Getting high on the Short Base

1) "I'M RUNNING OUT OF ALL OUR INVENTORY"- HEARD OUT OF (prime broker) LEND DEPT.

2) CONSENSUS (clients) - RALLY WILL NOT LAST, JUST ANOTHER DEAD CAT BOUNCE, IGNORE BULLS

3) See: (this-market-has)
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The USA really is really big

Stumbled upon this on the excellent STRANGE MAPS website...

US States renamed for countries with similar GDPs:

OK for Brazil & NY state, Canada & Texas and France & California, but... any New Hampshire residents out there? You must be very proud.

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(Bear in mind, though, the data's from over a year ago, when the USD was way higher and the Russian, Saudi, Iranian and Nigerian etc GDPs hadn't seen the oil-based upswing.)
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Speccies call crude DOWN

Futures gone net short overnight for the first time since around the start of last year. Commodities trading mate of mine told me a couple of weeks ago that he wouldn't short at $130/bbl, but would at $120/bbl... which isn't too far off at the moment (Nigeria, Iran etc willing.)

That said, the futures players have not been the best longer (or even medium) term indicators of the direction of oil prices over the last 5 (or 10) years.




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"So whaddayathink - is THIS the start of the next downleg??!"

Asian sellside after lunch... no consensus to go against, this time:



If I was on the sellside, I think would tip the scales to the right-hand side.

The Brits are History

Absolutely Shocking article in the Daily Torygraph today flagged to me by a great Credit Suisse salestrader which cites a study by the Yorkshire Building Society finding that:

"More than a third of people would run out of money in less than a fortnight if they were unable to work, according to new research. The findings show that 36pc of people would see their cash run out within 11 days if they could not work because they have less than £500 in savings. It is the latest indication yet of how people are living on a financial tightrope during the credit crisis as they struggle to cope with rising household bills and mortgage payments."

FTSE... on its way to 4k?

$130 oil? Try $30/bbl...

For those who think this time it's different (actually it is, isn't it? Errmmm...) check out this item from Credit Suisse global strategist Jonathan Wilmot, entitled "How Much Demand Destruction" in which he says that oil prices are and remain very sensitive to global economic growth and given inflationary concerns (and central bank cred, what's left of it) we're pretty close to a tipping point... and oil prices could well get to the $30 range.

Here are his front page bullet points (my emphasis):

How Much Demand Destruction?

• Most of the emerging world has a genuine inflation problem while most of the developed world has a rapidly escalating income, profits and credit problem that points to recession or worse.
• But two decades of hard won credibility for G10 central banks is at stake, so they cannot completely ignore the simultaneous shock to inflation expectations.
• Current and near-term global oil supplies are severely constrained: stabilising or reducing oil prices thus seem to require accelerated demand destruction in the OECD.
• By implication, the world’s major central banks may have little choice but to quietly allow the developing recession to unfold, while using other policies to limit damage to the financial system.
• That is essentially what market price action over the last month or so has been telling us, and might even be seen as the real sub-text of Bernanke’s testimony.
• This makes it all the more important to understand what combination of slower global growth and high energy prices will bring global oil demand to a halt. Our analysis suggests we are close to a tipping point towards much lower oil demand, and price.

If you can access CS research, please do so (or you can always ask me.) Otherwise, it's all Wordled here:

Bernanke's Word Cloud vs Bernanke's ThoughtCloud

Great stuff from Barry at Big Picture again - Bernanke's WordCloud from Econymous on Wordle:

I would be as interested in his ThoughtCloud... would it be dominated by words such as Princeton, Retirement, Stressed-out, Losing-my-hair, Hospital-Pass, Maestro-my-@ss, Greenspan and B*st*rd...??

“Bertha, I urge you to get a balance sheet... and get somebody to explain it to you…”

“...if you think this is because of short sellers... you need to get a new job...”

Thanks, iBankCoin!

Lower GDP and CPI than expected usually means less tight policies, right?

... but HK/China markets seem not to be seeing it quite that way, if you look at how the equity markets were performing late in the morning session.

	Actual	Survey		Prior
China CPI YoY, %	7.1	7.3	Lower than expected!	7.7	Down on prev. month!
China Real GDP YoY, %	10.1	10.3	Slower than expected!	10.6	Down on prev. month!

(Bloomberg data and ests)

This market has...

... legs??



... if only because it's being pretty much universally accepted on the Street (out here anyway) that it's not going to last, the US is still in deep sh1t, Asian earnings are still going to slide, redemptions are brewing in the colon of giant mutual funds and hedgies alike and there's another major major leg down just round the corner, etc etc.

So... a perky start to the day, on decent volume, mostly retail + short covering with a buncha long onlies reportedly promising to pull the trigger on a rally... and now, around noon, looking decidedly less exciting. The TOLDYASO crowd will be out in full force this lunchtime, but...

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(And yes, I did almost go blind to this video a quarter of a century ago.)

Fannie and Freddie... 2 Big...

How fast do you want to be bailed out?

Zut alors! Mein Gott! 'ckin 'ell...

So the cunning plan is to take the lead for European trading from the S&P's close the day before. Sounds reasonable enough, given that the US remains the source of most of the financial market newsflow in the world these days. Would have worked fine in the April and May, with a directional bet working out about 2/3rds of the time based on the previous night's US move.

However, the plan went pear shaped in June and looks just as bad in July, with a pretty much 50/50 hit rate. 5 of 9 days in July, so far, whipped around all over the place!




Better start to work for your money, Eurotrash!

The USA - at the top of the world on the Fourth of July!

Happy Fourth of July!




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And while we're with the inimitable Mr Cagney...

Lehman - Top of the World (ma)?

So yesterday, we heard that Lehman is going to issue more stock to retain key employees and award a mid-year bonus. Pretty juicy stuff. The company's been getting hit time and time again in recent months, with vultures circling, dirty rats short selling the stock, trying to Bear Stearns 'em etc. Reminds more of Jimmy Cagney than Jimmy Cayne - no matter how many times he gets hit, he just keeps on going. Stirring stuff.



(If you work at Lehman, please stop watching at 1:07.)