I really don't see how it's possible for the stock market to not crash, much less hold any gains in this current economic environment, considering the fact that the bad news keeps coming every day.
Think about it people, Citibank ... THAT'S RIGHT CITIBANK, just completed a really bad deal with the Arabs, just so they could pay their bills for a few more months.
I wonder if Freddie Mac could accept a cash infusion from a foreign interest like Abu Dhabi (translated means "father of gazelle" no kidding!) seeing that Freddie has a quasi affiliation with the US government? I have no idea, but maybe someone here does?
The Citi deal was just stupid, but that's what entities do when they become desperate. The divi pays more than junk money ... WTF???? And how the permabulls managed to spin this into a positive event escapes me. Wholly ****, Citibank just prostituted itself to pay their bills.
Can someone please explain how this Citi deal is better than a simple public offering? Why offer a 11% sweetheart deal to Abu Dhabi rather than, say, a 10% deal to any Tom, Dick & Harry in Kansas? I mean, How is this market efficient? Appears like a stinking insider deal.
The real question is what are half the people drawing checks in financial services going to do after next year?
Wall Street traditionally has a bloodbath in employment on bad numbers. This looks like one of them.
No Bonus for you! Here's your box!
See ya!! Replaced you for 60k!
Now, Wall Street can feel the pain they have inflicted on Main Street for so long. This will be good!
I still vote for inflation. Stop concentrating on housing prices!!!
It was just a standard bubble. Bubble over, crash follow. Nuff said.
Nobody is going to finance any real estate speculation for two decades after this debacle.
Only heavy inflation will save us, but the real values are doomed from the boomer bust and recession flow Southward of our recent immigrant population.
How about a truly radical thought- five million jobs disappear and unemployment barely rises!
"Could Lurker or someone else explain the meaning and implications of the bullion inflows into GLD. I undstand that the price of gold was down today.
BillD "
BillD - I'll give you my view on it. It means that there is more demand for GLD shares - which isn't necessarily bullish.
Let me explain. Any of the ETF's can be created and redeemed on an "in kind" basis. In the case of GLD an authorized participant (specialist, market making firm, prop trading desk, etc) can turn in 100,000 shares of GLD to the trust and get back the equivalent value in Gold and some cash. Conversely, an authorized participant can turn in the appropriate amount of Gold to the trust and get back 100,000 shares of GLD.
Why would anyone go to the trouble?? Well they could do it as part of their market making and to arbitrage any intraday differences in the NAV of the ETF and the traded prices of the ETF.
Why is a creation of additional GLD shares not necessarily bullish??
Well, if someone is bearish on GLD and they want to sell short they must first "locate" the shares in order to be able to borrow them. If there is a lack of available shares to borrow there can be an economic incentive for an authorized participant to create additional GLD shares for the sole purpose of loaning them out to someone who wants to short GLD.
Another example of a "not necessarily bullish" view of more GLD shares being created is as a result of an arbitrage.
If the quoted market is 80.00 x 80.10 and I can buy the requisite amount of Gold to create GLD shares for less than 80.00/share in GLD terms I'll short the living crap out of GLD at 80.00 and buy my hedge (physical gold)in the appropriate amounts. At the end of the day I'm short GLD @ 80/share and long gold at something less than 80/share in GLD terms. To realize my arb profit and close the position I'll turn in my gold hedge to the GLD trust and get back GLD shares which I'll use to close my GLD short.
So long story short - creation of new GLD - or any ETF shares for that matter - doesn't mean its bullish - in my opinion anyway
CR, I think it is kind of important whether they cut it, or whether they eliminate it, and of course, WHEN they announce either one. My guess is, they do it pretty soon, since the bad news is piling up and they are going to have to wait for a good day to announce something this ridiculously bad. My guess is a cut in half, and it is announced shortly after the rate cut on the 11th.
I'm not. I'm looking at yield spreads at the longer end. "Safe" gov't treasuries are down. anything else is increasing spread.
Now that could signal future inflation and at the same time flight to quality. In other words, treasuries are really liquid now I'll take the paltry yield, but I see future inflation, so you clowns not in tbills are going to have to cut prices if you want me to buy THAT debt. Fair enough, a good argument can be made there.
However the counter argument is that treasury buyers don't see inflation. They see money drying up as they see that other stuff just going into default. So they take the small yield on LT debt, figuring that as the pool of lendable funds continues to dry up they need to be as liquid as possible with as high a yield as they can get in very liquid treasuries.
Which is it? I'll grant the Fed added $4.5B in short term repos, but, was that just money to goose the market, to sqeeze shorts today? I think so. We'll see tomorrow.
I'm not NECESSARILY in the deflation camp, but my bets are increasingly looking that way.
Both arguments are fair assessments in VERY simple terms. But M0 and M1 aren't exactly zip zooming up. And I'd bet if I caused the Super Colander to plasmatize a green virtual eyeshade over my eyes, I could find that the rate of increase in debt is declining. Perhaps I'll try to gen some digits.
Look at the growing divergence between M1, M2, and M3. Can't say that looks like a healthy seperation. Remember, debt pyramids upside down off of M1. That thing is looking a might top heavy. And M1 is the difficult to grow.
Could Lurker or someone else explain the meaning and implications of the bullion inflows into GLD. I undstand that the price of gold was down today.
here's the technical explanation. GLD takes receipt of gold bullion from Authorized Participants, institutions that create ETF shares. They deposit this bullion in their vault and issue the shares in return. So, net inflows mean more ETF shares are being created and more gold is going into the vault. But the reverse can happen when APs want to cash in their shares. GLD has to give them gold. The APs can sometimes make a tiny spread trading the shares for the gold and vice versa. Basically, he's telling you that there's a lot of demand for golden ETFs today and the vaults are getting fuller, which is a major source of increased demand in the market.
Can someone please explain how this Citi deal is better than a simple public offering?
$7.5 billion is not peanuts. If C tried to raise that in a simple public offering, it might cause even worse dilution.
How much would you pay for the deal AbracaDhabi took? Including the forced conversion at ~$32/share two years from now...
You might be right, but it's not slam dunk obvious (apologies to G. Tenet).
So the Spouse of Death Mask says $7.5 billion is peanuts. OK, but their actions suggest they are trying to preserve the dividend at all costs, including further dilution. That looks stupid to me, but their existing large shareholders may not be giving them any choice.
I am not convinced we will see a C dividend cut, at least not until they have exhausted all other options for raising capital.
so I should buy GLD? Not the first time I heard that in past month or so. I hear Gold in general will go to 1500+ by end of next year, and fed will be easing hard!
However, does anyone consider that if shit hits the fan that there could be forced liquidations of GOLD, OIL, and other hedgy positions?
Nope, it's not. And it's also level 1, and used as a fill for Cap requirements. Citi ain't touching that to pay a dividend. I think they have to cut it, and hold that sweet Abu Dabi crude...erm cash, to start thinking about moving those sewer..erm SIV contents onto the balance sheet.
I just upped the wattage to the Super Colander Tin Foil Hat. I prefer The Brian Setser Orchaestra this time of year. I'm going to crawl into the bunker now and count my ammo.
"However the counter argument is that treasury buyers don't see inflation. They see money drying up as they see that other stuff just going into default. So they take the small yield on LT debt, figuring that as the pool of lendable funds continues to dry up they need to be as liquid as possible with as high a yield as they can get in very liquid treasuries.
Which is it? I'll grant the Fed added $4.5B in short term repos, but, was that just money to goose the market, to squeeze shorts today? I think so. We'll see tomorrow."
We have 37.5 Billion due tomorrow... I'd look to see gold go off a cliff for margin calls and all that good stuff... then it'll pop back up and we can do it again for minute.
I can't believe the posts I'm reading tonight. If this phone had a keyboard I'd set you all straight.
Somebody give these people a hard time for me please. Just tell them they're wrong, make up some reason that sounds good using a few technical terms from the relevant Wikipedia entry and support the claim by referring to Japan in the 90s even the topic is SoCal demographics.
Maybe throw some comment in at the end like "Some people you just can't help."
Helicopter Ben, printing press, monetize the debt, lender of last resort, pushing on a string, Keynesian, NeoKeynesian, Austrian, Bretton Woods III (?), Weimar Republic, Japan in the 1990s, some people you just can't help.
Citibank just prostituted itself to pay their bills.
Not exactly, It sold off some of its capital to pay its expenses. Called "dipping into capital." A no-no. Reminds me of the movie A New Leaf. Next C will have to find a super rich spinster to marry and murder.
I'm asking Santa for a tinfoil hat for Christmas. I've already got a ton of crazy maggoty schemes running through my brain. My friends now call me "Mr. Doom and Gloom" and I thought I was being carefully non-judgmental.
For example: the quant funds seem to move in a pack, but surely there must be some who have thought a step further and are either trying to stay in front of the pack, or trying to maneuver to set traps for the pack.
The "worthless" 2nds and HELOCs have a definite floor value. That is the value of the paper used in any transactions. The Nature Conservancy should attempt to setup a fund to prevent the needless loss of trees involved with these transactions.
I wonder if some of the commenters are actually Artificial Intelligence test platforms, (like those incurably optimistic ones [wink, wink]). And maybe the others, too, especially that Misean, he can call up a YouTube post faster than I can type, then launch another before I can even click on the first one.
I follow you, but what about Minsky, Wiley E. Coyote and the PPT?
Minsky: Give me a moment...
Wile E. Coyote: I picture him wearing a Princeton class ring, one hand on a printing press lever, mumbling something about "Super Geeeenius". Dang I wish I could draw.
PPT: There is no PPT. Ignore the man behind the curtain. There's no place like home. Safe as houses.
Wow, that ShadowStats.com page is disturbing, especially in light of what's happening with the banks.
I believe the Feds have no idea of what to do now. Part of Greenspan's success was that he had the empirical roadmap of the Great Depression to follow. But now they're just Guessing in Nowhereland.
By my estimate, Citigroup has basically issued restricted equity (to be officially issued in two-plus years) at a price per share around the mid 20's when you take into account the 11% interest it is paying on the $7.5 bln. Additionally, Citi does get the benefit of using $7.5 bln now instead of only getting $5.7 bln now (if it had just done a straightforward equity deal), while paying $1.8 bln over the next two-plus years in interest.
All in all, this deal is a tough deal for Citi in my opinion because it smells like desperation. But don't be confused about the 11%. It is clear since the deal has mandatory conversion prices that the 11% interest rate is basically a discounting mechanism for the conversion price, which is why I say the equity was effectively issued in the mid 20's.
If I wasn't so disgusted I'd be LMAO. "let the market's work w/o govt interference".
If spending a trillion dollars on a war protect oil interests isn't govt interference, than what is?
If that trillion would have been invested in alternative energy technologies, after 9/11 with the support of virtually every major government, we'd be looking at the greatest global expansion in world history.
But hey, what do I know. Hopefully my grandkids will know better because of it.
Anyone have any thoughts on the FRE dividend cut and capital raise? Enough to grow portfolio (e.g., buy all the GSE eligible loans being produced by CFC and friends?)? Or just enough to stop the sell-off from their portfolio?
Just back from dinner. Yours is the first post I read.
"And maybe the others, too, especially that Misean, he can call up a YouTube post faster than I can type, then launch another before I can even click on the first one."
This deal begs the question: Why did Buffett turn down this deal? He understands banks and has a huge war chest of cash he's trying to invest. You KNOW he got the call on this deal before the Arabs... and clearly he turned Citigroup down. Doesn't bode well.
"This deal begs the question: Why did Buffett turn down this deal? He understands banks and has a huge war chest of cash he's trying to invest. You KNOW he got the call on this deal before the Arabs... and clearly he turned Citigroup down. Doesn't bode well."
I always hate to be an evidence hog...but where's your evidence?
In quant funds, mathematicians and computer scientists mine enormous amounts of data from financial markets looking for correlations among stocks, bonds, derivatives and other instruments. They search for predictive signals that will foretell whether, say, a palladium futures contract is likely to rise or fall.
Behold the power of the financial real yield mining equipment. (We'll get the leftover scraps, if we're lucky.)
"In quant funds, mathematicians and computer scientists mine enormous amounts of data from financial markets looking for correlations among stocks, bonds, derivatives and other instruments. They search for predictive signals that will foretell whether, say, a palladium futures contract is likely to rise or fall."
And they do it with a measuring stick that constantly changes in size.
So when one of those linear differential equation variables changes size in the wrong direction the quants get killed. LTCM anyone?
A little data would be nice. Otherwise your just a silly poster like me, talking theory. If you have some data it would be nice. Post it. If you can't then at least say why. Although.....psstt over hear...I talk to BS Bernutty daily...but assert it if you wish.
Behold the power of the financial real yield mining equipment. (We'll get the leftover scraps, if we're lucky.)
Let's see, what's left over, hmmm, usually a superfund clean-up site with toxic slag and heavy metals (not the good kind) poisoning the ground water. Yep, that's probably true.
Let's see, what's left over, hmmm, usually a superfund clean-up site with toxic slag and heavy metals (not the good kind) poisoning the ground water. Yep, that's probably true.
automated data mining machine startup initiated control lever moved to search for hidden meaning initial results tabulated and displayed
Clean-Up, Heavy Metals, Ground Water
advanced analysis performed secondary results tabulated and displayed
Bury, Gold, Water
data reparsed, reprocessed, reanalyzed tertiary database lookup
A government that is big enough to give you all you want is big enough to take it all away. - Barry Goldwater
Wow. Great chain of logos and logic. My subconscious must be a hell of a lot smarter than I am. Thanks for the calming music. I miss that forest picture CR used to have.
The surprise is, they should have eliminated the dividend. And given the implicit government backing, the feds should have required it. There should be a law for Fannie and Freddie that they have to have capital ratios over X before paying out dividends.
Orders for Big-Ticket Goods Drop
AP
Orders for Big-Ticket Goods Drop
Wednesday November 28, 8:36 am ET
By Martin Crutsinger, AP Economics Writer
Orders for Big-Ticket Manufactured Goods Drop for Third Straight Month
WASHINGTON (AP) -- Orders to factories for big-ticket manufactured goods fell in October for a third straight month, the longest stretch of weakness in nearly four years.
The Commerce Department reported that orders for durable goods declined 0.4 percent last month, a weaker showing than expected. The October decline followed even bigger decreases of 1.4 percent in September and 5.3 percent in August, raising worries that the steep plunge in housing is beginning to drag down other sectors of the economy.
Nov. 28 (Bloomberg) -- Wolseley Plc, the world's biggest distributor of plumbing and heating equipment, plans to cut 1,300 jobs in the U.S. in its fiscal second quarter as the worst housing recession for 16 years hurts profit.
Cyber Monday Stats:
total spending up 21% from last year
number of shoppers up 38%
dollar amount per buyer down 12%
61% purchases made on computers at the office.
One of the troubling aspects of the report on durable goods was that orders for capital goods excluding aircraft, a category considered a good proxy for business investment, fell by 2.3 percent in October, the biggest decline since a 2.4 percent fall in February.
It had been hoped that business investment would offset part of the slump in housing. However, the October decline, if it continues, could show that businesses are cutting back on their plans to buy new equipment in the face of widening economic problems.
Excluding the volatile transportation category, durable goods orders fell by 0.7 percent in October, the biggest drop since a 1.7 percent fall in August.
I don't hear a lot of news about expansion or new capital buys from folks I talk to... There was some of that last year but it's been pretty quiet lately. If there is a silver lining excuse it would be that a number of the firms I call on have new product coming out now and put the equipment in the ground a year ago... so no need for new buy in the near future.
A couple firms I talk with have new prod dev programs on the drawing board & too early to plan for new equipment buys - but in most of those cases it looks like the build will be in Asia (that's the early intent I'm told - not because of labor cost or price either but because the end users & final customers will primarily be in Asia).
I don't see where all the hype came from over business expansion... except maybe in energy & commodities. Moving & processing grain, metals & coal sure... but what else?
Oh and the dollar effect? It will have one - but will take years for businesses to believe the fall in the dollar is long term (I think it is but what do I know). Capital plant location decisions are loooooong term, they need to see long term trends before they change paradigms. Dollar fall hasn't been that long...
This report should not have surprised anyone - I doubt it will have much effect on the markets or fed thinking. IMHO.
Not sure if this was your point but if you are decreasing the value of money are you decreasing the want to make money? In other words why invest in capital structures? If oil becomes more valuable in relationship to money why produce more? Instead are you more wealthy if you decrease production and charge more?
How accurate are the stock futures as a predictor of real market action? It seems to me that after the first half hour of trading, they are near-worthless.
The paranoid in me says that they are also susceptible to "jamming" by hedge funds and other black hats. You know, the sort of folks who might benefit from a quick pop and drop.
At any rate, back to attempting to contribute something useful ... did anyone see this? mortgage apps crater
The real story here i think is that a 1 year ARM is now more expensive in terms of interest rates than a 30 year fixed. This can't be good for underwater homedebtors ... no way out except mail in the keys and move back in with Mom and Dad.
Not sure if this was your point but if you are decreasing the value of money are you decreasing the want to make money?
Are the people making the money and the people valuing the money the same people? If not might they have different agendas? Different 'value sets' and different expectations of what they would like to see as eventual outcomes?
It is likely those creating the money do so for completely different reasons for what they do than those 'valuing the money' in the market have for their actions. The two might be coupled but that isn't the same as saying 'synchronous'.
In other words why invest in capital structures? If oil becomes more valuable in relationship to money why produce more?
Produce more oil or produce more money? Again does one person have control over both or even either? Are their interests aligned?
Instead are you more wealthy if you decrease production and charge more?
tg | 11.28.07 - 9:33 am | #
Only true in a monopolistic environment with no substitution. That isn't reality... so in reality if you cut back and your competitors can expand - your cutting back makes THEM richer. I don't think that is a sound business model for anyone.
In an inflationary environment it makes tons of sense to put capital in the ground now in today's dollars so as to reap far more dollars in the future. But you have to be 100% sure (1) the prices of the products inflate faster than the prices of the inputs AND the real cost of money today is less than the cost of money will be tomorrow. Even in the most inflationary periods both conditions are iffy.
In a deflationary environment you hoard cash and neither invest nor produce going forward since the money will be worth more than goods & services produced (going forward).
That is why in functioning markets you need both else transactions can't happen. Its only when the balance either way is so extreme that transactions freeze that a huge mess occurs. We might be seeing hints of that in financial markets but anyone who has walked a shopping isle or pumped their own gas will know it hasn't happened in the world of real goods.
My guess is one reason you see so damned much infrastructure building right now is that market participants have determined that for them both conditions fro expansion have been met. For services & mfg - especially domestics - probably not so sure. They are probably worried about cost of their inputs going forward AND the certainty of the demand for their products. Sounds like a functioning market to me.
any edumacated guesses on when C announces its divi cut?
Geoff, before the next divident declaration? It seems like a given. Check out the Meredith Whitney comments (video at the bottom of the posts).
Best Wishes.
OT: GLD
I think it's the biggest infusion into GLD ever -- over 18 tonnes in one day!
404 Page Not Found
They just paid out so they don't go ex dividend for a couple of months. No chance they will rush to announce a dividend cut.
I really don't see how it's possible for the stock market to not crash, much less hold any gains in this current economic environment, considering the fact that the bad news keeps coming every day.
Think about it people, Citibank ... THAT'S RIGHT CITIBANK, just completed a really bad deal with the Arabs, just so they could pay their bills for a few more months.
Isn't that called insolvency?
Did you see the details of the C deal? 11% ... Its a "ChecksCashed" loan. On to the death spiral...
I wonder if Freddie Mac could accept a cash infusion from a foreign interest like Abu Dhabi (translated means "father of gazelle" no kidding!) seeing that Freddie has a quasi affiliation with the US government? I have no idea, but maybe someone here does?
Could Lurker or someone else explain the meaning and implications of the bullion inflows into GLD. I undstand that the price of gold was down today.
being marketed on Tuesday with a coupon fixed at 8.25 percent for five years
hmmmm
The Citi deal was just stupid, but that's what entities do when they become desperate. The divi pays more than junk money ... WTF???? And how the permabulls managed to spin this into a positive event escapes me. Wholly ****, Citibank just prostituted itself to pay their bills.
Tonight it all gets digested.
Donny,
the major holder's of citi are the same major holders of all the other major stocks in the major indices , all run by major peons
You should make sure that GLD actually has a vault somewhere...
and that it's filled with actual gold, not just paper reciepts for gold
Is it true that Citi has agreed that its female employees will be subject to Sharia law?
Can someone please explain how this Citi deal is better than a simple public offering? Why offer a 11% sweetheart deal to Abu Dhabi rather than, say, a 10% deal to any Tom, Dick & Harry in Kansas? I mean, How is this market efficient? Appears like a stinking insider deal.
The real question is what are half the people drawing checks in financial services going to do after next year?
Wall Street traditionally has a bloodbath in employment on bad numbers. This looks like one of them.
No Bonus for you! Here's your box!
See ya!! Replaced you for 60k!
Now, Wall Street can feel the pain they have inflicted on Main Street for so long. This will be good!
I still vote for inflation. Stop concentrating on housing prices!!!
It was just a standard bubble. Bubble over, crash follow. Nuff said.
Nobody is going to finance any real estate speculation for two decades after this debacle.
Only heavy inflation will save us, but the real values are doomed from the boomer bust and recession flow Southward of our recent immigrant population.
How about a truly radical thought- five million jobs disappear and unemployment barely rises!
Think about it- no papers-no benefits.
That is what reality is about in America today!
Someday this war's gonna end...
"Could Lurker or someone else explain the meaning and implications of the bullion inflows into GLD. I undstand that the price of gold was down today.
BillD "
BillD - I'll give you my view on it. It means that there is more demand for GLD shares - which isn't necessarily bullish.
Let me explain. Any of the ETF's can be created and redeemed on an "in kind" basis. In the case of GLD an authorized participant (specialist, market making firm, prop trading desk, etc) can turn in 100,000 shares of GLD to the trust and get back the equivalent value in Gold and some cash. Conversely, an authorized participant can turn in the appropriate amount of Gold to the trust and get back 100,000 shares of GLD.
Why would anyone go to the trouble?? Well they could do it as part of their market making and to arbitrage any intraday differences in the NAV of the ETF and the traded prices of the ETF.
Why is a creation of additional GLD shares not necessarily bullish??
Well, if someone is bearish on GLD and they want to sell short they must first "locate" the shares in order to be able to borrow them. If there is a lack of available shares to borrow there can be an economic incentive for an authorized participant to create additional GLD shares for the sole purpose of loaning them out to someone who wants to short GLD.
Another example of a "not necessarily bullish" view of more GLD shares being created is as a result of an arbitrage.
If the quoted market is 80.00 x 80.10 and I can buy the requisite amount of Gold to create GLD shares for less than 80.00/share in GLD terms I'll short the living crap out of GLD at 80.00 and buy my hedge (physical gold)in the appropriate amounts. At the end of the day I'm short GLD @ 80/share and long gold at something less than 80/share in GLD terms. To realize my arb profit and close the position I'll turn in my gold hedge to the GLD trust and get back GLD shares which I'll use to close my GLD short.
So long story short - creation of new GLD - or any ETF shares for that matter - doesn't mean its bullish - in my opinion anyway
GLD - The People's Central Bank!
Gold is never OT IMO.
OT: GLD
I think it's the biggest infusion into GLD ever -- over 18 tonnes in one day!
http:// http://www.streettracksgoldshare...b_value_usa.php
Lurker | 11.27.07 - 7:09 pm | #
CR, I think it is kind of important whether they cut it, or whether they eliminate it, and of course, WHEN they announce either one. My guess is, they do it pretty soon, since the bad news is piling up and they are going to have to wait for a good day to announce something this ridiculously bad. My guess is a cut in half, and it is announced shortly after the rate cut on the 11th.
BSR,
You got $7.5B burning a whole in your pocket, looking for some yield, whilst your dollar plummets in value at ~11-13%yoy? No? That's why.
Sorry it's just the tooth. ;P
Cheers,
AllenM,
"Stop concentrating on housing prices!!!"
I'm not. I'm looking at yield spreads at the longer end. "Safe" gov't treasuries are down. anything else is increasing spread.
Now that could signal future inflation and at the same time flight to quality. In other words, treasuries are really liquid now I'll take the paltry yield, but I see future inflation, so you clowns not in tbills are going to have to cut prices if you want me to buy THAT debt. Fair enough, a good argument can be made there.
However the counter argument is that treasury buyers don't see inflation. They see money drying up as they see that other stuff just going into default. So they take the small yield on LT debt, figuring that as the pool of lendable funds continues to dry up they need to be as liquid as possible with as high a yield as they can get in very liquid treasuries.
Which is it? I'll grant the Fed added $4.5B in short term repos, but, was that just money to goose the market, to sqeeze shorts today? I think so. We'll see tomorrow.
I'm not NECESSARILY in the deflation camp, but my bets are increasingly looking that way.
Both arguments are fair assessments in VERY simple terms. But M0 and M1 aren't exactly zip zooming up. And I'd bet if I caused the Super Colander to plasmatize a green virtual eyeshade over my eyes, I could find that the rate of increase in debt is declining. Perhaps I'll try to gen some digits.
Cheers,
AllenM,
OK, the M3 number still is hickuping up, but take a look at the top chart on this page:
Inflation, Money Supply, GDP, Unemployment and the Dollar - Alternate Data Series
Look at the growing divergence between M1, M2, and M3. Can't say that looks like a healthy seperation. Remember, debt pyramids upside down off of M1. That thing is looking a might top heavy. And M1 is the difficult to grow.
Cheers,
Could Lurker or someone else explain the meaning and implications of the bullion inflows into GLD. I undstand that the price of gold was down today.
here's the technical explanation. GLD takes receipt of gold bullion from Authorized Participants, institutions that create ETF shares. They deposit this bullion in their vault and issue the shares in return. So, net inflows mean more ETF shares are being created and more gold is going into the vault. But the reverse can happen when APs want to cash in their shares. GLD has to give them gold. The APs can sometimes make a tiny spread trading the shares for the gold and vice versa. Basically, he's telling you that there's a lot of demand for golden ETFs today and the vaults are getting fuller, which is a major source of increased demand in the market.
BSR --
Can someone please explain how this Citi deal is better than a simple public offering?
$7.5 billion is not peanuts. If C tried to raise that in a simple public offering, it might cause even worse dilution.
How much would you pay for the deal AbracaDhabi took? Including the forced conversion at ~$32/share two years from now...
You might be right, but it's not slam dunk obvious (apologies to G. Tenet).
So the Spouse of Death Mask says $7.5 billion is peanuts. OK, but their actions suggest they are trying to preserve the dividend at all costs, including further dilution. That looks stupid to me, but their existing large shareholders may not be giving them any choice.
I am not convinced we will see a C dividend cut, at least not until they have exhausted all other options for raising capital.
Have not seen this posted:
http://www.rgemonitor.com/blog/setser/229071
Horrific!
so I should buy GLD? Not the first time I heard that in past month or so. I hear Gold in general will go to 1500+ by end of next year, and fed will be easing hard!
However, does anyone consider that if shit hits the fan that there could be forced liquidations of GOLD, OIL, and other hedgy positions?
Nemo,
"$7.5 billion is not peanuts."
Nope, it's not. And it's also level 1, and used as a fill for Cap requirements. Citi ain't touching that to pay a dividend. I think they have to cut it, and hold that sweet Abu Dabi crude...erm cash, to start thinking about moving those sewer..erm SIV contents onto the balance sheet.
IMHO.
Cheers,
squeezed,
I just upped the wattage to the Super Colander Tin Foil Hat. I prefer The Brian Setser Orchaestra this time of year. I'm going to crawl into the bunker now and count my ammo.
Cheers,
Misean -
Rock on!!!! You've got it.
"However the counter argument is that treasury buyers don't see inflation. They see money drying up as they see that other stuff just going into default. So they take the small yield on LT debt, figuring that as the pool of lendable funds continues to dry up they need to be as liquid as possible with as high a yield as they can get in very liquid treasuries.
Which is it? I'll grant the Fed added $4.5B in short term repos, but, was that just money to goose the market, to squeeze shorts today? I think so. We'll see tomorrow."
We have 37.5 Billion due tomorrow... I'd look to see gold go off a cliff for margin calls and all that good stuff... then it'll pop back up and we can do it again for minute.
I can't believe the posts I'm reading tonight. If this phone had a keyboard I'd set you all straight.
Somebody give these people a hard time for me please. Just tell them they're wrong, make up some reason that sounds good using a few technical terms from the relevant Wikipedia entry and support the claim by referring to Japan in the 90s even the topic is SoCal demographics.
Maybe throw some comment in at the end like "Some people you just can't help."
any edumacated guesses on when C announces its divi cut?
Read somewhere that the reason Rubin flew to Dhabi and begged for the money was to avoid a dividend cut.
ac --
Helicopter Ben, printing press, monetize the debt, lender of last resort, pushing on a string, Keynesian, NeoKeynesian, Austrian, Bretton Woods III (?), Weimar Republic, Japan in the 1990s, some people you just can't help.
Sorry, no links. What was the topic, again?
Citibank just prostituted itself to pay their bills.
Not exactly, It sold off some of its capital to pay its expenses. Called "dipping into capital." A no-no. Reminds me of the movie A New Leaf. Next C will have to find a super rich spinster to marry and murder.
I'm asking Santa for a tinfoil hat for Christmas. I've already got a ton of crazy maggoty schemes running through my brain. My friends now call me "Mr. Doom and Gloom" and I thought I was being carefully non-judgmental.
For example: the quant funds seem to move in a pack, but surely there must be some who have thought a step further and are either trying to stay in front of the pack, or trying to maneuver to set traps for the pack.
The "worthless" 2nds and HELOCs have a definite floor value. That is the value of the paper used in any transactions. The Nature Conservancy should attempt to setup a fund to prevent the needless loss of trees involved with these transactions.
I wonder if some of the commenters are actually Artificial Intelligence test platforms, (like those incurably optimistic ones [wink, wink]). And maybe the others, too, especially that Misean, he can call up a YouTube post faster than I can type, then launch another before I can even click on the first one.
I"ve got my GLD, FXE, FXP and SRS. You people told me I was gonna be rich.
What gives?
Nemo:
I follow you, but what about Minsky, Wiley E. Coyote and the PPT?
Uncle Festus --
I follow you, but what about Minsky, Wiley E. Coyote and the PPT?
Minsky: Give me a moment...
Wile E. Coyote: I picture him wearing a Princeton class ring, one hand on a printing press lever, mumbling something about "Super Geeeenius". Dang I wish I could draw.
PPT: There is no PPT. Ignore the man behind the curtain. There's no place like home. Safe as houses.
(and of course, follow the yellow brick road...)
CR, misean, james, et al-
Explain to me "in detail" how this deal has a net cost of 11% to Citi, you have all been proclaiming the terms of this deal and the structure-
Read the terms, and cite the net cost-
The resource cannot be found.
Wow, that ShadowStats.com page is disturbing, especially in light of what's happening with the banks.
I believe the Feds have no idea of what to do now. Part of Greenspan's success was that he had the empirical roadmap of the Great Depression to follow. But now they're just Guessing in Nowhereland.
What gives?
12th percentile
Just be patient! You are going to get rich tomorrow.
Fortune interview with Dick Cheney - Nov. 25, 2007
anonymous:
is that first picture of Dick Cheney supposed to make him look happy and likeable???
my grandfather looked happier and more congenial as well as more huggable in his coffin.
my gosh.
But the real question to the recovery is how long before we lend again to those recently foreclosed on?
The standard 2-4 years. I think we are going to need them back as buyers sooner than that.
A quick letter of explanation by your trusted loan officer shoud do the trick.
By my estimate, Citigroup has basically issued restricted equity (to be officially issued in two-plus years) at a price per share around the mid 20's when you take into account the 11% interest it is paying on the $7.5 bln. Additionally, Citi does get the benefit of using $7.5 bln now instead of only getting $5.7 bln now (if it had just done a straightforward equity deal), while paying $1.8 bln over the next two-plus years in interest.
All in all, this deal is a tough deal for Citi in my opinion because it smells like desperation. But don't be confused about the 11%. It is clear since the deal has mandatory conversion prices that the 11% interest rate is basically a discounting mechanism for the conversion price, which is why I say the equity was effectively issued in the mid 20's.
Citigroup: The Real Deal-Minyanville
If I wasn't so disgusted I'd be LMAO. "let the market's work w/o govt interference".
If spending a trillion dollars on a war protect oil interests isn't govt interference, than what is?
If that trillion would have been invested in alternative energy technologies, after 9/11 with the support of virtually every major government, we'd be looking at the greatest global expansion in world history.
But hey, what do I know. Hopefully my grandkids will know better because of it.
g.a.b. - Hopefully, but is our children learning?
"Just be patient! You are going to get rich tomorrow."
What time tomorrow? LOL
And there will be pie in the sky by and by.
Anyone have any thoughts on the FRE dividend cut and capital raise? Enough to grow portfolio (e.g., buy all the GSE eligible loans being produced by CFC and friends?)? Or just enough to stop the sell-off from their portfolio?
I'm going with the latter.
I'd love to see the personal ad for this deal...
"Dominant SWF seeks interested submissive for a good time. Must have frequent flyer card."
Oops. My goof. It's late and I added to the wrong thread...
Sorry. It's bedtime now.
sdtfs,
Just back from dinner. Yours is the first post I read.
"And maybe the others, too, especially that Misean, he can call up a YouTube post faster than I can type, then launch another before I can even click on the first one."
Beware the dark side: YouTube -
Cheers,
Dustdevil,
Well of course....reminds me of this video:
YouTube -
Yes they did this. Now it's collapsing.
Cheers,
for anyone interested in approximating CDOs containing subprime no-doc loans....
Accrued Interest: AMBAC: This is not going to work
Cheers!
Plosser seems to deserve a musical tribute today.
ades don't be stealing my tag line
Cheers,
Well there's the Tanta bit...
YouTube -
Just a thought.
Cheers,
Stag Mark,
I can give him this:
YouTube - Uriah Heep - Wizard
Good enough?
Cheers,
This deal begs the question: Why did Buffett turn down this deal? He understands banks and has a huge war chest of cash he's trying to invest. You KNOW he got the call on this deal before the Arabs... and clearly he turned Citigroup down. Doesn't bode well.
Dominant SWF seeks interested submissive for a good time. Must have frequent flyer card."
Oops. My goof. It's late and I added to the wrong thread
You have my attention.
Could you point me to the "right" thread?
Yuk yuk.
Great profile of a smart hedge fund guy, Jim Simons at Renaissance:
Simons at Renaissance Cracks Code, Doubling Assets (Update1) - Bloomberg.com
I'm feeling mighty, mighty humble after reading his story!
Misean,
Me and my magic man kinda feeling fine.
Dave,
"This deal begs the question: Why did Buffett turn down this deal? He understands banks and has a huge war chest of cash he's trying to invest. You KNOW he got the call on this deal before the Arabs... and clearly he turned Citigroup down. Doesn't bode well."
I always hate to be an evidence hog...but where's your evidence?
A link would be nice.
Cheers,
Stag Mark,
I wanted to go with this,
YouTube - Black Sabbath - War Pigs
Given the Shrubboy maladministration...but thought I'd interject a little hope. Conjure bag should enjoy it though.
Cheers,
jg,
In quant funds, mathematicians and computer scientists mine enormous amounts of data from financial markets looking for correlations among stocks, bonds, derivatives and other instruments. They search for predictive signals that will foretell whether, say, a palladium futures contract is likely to rise or fall.
Behold the power of the financial real yield mining equipment. (We'll get the leftover scraps, if we're lucky.)
A link? That's rich.
Try a phone call.
By all means, feel free to disregard my previous post. It's not my goal to persuade anyone of anything. Believe whatever you want to believe.
"In quant funds, mathematicians and computer scientists mine enormous amounts of data from financial markets looking for correlations among stocks, bonds, derivatives and other instruments. They search for predictive signals that will foretell whether, say, a palladium futures contract is likely to rise or fall."
And they do it with a measuring stick that constantly changes in size.
So when one of those linear differential equation variables changes size in the wrong direction the quants get killed. LTCM anyone?
Cheers,
Dave,
A little data would be nice. Otherwise your just a silly poster like me, talking theory. If you have some data it would be nice. Post it. If you can't then at least say why. Although.....psstt over hear...I talk to BS Bernutty daily...but assert it if you wish.
Cheers,
Top economic advisor Al Hubbard to quit White House:
Behold the power of the financial real yield mining equipment. (We'll get the leftover scraps, if we're lucky.)
Let's see, what's left over, hmmm, usually a superfund clean-up site with toxic slag and heavy metals (not the good kind) poisoning the ground water. Yep, that's probably true.
BTW- I'm still laughing at capital punishment
Speaking of Wile E. Coyote and the FED, (you notice you never see them together?); the printing presses aren't made by ACME are they?
sdtfs,
Let's see, what's left over, hmmm, usually a superfund clean-up site with toxic slag and heavy metals (not the good kind) poisoning the ground water. Yep, that's probably true.
automated data mining machine startup initiated
control lever moved to search for hidden meaning
initial results tabulated and displayed
Clean-Up, Heavy Metals, Ground Water
advanced analysis performed
secondary results tabulated and displayed
Bury, Gold, Water
data reparsed, reprocessed, reanalyzed
tertiary database lookup
A government that is big enough to give you all you want is big enough to take it all away. - Barry Goldwater
99.9999% confidence match
warning issued
warning deleted
calming video played
Wow. Great chain of logos and logic. My subconscious must be a hell of a lot smarter than I am. Thanks for the calming music. I miss that forest picture CR used to have.
Best blog in the universe. That's my comment.
I miss the forest picture too - you took it away at the worst possible moment CR!
It was very calming...
Countrywide Falls as Schumer Seeks Probe of Advances (Update2) - Bloomberg.com
Can we see a chart of the stock market showing when the forest picture was removed?
We certainly don't want this to happen.
That's flight to safety level stuff.
OT:
Check out Roubini on the "stealth public bailout" of Countrywide.
RGE - The Stealth Public Bailout of Reckless “Countrywide”: Privatizing Profits and Socializing Losses
Good morning, and here's how it is in the sunshine state, where there's a run on the state siv-soaked investment fund:
Florida School Fund Rocked by $8 Billion Pullout (Update2) - Bloomberg.com
Which state will get the runs next?
PPT making a stand this morning? Santa Claus rally coming and you're gonna like it, no matter what state the economy is in.
The surprise is, they should have eliminated the dividend. And given the implicit government backing, the feds should have required it. There should be a law for Fannie and Freddie that they have to have capital ratios over X before paying out dividends.
Orders for Big-Ticket Goods Drop
AP
Orders for Big-Ticket Goods Drop
Wednesday November 28, 8:36 am ET
By Martin Crutsinger, AP Economics Writer
Orders for Big-Ticket Manufactured Goods Drop for Third Straight Month
WASHINGTON (AP) -- Orders to factories for big-ticket manufactured goods fell in October for a third straight month, the longest stretch of weakness in nearly four years.
The Commerce Department reported that orders for durable goods declined 0.4 percent last month, a weaker showing than expected. The October decline followed even bigger decreases of 1.4 percent in September and 5.3 percent in August, raising worries that the steep plunge in housing is beginning to drag down other sectors of the economy.
[snip]
barely,
Yes you will have a yen induced force fed rally and like it!
Of course, yesterday's rally had ~14 issues at a 52 week low for each issue at a 52 week high on the NYSE, but nothing to see there...move along...
Wolseley Will Cut 1,300 U.S. Jobs as Profit Drops 15% (Update1)
By Scott Hamilton
Nov. 28 (Bloomberg) -- Wolseley Plc, the world's biggest distributor of plumbing and heating equipment, plans to cut 1,300 jobs in the U.S. in its fiscal second quarter as the worst housing recession for 16 years hurts profit.
[snip]
In the details of the durable goods number for October, ex-aircraft it is a 2.3% decline...
Cyber Monday Stats:
total spending up 21% from last year
number of shoppers up 38%
dollar amount per buyer down 12%
61% purchases made on computers at the office.
Cyber Monday Spending Rose 21% - NY Times
From energyecon's Big Ticket Link...
One of the troubling aspects of the report on durable goods was that orders for capital goods excluding aircraft, a category considered a good proxy for business investment, fell by 2.3 percent in October, the biggest decline since a 2.4 percent fall in February.
It had been hoped that business investment would offset part of the slump in housing. However, the October decline, if it continues, could show that businesses are cutting back on their plans to buy new equipment in the face of widening economic problems.
Excluding the volatile transportation category, durable goods orders fell by 0.7 percent in October, the biggest drop since a 1.7 percent fall in August.
I don't hear a lot of news about expansion or new capital buys from folks I talk to... There was some of that last year but it's been pretty quiet lately. If there is a silver lining excuse it would be that a number of the firms I call on have new product coming out now and put the equipment in the ground a year ago... so no need for new buy in the near future.
A couple firms I talk with have new prod dev programs on the drawing board & too early to plan for new equipment buys - but in most of those cases it looks like the build will be in Asia (that's the early intent I'm told - not because of labor cost or price either but because the end users & final customers will primarily be in Asia).
I don't see where all the hype came from over business expansion... except maybe in energy & commodities. Moving & processing grain, metals & coal sure... but what else?
Oh and the dollar effect? It will have one - but will take years for businesses to believe the fall in the dollar is long term (I think it is but what do I know). Capital plant location decisions are loooooong term, they need to see long term trends before they change paradigms. Dollar fall hasn't been that long...
This report should not have surprised anyone - I doubt it will have much effect on the markets or fed thinking. IMHO.
61% purchases made on computers at the office.
back to work. no more internet !
Citigroup spurns Bank of America overture
Ho Ho Ho
Dryfly
Not sure if this was your point but if you are decreasing the value of money are you decreasing the want to make money? In other words why invest in capital structures? If oil becomes more valuable in relationship to money why produce more? Instead are you more wealthy if you decrease production and charge more?
How accurate are the stock futures as a predictor of real market action? It seems to me that after the first half hour of trading, they are near-worthless.
The paranoid in me says that they are also susceptible to "jamming" by hedge funds and other black hats. You know, the sort of folks who might benefit from a quick pop and drop.
At any rate, back to attempting to contribute something useful ... did anyone see this?
mortgage apps crater
The real story here i think is that a 1 year ARM is now more expensive in terms of interest rates than a 30 year fixed. This can't be good for underwater homedebtors ... no way out except mail in the keys and move back in with Mom and Dad.
Good morning, and here's how it is in the sunshine state, where there's a run on the state siv-soaked investment fund:
Bloomberg.com refer=home
You would pull your money out of this pool, too. Read deep down in the story. The FL pool holds $650 million of Countrywide CDs, 3% of pool assets.
central,
That is with an adjustment for the Turkey day holiday in there - uffda!
Not sure if this was your point but if you are decreasing the value of money are you decreasing the want to make money?
Are the people making the money and the people valuing the money the same people? If not might they have different agendas? Different 'value sets' and different expectations of what they would like to see as eventual outcomes?
It is likely those creating the money do so for completely different reasons for what they do than those 'valuing the money' in the market have for their actions. The two might be coupled but that isn't the same as saying 'synchronous'.
In other words why invest in capital structures? If oil becomes more valuable in relationship to money why produce more?
Produce more oil or produce more money? Again does one person have control over both or even either? Are their interests aligned?
Instead are you more wealthy if you decrease production and charge more?
tg | 11.28.07 - 9:33 am | #
Only true in a monopolistic environment with no substitution. That isn't reality... so in reality if you cut back and your competitors can expand - your cutting back makes THEM richer. I don't think that is a sound business model for anyone.
In an inflationary environment it makes tons of sense to put capital in the ground now in today's dollars so as to reap far more dollars in the future. But you have to be 100% sure (1) the prices of the products inflate faster than the prices of the inputs AND the real cost of money today is less than the cost of money will be tomorrow. Even in the most inflationary periods both conditions are iffy.
In a deflationary environment you hoard cash and neither invest nor produce going forward since the money will be worth more than goods & services produced (going forward).
That is why in functioning markets you need both else transactions can't happen. Its only when the balance either way is so extreme that transactions freeze that a huge mess occurs. We might be seeing hints of that in financial markets but anyone who has walked a shopping isle or pumped their own gas will know it hasn't happened in the world of real goods.
My guess is one reason you see so damned much infrastructure building right now is that market participants have determined that for them both conditions fro expansion have been met. For services & mfg - especially domestics - probably not so sure. They are probably worried about cost of their inputs going forward AND the certainty of the demand for their products. Sounds like a functioning market to me.
Dryfly
Thanks you make a great deal of sense as always