Oct 29.

Stocks continued to decline Wednesday, with Nasdaq off 2.7% and SP500 -2.0%.  While Norway raised rates yesterday, Russia cut today.  Durable Orders were up 1% yesterday, and although the rate of decline is improving, y-o-y change was still -19.6%. New Home sales were also lower than expected.

–Q3 GDP expected +2.7% (might as well go with Goldman estimate).

–Summers speaks today, as does Geithner, who appears before the House Financial Services Comm.  Could be interesting given the AIG 100% payout story that won’t go away, partially engineered by Geithner.

–The only real bright spot for the administration has been the stock market rally, which could signal better growth and increased tax revenue ahead. However, if stocks decline, it will mean increased govt spending which translates into larger debt sales.  Stocks and long bond prices could both decline.  Also, there seems to be a fairly large disconnect between credit card financing rates, with stories of 25-30% becoming routine, and mortgage rates at around 5%.  Govt support of MBS has helped, but the smaller businesses and consumers are still being crushed. 

–Further increases in QE appear likely, perhaps announced as soon as the next FOMC.  Has the tendency to backstop the biggest financial firms with zero funding and juicy carry on govt supported assets while crowding out smaller borrowers.

–Link below outlines muni market problems.  Interesting read as pension costs and federally mandated programs are choking muni budgets.

 Chicago Tribune…Smaller retailers/boutiques….”A growing number of independent retailers who made it through the grim holiday season of 2008 are shutting down instead of sinking more money into new inventory, worried that this holiday will be no better. Others are cutting hours of operation, stocking goods under $100 and literally going the extra mile to make a sale by personally delivering some purchases.”

 

Collapse of muni bond market?

http://www.zerohedge.com/article/collapse-muni-bond-market

Posted on October 29, 2009 at 5:28 am by alexmanzara · Permalink
In: Eurodollar Options

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