coolhand's Account Talk

[coolhand]

http://www.nytimes.com/2010/05/16/business/16ben.html?ref=business&pagewanted=all

NINE days ago, Ben S. Bernanke, the Federal Reserve chairman, caught a Friday-night flight from here so he could address 1,100 graduates at the University of South Carolina the next morning about “The Economics of Happiness.” After the speech, he took a call in his hotel room from Jean-Claude Trichet, head of the European Central Bank, and the next day pledged billions of dollars to help Europe stave off a financial crisis — a flashback to the huge lending programs the Fed put together in 2008 to forestall economic collapse at home.

Mr. Bernanke, 56, hasn’t had much time to reflect on whether history’s verdict on his extraordinary actions of recent years will be harsh or forgiving. Nor has he had time to read the spate of new books about how he and two Treasury secretaries, Henry M. Paulson Jr. and Timothy F. Geithner, navigated a maelstrom that left millions of Americans jobless, homeless or broke.

 

[coolhand]

http://www.zerohedge.com/article/ft-says-volcker-rule-given-dead-likely-pass

When Zero Hedge first wrote about the adverse role of prop trading in capital markets, long before it was a mainstream issue, which in turn incited the response of one Lucas van Praag, in which they assured us and our readers that there were never any issues with Goldman's prop trading desk and that all concerns about prop trading are misplaced. A few months later one of the luminaries of modern finance picked up the Zero Hedge banner and proposed a rule that would end banking prop trading for ever, in essence overriding Mr. van Praag explanation. Yet for the past three months most had left the Volcker Rule for dead, after the banking lobby had once again bought a two year full recourse lease on Obama and his cronies. Until the last two weeks, when first on May 6 we saw what happens how an entire market, gripped in computerized gambling and speculating can break in the span of a few minutes, without doubt facilitated by the banks' prop operations, and also when we saw that the big 4 banks had monopolized prop trading to such an extent (and disingenuously masking it as flow trading: yeah, right, flow trading with a VaR of $150 million... better luck finding greater idiots next time) that none had a losing day, in essence making Madoff's ponzi scheme, with its worse "win" track record a joke in comparison with the ponzi that the market has become. Which is why we read with great satisfaction in the FT that the banking lobby's power is slipping at a critical time: this week the Volcker Rule will be voted on by the Senate, and it may very well pass, despite the "cornered rat" response by the banks. As the FT notes, "the political mood is such that a straight vote on derivatives would be close and the Volcker Rule would be likely to pass." Should the Volcker Rule pass, this will be the beginning of the end for the current casino capitalism system that has gripped Wall Street. And don't be surprised to see a 10% drop in the market as a last ditch self defense mechanism by the primary dealers.

 

[coolhand]

Amazing how the decline accelerated right at 1200.

At this point it appears obvious that the last SS buy signal was a false signal due to extreme volatility. The news is bad just about everywhere too; from the Europe to China. This isn't the kind of environment I'd expect things to fall apart, but it could happen.

I would imagine the SS will move back to a sell at the close today; assuming current market activity holds up. That would put me in a position to sell tomorrow and be done for the month (and miss any potential bounces) or ride it out. Or something in between like a 50/50 stock/cash position or some other allocation.

Once again the 2 IFT limit rears its ugly head.

 

[coolhand]

http://globaleconomicanalysis.blogspot.com/2010/05/china-equities-sink-5-down-22-for-year.html

What will China do with its much beloved peg to the US dollar?

Tonight, the Euro fell to as low as 1.235 to the US dollar.

Bear in mind, Europe is China's biggest trading partner, further exacerbating China's problems with its currency peg to the US dollar. This can get very interesting in a hurry if the Euro collapses.

What all the jaw-boning from Washington D.C. did not accomplish, a collapse in the Euro might.

Currency pegs work, until they don't.

 

[coolhand]

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aXoGZOIni1EA

Corporate bond issuance in the U.S. is showing signs of a revival as investors speculate companies in the world’s largest economy will be insulated from the worst of Europe’s sovereign debt crisis.

Borrowers came to the market with at least $3.2 billion of debt yesterday, after selling $1.15 billion a week earlier and $13.6 billion in the five days ended May 14, according to data compiled by Bloomberg. Franklin Resources Inc., the manager of the Franklin and Templeton mutual funds, sold $900 million of notes in its first offering since 2003. EOG Resources Inc., a Houston-based pipeline operator, issued $1 billion of bonds.

The flurry signals improving sentiment that the European plan to provide almost $1 trillion of loans to help indebted nations avoid default will keep the regional crisis from spreading around the globe. Of the 460 companies in the Standard & Poor’s 500 Index that reported first-quarter results, 77 percent said earnings exceeded analysts’ estimates, Bloomberg data show.

 

[coolhand]

How the 'Flash Crash' Echoed Black Monday

http://online.wsj.com/article/SB100...02626326346.html?mod=WSJ_hpp_MIDDLETopStories

 

[coolhand]

http://online.wsj.com/article/SB100...64210294510.html?mod=WSJ_hpp_sections_opinion

President Obama guaranteed Americans that after health reform became law they could keep their insurance plans and their doctors. It's clear that this promise cannot be kept. Insurers and physicians are already reshaping their businesses as a result of Mr. Obama's plan.

The health-reform law caps how much insurers can spend on expenses and take for profits. Starting next year, health plans will have a regulated "floor" on their medical-loss ratios, which is the amount of revenue they spend on medical claims. Insurers can only spend 20% of their premiums on running their plans if they offer policies directly to consumers or to small employers. The spending cap is 15% for policies sold to large employers.

This regulation is going to have its biggest impact on insurance sold directly to consumers—what's referred to as the "individual market." These policies cost more to market. They also have higher medical costs, owing partly to selection by less healthy consumers.

Finally, individual policies have high start-up costs. If insurers cannot spend more of their revenue getting plans on track, fewer new policies will be offered.

This will hit Wellpoint, one of the biggest players in the individual market, particularly hard. The insurance company already has a strained relationship with the White House: Earlier this month Mr. Obama accused Wellpoint of systemically denying coverage to breast cancer patients, though the facts don't bear that out.

Restrictions on how insurers can spend money are compounded by simultaneous constraints on how they can manage their costs. Beginning in 2014, a new federal agency will standardize insurance benefits, placing minimum actuarial values on medical policies. There are also mandates forcing insurers to cover a lot of expensive primary-care services in full. At the same time, insurers are being blocked from raising premiums—for now by political jawboning, but the threat of legislative restrictions looms.

 

[coolhand]

http://online.wsj.com/article/SB100...72000040654.html?mod=WSJ_hpp_sections_opinion

What a fiasco. That's the first word that comes to mind watching Mahmoud Ahmadinejad raise his arms yesterday with the leaders of Turkey and Brazil to celebrate a new atomic pact that instantly made irrelevant 16 months of President Obama's "diplomacy." The deal is a political coup for Tehran and possibly delivers the coup de grace to the West's half-hearted efforts to stop Iran from acquiring a nuclear bomb.

Full credit for this debacle goes to the Obama Administration and its hapless diplomatic strategy. Last October, nine months into its engagement with Tehran, the White House concocted a plan to transfer some of Iran's uranium stock abroad for enrichment. If the West couldn't stop Iran's program, the thinking was that maybe this scheme would delay it. The Iranians played coy, then refused to accept the offer.

But Mr. Obama doesn't take no for an answer from rogue regimes, and so he kept the offer on the table. As the U.S. finally seemed ready to go to the U.N. Security Council for more sanctions, the Iranians chose yesterday to accept the deal on their own limited terms while enlisting the Brazilians and Turks as enablers and political shields. "Diplomacy emerged victorious today," declared Brazil's President Luiz Inácio Lula da Silva, turning Mr. Obama's own most important foreign-policy principle against him.

 

[coolhand]

Check this out...

Larry Tabb Confirms Exchange-Based Frontrunning Is The Norm

http://www.zerohedge.com/article/larry-tabb-confirms-exchange-based-frontrunning-norm

 

[coolhand]

Dow Theorist Richard Russell: Sell Everything Liquid, You Won't Recognize America By The End Of The Year

http://www.businessinsider.com/dow-...a-by-the-end-of-the-year-2010-5#ixzz0oIeVcOMF

 

[crws]

I saw that too, but haven't finished reading.
I think the great news is Germany nixing naked short sales, if only for a year! WooHoo!
Gettin' ahead of the game before the hyenas come calling. I'll try to find the article that said Germany will need to lead the EU out of the hole, and it looks like they are ahead of the game.
I-Fund anyone? Only 2.3% Chinese companies!!

EAFE Top Ten Holdings
as of December 31, 2009
Company​

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HSBC Holdings (GB) PLC
BP PLC
Nestlé S.A.
Total S.A.
Banco Santander S.A.
BHP Billiton Ltd.
Toyota Motor Corp.
Vodafone Group PLC
Roche Holding Genuss​

Telefonica S.A.

EAFE Index

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Country Composition
December 31, 2009
Country Percent of Index* Number of Companies​

Europe​

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Austria 0.3 8
Belgium 1.0 13
Denmark 0.9 13
Finland 1.1 17
France 11.1 76
Germany 8.1 50
Greece 0.5 12
Ireland 0.3 4
Italy 3.5 33
Netherlands 2.7 20
Norway 0.8 8
Portugal 0.3 9
Spain 4.6 29
Sweden 2.5 30
Switzerland 7.7 37
United Kingdom 21.6 104​

Europe 67.0% 463​

​

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Australasia/Far East​

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​

​

​

​

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Australia 8.4 73
Hong Kong 2.3 41
Japan 20.7 346
New Zealand 0.1 5
Singapore 1.5 29​

Australasia/Far East 33.0% 494​

Total EAFE Index 100.0% 957

Dow Theorist Richard Russell: Sell Everything Liquid, You Won't Recognize America By The End Of The Year

http://www.businessinsider.com/dow-...a-by-the-end-of-the-year-2010-5#ixzz0oIeVcOMF

 

[Bullitt]

I Fund is not a good idea right now. Plain and simple.

Richard Russell- He was wrong in March 2009. This is from around March 6, 2009.

“My advice, don’t let the market fool you. The path of least resistance continues to be down. Worse, MACD is about to give us a new bear signal as the histograms sink into negative territory”.

Link
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[crws]

I'm not so easily convinced... At least we have 8 hours of time zone to watch before an IFT, and the EU isn't at each others throats politically.

Meanwhile, we're seeing the same overseas. China may be tightening, but its companies' sales are surging. Elsewhere, Korean GDP in the first quarter was 7.8% year-over-year, while Hong Kong imports are up 38.5% annualized and German machinery orders are up 21% this year -- a fact that will be helped by the recent plunge in the euro. As you can see in the chart above, the manufacturers' Purchasing Managers' Index has surged in recent weeks despite the Greek debt fears.

In short, the global economy is probably healthy enough to resist much of the predations of European credit weakness unless the continent's leaders really blow their chance. My expectation is that the recent declines will actually boomerang on credit bears and increase the institutions' appetite for bonds and equities.
http://moneymorning.com/2010/05/17/u.s.-recovery-2/

I Fund is not a good idea right now. Plain and simple.

Richard Russell- He was wrong in March 2009. This is from around March 6, 2009.

Link
​

 

[coolhand]

Normally, this kind of sentiment would put a floor under the market...

http://www.businessinsider.com/suddenly-everyones-in-the-crash-camp-not-just-the-bear-camp-2010-5

Newsletter writers, hedge fund managers, journalists, bloggers, technicians, fundamental analysts, economists and strategists are joining the crash camp left and right. Not the bear camp...the crash camp.

I've been running around Manhattan all day taking care of business, meeting clients etc. After scanning today's articles and blog posts, I can honestly say that I've never heard more chatter about an imminent market crash, all at once, in my life. It's like the May 6th Flash Crash got everyone in the mood to talk cataclysm all of a sudden.

 

[nasa1974]

Normally, this kind of sentiment would put a floor under the market...

http://www.businessinsider.com/suddenly-everyones-in-the-crash-camp-not-just-the-bear-camp-2010-5

Newsletter writers, hedge fund managers, journalists, bloggers, technicians, fundamental analysts, economists and strategists are joining the crash camp left and right. Not the bear camp...the crash camp.

I've been running around Manhattan all day taking care of business, meeting clients etc. After scanning today's articles and blog posts, I can honestly say that I've never heard more chatter about an imminent market crash, all at once, in my life. It's like the May 6th Flash Crash got everyone in the mood to talk cataclysm all of a sudden.

Even though there is no hard support for a 1929 or 2008 all over again, this kind of talk can take a life of its own and it will happen. Are we being manipulated again?

 

[coolhand]

Even though there is no hard support for a 1929 or 2008 all over again, this kind of talk can take a life of its own and it will happen. Are we being manipulated again?

I think there's always some measure of manipulation, but the EU is scrambling and many of them are not on the same page, which has always been the achilles heel of making the EU work. A lot of economic moving parts are now unknowns and the market hates unknowns (the insiders do anyway )

 

[markmars]

I read the article yesterday I hope it doesn’t get that bad. But you can’t put your TSP into Liquid assets.

Dow Theorist Richard Russell: Sell Everything Liquid, You Won't Recognize America By The End Of The Year

http://www.businessinsider.com/dow-...a-by-the-end-of-the-year-2010-5#ixzz0oIeVcOMF

 

[WorkFE]

Any body and every body who has the name to move financial mountains will speak out to push things the way they want. Oh the motives at work are amazing.
Just listen to the harshness of the language. If thats the case cash and gold are useless. Buy beans and bullets.

 

[coolhand]

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a6qIosYblVK4

Luxembourg Prime Minister Jean-Claude Juncker, who leads the group of euro-area finance ministers, said that while the pace of the euro’s decline is a concern, foreign-exchange intervention isn’t an urgent issue.

“I’m a little bit concerned by the rapidness” of the euro’s slide, Juncker said to reporters in Tokyo today. When asked about intervention, he said: “I don’t think this is a matter of immediate action.”

Juncker’s comments come a day after the currency shared by 16 European Union members reached the lowest level in four years against the dollar. The currency has depreciated against the dollar and yen as EU leaders failed to contain a crisis of confidence in Greece’s debt.

 

[coolhand]

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=acD0zbECWu.s

Investors pulled an estimated $14 billion from U.S. stock and bond mutual funds in the week ended May 12, the first net withdrawals since March 2009.

Customers took out $12.3 billion from stock funds and $989 million from bonds funds, the Investment Company Institute, a Washington-based trade group, said today in a statement. The last time funds saw net redemptions was in the week U.S. stocks fell to a 12-year low.

The latest withdrawals came in the week of May 6, the day the Dow Jones average briefly lost almost 1,000 points and then recovered, and concerns were raised that a European financial rescue of Greece might fail to avert defaults.

Through the first four months of the year, investors contributed $165 billion to U.S. stock and bond mutual funds, according to Morningstar Inc., a Chicago-based research firm. Bond funds attracted more than three times as much money as stock funds, Morningstar data show.