Bank Failures Reach 140, FDIC List

Insane in the membrane..
"Bank Failures in Brief 2009

The list of Bank Failures in Brief is updated through December 18, 2009. Please address questions on this subject to the Customer Service Hotline (telephone: 888-206-4662).

December

First Federal Bank of California, F.S.B., Santa Monica, CA with approximately $6.1 billion in assets and approximately $4.5 billion in deposits was closed. OneWest Bank, Pasadena, CA has agreed to assume all deposits. (PR-239-2009)

Imperial Capital Bank, La Jolla, CA with approximately $4.0 billion in assets and approximately $2.8 billion in deposits was closed. City National Bank, Los Angeles, CA has agreed to assume all deposits, excluding certain brokered deposits. (PR-238-2009)

Independent Bankers' Bank, Springfield, IL, with approximately $585.5 million in assets and $511.5 million in deposits was closed. The FDIC created a bridge bank, Independent Bankers' Bank Bridge Bank (IBB Bridge Bank, N.A.), to take over operations. (PR-237-2009)

What Level is the "New" Normal For Distressed Volatility, 10 or 20?

For you volatility valuation analysts out there, what level is the new (or old) normal for distressed volatility, 10 or 20? We hit the 10s in 2007 before the market peak and now we are around 20. Is buy and hold back which will push volatility back to 10 or are we in a new era of heightened volatility. Below I provided a VIX spot chart, futures curve and a video from the most recent Sonar.

David Rosenberg thinks the VIX will be between 30 and 40 next year and if Prechter's right that a new wave is coming in 2010, perhaps he's right. The S&P still needs to break the uptrend. I'd like to hear what the VIX pros have to say. Good places I like to check.

Morgan Stanley Now Bullish on US Dollar, CMC's Laidi on USD/JPY (video, chart)

Sara Eisen of Bloomberg said Morgan Stanley is now bullish on the US Dollar...

Roubini Discusses Dollar Carry Trade, Emerging Markets, Slack In US Economy

From the HKTDC press release + video below, Roubini was interviewed ahead of the Asian Financial Forum in Hong Kong coming up on January 21, 2010. He said a reversal in the USD carry trade, which could take a while, could affect asset prices in Asia and emerging markets. Also there's a 20% chance of a double dip recession.

"14 December 2009 – Asian markets can expect a rough start to 2010 as low interest rates push down the value of the US dollar and create asset bubbles, particularly in emerging markets, according to the New York-based economist, Professor Nouriel Roubini.

In an interview with the Hong Kong Trade Development Council (HKTDC), Prof Roubini said the trend is likely to continue for another six to 12 months, with near-zero interest rates prompting global investors to take short positions on the US dollar and long on relatively risky assets.

“Asian, Latin American and emerging markets will have to close their short dollar position, and dump their leverage long positions in the assets,” said Prof Roubini. “And that would lead to a very classic, dramatic snap back of the dollar, and also sharp correction of asset prices in Asia and in other emerging market economies. But it’s not going to happen anytime soon." Source: HKTDC.com

Roubini: Dollar Carry Trade Has Legs, Brazil Real Overvalued (USD/BRL, Global Interest Rates)

Roubini believes the rally in risky assets has further to run on the US Dollar carry trade. From Reuters yesterday: Roubini: carry trade to last at least 6 more months. He also believes the Brazil Real is overvalued (Bloomberg). Others are hopping on the BRL is overdone train (Demand for Brazilian Real May Wane in 2010, Levycam Says).  So who will pick up BRLs carry trade slack, AUD? Here's a 1 year chart of USD/BRL and global interest rates.

BRL/USD (courtesy quote.com)





Interest Rates Powered by Forex Pros

Three Gold Support Levels To Watch (GLD), Watching SEA/Shippers As Well

Gold stabbed through it's 50 day moving average today. Crazy moves. It was definitely a good idea to buy put protection on December 2! Gold has a few support levels to battle (1075, 1025, 1000 and 985). Gold is at 1100 and Jim Rogers said he'd nibble at $1000. The 200 day moving average is at 985.

Gold Continuous Contract (Courtesy of Stockcharts.com)


US Dollar Index Short Squeeze Continues, UUP Calls, Large Specs Making Money! (12/17)

Nice move tonight on the US Dollar Index. It is up 0.55% to 77.41 and hit an intraday high of 77.60. The catalyst for the Dollar rally could have been from the mess in Dubai on Thanksgiving.  Investors were piling into UUP calls at the beginning of November.  UUP call buying continued in December and large specs were also loading up on futures. From the chart tonight it looks as if the short squeeze is still in play.  It is close to testing August resistance and now has the 50dma to act as support.



(DXY Courtesy of INO.com)

So UUP/UUP calls, DXY large specs should be making some money here on this parabolic move from 74.50.  Whether it's a new long term trend to 90 is a wait and see.  Big money could be covering their shorts and riding some money to the upside on this crowded trade, imo.  Jim Rogers is making some dough on this move, he told you on a Tech Ticker video.  This move in USDX could be related to: Sovereign debt downgrades in Dubai and Greece and possible bank nationalizations in Ireland, a potential S&P downgrade of EUR1.46 trillion covered bond programs, US Growth (or not) and/or Bernanke hawkishness, and maybe PMs are taking risk off the table and/or switching to Yen as a funding currency.  *Update on US data today (FedEx issues cautious 3Q forecast, Claims for jobless aid rise).  It will be interesting to see how the S&P reacts to the Dollar.  A higher dollar cuts into overseas profits.

Also, Adam Hewison of MarketClub just released a US Dollar, crude oil and gold technical trading video update on his blog.  I'm going to check out shippers, coppers and a potential play.  мир.  Full disclosure, although I work as an affiliate for MarketClub, I have followed Adam's work and am confident in his services.

FOMC Statement 12/16/2009: Federal Funds Rate Stay at 0 to 1/4 Percent

FYI
"Federal Reserve Press Release

Release Date: December 16, 2009
For immediate release

Information received since the Federal Open Market Committee met in November suggests that economic activity has continued to pick up and that the deterioration in the labor market is abating. The housing sector has shown some signs of improvement over recent months. Household spending appears to be expanding at a moderate rate, though it remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment, though at a slower pace, and remain reluctant to add to payrolls; they continue to make progress in bringing inventory stocks into better alignment with sales. Financial market conditions have become more supportive of economic growth. Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability.

JP Morgan's Thomas Lee on 2010: S&P Will Hit 1300, Cyclicals Still Room To Run

JP Morgan's Tom Lee was on Bloomberg with his 2010 outlook (JPMorgan's Lee Interview About U.S. Stocks, Economy: Video).  Here's a short summary I came up with.
  • Forecasts S&P will hit 1300 by end of 2010, +18% from here.
  • Room for rates to rise and not hurt equities:  Credit spreads still going through compression, equities take cues from high grade and high yield.
  • JPM forecasts unemployment to fall by 50 basis points (0.50%).
  • Retail sales, inventories, claims improvement points to more vigorous recovery, "I think that's not discounted in stocks".
  • Cyclicals will run their course when "we've embraced broad recognition that a recovery is underway and you'll see it when the ISM hits 57.  Also when people start worrying about inflation and when earnings revisions runs their course".....  He gives views on specific sectors as well.
Thomas Lee has been right.  For proof here's a search by date with "Lee" in title or click the label.  For Abby Cohen's 2010 estimate click here (previous post).

Goldman's Abby Cohen 2010 Estimate: Growth to Slow, S&P Range 1250-1300 and Likes Energy

Goldman's Chief Equity Strategist Abby Cohen says growth will slow in 2010 based on fading inventory builds and less "pop" from stimulus. Next year Goldman's range for the S&P is between 1250-1300. She likes energy next year. Robert Doll of Blackrock sees the S&P at 1250 and Vanguard's Jack Vogel is skeptical on various valuation measures and worried about deficits. CNBC videos below.

More earnings S&P estimates:
S&P 500 to Climb to 1,350 Next Year, Prudential’s Praveen Says (Bloomberg)
Morgan Stanley Sees 8% Gain in S&P 500 by End of 2010 (Bloomberg)
Praveen Says Emerging-Market Stocks May Rise 25% in 2010 (Bloomberg Video)
JPMorgan Says S&P 500 Will Rise 18% by End of 2010, 1300 (Bloomberg)
The S&P 500 May Climb to 1,250 Next Year, UBS Says (Bloomberg)
*Societe Generale's Edwards Says U.S. Stocks Will Plunge Below March Lows (Bloomberg)
S&P 500 Rallying 9.8% Is Forecast of U.S. Strategists, S&P 1223 (Bloomberg)

Elliott Wave's Prechter: Market Topping Out Amidst Good News, 2010 Will Be A Down Year

I've posted about Robert Prechter of Elliott Wave International many times this year. He's been warning for months now that a big decline is coming and that we're in the largest wave we've ever lived through. Below I provided the full interview, a long term chart of $SPY and links to reports. Here are quotes from the Bloomberg interview:
"..Now we're looking at a more normal valuation market. So far the retracement rally that we were looking for is perfectly on track. The first quarter was very exciting because we had an oversold market bottoming amid bad news and now we have a stock market topping out amidst good news.."

"..What creates a bubble is excess credit being focused on a market and there was so much credit available from 1999 to 2007 that it ballooned markets way passed historical norms and that's what a bubble is. The last time we saw anything that extreme was the South Sea Bubble of 1720.. These are once in a century extremes.."

Ken Fisher Disses PIMCO's "New Normal" Declaration

The Old Normal
Ken Fisher, 11.29.09, 06:00 PM EST
Forbes Magazine dated December 14, 2009
 http://www.forbes.com/forbes/2009/1214/investment-guide-10-brazil-stocks-pimco-portfolio-strategies.html 
"the "new normal" is Pimco's way of declaring that the decade ahead will be lackluster. The slogan has taken on a life of its own and been widely adopted. It's also utter nonsense--rubbish of the first caliber."

"Take note: Pimco, a division of Allianz, is getting into the equity business right now. Watch what its managers do, not what they say."

Does Fisher Investments have mutual funds?

Activity in US Dollar ETF Options and ETF (100k UUP January 2011 Calls)

Someone is maneuvering in UUP stock and options in size again (Big Volume in $UUP March 23 Call Friday, US Dollar COT etc). The US Dollar Bullish ETF options saw 203k calls/42k puts trade total. Today had the most put action on the month (whatstrading's UUP chart). CrimsonMind Activity Watch laid down the trade in detail: "100,000 Jan (2011) 24 calls traded at $1.00 (bid:0.90 ask:1.10)". That's 10 million dollars. UUP calls/puts were 2nd most most active on the ISE, 9,887 calls vs. 509 puts opened giving it an ISEE ratio of 1,942. UUP itself traded 14.6 million shares today and closed at 22.79. Short interest as of 12/1 was at 810,000 shares vs. 3.14 million on 10/1 (SchaeffersResearch). It will be interesting to see what happens with the US Dollar/S&P relationship, previous post (The S&P/US Dollar Have Been Dating Since Nov 30 (Gold, Oil, Treasury Yield, $SPX, $USD Charts).

Links:
Constructive Action in US Dollar (UUP) (Benzinga)
Bucking the Dollar (Minyanville)
Tuesday Options Update: CAT, MS, UUP, STI, WFC, MCO, M, ROK (SeekingAlpha)

Jim Chanos: Demand For Raw Materials In China Is Overinflated (CNBC)

Jim Chanos shares his views on Wells Fargo, Airbus, the autos, OEMs, China, raw material demand etc.

John Williams Warns Of Hyperinflation, Look At Germany In 1923 (Video)

Re-blogging Zero Hedge's post in a way. I'm not promoting doom here but history says inflation can be a deadly disease.  Look at Germany in 1923 (video below) and the Zimbabwe example.

John Williams of Shadowstats put out a research piece warning about hyperinflation and the negative consequences, including a deeper depression.  He calls today a modern day depression.  ZeroHedge covers it well here (must read) and KingWorldNews recently interviewed him here.  I'm not trying to be all gloom and doom but the pricing of purchasing power risk is probably important.  Hopefully Bernanke is on top of this.  We saw what happened to Zimbabwe (Zimbabwe Inflation Rate Hits 231 Million Percent, In Crisis (Videos, 11/2/08)). Also while I'm on the topic read this at Gregor.us: California Enters Inflationary Depression from 10/28/09.

The S&P/US Dollar Have Been Dating Since Nov 30 (Gold, Oil, Treasury Yield, $SPX, $USD Charts)

Here's a chart of the first half of December comparing the performance of oil, gold, S&P and the US Dollar.  Since November 30, gold is down 4.47%, oil is down 7.01%, the US Dollar is up 2.06% and the S&P is up 1.69%.  Usually we would've seen an inverse move with SPX/USD however this time they moved up in tandem.  The US Dollar and S&P are dating WHO would've thought.  We'll see how long it lasts.  Also take a look at the 30 Year Treasury Yield Index which is up 6.7% month to date (oil down 7%).  Yields could take control of the market(s) here if they continue to rise, imho.  In that case it will be rising yields vs. equities imo.  If flight to quality (deflation whale) re-emerges then it's a different story.  Thoughts?

Gold, $USD, $WTIC (oil), $SPX (Courtesy of Stockcharts.com)

Gold, $USD, $TYX (30Y-Treasury Yield, $SPX (Courtesy of Stockcharts.com)

Also look at the S&P 500.  It's been riding a rising wedge above 1,100 support and could break out to test the 1,121 50% retracement level (2007 peak/2009 trough).  I'd like to see the S&P correct 12% to give the chart a breather but, until 1,100 is stabbed, the S&P could rise to pre-Lehman levels like JP Morgan's Thomas Lee said.  Maybe the market wants to visit pre-Lehman levels to be at peace and then proceed to 0.

 $SPX (S&P 500 Large Cap Index) (Stockcharts.com)

Big Volume in $UUP March 23 Call Friday, US Dollar COT etc (12/11/09)

There was interesting activity in the $UUP (US Dollar Bullish ETF) call options and US Dollar Index COT (commitment of traders by CFTC). 39k traded on the December $23 CALL with 300k open (expires next Fri), 20k traded on the January $23 CALL with 100k open, 15k traded on the January $24 CALL with 20k open and most notably, 342k traded on the March $23 CALL with 100k open. Looking closer at the March $23 trade, according to Crimson Mind, "top blocks: 216,000 March 23 calls traded at $0.55 (bid:0.50 ask:0.55) and 102,500 traded at $0.55 (bid:0.50 ask:0.55). This will be an interesting trade to watch. Hedge fund X threw down $17.5 million for the right to own 31,850,000 shares of UUP above $23 before March 19, 2009. Profits above $23.55. This could be a hedge or an institution trying to game a trend break in size.

Iowa Farmers Being Squeezed By Recession, Lower Debt Levels Help

PBS Newshour had a special on how Iowa farmers in Sioux Center are coping with the slowdown. If you watch the video they say Sioux's unemployment rate is half the national average and they are fiscally sound, while other Municipalities are servicing debt with IOUs. I peeked at the Sioux Center Annual FY2009 CAFR and their total fund balance was +$2.9 Million. Some farmers in Sioux are cutting production due to the lack of demand for expensive products and lower exports.  Also higher input prices (feed for livestock) are squeezing the bottom line and machines cost a million dollars. Is reflation working yet?

Obama: People on Wall Street Still Don't Get It (60 Minutes Video 12/16)

Obama had some harsh words about Wall Street and the banks. "I did not run for office to be helping out a bunch of fat cat bankers on Wall Street".... "people on Wall Street still don't get it". He brings up TARP paybacks and bank bonuses.

Rick Santelli, Steve Liesman on Emergency Unemployment Compensation, Charts of Initial Claims Data

Steve Liesman and Rick Santelli on CNBC argued about emergency claims data which I found interesting (CNBC video below).  First some data:  Initial claims for employment insurance were +17,000 to 474,000 seasonally adjusted and +204,703 to 664,865 unadjusted for the week ending December 5 (find data at dol.gov).  Here is a chart of initial claims going back 5 years (not seasonally adjusted) from the St. Louis FED FRED database.