out of Beranke on Friday, and we will see what could possibly be the most epic market crash ever. For those wondering why stocks surged on this horrible news: look no further than the central planners in the Marriner Eccles building who are now expected to do "the right thing" for stocks.
Collapse Continues
Is the Fed Buying the Stock Market?
If true, this would be an unprecedented market manipulation by the Fed. There is no free market left!
excerpt from Phoenix Capital Research via Zero Hedge:
I found it interesting that the New York Post published a story containing the following quote just 3 hours before the post-FOMC market ramp job started.
Back in October 1989, a guy named Robert Heller, who had just quit his post as a Fed governor, suggested that the government should purchase stock index futures contracts to calm the markets in times of distress.
"The Fed could support the stock market directly by buying market averages in the futures market, thus stabilizing the market as a whole," Heller wrote in an op-ed piece in The Wall Street Journal after saying the same thing in a little-noticed speech. "The stock market is certainly not too big for the Fed to handle."…
This is a rather odd turn of events… a former Fed official urges the Fed to step in and buy the stock market… just three hours before the markets mysteriously reverses and rallies hard on no real news of note.
This begs the question… did the Fed buy the market to put a floor under the collapse? There’s no telling for sure. But it’s rather odd that this article came out just three hours before the market magically reversed and exploded higher
If the Fed did actively buy the stock market to try and put a floor under it, we can assume three things:
1) The Fed is becoming truly desperate
2) The Fed realizes QE isn’t helping
3) QE 3, if it arrives, will be coming later down the line
If the Fed did in fact buy the market two weeks ago, then the Fed is getting extremely desperate. We know the Fed has been supplying juice to key Wall Steet firms who then bought the market, but never before has it been so obvious that the Fed itself may have been buying the market.
Remember since March 2009, QE has been the primary tool the Fed used to deal with the Financial Crisis. QE 1 was something of a success in that in restored investor confidence in the system. However, as I’ve noted in previous articles, by the time we got to QE 2, the negative consequences of QE (inflation) far outweighed the positive consequences (stocks rising).
So the fact the Fed did not announce QE 3 two weeks ago but chose to buy the market (at least it looks that way), indicates then we’re are DEFCON 1 RED ALERT for the entire financial system as it indicates that the Fed is abandoning its more traditional monetary tools and simply trying to buy the market it means the Fed is losing control of the system in a big way.
It also indicates that the Fed realizes that the benefits of QE come at too high of a cost for it to engage in more of this for now. Instead, the Fed will save QE 3 for a little further down the road as a final Hail Mary pass.
Which brings me to the most important point from yesterday’s Fed FOMC: there were three dissenting votes (an 18 year high). This tells us that Bernanke’s “inflate or bust” mentality is coming up against serious friction at the Fed. And it also tells us that there will be fierce resistance to QE 3 if the Fed chooses to unveil it down the road.
The take home point here is that the Fed is not as market friendly as before. There is growing dissent amongst Fed officials. And we’re beginning to see signs of desperation.
In plain terms, the situation in the markets right now is very VERY dangerous. It is easily the most dangerous market I’ve ever seen. We are going to see greater losses and sharp rallies. But the overall trend is now down.
Another Bull-Bear Day?
Monday, August 22, 2011
Consumer Confidence "Deteriorated Sharply", Expected to Fall Further
Is it any wonder that stocks have stagnated today?
(Reuters) - Consumer confidence has fallen further after weeks of intensified economic concerns and broad stock market declines, and Conference Board data due later this month could be even weaker than current projections suggest, Consumer Edge Research said on Monday.
Readings from high, middle and low-income consumers all deteriorated sharply, due mainly to dramatic declines in outlook, the independent equity research firm said.
The firm's Consumer Economic Index is now at 45.4, down 10 percentage points from July and down 1.5 points from the 46.9 level it reported on August 10. Two days after that report, the Thomson Reuters/University of Michigan's preliminary August reading showed that U.S. consumer sentiment had fallen to its lowest point since May 1980.
The 45.4 reading is the lowest since Consumer Edge Research began its index in March 2010.
Consumer Edge Research forecast that the Conference Board's full-month Consumer Confidence Index would deteriorate 8 to 10 percentage points from an unadjusted 59.5 in July when its report is issued on August 30.
As of Friday, consensus was calling for a 2.5 percentage point decline, "so we believe there is downside risk to current expectations," Consumer Edge Research said.
Near Overthrow of a Dictator is the Only News, So Likely to be Another Meltup Day
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