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Wednesday, October 15, 2008


another bad day

updating the credit watch -- per calculated risk, things got somewhat worse -- not better, worse -- today.

equity reacted to this as well as an awful retail sales report (verifying to some extent the collapse of the LEI and other econometrics) by selling off (-9%). indexes remain above their lows of this week following monday's monster rally, but only just.

a break to new lows could spark a stampede to the increasingly-widely-watched 2002-2003 equity lows around s&p 770. that's another (-15%) from here. but any bear positions should carry a stop -- tomorrow is expiration, and the government may try to angle the market into the event yet again.

john jansen noted about the economic reports:

Economic data released today highlight the parlous state of the US economy. In a note to clients a JPMorgan economist makes several points which manifest how dire the situation is and the extent of the retrenchment by consumers. He notes that ex auto retail sales have contracted at an annualized rate of 5.4 percent in the last three months. That is the steepest decline for any three month period since the inception of this series in 1967. (I was listening to Barry Maguire croon “The Eve of Destruction”.) Additionally, JPMorgan estimates that real consumer spending will have declined at a 3.2 percent rate in Q3. If that comes to pass, it will be the worst reading for that category since Jimmy Carter imposed credit controls in the spring of 1980.

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gm - what's krappenin'? great posts as of late. thanks. i hope you enjoyed our very short respite from chaos.

holy krap. it's all pretty bewildering, eh? i went to the grocery store today and it was nothing but bad vibes. i would even say eery.

time for bourbon, bacon and bullets? Lord, what a mess.

as far as voting, i don't like our 2 party choices either. i had hopes for a democratic congress and executive. (my theory was we needed the "opposite" of the past 8 years to undo the damage.) but i got derailed when the dems backed bush on the bailout and his own party did not. it's frikkin' bizarro world out there. i don't know what i'll do with my vote.

man, pretty soon we're all going to have to sleep with one eye open.

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lol -- i happened to be at home with the kids for the Columbus Day rally (schools closed -- maybe the tweens were bidding). about 15 minutes from the close i shorted the thing -- modest position size, which i frankly expected to be either stopped out of or have to scalp near par after a couple sideways consolidation days.

but here we are. jeff cooper first noted the 1929 fractal pattern resemblance following the 9/29 disaster day; rob hanna picked it up this morning. furthermore, the esteemed market timing lowry report clocked yet another 90% down day yesterday that pushed their metrics of selling pressure to new all-time highs and demand all-time low -- their commentary suggested another down leg is likely before prices get low enough to exhaust supply and bring in demand.

this is getting very scary, dc. cnbc is reporting that citadel and highland are both in very deep trouble, struggling to meet margin calls. laypeople i talk to seem to think cash is out there building up on the sidelines; i think the truth is that it's being pressed into debt liquidation. there is (unbelievably!) very definitely the possibility still of a titanic down move if big players are forced down.

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here's that report on citadel and highland. this would be utterly consistent with the worst-case scenario in hedgistan.

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this monring i found out that highland is in fact liquidating. not a surprise, i suppose, given the size of the bid list gasparino is reporting.

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thanks for the links. scary krap indeed, gm.

looks like government actions could exemplify the classic "cart before the horse" syndrome. the horse is deleveraging, the cart is recapitalization.

as usual, they are late to the game, and incompetent.

think bush might make a moron move and blow the whole thing out of the water before the election? (you know, take his ball and go home?)

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as to policy -- i think the TARP is a placeholder of sorts that is supposed to get us through to january. i doubt any furtehr serious policy action is forthcoming. systemic nationalization will be the next president's task and liability.

looking deeper into improbability, though -- of such times are revolutions born and made, dc -- but while i have long considered bush/cheney to have plenty of potential to use a reichstag-fire "disaster" to postpone an election (call me paranoid, but some president inevitably will as this society grows ever more militant beneath a unitary executive), i think their incredible unpopularity probably precludes it. dictators generally ride to power on the shoulders of the masses. that is not the case now.

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good points - even if bad news lies ahead.

hope you're right on the bush-cheney final snafu. (pre- and post-election.) i don't trust the "bastiges", and i don't think they care what anybody thinks.

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