And that's a wrap
May. 6th, 2010 10:18 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
solarbirdZero Hedge on the crash bounce:
Lost in the noise today was that the attempt to force break-up of "too big to fail" banks failed in the Senate. "Too big to fail" looting will continue, at least for now.
Jonathan at America Canada carries forward a bunch of notes from other sources including "The Death of the Triple-A Sovereign;" it's worth a read.
Dr. Roubini of RGE Monitor, in video interview on CNBC, talks about what he expects to be a a solid three bad months for the market.
The US dollar index has stabilised at around 84.8, for the moment, halting several days of rise. The Japanese Central Bank is moving to lower the value of the Yen, which has been rising quite a bit; they've punched it for about 1.6% so far today, and the Nikkei has responded favourably. The Euro is stabilising a bit tonight; rumour says there's support action out there, but the European central banks are keeping mum. The Pound Sterling is taking a bit of a beating.
There's a US jobs report out tomorrow; it's expected to be pretty good. Chief Executive Obama is going to make a special address on the topic, which almost certainly means it is quite good; rumour is +100,000, excluding census hiring. I forgot to mention back in January, but the 585,000 jobs added via the BLS birth-death model since the previous April 2009 baseline were reduced to 158,000, retroactively. That's clearly what January is for.
I saw data on the consumer spending numbers that have been climbing this year; it all comes from cuts in savings rates and government outlays. The private economy isn't helping yet. Sorry; no link.
A while ago, I posted suggested reading on the M1 money multiplier, and this followup post. Money velocity is still quite poor - actually worse when I made those reading recommendations - which implies bad things about liquidity, which leads to spikes like today, and so on.
Seriously, markets haven't been this unstable in a while. And Europe's a mess. It's currencies and equities and you're seeing CDS spreads rising and I've seen this before, recently even, up close, and I didn't like it. So were I in the EU, I'd be making sure I had a little earthquake cash. Just a little, just to be safe, the kind of stash you should have sitting around in the event of an earthquake or typhoon anyway. Nothing more than that.
I want to stress that this does not feel nearly as dire as October 9, 2008 did (the UK came within about three hours of a systemic banking collapse the very next day, which would have triggered disaster throughout the modern economies), and this time, governments and banks are all really, really watching for all this, which matters. A lot. I'm not seeing that degree of chatter, and all of these factors are reducing the fear level. But... I'm not in Europe. I'm not in France, I'm not in Portugal, I'm not in Greece, and that affects what I see and hear and tones things down for me. Also, this time - if there is a "this time" - we've had a real warning shot. All these bring perception of risk down.
But.... something isn't right. There's no explanation for what set off today, and my best guess is still that this means somebody needed a lot of money, quickly, no matter what. And we don't know whether it was resolved. We just don't. That same kind of thing happened a few times in 2008 - it showed up in exchange rates and stocks both - and, like in 2008 when we saw these events, we should see a bounce that carries out a little while. But even with that, well, we know how 2008 worked out, don't we?
It's rather late here in Cascadia; this is my last post of the night. The Nikkei is still down around 3% (-330.39) after rallying up a bit midday; Hong Kong is pretty stable (down 0.7%, 140.36) at the lunch break. Moscow isn't open yet, but will be in a few hours. Good morning, Europe; good luck, everyone.
In 20 minutes the market showed that it is as broken as it was at the nadir of the market crash. Through its inactivity to investigate the market structure, the SEC has made things a million times worse, as HFT-trading seminars for idiots are now rampant. HFT killed over 12 months of hard fought propaganda by the likes of CNBC which has valiantly tried to restore faith in our broken capital markets. They have now failed in that task too. After today investors will have little if any faith left in the US stocks, assuming they had any to begin with. We need to purge the equity market structure of all liquidity-taking parasitic players. We must start today with High Frequency Trading.Recommended reading.
Lost in the noise today was that the attempt to force break-up of "too big to fail" banks failed in the Senate. "Too big to fail" looting will continue, at least for now.
Jonathan at America Canada carries forward a bunch of notes from other sources including "The Death of the Triple-A Sovereign;" it's worth a read.
Dr. Roubini of RGE Monitor, in video interview on CNBC, talks about what he expects to be a a solid three bad months for the market.
The US dollar index has stabilised at around 84.8, for the moment, halting several days of rise. The Japanese Central Bank is moving to lower the value of the Yen, which has been rising quite a bit; they've punched it for about 1.6% so far today, and the Nikkei has responded favourably. The Euro is stabilising a bit tonight; rumour says there's support action out there, but the European central banks are keeping mum. The Pound Sterling is taking a bit of a beating.
There's a US jobs report out tomorrow; it's expected to be pretty good. Chief Executive Obama is going to make a special address on the topic, which almost certainly means it is quite good; rumour is +100,000, excluding census hiring. I forgot to mention back in January, but the 585,000 jobs added via the BLS birth-death model since the previous April 2009 baseline were reduced to 158,000, retroactively. That's clearly what January is for.
I saw data on the consumer spending numbers that have been climbing this year; it all comes from cuts in savings rates and government outlays. The private economy isn't helping yet. Sorry; no link.
A while ago, I posted suggested reading on the M1 money multiplier, and this followup post. Money velocity is still quite poor - actually worse when I made those reading recommendations - which implies bad things about liquidity, which leads to spikes like today, and so on.
Seriously, markets haven't been this unstable in a while. And Europe's a mess. It's currencies and equities and you're seeing CDS spreads rising and I've seen this before, recently even, up close, and I didn't like it. So were I in the EU, I'd be making sure I had a little earthquake cash. Just a little, just to be safe, the kind of stash you should have sitting around in the event of an earthquake or typhoon anyway. Nothing more than that.
I want to stress that this does not feel nearly as dire as October 9, 2008 did (the UK came within about three hours of a systemic banking collapse the very next day, which would have triggered disaster throughout the modern economies), and this time, governments and banks are all really, really watching for all this, which matters. A lot. I'm not seeing that degree of chatter, and all of these factors are reducing the fear level. But... I'm not in Europe. I'm not in France, I'm not in Portugal, I'm not in Greece, and that affects what I see and hear and tones things down for me. Also, this time - if there is a "this time" - we've had a real warning shot. All these bring perception of risk down.
But.... something isn't right. There's no explanation for what set off today, and my best guess is still that this means somebody needed a lot of money, quickly, no matter what. And we don't know whether it was resolved. We just don't. That same kind of thing happened a few times in 2008 - it showed up in exchange rates and stocks both - and, like in 2008 when we saw these events, we should see a bounce that carries out a little while. But even with that, well, we know how 2008 worked out, don't we?
It's rather late here in Cascadia; this is my last post of the night. The Nikkei is still down around 3% (-330.39) after rallying up a bit midday; Hong Kong is pretty stable (down 0.7%, 140.36) at the lunch break. Moscow isn't open yet, but will be in a few hours. Good morning, Europe; good luck, everyone.
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no subject
Date: 2010-05-07 05:48 am (UTC)i'm honestly not keeping up with this too well, but my understanding was that greece was the catalyst of today's fiasco
no subject
Date: 2010-05-07 03:42 pm (UTC)I wouldn't be too surprised if it was somebody Swiss, or somebody heavily in the Swiss markets or banking system. The Swiss had to let their Franc rise in the 24 hours before this started, and that could've triggered something. But it's all speculative until we know something real.
no subject
Date: 2010-05-07 02:25 pm (UTC)no subject
Date: 2010-05-07 03:46 pm (UTC)Plus, I mean, while they aren't printing per se', they're really printing. In theory, all those sales to the Federal Reserve are backed by instruments of value, formerly owned by banks, swapped for previously-purchased T-bills. This is what all that AIG funnelling was about. But most of those "assets" are actually valueless, or close to, with a fake value attached by "model" based pricing. ("What we think these should be worth.") If you pretend those are real and issue actual money based against them, you're de facto printing. And printing adds to liquidity. It's not adding quickly enough to counteract credit deflation, but it's a positive.
no subject
Date: 2010-05-07 05:01 pm (UTC)The banks are still holding enough bad paper to drag them under, (although they seem to be allowed to "hide" this from their balance sheets.) There were 500,000 homes that went into foreclosure last month. There is still the probability of massive credit card default and equally massive student loan default. (I know student loans cannot be wiped by bankruptcy or the like, but you also cannot get blood from a stone.)
There are other factors I'm sure I'm overlooking, but I have little doubt our current "recovery" is built on a house of cards.