Sunday, April 18, 2010

Cover Letter For Dental Office

my usual mustard on the current market situation 18.4.10

Hi;
So if the financial markets in recent weeks by the Greek tragedy and the alternate Hilfszu-cancel and was already politicized already abundant, as final with the Goldman-charge policy now regained the upper hand over the financial news.
That the SEC has chosen independently and without political agreement the date for the apparently long-planned prosecution believes no one on Wall Street anyway. The discussion about more stringent regulation is in Congress in the hot phase and is an important election issue in the upcoming congressional elections in November are. Obama's Democrats, who had expected heavy losses, since rely on a very popular topic. Moreover, the markets have now been completely normalized. More than that, probably even. For investors, there is growing investment in the central state of emergency and the fear that with each additional dollar that flows into the markets at the end again just stupid to be financed, which trigger the next crisis. But what should make the banks? The interest they may still raise difficult. A chart of the most quite clearly identifies:

The large corporations that are used for the ISM survey, can finance and on the financial markets, swimming in cash, and are there more for acquisitions Using now but does not create jobs. Small businesses, which account for the most part, and job growth are dependent on the banks are, however, as more and worse.
The result
The labor market situation does not improve really. The initial claims to rise slightly even at the moment.

The level of redundancy is much higher than the ISM would be expected (Initial Claims right scale, inverted).

difficult to imagine, that the central banks raise interest rates now. The still falling money supply M3 in the euro zone and the U.S. show anyway, the lack of credit growth.
must also the U.S. has a budget deficit financing that is nearly as high as that of Greece in the last year (in% of GDP). In U.S. government bonds therefore threatened already a crash after the continuing downward trend for decades, was severely at risk.

Bond A crash would have meant not only the additional higher interest costs for the U.S. government, he would also have the balance sheets of small banks again badly damaged, the clean up is now by the yield carry trade all over again. This in turn would mean a further fall lending. (If you buy now more U.S. bonds, except the Chinese and Japanese, who must invest their trade surpluses? Now, probably mainly the banks that get the money right now for practically nothing, for lack of risk capital but do not award credits and earn at the steep yield curve on government bonds. As long as they would not lose money by losses again ...)
that raw material prices earlier this week have broken out at short notice to new yearly highs, was there not exactly an advantage. (The GSCI, see chart last week, rose briefly on the 550th)
Wall Street has already become heavily unpopular. In sum outweigh the benefits politically by means of the increasing uncertainty that Goldman brings the action with them. That now wants to jump up and the German Government on the train, is the Nervousness in the banking sector to increase even further.
As I said, this will be by central banks and governments probably not be seen as a problem. The big companies are fully financed for years. The banks have to scrap their balance sheets now also be related to yield-hungry investors again. Positive, if again should flow more money into government bonds.
reminds me a little also 2002nd At that time it was thought that the Internet bubble crisis would be overcome, and then came up with the delay of the bubble scandals (Enron, Worldcom, etc.) to the surface. This time you have chosen the politically well-date. Although it remains unclear how far the successful prosecution can be (self-declared Goldman-haters like it questioned zerohedge.com have), but I would assume that this will be only the beginning. (An old quote from Warren Buffet: ". Kitchen There's never just one cockroach in the") It took a long time to roll up the responsibility for the financial crisis. When they thought the world is at an end, it made little sense to search for culprits. For the stabilization of the system, the investment banks were too important. Now, when you weigh in security, can begin the witch hunt.
And so until next time
Lg
Franz