Glimpsing a Return to Normal

The money markets of which I have often written here are undergoing a process of rehabilitation and repair. My correspondent in this sector has begun to see a small wave of investor money flowing into the Commercial paper market. He said that beginning late yesterday he has seen three large trades in the one month to two month sectors in which the investor bought between $500 million and $1billion blocks.He says the investors are large and savvy and are sitting atop a pile of cash.

He noted that one week Libor has declined dramatically this week with the rate dropping 50 basis points on the 14th, 25 basis points on the 15th,38 basis points on the 16th and 29 basis points on the 17th (today).

That significant decline has caused a pronounced steepening of the money market curve and in his phrasing “unless a comet strikes the Fed’s headquarters in DC” the steeper curve will force investors out the curve to garner some yield.

While I was on the phone with him an investor came in to buy $40 million of two week CP. He demonstrated an anecdotal point. The issuer marked the price up by 25 basis points and the investor purchased anyway. He noted that would have been unheard of just one week ago.

So he suggests that the operational significance of the huge pool of dollars flooding Europe and the States should not be underestimated and that it does appear that sentiment is slowly and subtly shifting to Warren Harding’s bastardization of the language in which he proclaimed a return to normalcy (rather than normality).

Comments

[MarvinMBA:]

I agree and for the first time in a long time I believe there are investment opportunities in todays stock market. Get your spy glasses on and start looking over the abyss and try to spot a few potential winners. New drugs for example could be on the horizon like products that will eventually be blockbusters in early testing like NNVC for example. Believe it or not I also like GE and MSFT and believe it or not I like NT at these prices...MarvinMBA

2008 Oct 17 01:15 PM

[Dan Walker:]

John, exercise your imagination. Give me three scenarios where long bonds will rise in price over the next twelve months. If you cannot live with any of those futures, tell me why bonds can't rise. (I know this is a loaded question, but you live in the world of the 'no BS crowd' and you can provide a valuable insight to your fellow traders in other markets here).

2008 Oct 18 08:12 AM

[Oh Blah Dee...:]

RE: "... Warren Harding’s bastardization of the language in which he proclaimed a return to normalcy (rather than normality)."

=====================
1. "normalcy" is listed in the Merriam-Webster Third International Dictionary as a standard (American) English word.

2. "normalcy" was listed in dictionaries as far back as 1857.

"A return to normalcy" was U.S. Presidential candidate Warren Harding’s campaign promise in the election of 1920. Although many of Harding's detractors believed that the word was a neologism as well as a malapropism coined by Harding (as opposed to the more usual term "normality"), there was contemporary discussion and evidence found that normalcy was listed in dictionaries as far back as 1857.[1][2] Furthermore, the concept apparently encapsulated what Americans wanted, since he was elected president over his Democratic opponent James Cox. Many historians have found humor in the fact that Harding's presidency was, considered by many to be, one of the most scandalous presidencies ever.

Source: Wikipedia

2008 Oct 18 09:17 AM

[ashizashiz:]

Dear Fellow Victims:

Together, daily, we share news of the latest in the greatest financial ripoff in the history of history. Billions---literally--... human beings left to suffer and freeze and starve over the next 5-10 years, as the Plutocrats and Kleptocrats hunker down with their riches, their mansions, their Lamborghinis, etc.

Well, I take my lessons from 2 sources: Mohandas K. Gandhi and Billy Ray Valentine. Gandhi you know, I hope. Valentine, played gracefully by a young Ediie Murphy, was the guy in TRADING PLACES who goes from being poor to rich, at the expense of Winthorp, played gracefully by a skinny Dan Aykroyd. ANYWAY....

So, here's the point:

1. Gandhi organizes a day of "fasting and prayer" to protest British rules in India. Of course, a day of fasting and prayer also means 500 million Indian workers off the job: no trains, no buses, no public works---which effectively leaves 100,000 British ex-pats in India totally cut off from the world. A bad day for the Brits, to say the least.
2. Billy Ray Valentine (Capricorn) points out to Lewis Winthorp--as Winthorp cleans out his shotgun barrel in preparation, one can only assume, for a knee-cap shattering meeting with The Dukes brothers (Randolph and Mortimer Duke, of Duke and Duke Commodities, INC.)---that the way you really get a rich person back is NOT by shooting him, but instead by making him poor.

OK, you with me so far?

Now for the union of Gandhi and Valentine.

It seems to me that the real criminals in all of this are the bankers, the folks in the financial industry, the Paulsons and Bernankes and Fulds and all of the folks who have become wealthy on the backs---and on the debt---of the rest of us. This system of FRACTIONAL RESERVE BANKING, a system in which money = debt, this system can only function and make millionaires of a few while leaving the rest in the dust if and only if the rest of us choose to play.

Look, what terrified Paulson more than anything---and then he convinced Bush to be terrified, and he convinced the scumbags in Congress to be terrified----was the idea of a financial system, whose very existence is dependent upon growth and therefore upon more and more debt, collapsing because the borrowing cycle had been shut down.

These total assholes admitted it, and they assumed the rest of us wouldn't really get it. They said, flat out, that we are risking a systemic financial collapse unless we can get the credit markets working again.

Look, I want you to PLEASE watch this video RIGHT NOW. Afterwards, come back to my post.

video.google.com/video...

OK, now...here comes my thesis...well, not really...ummmm....more like my proposal.

Let's stop playing! I say, get together with people in your community and come up with a plan so that (a) everyone can eat and (b) everyone can stay warm and (c) everyone has water to drink and (d) EVERYONE STOPS PAYING FOR THINGS THAT ARE MAKING THE MOTHERFUCKERS RICH!!!

To hell with paying taxes! Think about taxes for one second. All of our taxes have to go up, because we have, to this point, lent the FED over a TRILLION dollars---and Scumbag Paulson is giving all of OUR money (money that we have earned through our hard work as teachers, and carpenters, and farmers and police officers, etc.) to the banks so that the credit market will loosen so that the banks will loan us back our money...at interest!!! I say, no more!!!!!!!!!!

I say we need to come together in our communities and protect each other and help each other and go on strike from giving our hard earned money away so that amoral scum like Henry Paulson can make millions more dollars off of us. I am done with that shit!

We cannot do this alone. Alone we are pariah who get nicked by the FBI and thrown in jail and called extremists. I say, this needs to be a mass movement. A mainstream movement of protest against a financial system that CAN ONLY SURVIVE on the growing debt burden of the ordinary folk.

I may not be William Wallace, and while I like Mel Gibson as an actor I find some of his views about religion rather abhorrent...but I will say this: It is time to claim...OUR FREEDOM!!!!!!!!!!!!!!!...

2008 Oct 18 06:03 PM

[Did U Think...:]

There is much truth in what you say and who you blame, but people will suffer greatly with your idea. Why cut off your nose to spit your face? I have a much better idea. Get control of our money supply. Start trading for goods in gold and silver only. Give unto Ceasar what is Ceasar's, give him his green paper back by trading it in for gold and silver coins and bullion. Stop using the dollar but pay taxes on every dollar you earn or transact with (which if we are smart will be zero). Stay within the law. Gold and silver are still constitutional money, so let's just decide to return to the use of it. That could be via exchange of the specie or via something like egold.

Simply cut the bastards out of the real wealth generation mechanism of the country which is HUMAN LABOR, not financial manipulations. Stop allowing them a portion of your productive labor. Change your dollars into gold. Take all the wealth out of the fiat paper and put it into the metal.

ALL in the enlightened ways of Ghandi and Martin Luther King - nonvilolence, nonviolence.

2008 Oct 19 02:33 PM