2009-11-22

Saturday, November 28, 2009

October Cass Freight Index: Monthly Shipments Down 4.6%, Annual Shipments Down 12.2% [Interactive Time Chart]

The Cass Freight Index is an interesting index you should follow. It is run by Cass Information Systems, Inc. They process over $17.5 billion in annual freight payables. Here is the definition of the index from their site (http://www.cassinfo.com/frtindex.html). I first came across this index at the Journal of Commerce.

$18 Billion Worth Of Dubai Debt Coming Due In Next 18 Months (Video, Links)

The question is, will this put extended pressure on the USD carry trade? This aint no black swan event, but this plus the commercial real estate debt implosion should keep a cap on debt financing for a while, unless hedge funds/private equity pick up the slack imho.

RBS Led Dubai World Lenders; HSBC Most at Risk in UAE (Bloomberg)
Pimco: Dubai triggers "overdue correction" in stocks (Reuters)
UAE faces up to $184 billion total debt: BofA-Merrill Lynch (Reuters)
Abu Dhabi banks have big Dubai exposure-bank execs (Reuters)
Banks, world leaders play down Dubai debt threat (Reuters)
Dubai Crisis May End in ‘Major’ Default, BofA Says (Bloomberg)
Dubai Debt May Be Higher Than $80 Billion, UBS Says (Bloomberg)
Dubai Shows Limits of Government Rescues, Roubini’s Das Says (Bloomberg)
Dubai Is Dead Long Live Dubai (TheDubaiLife)
Gulf Research's Woertz Doubts Dubai Debt `Contagion' (BloombergTV)
Powering the Dubai Overshoot (Gregor.us)
Dubai knew debt would 'hit markets'(UKPA)
Redeker Says Dubai Fallout May Hit U.K. Property, Pound (BloombergTV)

$IRX, 3 Month T-Bill Yield Volatility, Investors Getting Short and Safe Or Banks Getting Liquid For Year End (Charts, Articles)

I'm sure you have all seen the action in 3 month Treasury bills lately. There are also stories out about T-bill yields going negative recently. You can see yield volatility on the 3-month T-bill discount rate below ($IRX at Stockcharts.com). On October 18th and 19th $IRX went from 0.55% to 0.05%! 50 basis boints cut in two business days to just about 0%. It since rallied and fell to 20 basis points (0.20%). 3-Month bills were yielding 2% this summer. The last time $IRX hit 0% was during the financial crisis (November/December 2008, 2nd chart below). Some say the action is related to banks getting liquid for year end. Others say investors are getting safe and short term to battle WAVE C or the bond bears. As I mentioned a few days ago, 20+ Treasury Bonds ($TLT) and 30 Year yields are approaching judgment day (pierced through downtrend today). I don't trade 3-Mo bills or run a money market fund so any input here would be great. If gold and the markets implode or yields spike, bills seem like the place to be imo.

News Links [Dubai, Markets, GE, Japanese Prime Minister, White House, Bolton etc]

This is one big retweet for @bored2tears on Twitter. Interesting articles.

Dubai in deep water as ripples from debt crisis spread (TimesOnline)
Bolton puts off retirement to run new China fund (Independent.co.uk)
Japanese Prime Minister warns of double-dip slump (TimesOnline)
Dubai finds Eid not such a good day to bury bad news about Nakheel (TimesOnline)
The brazen art of gatecrashing a party at the White House (NYT)
Dubai's Woes Shake U.A.E., Region (WSJ)
Dubai’s Nakheel May Need $2 Billion for Developments (Bloomberg)
Is GE Having a Yard Sale? (Forbes)

Someone Bought Extreme Upside Dec VIX Calls On Monday (VIX Futures Curve STEEP)

Someone on Twitter (hat tip) mentioned an interesting trade in the $VIX (volatility index) options on Monday via the OptionMonster Volatility Sonar Report. A trader sold 20,000 Dec 40 Calls for 8 cents and bought 40,000 December 60 Calls for 4 cents. The VIX closed at 20.48 on Wednesday, around the 52 week low. Also look at the VIX futures curve, the VIX April future is trading at a 34% premium to cash! Someone was expecting volatility it seems... OptionMonster provides a daily video from the floor of the CBOE here.

Dubai Mess Gutting Futures Overnight, DJZ9 -267pts, DXZ9 +0.38 (Videos, Charts)

Overnight, Dow December Futures are down 267 points, or down 2.56% [10,175]. Uptrend and floor support is at 10,030. The Dollar Index December Future is ready to test the downtrend. For my domestic and overseas readers I provided news videos on the Dubai debt situation.

Thanksgiving US Dollar Rally (Dollar Index, EUR/USD, USD/CAD, AUD/USD, GBP/USD, USD/BRL)

On Thanksgiving Day the US Dollar Index rallied to $74.80 and needs to break above $75 (new resistance) and break through that downtrend line to confirm underlying strength. I charted out USDX, EUR/USD, USD/CAD, AUD/USD, GBP,USD and USD/BRL below. I'm mainly monitoring commodity currencies at this point via Canadian Dollar, Australian Dollar and Brazilan Real for confirmed downside reversals. Debt de-leveraging out of Dubai could provide a catalyst. Structures will be tough to break from the beginning of the year. We'll see next week. Oil is down 2% to $76. Gold sold off from 1195 to 1180 but since rallied back to 1191.

AUD/USD, Dow Futures -1.8%, FTSE -3%, Dubai CDS Widening [11/26/09, Charts]

Thanksgiving Day update on AUD/USD, Dubai, Dow Futures and FTSE..

AUD/USD (Austrailian Dollar priced in US Dollars) just broke below a wedge support level and pierced through the 50 day moving average to the downside. AUD/USD is currently at 0.911147, -1.19%. AUD and other commodity currencies have been rising with the reflation trade since the beginning of the year. The Aussie so far almost retraced the whole 2008 down move. You can also look at the long term $XAD/$GOLD performance dislocation and say the gap must be closed somehow. I'll chart $XAD/$GOLD performance and other commodity currencies later.

Treasury Yields, TLT, FOMC Minutes (Charts,Put/Call,COT,Shorts,Technicals,Links)

Soon a decision will be made on 20+ Treasuries (ETF: $TLT). TLT is at $95.60. Does risk reappear and send TLT to $106 or will Treasuries be under pressure, sending TLT to $88. I provided a live chart below of TLT, static chart of 30 Year T-Bond Yield, articles of recent option activity, put/call ratios, short interest data and US Bond large speculator COT from Schaeffers Research. As you can see there is a short bias with low volatility.

Put/Call Ratio: 1.27, up from .60s in September
Short Interest Uptrend, As of 11/1/2009: 12.94 Mln Shares, up from 7.57 Mln 6/15/09
Schaeffers TLT VIX: 0.12, at 52 week low
U.S T. Bond COT: Large Speculator Net Short position doubled to -120k from -60k recently

General Electric $GE January 2011 $22.50 Calls Active, 135,000 Opened On ISE So Far, JP Morgan Had Positive Comments (Charts)

While browsing my blog I saw on the ISE Put/Call widget that GE call options were active. So far on the ISE, 135,000 Calls traded verses 2,000 puts with an ISEE Value (ISE customer calls opened/puts*100) of 6,869. Ebay was second place at 6,771 FYI. The actual contract in play was the January 2011 $22.50 Call and most of the volume occurred between 11:00-12:00p, from $0.70-$0.75. This is just under million being put to work for January 2011, even if just a hedge. Since GE is trading at $16, if this trade is a spec long then it's betting on 40% upside by January 2011, or a volatility spike. Here is a snapshot courtesy of Optionsxpress of .VGEAX (GE January 2011 $22.50 call). I also provided a chart of GE itself and it's at a wedge inflection point (chart courtesy of Stockcharts.com). JP Morgan had positive comments about GE today and the DOE is making moves with smart grid spending, related? Read articles below.

Articles on the trade:
Options & Future Only Highlight Positive GE Research Call (GE) (24/7 Wall Street)
JP Morgan Talks Up GE After CFO Interview (Barron's)
DOE smart-grid trials fund utility-scale energy storage (CNET)
GE Applauds the Department of Energy's Announcement of Smart Grid Demonstration Projects across the Nation (BusinessWire)

Birinyi Says Market Structure Similar To 1982 (Chart), Don't Have To Have A Correction (Video)

"We don't have to have a correction", Birinyi told Bloomberg. He thinks the market has structural similarities to 1982, look at the chart of the early 80s below. The posts below show various market bottoms. 1)Charts Comparing 1974, 1982, 2002 Market Bottoms To Today, 80s Recovery, 2)Dow 1929 Bear Market Rally Compared To 2009 Rally (Charts + Smoot Hawley). Also Robert Prechter of Elliot Wave International was just on Fast Money saying the closest comparable was the 1930s. Terranova brought up the rally in 2003. So which one is it people..

Ashraf Laidi: Unwinding of Risk Appetite Trades, Dollar Stabilization Towards End Of Year A Possibility

Ashraf Laidi (CMC Markets) was on BloombergTV discussing currencies (USD/CAD, USD/AUD, EUR/USD, USD and Yen patterns), the stock market, unwinding of risk appetite trades and the possibility for dollar stabilization towards the end of the year. Follow Ashraf Laid on Twitter @Alaidi.

Prechter: Dow's 50% Retracement, Largest Wave Structure We've Lived Through, Decline Coming in 2010 (Fast Money Video - 11/23/2009)

Robert Prechter was on Fast Money tonight.

"The Dow has retraced 50% of the decline, this is the same amount that it retraced going into April of 1930 after the 1929 crash (example). I think we're in for a very large decline in 2010, I think it's going to be at least as big as what we saw in 2008. I recommend people get as safe as they possibly can with their money. This wave structure is the LARGEST that we've lived through (can't use 2003 as template). I'm very bullish on something that everyone hates these days, that is the US Dollar".

Respect the wave people.... Download Prechter's free 50-page eBook: The Ultimate Technical Analysis Handbook (Guide to Elliot Wave, MACD, Fibonacci and more).

President Obama, Chinese President Hu Jintao Joint Statements (Video) 11/17/2009

President Obama, Chinese President Hu Meet in Beijing

The President and President Hu Jintao of China make a joint statement to the media after their extended bilateral meeting in Beijing. November 17, 2009 (Public Domain). Video Source: Whitehouse.gov.

Fun fact: As of September 2009, China, Mainland was the largest holder of US Treasuries at $798.9 Billion (treas.gov/tic).

Peter Schiff in 2006 and 2007 [Video]

I could watch this over and over and over again.

Peter Schiff Was Right 2006 - 2007 (2nd Edition)

Sunday, November 22, 2009

Peter Schiff: Gold To Decouple From Stocks, Disagrees With Roubini On Gold Bubble ($SPX:$GOLD, Video 11/20/2009)

What Schiff says here is interesting because the $SPX:$Gold ratio lost 13.6% (1.10 to 0.95) from its peak at the end of August. Mainly because gold has been outperforming the S&P. If gold keeps rising with a lower market that would not be good. $SPX:$Gold is trading under the 200dma and an ounce of gold is worth more than the S&P. Schiff also disagrees with Roubini that gold is in a bubble. We shall see. These guys have both been right at different times. Monetary Base is up 134% in 2 years.

"Gold is still in the process of decoupling from other assets and rising despite the fact that assets like stocks are falling".

$SPX:$GOLD (Courtesy of Stockcharts.com)

Adjusted Monetary Base At $2.01 Trillion From $857 Billion In 2007, Up 134% [FRED Database]

On 11/18/2009 the St. Louis Adjusted Monetary Base (BASE) hit $2,010 Billion aka $2.01 Trillion. This is up 134% from $857 Billion on 11/27/2007 (data source, St. Louis Fed).

Source: http://research.stlouisfed.org/fred2/series/BASE

Financial News: Bills Yielding Zero, Gold Set To Hit 1,200, SocGen Preparing For The Worst

Bills Yielding Zero as Stocks Soar Make Bernanke’s 1938 Moment (Bloomberg)
Texas Pension Fund Plans Investment in Private Equity in Asia (Bloomberg)
Is Gold Set To Hit $1,200 Within 24 Hours? (Zero Hedge)
Top 100 Most Active Cash Bonds (Zero Hedge)
*Israeli warplanes pound Gaza (Reuters Video)
Iraq's Oct. oil exports drop due to attacks (AP)
Carlyle Group’s Rest-Stop Deal: Private Equity Goes Mr. Clean (WSJ/DealJournal)
Cellphone Entertainment Takes Off In Rural India (WSJ)
U.S. dollar no longer a one-way bet (Reuters)
Microsoft and News Corp eye web pact (FT.com)
Zhou Says China Has Excess Capacity in Manufacturing (Bloomberg Video)
Asian Stocks, Aussie Gain on Economy Outlook; Gold Hits Record (Bloomberg)
MacroTwits w/ GregorMacdonald, 11/22/2009 Archive (Stocktwits.tv)
Chicago Fed chief sees 10.5% jobless peak (FT.com)
*Bets rise on rich country defaults (FT.com)
Deutsche Bahn signs $26B Qatar railroad deal (AP)
China to float 15b yuan T-bonds next week (ChinaDaily)
Report: Ill. prison deal could create 3,000 jobs (AP)
Microsoft Offers To Pay News Corp To "De-List" Itself From Google (BusinessInsider)
SocGen: Prepare Yourself For The Worst Case Scenario! (11/19, BusinessInsider)

If you have other good stories, put link in comment.

SPY, DIA Hitting 50% Retracement, Downtrend Resistance Level From 2007 (Live Charts, Technicals, Fibonacci)

Both the S&P and Dow are testing downtrend resistance from the 2007 peak and the 50% fibonacci retracement level from 2007 peak/2009 lows. "Two major forces collide in the index markets" -INO Chart Video. Both indexes blew through the 38.2% retracement without a problem but DID retrace 9% from the initial downtrend test. So we'll see if these levels weigh on the Dow and S&P going forward (w/out a currency crisis). I advise you to watch Adam Hewison's video at INO.com here where he goes through the chart. Anybody think the market indexes could decouple from precious metals and other reflation trade recipients? That is what Peter Schiff believes and I'll embed a video of his explanation. There a bunch of moving parts to the S&P 500 (forward earnings, underlying currency) so hard to say. The S&P is moving inversely with the US Dollar at the moment and running with gold, though underperforming. Gold is hitting new highs tonight, up 11.83, 1.03% to 1,162 wow.