coolhand's Account Talk

[coolhand]

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aU1fAD2hZxd4

Corporate bond sales are poised for their worst month in a decade, while relative yields are rising the most since Lehman Brothers Holdings Inc.’s collapse, as the response by lawmakers to Europe’s sovereign debt crisis fails to inspire investor confidence.

Companies have issued $47 billion of debt in May, down from $183 billion in April and the least since December 1999, data compiled by Bloomberg show. The extra yield investors demand to hold company debt rather than benchmark government securities is headed for the biggest monthly increase since October 2008, Bank of America Merrill Lynch’s Global Broad Market index shows.

Investors are fleeing all but the safest securities on concern European leaders won’t be able to coordinate a response to rising levels of government debt from Greece to Spain, while U.S. legislation threatens to curb credit and hurt bank profits. The rate banks say they charge each other for three-month loans in dollars has almost doubled since February.

“This is a quintessential liquidity crisis,” said William Cunningham, head of credit strategies and fixed-income research at Boston-based State Street Corp.’s investment unit, which oversees almost $2 trillion. “It’s not inconceivable to imagine a situation where the markets behave so poorly, the liquidity behaves so badly, and risk-tolerance just evaporates that -- particularly in Europe -- consumers contract, businesses stop hiring and stop investing, and economic activity halts.”

 

[coolhand]

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aVFiLT4SvaPs

The dollar will probably become a “growth currency” during the next 10 years, shedding its haven status of the past decade, as the U.S. economy outperforms Europe and Japan, according to UBS AG.

The dollar will return to a pattern seen in the early 1980s and late 1990s, when it appreciated as stocks rose, Mansoor Mohi-uddin, global head of foreign-exchange strategy at UBS in Singapore, wrote today in a research report titled “FX Mega- Trends 2010-2020: Dollar Regime Change.” Central banks may intervene more frequently in currency markets as price swings, or volatility, intensify, he said in separate reports.

The greenback has risen 9.7 percent this year, Bloomberg Correlation-Weighted Currency Indexes show, amid evidence the U.S. economic recovery is gathering pace. The Federal Reserve will be the first major central bank to boost interest rates, Mohi-uddin wrote. Further dollar strength may be underpinned by U.S. money managers, foreign central banks and sovereign wealth funds, he said.

 

[coolhand]

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aj1QC261xH5k

Secretary of State Hillary Clinton met with senior Chinese officials today to convey how seriously the U.S. views developments on the Korean peninsula, a U.S. government official said.

In a speech tomorrow morning, South Korean President Lee Myung Bak will call North Korea’s suspected torpedoing of a South Korean navy ship a “clear military attack.” Lee will warn that South Korea will take “all possible strong measures” against additional provocation, the South Korean presidential office said today.

North Korea’s alleged attack has overshadowed all other issues on Clinton’s agenda as she prepares for the second annual U.S.-China Strategic and Economic Dialogue to begin in Beijing tomorrow. The U.S. and its allies have not faced such a serious regional incident in decades, said the U.S. official, who spoke on condition of anonymity. The U.S. wants China, an ally and supporter of North Korea, to help fashion a response to the isolated communist regime.

 

[coolhand]

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aCT6uWo5c0BY

Hedge funds sold oil at the fastest pace in almost eight months, cutting their bullish bets by 32 percent as crude prices plunged on concern Europe’s debt crisis will hurt energy demand.

The speculative net-long position in crude oil futures and options combined on the New York Mercantile Exchange fell to 89,335 in the week ended May 18, the biggest percentage decline since Sept. 29, according to the U.S. Commodity Futures Trading Commission’s Commitments of Traders Report on May 21.

Crude dropped 20 percent from a 19-month high of $87.15 a barrel May 3 on concern Europe will undermine a recovery from the worst recession since World War II. Supplies of oil and all petroleum-based fuels jumped to 1.81 billion barrels in the week ended May 14, the highest stockpiles on a seasonal basis based on Energy Department data back to 1990.

“Wall Street was bailing out of the market,” said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania. “The latest sell-off is confirmation that money managers are exiting. I expect next week’s report will show another significant sell-off.”

 

[coolhand]

http://www.nytimes.com/2010/05/23/world/europe/23europe.html?hp=&pagewanted=all

Across Western Europe, the “lifestyle superpower,” the assumptions and gains of a lifetime are suddenly in doubt. The deficit crisis that threatens the euro has also undermined the sustainability of the European standard of social welfare, built by left-leaning governments since the end of World War II.

Europeans have boasted about their social model, with its generous vacations and early retirements, its national health care systems and extensive welfare benefits, contrasting it with the comparative harshness of American capitalism.

Europeans have benefited from low military spending, protected by NATO and the American nuclear umbrella. They have also translated higher taxes into a cradle-to-grave safety net. “The Europe that protects” is a slogan of the European Union.

But all over Europe governments with big budgets, falling tax revenues and aging populations are experiencing rising deficits, with more bad news ahead.

 

[coolhand]

http://www.businessinsider.com/market-oversold-indicator-2010-5

Here's one reason to believe that bearishness is getting long in the tooth. Less than 2% of S&P 500 stocks are above their 52-week moving average.

Basically the entire market has been creamed and historically this has been a decent trading opportunity.

 

[coolhand]

http://www.telegraph.co.uk/finance/.../Hedge-funds-bet-big-on-the-falling-euro.html

Hedge funds, including Hayman Advisers and Matrix Group, have told investors that they expect the sovereign debt crisis to worsen despite the €110bn (£79bn) bail-out by the International Monetary Fund, the European Union and the European Central Bank.

Anxiety about the financial health of Europe increased yesterday after Spain’s national bank was forced to take control of CajaSur, a savings bank ridden with distressed property debt, after a rescue merger with a rival collapsed.

Traders and brokers told The Sunday Telegraph that hedge funds are using a range of financial instruments to bet that the value of the euro will fall. One trader said: “Shorting the euro is the biggest bet in town.

“We’re seeing big volumes in credit default swaps and short selling in equities that are exposed to the euro.”

 

[coolhand]

http://www.timesonline.co.uk/tol/news/politics/article7134040.ece

AT least 300,000 Whitehall and other public sector workers may lose their jobs as the coalition government sets to work cutting the £156 billion budget deficit.

As George Osborne, the chancellor, prepares to unveil the first £6 billion of cuts tomorrow, the full scale of the job losses that will follow has begun to emerge.

The initial savings to be announced will target such items as civil servants’ perks, which include taxis, flights and hotel accommodation.

The package will also include a £513m cut in the budgets for quangos, with some being abolished altogether.

“The outgoing chief secretary [Liam Byrne] said it all, there is no money,” said a Treasury source. “There is no time either.”

 

[coolhand]

http://www.theinternationalforecast.../Dysfunctional_Markets_That_Change_Every_Hour

Markets too hard to follow, Euro bailout continues to fail, Fed the source of liquidity for ECB, Bank failures and home losses continue, layoffs rise, Goldman Sachs likely to payout for SEC suit, California pension pressures, deflation fears...

Keeping up with today’s dysfunctional markets is very difficult because they change hour by hour. The problems of Europe have stolen center stage from US problems. The focus is on Europe, but we all should remember trillions of dollars have been injected into the US financial system since mid-2007. All are attempting to maintain the façade that all is well, when in fact all is not well. Underlying assets are worth far less than their stated value. As a symptom of this corporate bank lending has fallen off a cliff and in Europe it doesn’t exist. Without such lending there can be no recovery. The American implosion will now be repeated in Europe. The green shoots of recovery have now turned into poison ivy. The abyss has again been filled with more debt and more fiat currency. In the process the Fed and now the ECB have lost all credibility.

 

[Tsunami]

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aU1fAD2hZxd4

Corporate bond sales are poised for their worst month in a decade, while relative yields are rising the most since Lehman Brothers Holdings Inc.’s collapse....Investors are fleeing all but the safest securities.”

That can be seen visually with Terry Laundry's Confidence Index. The dive in the ratio of the low-quality debt bond fund FAGIX to the Vanguard U.S. Treasuries fund is falling off a cliff, which indicates the stock market top is in, or will be with one more rally into August.

http://ttheory.typepad.com/.a/6a00d83455c65c69e20133ee47b567970b-pi

 

[nasa1974]

CH, Thanks for posting all the information. I just wish it was more positive.

 

[KevinD]

http://www.nytimes.com/2010/05/23/world/europe/23europe.html?hp=&pagewanted=all

Across Western Europe, the “lifestyle superpower,” the assumptions and gains of a lifetime are suddenly in doubt. The deficit crisis that threatens the euro has also undermined the sustainability of the European standard of social welfare, built by left-leaning governments since the end of World War II.

Europeans have boasted about their social model, with its generous vacations and early retirements, its national health care systems and extensive welfare benefits, contrasting it with the comparative harshness of American capitalism.

Europeans have benefited from low military spending, protected by NATO and the American nuclear umbrella. They have also translated higher taxes into a cradle-to-grave safety net. “The Europe that protects” is a slogan of the European Union.

But all over Europe governments with big budgets, falling tax revenues and aging populations are experiencing rising deficits, with more bad news ahead.

Thanks for this and all the other news articles.

 

[coolhand]

CH, Thanks for posting all the information. I just wish it was more positive.

That's a matter or perspective. Birch would see all this news as a great opportunity to grow his oceanic. And I'm not being sarcastic either. Bad news tends to move markets higher.

 

[coolhand]

That can be seen visually with Terry Laundry's Confidence Index. The dive in the ratio of the low-quality debt bond fund FAGIX to the Vanguard U.S. Treasuries fund is falling off a cliff, which indicates the stock market top is in, or will be with one more rally into August.

http://ttheory.typepad.com/.a/6a00d83455c65c69e20133ee47b567970b-pi

Trying times indeed. I've noticed Vanguard's High Yield Corporate fund is also taking a hit. I'm in PRULX in my Scottrade account and it's been in rally mode the past couple of weeks.

I'm looking for a relief rally any time now, but I think the bull is in trouble. We'll see soon enough.

 

[Bullitt]

Aww, come on Coolhand. You mean you're not going to soak up more shares at these bargain based prices?

 

[eccougar]

Sold my position in FAGIX last week. It was a good fund for the last year.

 

[coolhand]

Aww, come on Coolhand. You mean you're not going to soak up more shares at these bargain based prices?

Just going to play it as it comes. You won't catch me arguing with your bearish perspective.

Just following my system as best I can.

 

[amoeba]

http://www.businessinsider.com/market-oversold-indicator-2010-5

Here's one reason to believe that bearishness is getting long in the tooth. Less than 2% of S&P 500 stocks are above their 52-week moving average.

Basically the entire market has been creamed and historically this has been a decent trading opportunity.

That particular call based on the average is misleading to me. Very few of those stocks are near their 52-week lows; plus, unless the average is market-cap weighted it doesn't mean anything.

I am going to wait to see what the last half-hour brings; altho the only thing I can do at this pt. is <1% IFTs or go to G (I recommend the latter). If there is another Acapulco cliff dive at the close to , say, under 1,140; I will head for the door ditching my deminimus 1% each in CSI - and maybe even get rid of 7% F; I already indicated in my acct talk the last 7-8 sessions that the sell signal was blaring; nothing today changes that view.

 

[coolhand]

That particular call based on the average is misleading to me. Very few of those stocks are near their 52-week lows; plus, unless the average is market-cap weighted it doesn't mean anything.

I am going to wait to see what the last half-hour brings; altho the only thing I can do at this pt. is <1% IFTs or go to G (I recommend the latter). If there is another Acapulco cliff dive at the close to , say, under 1,140; I will head for the door ditching my deminimus 1% each in CSI - and maybe even get rid of 7% F; I already indicated in my acct talk the last 7-8 sessions that the sell signal was blaring; nothing today changes that view.

Longer term, something else that can have a big influence on this market is the upcoming November elections. The incumbents are in big trouble now as it is. I would think the market would "miraculously" find its feet so that the "recovering" economy isn't as much of an issue at the polls. It's less than 6 months away now.

That's thinking with my tin foil hat of course. lol

 

[CountryBoy]

Longer term, something else that can have a big influence on this market is the upcoming November elections. The incumbents are in big trouble now as it is. I would think the market would "miraculously" find its feet so that the "recovering" economy isn't as much of an issue at the polls. It's less than 6 months away now.

That's thinking with my tin foil hat of course. lol

Well they did pass that big jobs bill and extend unemployment for the umpteenth time. :suspicious: