May. 15th, 2009

solarbird: (Default)
Good morning!

The Fed today bought just under US$3B in short-term treasuries today, a record third day in a row of such purchases. One might suggest that this is related to private investors being exceedingly nervous about treasuries in the face of a flood of new borrowing. The Financial Times is getting overtly worried about the US's AAA credit rating. Possiby in response, Mr. Obama referred to the US debt as unsustainable, but you can talk all you want to and it doesn't have to mean anything.

Meanwhile, Dr. Roubini talks about what China needs to do in order to make the Renminbi a true reserve currency. China has been taking some of these actions, but by no means all. Japan's main opposition party, the Democratic Party Japan, has indicated an unwillingness to purchase future dollar-denominated US bonds. However, it's not likely they'll take power any time soon. However, it appears that Japan's economy shrank at a record rate last quarter.

New unemployment claims were quite a bit higher than expected - 637,000 last week, up 72% year-to-year. More, it's harder to find a job in that job listings are at modern record lows; the average length of unemployment is up to 21 weeks (a modern record) and 25% have been off more than six months (same notation). It's being blamed on Chrysler; those layoffs are still going. Census layoffs aren't showing up yet.

But back to cars - Chrysler notified 789 dealers that they're being cut off today, or a little over 25% of their dealer network. Here's a link to a copy of the list.

Chrysler's bankruptcy will take a lot longer than 60 days.

Retail sales fell in April a somehow-unexpected 0.4% month-to-month, and 9.4% year-to-year. Take out car sales and the data was worse, not better, at -0.5% mtm. Frankly, I'm surprised it's only that much worse, but that's me. March sales were revised to the worse. But instead of reacting to that, the markets decided that discounters doing comparably well is an indication everything will be fine. Mish talks about the sales figures here.

Back at housing, US foreclosure filings hit a second straight monthly record, at 342,038, in no small part thanks to rising unemployment. CNN Money calls the number "a shocker," but one has to wonder who exactly is so shocked other than people who simply refuse to look at the data. Minyanville reports that subprime lending is back, with a vengeance - but this time through tax subsidy, as the tax rebate for house purchases is adjusted to allow the rebate to be used as your down payment, recreating the failures of the subprime era with tax credits.

Careful with those stocks, Eugene - noted technical analyst Robert Prechter thinks equities are headed south, and far. Also, US commercial paper, used to fund private debt, has dropped again. It's used for short-term operational funding, similar to shipping loans discussed previously. Corporate bonds were downgraded in the first quarter of 2009 at a rate of 14.5%. That's a lot - $522.4B in bonds were so downgraded.

California, land of the ever-increasing budget deficit, has formally asked the Treasury for TARP assistance. Clusterstock reports that the Federal government is getting ready to backstop all municipal bonds, a move commonly thought to be aimed at propping up California.

The US Treasury wants to regulate the derivatives market. This could have good and/or bad effects, depending upon what they do.

The Baltic Dry Index continues to slowly trend back up from crazily-low numbers. The US dollar is hanging out in the low 82s on the Index, and is lower against both the Canadian dollar and the Japanese yen. Stock futures are somehow all higher in European, US, and Canadian markets. Good luck!
solarbird: (Default)
Good afternoon.

I want to punch this guy in the face. Why? Not because he was an idiot with his finances and is a portrait of all the stupid individual manoeuvres made over the last few years - tho' he's certainly that - but because he's a New York Times financial reporter who actually reported on all these kinds of stupidity while he was emulating them. Honesty's nice and all, but EDMUND L. ANDREWS is an idiot, and should never work as a financial reporter again. Seriously, read it, it has it all; liar loans, multiple refinances, automatic withdrawals(!) from credit cards in response to bouncing cheques, idiotically frivolous spending - and as of right now, he's living in a house rent- and mortgage-free for the last eight months because his latest bank is so far behind in processing restructuring applications that they still haven't even got to him!

Punchings. Lots and lots of punchings.

Anyway.

US consumer sentiment rose in May "on a rosier outlook," says Marketwatch, or, on buying into the bear-market rally, says me. Well, that, and falling prices - the biggest drop in 54 years - will make people happier, until and unless a deflationary cycle really starts to eat people.

There's a neat contradiction in polled perceptions and reality, however; take this from the CNBC version of the Reuters story:
"Consumer confidence rose in early May as consumers became increasingly convinced that the economy is in its final stages of contraction, and paradoxically, that their personal finances would remain dismal and keep their spending at reduced levels for the foreseeable future," the Reuters/University of Michigan Surveys of Consumers said in a statement.

Confidence remained shaky overall however, with the majority of consumers in early May reporting their financial situation had worsened due primarily to income declines, shorter work hours and lost jobs, according to the survey.
Neat, huh? The typical poll respondent is saying essentially, "The economy's going to start getting better now for everybody but me. My sitation is getting worse, and I expect it to keep getting worse. Externalised optimism of this sort is kind of a new one on me.

Oh, and credit card defaults set another new record in April. Citigroup's charge-off rate hit an annualised 10.21%, Wells Fargo hit 10.03% (also annualised, as these all are), JP Morgan Chase and Company hit 8.07%, Discover's hit 8.26%.

GM announced its dealership cuts today - 1,100 across the US on the GM label, another 470 from cutting Saturn, Saab, and Hummer. Mergers will bring the total cuts to 2,600 for GMC as a whole; add in Chrylser's closings and you're looking at about 100,000 in job cuts.

If you want some bear pr0n, by which I mean economic bear pr0n, check out Marc Faber on CNBC and John Browne of Euro Pacific Capital, the latter calling for a DJIA - yes, DJIA - of 1,000, also on CNBC. Bill Spiropoulos argues back that jobless claims are falling - and they're still below April peaks - which is the counter-argument. Idly, the atmosphere right now feels a lot like 1930 - everyone optimistic and thinking it's about wound up, but, well.

Mish expects oil prices to drop as Chinese storage capacity is reached. Russia's economy, already reeling from oil price drops, will not like that. Meanwhile, Hong Kong's economy contracted at the worst rate since 1955 in the first quarter, down at an annualised rate of 6.5%. Germany and Italy both set modern decline records, leading Europe down in the last quarter.

Today's another FDIC Friday. Florida expects to see at least one bank seizure today. We'll find out, and I'll eta this later if appropriate.
solarbird: (Default)
...as it were...

An interview with a stick of butter.

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