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solarbirdGood morning.
The TED spread this morning has fallen to 3.83. LIBOR is also continuing down, though not as much - but down is down. This is good; we can only hope it continues as a trend. You'd sure hope so with Fed liquidity at US$784.5 Billion as of Wednesday. (My traditional source for measuring this no longer works usefully, since so much of it is now simply ad hoc.) The stock markets are what would traditionally be thought of as extremely volatile but in recent terms not so much, and are currently trading around flat. (Remember, "down 400" is the new "up.") Oil is recovering a bit of its massive losses, still at half price vs. a year ago. 10-year T-bills are in light selloff. Dollar index is volatile but not moving in any decisive direction; Yen and Canadian dollar are both off their recent lows.
I suppose it's meaningless now, but I finally looked at the October 8 H.3 bank reserves report, and nonborrowed reserves at US banks fell to US$-363.5 Billion. Back then, they were only borrowing half a billion from the Fed, so one presumes you can expect it to drop another few hundred billion by the next report, and after that, who knows? Maybe they can go for a trillion! 24/7 Wall Street calls it armed robbery. The Mess that Greenspan Made says Fed so-called lending could hit 3T by EOY2008. Good times!
It doesn't inspire confidence, though. Particularly since the non-financial economy took it in the gut last month. That polling data I mentioned earlier is starting to show up in official numbers, as overall consumer sentiment fell in October at the fastest rate ever, to 57.5 from 70.3. Current conditions sentiment is at the lowest number in the history of the poll. Housing starts continue to plummet, which is actually good since the market is oversupplied, but bad for construction workers.
I mention this because I thought they were a pretty good store, with a name that prompted a series of geeky math injokes: N is now approaching 0 as Linens N Things is going out of business. Permanently. This isn't a bankruptcy reorganisation; liquidation sales start immediately.
I mention this because of the "huh, wow" involved; Countrywide has decided to ignore the State of Illinois's ruling revoking their license to issue new loans in the state, relying instead on their Federal charter.
By the way, the Federal Reserve still can't hit their supposed target rate, tho' with the newtype definition of "anything within 75 basis points" they are. But I have to express my lack of support for bullshit like that. Whenever you're talking lessons from the Italian fascist movement (who made the trains run on time by declaring +/- 1 hour to be "on time"), I feel all skeevy. In a strange intersection of skeeviness, Mish has hard questions for "Joe the Plumber," such as, "If you can't pay your tax bills how are you going to buy out your employer?" He also sees food prices falling, based on falling general commodity prices. See, deflation's not all bad.
eta: at 13:37 Eastern, which I report that way solely because it is l33t time, the TED had fallen to 3.53. The LIBOR is not moving as solidly, which is somewhat confusing.
The TED spread this morning has fallen to 3.83. LIBOR is also continuing down, though not as much - but down is down. This is good; we can only hope it continues as a trend. You'd sure hope so with Fed liquidity at US$784.5 Billion as of Wednesday. (My traditional source for measuring this no longer works usefully, since so much of it is now simply ad hoc.) The stock markets are what would traditionally be thought of as extremely volatile but in recent terms not so much, and are currently trading around flat. (Remember, "down 400" is the new "up.") Oil is recovering a bit of its massive losses, still at half price vs. a year ago. 10-year T-bills are in light selloff. Dollar index is volatile but not moving in any decisive direction; Yen and Canadian dollar are both off their recent lows.
I suppose it's meaningless now, but I finally looked at the October 8 H.3 bank reserves report, and nonborrowed reserves at US banks fell to US$-363.5 Billion. Back then, they were only borrowing half a billion from the Fed, so one presumes you can expect it to drop another few hundred billion by the next report, and after that, who knows? Maybe they can go for a trillion! 24/7 Wall Street calls it armed robbery. The Mess that Greenspan Made says Fed so-called lending could hit 3T by EOY2008. Good times!
It doesn't inspire confidence, though. Particularly since the non-financial economy took it in the gut last month. That polling data I mentioned earlier is starting to show up in official numbers, as overall consumer sentiment fell in October at the fastest rate ever, to 57.5 from 70.3. Current conditions sentiment is at the lowest number in the history of the poll. Housing starts continue to plummet, which is actually good since the market is oversupplied, but bad for construction workers.
I mention this because I thought they were a pretty good store, with a name that prompted a series of geeky math injokes: N is now approaching 0 as Linens N Things is going out of business. Permanently. This isn't a bankruptcy reorganisation; liquidation sales start immediately.
I mention this because of the "huh, wow" involved; Countrywide has decided to ignore the State of Illinois's ruling revoking their license to issue new loans in the state, relying instead on their Federal charter.
By the way, the Federal Reserve still can't hit their supposed target rate, tho' with the newtype definition of "anything within 75 basis points" they are. But I have to express my lack of support for bullshit like that. Whenever you're talking lessons from the Italian fascist movement (who made the trains run on time by declaring +/- 1 hour to be "on time"), I feel all skeevy. In a strange intersection of skeeviness, Mish has hard questions for "Joe the Plumber," such as, "If you can't pay your tax bills how are you going to buy out your employer?" He also sees food prices falling, based on falling general commodity prices. See, deflation's not all bad.
eta: at 13:37 Eastern, which I report that way solely because it is l33t time, the TED had fallen to 3.53. The LIBOR is not moving as solidly, which is somewhat confusing.
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no subject
Date: 2008-10-17 05:10 pm (UTC)Michael Pollan has a different take on the future of food prices. (http://www.nytimes.com/2008/10/12/magazine/12policy-t.html?_r=2&ref=magazine&oref=slogin&oref=slogin).
no subject
Date: 2008-10-17 07:34 pm (UTC)*sigh* I LOVED shopping there. They had better prices than BB&B. I was smart and went to my favorite as it was an early shut down and enjoyed what I could find. *sigh*
Frankly, I don't think anything I NEED to buy, like food or energy or health insurance, is going to deflate much. There are too many hands in the way making their greedy profits.
no subject
Date: 2008-10-17 07:47 pm (UTC)I pretty much agree with you that TED under 3 would be an indication that the credit situation, while still insane, is no longer on the precipice. The drop to 3.5 is good news on that front.
As for LIBOR, isn't TED determined by (LIBOR-Treasury rate)? LIBOR can move more slowly but only if the Treasury rate is compensating. That's what I thought anyway, so I'm also confused.
no subject
Date: 2008-10-17 08:32 pm (UTC)no subject
Date: 2008-10-17 08:35 pm (UTC)no subject
Date: 2008-10-17 09:46 pm (UTC)The market is going to be liquid if the FED has to administer it intravenously. :)
From some trade publication reading, I don't expect food prices to move down much, if at all. Most of the commodities are still substantially higher then last year, and the groceries will be slow to yield back the profits. Although if the prices keep dropping, eventually they may come down substantially. Keep an eye on your Sav-A-Lot and other stores of that ilk.
In addition, I don't think it's likely that oil prices will hold for long at their current low. OPEC may have a hard time forcing prices up on their own, as I expect demand to continue to fall, but the sheer general increase in population will eventually push demand back up, short of major changes that would surprise me. (are people going to continue dumping the SUVs at $3/gallon?)
In addition, part of the drop in oil appears to be linked to hedge funds unwinding their own deals. That won't continue indefinitely.
no subject
Date: 2008-10-18 03:26 am (UTC)