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So what happened this week
May. 15th, 2009 12:34 amGood 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!
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!
