Roubini at Ambrosetti Forum Italy (Video), Sees Stall Speed Growth

Nouriel Roubini  (NYU Professor/Roubini Global Economics) spoke with CNBC Europe Squawk Box before the Ambrosetti Forum in Italy. The view is from Villa D'Este on Lago di Como (Lake Como), Roubini Twitpic'd a better view. He still sees a 40% chance of a double dip recession. View the full 12 minute video below.

Today, the Labor Department reported that the economy lost 54,000 jobs, better than the 120,000 (economists) or 90,000 (wall street) loss expected. The unemployment rate rose to 9.6% (Aljazeera, Forbes). Also, Royal Bank of Scotland Plans to Cut 3,500 Jobs. Happy Labor Day people. Nice short covering today, $SPY closed at 110.91 +1.30%, see previous post for long and short term charts with moving averages. I parsed a few things from the video.

*Growth in the second half of the year will be worse than the first half, we'll reach a stall speed for the economy less than 1%.

S&P-Nikkei Performance Spread Wide, Nikkei >9000, E-mini S&P Future at Inflection Point (ES, NK, SPY, EWJ, Japan)

Right now I'm watching Nikkei 225 Index Futures (September/December), the ES-NK performance spread and E-mini S&P December Future. Starting in July, the performance spread between the E-mini S&P and Nikkei 225 Index widened dramatically. I wonder when and how the gap closes, or if Japan and U.S. growth rates (or prices) diverge from here. These are financial futures in case you are lost.


Nikkei (NK) vs. E-mini S&P (ES) - December Future (courtesy of optionsXpress)


Nikkei 225 Index Futures are still trading in a descending channels but could be forming a falling wedge reversal pattern. You can see the downtrend and apex point to break. 

Ben Bernanke, Sheila Bair at 2008 Financial Crisis Hearing (9/2/2010)

Federal Reserve Chairman Ben Bernanke and FDIC (Federal Deposit Insurance Corporation) Chair Sheila Bair testified before the Financial Crisis Inquiry Commission about the actions of the Fed during the 2008 financial crisis.

The U.S. Lost Decade is Over

According to Doug Kass (TheStreet.com)

U.S. Faces Deflation Risk Due to Indebtedness (Linda Yueh/Oxford Economist - Video)

Oxford University Economist Linda Yueh was on Bloomberg on 8/30/2010 talking about the Yen (BoJs recent move) and deflation risks in the U.S. and portions of Europe.
"I think there is a real (deflation) danger for the United States. It's less of a danger for Europe even though this was the big thing at Jackson Hole. Trichet is very worried about Europe going into a 1990s style Japanese deflationary trap because of all this debt de-leveraging which can cause a deflationary price spiral. As debt gets shed, prices fall, output falls, and then it's reinforcing. However, in the U.S. where this is more likely to be the case because of the scale of the financial crisis and the scale of indebtedness, Bernanke wasn't worried about deflation and he's really viewing the U.S. more as a slow growth story".

Former Lehman CEO Dick Fuld Testified Before FCIC (9/1/2010) $LEH

Dick Fuld testified before the Financial Crisis Inquiry Commission yesterday. Click the link to see the video at Cspan.org.

2008 Financial Crisis and Systemic Risk, Lehman Brothers Hearing (cspan.org)

"Thomas C. Baxter, Jr., General Counsel and Executive Vice President Federal Reserve Bank of New York Richard S. "Dick" Fuld, Jr., Former Chairman and Chief Executive Officer Lehman Brothers Harvey R. Miller, Business Finance & Restructuring Partner Weil, Gotshal & Manges, LLP Barry L. Zubrow, Chief Risk Officer JPMorgan Chase & Co."

SPY Pierces 50-Day Moving Average, Holds 200-Month But Growth Recession Upon Us

Simple Technical Analysis on SPY, S&P 500 ETF - 9/1/2010 (Distressed Volatility Research - For Internal Use Only*see charts after the jump

Today SPY pierced the 50 Day Moving Average and held the 50 Month moving average but still needs to conquer the 200 Day Moving Average, 50 Week Moving Average, 200 Week Moving Average and 50 Month Moving average. We'll see how the HFT bots trade the market between now and the elections. Bank of America/Merrill Lynch forecasts a "Growth Recession" ahead (From LA Times).
"Bank of America Merrill Lynch on Wednesday downgraded its forecast for the economy, calling for a “growth recession.”

What’s that? As BofA Merrill economists describe it, the U.S. would continue to grow in the fourth quarter and in 2011, but not fast enough to generate significant employment gains." (read article for more numbers)

Speaking of HFT, I think CNBC's Fast Money needs to hire an HFT Robot correspondent to tell people what's really going on in the market. Zero Hedge is the only site out there talking about it in depth.

Dan Rather Interviews SecondMarket CEO Barry Silbert, Revolutionizing Markets

Barry Silbert of SecondMarket.com is revolutionizing markets. Big things happening here! As of June they were managing $25 Billion in illiquid assets according to the Dan Rather interview. Centralize it! SecondMarket is a global platform for liquidity with competitive bids for illiquid assets. From their website, SecondMarket trades asset backed securities, auction rate securities, bankruptcy claims, collateralized debt obligations, limited partnership interests, private company stock (also see StockTwits "Private Ticker"), mortgage backed securities, bankruptcy claims, restricted securities, whole loans and soon to come, 363 bankruptcy sales, condo hotels, private REITs, and trust preferred securities (TRuPS).

Watch Dan Rather interview SecondMarket CEO, Barry Silbert - SecondMarket

Gunman James Lee In DiscoveryTV Building Holding Hostages (Video, Links)

This hostage situation in the Discovery Channel building (Maryland) has been going on for hours now. James Lee is holding a "small" number of people hostage. Watch the live video stream below for real-time information via WashingtonPost.com. First, read the initial incident.

"Money-throwing protester gets probation, fine
California man would face jail if he comes within 500 feet of Discovery building" (Gazette.net).

VIDEO: James Lee Throwing Cash In The Air During Earlier Stunt At Discovery Channel (BusinessInsider.com)

That was "Wave 1", now for "Wave 3"..

Jim Rogers Q&A, Gold Should Be >2,000, Prefers Silver (GLD, SLV)

Jim Rogers prefers Silver over Gold here but owns both in his portfolio. He made his case on CNBC on August 29.
  • Gold should be greater than $2,000/ounce if you adjust it for the 1980 high
  • If there's a currency crisis both gold and silver will rise  
  • Prefers Silver over Gold because (a) it's so depressed (b) potential for more gains on a percentage basis

Today I charted out $GLD and $SLV (Gold and Silver ETFs) and both are testing ceiling resistance levels. SLV is plotting a 2008 ceiling breakout which Gold took out 10 months ago (November, 2009). $SLV needs to rush the opposition (sellers) successfully at $19.50 resistance to run free (imo, mid-20s, top of ascending channel, see chart update link).

GLD, SLV Approaching Highs From May, June (Charts) - August 31, 2010

Chart Update, Ratio Analysis: GLD, SPY, SLV, IWM, TLT, UUP, GDX, GDXJ, SP-500 Index - August 25

FOMC Minutes From 8/10/2010

Find the August 10, 2010 FOMC Minutes release here (FederalReserve.gov) and read this article at Bloomberg.com: Fed Officials Saw Risk of Sending Wrong Policy Signal (Bloomberg). Here's a snippet.

Fed Allows CIC (China) to Acquire 10% of Morgan Stanley Voting Shares (MS)

I was looking for the FOMC Minutes PDF and found another interesting release. First off, CIC (China Investment Corporation) owns MS convertable notes from 2007:

CIC Sells Another 1.6M Morgan Stanley Shares--Filing (WSJ)
"CIC now owns 150.8 million shares of Morgan Stanley and will take possession of about 116.1 million of those shares when the roughly $5.6 billion in principal of mandatory convertible notes yielding 9%--bought in late 2007--convert into common stock, a conversion set to happen on Aug. 17."

From the Fed release:
"FEDERAL RESERVE SYSTEM
China Investment Corporation Beijing, People’s Republic of China
Order Approving Acquisition of an Interest in a Bank Holding Company
China Investment Corporation (“CIC”), Beijing, People’s Republic of China, has requested the Board’s approval under section 3 of the Bank Holding Company Act of 1956, as amended (“BHC Act”),1 to acquire indirectly up to 10 percent of the voting shares of Morgan Stanley, New York, New York. (read full PDF at Federal Reserve here).

Also read: CIC's bitter payoff for Morgan Stanley stake (8/8) (MarketWatch.com)

GMO's Q2 Letter

Read "Seven lean years: No recovery till 2016: 10 reasons Jeremy Grantham's betting $100 billion on historic game-changer" at MarketWatch.com.

Here is GMO's Q2 letter (from July)

GLD, SLV Approaching Highs From May, June (Charts)

GLD (SPDR Gold Trust) - FreeStockCharts.com (Gold ETF)

SLV (iShares Silver Trust ETF) - FreeStockCharts.com (Silver ETF)


*See previous post for more thoughts on this: Chart Update, Ratio Analysis: GLD, SPY, SLV, IWM, TLT, UUP, GDX, GDXJ, SP-500 Index (8/25/2010)

Nikkei Back Below 9,000 (-3.55%, 8,824), Nikkei Futures Charts (NKY, EWJ, NK_U, NK_Z)

The brief rally (1, 2) might be over in Japan after the initial Nikkei 9,000 breach on 8/24. The Nikkei blasted through that level again today, closing down 3.6% at 8,824. Anyone know where I can find a chart of the Nikkei Volatility Index ($VXJ)? I bet it was going crazy these past few weeks.

If I were forced to be a perma-Nikkei 225 bull, I'd watch for a downtrend breakout and of course a break above 9,000. Until then, like I said on 8/24, the Nikkei could swim in the 8000's for a bit and perhaps test the 2008/9 lows if Japan double dips. I'm watching to see what happens with the S&P at neckline support. U.S. E-Mini futures are currently unchanged to slightly lower at 5:02/6:02am. Below is the 1-day Nikkei Index move and the September (NKU10), December (NKZ10) Nikkei futures.

Read: Canada Housing Market, Zhou Xiaochuan (PBoC), Oil, Gary Shilling on 3% 30y-Treasury Bonds

Gary Shilling (A. Gary Shilling & Co.) on Fast Money said the 30-Y Treasury Yield will hit 3% (you'd make 15% from here, or 28% on a 30-Year Zero Coupon Bond) (CNBC Video)

Why Canada's housing market may be heading for a correction - The Globe and Mail (h/t @FLYir)

Peter Beutel (Cameron Hanover) told CNBC Monday that oil should be at $10 (CNBC Video)

J.P. Morgan cuts 3rd-quarter oil price forecast to $75 a barrel (MarketWatch) (predicts $65 by October, Nymex Crude is at $73.59)

*Top China bank official's defection rumors quashed (Zhou Xiaochuan) - (Washington Post)

*Japan Confirms Meeting With Zhou Amid Speculation He Left China (Bloomberg)

Read the articles and watch a video from Stratfor.com today (found originally by Zero Hedge). The rumor was he lost $430 Billion holding U.S. Treasury bonds and would be punished by the Chinese Government, so he fled to the U.S. It's funny because the value of Treasury bonds are testing their all time highs and Gary Shilling (see first article) thinks they are going higher. The original thought from my Twitter stream was that maybe Treasury derivatives blew up in his face, or the losses were from GSE securities.

Dow Industrials P&F Chart Targets: 9750 (Daily), 9150 (Weekly) $INDU $DIA

Check out the Dow Industrial Average ($INDU) point & figure chart. P&F charts represent "filtered" price movements over time, or cut out the noise (read more at Stockcharts.com ChartSchool and see P&F Pattern Alerts). The daily $INDU P&F chart is giving a downside target of 9,750 and the weekly chart says 9,150. It's another form of technical analysis.

The Dow closed at 10,009 today, so the daily sees -2.5% downside from here and the weekly sees -8.5% downside. Keep in mind that big price movement tomorrow could change the P&F's mind. Below are the daily and weekly $INDU P&F charts and the wider versions.

President Obama Update On Economy (Video, 8/30/2010), Alaska Protester Wants Free Speech

"The President talks about his Administration’s focus on moving the economy forward and urges Congress to pass legislation that will benefit small businesses in remarks to the press after meeting with his economic team at the White House." (Whitehouse.gov) #Obama

Hurricane Earl and Tropical Storms Danielle, Fiona in Atlantic (Radar)

Hurricane Earl and Tropical Storms Danielle and Fiona are creeping in the Atlantic Ocean. Hurricane Earl is a category 4 hurricane and right around the Virgin Islands. Check out the radars of wind speed probabilities and 5-day forecasts at NOAA.gov. They forecast Hurricane Earl will hit the coast of New Jersey on Friday.



$SPY Symmetrical Triangle Approaching Vertex Point, Hedge Risk (S&P 500)

SPY is approaching the vertex point in the symmetrical triangle. If I was long I'd hedge downside risk. Below is the weekly chart. SPY is still below the 50 week and 200 week moving average resistance levels. The MACD (momentum) indicator is below the midline (-0.98).

SPY (SPDRs S&P 500 ETF) via FreeStockCharts.com

When Do Treasury Bonds Officially Breakdown (Schiff, Faber on CNBC, TLT)

Here's a post for my hyperinflationist readers. Nothing new here, just Peter Schiff (Euro Pacific Capital) and Marc Faber (Gloom Boom Doom Report) telling CNBC viewers that Treasury bonds are in a bubble. Marc Faber's view is that Treasury yields bottomed out (prices peaked) in December 2008 (2.08% on the 10-year and 2.53% on the 30-year yield). He said "there isn't much upside for Treasuries unless it's for the short term and even the short term is uncertain". He believes the weak economy and policies will expand the Government debt even further and said "one day the interest payments on the Government debt will become unbearable". Faber likes gold, farmland (+6% in the Midwest 8/26) and agricultural commodities.

Peter Schiff is also concerned about interest payments.

"What I'm afraid of is that when people realize that we can't pay this money back, we're not going to be able to roll over all this short term debt, and so it's not just paying the interest, we're going to have to start retiring the principal, and that is just impossible, so there's going to be massive inflation".

Schiff thinks the bond market is the mother of all bubbles: "when it bursts the losses will dwarf the combined losses of the stock market bubble and real estate bubble".

"This decade is going to be the worst decade for bonds in U.S. history. Bond holders are going to get wiped out, because either the Government's going to default or they're going to inflate, but either way the people holding the bonds are left holding the bag."

USD/JPY Volatility, Yen Intervention Rumor Was Sold, Dilute The SOB BoJ

Look at USD/JPY (US Dollar/Japanese Yen) volatility tonight. Traders bought the Bank of Japan Yen intervention rumor and sold the news, hard.

"The BOJ will boost the amount of funds in the facility by 10 trillion yen ($116 billion) to a total of 30 trillion, the bank said in a statement after an emergency meeting in Tokyo. Governor Masaaki Shirakawa led the gathering after cutting short a U.S. trip in the wake of increasing calls from politicians for the BOJ to help stem a surge in the yen to a 15-year high." (read full article at Bloomberg.com)

USD/JPY swung between 85 and 86 and the Nikkei closed +1.76%. Also read: Yen Erases Loss on Concern BOJ's Steps Not Enough to Curb Gains (Bloomberg.com). USD/JPY would be a decent long if it broke through that downtrend line. It is testing critical support from December (chart after the jump). Dilute the SOB BoJ!

Bernanke Pledge on Economy Gives Some Relief to Oil Prices - Guest Post

Guest post by OilPrice.com

Bernanke Pledge on Economy Gives Some Relief to Oil Prices

Oil Market Summary for 08/23/2010 to 08/27/2010

Oil prices recovered some lost ground Friday after Federal Reserve chairman Ben Bernanke said the Fed stands ready to do whatever it takes to support economic recovery.

USD/JPY Spikes on BoJ "Monetary Control" Meeting, Nikkei Up 3% (FXY, NKY)

USD/JPY spiked on this news and Tokyo's Nikkei 225 Index was up 3%. Traders last week were already gaming the Nikkei to the upside. S&P and Nasdaq E-Mini futures are up 0.80%. Recently the U.S. markets have been following the Nikkei. Check out the charts below and the BoJ release.

Quantitative Easing Will Resume (Zandi), Dollar Could Collapse (Hussman) USDX DXY

Moody's Analytics President, Mark Zandi, told Bloomberg on 8/26 that quantitative easing would resume when the unemployment rate picks back up again in the next few months. He also increased the odds of a double dip recession to 1/3 from 1/4.

"I do think that the Federal Reserve will restart quantitative easing over the next few months. I think the economy's going to be at best very weak, so weak that unemployment will begin to rise again and I think that will be the signal for the Fed to resume quantitative easing".

"It could be for example if angst about the European debt situation were to flare up again and we'd see the equity markets, stock prices fall another 5-10-15%, I think that would qualify and certainly push us back into recession".

Bill Ackman Bought BP CDS In May (280bps), Short BP Debt

Hat tip to Bloomberg via DealBreaker who posted Pershing Square's Q2 Investor Letter. According to Ackman's letter, Pershing averaged into BP CDS at 280 basis points per annum, or bought credit insurance on BP's bonds. He's betting that BP's credit risk is mispriced due to U.S. operation risk, balance sheet impairment risk ("clean-up costs, penalties and legal liabilities") and statistically speaking, the CDS is mispricing the probability that "the current liability estimates that have been publicly promulgated materially underestimate the ultimate costs to BP".

Back in June I reported that BP CDS spiked to 382 bps (+128% in 7 days) and BP bond yields hit 7.82% (chart) when oil was flowing like mad and killing birds. Ackman's letter stated that BP CDS peaked at 600bps. So if another event threatens BP's financial condition, even if nothing happens to the company, BP credit traders could buy BP protection again and run the CDS up to 600bps (test the top). The value of Ackman's CDS holding would rise 114%.