Today should be very interesting.
One year to the day after Lehman Brothers collapsed and precipitated a financial crisis that reverberated across the globe, President Obama will deliver a major speech on the financial crisis at Federal Hall in New York City at midday on Monday. According to the White House:
"He will discuss the aggressive steps the Administration has taken to bring the economy back from the brink, the commitment to winding down the government’s role in the financial sector and the actions the United States and the global community must take to prevent a crisis like this from ever happening again."
As I had mentioned in our Year One Review of the Stock Market Crash, Obama and Wall Street did not get off to a great start but, even after the March crash, we are still up 20% since he was sworn in in January as the President has been EXTREMELY accommodative to Wall Street’s needs (i.e. free money) so far. That has been the carrot - perhaps now it is time for the stick…
The Treasury just released a document entitled: "The Next Phase of Government Financial Stabilization and Rehabilitation Policies" which, at 51 pages, is a pretty neat review of the crash as well but I still prefer mine as it saves you an hour and has much better pictures. There are many charts in the government’s documents and they are not all that encouraging. As the report concludes:
We must address the structural weaknesses in our financial system that this crisis revealed. The Administration is working to gain approval of a detailed set of proposals to reform our regulatory system to address these weaknesses and keep our financial markets and economy on track to a sustainable recovery.
In addition to Obama speaking at noon, we have 3 Fed Governors making speeches today. Duke speaks on Regulatory Reform at 8:30, Lacker talks about Financial Regulation at 12:30 (right after Obama) and Yellen gives an Economic Outlook at 3:50, just in time for a stick-save into the bell so we could have a wild ride this morning!
Speaking of the Fed, I just read a great book called "The Creature from Jekyll Island," which our man Ron Paul calls: "What every American needs to know about central bank power. A gripping adventure into the secret world of the international banking cartel." The book tears down the wall of our monetary system and the secret meetings that started the modern reserve system and looks at the men behind the curtain - very good stuff… Here’s a video of Ed Griffin discussing some of the themes from his book for the reading/time challenged.
Asia had a down morning with the Nikkei hitting the 2.5% rule to the downside as the dollar failed 91 Yen. The Hang Seng fell 1.1%, back just below 21,000 but the Shanghai gained 1.2% and got back over 3,000 so go figure. There’s a huge story about the eruption of the Trade War I warned about last month but the Oxen Group did a nice job of covering it so I’ll move along. Europe is down about a point across the board at 8am so it’s up to the US to turn things around this morning. Moody’s says UK banks are likely to face another $215Bn in losses (in addition to the $200Bn they’ve already lost) because "sustained weakness of the U.K. macroeconomic environment will feed through into higher loan arrears with ensuing pressure on profitability and capital."
The EU believes Europe is on the cusp of emerging from recession but it’s still unclear whether the rebound, fueled by aggressive stimulus measures, is sustainable. As if to make that point, Euro-zone unemployment fell by another 702,000 in Q2, up 2.4% from last year but the OECD put out a report that unemployment in its 30 member states seems to be "steadying" at 8.5%. Keep in mind the OECD is like a global Chamber of Commerce so a statement like that from them is like a poster at your local deli promoting the downtown shopping district.
Eurozone Industrial Production dipped 0.3% in July vs. the previous month and fell 15.9% for the year. Economists had expected -0.3% for July but somehow (and I can’t imagine how this would work) -16.6% year over year so it’s a "beat" and is being spun as a win in the press (cough, Murdoch, cough, cough). Perhaps it’s a Monday thing but if the -0.3% is in-line, how could you expect worse than 15.9% when you already know what the other 11 months added up to? So we’re going to score that "nailed it" on the monthly forecast but we’ll have to take away points from the economists for taking a previous -15.6% total and subtracting another -0.3% and coming up with a forecast of -16.6%, that is just shameful for a bunch of World-renowned economists!
It looks like we were right to be short into the weekend but we are BUYBUYBUYing on the dips in our $100,000 Portfolio, now $101,674 in week 3 as reported on Wall Street Survivor for people who are interested in following the action over there. We are going to be selling a bunch of September puts on the dip, hoping to scalp a few dollars for the week so our outlook is for a dip, but not a big or lasting one. I have been trying to finish my Crash Review with an outlook for Q4 and beyond but clearly things are not clear yet - hopefully after expiration day this week and a good look at the data, I’ll be able to come up with something intelligent to say over the weekend. I think all this trade talk is just posturing and that’s how we’re playing it for now but, if not - then many things change…
It’s a data-palooza this week and here’s the Briefing.com calendar:
Date | ET | Release | For | Briefing.com Consensus | Prior | Revised From | ||
|---|---|---|---|---|---|---|---|---|
Sep 15 | 08:30 | Aug | 0.0% | 0.1% | -0.1% | |||
Sep 15 | 08:30 | Aug | 1.0% | 0.8% | -0.9% | |||
Sep 15 | 08:30 | Aug | 2.1% | 1.9% | -0.1% | |||
Sep 15 | 08:30 | Aug | 0.1% | 0.4% | -0.6% | |||
Sep 15 | 08:30 | Empire Manufacturing | Sep | 13.00 | 15.00 | 12.08 | ||
Sep 15 | 10:00 | Jul | -1.2% | -0.8% | -1.1% | |||
Sep 16 | 08:30 | Aug | 0.0% | 0.1% | 0.1% | |||
Sep 16 | 08:30 | Aug | 0.2% | 0.3% | 0.0% | |||
Sep 16 | 09:00 | Net Long-term TIC Flows | Jul | NA | NA | -31.2B | ||
Sep 16 | 09:15 | Aug | 69.6% | 69.1% | 68.5% | |||
Sep 16 | 09:15 | Aug | 1.0% | 0.7% | 0.5% | |||
Sep 16 | 10:30 | Crude Inventories | 09/11 | NA | NA | -5.91M | ||
Sep 17 | 08:30 | Aug | 575K | 596K | 564K | |||
Sep 17 | 08:30 | Aug | 570K | 580K | 581K | |||
Sep 17 | 08:30 | 09/12 | 565K | 555K | 550K | |||
Sep 17 | 08:30 | Continuing Claims | 09/05 | 6000K | 6114K | 6088K | ||
Sep 17 | 10:00 | Sep | 10.0 | 8.0 | 4.2 |
That’s going to be three intensive days of data so strap in and be ready for anything as it looks like we’re in for a wild ride, kicking off with Obama at noon but Elizabeth Duke has already made her speech this morning and said: "Regulators need to balance much-touted fair-value accounting initiatives and changes to capital requirements with the need to maintain a free flow of credit. Otherwise, we could be faced with substantially less credit availability."
That’s a nice bone for Wall Street already - let’s see where they bury it…
