Traders,
The market could not hold the gains (“buy the rumor, sell the news”) – eagerly waiting for Obama’s first speech to Congress – buy buy buy – Ok we heard it – sell sell sell. A few would say it was short covering – probably so – if you saw some of the short open interest. We DID have a big sell off earlier in the week.
This morning on CNBC – NH Senator Gregg (ranking member of the budget committee and recently abstained from being Commerce Sec.) – talked about the Budget that was introduced by Pres. Obama. His concern, was not really the increase in taxes – but rather the massive amount of spending, when this nation should be focusing on cutting spending. This budget (which to be fair to Obama was partly inherited) will be about 7-8% of the GDP and will be bigger than ALL of Bush’s budget over the last 7 years. The BIG concern – the dollar and keeping it strong. We need to finance $2 trillion in fiat currency (to spend that much) – how do you explain the budget and increase spending to the foreign nations we rely on to loan us the money?
This is a very good video to watch (he is very fair in his assessment): http://www.cnbc.com/id/15840232?video=1046232917&play=1
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GM – blows $9 billion in one quarter….
Today GM meets with the government’s audit committee – to review their options – of course they NEED another $2 billion by March (or face bankruptcy). The losses are staggering – of the $13.4 billion in aid they received (just a couple of months ago) they have gone through it fast. The deficit was $15.71 a SHARE – which is insane.
At this point – GM has failed (actually they failed months ago) – it is just barely hanging on. How much MORE money does the government give to a company. We CAN blame the economy only so far – but GM’s debt funding is decades old (and continued to get bigger). The only reason GM was ABLE to survive for decades was their ability to borrow billions of dollars based on a credit rating. They NEVER fixed their business model!
GM’s and the Governments problem is that they are blaming the economy – I would say the current economic condition just exposed GM’s failed business plan of never ending of borrowing of money.
The question – does anyone wake up to that fact or does the government just continue to pour money into it?
GM’s stock is down in the pre-market (I am still wondering – other than the government – what fools still own this stock.)
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Orders for durable goods drop
For 6 months in a row – companies are cutting spending, which can be seen as the orders for durable goods fell. The 5.2% drop was more than the largest projection. It CLEARLY shows – that the slow down (regardless of what anyone says) is big and getting bigger.
Economist on avg (71 of them) estimated a 2.5% drop, coming in at 5.2% is significantly higher. Big ticket items are not moving and that means more cutting and cost savings at companies that rely on the revenue from moving merchandise.
The market could not hold the gains (“buy the rumor, sell the news”) – eagerly waiting for Obama’s first speech to Congress – buy buy buy – Ok we heard it – sell sell sell. A few would say it was short covering – probably so – if you saw some of the short open interest. We DID have a big sell off earlier in the week.
This morning on CNBC – NH Senator Gregg (ranking member of the budget committee and recently abstained from being Commerce Sec.) – talked about the Budget that was introduced by Pres. Obama. His concern, was not really the increase in taxes – but rather the massive amount of spending, when this nation should be focusing on cutting spending. This budget (which to be fair to Obama was partly inherited) will be about 7-8% of the GDP and will be bigger than ALL of Bush’s budget over the last 7 years. The BIG concern – the dollar and keeping it strong. We need to finance $2 trillion in fiat currency (to spend that much) – how do you explain the budget and increase spending to the foreign nations we rely on to loan us the money?This is a very good video to watch (he is very fair in his assessment): http://www.cnbc.com/id/15840232?video=1046232917&play=1
____________________________________________
GM – blows $9 billion in one quarter….
Today GM meets with the government’s audit committee – to review their options – of course they NEED another $2 billion by March (or face bankruptcy). The losses are staggering – of the $13.4 billion in aid they received (just a couple of months ago) they have gone through it fast. The deficit was $15.71 a SHARE – which is insane.
At this point – GM has failed (actually they failed months ago) – it is just barely hanging on. How much MORE money does the government give to a company. We CAN blame the economy only so far – but GM’s debt funding is decades old (and continued to get bigger). The only reason GM was ABLE to survive for decades was their ability to borrow billions of dollars based on a credit rating. They NEVER fixed their business model!
GM’s and the Governments problem is that they are blaming the economy – I would say the current economic condition just exposed GM’s failed business plan of never ending of borrowing of money.
The question – does anyone wake up to that fact or does the government just continue to pour money into it?
GM’s stock is down in the pre-market (I am still wondering – other than the government – what fools still own this stock.)
___________________________________________
Orders for durable goods drop
For 6 months in a row – companies are cutting spending, which can be seen as the orders for durable goods fell. The 5.2% drop was more than the largest projection. It CLEARLY shows – that the slow down (regardless of what anyone says) is big and getting bigger.
Economist on avg (71 of them) estimated a 2.5% drop, coming in at 5.2% is significantly higher. Big ticket items are not moving and that means more cutting and cost savings at companies that rely on the revenue from moving merchandise.__________________________________________
Jobless claims rose
As the durable goods orders see a drop – so comes cost cutting. First-time claims for unemployment benefits unexpectedly rose last week by 36,000 to 667,000 – the highest since 1982 – while the number of people STAYING on benefits rose by 114,000 to 5.1 million.
Expectations for a continued increase is expected to continue for the next few months.
______________________________________________
Futures Pre-market
We are getting a boost in the futures in the pre-market, after the sell off yesterday. The fair-value spread is to the upside. Expect Arb traders to short the futures and buy the basket into the opening – which should give the market a little pop to the upside at the opening.
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Support / Resistance
INDU 7000 – 7500 (It looks like after the sell-off the INDU is creating a little range area.)
NDX 1100-1150 / 1200 (Really – who knows a move to 1100 or 1200 is really needed to make heads or tails.)
SPX 735-750 / 800 (750 is a support with 735 being the bottom range of support – which NEEDS to hold if you expect to see any strength.)
RUT 400!!! (We fell pretty hard in the RUT compared to the narrower indices – but held 400. Can we continue to do so?)
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Conclusion
The Video of Sen. Gregg (who is VERY well informed – both being a senior member of the budget committee – and in high enough regard by both the Democrats and Republicans that he was going to be the Sec. of Commerce – but decided to refrain from that post). His cornerstone concern confirms my worries about the US Dollar (fiat) – we face challenges by convincing our nations creditors (foreign nations) to buy more of our debt as the nation moves to spend MORE money – rather than cost cutting. His demeanor was calm and concerned – rather than a finger pointing blame game. He no doubt has respect for Obama – but is concern rather with the direction the budget has taken.
Jobless claims rose
As the durable goods orders see a drop – so comes cost cutting. First-time claims for unemployment benefits unexpectedly rose last week by 36,000 to 667,000 – the highest since 1982 – while the number of people STAYING on benefits rose by 114,000 to 5.1 million.
Expectations for a continued increase is expected to continue for the next few months.
______________________________________________
Futures Pre-market
We are getting a boost in the futures in the pre-market, after the sell off yesterday. The fair-value spread is to the upside. Expect Arb traders to short the futures and buy the basket into the opening – which should give the market a little pop to the upside at the opening.
______________________________________________
Support / Resistance
INDU 7000 – 7500 (It looks like after the sell-off the INDU is creating a little range area.)
NDX 1100-1150 / 1200 (Really – who knows a move to 1100 or 1200 is really needed to make heads or tails.)
SPX 735-750 / 800 (750 is a support with 735 being the bottom range of support – which NEEDS to hold if you expect to see any strength.)
RUT 400!!! (We fell pretty hard in the RUT compared to the narrower indices – but held 400. Can we continue to do so?)
_______________________________________________
Conclusion
The Video of Sen. Gregg (who is VERY well informed – both being a senior member of the budget committee – and in high enough regard by both the Democrats and Republicans that he was going to be the Sec. of Commerce – but decided to refrain from that post). His cornerstone concern confirms my worries about the US Dollar (fiat) – we face challenges by convincing our nations creditors (foreign nations) to buy more of our debt as the nation moves to spend MORE money – rather than cost cutting. His demeanor was calm and concerned – rather than a finger pointing blame game. He no doubt has respect for Obama – but is concern rather with the direction the budget has taken.
it is important enough to listen too – as it does affect each and every one of us.
These are challenging times – we (as a nation) face very important decisions ahead – we have to go through this, but these decisions will determine longer term fates of this country.
These are challenging times – we (as a nation) face very important decisions ahead – we have to go through this, but these decisions will determine longer term fates of this country.
1 comment:
"We need to finance $2 trillion in fiat currency (to spend that much) – how do you explain the budget and increase spending to the foreign nations we rely on to loan us the money?"
I saw an interesting interview yesterday on CNBC regarding this. It basically went as follows: China has typically bought 600 million per year to finance our budget. If and I mean IF they do the same again this year we will still be short 1.4 Trillion. What other countries will step up to the plate to do this while they are all going through their own problems?
So how is this solved:
Two ways 1) The US provides higher more attractive rates 2) We print it.
Neither one of which is good.
Thoughts?
Rotag
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