Bailout Nation, Soviet Style: Russian Trading Halt
The criminal enterprise, formerly known as Russia, has decided to halt trading. With its stock market down 57%, Putin & Co. are being even more risk averse than Paulson, Bernanke, et.al. & Co.
"Russian markets stopped trading for a second day after emergency funding measures by the government failed to halt the biggest stock rout since the country's debt default and currency devaluation a decade ago.
The ruble-denominated Micex Stock Exchange suspended trading indefinitely at 12:10 p.m. after its index erased a 7.6 percent gain and plunged as much as 10 percent within an hour. The benchmark fell 17 percent yesterday, the biggest drop since Bloomberg started tracking the gauge in May 2001. The dollar- denominated RTS halted trading after similar declines.
The government yesterday injected $20 billion into the interbank lending market via central bank and Finance Ministry auctions in a bid to contain soaring borrowing rates as credit dried up in the wake of the Lehman Brothers Holdings Inc. bankruptcy. The one-day MosPrime overnight rate, a gauge for monitoring liquidity demand, leapt 25 basis points to a record 11.08 percent today."
Here in the US, we may be well meaning interventionists Socialists -- but at least our markets are open !
Russian Markets Halted as Emergency Funding Fails to Halt Rout
Alex Nicholson and William Mauldin
Bloomberg, Sept. 17 2008
I really don't like to discuss 9/11 each year, other than to say its shameful the new WTC has yet to be rebuilt.
I was down at World Financial Center to do something at Barron's last month, and it totally creeped me out. The familiar burnt electric plastic smell was still there. I couldn't wait to get out of there.
Anyway, when I don't mention September 11th, I get all sorts of obnoxious emails from jerks ad asshats. I have nothing new to add to what happened. Newer readers can see my experiences from that day here: A Personal Recollection From a Day of Horror.
I have nothing else to add to this . . .
War Costs, US: Revolution to Present
Data file: Military Costs of Major U.S. Wars in 2008 U.S. Dollars and % of GDP
Data source: Congressional Research Service
Barrons.com: No War, Economy Expanding
Long time readers know I am a fan of Barron's, and frequently reference the usually fine Econoday updates of daily economic data. But the NYT's Floyd Norris points to what can only be described as the single most absurd commentary on Sentiment data you will likely read in your lifetime.
"Consumer confidence is unusually low, at its fifth all time worse reading in 40 years of Conference Board data. The Conference Board's consumer confidence index literally plunged in June, down nearly 8 points to 50.4. The expectations component is at a record low of 41.0, down more than 7 points, with the present situation at 64.5, down nearly 10 points for its worst reading since the early part of the ongoing expansion in 2003. But there is an expansion still underway and this is not a time of war, which makes the results difficult to figure."
Normally at this point in our conversation, I would be railing about whether the economy is expanding, given the negative readings in jobs creation, manufacturing, income, and consumption, and how understated inflation makes GDP look better than it is regardless.
But considering that this is not a time of war, I must have another explanation. It seems I have fallen thru a tear in the fabric of spacetime into an alternate universe. Back in my universe, where the US is likely in a recession, there is also two wars going on, one in Afghanistan and one in Iraq.
This tear in the fabric of spacetime does explain some of the more absurd commentary we have heard over the past few years: That the credit crisis is contained, or the economy was doing well, that real estate has bottomed, etc. We are simultaneous inhabiting two separate universes, one where everything is going swimmingly -- and this one.
The disagreements about the state of the economy, the housing debacle, and the credit crisis seem to come about when someone from THAT universe -- the one where the economy is expanding and there is no war -- accidentally falls into OUR universe -- but keeps discussing their universe.
Other than that, I can find no other explanation for the Barron's Econoday commentary. Can you?
We'll have more on Sentiment data later today . . .
NOTE: This data is not the same commentary found in Barron's the weekly financial magazine, but rather, is via Econoday, which feeds some data and commentary to Barron's. Its not the sort of thing you can blame Rupert Murdoch for . . .
UPDATE: June 26, 2008 10:32pm
CORRECTION/CLARIFICATION: The original reference to war excluded the word "beginning" preceding the phrase. Corrected text below. Our deepest apologies to those we may have inadvertently offended.
Consumer confidence is unusually low, at its fifth all time worse reading in 40 years of Conference Board data. The Conference Board's consumer confidence index literally plunged in June, down nearly 8 points to 50.4. The expectations component is at a record low of 41.0, down more than 7 points, with the present situation at 64.5, down nearly 10 points from its worst reading since the early part of the ongoing expansion in 2003. The results are difficult to figure. The expansion is still underway and we're not at the beginning of a war such as 2003 or 1990 when the last such lows occured.
Are We Too Gloomy?
War? Recession? Not Here
June 25, 2008, 3:41 pm
Consumer Confidence 10:00 ET
Barron's Econoday, June 25, 2008
12 Questions on Markets and the Economy
Today we are going try something a little different.
Rather then synthesize what's in the news, flavored with my opinions, I am going to ask several questions -- and leave the answering to you, the reader:
1) Economy: Is the US in a mild recession, or, will we successfully
avoid one? How weak is consumer spending, and how much further can it fall? Might the US be entering a significant and
2) Inflation: How much inflation is in the system? How high are inflation expectations? Under normal circumstances, inflation moderates as an economy cools. Why has that not yet happened in the United States? Will it happen in the coming year?
3) Fed cuts: Are any further Fed cuts coming? Has the market accepted the possibility that more Fed cuts are unlikely? Are equities priced for potential Fed increases as a response to inflation?
4) Market technicals: Markets have been very choppy, with advances narrow, low volume affairs. Will the March lows holds? How fraught with danger are current market conditions? How significant is the failure of major indices at the 200 day moving average? The NASDAQ is holding up much better than the S&P or Dow -- Why?
5) Employment: How strong or weak is the job market in the United States? Why has job creation been so weak this cycle? Why are new unemployment claims still below 400,000? Why have we not seen layoffs in the multi-100,000 range? Is employment significantly affecting sentiment polls? What are the odds of a robust jobs recovery in the next 12-24 months?
6) Housing: Has the real estate market bottomed yet? How much further will home prices fall? When will inventory of real estate get worked down? When will home sales turnaround? When will real estate stop negatively impacting the macro economy?
7) Credit crunch: How much damage has been done to the financial sector? How much damage will be done in the future to the banks and brokers? Are we in the ninth inning, as some have posited, of the credit crunch? Or, do we still have all way to go, to work away through financial issues?
8) Tax rebate checks: Are they stimulating the economy? Are they merely paying for food and gas price increases?
9) Politics: What is the most likely outcome of the United States elections in November? How likely is a significant increase in the razor thin Democratic majority in the Senate? In the House? How likely is a full Democratic sweep including the presidency? What are the economic and market repercussions of such an event?
10) Sentiment: Why is sentiment so negative? Is it the war, employment, gas prices -- or something else altogether? Has sentiment reached an extreme level where it can be considered a contrary indicator?
11) Data analysis: There's been lots of chatter (elsewhere as well as here) about the reporting of economic statistics by the United States government. How accurate is the data that we get out of the BLS, BEA, Census Department, Federal Reserve, and other official outlets? Have we reached the point where this data has lost significance? What does this do to the credibility of these governmental agencies? Is it possible that this data can be improved?
12) Iraq, Iran, Afghanistan: The economy seems to have
pushed the Middle Eastern war(s) off the front pages of the newspapers. How good or bad are
things progressing in Afghanistan? How about the war in Iraq? There is
a continued buzz about a late summer or early fall assault by Israel
against the nuclear facilities in Iran (with tacit US approval). How
would this affect the price of oil? The global economy? The elections
in the United States?
Please feel free to answer fully and completely in the comments section.
Why so skeptical?
I hear that question way too often. The short answer is that after a few decades on Wall Street, you learn that when
a lot of any money is at stake, people quite easily become completely and totally full of bullshit.
This is why I (to quote someone else) "consistently doubt everything, especially government and mainstream media, and asks questions that have readers asking their own questions."
The most egregious example in recent memory landed on the front page of the Sunday NYT:
Hidden behind that appearance of objectivity, though, is a Pentagon information apparatus that has used those analysts in a campaign to generate favorable news coverage of the administration’s wartime performance, an examination by The New York Times has found.
The effort, which began with the buildup to the Iraq war and continues to this day, has sought to exploit ideological and military allegiances, and also a powerful financial dynamic: Most of the analysts have ties to military contractors vested in the very war policies they are asked to assess on air.
Those business relationships are hardly ever disclosed to the viewers, and sometimes not even to the networks themselves. But collectively, the men on the plane and several dozen other military analysts represent more than 150 military contractors either as lobbyists, senior executives, board members or consultants. The companies include defense heavyweights, but also scores of smaller companies, all part of a vast assemblage of contractors scrambling for hundreds of billions in military business generated by the administration’s war on terror. It is a furious competition, one in which inside information and easy access to senior officials are highly prized.
Go read the full article -- but not on a full stomach . . .
Behind Military Analysts, the Pentagon’s Hidden Hand
NYT, April 20, 2008
Active Denial System: non-lethal, directed-energy weapon
Fascinating report on the Pentagon's Active Denial System, a/k/a the Pentagon Ray-gun:
What if we told you the Pentagon has a ray gun? And what if we told you it can stop a person in his tracks without killing or even injuring him? Well, it’s true. You can’t see it, you can't hear it, but as CBS News correspondent David Martin experienced first hand, you can feel it.
Pentagon officials call it a major breakthrough which could change the rules of war and save huge numbers of lives in Iraq. But it's still not there. That because in the middle of a war, the military just can't bring itself to trust a weapon that doesn't kill.
The Pentagon's Ray Gun
CBS 60 Minutes, March 2, 2008
Active Denial System
I got your wall-o-worry right here:
HALLOWEEN AIEEEEEEEEEEEE- EEE
Daryl Cagle. Cagle Cartoons
Triggers & Tipping Points
Futures are higher this morning on positive earnings news, strength in Asian and European bourses, and a dearth of any new credit disasters. (It is also the last day of the month).
As we mentioned yesterday, investors should watch the quality of this overall bounce, keeping a close eye on volume and breadth, to determine the next move beyond this week.
While there was plenty of teeth-gnashing angst over this very minor correction, I have not seen the sort of capitulatory panic that typically marks the end of a major selloff.
Some commentators have pointed to Thursday as a 90/10 day -- more than 90% of the volume was to the down side -- but historically, that marks a bottom only when it comes after a long decline. A 90/10 down day within 5% of a high has never been shown to be a reliable buy signal.
Considering that we have yet to see a 10% SPX or Dow correction in this 5 year old Bull, what might actually cause that major dislocation? MarketWatch's in-house curmudgeon, Paul Farrell, gives us a menu to choose from:
1. War/military defense budget busting2. Real estate bubble raging3. Foreign trade imbalance, trillions new debt4. China's economy overheating5. Private-equity credit imploding6. 'Homeland Insecurity' failures7. Hedge funds hurting retirement plans8. Oil rocketing toward $100 a barrel9. Weak U.S. dollar keeps sinking10. Federal budget deficits11. Social Security entitlements12. Medicare's massive deficits13. Health-care-insurance deficit14. Climate change fuels global wars15. Personal savings shortfall16. Consumer debt surging17. Corporate pension defaults18. Local government pension deficits19. International credibility deficit20. Washington politics in endless gridlock
I find 7 of these (in italics) that represent serious threats, some short term, some long term.
Which of these are real threats? Which are hyped up and already discounted by Mr. Market? What unknowns have been omitted from the list? The comments await your insights . . .
New contest: Pick one big tipping point
You decide: which of 20 triggers will end 'aging bull'
Paul B. Farrell
MarketWatch, 7:54 PM ET Jul 30, 2007
Crude Remains Strong Despite Inventory Build
Light Crude Oil (CL, NYMEX)
Daily Commodity Futures Price Chart: July, 2007
chart courtesy of TFC Commodity Charts
Crude closed at $68.86 (August 2007) today -- down 68 cents -- and the new futures contract starts tomorrow.
Since I have been ranting today -- I remain firmly convinced that:
- Energy is not only a matter of economics, but a matter of National Security;
- Subsidies for Oil and Ethanol need to be replaced with subsidies for Solar;
- CAFE standards need to be raised;
- Expedited processing for Nuclear Power plant permits should be issued
I own a V8 (automatic), a straight 6 (6 speed), and a 4 cylinder (5 speed) -- so I am the last person to preach we all need to shift to Vespas and biofuels. But its pretty apparent to even a gas hog like me that we need to do something other than send billions of dollars to terrorist nations each and every single month.
Source: Pat Oliphant via Yahoo!