Wednesday, June 23, 2010

Nothing Good In The News (Is There Ever?)

Uh, how bout that 12 point spike in 7 minutes on no news, basically totally without merit? And some say the markets are not busted or rigged. I'm guessing some traders took a late lunch,  programmed some algos to go off 10 minutes after the FOMC announcement and BAM a 1% move. Now that is funny. Of course it gave it all back and more in the next 30 minutes. Simply amazing stuff. Of course if they tried to investigate what caused the move the SEC would never be able to conclude who or why it happened (although you can track each trade back to a specific ticket).

I've been warning about not only the global default train coming, but also the financial contagion that will spread amongst our states and municipalities. I would like to congratulate the most corrupt state in the land, Illinois (the one that spawned Rham and the Omeister and the likes of the Jackson family) in bypassing Cali and over half the PIIGS in the race to top the most likely to default list. Illinois cracked the top 10 landing at number 8 on the hit list with a near 25% chance of default. Mish has Investors Fly Into Municipal Bonds Like Moths to a Flame where you find, "Investors badly burnt in the stock market crash have been attracted to municipal and junk bonds like moths to a flame. It remains to be seen if states will default, but to escape untenable pension obligations I believe they should." Ouch, I really appreciate Mish for picking up the local angle and shining a light were few are willing to go.

I have always had trouble reding the Fed statements and making sense of them. Thank goodness for Denninger. He has a way of putting these things into a form of English I can understand and relate to. I guess someone gave him the secret decoder ring. In Federal Reserve Statement In English Karl cuts thru the crap and gets to the point. Mainly, "Nobody in their right mind would hire anyone with the economy this crappy and the only consumer and business spending that is taking place is coming from the nipple of a government tit.  Businesses are taking seller-financed OptionARM equipment deals, which will soon start bankrupting the firms that were idiotic enough to do that" Nice! It gets even better. Please give it a read.

In Black Gold From The Heavens: Oil Rain In Louisiana? Zero Hedge pulls from the RT (why does the RT always report real news here better than our own MSM?) Now, this one can possibly be dismissed as some pummeled Cajun wanted some web time and threw out a few quarts of 30/10 in the yard. But, if it is real, the damage is now spreading inland. Talk about massive pollution. How about the whole Southeast gets quarantined eventually. Think BP will be writing a check for that? BP is toast. I'm terribly disappointed in the administration for the way they have lackadaisically handled the whole fiasco.

Prag Cap has SOROS: THE EURO IS A FLAWED CONSTRUCT Nothing like having a billionaire investor activist come down on a whole regions currency. I have to believe there is some truth in what he is saying. Eventually the truth will come out and everyone will see the light. Sadly at that point it will be to late in the game though.

Calculated Risk is always the place to go for anything regarding RE. They cover New Home Sales collapse to Record Low in May really well and shine the light on the misery of the double dip to come (just without the flair of ZH).

We get blessed with an enormous day of market movers tomorrow all starting with the unemployment report in the morning. the big news may be Friday a.m. with the GDP number. Not sure how they will put one of those out without a budget director or a budget for that matter in the future. Maybe they'll simple outsource it to GS, they alwasy seem to have the numbers in advance anyway.