| Kidder Reports Market Archive, Wednesday, Dec 30 |
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Latest Posts, News & Opinions
DJIA closed at 10,548.14 +2.73 +0.03% S&P closed at 1,126.41 +0.22 +0.02% Today's Recap Archives ABC Consumer Comfort Index falls 2 to -44 from -42 GMAC in talks for $3.5 bln more federal aid on top of $12.5 billion already received Japan sets 2% long-term economic goals, meets skepticism JAL shares down 25% as bankruptcy worries mount Nikkei closed down -91, missing expected level by 173 points in last session of 2009 Euro-zone Nov. leading economic index up 0.7%; annual M3 fell 0.2% in Nov Russia to curb speculative capital inflows; rouble falls on Putin’s inflow warning There is no MBA mortgage applications data today due to the holidays Chicago PMI 60.0 vs 56.1, better than expected 55.1 Chicago Prices Paid 54.9. New Orders 63.5 vs 62.8; Employment index 51.2 vs. 41.9 Crude inventories fell 1.5 million barrels vs expected drop of 2.2 barrels KC Fed Manufacturing: 10 vs. 17; six-month expectations index 19 vs. 36. Treasury sells 7Y to yield 3.345%; cover is 2.72 and indirect bidders buy 44.7% Thursday -Japan and most of Europe will be closed 08:30 Jobless claims 08:30 Continuing claims 10:00 Milwaukee PMI 13:00 Early close in Chicago ahead of New Year's Day Holiday 14:00 US month end duration extension is estimated at 0.06 years 18:00 A rare 'blue moon' Thursday night -- on New Year’s Eve only once every 20 years
Analysis Abnormal BCA Big Pic CalcRisk CW Econoday EconPic MFGR Mish MS Roubini
The level of Bears in today’s Investors Intelligence reading fell to 15.6% from 16.7% last week and is now at the lowest level since April 1987. Back then the bulls were right for another 6 months and then something bad happened. Combine this sentiment reading with the VIX at 20 and 2010 will be interesting, especially with the very likely prospect of higher interest rates. Bulls are at 51.1% and those expecting a correction but are long term bullish total 33.3% -Big Picture
Bond Market Briefing Bloomberg Bloomberg Tsys SMRA Reuters Spread Dec10 Wrightson
Treasuries finished with minor gains as the market breathed a collective sigh of relief that this week's auctions went off without a major disruption. Of course, the US taxpayer got shot in the foot with some of the year's highest yields being paid. Domestic retail accounts were reported buying the 10&30yr sectors today, while fast/pro accounts seemed to be day-traders. The curve flattened a bit with the 30yr the star. The street apparently came out of the 7yr auction long, we shall see how that plays out. Technicians remain in a negative mode, but the small group that believes a near term bottom has been formed have not been proven wrong thus far. -Courtesy of JK Wednesday close: The 2Y/10Y is steeper by +0.2bp to 270.8 10Y yield is -1.1bp to 3.788% 10yr Tips is +0.5bp is 1.404% 2Y yield is -2.4bp to 1.079%
Chart Feature Euro futures closed at 1.4252 on Dec 22, recent low Monday Dollar index closed at 78.25 on Dec 22
At 15:20 Wednesday, Mar euro is 1.4330 and USD index is 77.98
Columnists Asia Times Beat Bloomberg Crane Econ View David Goldman Plessis Pritchard RealClear
Commentary Aleph Baseline Hutchinson Kid Dynamite Mauldin Naked Noland Oracle Roseman
Commodities List Bloom Energy Kitco Drum Reuters CLG Gold G Soy H Wheat NGG HGG CRB
At 16:00 Wednesday Oil is $79.31, up +$0.43 from $78.87 Gold is $1,090.94, down -$7.16 from $1,098.10
Currencies Bloomberg BBH USD Index Greg Mike Laidi AL Twitter Reuters Spot
Wednesday closes at 15:00 Euro: 1.4330 vs 1.4351 Dollar-Yen: 92.463 vs 91.939 Euro-Yen: 132.51 vs 131.96 Canadian dollar: 1.0554 vs 1.0431 Aussie dollar: 89.38 vs 89.44 Euro support at 1.4325, then 1.4304 Looking for yen to move to 92.72, then to 93.12; support at 92.32 - Greg Mike at 15:30 Wednesday
Current Events Atlantic Buchanan Common Counter Harpers Huff Global Salon Slate Time
Are Presidents Afraid of the CIA? By Ray McGovern in Common Dreams - President Obama stands in the tradition of a dozen American presidents. Harry Truman and John Kennedy were the only ones to take on the CIA directly. In Truman's view, misuse of the CIA began in February 1953, when his successor, Dwight Eisenhower, named Allen Dulles CIA Director. Dulles' forte was overthrowing governments (in current parlance, "regime change"), and he was quite good at it. With coups in Iran (1953) and Guatemala (1954) under his belt, Dulles was riding high in the late Fifties and moved Cuba to the top of his to-do list. ...Kennedy stuck to his guns, so to speak; fired Dulles and his co-conspirators a few months after the abortive invasion in April 1961; and told a friend that he wanted to "splinter the CIA into a thousand pieces and scatter it into the winds." The outrage was mutual, and when Kennedy himself was assassinated on November 22, 1963, it must have occurred to Truman that the disgraced Dulles and his outraged associates might not be above conspiring to get rid of a President they felt was soft on Communism-and, incidentally, get even. A Grand Jury May Answer the Question: Who Is Accountable for a War Started on The False Claims That Iraq Had WMD? - Pending in Washington at the United States District Court for the District of Columbia is a report and request to the grand jury that it conduct an investigation of the Bush Administration’s false and fraudulent statements that Iraq had sought uranium for a nuclear weapon. I contend that said statements violated the criminal statutes 18 U.S.C. § 1001 and 18 U.S.C. § 371 that prohibit making false and fraudulent statements to Congress and conspiring to obstruct the functions of Congress. The law clearly allows a grand jury to actually conduct its own investigations without the consent or participation of the Justice Department, and the law allows that grand jury to return an indictment in open court against President Bush and his officials even if the Justice Department’s prosecutors refuse to sign that indictment. || “[W]ithin certain bounds, the grand jury may act independently of any branch of government. The grand jury may pursue investigations on its own without the consent or participation of a prosecutor. The grand jury holds broad power over the terms of the charges it returns, and its decision not to bring charges is unreviewable. Furthermore, the grand jury may insist that prosecutors prepare whatever accusations it deems appropriate and may return a draft indictment even though the government attorney refuses to sign it.” - Global Research
Foreign Policy Afghan Anti-War Asia Times Cole Debka FP Brief Stratfor Walt Wired
A top Chinese naval official has proposed setting up a permanent base to support ships on an anti-piracy mission in the Gulf of Aden \\ KR: Yeah, sure thing the base for anti-piracy. Just like the US is in Columbia for drug enforcement... Ben Stein Says Ron Paul Is Antisemitic for Calling US ‘Occupiers’ - On Larry King, Ben Stein said that Ron Paul calling the US “occupiers” was “using the same antisemitic argument we’ve heard over and over.” Former game show host and economist Ben Stein first came into prominence when he worked for notorious antisemite Richard Nixon. - Anti-War
Grumpy Guys Cluster FA GW G's Mess Jesse Kadrosky Michaelson Ticker Taibbi Zero
Leave it to the WSJ to report the truth - and then try to paper over it: Sales taxes declined 9% to $70 billion in the third quarter compared with the year-ago period, the Census Bureau said. Income taxes plunged 12% to about $58 billion. Together, sales and income taxes make up roughly half of state and local tax revenue. The WSJ then goes on to opine: State and local tax revenues tend to lag behind the downturns as well as the upturns in the economy because of the time it takes for collections to catch up with depressed store sales and diminished incomes. \\ This is true for income taxes. It is absolutely false when it comes to sales taxes. -Market Ticker A dufus lights a soggy firecracker and burns his private parts on a plane and the whole world is in a tizzy over terrorism striking in Detroit. (Rather an in-joke for those who've been to Detroit in the past few years.) In a live fire exercise in the US target range known as Afghanistan, the US kills 10 civilians, 8 of them school children and the world doesn't give a damn. -Michaelson The European Commission (EC) itself has warned that the finances of half of the Eurozone's sixteen economies are at risk of becoming 'unsustainable', essentially bankrupt. As shown in the Wall Street Journal graphic below, Spain, Ireland, Netherlands, Slovenia, Slovakia, and Greece are all teetering on the brink. - Clusterstock
History A&L Bob History Neil Howe New Geo News from 1930 Fourth Turning
Officials who are usually skeptical of “general communistic alarms” believe there may be something to reports of Communists spreading rumors about bank stability. “On one occasion, according to reliable reports here, the occupants of entire buildings were called up from a telephone pay station to which the calls could not be traced [???] and given mysterious warnings about the safety of a certain bank.” On another, rumors were sent by telegram signed “Wall Street.” -1930 The Chinese embassy referred to the controversial role Britain played in supplying opium to China following the execution of British citizen Akmal Shaikh, according to a leading historian. The official statement from the Chinese embassy said the "strong resentment" felt by the Chinese public to drug traffickers was in part based on "the bitter memory of history". -History
Political AmBlog Beast Drudge 538 Hines Politico P-Animal P-Wire Raw Swamp TruthDig
In new poll, 16 percent pick Clinton most admired woman in America and Palin gets 15 percent of votes
South America Merco Ambito AP FT Bloom Independent Economist Strat
The Lithium Rush - In the Bolivian Andes lies a vast salt flat that may shape the future of transportation. -MIT in Science
Stock Market Briefing Futia BW Pragmatic Nikkei Schaeffer St Smart 24/7 Wall St Yahoo
Today's range estimate for the March contract is 1110-1120. So far the market has dropped about 15 points from its high of 1128.50 yesterday, but I think that this reaction will find support in the 1105-10 range before a move to 1140 develops. I also expect the market to reach the 1170 level during the next month or so. - Futia Don’t let the flat market of the last three months lull you. Be prepared for high volatility to return very soon. I showed you a few times in recent weeks how Bollinger Bands had narrowed to an unusual degree, an indication that considerable volatility and a big market move in one direction or the other will follow. Stock Market Patterns. The ‘monthly strength period’ is due to begin today, and to run through next Thursday, January 7. But as I said yesterday morning, it will be interesting to see if it shows up after the market has already been up 6 days in a row, and is somewhat short-term overbought. -Street Smart
Bond Market Briefing Bloomberg Bloomberg Tsys SMRA Reuters Spread Dec10 Wrightson
Wednesday close: The 2Y/10Y is steeper by +0.2bp to 270.8 10Y yield is -1.1bp to 3.788% 10yr Tips is +0.5bp is 1.404% 2Y yield is -2.4bp to 1.079% Tips CPI inflation gauge is cooler by -1.6bp to 2.384% - YTD high is 2.447% on Dec 28 * Gauge was 0.135% on Dec 31; decade average is about 2.70% * All-time low is 0.010% on Nov 20; recent low is 1.55% in July * The 2008 high was 2.613%; gauge was 1.94% just before Lehman bankruptcy On Tuesday, the spread between Dec 2010 euribor and eurodollars closed at 28.5, narrower by -24.5 from 53.0 on Dec 11. The Dec 2010 Euribor-Eurodollar spread has been narrowing below its 18-day average (last at 43.3) for most of December. This narrowing of the EU/US interest-rate differential probably means traders are losing faith in 'an extended period' of zero US interest rates. The spread provided an early warning to exit the dollar carry trade.
Currencies Bloomberg Brown Bros USD Index Laidi AL Twitter Reuters Spot
Wednesday closes at 15:00 Euro: 1.4330 vs 1.4351 Dollar-Yen: 92.463 vs 91.939 Euro-Yen: 132.51 vs 131.96 Canadian dollar: 1.0554 vs 1.0431 Aussie dollar: 89.38 vs 89.44
Calendar Econoday SMRA Wrightson Barchart Any Date
Thursday, 12/31 08:30 Jobless claims 08:30 Continuing claims 10:00 Milwaukee PMI 13:00 Early close in Chicago ahead of New Year's Day Holiday Monday, Jan 4, 2010 10:00 ISM factory report 10:00 Construction spending Tuesday, 1/5 07:45 Weekly chain store sales 10:00 Factory orders 10:00 Pending home sales 11:30 4-week bill auction 12:00 Auto sales 17:00 ABC Consumer Comfort Index Wednesday, 1/6 07:00 MBA mortgage applications 08:15 ADP employment report 10:00 ISM non-mfg report 14:00 FOMC minutes
Baltic Dry Index - - - Bloomberg - - - Google
The Baltic Dry Index fell -18 to 3,005 Thursday, its 14th consecutive decline. BDI is closed for the year. The index range in 2009 was 772 to 4,661. The BDI is down 1,656 points from its 14-month high on Nov 19 at 4,661. The multi-month low is 2,163 on Sept 25 and its 2008 high was 11,793. The 20 year average is near 2,300.
2Y Yield Spread: Germany Over US - - - Tsys Yields
At 10:48 Wednesday, the spread of Germany 2Y over US 2Y is +26 vs +54 on Dec 7 German Dec 2Y is 1.34%, higher in yield by +5.3bp US Dec 2Y yld is 1.08%, unchanged On Dec 7, Mar euro contract was 1.4815 vs 1.4292 today
Nikkei Forecast- - - Nikkei - - - NKH0 - - - DJH0 - - - NKH vs DJH
The Nikkei is expected to open up +82 Wednesday in Tokyo. The NK/DJ spread is +247, making NK quite rich at 445 over its 21-day average of -190.
Archives and All Links - - - Archives
Keep In Mind
Either currencies or debt markets will blowup in next financial dislocation Public finances of the major Western countries are going to become unmanageable Four troubled giants are on life support and need continuing infusions Banks face huge rollovers of their corporate debt in next few years Consumer spending remains persistly weak Unfavorable conditions in residential real estate Commercial real estate foreclosures will have “catastrophic effects” Continued policy reflation should see trade weighted index fall to fresh lows (BCA) Core inflation is nearly impossible (statistically, anyway) Stocks represent valuable enterprises which are inflation and dollar hedges Either currencies or debt markets will blowup in next financial dislocation -- Dollar, gold and the VIX are likely to produce the biggest gains -- Australian Dollar and Brazilian Real appear particularly overvalued -- China and Hong Kong have ‘dangerous’ bubbles in the real estate market -- Global economy could down dramatically if China slows growth because if inflation Public finances of the major Western countries are going to become unmanageable -- Bond market pressures on the PIIGS: Portugal, Italy, Ireland, Greece and Spain -- Credit-rating agencies are on collision courses with Spain, Portugal and Greece -- Social security systems likely to be raided and social unrest is probable -- Many state/local/provincial/regional governments face a funding crisis Four troubled giants are on life support and need continuing infusions -- AIG, Fannie Mae, Freddie Mac and GMAC are long-term wards of the state -- Total risk they pose to the taxpayer far exceeds that of the big banks Banks face huge rollovers of their corporate debt in next few years -- More bank failures: 140 failures ytd and 545 banks on so-called problem list -- S&P has warned that nearly all of the world's big banks lack sufficient capital Consumer spending remains persistly weak -- Unemployment likely to move above 10.0% again after Nov drop from 10.2% -- To get a 5% unemployment rate within 7 years, US needs 300,000 new jobs a month -- Gasoline prices are higher than year ago and a cash flow drain on consumers Unfavorable conditions in residential real estate -- Residential investment is best leading indicator; huge overhang of vacant units -- Higher mortgage rates likely when the Fed stops buying GSE MBS on Mar 31 -- The bulk of the Option Arm resets trigger in 2010-2011 -- Second wave of defaults likely as a result of resets and strategic defaults -- At least 23% of all homeowners with mortgages are underwater Commercial real estate foreclosures will have “catastrophic effects” * Fitch warns of huge CRE losses for life insurance carriers on mortgages * $1.4 trl in commercial loans are due in next 5 years; much will not be renewed Continued policy reflation should see trade weighted index fall to fresh lows (BCA) -- Yen may become the funding currency to short to fund the carry trade -- Dollar in bear market until Fed signals confidence in growth and hints of exit! -- Capital controls to curb hot money flows if dollar weakens again -- But watch trade deficit -- if it continues to narrow, the dollar may do better Core inflation is nearly impossible (statistically, anyway) -- Owners' equivalent rent is largest single component of the core CPI at 24%. -- Rental vacancies remain high, landlords have virtually no pricing power -- CapU is 71.3%, up from post-war low of 67.6%; but still curbs inflation and wages Stocks represent valuable enterprises which are inflation and dollar hedges -- Inventories and staff are very lean; operating leverage gives earnings much upside -- Dollar devaluation is huge positive for firms with int'l revenues; and visa versa -- Emerging economies with reserves, high productivity growth, low debt are valuable Six Factors In Play - Mish in Analysis * If there is a spike, it is far more likely earlier in the year than later and we are headed into 2010 currently at 3.84%. Another 75 basis points certainly seems possible with the "hate treasury trade" back in vogue. * Treasuries are in an unseasonably favorable period right now, and that lasts all the way through May. * If there is a chain of favorable data such as a surprise to the upside in GDP for the 4th quarter of 2009 or 1st quarter of 2010, that too can contribute to a spike in yields. But all the way to 5.5%? Sustained? I'll put the odds of that at 15%. * Most analysts seem cock-sure the bottom in the stock is in and we are off to the races. The bottom may be in, but even if so the odds of a hard correction are very high in my opinion. Should that happen, there can easily be another flight to safety trade. * Unemployment is unlikely to dip substantially below 10% in 2010 and could easily rise to 11%+. That would kill a sustained rise in consumer spending, put a damper on earnings, and lead to higher chargeoffs on credit cards. Such events would be favorable for treasuries. * The global recovery can easily falter in the second half of 2010. That too would be favorable for government bonds in general.
28 December 12PM
Eurobondonline - Fixed Income - Euro$ - Eurex - Euribor - EquityIndex - SFE - Ratios EquityIndex We are long ESH0, NQH0, DJH0 We have stop reversals, opposite the trendspotter.We are long Feb Vix CBT we are short ZBH0, ZNH0, ZFH0, ZTH0 We have stop reversals, opposite the trendspotter . we are long TBT and PST Fixed Income ETF's CBTSpreads We have flatners & steepners on. ZBH0 - ZTH0 trades 3.02 ; We are long 2 ZBH0/short 7 ZTH0 from 3.02 bp's; ZFH0 - ZTH0 trades 1.04 bp's . We are short 5 ZFH0/long 6 ZTH0 from .96 based on daily moving average cross. Eurex we are short Bund , Bobl , short Schatz & long Gilt .We have stop reversals , opposite the moving averages. Eurex Curve We have steepners on Mar10 Bund/Schatz trades 1.54. We are short 2 Mar0 Bund / long 9 Schatz at 1.335 bp's ;Bobl/Schatz trades .65 bp's; We are short 5 Mar0 BOBL/long 12 Shaz at .53 bp's Mar10 Bond/BUND trades 1.356 We are long 2 ZBH0/short 3 Mar10Bunds 1.38 bp's; based on daily moving average cross. EURO$ We are short GEH1 GEH0 - GEH1 trades 1.49 . We are long GEH0/short GEH1 at 1.38 Euribor We are short IH1 IH0 - IH1 trades 1.20 . We are long IH0/short IH1 at 1.14 Short Sterling We are long LH1. LH0 - LH1 trades 1.66. We are short LH0/long LH1 at 1.64 LU0/LU1 - IU0/IU1 We sell 10 LU0 / buy 10 LU1 at 1.64 and buy 6 IU10/sell 6 IU11 at .91 = .73;Dec 3 we exit at .66.LU10/LU11 Sterling - IU10/IU11 Euribor trades .75 Dec 21 - short 10 LU0 /long 10 LU1 at 1.67, long 6 IU0 /short 6 IU1 at .91 = .76 SFE we are short SFE 10yr, 3yr & IRU0 . We have stop reversals , opposite the moving averages. SFECurve We are long 5 IRH0/short 5 IRZ0
BONDS Briefing USH TYH 5-min 10-min 10Y 2Y/30Y TU/US Bund/TY
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