As has been noted before, every week is six months of important financial news. I was looking over my older posts earlier and they'd be four or five things maybe once or twice a week; these days, well, on a weekend things are happening quickly enough that I'm adding new material as I'm assembling this mess.
Which is why today's is, in fact, such a mess.
First, a new data source: Texas ratio lookup. Not an official site, but recommended to me. By the way, apparently a lot of Georgia banks have terrible, terrible scores. Do not presume they are alone.
David Calloway at Marketwatch pronounces the end of the Santa rally, and says reality will overwhelm wave four of three moving forward. (Actually, what he says is "the great dying begins in corporate America," but I'm not as dramatic as he is.) Mish asks whether the stock market is now "cheap," and thinks not - not with continually-lowered forward sales guidance. (Here's his technical analysis, too; he's not sure we're past Wave 4, but thinks it's reasonable to think so.) If you want some real amusement value, check out the NASDAQ Bailout Index, a new index tracking prices of bailed-out/semi-nationalised companies.
Something happened in the ABX market late last week; all the buyoffs in the world aren't propping up the MBS market anymore. Federal Home Loan Banks face potentially “substantial” losses on mortgage bonds. So something's up, and I don't know what. I do know that there's an effort being floated - and Citigroup is onboard here, which is important - to allow judges to modify mortgage contracts in bankruptcy court. (This has been explicitly disallowed - as an exemption to normal bankruptcy rules - in the past.) Oh, and once upon a time, more companies converting themselves into bank holding companies to get taxpayer money would've been big news, but now I'm not even sure I should even bother noting it.
The European Central Bank has decided that Great Britain no longer meets the standards necessary to join the Eurozone. That's an interesting decision given that right now a lot of countries already in the Eurozone no longer meet those requirements either, such as Germany, which saw exports spiked down sharply in November. That's gotta hurt. The Bank of England is getting ready to print more c
Auto sales in Brazil form a bit of a bright spot, but next year is expected to be bad. Indian IT rental rates have fallen through the floor, with projects being paused or cancelled outright. Japan plans massive tax cuts on capital gains made by foreign investment. South Korea, on the other hand, is arresting bloggers for talking about the currency.
Back in North America, Boston commercial real state sales collapse. That'd not the ABX issue, though, but you might be seeing a bit of it in the CMBX risk spreads (up == bad). Boston's Hancock Tower is a particular example, with the owners having just missed a loan payment and being in technical default.
The big job loss report was all over the news, of course; U3 (headline) of 7.2%, U6 (broader report) reported a brutal 13.5%. Here's the full release, but it doesn't include the birth/death number report, which Mish Shedlock analyses here, pointing out how it again added tens of thousands of jobs to the non-seasonally-adjusted data, in industries known to be losing jobs, not adding them. In short: expect more downward adjustments moving forward, as usual. Nisson UK axed 1,200; Sprint is talking about closing 20 call centres.
Boeing's plane orders fell by more than half last year. They're laying off 4,500 around here. Google's reported cuts are confirmed. Ohio, by the way, is out of unemployment compensation money by Monday.
M1 continues to soar. Consumer credit has contracted massively - by US$7.9billion in November alone. Paul Krugman talks about deflation and its risks. In a sign the rich can panic, Merrill Lynch reports mass movements into physical gold holdings by the wealthy. As in gold bars, in safes. "I never thought I would be getting calls from clients saying they want a box of krugerrands," says Merrill Lynch chief investment officer Gary Dugan.
President-Elect Obama's stimulus plan section: Mr. Obama says without it we're looking at a depression. This is the Obama team's analysis. Marketwatch's reaction is here. Payday lenders got hit hard, based on details of the Obama plan - some of the usury practices might be in trouble. Mish has a bit of a roundup here, noting the continually-increasing estimates of job creation from the Obama team. Not everyone is onboard, however. Jeffrey Klein at Huffington Post talks about Mr. Obama's "perilous compromise with looters." Richmond Fed president Jeffrey Lacker doesn't like the goings-on with the Fed financing a stimulus plan; little late to that game, aren't we, coach?
I'm highlighting this little trick separately; Chief Executive Mr. Bush is asking for Congress to move on the second half of the US$700B TARP funding immediately. The trick seems to be that either Congress will do nothing (which counts as approval or they'll vote against releasing the funds and he'll veto that no vote, which will cause the money... to be allocated. Mr. Obama is faced with the same choice and is apparently willing to do the same thing, but wants Mr. Bush to take the hit. What the hell, people? What the hell?
There's chatter that you're seeing leading indications of a drop in foreign interest in US treasuries. Goldman Sachs says there's no such thing as a treasury bubble; Alphaville begs to differ. FDR All Over Again provides a case for a counter-trend rate rally followed by a new round of buying. Brad Setser doesn't address that, but doesn't see any drop yet in Chinese interest. Karl Denninger has some thoughts as well.
Oil traders are renting supertankers to stockpile oil - since renting idle ships as warehouses (effectively) counts as Cape-class ships, does that explain some of the Cape-class led rebound in the Baltic Dry Index?
Finally, Microsoft's Steve Ballmer at CES talks about a variety of things, but also talks about the current economic situation, calling it not a "downturn," but a "reset." And he's trying to figure out what to do about that. Mr. Ballmer is a variety of things, but he's not stupid. And a lot more people are demanding to see heads on pikes, and some of them still have money.