Friday, 12/6, Market WrapUp (Unemployment Report Overshadowed by New Economic Team)

Financial Sense Online ^ | 12/6/2002 | Michael Hartman

[rohry]

"The Stock Market has been going sideways for over a month now, Treasury Bonds have been in consolidation since the sharp break in early October, the US Dollar has gone sideways since July, gold has been consolidating since the high reached in June, and the CRB Index has been catching its breath for the last three months after marching higher all year long."

[rohry]

Market WrapUp is delivered...

[arete]

The media is bashing the heck our of Paul O’Neill. I guess that he must have been responsible for those bad employment numbers. Ah yes, the games we play.

Richard W.

[rohry]

If you have not read the Howe/Bolser masterpiece, Gold Derivatives: Moving towards Checkmate, you can find it here:

http://www.goldensextant.com/commentary23.html#anchor19855

[steveegg]

I can vouch for that. The 9 am CBS radio report on this wistfully pined for the return of Robert Rubin.

Still, if this shakeup of the two folks that the market supposedly absolutely hates couldn't yield any meaningful gains (heck, most of the gains can be attributed to UPS replacing United on all the Dow averages), then there ain't much hope for this market.

[RightWhale]

going sideways . . . in consolidation . . . gone sideways . . . consolidating . . . catching its breath

So it shall be until the end of January. Not everything can be as dynamic as GNMA.

[steveegg]

Sounds like general malaise to me as everything has found a temporary "happy medium".

[Plunge Protection Team]

bump for later

[razorback-bert]

President Bush asked for both of the men to resign

Meet the new boss, same as the old boss.

[arete]

He fed them to the wolves to save his political rear. "Oh look, we're doing something -- we're going to give you someone who can communicate better with Wall Street. We're looking for another Robert Rubin." What???? The last thing we need is anyone who is going to feed us to the sharks again.

Richard W.

[dalereed]

First thing that had better happen is to change the bankruptcy rules so that people have to pay for the obligations that they make. That would probably start a depression but we're headed for one anyway, better now than later when it will be much deeper and longer.

[arete]

First thing that had better happen is to change the bankruptcy rules so that people have to pay for the obligations that they make.

I agree with you but it isn't going to happen. We are the very strange situation where actually paying for things doesn't matter. It is all about the exchange of goods and promises to pay later. It is all an illusion. This is the closest we'll ever get to "free money" for an orgy of comsumption. With the new age financial engineering, no one really knows where all that debt is or who will eventually pay. Disney is on the hook for a chunk of UAL debt and when UAL goes bankrupt, DIS shareholders will take it in the neck and any money market fund that are holding DIS's commercial paper if it gets downgraded. It's frightening but this the wonderful world of Greenspan's structured finance that passes risk on to people who didn't even know they were exposed.

Richard W.

[dalereed]

It really gets to me when someone goes bankrupt!

I fed over $200k of my money into the corporation before I closed it and closed it with all bills paid.

I was just raised that way!

[arete]

Yes, me too, but there are so many others who think nothing of screwing the next guy. They actually think that it is the smart thing to do. Live high and let someone else pay. Anyway, here is an snip from another site that I read --

"'Most airplane financing companies will be forced to take significant cuts in their lease rates and note payments just to keep the planes flying. But United’s troubles could be so deep because its financial arrangements are so complicated, a restructuring would be impossible.'”

Why is that?

Could it be that United’s balance sheet was a favorite Grand Experiment by the off-balance sheet financiers, who sucked every member of the Hillbilly Family into the UAL Vortex by offloading this risk, and swapping it to this party, who in turn stripped it and sold it to the other party, who turn around and hedged it to that party, who arranged a Bermuda corporation to transfer risk to a counterparty, who in turn bought puts on GE stock, which was purchased by a HedgeHog, who in turn countered the trade by buying AIG options, hedged by credit swaps on JPM, who in turn transferred half of it to MER, who marked it up and sold it back to UAL?

Even unrelated companies like DIS were sucked in, stuck with $114 million in aircraft lease investments which management “is now monitoring”.

UAL’s unsecured debt is now trading at 12 cents on the dollar.

This is a look at the credit monster that Mr. Greenspan proudly points to when he addresses congress. We should be outraged and calling for his head but no one is paying attention or they don't care. Here is the whole article if you are interested. The writer is a bit too edgy for most people, but he is generally on target.

Mark to Market

Richard W.

[dalereed]

Still laughing!

The sad part is that it's all to true and real.

This country is in deep S**t and this credit bubble is going to crash and it's going to be ugly.

[David]

"If you have not read the Howe/Bolser masterpiece, Gold Derivatives: Moving towards Checkmate, you can find it here: http://www.goldensextant.com/commentary23.html#anchor19855 "

A lawyer friend of mind whose office is in London got me out of bed in the night to tell me I had to read this--it is a real commentary on the future of the monetary system. Everyone should study it and read it carefully--it is complicated and important to understand. Good luck.

[Cicero]

Gold is back up, testing the heavy resistance levels again around $330. We'll see if it breaks through or still needs more time.

Contrary to the argument here, I think the long bond is due to head up again, at least for the short term.

[Doctor Stochastic]

ie-radio or something like that was all over this story. They claimed that the "criminal" Bush clan announced the resignations to cover up the unemployment reports.

Of course, they also don't want Kissinger investigating the airline attacks of 9/11/2001 either. And they really were angruy that Phil Gramm might become TSec.

[STONEWALLS]

"Let’s see if President Bush will push through a tax cut to relieve the double taxation of dividends. If he is successful, tax-free dividends could really boost stock prices."

...I expect this has a realistic chance to pass...with over 50% of all households invested, the stock market is now a middle class wedge issue.....

As always, thanks Rohry and good luck to everybody!

Stonewalls

[Orion]

The media is bashing the heck our of Paul O’Neill. I guess that he must have been responsible for those bad employment numbers. Ah yes, the games we play.

Agreed. O'Neil was not the problem, and replacing him is not the solution. Lower prices and less debt is the solution.