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what's that blue thing?
Dec. 5th, 2008 02:59 pmGood afternoon.
I don't entirely understand what happened here, but from 2pm-2:30pm Eastern Standard Time the Federal Reserved purchased US$5B in agencies from FNMA, FHLMC, and FHLB. These are unsterilised permanent outright purchases. This is because no treasuries or other debt appeared to have been exchanged, so no debt was created to balance the issuance of notes to purchase the agencies. As such, this seems to be functionally a printing operation. But I don't know. It's a strange note to a strange week. Stocks rallied sharply in response; the dollar fell against several major currencies and against the index on the news, but not outside of its recent trading range. Watch the M1. Also maybe these Fed charts.
The jobs report was terrible; 533,000 jobs lost in November. Marketwatch has a chart showing the rate of change. Mish notes that yet again, the birth/death black-box has added tens of thousands of jobs, tho' he considers this month's edition to be less comically wrong than usual. The U-6 number - closest to the European standard, and arguably most realistic - puts unemployment at 12.5%, up 50% in a year. Ian Shepherdson of High Frequency Economics describes the numbers as "almost indescribably terrible." Good thing he had that "almost" handy!
Treasury official Neel Kashkari says that the financial system bailout is working on the basis that there is still a financial sector. This is one of the more asinine statements I've heard out of him; sure, some of the major investment banks survived in some form, tho' they're no longer private investment banks, and sure, a bunch of institutions are currently sockpuppeted up via mass infusions of taxpayer money they're refusing to lend out. (You'll note that the TED spread has continued to remain above 2, and has yet to returned to anything like normal.) I suppose that counts as "a financial sector," sure. Why not. What really matters is bonuses are still going out, amirite?
Mortgage foreclosures are at record highs - 3% - with 7% of mortgage holders behind but not in foreclosure, for a total of 10% in some state of delinquency. WIth all the tax revenue losses, California is expecting to have to "pay" a bunch of bills with IOUs.
Institutional stock traders globally are moving to "dark pool" trading fora - where sales are secret and prices not disclosed. Nothing like huge hidden swing sales of stocks to improve market function, ne? Transparency is apparently for losers.
Finally, Japan is worrying about price deflation, with good cause. China is talking up its unwillingness to "saving" the west from the financial crisis. The Fed is continuing to fail to meet targets, missing by 80% today. And the Baltic Dry Index fell to 663, which puts us back to August of 1986.
I don't entirely understand what happened here, but from 2pm-2:30pm Eastern Standard Time the Federal Reserved purchased US$5B in agencies from FNMA, FHLMC, and FHLB. These are unsterilised permanent outright purchases. This is because no treasuries or other debt appeared to have been exchanged, so no debt was created to balance the issuance of notes to purchase the agencies. As such, this seems to be functionally a printing operation. But I don't know. It's a strange note to a strange week. Stocks rallied sharply in response; the dollar fell against several major currencies and against the index on the news, but not outside of its recent trading range. Watch the M1. Also maybe these Fed charts.
The jobs report was terrible; 533,000 jobs lost in November. Marketwatch has a chart showing the rate of change. Mish notes that yet again, the birth/death black-box has added tens of thousands of jobs, tho' he considers this month's edition to be less comically wrong than usual. The U-6 number - closest to the European standard, and arguably most realistic - puts unemployment at 12.5%, up 50% in a year. Ian Shepherdson of High Frequency Economics describes the numbers as "almost indescribably terrible." Good thing he had that "almost" handy!
Treasury official Neel Kashkari says that the financial system bailout is working on the basis that there is still a financial sector. This is one of the more asinine statements I've heard out of him; sure, some of the major investment banks survived in some form, tho' they're no longer private investment banks, and sure, a bunch of institutions are currently sockpuppeted up via mass infusions of taxpayer money they're refusing to lend out. (You'll note that the TED spread has continued to remain above 2, and has yet to returned to anything like normal.) I suppose that counts as "a financial sector," sure. Why not. What really matters is bonuses are still going out, amirite?
Mortgage foreclosures are at record highs - 3% - with 7% of mortgage holders behind but not in foreclosure, for a total of 10% in some state of delinquency. WIth all the tax revenue losses, California is expecting to have to "pay" a bunch of bills with IOUs.
Institutional stock traders globally are moving to "dark pool" trading fora - where sales are secret and prices not disclosed. Nothing like huge hidden swing sales of stocks to improve market function, ne? Transparency is apparently for losers.
Finally, Japan is worrying about price deflation, with good cause. China is talking up its unwillingness to "saving" the west from the financial crisis. The Fed is continuing to fail to meet targets, missing by 80% today. And the Baltic Dry Index fell to 663, which puts us back to August of 1986.
