Flagstar On Unusual Stock Volume (FBC), $600 Million Share Sale #banks

Flagstar Bancorp ($FBC), a regional bank headquartered in Troy, Michigan (who needs a capital injection) put out a press release regarding the big stock volume on 9/14 and 9/15/2010. They didn't address the volume specifically but reaffirmed their outlook for 2010 with key drivers. I originally found this information at Crain's Detroit Business.

MatlinPatterson Global Advisers LLC, the majority owner of Flagstar, who provided a $250 million capital injection in December 2008, is trying to raise $600 million through a stock offering. For a better explanation, listen to this Bloomberg audio interview with an Oppenheimer analyst.

It will be interesting to see what happens. Below is part of the press release, $FBC's stock chart with volume and a ychart showing the five year net income and revenue trend ending on 6/30/2010. $FBC hit a 52 week low of $1.73 on 9/15 and closed at $1.94 today.

USD/JPY 15 Minute Wedge Getting Tighter After Yen Intervention Spike

USD/JPY (US Dollar/Japanese Yen) is in a rising wedge on the 15-minute chart and it's getting tighter. It's above the 50 day moving average and brushing up against downtrend resistance from the peak in May. Dollar/Yen is up big since the Yen intervention spike. I bet there's a retracement at some point. You are fighting "strong monetary easing". Quote from Bloomberg today:
“The BOJ pretty much left the full amount of intervention in markets, a sort of effective unsterilization,” Nishioka said. “The chance for additional policy easing is increasing after the government finally intervened in the currency market.”
Keep an eye on the Yen and JGBs (Japanese Government Bonds). Keynesian end point?

George Soros on Gold's Bubble, "Blah" U.S. Economy, China (Video)

Billionaire George Soros, who runs (or used to run) billions at Soros Fund Management, spoke with Reuters about the "blah" U.S. economy, double dip recession risk, fiscal restraints, effectiveness of quantitative easing ("if there's no demand [for the money], it won't be used"), China's explosive growth, the undervalued Yuan, Euro, Japanese Yen intervention and the gold bubble.

AIG CDS Chart Reflection (Insurance on the Insurer) 2008-2010

Below is the 5-Year AIG Group Credit Default Swap from 2008-2010 via Bloomberg.com (link: CAIG1U5). The chart shows the insurance premium to protect against the default of the biggest property and casualty insurance company in America (in 2006 and 2007). AIG's Fortune 500 rank was #9 in 2006, #10 in 2007, #13 in 2008 and #245 in 2009. AIG Group CDS is currently trading at 2008 levels, the period of complacency before the Lehman bankruptcy bomb hit. Pretty big moment in history no?

Alan Greenspan Converses With Council on Foreign Relations 9/15/2010 (CFR.org)

Alan Greenspan (President of Greenspan Associates and Former Federal Reserve Chairman who kept interest rates artificially low in the early 2000's, heh), had a conversation with Mort Zuckerman at the Council on Foreign Relations today (September 15, 2010).

He discussed the future of the housing market, prospects for recovery, how raising taxes would decrease the deficit and how "stimulus is crowding out private investment".

Link: http://www.cfr.org/publication/22947/conversation_with_alan_greenspan_video.html

Nouriel Roubini at Google Zeitgeist 2010 (Video)

Dr. Realist, Nouriel Roubini, spoke at the 2010 American Google Zeitgeist conference. Nouriel starts at 19:50. The video includes:

Chrystia Freeland Global Editor-at-large, Reuters
James Wolfensohn Chairman, Wolfensohn & Company, LLC
Nouriel Roubini Chairman & Co-founder, Roubini Global Economics
Ted Turner Chairman, United Nations Foundation
Tom Brokaw Special Correspondent, NBC News
Mikkel Vestergaard CEO, Vestergaard Frandsen Group

Links: LA Port Traffic, Pimco's Deflation Bet, China CDS, TARP Deadbeats, Yen Intervention (USD/JPY, Nikkei Charts)

Pimco Makes $8.1 Billion Bet Against `Lost Decade' of Deflation - Bloomberg (h/t Morgan_03)

LA Port Traffic in August: Imports Surge, Exports down year-over-year - Calculated Risk (h/t credittrader)

China to Allow Credit-Default Swaps With Restrictions - BusinessWeek

Flagstar ($FBC) seeking $600 million share sale: report - Reuters

TARP Deadbeat Bank List Tops 120 in August - SeekingAlpha

Japan Intervenes for First Time Since 2004 to Rein in Yen - Bloomberg

$SPY at Apex Point in Symmetrical Triangle (Weekly Chart) 9/14/2010

*$SPY (S&P 500 ETF) symmetrical triangle inflection point alert on the weekly chart. Omfg. Directional judgment day is near for $SPY. The downtrend line from 2007 is closing in on the uptrend line from 2009, near the apex point (where the trends cross). Watch for a strong catalyst that breaks a trend. All I can say is, hedge accordingly.

$SPY price position:
> 50 Week Moving Average
< 200 Week Moving Average
< January 2010 High (potential left shoulder)

SPY chart courtesy of freestockcharts.com

Continued from: $SPX Trend Line From 1974 Hits 650-800 Until 2015 ($SPY, S&P 500)

$SPX Trend Line From 1974 Hits 650-800 Until 2015 ($SPY, S&P 500)

I'm taking you back to the seventies (1974 low) in the first $SPX chart (S&P 500 Index). I drew important trend lines and added the 50 and 200 month moving averages to both charts. The second chart shows the 2000-2010 chop-fest. Writeup pending..

*Writeup 9/14/2010: On the first $SPX log chart, I drew a trend line that hit the 1974 low, 1982 recession low and almost the March 2009 low. The S&P/Trend Line spread widened significantly during the late eighties and early nineties, but tightened when the tech bubble burst. Today, after rallying 80% from the March 2009 low and correcting a bit, market participants have to decide if we're experiencing a 2004 redux (see chart 2) or in a 100 year structural change. If we're in a 2004 redux, the S&P must break above the 50 month moving average. All throughout 2004, $SPX was above and below that level and eventually found support.

As you can see from chart 1, the S&P is trading above the 200 month moving average and below the 50 month moving average. What we don't want to see is the 50 month cross the 200 month to the downside. It would either put overhead pressure on the S&P or aggressively price it in before it occurred (imho). You can't see it, but I bet the 50 month crossed the 200 month to the upside in the early eighties, which sparked the 20-25 year rally. I'm saying this now because the moving averages haven't been this close since that time period.

Links: Jim Simons on CNBC, Warren Buffett (No Double Dip), Albert Edwards, Pento on Interest Rates, BofA (9/13/2010)

Banks Rise as Basel Gives Firms Eight Years to Comply - BusinessWeek

The graphs indicate bonds are at inflection point - Citywire

Microsoft Said to Plan Debt Sale to Pay for Dividends, Buybacks - Bloomberg

Chart of the Day: Beware Downward Adjustments to Earnings Estimates (by David Rosenberg) - Credit Writedowns

Hussman: Watch the lagging indicators - Credit Writedowns

Jim Simons (Renaissance Technologies): Market 'Resilient,' Not Going Much Lower - CNBC [3 part video - Market Outlook, Flash Crash, Future of Renaissance and Math for America]

Goldman's Hatzius Sees 25-30% Chance of Recession, Tax Expiration Risks, Quantitative Easing on 10% Unemployment (CNBC Video)

Jan Hatzius, Chief US Economist at Goldman Sachs, was on CNBC today. Here's a summary of what he said and the video.

Karl Denninger Interviewed By Max Keiser (9/10/2010)

Karl Denninger who writes the Market Ticker blog was interviewed by Max Keiser. Real talk.

Link: http://maxkeiser.com/watch/on-the-edge/episode-70-10-september-2010-guest-karl-denninger/

Signs of Financial Stress First Appeared in Credit Default Swaps (CDS)

I was flipping through this month's Bloomberg Markets magazine and came across page 150 titled "Finding Stock Clues in CDSs". Here's a quote:
"This year's fiscal turmoil in Europe and the market slump of 2008 have something in common: Both had their roots in debt. Be it Greece in 2010 or Lehman Brothers Holdings Inc. and General Motors Co. two years ago, some of the earliest signs of financial stress first appeared in the credit markets--specifically, credit-default swaps--before spreading to other asset classes such as equities." (from the October issue)

Credit default swaps are insurance contracts on a company's bonds that trade over-the-counter between banks, institutional investors and hedge funds. There has to be a way for smaller "accredited" players to get involved in a liquid and more transparent CDS market, since "too big to fail" obviously didn't work. How about a revolution in securitization as well? I'll give more thoughts on this later.

Price moves in credit default swaps provide "material" (in my opinion) information on underlying credits and have more credibility than the actual credit rating. If CDS prices spike dramatically, either a bank or hedge fund is speculating on higher default risk, nervously hedging underlying long exposure, or as billionaire hedgie George Soros put it,