What’s Movin’ Markets – Weekend/Monday, November 24th

  • Citigroup Gets $306 Billion Loan Guarantee, $20 Billion of Government Cash (Bloomy)
  • Fed Pledges Exceed $7.4 Trillion in Rescue of Companies With Frozen Credit (Bloomy)
  • Treasury Traders Paid to Borrow as Fed Struggles With Frozen Repo Market (Bloomy)
  • German Ifo Business Confidence Fell to 16-Year Low in November; Exports Drop (Bloomy)
  • New Economic Lineup Puts Bernanke’s Role in Play (WSJ)
  • Recession’s Grip Forces U.S. to Flood World Economy With Even More Dollars (Bloomy)
  • Congress Will Send Obama Stimulus Bill on Inauguration Day, Democrats Say (Bloomy)
  • GM Said to Seek Cut in Debt, New Union Rules to Win Support for U.S. Aid (Bloomy)
  • Monster in Closet Is Recession, Not Deflation: Commentary by John M. Berry (Bloomy)

What’s On OUR Minds:

After Friday’s monster stock market rally as an endorsement of Timothy Geithner for Treasury Secretary WE here are left with many more questions than answers which leaves US a bit less optimistic than prices would indicate. Why? How about shaking up the leadership at the Fed at precisely a time where we need someone who’s got a proven NON-partisan track record such as Bernanke. THIS ARTICLE in the WSJ suggests there might just be some change in the wind and we’d argue at this point in time that’s the LAST thing these fragile markets want or need. Seems to US very much like putting a humidifier and a de-humidifier in a room and letting them fight it out. Geithner = good … (NOT) Ben = bad.


Moving on then to the more pressing news of the moment and most likely for the day. Citi. Suffice it to say WE think it’s an outrage – not so much saving of them, but the almost blasé mkt reaction to doing so. That in mind, here’s a link to joint statement (Tsy, Fed and FDIC) as well as a ‘post’ on The Big Picture blog-thingy we thought appropriate:


“Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup’s balance sheet. As a fee for this arrangement, Citigroup will issue preferred shares to the Treasury and FDIC. In addition and if necessary, the Federal Reserve stands ready to backstop residual risk in the asset pool through a non-recourse loan.


In addition, Treasury will invest $20 billion in Citigroup from the Troubled Asset Relief Program in exchange for [$27 billion of] preferred stock with an 8% dividend to the Treasury. Citigroup will comply with enhanced executive compensation restrictions and implement the FDIC’s mortgage modification program.”




For Citi, its a great deal — but its a terrible one for taxpayers. The US is guaranteeing $306 billion on bad investments.  (So much for Capitalism without failure)


Where is the “Protection” for the taxpayers? Where are the clawbacks? How about going after the idiots that bought a third of a trillion dollars worth of junk, and then got paid large on it? Where is the sense of outrage and justice?


At what point do taxpayers demand that the people responsible for creating this mess must pay their pound of flesh?” 

Nuff said. Moving on then to upcoming holiday shopping season, perhaps these coupons might come in handy on Black Friday …

Items Of Interest:

Bloomy’s Economic Calendar November 24th

Bloomy’s Fed-speak Calendar November 24th

GPs Key Econ Indicators November 17th, 2008 -> Our “Economic Graph Package” is used by some of our clients to include in their monthly or quarterly reports. We have most of the major economic indicators included to give an accurate snapshot of the economy.

GPs 5yr & Under Summary November 24th, 2008 – > This is our chart package we call the “One to Five Year Daily”. It tracks agency bullet spreads to Treasuries, date to date, to compute the real maturity spread levels (in basis points) out to five years. We track agency callables against agency bullets and Treasuries. We compare equal maturity dates when tracking these spreads because the effective durations of callables are not stable. So over time we have a consistent methodology that we use to determine “value”. Please give us a call for more in depth explanation. 

GPs Index Spread Summary November 17th, 2008 -> We use certain Merrill Lynch indices, which are described at the top of each graph, to try and determine optimal entry and exit points for each sector. Though the indices should have similar durations, they commonly don’t match precisely so we’ve included the green line (which should be read off from the right axis) to allow you to take the curve into account when looking at historical spread relationships.

GPs Daily Pivots November 24th, 2008 -> The pivot point is essentially a mechanism for analyzing the short-term supply and demand factors affecting the market. It has limited applications for long- term decision making. Professional futures floor traders, also known as locals, are the biggest proponents of the pivot technique. Scalpers, brokers, market makers, and other short-term traders also use the technique, while upstairs or longer-term traders occasionally look at the pivot for ideas of what the floor traders are doing. The pivot point is basically the weighted average price of the previous trading day, calculated as the average of the previous trading day’s high, low, and closing prices. It represents the major point of inflection each day. Unless there has been significant market news between the previous trading day’s close and the current trading day’s opening, locals often try to test the near term support, resistance, and pivot point. For example, many floor traders cover their shorts and go long into the pivot level if the market opens above the pivot point and starts to sell off.

StreetStuff – WEEKLY November 24th

Technicals – November 24th

  • JPM: Tens: Drop from 2.99% All-Time Rich, with $36.31 Record $Wtd Call/Put
  • BarCap: US Treasuries – 10s and 5s: A bounce for equities, but within the context of the larger bear; Eurodollars and Cash 2s: Eurodollar stalling risks increase
  • CSFB: Longs squared on the test of 120-01. Re-buy at 119-20/10, stop below 119-00, for 121-255, then 122-17. Below 119-00, re-try a long at 118-20/105, stop below 118-05.
  • UBS: Still More Bullish While Trading Above 119.10, Breaks of 1220.26 The Trigger to 121.255, Even 122.13. Current Recommending Positions: Flat but we recommend working bids at 119.14 to get long, with stops at 118.10. Current YTD All Market Trade Recommendations P&L: +30.18%

In Press NOW:



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