OT,

FT.com / Companies / Banks - Citigroup scrambles to raise capital

This is priceless:

/snip

People close to the situation said both Citi and BofA were contesting some of the conclusions made in the stress tests. Citi executives, led by finance chief Ned Kelly, are believed to have told regulators the estimates for losses on credit cards – based on rising unemployment – are too high.

/endsnip

Prepare for the end game, we're getting there.

--bh

So, in the past year, how much has our GDP contracted?

This market is insane.

As expected, nonresidential investment - both structures (blue), and equipment and software (green) - fell off a cliff.
Blame it on Vista. We've hit a product cycle wall where the vast majority of users don't need a car.. errr,, operating system with the latest tail fins... err... screen saver.

so who needs investments for future growth? oh, wait.

yeah, investments levels are declining a ton, but it's a healthy rational reaction to over capacity, so in the long run it's good....and in the long run we're all dead,...so we got that going for us.

one other thing, don't make the mistake of confusing level and growth of GDP. we should see a large reset to a much lower level of GDP, we all know that and we need it. but when the level is reset to match demand, it will grow at some level, off of that reduced base. here are the million dollar questions. at what level does it settle, and what is the growth rate from there (for the next decade or so). that will determine level and direction of the market. methinks that a lot of market participants are pricing in 3-4% GDP growth after the reset. If it turn out to be more like 0-1% then that makes a huge difference in market valuation.

Is it possible that this flood of new government debt will begin to choke off the private debt markets as is happening in Greece right now?

It seems to me that if these government spending programs don't work out well enough to pay for themselves we could be in for a "secular" decline in private investment.

With the ongoing debt saturation of this country and a central bank that openly advocates theft of private assets (inflation is simply a lawless form of taxation and wealth confiscation) what businessman in their right mind would start a new enterprise or relocate their capital to this country?

You'd have to be pretty dumb to do that.

and as far as the PCE rising more than expected, that's nice but i suspect it was at great expense to corporate profit margins, so in the silver lining beware. i'm not a doomer, but i'm always looking at how "good" news may be exaggerated and missing the flip side "bad" implications of the good news. corporate profit margins were at all time highs and were ripe to contract, question is, will they contract as far below trend line as they expanded above (and remained above for record time)

CR- You may want to comment on the fall of imports (-34%) and exports (-30%), in addition to the 52% decline in investments
Given this level of declines and the rising unemployment, the recovery will come from where? Stimulus spending????

and if i knew the answer to that i wouldn't be posting here with all of you tossers. woo hoo!

My math may be off, so I am open to correction, but here is what I think may be the answer to my question. How much has the GDP fallen over the past year?

2008q2: 2.8%
2008q3: -0.5%
2008q4: -6.3%
2009q1: -6.1%

If we take the economy's GDP as 100 at the end of 2008q1, then: (((100(1 + 2.8% / 4) )(1 - 0.005 / 4) )(1 - 0.063 / 4) )(1 - 0.061 / 4) = 97.48

That is, the economy has decreased by 2.52% over the last year.

no doubt about it now, they are not letting the market go down, there only way to reflate....

They manipulate the bond market, why not the stock market.

Again, a reminder:

Historically it is third world countries that print money and manipulate their markets, not first world countries.

"Imagine you were a trader with infinite liquidity resources. Literally infinite. You could never, ever be forced out of a trade because of liquidity issues."

With women there is no such thing as infinite liquidity...you will run out of money. But go ahead invest in US markets, there are by now all so transparent, honest and safe! But I'd still recommend booze and women. Much better ROI!

Yalt and the earlier posters commenting on "gaming the printing presses" ... I am beginning to see the light.

Does anyone else remember that dingbat eCONomist David Malpass form Bear Stearns? He continually stated that the decline in the savings rate was not a cause for alarm. His reasoning was that Americans had "other" forms of savings such as equity/stock and housing wealth.

Is it any wonder Bear Stearns went broke? And Bernanke publicly agreed with Malpass.

Morons.

I'm pretty sure the best strategy would be to squeeze out other players by trading wrong: use your massive liquidity advantage to move markets against fundamentals and accepted trading strategies. You'd get the best squeeze out of opponents who were most convinced of the rightness of their trade and were thus the most stubborn and slow to close their positions.

Given the enormous, and perhaps quite literally infinite if Bernanke never pulls his bluff, liquidity advantage now held by the program traders at the former investment banks (look at the percentage of daily volume controlled by GS's program trades alone), I wonder how much this explains recent market action?

I stress the importance of infinity here--remember, you never have to worry about taking a loss because you can never be forced out of the position and the government will make good all your losses anyway. You're just maximizing the gains

Denninger:

And by the way, CNBS was spinning this as showing that the economy has turned the corner. You're not going to get me to believe it, and here's the one line that tells me why:

Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- decreased 7.8 percent in the first quarter, compared with a decrease of 5.9 percent in the fourth.

That sounds about right, given the layoffs and cut in hours. So how in the hell did we get this?

Disposable personal income increased $133.6 billion (5.1 percent) in the first quarter, in contrast to a decrease of $62.6 billion (2.3 percent) in the fourth.

Sounds to me like people are spending their mortgage payment on Starbucks Lattes and telling the lenders to go to hell. After all, the reality "on the ground" is well-captured here:

Current-dollar personal income decreased $59.9 billion (2.0 percent) in the first quarter, compared with a decrease of $42.9 billion (1.4 percent) in the fourth.

Personal current taxes decreased $193.5 billion in the first quarter, in contrast to an increase of $19.7 billion in the fourth.

How do you spell "off-the-charts increases in defaults"?

Yalt and the earlier posters commenting on "gaming the printing presses" ... I am beginning to see the light.

That's how this artificially manufactured inflation destroys the middle class - the people who benefit from the printing presses are those in finance and those with a deep understanding of the markets and monetary system.

The Federal Reserve is in effect acting to redistribute wealth to the monetarily savvy from to those who aren't (i.e. J6P). The problem is that they're creating a whole class of professional parasites that are sucking the life out of the productive economy.

Ben Bernanke is the worst enemy the middle class has ever had.

Some more bear-stomping news: Mexico: Health Ministry reduces the number of confirmed, fatal swine influenza cases from 20 to seven.

I'm pretty sure the best strategy would be to squeeze out other players by trading wrong: use your massive liquidity advantage to move markets against fundamentals and accepted trading strategies.

Are you asserting that there is no gravity ?

Dow Jonestown is just lapping up the kool-aid...

"we have enough extra crap left over from the bubble binges to trade among ourselves using free online ads for maybe the next 10 years."

same thing happened after the dot coms on a smaller scale with tech equipment..

why pay $800 for an aeron chair new, when you can get it from the liquidator of some pets.com style tech bubble company.

You GO Kermit!

forget fundamentals, or even stock symbols, just trade charts.

it's different this time and earnings do not matter.

snap

re: PCE
Gift card redemptions? Bargain shopping? Maybe to some extent.

Disposable personal income increased $133.6 billion (5.1 percent) in the first quarter, in contrast to a decrease of $62.6 billion (2.3 percent) in the fourth.

Low interest rates > reduced monthly expenses> more money to save and/or spend.

That's good advice Otishertz unless ... as Yalt suggests ... proprietary trading desks at the larger banks (read: Goldman) are deliberately trading against the most widely used trading signals and methods ... even setting up false signals that they promptly take apart. On both sides of bull/bear.

Trend following may save your butt if you have excellent discipline and solid risk management tools in place. However, the volatility really scrunches down your trading size, and even at that you are likely to get whipsawed.

ac: "The problem is that they're creating a whole class of professional parasites that are sucking the life out of the productive economy."

I have not doubted that since FIRE became half of our economy.

But this notion of PCE riding on money that used to go to servicing debt-- isn't that backwash into the vampire?

Or something like that...

The play here is apparently on a Dead cat bounce in the US economy, given the wipeout of inventory and business investment. That's been the play since March. Getting a little long in the tooth...

The S&P is about 870. Can it get through 875 and hold?

I think that a trader with infinite resources, the only trader in the market, could never stop buying; otherwise, the bottom would fall out.

It's a Debt Cat Bounce, Cheshire if i'm not mistaken.

I am totally lost. Where do I get directions to the re-education camp ?

Thought of the day.

Ask not what you can do for your government, Ask what your government can do for you. After all you're paying for it.
I don't buy into the Obama mandated volunteerism crap. 40% of my money goes to every stage of governments in my life in the form of taxes and fees. If you ask me, the governments should be volunteering to clean my house from time to time for nothing.

dum luk (profile) wrote on Wed, 4/29/2009 - 7:24 am reply Ignore user
I am totally lost. Where do I get directions to the re-education camp ?

We have special trains just for you. There you will be taught Fedspeak and the showers are referred to as liquidity immersions.

@ Nantucket, I agree. A decline in investment during an era of over-capacity AND during a mind-set of over consumption can be good or 'bad'. If it represented the long-needed but oft-resisted reset to a different economy with a smaller GDP in dollars involving a lower level of consumption, then it's ‘good’ because an economy that is financially sustainable and environmentally sound will feature a GDP smaller than 2006's $14.5 Trillion if certain things stay equal (esp. the dollar and inflation, and pop growth is low).

However, even under Team Obama we are not on some guided path steered by long-term thinking, clear-eyed reasoning, and a firm hand committed to long-term financial sustainability.

Instead, Team Obama is eyeing the 2010 mid-terms and 2012 election, AND/or are also pursuing their clearly stated policy goal which is this 2-step:
1st is to return the economy to recent higher states of consumption (e.g. cars and retail) and of house production and sales; and to where housing prices along with equity prices were higher... say 2004.
In their preferred fairytale, once they have re-inflated global debt bubbles (credit) with surgical control and achieved a Return To 2004, the 2nd step is to use policy and incentives to insert a more regulated banking system, clean coal, NAFTA-lite, and a tweaked health care system.
Reminds us of how Bernanke says he can & will easily remove the $8 Trillion in 'faux liquidity’ he conjured up via financial alchemy and pumped into the financial system.
Yeah Ben, right.
And Team Obama? Keep drinking that Spiked Kool-Aide.

So GDP shrinkage at a historic high, investment at a low, RE in a funk, and over-capacity evident everywhere today in Q1? Why it’s still simply the tell-tale sign of grueling Debt Unwind grinding away; not a sign of 'Enlightened Policy' or an enlightened electorate and taxpayer.

Debt Unwind will deposit us wherever its co-incident ‘L’-shaped Descent (trajectory) takes us, in due time, on the bumpy economic crater floor far from the old GDP model that’s 70% driven by debt-enabled consumer spending.

And that’s when the economic groping in the dark by a huge 300+ million-person nation will really blow some minds.

See the historic 1973-1982 structural economic transformation of the US as a reference guide for magnitudes of duration, of bumpiness, and of pain, and historic examples of 9 years of numerous headfakes in ‘bottoms’, ‘fixes’ and ‘recoveries’. And the toll taken on 3 Presidents.

""Imagine you were a trader with infinite liquidity resources. Literally infinite. You could never, ever be forced out of a trade because of liquidity issues.
What would you do--how would you maximize profit, given that advantage?"

Why on Earth would you want to trade? Take your money and go home and enjoy life."

To accumulate political power.
They own all of the money now, but don't yet own the whole world.

"Whom the gods would destroy, they first make mad. "

And guess which phase this is for UNITED STATES OF AMERICA, THE LAND OF THE FREE AND BRAVE? Pure unregulated MADNESSSSSS!

The shorts are mostly shaded brown, as deception pump-fakes the market.

moose, i see the scribbling over chart patterns by the tape painters. i was being sarcastic. there is no way to rationally trade this market and that will have long term effects on confidence and market participation. in the long term, stagflation will not be good for earnings and artificially rising stock prices in an atmosphere of plummeting earnings is setting up a bigger collapse.

my guess is the asshoiles pulling off the historical pump and dump will be long gone in the long run.

Of course there's a market rally! Bank carcasses got their flu shot, so they're suddenly healthy again, don't you know?

The vermin are cleverly amassing more cheese and it matters not that it's all gone rancid, more is better.

Artificially rising stock prices in an atmosphere of plummeting earnings is setting up a bigger collapse. - Otishertz
Saved for posterity.

You guys worry too much. This market is amusing as hell.

They're setting themselves up for a massive sell-off.

Why on Earth would you want to trade? Take your money and go home and enjoy life."

To accumulate political power.
They own all of the money now, but don't yet own the whole world.

Yes, money is a fiction. Power is real.

But a more primary answer is that they trade because they are traders. That's their game and their life...they're sure as hell not going to quit just because they've won a few games.

i would get as many shorts in the market as possible with shill buying contrary to fundamentals, squeeze them with my infinite liquidity, then short the market right before pulling all bids.

Quite right.

But anybody on the outside trying to trade this may be disappointed by their ability to hold the bluff to the last second. Good luck timing the turn.

(Confession: I'm one of the people that will try.)

American Idoligarchy

WHO may be tossing a new number into the soup at 12:00 ... although the reduction in confirmed deaths in Mexico may mitigate against that. The pressure on them to not declare a Stage 5 must be incredible.

.....NOW 9 out of 10 investors are in short position and praying market to crash.....you really believe wall street big hands let individual investors make money ?......Hell,No......this rally will go longer than most people think .........

Basically, every too big too fail financial titan is "All-In" with a busted flush & straight, and a hand of 1 of a kind, seven times.

You either bluff or go bust.

Sarah J Parker-Most movie stars without the stylists, make up artists and such can't hold a candle to a lot of office working gals out there...amazing special effects studios in Hollywood....

WHO is "backtracking" big time it seems:

Only 7 swine flu deaths, not 152, says WHO

"A member of the World Health Organisation (WHO) has dismissed claims that more than 150 people have died from swine flu, saying it has officially recorded only seven deaths around the world.

Vivienne Allan, from WHO's patient safety program, said the body had confirmed that worldwide there had been just seven deaths - all in Mexico - and 79 confirmed cases of the disease."

Party on, Goldman dudes!

(with apologies to Orson Welles)

"We will sell no swine, before it's time"

One thing is certain. Americans are very soon going to face the YEAR ZERO. After all things familiar have collapsed and Americans are seen from abroad as 1946 Germans. Losers, idiots, villains, enemies, beggars, kill-them-all etc etc. Phoenix time...good luck.

.......swine flu will evetually end up as a happening just like SARS ......it doesnt change big trend of the market......BTW , anybody knows pigs have higher IQ than doggies ?......

Anoddamoose,

No backtracking - as the article states, that was not their number - reposting the last presser from WHO:

28 April 2009

Swine influenza - update 4
28 April 2009--The situation continues to evolve rapidly. As of 19:15 GMT, 28 April 2009, seven countries have officially reported cases of swine influenza A/H1N1 infection. The United States Government has reported 64 laboratory confirmed human cases, with no deaths. Mexico has reported 26 confirmed human cases of infection including seven deaths.

The following countries have reported laboratory confirmed cases with no deaths - Canada (6), New Zealand (3), the United Kingdom (2), Israel (2) and Spain (2).

Further information on the situation will be available on the WHO website on a regular basis.
WHO | Swine influenza - update 4

"but at some point the valuations and analysis of volumes become so absurd that rational participants leave financial markets."

Only to replaced by the irrational. Look at how long CA housing was at >3.5 income. Look at how long it took people to list houses at a sellable price. It took foreclosures to start them down toward sanity.

"GDP does not matter any more... Stocks only go up. Interest rates will be a 0% forever... Pay no attention to the printing press."

Tim and Ben can keep this BS going until the bond market or currency markets make them stop.

--
WAR and the GDP

From an e-friend (an economist with a Ph.D.):

“Were war spending to be growing in line with the yoy real rate of US gov't spending, instead of 3-4 times the rate, the US economy would be contracting at a 6-7% yoy real rate vs. 2.6%: war as economic policy by other means.

“In fact, as measured by gov't GDP data, nearly half of cumulative GDP growth since '00 has been from gov't spending, and nearly a quarter of gov't spending growth during the period has been associated with war spending.

“The vast majority of Americans are utterly unaware of the extent to which the growth of imperial war spending, i.e., 9-10%/yr. since '00-'01 (and since WW II beyond that), has provided the illusion of the US economy maintaining a "growth" trajectory.”

Not every American-born economist is a BBAD and calls plays from the Rogue Economist’s Hand Book.

But for the War On Iraqis and the Housing Bubble, GW Bush had zero chance of re-election in 2004. That is what makes him an evildoer, but he needed help from two other evildoers--Greenspan and Bernanke.

The Era of the Evildoers is what got the US economy in its current predicament.

Jas

blackhalo said, "Only to replaced by the irrational.""""

true dat.

i suppose it is safe to assume that the irrational outnumber the rational. how does one become irrational?

Jas,

Government spending IS the engine of the U.S. (e)CONomy. It has been so since FDR instituted the nanny state in the 1930s. The "free" market is largely a myth, more so now than ever before.

The surest path to wealth in America is too get in on the scam.

A bonus random thought: Sean Hannity and Rush Limbaugh are two of the biggest useful idiots in history.

snp500 pe:

MarketGauge by DataView, LLC 

check out RUT

P/Es & Yields on Major Indexes - Markets Data Center - WSJ.com 

Yalt asks, "Imagine you were a trader with infinite liquidity resources. Literally infinite. You could never, ever be forced out of a trade because of liquidity issues. What would you do."

If I could only take long positions, I would buy carefully selected mildly distressed corporate debt. This is labor intensive and requires people who can do real thought, but quite profitable.

If I could do a startup, I'd be a municipal bond insurer. I'd call the firm, Infinite Liquidity Resources Guarantee, or The Federal Government, not sure which.

--
I would have loved to read Bernanke's How Politicians and Policymakers Caused the Great Depression. Then we would have known the REPLAY.

Only BBAD can have faith in Bernanke and Obama's ability to fight the Greater Depression. We are dealing with two Baby Doomers, a generation bred to lead to America's DOOM.

Jas

Maybe the explanation for the rally is the sign that investors will start throwing out management like Ken Lewis.

Interesting view - what names continue to sell on strength

Money Flows: Selling on Strength - Markets Data Center - WSJ.com

for a more optimistic take on the RUT you can go to their website and consume this data:

"P/E Ex-Neg earnings ... 12.25"

vs about 40 PE yesterday on the real number.

Russell Index data at a glance (Russell.com)

--
"Funny, Jas. I moved my stuff to cash about 2 years ago based on stuff I learned here. Now, how do you suppose I came to that decision?"

LOL!!!!!!!!!!!!!

If CR had forecasted severe recession, or even better a depression, you would have been long gold and the USTs and short the Scam Market, as I have been.

CR derives lot of support from BBAD and he knows his audience like any good reporter who wants success over the truth. I am selling nothing to nobody.

Jas

Rally market......bipolar meds in short supply.

At what point do citizens of the republic start shooting their elected congressional representatives?

otis,

I love that approach - "If you just leave out all our losses we are profitable!"

Jas Jain (homepage, profile) wrote on Wed, 4/29/2009 - 8:46 am reply Ignore user
Q: What do they say about those who don't learn from history?

A: "Ignore user" [x]

finally, i see CITI's logic when they say,

"the value of our debt went down and if we had some money we could buy it back some day so let's book it as income now."

tow the line or get left behind.

when you see the green "applause" sign begin clapping and continue until the light goes off.

i can do this.

this is exactly what happended in argentina, together with a collapsing public pension system. go figure!

"Is it possible that this flood of new government debt will begin to choke off the private debt markets as is happening in Greece right now?

It seems to me that if these government spending programs don't work out well enough to pay for themselves we could be in for a "secular" decline in private investment.

With the ongoing debt saturation of this country and a central bank that openly advocates theft of private assets (inflation is simply a lawless form of taxation and wealth confiscation) what businessman in their right mind would start a new enterprise or relocate their capital to this country?

You'd have to be pretty dumb to do that."

watching CNBC is so painful...I don't know i you get that CNBC commercial over there where there are a series of leaders asked what are the qualities of
being a good are - the Jack Welch one is kind of sad, he sounds like Stephen Hawking...

evidence of an investment slump.

Financial Statements for Interactive Brokers Group, Inc. - Google Finance

Interactive Brokers
Revenue In Millions of USD

3 months ending 2009-03-31, 264.80
3 months ending 2008-12-31, 385.67
3 months ending 2008-09-30, 459.52
3 months ending 2008-06-30, 351.45
3 months ending 2008-03-31, 466.89

". I am selling nothing to nobody."

Normally that's a bad business model if it's voluntary.

more good news.

April 29 (Bloomberg) -- At least six of the 19 largest U.S. banks require additional capital''''

Fed Is Said to Seek Capital for at Least Six Banks (Update2) - Bloomberg.com

when you see the green "applause" sign begin clapping and continue until the light goes off.

I like the Obama Deception documentary commercials on the Glen Beck radio program.
See the free version on Google video.

--
The modern Age of Propaganda ushered in the Age of the Evildoers in America.

We know how it ends. Ask Germans. BBAD are in massive denial.

Jas

dum luk (profile) wrote on Wed, 4/29/2009 - 12:06 pm
Samdog,
.... point.

Ha ha ha! Good call dum luk--
the real "Samdog" is my Labrador retriever!

Monday we were at confirmed 40, today confirmed 91...anyone have the suspected numbers?

WHO says moving closer to swine flu alert phase 5
GENEVA (Reuters) - The World Health Organization said on Wednesday it was moving closer to declaring a pandemic alert phase 5 for swine flu, which is spreading with no sign of slowing down.

No meeting has been set for the WHO's emergency committee, which could recommend an increase of the alert level to the second-highest level of the 1-to-6 scale.

"It appears we are moving closer to that, but we are not there yet," Keiji Fukuda, WHO acting assistant director-general, told a news conference.

Moving to phase 5 from the current phase 4 would be a significant step, he said.

WHO experts are examining the transmission patterns of swine flu for signs the disease is spreading among people who have not been to Mexico, or had close contact with those who had.

The United Nations agency has previously said it might raise its pandemic alert level to phase 5 if it were confirmed that infected people in at least two countries were spreading the disease to other people in a sustained way.

Fukuda said the WHO has confirmed 114 swine flu cases in Mexico, the United States, Canada, Israel, Spain, Britain, and New Zealand, with seven deaths in Mexico and one in the United States -- which U.S. authorities have said was a Mexican baby who traveled there for medical assistance.

"It is clear that the virus is spreading and we don't see any evidence of this slowing down at this point," he said.
WHO chief to raise pandemic alert level: sources
| Health
| Reuters

CRVIX way up and no comments. come on, come out and admit your shorts are blown.

from now on:

when you see the green "applause" sign begin clapping and continue until the light goes off.

Jas Jain (homepage, profile) wrote on Wed, 4/29/2009 - 12:13 pm reply Ignore user --
"Can you say "Hello, Argentina"? "
Americans can't be that lucky. How about Germany post WW I?
Jas

OK,

Können Sie sagen, "hallo Deutschland" (um 1923)?

GDP Report: The Good News

Thanks for the reminder on RUT.

I'll have to start revisiting one of my favorite ultras, TWM. See how that looks...now that we're officially once again seeing a meth market, it might be worthwhile.

Unlike TBT, which I sold at a loss and EEV, which is underwater - but I have hope since the Fed doesn't control the rest of the world's monetary system.

Glen Beck is a self proclaimed rodeo clown with an opinion. Just like Jon Stewart is. Both reveal some interesting thought, just on opposite sides of the street.

Beck is God! (not the goofball pontificator, the guitar one)

Jas,

Doesn't your statement about the US being closer to Germany post WWI kinda contradict your deflation arguments given the massive inflation in Germany post WWI?