an exciting week, isn't it?

Good morning. It's been an exciting week! This AM, we'll get more excitement as we see the producer price index (PPI) numbers, some initial jobless claims numbers, and the Empire Manufacturing Index. That should be fun. 8118 is December's low on the DJIA, in case you forget. Depending upon these numbers, we could see a retest, um, today. Futures are not looking good overnight, though some of the commentariat are blaming Steve Jobs' medical leave of absence from day-to-day operations at Apple.

All this trade and manufacturing data is showing up strangely in the Baltic Dry Index, though, which I want to point at again for a moment. It's been up sharply several days in a row and is now back over 900. This is still a crash number, but it's a big chunk of recovery. However, it is entirely due to spikes in Cape-class ship utilisation, a very small pool of very high value. All the smaller ships are still in the toilet, price-operations-wise. And I've read that container shipping is still a mess. Is all this stockpiling oil? I don't know. But something's happening.

Have I mentioned commercial property lately? I think I have. Loan distress rates are spiking. (As are risk spreads on commercial real estate loans. Remember, up is bad here.) And the banking situation is a clusterfuck of unintended consequences as bailouts have spurred the need for... more bailouts. Bank of America may be next in the queue, with Citigroup disassembling itself now to try to save the core Citibank. Oh, and, of course, GM's already lining up for more taxpayer money. As expected.

Really, the one bit of good news is that the TED spread has fallen below 1 - but lending volumes are still terrible. Still, if they trust you enough to lend to you, the rates are no longer as bad; it's not entirely pretend good news, unlike the technical recovery of "non-borrowed" bank reserves, the H.3 - nonborrowed reserves are positive, at US$228B! But that's also bullshit, because the Fed changed the rules so most of the borrowing doesn't count as borrowed funds. Transparency loses.

Canada's TSX hasn't been having a good week. Japan is hit hard overnight, the Nikkei 225 down almost 5% in reaction to a terrible, terrible machinery orders report. (The broader 500 was down in line with US markets, at 3.1%) Still, the Yen remains around 円89/US$1. Korean stocks are down significantly as well.

December sales were a worse disaster than surveys indicated. Calculated Risk has an excellent graph; there is no good news in that report. We're starting to see more crazy ideas like taxes on savings, with the intent to "force" people to spend money. Fortunately, so far, these are only crazy ideas, and not policy. We'll see more crazy ideas as the problems in pension plans become unignorable. Did you know that the Pension Benefit Guaranty Corporation - the underfunded, unstable insurer of pension plans - is a Bernard Madoff creditor? Can you see where this goes? I can!

The UK is changing Bank of England rules so they can print currency without reporting it for longer periods of time. It still has to come out eventually, but instead of weekly reports, they'll be monthly, allowing for almost two months of lag. There's a thesis out there that the US is screwed - hard - but that Europe is screwed harder; the even-worse opacity of the European banking system is the prime motivator. We'll see whether that's right - but the key may be whether the Mexican government collapses. (That instability I've talked about previously is recognised by the US military.)

Talking of which, Ben Bernanke's London School of Economics commentary got taken apart (or "translated") by Mish here, and by Karl here. Neither are what you'd call "impressed."

Spain gets worse: S&P has put it on credit-watch negative, indicating that its AAA sovereign rating is in danger. There's kind of a running bet as to whether Spain or Greece will fail first, and whether one or the other will bring down the Euro. However, remember that the death of the Euro has been predicted more often than the death of Usenet (film at 11) so. Greece did get its rating cut by S&P today - to A-/A-2. That's not good for a sovereign country.

There's been another leg of US dollar rally recently as Europe looks worse and worse; the Yen has actually strengthened quite a bit. But the rest of the basket? It's not pleasant. Read this analysis of Chinese reserve growth in the 4th quarter over at Brad's column for the CFR; much of the latest round is illusory. And while monthly estimates are not the most reliable things, he's become much more convinced that China's reserve growth rate has peaked. This has interesting implications for the value of the Yuan.

China is getting louder about blaming the US for the crisis, btw. Karl has very cranky commentary here. Marketwatch has started publishing articles called Seven most horrible things about Bush's presidency. The cost of the 2009 stimulus bill has jumped to US$850 Billion. I sure hope that the Chinese, Korean, Japanese, and Gulf state governments keep buying US treasuries, because if they don't, well. That'd be bad.

correction: Errant commentary about the Can$ removed. That's what I get for trusting Yahoo!'s new reporting system, which handed me bad data. Right then, INO for all currencies from now on. Thanks to gfish for the catch.

been a bit

Scatterings

update on s00j

Okay, so s00j's surgery yesterday went well, but they discovered that she had both appendicitis and the ovarian cyst, which meant bringing in an extra surgeon mid-procedure to take care of both at once. You can read lots of details here. As I mentioned previously, s00j is a full-time working musician without health insurance, so that's all very expensive.

One of the things being done to help raise money for all this - they need around US$25,000 - is a benefit anthology that sounds awesome. So go look at that, if you already have her CDs or the Tricky Pixie live CD, or, you know, something else. There are a lot of options.

And while we're on the topic of Tricky Pixie, jenk noted over in alexanderfans that Tricky Pixie band member and solo musician Alexander James Adams's finances are still pretty iffy for various unfortunate reasons. I'll just quote her:

...we did save Fae Hollow from the loss of the Washington Renaissance Faire, but Alec has told me that finances are still strained, and probably will be for a few years. Partly it's the cost of the transition (he does have insurance, at least at the moment) and the ongoing cost of buying Phil out of the house and the business. So if you have friends or relatives you'd like to corrupt introduce to Alec's music, it's always a good time. (And CDs are all $15 at shows - just a little discount there. :)

So! It's been a difficult year for musicians I know. Check their stuff out, it's fun.

Friday like Sunday

Good evening, Cascadia; good morning, nearly everywhere else. Friday's economic calendar includes the CPI, December factory capacity utilisation, and December industrial production numbers, amongst others. Most of yesterday's numbers came in reasonably in line with expectations, some slightly better, some - first-time jobless claims, mostly - a bit worse. 24/7 Wall Street has a brief commentary on the ominous sign of profitable companies laying off workers, with several examples.

But tonight's big overnight story: Bank of America is getting US$20B in direct taxpayer money and Federal pledges to backstop another US$118B in losses. They're blaming post-merger found losses at Merryl Lynch, tho' really the only part of that's which is almost certainly a lie was the "post-merger" part. There's an amusing stock-price chart at the link, and by "amusing" you may read "infuriating." Stockholders are furious, now. Go fig. (Bloomberg story here.)

BoA has moved its earnings announcement up from Tuesday to Friday, 7AM EST; nobody knows why, rumours are of a short squeeze. (That big EOD rally? Led by financials. And stock futures are sharply up on news of yet another taxpayer money spigot being hooked up.) Minyanville had some commentary on this earlier Thursday, when rumours started flying late in the day.

Some of this is typical negotiation bluster, but California Gov. Arnold Schwarzenegger says California will be insolvent within a few weeks. Nationally, yesterday's report of a US$850B stimulus package was slightly wrong; it's $825B. For now. How does anyone think the US can just keep doing this? Looking forward from the last few months, you'd be looking at a US budget deficit of well over US$2-3 trillion with a T and rhymes with T, and stands for Trouble. Picking the middle range you get 17% of GDP, in a year, just of deficit. You want to sell that many Treasuries?

Ireland, by contrast, is making cuts to try to prevent that sort of thing from happening. Over in the middle east, Brad Setzer thinks Gulf-state sovereign funds have been hurt quite badly, but calling his opinion an educated guess given the lack of data.

Marketwatch lists Six Brutal Facts About Your Nest Egg. Minyanville talks about deflation and effects thereof - read that one, Kevin's pretty good, and talks a lot about societal mood. Mish does too, tho' to my mind less convincingly. Oh, and since the election, I've seen a lot more GOP-conservatives trying to paint this scenario as Atlas Shrugged and themselves as Randians. Sorry, fuckers, you can't spend a decade and a half being Paul Larkin and then spin 'round and declare yourselves the heirs of Dagny Taggart. Stop masturbating and start facing reality, if that's even possible.

Societe Generale's Albert Edwards says the US is likely to face a depression, and to sell any stock rally. Oh, and by the way, China could implode fiercely, and a likely alternative to that is a global trade war with China. So now both sides of the Atlantic are making implosion calls for each other, and saying the Pacific will implode too. (The last time I saw intelligence reports like that,^* both sides were right. Not cheery!) And Hugh Hendry of Eclectica told CNBC that there is no money waiting on the sidelines - it's a myth; don't expect that rescue.

On the other hand, the stock market failed to break through December lows on Thursday, so that's something. (The only thing lower was the crash close print in late November, in the mid-7000s on the Dow, so under that you nave no support.) Is tonight's BoA action what daytraders refer to as a sticksave? If so, well, those have not been lasting more than a couple of days. So good luck, and enjoy the long weekend.

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^*: 1913. Austria-Hungary and Imperial Russia. Long story.