Credit Crisis Indicators: LIBOR Rises Again
Submitted by
CalculatedRisk on Fri, 11/14/2008 - 10:03am (229 comments)
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Can I haz hat trick
1P came and went
A default or bankruptcy of General Motors (NYSE:GM - News) would have little impact on credit markets because the risk of failure by the automaker is already priced into the market, a Citigroup director said on Friday.
We're effed
Why so quiet here?
Come on CR-this is probably as good as it gets for a long long long time.
We are about to have a crash of epic proportions in the value of almost everything, yet here we are comparing to the way things were. Statistics will be darn near useless by next year's Xmas.
This is the New Economy!
Your previous datasets will be pretty much useless.
Now begins a new phase of economic data.
Someday this war's gonna end...
Oopps, didn't know we were at a wake.
"Why so quiet here?" possibly everyone is getting an early start at Lefty's
Any banks going down?
For anyone complaining that the comments here are getting hard to keep up with, this may interest you.
Ive written a Firefox extension specifically for CR comments thats a good first step towards separating the wheat from the chaff. Its beta code, but Ive been using it for a bit now, and havent seen a bug in days. The more of you that try it out and shine a light on any that remain, the better.
Highlights:
-\tComment filtering by several criteria, including ratings you specify for authors (better than a kill file)
-\tA view of the authors posting to particular thread, so you can see whos on, and how chatty theyre feeling
-\tA way to navigate to specific authors comments
-\tUnobtrusive and easy to install and use
As a bonus, it also notifies you when theres a new thread! (Maybe not as quite as quickly as nemos monkey, but you never know)
Theres no malware in it, any techies among you can look at the source (all javascript). It does call out, but only to check for updates to CRs blog.
Heres a link that describes it, and gives you a link to the download page:
<a href=http://crcompanion.blogspot.com">CR Companion
It of course requires Firefox, which I heartily recommend anyway.
"The basic theories of neoclassical economics breaks many conventional rules of science: for starters the boundaries are wrong, the laws of thermodynamics are not respected and the whole edifice is based on sets of more or less plausible but entirely arbitrary assumptions about the economy that were chosen based on an inappropriate physical analogy and that were analytically tractable (Leontief, 1981; Hall et al., 2001; Nadeau, 2008). In fact why should economics be a social science at all? Real economies are about the flow of real materials and the energy required for those flows and materials. Earlier economists (the physiocrats and the classical economists such as Adam Smith and David Ricardo) understood the physical base for wealth and made no such foolish assumptions, nor should we."
A default of Citigroup would have little impact on the automakers, a spokesman for the big 3 said, because we're toast either way.
[A default or bankruptcy of General Motors (NYSE:GM - News) would have little impact on credit markets because the risk of failure by the automaker is already priced into the market, a Citigroup director said on Friday]
Did this director have the same opinion of what might happen if C went BK ?
1worldcurrencyyogi,
LOL
Sorry, that link was bad. Try the following:
CR Companion
It's quiet because when Comrade Paulson speaks, everyone listens.
Hold onto your wallets, Comrade Paulson is in the room.
If everything is all factored in forever, why does the mkt move at all, much less in the wild gyrations of the last few months?
Yesterday's 800-900 point swing factored in what exactly, except that nobody knows what to do or what is factored in?
Mr. Market likes Mr. Paulso
And, good news: Total Public Debt moves lower.
Nov. 6 - 10.624
Today - 10.618
Victory! Dow will now be pumped!
That's trillion, right?
Ken Cooper,
It's silly that firefox makes you register before being able to download it, but I've got it working on mac safari right now. 15 others had downloaded it when I visited
yup the big T!
Sold at a loss
About half of all homes that changed hands during the 12 months that ended in September were sold for less than the last recorded transaction price.
County % sold at a loss
Alameda 47.6%
Contra Costa 59.3%
Marin 24.1%
Napa 43.1%
San Francisco 17.2%
San Mateo 30.2%
Santa Clara 40.1%
Solano 62.0%
Sonoma 49.9%
Bay Area 46.7%
BTW- does any Califolk think this will get to 100% for some counties YoY?
Town hall meeting at C on Monday.....ticker news.
IS that before or after the town is burned?
And Count Vickula has given the dreaded reassurance on liquidity and capital levels.....
See you at $5 soon.
Ciao
MS
Wow, just watched the CR "video of the day" featuring Peter Schiff. Really deserving of its own post. The best moment was 3 guests gushing over the financials while Schiff said they were all toxic and they all laugh and tut-tut at him. It really is a good lesson in how we have to think criticly for ourselves because the "experts" for the most part are either liars or incompetents or both.
Another classic moment when one guy names WM the 2008 STOCK OF THE YEAR! Whoo hoo.
Deflation? Inflation? Recession? Depression? Mad Max? Reflation? USD? GBP? Euro? Gold? Silver? Stimulus? Bankrupcy? Natural Resources? Agriculture? Banks? War? China? India? Coupling? Decoupling?
No one has any idea wtf is going to happen. The only people that are enjoying themselves are the traders.
I am just going to go out and buy myself something ridiculously expensive to get rid of my money so I can stop worrying about losing it. May what comes come.
Sportsfan I believe with my heart (no inside dope) that behind closed doors they see that Pelosi is a chump and someone like Kucinich or Brad Sherman will be the next speaker. And I can't wait.
Here's a sobering look at the possibility that Britain will turn into "the next Iceland."
FT.com | Willem Buiter's Maverecon
The risk of a triple crisis - a banking crisis, a currency crisis and a sovereign debt default crisis - is always there for countries that are afflicted with the inconsistent quartet identified by Anne Sibert and myself in our work on Iceland: (1) a small country with (2) a large internationally exposed banking sector, (3) a currency that is not a global reserve currency and (4) limited fiscal capacity.
Ken Cooper,
This looks incredibly sweet! It may be time to dump Greasmonkey.
Anonymous: Much as I hate it, I see their position. They want to instill confidence in addins - it would be a PR ding for Firefox to see malware appear.
Once registered people comment well on it (hint, hint), the reviewers will likely take it out of the sandbox, and people won't need to register.
Sportsfan I believe with my heart (no inside dope) that behind closed doors they see that Pelosi is a chump and someone like Kucinich or Brad Sherman will be the next speaker. And I can't wait.
If Pelosi was a man, they would certainly can her.
But there's no way they'll knock a woman out of that post.
Thanks, TCA!
Ken Cooper - Can't install getting a hash file error
lawyerliz writes:
If everything is all factored in forever, why does the mkt move at all, much less in the wild gyrations of the last few months?
Yesterday's 800-900 point swing factored in what exactly, except that nobody knows what to do or what is factored in?
lawyerliz | 11.14.08 - 1:34 pm | #
This is a good point, and one that I mentioned to my dad the day of that 993 point upswing. He was talking about how the markets realized how irrationally low stock values were and was correcting for it.
My response: the markets realized this all in one day? They were wrong yesterday and right today? New data emerged today indicating that forward earnings of the Dow will be 11% higher than previously thought?
What happens when it falls 2000 points tomorrow? Is that the new "correct"?
Ken,
How much work would it be to expand this to a Haloscan filter? That would give this a broader audience. I like Haloscan, but the lack of a killfile has always been a sore point.
If Pelosi was a man, they would certainly can her.
But there's no way they'll knock a woman out of that post.
Chuck her and replace her with another (more liberal, more qualified) woman.
It's only correct when the mkt is up!!!
Hey CR, any speculation of what will be discussed/proposed at the G20 meeting this weekend? Like maybe a new world currency proposed by the IMF based on GLOD?
MS - you here?? From earlier thread:
MS writes:
Rumor is that there's a "town hall meeting" at C on monday.....and Count Vickula has just given the dreaded reassurance on liquidity and capital levels
Is the last part true? I can source the info
Once again, as economic activity dives off a cliff,
Is it a sad thing when I'm happy to see the economy behaving as the fundamentals point to? Oh... fundamentals are, of course, not pretty.
Got Popcorn?
Neil
Then I'll settle for Marcy Kaptur.
But someone who voted no will get it.
Pelosi is Tommy DAlessandro's daughter. Grumble, grumble. Dishonest pol of Md 50s. Apple not rolling very far from the tree.
Comrade Clueless Dufus: Can you tell me more?
And maybe troubleshooting should happen on the crcompanion blog - the whole goal here is to get rid of clutter on CR.
Gulp. I fear the Cooper Plan (tm) will phase out my voice. (Not a great loss). ... At least I'll go on reading all y'all.
barley-
It's a C news item in the platform..
http://custom.marketwatch.com/custom/tdameritrade-com/html-story.asp?guid={088989fc-eb45-428e-beba-a88989f4f2cc}
That's all it says
Ciao
MS
Yeah, I think it would have a chilling effect. Do I want to know that a certain number have blocked me out. Jas wouldn't care, but Jas has (sorta) been rehabilitated.
That Paulson pop was shorter than Vern Troyer. Looks like Hank is no W.
TCA: I haven't looked much at other haloscan sites. This is where I spend (for too much of) my time. For now I think I'd rather focus on making things easier for CR readers.
It's fun.
I think it's awesome. Make it like a tv show. 'Survivor--comment style
One small step for credit crisis indicators, one giant leap toward global financial meltdown.
I see why some would want to screen out comments however ignoring anything paints a skewed picture IMO. We need to see all angles don't we??
Ciao
MS
One small step backwards for credit,
One giant leap backwards for main street.
Hank Paulson's Mom
How about heloc/exempt?
Ken,
Cool freakin' add-on. Thanks.
That Paulson pop was shorter than Vern Troyer. Looks like Hank is no W.
Anyone taking bets on the CNBC cage-match coming up in eight minutes?
Hank Paulson vs. Erin Burnett.
I can't imagine she stands a chance.
default or bankruptcy of General Motors (NYSE:GM - News) would have little impact on credit markets...
Anonymous | 11.14.08 - 1:26 pm
Not to often does a relatively small group get to do as much damage as these idiots have, and will continue to do.
Anyone notice how CR is moving a little more towards the "we are going to be so toasted" group.
carolyn norton Oakton HS 1972 1973
Geoff,
you beat me to it
Yes MS, that's my take too, but sabotage is too easy. Why not a subthread option? Like-minded people can easily congregate.
Ken - posted to your blogs comments but hasn't appeared yet
MS: I agree. Using it for awhile gives me the sense sometimes that I'm missing something. One thing I've considered is offering the ability to gray out 'undesirable' posts, rather than removing them.
Another one is to provide a ranking/tagging facility, so the community could vote up or down. But that requires a server, which I would could do, but would require enough interest on people's parts.
Anyone got the number for the IMF?
Nov. 14 (Bloomberg) -- Ecuador will miss a $30 million interest payment due tomorrow, opting to use the 30-day grace period to decide whether to honor the debt as a tumble in oil prices erodes the South American country's revenue.
The price on the 12 percent bonds maturing in 2012 plunged to as low as 14 cents on the dollar, sending yields over 100 percent, as investors braced for the first sovereign default since the global financial crisis deepened in September.
How about those voted off have to make a nominal tip to CR to return.
Comrade Clueless: oops, had comments moderated. Turned that off. Will chat with you there now.
How about we all just take a deep breath and step away from the blog changes
a f/u from a CR post yesterday:
LONDON, Nov 14 (Reuters) - Prices of investment-grade bonds have fallen so far that their spreads already compensate for default rates worse than the Great Depression, Citigroup analysts said
It of course requires Firefox, which I heartily recommend anyway.
Ken Cooper | Homepage | 11.14.08 - 1:30 pm | #
This is great. Thank you.
The only thing is, sometimes, a lurker, or someone new, pops in and blows everyone aways with incredible insight or specific knowledge.
We wouldn't want to miss those!
Subthreads showing who has commented works for me. I know it clutters the page, but this blog is too important.
Superduperdave,
I've been beating the drum regarding UK as the next Iceland here for a few days. They really are quite similar; the main(and disturbing) difference is that UK doesn't have the benefit of Iceland's community sense and homogeneity. Should the UK default there will most certainly be civil disorder and possibly breakup of the country. Scotland has a separatist movement that has been agitating for quite a while. England is known for mob violence over sporting events. And the class system is likely vulnerable to conflict as lower classes realize that upper class financiers destroyed their benefit checks.
Re: add-on
Don't think I will block anybody out, but it does list everyone who has commented and how many times. It's almost like a stock ticker for CR.
Also, with the exception of a few people, most of the people who have commented this thread are the usuals. When the market crashes again and visitors go to 1200 filtering might be worthwhile.
How does it beat Find [enter your favorite bloggers]?
I, too, cannot hope to read even "uncluttered" threads beyond a couple of dozen entries...and even just sticking to CR's blogbase there are a dozen other blogs that I peruse.
What happens if JJ makes an interesting post? 'Find' might pick it up through other (favorite) bloggers, but does your CR companion bury him foreva...or just until one of your pre-selections notifies you of his resurrection?
Interesting Times: totally agree, which is why I think the full solution is a voting mechanism. Could be done if there's enough interest (and my time doesn't get sucked away by other projects, or more likely, CR posts).
How come Roubini got hold of a picture of the CR-audience in yesterdays article "Explaining Today's Bounce" ?
RGE - Explaining Today's Bounce
Dinosaur Harley Davidson down 16% today. You'd think bikes would be good in a recession, but I believe others make them better and cheaper.
Paulson refusing to say C won't fail.
buh bye C
s0mebody: that's the way I use it. I don't filter anyone out except irritating (equivalent of a kill file).
But by rating authors, they show up sorted higher in the list, so I can see who's on, and if I'm running behind, whether it's worth going over the thread.
Eric,
Is being acquired by Goldman Sachs with a pier loan from the Federal Reserve considered a failure? That's where I see it heading short of the executive allowing the former #1 US bank to be wholly acquired by a SWF
Votes ok if one wide-open thread. The lunatic fringe and avant garde are occasional dead on.
Thanks Ken - looks like this add-on you built might save me some time.
Meant one open and the rest controlled.
Hip hip hooray for Ken Cooper.
Market loving Paulson so far
So the green blocks are numbers of posts, and you can filter out any types of people you want, by how you rate them.
But there isnt anything on here that allows you to see how other users of the add-on are rating you though, is there?
Listening to Paulson, he says he will never apologize, but it also sounds like he expects other people to apologize to him.
Ken Cooper, will it be possible to sort the comments as threaded? I miss the old newsgroup type discussion. Oops.. showing my age there.
Ken: Is there a way that your add-on could get ac, mp, Dryfly, banker, AllenM, and about two dozen others who posted here regularly a year or two ago to post here again? I learned a great deal from those guys. They (and CR and Tanta of course) really helped me personally understand this economic mess and in doing so, helped me avoid tremendous financial mistakes.
(ac is still around some days, but the others, not so much.)
Erin & Hank on TV..Desperate Dramas, Divas and Dumb Asses
Geoff: no, not without a server. All the functionality is happening in your browser right now.
I am considering setting up a server for it to retrieve community ratings from. Is that interesting to anyone? I wasn't sure whether people would like it, or be creeped out by it.
Today's market looking a lot like yesterday's.
Ken Cooper,
I tried firefox recently and couldn't up/down load videos. I down loaded the newer adobe program but still no luck. Plugin message or something.
Any ideas?
All those people still post, except banker, who predates my entry. Dryfly often quite a lot.
I would rather read an entire thread, and just not read some when I'm busy.
But that's just me. I'm sure Ken's efforts will be appreciated.
1worldcurrencyyogi writes:
Dinosaur Harley Davidson down 16% today. You'd think bikes would be good in a recession, but I believe others make them better and cheaper.
Wow. Any further thoughts or news on this? Doom and gloom in Milwaukee, York, etc?
giacutter,
I am still here, just busy.
The coming earthquake in international finance has me fricking terrified.
Our mainstream media is totally clueless at the moment.
Paulson: "The next systemic crisis..."
If that is the dollar, we are going to see things go wild.
Someday this war's gonna end...
giacutter: my thoughts exactly! I miss those days. Maybe a post rating system would help with that.
@giacutter,
Banker I have not seen in a while. The others you list still post. I've been reading this blog for a little over 2 years. As time went along, everyone you list saw this collapse coming. All of them went through their phase where they were angry. Now I just think they don't have more to say. They've said it. I think a lot of people here are dejected by what has been happening to this country.
MS writes:
I see why some would want to screen out comments however ignoring anything paints a skewed picture IMO. We need to see all angles don't we??
As long as you don't consider DK, Sperm Shack and the FakePaycheck stub guy 'angles', I agree 100%.
My son bought a Harley about 8 months ago. He just loves it, but it seems to break down a lot.
^
^
^
^
^
^
^
Federal Reserve Assets
Value of the dollar
V
V
V
V
V
V
V
V
V
V BOOM! CRASH AND BURN GAME OVER
^
^
^
^
^
^
^
Federal Reserve Assets
Value of the dollar
V
V
V
V
V
V
V
V
V
V BOOM! CRASH AND BURN GAME OVER
asun: I like threads too, but they would be too hard without support from haloscan.
1worldcurrencyyogi - HOG got TARPed
Dinosaur Harley Davidson down 16% today. You'd think bikes would be good in a recession
HD isn't about buying a bike. Its about buying an image.
Glad you're not fluffy anymore nova.
C? I thought they were of the annointed Too Big to Fail.
Have we now reached the point of Too Big to Bail?
Happened in the 30's.
Nostrovia,
Maybe Harley can get a bailout.
and dont forget that a big share of HOGS were sold to subprimers. Ive seen the income profile for the overall industry, and how HD compares. My only surprise is that they havent thrown a tarp over that pig yet.
1worldcurrencyyogi writes:
Dinosaur Harley Davidson down 16% today. You'd think bikes would be good in a recession, but I believe others make them better and cheaper.
They are closing up shop here is SC, CA. Everyone in town has all the village people cloths and toys they need for now.
Now this is interesting
negative swap spread
Glad you're not fluffy anymore nova.
Thanks. Just a phase in a ponys life.
Paulson: it's almost impossible to lose money in preferreds of banks we support.
Ch-yeah, right.
Sorry for the double post.. I get so angry sometimes I get shaky
Ken Cooper -
Pls email me at
munochoc@guerrillamail.org
so we can work out the install problems
"You'd think bikes would be good in a recession"
Lots of used ones flooding the market.
Bond Girl writes:
Now this is interesting
Why?
Fuck it, just buy this market.
Paulson pop had some staying power, but it's starting to look a bit frothy, and we're still down over 1.5%. I think we still need another retest of the sub-850 before I'm going to feel remotely warm and fuzzy about a possible sustained bear rally. yesterday's reversal was just too fast. As goofy as Mr. Market can be, he rarely turns on a dime like a superball without gravity tapping him on the shoulder at least once.
Sorry, I don't know what the graph means.
From Tuesday:
NEW YORK (AP) -- Fitch Ratings on Tuesday cut its investment-grade issuer default ratings for Harley-Davidson Inc. and its financing arm to "A" from "A+," citing the continued slump in sales at the motorcycle maker.
Fitch also cut Harley-Davidson Financial Services' senior unsecured rating to "A" from "A+" and affirmed its short-term issuer default rating at "F1." The outlook on the ratings is negative.
Fitch's moves affect $175 million of debt at Harley-Davidson and $3.2 billion of debt at the financing subsidiary.
Fitch cited the declining operating performance, reduced financial flexibility and deteriorating asset quality at Harley-Davidson Financial Services combined with its parent company's declining sales and weaker margins.
I would have more respect for Schiff if he'd been saying the same about the international market, but 1 out of 2, 50% isn't too bad. The quotes are definitely interesting vs the heckling.
Joe B has been dead on this market as well in the face of talking heads, much respect. This market is delusional on the upswings. There is much to fear.
Three Steps
1) buy below 8k
2) sell and short at 9.5k
3) repeat step one
heh.... she's asking him about "government sachs"
I'll tell my son he'd better continue making his payments, or the whole economy will fail. (He is.)
Bond Girl,
Thanks for the disaster porn, but you should really put more of warning on these things.
Instead of "This is interesting" try "This is terrifying."
TIA.
Knurd!
Nostrovia,
My son bought a Harley about 8 months ago. He just loves it, but it seems to break down a lot.
lawyerliz
Now your son owes more to Uncle Sam
HD has problems as they financed a lot of bikes inhouse.
Looks like PCA was right again. Go Anonymouse!
...the equivalent of economic war ...
ok, that's over. resume downward march.
(pretty please?)
MS writes:
I see why some would want to screen out comments however ignoring anything paints a skewed picture IMO. We need to see all angles don't we??
Just a thought, and this is as a vocal opponent of registration --
We're getting too big, we're gonna get raided soon.
5,000 people talking about the market effects of Fail & AIDS will not be pretty.
Sans registration, we definitely want some distributed defenses that can block everyone but known posters.
Typical naval gazing from the peanut/blog gallery. Here you got a G20 meeting coming up to discuss a "Global Financial Meltdown", another MegaMansion consuming fire in California, a possible Bear bottom in the markets and you're busy discussing the pros and cons of a Blog filter.
Why not ask CR to at least insist on valid emails? - it would be a start.
Bear market for image
Bull market for substance
Paulson: it's almost impossible to lose money in preferreds of banks we support.
Does Paulson have any idea how damaging that statement is to the lnog term value of the dollar or the credit standing of the U.S.?
No wonder we have a disfunctional financial system.
Someone must bite the bullet and create a shadow CR.
Instead of "This is interesting" try "This is terrifying."
TIA.
Knurd!
Nostrovia,
Comrade Misean is Dope
Can you break it down for the short bus blog peeps?
Finally after 290 billion has been spent a key provision of the bailout bill is filled. Special Inspector General.
Bush names prosecutor as TARP inspector general
| Reuters
I think that everyone sees that Paulson's rise to power must have been more balls than brains.
-He didn't see this coming.
-He has no idea what to do to fix it.
Angry Saver writes:
Paulson: it's almost impossible to lose money in preferreds of banks we support
Tell that to some who hold prefs of F&F
deb writes:
Wow, just watched the CR "video of the day" featuring Peter Schiff.
Ben Stein ... what a tool.
I'm surprised Cuvuto actually had someone like Peter Schiff on.
Can someone in the know regarding volume and sources of movement for this market explain the turn around yesterday and today (regardless of whether this holds)?
World-class economists from around the globe were asked what they would recommend for G20 leaders....
All seemed to agree that more liquidity and stimulus was needed.
More Debt!
Of course, this recommendation will be met with great Huzzas, balloons, and champagne, for they are politicans who love to party.
Tell that to some who hold prefs of F&F
They weren't banks.
Besides, GSEs.... that's sooooo last summer.
Re the G20 meeting:
`"Having some broad restructuring at this point would kind of be like in the middle of a five-alarm fire calling together the fire chiefs and trying to restructure the fire department," said Steven Schrage, a former economic advisor in the Bush administration and now an analyst at the Center for Strategic and International Studies.'
Experts set low threshold of 'do no harm' for G20
I'll say it again: Paulson should get Time's Man of the Year title. Who else, in retrospect, was a big newsmaker this year?
If you are getting file hash error when installing the firefox addon, you need to enable third party cookies for installation to succeed. Preferences > Privacy > Allow third party cookies.
You can disable them again after installation. I would suggest disabling them unless you have a very good reason not to.
If you are getting file hash error when installing the firefox addon, you need to enable third party cookies for installation to succeed. Preferences > Privacy > Allow third party cookies.
You can disable them again after installation. I would suggest disabling them unless you have a very good reason not to.
So what, if anything, will G20 bring?
The long-awaited move away from the almighty US dollar as the world's reserve currency?
In my humble, amaterish opinion, China, Japan, and the Middle Easterners who hold so many dollars will want to wait a bit longer to further decrease their dollar holdings before that happens.
On the other hand, maybe it is better to get out now before Congress and the Fed further dilute the dollar and print it into oblivion.
Obamas informal economic advisor kind of gets it!
The real problem is on the demand side of the economy.
Consumers won't or can't borrow because they're at the end of their ropes. Their incomes are dropping (one of the most sobering statistics in Friday's jobs report was the continued erosion of real median earnings), they're deeply in debt, and they're afraid of losing their jobs.
Introductory economic courses explain that aggregate demand is made up of four things, expressed as C+I+G+exports. C is consumers. Consumers are cutting back on everything other than necessities. Because their spending accounts for 70 percent of the nation's economic activity and is the flywheel for the rest of the economy, the precipitous drop in consumer spending is causing the rest of the economy to shut down.
RGE - The Mini Depression and the Maximum-Strength Remedy
Can someone in the know regarding volume and sources of movement for this market explain the turn around yesterday and today (regardless of whether this holds)?
More buyers than sellers.
Option expiration.
Martians.
The PPT.
SWFs.
Irrational behavior by investors.
Any and/or all.
Nova,
Swap spreads are just totally dysfunctional right now. CR references the 2 year spread, and you can interpret the increasing spread as a sign that investors see the credit of their counterparties diminishing versus the corresponding treasury. On the longer end of the curve, it is just the opposite. The spread is not only negative, but is now deeply negative. Why would an investor want a lower rate on a transaction with a bank than the purported risk-free rate? It is nonsensical. In the past, I have heard market commentary suggest that pensions scrambling to hedge their longer-term liabilities as being behind it, but I have no idea. I do not really see it as an indicator so much as a wacky phenomenon that last appeared during the weeks of credit paralysis.
Thanks, Function!
It's alarming that the first instinct of some here is to limit diversity of thought and opinion. You don't have to read Taleb to know that you never know where the good stuff is going to come from.
So what, if anything, will G20 bring?
A statement with predictable gobbledygook about gov'ts working together to fix these extraordinary dislocations in the market. Maybe more lame quacking by the pres too.
Re: low bar at the G20 meeting
Obama is sending Madeleine Albright and Jim Leach as his liaisons.
That would be the same Jim Leach, the co-author of Gramm-Leach-Bliley Act, which tore down Glass-Steagall.
Could this be proposed at the G20 meeting?
http://www.moneyandmarkets.com/the-g-20s-secret-debt-solution-2-27999
andy in nz writes:
"Obamas informal economic advisor kind of gets it!"
More spending on health care will save us? We already spend more per capita than any other country.
I think he's trotting out the same old ideas for a new showing under different conditions. Not a win.
It occurs to me that it is in nobody's best interest for the US markets to crash on Monday. For that reason, I think we will see something very tepid from the G-20 ... perhaps an agreement to set up a working group to develop an agenda for a future meeting, date to be determined. I'm sure that both Paulson and Bush and been working the phones to this end.
Check it out, Detroit wants $10 billion WASHINGTON Three big city mayors asked the federal government Friday to use a portion of the $700 billion financial bailout to assist struggling cities.
They sought help with the pension costs, infrastructure investment and cash-flow problems stemming from the global financial crisis.
The mayors _ Michael Nutter of Philadelphia, Shirley Franklin of Atlanta and Phil Gordon of Phoenix
Could this be proposed at the G20 meeting?
No. You would have already heard it.
El Cliffo writes:
It's alarming that the first instinct of some here is to limit diversity of thought and opinion.
^^^
Never had 5,000 /b/-tards in his swimming pool.
Bait n Switch is the phrase of the week.
Detroit doesn't need $10 billion.
It needs Robocop.
Paulson has already said on a number of occasions that the money will not be used to help municipalities.
Old school salesman. Combination of Alec Baldwin and Ed Harris's characters if you remember Glengarry.
Speaking of missing posters, where did bacon dreamz go?
It occurs to me that it is in nobody's best interest for the US markets to crash on Monday. --Anoddamouse
When is a good time for markets to crash?
Bond Girl writes:
CR references the 2 year spread, and you can interpret the increasing spread as a sign that investors see the credit of their counterparties diminishing versus the corresponding treasury.
This means they see the counterparty (person they are doing deal with) as someone who will be around to finish it. Yet, they have doubt. The higher the spread - the more the doubt? Aftyer a certain point doubt gets upgraded to possibly?
On the longer end of the curve, it is just the opposite. The spread is not only negative, but is now deeply negative. Why would an investor want a lower rate on a transaction with a bank than the purported risk-free rate? It is nonsensical.
They should want the treasury rate because it is risk free and higher return. But this says they do not?
In the past, I have heard market commentary suggest that pensions scrambling to hedge their longer-term liabilities as being behind it, but I have no idea. I do not really see it as an indicator so much as a wacky phenomenon that last appeared during the weeks of credit paralysis.
Isn't the long end where babks make there money?
Oh, and thanks for the explanation.
Anyone has kaskari's roasting? please post a link.
think that everyone sees that Paulson's rise to power must have been more balls than brains.
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Function - Thanks. Temporarily enabling 3rd party cookies did the trick
@el cliffo
some o'the folks are sending messages to each other, so why slog through all the retards
Bond Girl writes:
Paulson has already said on a number of occasions that the money will not be used to help municipalities
I think he has said alot of things...
I say Liar, Liar pants on fire
You know, in reflecting on the possibility the government would loosely tie the dollar to gold again would spark a lot of short term consumer spending.
If you told the average woman that she could get $20,000 cash for the contents of her jewelry box that she doesn't wear- do you think she would run down to the refinery and sell it?
I think she would, along with a lot of other folks.
It would provide a tremendous amount of stimulation.
Why not?
Nothing else to lose- and we could once again have all the gold on the planet in Fort Knox!!!
Someday this war's gonna end...
I see the desire to change this blog, etc.. camo'ed under "utility" as another lame-o control freak trip.
man, getting that straight up feeling.
no clickity-clack, just straight up.
Bond Girl,
Bond Guy had a good post on that last night. Pension funds under strict rules would be prone to buying swaps (inherently leveraged) to buy deflation protection for their floating rate portfolio. I can't speak to why arbitrageurs haven't stepped in, other than the bond vigilantes could eagerly preparing for a few more trillion of new bonds that must partly end up on the long end.
El Cliffo: I suppose some can turn their filter way up, but that's not the intent. I am very sparing with it. But it helps tremendously to get an overview of a thread, when you have a life outside of CR and can't keep up.
Often I read a thread straight through, but when I'm in a hurry, I'd rather filter a little than skip the entire thread.
I do think a rating system would really improve things further. Then infrequent posters wouldn't be punished.
sm_landlord
I did say, kind of
Better than throwing away 700 billion! Seems the TARP has no oversight, so the pigs are at the trough! This is going to become a bigger story for Joe6pk, when they realise it didn't help them.
They have kicked the can down the road till...early 2009 at best.
I wonder if the presence of comment filters will increase the redundancy of comments for non-filterers.
OT but here are the latest earnings estimate stats (from my Earnings Trends report):
Key Points:
\tKeep your eye on Trends, not Levels when it comes to Estimate Data
\tEarnings Expectations are Collapsing for both 4Q and 2009
\tAlmost all areas affected, Health Care the only tenuous holdout
\tRevisions ratios have been rising lately, but remain DEEP in negative territory
\tP/Es based on 2009 estimates will prove to be to low as E plunges
\tEnergy only source of significant growth in 3Q, will fade in 4Q and 2009
Scorecard and Median EPS Growth Rates
\t464 or 92.8% of S&P Companies have reported through 11/13 close
\tSurprise ratio at 1.75, median surprise at 1.83%, both somewhat below normal
\tMedian EPS growth at 6.67%, surprisingly good given the economic environment
\tEnergy (52.2%), Industrials (13.0%) and Tech (12.5%) leading
\tFinancials (-26.1%) doing the worst
\tExpected Growth of 12.3% for those left to report
\tHealth Care and Tech leading on surprise front, Telecom, Financials and Utilities disappointing
Total Net Income Growth
\tTotal net income of those that have reported down 17.1% from last year
\tTotal reported net income so far $159.6 billion vs. $192.6 billion for same firms last year
\tThose firms earned $173.7 billion in the second quarter
\tResults exclude non-recurring items, most of which have been negative
\tCombining results with expectations, earnings now expected to be down 17.6%
\tFinancials down 116.9% so far, a decline of 118.7% expected when all is said and done
\tExcluding Financials, earnings are up 10.5% so far
\tFive sectors expected to post lower total earnings than a year ago
\tEnergy is the only sector to post robust growth, up 57.4%, Staples next at 11.6%
\tExcluding Energy, earnings are down 31.0%
\tExcluding both Energy and Financials earnings are down 1.2%
\tExpectations for the 4th Quarter drop to up 10.4% from 14.8% a week ago, still looks very optimistic to me. I expect 4Q earnings to be below year ago
\tNegative year over year growth in 4Q now expected for six sectors
\tFull year net income in 2009 expected to be 6.3% above 2007 levels, down from 8.7% on a week ago. Count me as extremely skeptical, I think earnings in 2009 will likely be lower than in 2008, and far below 2007 levels
I wonder if the presence of comment filters will increase the redundancy of comments for non-filterers.
(sorry. lame joke. It's late on friday.)
JP, +1 LMAO
Ken Cooper,
thanks for the effort, but
I hope I won't be rated too badly on the new plugin
ova: Ponys with Antlers writes:
I see the desire to change this blog, etc.. camo'ed under "utility" as another lame-o control freak trip.
I largely agree. It's getting big enough for factionalism and that means people are struggling to define the system and exclude those they disagree with.
Two points.
1) Ever see the /b/-tards on the march?
2) Distributed tools are not nearly as bad.
"If you told the average woman that she could get $20,000 cash for the contents of her jewelry box that she doesn't wear- do you think she would run down to the refinery and sell it?
I think she would, along with a lot of other folks.
It would provide a tremendous amount of stimulation."
Spoken like a true gold bug. Hope your not basing your long term trading thesis on the above theory.
Could someone recommend an up to date overview of bond markets for the layman?
Thanks
Political content welcomed.
C today, BAC tomorrow, and WFC next week. There's no reason why these companies should be in double-digits.
Two points.
1) Ever see the /b/-tards on the march?
2) Distributed tools are not nearly as bad.
The Littlest Mandarin | 11.14.08 - 2:49 pm |
Scare me with something that has not happened, and may not, to change something in your favor?
Familiar story.
Lovin' the add-on, Ken.
I'll use it to flag and get rid of the juvenile, constantly off-thread posters. Not to filter out contrary opinions. As you say its an efficiency tool to make better use of this fine, fine blog
Earnings Trends Data continued:
The Zacks Revisions Ratio: 2008
\tRevisions ratio for full S&P 500 up to 0.38, from 0.33 last week
\tHealth Care by far the strongest at 1.12 in response to earnings surprises
\tAll other sectors have at least 2 cuts for every increase
\tCuts outnumber increases by more than 3:1 in 6 of 10 sectors
\tRatio of firms with rising to falling mean estimates at 0.31, up from 0.30
\tTotal number of revisions (4 week total) falls to 3,995 from 4,064 on Tuesday
\tIncreases up to 1,109 from 1,074, cuts down to 2,886 from 2,990
\tPassing the seasonal peak of total revisions activity
The Zacks Revisions Ratio: 2009
\tFull S&P 500 2009 revisions ratio at 0.14 up from 0.13 Tuesday
\tMore than 5 cuts per increase for all other sectors, more than 10 per increase in 4 sectors
\tHealth Care the best at a 0.48 reading
\tRatio of rising to falling mean estimates up to 0.13 from 0.11
\tTotal number of revisions up to 3,822 from 3,808 last week
\tIncreases up to 516 from 441, cuts down to 3,306 from 3,367
\tSize of cuts horrific: 26% of all S&P firms 09 estimates down more than 15% over last 4 weeks, 13% down more than 25%
\tOnly thing holding up 2009 expected growth is the decline of 2008 base
Market Cap versus Total Earnings
\tS&P 500 P/E for 2008 11.8 and 10.2x for 2009
\tForward Earnings Yield of 9.47% wildly attractive relative to 10 year T-Note of 3.78%
\tReal P/Es are higher (and earnings yields lower) since the E is still way to high
\tFinancials expected to get 5.9% of total S&P earnings in 2008, down from 21.6% in 2007, rebound to 15.5% expected for 2009, currently represent 13.0% of total market cap
\tEnergys share expected to grow to 22.4% of total in 2008 from 15.5% in 2007, expected to recede to 17.6% in 2009. Sector represents just 13.3% of the index market cap
\tAll sectors but Financials and Consumer Discretionary expected to lose earnings share in 2009, although both will be below 2007 shares
\tEnergy P/E by far the lowest for both 2008 and 2009, at 6.9x and 7.6x, respectively
Pissed Off In California writes:
"If you told the average woman that she could get $20,000 cash for the contents of her jewelry box that she doesn't wear- do you think she would run down to the refinery and sell it?
No, at least my wife would not.
EHP,
There's been a lot said on it in the past; it was a pretty sensational thing for fixed income geeks.
The swaps market doesn't really allow for that. This strikes me as a punitive transaction for one party to the contract. My guess is that their economic benefit is not straightforward.
Sorry, missed the info on add-on. Time of comment?
Ken Cooper writes:
I do think a rating system would really improve things further. Then infrequent posters wouldn't be punished.
IMO, too much factional leverage.
If you want to do this, I think it should eat html or xml files so they can be maintained by private individuals. Centralization encourages efforts toward structural subversion.
re: Central Bank Reserves, currency runs
While they may be a symptom of a distressed market, I consider them a positive.
Right now debtor central banks are attempting to maintain the money supply by issuing new debt where possible, and in the future nakedly issuing new currency.
Foreign CBs releasing their debtor currency reserves increases the money supply, and will not be inflationary so long as private credit is contracting more.
The benefit to having them assist debtor CBs in this self-interested manner are two-fold:
- it reduces the need to issue more treasuries while there is still binding competition from other borrowers
- creditor CBs have less power to threate
man, getting that straight up feeling.
no clickity-clack, just straight up.
I'm wondering if it's merely an impressive pre-open futures jam. Market opens in 10 minutes. We don't get to Double Jeopardy for another 55 minutes or so. I have trouble believing anyone in their right mind wants to be sitting helpless in a long position while Still President Bush runs amuck at the G20 toga party.
add-on
Ken Cooper at 1:32
Centralization encourages efforts toward structural subversion.
The Littlest Mandarin
lol
Cummings is the biggest clown in Congress
Here is the "Is Kashkari a Chump" Video from today
Nothing found for 2008 11 Cummings-asks-is-kashkari-a-chump
Post ratings do not work; see Kos, Daily.
What you eventually get are cliques who control all thought and opinion.
Can't let that go, sorry. I gain respect for Cummings every time I watch a hearing.
Who else, in retrospect, was a big newsmaker this year?
Thats Ballgame Comrades | 11.14.08 - 2:34 pm | #
Umm, how about Obama
What you eventually get are cliques who control all thought and opinion.
Only if the ratings are shared. Ken's addon has no rating sharing, right Ken?
ova: Ponys with Antlers writes:
Scare me with something that has not happened, and may not, to change something in your favor?
Chill, nova.
It would be weeks til we got the pool open again.
The tool is out there and in use right now.
Post ratings do not work; see Kos, Daily.
What you eventually get are cliques who control all thought and opinion.
I'm just glad to be rid of Burt and all his alts and those like him, who contribute nothing but friction. Everyone else I will read.
I'm wondering if it's merely an impressive pre-open futures jam.
I'm thinking my SPY 130 calls will be ITM.
Today.
Just went positive, should go hyperbolic now.
Not sure what you mean by this. I was picturing a simple web service using JSON that the addon communicates with. Not sure how to address your concern. I guess could provide an open browsable log of all votes...
Declining volume on rising price with price-RSI divergences on the peaks. Logic says this sucker is going back down.
In other words, "to the moon, baby!"
Rich
Was gold our clue?
Are you talking about the market or your drink preference for the night?
"to the moon, baby!"
from your lips to god's ears.
Ken Cooper:
Not sure how to address your concern.
Have me input a URI for a simple .xml rating file so if I choose to use one, I can choose which one to use.
Consider that you are devising a tool for a forum packed full of experienced index manipulators.
T=credit freeze indicators
OT comments=most of them
still interesting for the most part
Thank you for flight with CR Airline flight 1114.
We are entering a patch of turbulence. The captain has turn on the seat-belt sign.
Please go back to your seat and fasten your seat belt immediately.
UP over 9000 today at close
I concur that Glod and Sliver were the clue. Since they held up, I take that mean that the hedgies were done dumping for now.
Market now open. Party on, dude.
hey, did gav come in off the ledge?
Ken,
The new add-in is great. Extremely valuable. Well done!
Having Tanta's mortgage pig announce a new post is too funny.
Supoib control of the S&P. My compliments to whoever is flying this thing. A gentle touch and go at the crucial hour.
The stock thing is obviously not spinning out of control. Hopefully the same is true for their control of the Black Swans.
The market opened up today. We'll probably see the usual 500pt swing before close.
Was it the Federalist papers that were written under pseudonyms? Anonymity should be maintained. I self-censored the following a short while ago after a little paranoia:
What did Paulson say to Congressional leaders in that closed room that had them announce immediate bi-partisan action?
ew post
warning juvenile post please filter
hank to ppt: tarpy has some nice morsels today, some synthetic CDO's if you do well. (sound of hard disks purring)
zomg - I loved watching the schiff recap...
bond girl - thanks for the pointer.
1worldcurrencyyogi writes:
What did Paulson say to Congressional leaders in that closed room that had them announce immediate bi-partisan action?
The truth.
"The American banking system is insolvent"
Wow - no surprise that LIBOR will get jacked-up right before there are a flood of ALT-A and POA resets/recasts:
ALT-A: The Risk Abatement Disaster is Coming « Your Mortgage or Your Life…
That way it will be easier to repo all of our homes while our tax dollars bailout the Credit Card companies!
Say adios to the middle class, as we will be renters in the end. There is no incentive for the banks to Refi or Modify the loans that will reset beyond reason.
A great many foreclosures can be avoided if the lender would agree to Refi at the current 30y Fixed - even if the homeowner is underwater, the bank takes no loss - but this bailout is structured to reward the banks who do foreclose, have lots of REO's, and are uncooperative with viable borrowers:
Message to Distressed Borrowers: You Have to Help Yourselves « Your Mortgage or Your Life…
This is a massive assault on the middle class, and an attempt to Bankrupt our Nation - what better way to get rid of Social Security, Medicare, the Department of Education, HeadStart, WIC, all socially-based Federal programs and anything else that makes a civilized society as great as ours.