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possibly this scenario?
We shall see...
U.S. stocks rally as some global worries assuaged

Obama calls for legislation to help those impacted by devastating oil spill

NEW YORK (MarketWatch) -- U.S. stocks raced higher Thursday as the euro gained ground and after Germany's highest court declined to immediately block the government from contributing to the program to prevent defaults in the euro zone. "What really lifted the stock market was the German supreme court, which has at least delayed the lawsuit by a German lawmaker, helping risky assets in the short term," said John Brady, senior vice president at MF Global.
Brady cautioned the court decision is a preliminary one. "The case is by no means thrown out," he said. Read more about case viewed as crucial to Europe's stabilization program.

Unlike recent sessions, Brady doubts the market will reverse course in the final hour of trade.
"I don't think we'll get the fade today, but rather tomorrow," said Brady, who believes investors may take risks off the table ahead of the weekend


http://www.marketwatch.com/story/german-court-wont-immediately-block-euro-aid-plan-2010-06-10
 
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aVbaMVYI8hPE

The risk of owning Europe’s corporate bonds is the highest on record relative to U.S. company debt as investors lose confidence lawmakers and central bankers can tame the region’s worsening fiscal crisis.

Yields on investment-grade bonds in euros rose to a 10- month high of 239 basis points, or 2.39 percentage points, more than government debt, according to Barclays Capital index data. That’s 43 basis points more than the spread for U.S. company notes, near the record 44 basis points reached May 27. European bond spreads were below those on dollar debt as recently as February, the indexes show.

Yields suggest debt investors are concerned Europe’s sovereign debt crisis will stifle growth and curb profits even after European Union President Herman Van Rompuy said yesterday a 750 billion-euro ($908 billion) rescue package will be increased if it fails to quell volatility. About 75 percent of investors and analysts expect some governments in the region to default or the 16-nation euro area to break up, according to a quarterly poll of Bloomberg subscribers.

“It’s largely fear driven,” said John Milne, chief executive officer of JKMilne Asset Management, who oversees about $1.8 billion in Fort Myers, Florida, and favors U.S. corporate bonds. “People like ourselves are holding onto positions, watching the market like a hawk.”
 
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aWZ.voXWXmvo

Bonds of South Korean lenders such as Woori Bank are most at risk among Asian financial companies should Europe’s debt crisis escalate, according to Royal Bank of Scotland Group Plc.

“If there is a global liquidity crunch, Korean banks are likely the most vulnerable,” analysts led by Kristine Li wrote in a report e-mailed yesterday. “Korea is the most dependent on external bank financing besides Hong Kong and Singapore, and Korean banks have the highest loan-to-deposit ratio.”
 
http://online.wsj.com/article/SB10001424052748704312104575298652567988246.html?mod=WSJ_WSJ_US_News_5

U.S. companies are holding more cash in the bank than at any point on record, underscoring persistent worries about financial markets and about the sustainability of the economic recovery.

The Federal Reserve reported Thursday that nonfinancial companies had socked away $1.84 trillion in cash and other liquid assets as of the end of March, up 26% from a year earlier and the largest-ever increase in records going back to 1952. Cash made up about 7% of all company assets, including factories and financial investments, the highest level since 1963.

While renewed confidence in corporate-bond markets has allowed big companies to raise a record amount of money, many are still hesitant to spend the cash on hiring or expansion amid doubts about the strength of the recovery. They are also anxious to keep cash on hand in case Europe's debt troubles lead to a new market freeze.

"Cash is still king," said Jeff Hand, chief operating officer at Ross Controls, a Troy, Mich., maker of pneumatic valves and other products that is holding more cash as it struggles to recover from a sharp drop in business last year. "We're coming out of that, but the uncertainty is still there."
 
http://online.wsj.com/article/SB100...5298970678589804.html?mod=WSJ_latestheadlines

The U.S. federal budget deficit rose again in May as the government neared the $1 trillion mark a second straight year.

The government spent $135.93 billion more than it collected, the U.S. Treasury said in its monthly budget statement released Thursday.

Government spending on defense came short of the expectations of research firm Macroeconomic Advisers, causing the research firm to lower its tracking forecast for second-quarter economic growth to 3.6% from 3.7%.

The budget report came out a day after Federal Reserve Chairman Ben Bernanke issued a new warning on the U.S. fiscal condition. Mr. Bernanke, who testified to Congress Wednesday, said there is a risk to the overall economy if financial markets begin worrying about the government's commitment to reducing the deficit.

The U.S. ran a record $1.42 trillion deficit in fiscal 2009. Fiscal years begin Oct. 1.

Mr. Bernanke even said the U.S. could face problems that debt-stricken Greece has suffered if it doesn't come up with a plan soon to cut the deficit.
 
http://www.zerohedge.com/article/japans-new-pm-warns-country-risk-collapse-under-massive-debt-load

A week ago Hungary had the unfortunate mishap of telling the truth when it compared itself to Greece, resulting in a massive selloff of the Forint and leading to fresh lows for the euro. Today, it is Japan which is using the very same strategy in an attempt to devalue its own currency. So far it's working. The BBC reports that Naoto Kan has been a little truthier than the G-20 plenary sessions generally allow. We now look for the PM's reign of truth to be even shorter than that of his thousands of predecessors during the past couple of years: "Naoto Kan, in his first major speech since taking over, said Japan needed a financial restructuring to avert a Greece-style crisis."Our country's outstanding public debt is huge... our public finances have become the worst of any developed country," he said." Obviously, none of this is news. However, the market certainly does not appreciate when it is told that what it sees day after day in the non-mainstream media is actually the truth and nothing but the truth. What next - Tim Geithner coming out to say that a downgrade of the US is actually long overdue?
 
put together this crude excel sheet of Put/Call ratios from the CBOE
http://www.cboe.com/data/PutCallRatio.aspx
compared to the S fund since January. It's nothing special but is demonstrative.
I wish TSP.gov had exportable data- I think I will send them a note regarding that.
I inflated the CBOE #'s by 10 for charting purposes
 
AN INVERTED DEATH CROSS IN INVESTMENT GRADE CREDIT

http://pragcap.com/an-inverted-death-cross-in-investment-grade-credit

As we’ve previously described the primary differentiating factor between this sell-off and every sell-off since March 2009 has been the action in the credit markets. For the first time in over year we are seeing substantial deterioration across credit markets. This has been notable in IG credit. Spreads have started blowing out again as the sovereign debt fears raise memories of Lehman Brothers.

The action in yesterday’s market was notable due to the strong technical movement we saw in spreads. The 50 day moving average moving upward crossed the 200 day moving average moving downward. In a typical market this would be known as a “golden cross”, but as widening spreads are a negative indicator this is actually an inverse “death cross”. It sounds very phony as most technical analysis chart patterns do, but this is one that is worth noting. The crossing of the moving averages is a very rare event and generally indicates the beginning of a very strong directional trend. We have noted similar patterns in several markets over the last few years including the golden cross in the S&P 500 in June 2009 at S&P 900 and the death cross in Chinese equities just prior to their recent 20% decline.

From a purely simplistic technical perspective IG credit’s death cross is forecasting more difficult days ahead in the credit markets and that is certain to coincide with more difficulty in the equity markets. Investors would be wise to take note.

View attachment 9559
 
Very interesting. There are good arguments for both bulls and bears right now, hard to know what to do. I guess that is why they call it the wall of worry. I did see that IYB posted a SSBS that hit on thursday or friday of last week on his website so I am thinking about following that in tomorrow. :confused: That Stickan astro post is in the back of my mind though.
 
I think this post by robo over in Bear Cave regarding year 2 of the administration is in the money. I will be working that direction right after bewitching week.
http://www.tsptalk.com/mb/showthread.php?p=275575#post275575

However.... and this is purely speculation, I don't believe CBOE's ipo during quadruple witching week is a coincidence!:nuts::nuts:
Of course, yours truly is the host and MC!:laugh:
"Goldman Sachs & Co is leading the underwriting."
http://www.chicagobusiness.com/cgi-bin/news.pl?id=38537

I got in on the unexciting flat IPO of MapQuest back in the day, and did pretty well. Not spectacular, but well worth the risk.
I think VIX index stock, as this will be, is going to be a barn-burner and lite it up this week. After all, what Bear could resist investing in a sure bet of positive return for what they use ALL THE TIME?? PAAAARTY!!!
However, the mood will almost assuredly be short lived, as Robo pointed out, http://www.tsptalk.com/mb/showthread.php?p=275597#post275597 the week following is virtually guaranteed to be a dog.
Of course that would make all the investors of CBOE stock jump for joy as the VIX shot through the roof.
I say (speculating again) it will be a stock of self-fulfilling prophecy, and couldn't happen at a better time before November comes and the Bulls get serious about making some money.
In & Out, baby, just like Reno.
 
http://preview.bloomberg.com/news/2...s-as-traders-lose-confidence-in-currency.html

The biggest currency fluctuations since the aftermath of the collapse of Lehman Brothers Holdings Inc. are signaling waning confidence in the economic recovery and prospects for a rebound in the euro.

The euro’s 15 percent plunge against the dollar this year sparked a 6 percent loss for bets tied to foreign-exchange price volatility, according to Royal Bank of Scotland Group Plc indexes. That’s the worst performance among four currency strategies tracked by RBS and compares with a 22 percent gain last year, when the global economy rebounded.

Europe’s sovereign-debt crisis, the failure of regional leaders to improve sentiment toward the euro and diverging growth rates around the world means elevated volatility for years, according to UBS AG, the world’s second-biggest currency trader. Less predictable foreign-exchange levels may endanger the recovery by driving up short-term rates, even as a weaker euro stimulates exports, the Zurich-based bank said.

“The sources of concern won’t go away anytime soon,” said Dale Thomas, head of currencies in London at Insight Investment Management Ltd., which oversees about $144 billion. “We’re defensive and still don’t like the euro.” Thomas said he owns the Swiss franc and the Japanese yen.

Goldman Sachs Group Inc. reversed its forecast for the euro last week, saying it will drop to about a seven-year low of $1.15 by year-end as the European debt crisis deepens. The New York-based firm previously predicted $1.35. Royal Bank of Canada said June 7 the euro will depreciate to $1.10 in a year, after earlier forecasting $1.21, on reduced demand for the currency.
 
http://preview.bloomberg.com/news/2...-military-strike-on-south-s-loudspeakers.html

North Korea warned of an “all-out military strike” to destroy South Korean loudspeakers and other propaganda tools along their fortified border, according to the North’s state-run Korean Central News Agency.

South Korea’s preparation for psychological warfare, is a “direct declaration of a war” against the North, the general staff of the communist state’s military said today in a statement on KCNA. The North’s military retaliation may even turn Seoul into “a sea of flame,” said the statement.
 
Another time bomb in the making...so what else is new?

http://online.wsj.com/article/SB100...30299281828.html?mod=WSJ_hpp_sections_opinion

For 97 years the 12 regional banks of the Federal Reserve system have operated relatively free of political interference from Washington. The looming financial reform bill threatens that independence, not least through an effort to impose new presidential appointees at the regional banks.

The biggest underreported threat comes from Subtitle I, Section 1801 of the House financial reform bill titled "Inclusion of Minorities and Women; Diversity in Agency Workforce." Sponsored by California Democrat Maxine Waters, the provision requires each federal financial agency, the Fed Board of Governors and the 12 regional Fed banks to "establish an Office of Minority and Women Inclusion."

So what else is new, you say? Don't the feds already dictate racial and gender hiring? Yes, they do, through the Equal Employment Opportunity Commission and assorted other federal laws. As a matter of racial and gender diversity, the Waters provision is at best redundant.

But Ms. Waters and the House are hunting bigger game—to wit, the political allocation of credit. They want to put a network of operatives at the highest level of government who are responsible for making sure that regulators put the hiring of, and lending to, minorities at the top of their priority list. The House provision makes that very clear by making each diversity officer a Presidential appointee who must be confirmed by the Senate. The post, says the bill, will be "comparable to that of other senior level staff."

The law says this diversity czar will "ensure equal employment opportunity and the racial, ethnic and gender diversity" of the work force and senior management of these institutions. More ominously, this creature of Congress and the White House will also be charged with "increas[ing] the participation of minority-owned and women-owned businesses in the programs and contracts" of each agency and conducting "an assessment" of stated inclusion goals.

Mull over that one for a minute. Having recently lived through a financial mania and panic caused in part by political pressure for "affordable housing," Congress will now order regulators to allocate credit by race and gender. Isn't the point of this financial reform supposed to be to make regulators better judges of systemic risks, which means focusing on financial safety and soundness? If the Waters provision passes, federal regulators will have to put racial and gender lending at the top of their watch list when they do their checks on the banks and hedge funds they are regulating.
 
http://www.businessweek.com/news/20...cond-funding-squeeze-on-sovereign-crisis.html

European banks at risk of writedowns from the sovereign debt crisis face a funding squeeze that may depress earnings, curb lending and imperil economic recovery in the region.

Investors are shunning bank securities on concern Greek, Portuguese and Spanish bonds held by the lenders will plunge in value. Bank bond sales slowed in May to the lowest since Lehman Brothers Holdings Inc.’s failure in 2008 as the extra yield buyers demand to hold the securities over government debt soared to the highest this year. Firms are wary of lending to each other, depositing record funds with the European Central Bank.

“There is a lot of mistrust,” said Christoph Rieger, co- head of fixed-income strategy at Commerzbank AG in Frankfurt. “Banks are trading with the ECB rather than with each other.”

The central bank is preventing a crisis by providing banks with unprecedented funding. In substituting long-term money with shorter-maturity ECB cash, policymakers are making it harder to wean banks off life support as well as the short-term financing that regulators blame for the credit crisis.

The cost of insuring bank debt from default rose close to a record last week. The Markit iTraxx Financial Index of swaps on 25 European banks and insurers climbed to 208 basis points on June 8, approaching the all-time high of 210 basis points set in March 2009, JPMorgan Chase & Co. prices show.

Italy’s Intesa Sanpaolo SpA, SEB AB, the second-biggest bank in the Baltic states, DnB NOR ASA and ING Groep NV have isolated themselves from the freeze by already selling all the debt they needed this year, according to estimates by Morgan Stanley analyst Huw van Steenis. Germany’s Commerzbank AG, France’s Natixis SA and Spain’s Banco Espanol de Credito SA have raised less than 35 percent of the senior funding they require, he wrote in a note to clients on June 9.

“If you’re not a quality borrower, you’re not going to get funding from the market until you reduce your loan-to-deposit ratio and shrink your balance sheet,” said Simon Maughan, an analyst at MF Global Ltd. in London. “The credit and bond markets are doing their job. Unless you reform, you’ll be stuck on government support for the foreseeable future.”
 
Sheeesh...you can't make this stuff up.

http://www.nytimes.com/2010/06/12/nyregion/12pension.html?ref=todayspaper

Gov. David A. Paterson and legislative leaders have tentatively agreed to allow the state and municipalities to borrow nearly $6 billion to help them make their required annual payments to the state pension fund.

And, in classic budgetary sleight-of-hand, they will borrow the money to make the payments to the pension fund — from the same pension fund.

As word of the plan spread, some denounced it as a shell game and a blatant effort by state leaders to avoid making difficult decisions, like cutting government spending or reducing pension benefits.

“It’s a classic Albany example of kicking the can down the road,” said Harry Wilson, the Republican candidate for comptroller, who holds an M.B.A. from Harvard.
 
http://www.businessinsider.com/the-crisis-in-detroit-is-worse-than-a-recession-2010-6

Detroit was, in its heyday just after World War II, when the US auto industry was literally firing on all cylinders, the fourth largest in the U.S., Its population was 1.85 million in 1950. Today, fewer than half that number reside in the city.

Detroit is a ghost town.

This was brought home to me this morning when a friend told me of his work to help sell off shuttered Detroit schools. He said they had already sold off some 30-odd schools, with many more planned. The fact is Detroit doesn’t have the student population to support all the schools it has. And the school is losing massive amounts of money as a result.

Wikipedia says:

On December 8, 2008, State Superintendent of Public Instruction Mike Flanagan said that the district’s inability to manage its finances was crippling the students’ learning environment, and declared a financial emergency. Michigan Governor Jennifer Granholm appointed Robert Bobb as the fiscal manager of Detroit Public Schools in 2009 to manage the school districts finances… The school district began selling 27 previously closed school buildings. On 3 March 2009, Bobb initially estimated that DPS’s current year deficit would be no less than $150M…To begin to erase this deficit, the district put twenty nine vacant buildings up for sale in early 2009.

Detroit Public Schools is also burdened with a shrinking population of students. Between the years of 2002 and 2008, the number of enrolled students dropped from 157,003 to 94,054, a 64,929 person decrease… Detroit Public Schools had a goal of closing 95 schools by 2009.

The indications of decay are everywhere. Read my post “That’s what happens when a town full of broke people gets a whiff of free money” and you will get a sense of what has happened there and how much worse the recession has made it.

Now, it’s not as if the Detroit Metropolitan Area is shrunken. There are still 4.5 million people there. The larger CSA has 5.5 million, ranking 11th in the US. But, Detroit, the city itself, is being abandoned. "Black Flight is the New Worry for Detroit" writes the Wall Street Journal. As a result, abandoned property is everywhere, both residential and commercial. The Guardian writes "Detroit homes sell for $1 amid mortgage and car industry crisis" and The Detroit News wrote "Detroit to purchase old MGM Grand casino for new police HQ" .
 
You've gotta be kidding me?!?

http://www.zerohedge.com/article/ob...ram-mandating-behavioural-changes-within-us-s

Last week, with little fanfare, among the ever deteriorating oil spill crisis, the White House quietly noted the issuance of an executive order "Establishing the National Prevention, Health Promotion, and Public Health Council", in which the president, citing the “authority vested in me as President by the Constitution and the laws of the United States of America” is now actively engaging in "lifestyle behavior modification" for American citizens that do not exhibit "healthy behavior." At least initially, the 8 main verticals of focus will include: smoking cessation; proper nutrition; appropriate exercise; mental health; behavioral health; sedentary behavior; substance-use disorder; and domestic violence screenings. Eventually we fully anticipate that the program will also target such wholesome activities as screening for precious metal holdings, monthly minimum usage of available revolving credit (and a minimum threshold thereto) and the susceptibility of an individual to stay current on one's mortgage. Additionally, the president will establish yet another Advisory Group, composed of "experts" picked from the public health field, and one which tracks the successful uptake by the US population of the precepts for a better functioning society that the president deems important. Cosmo culture has just been adopted by the White House, where Big Brother is now in the business of counting calories, and soon, your bars of gold.
 
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