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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu May-07-09 04:51 AM
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1. Market Observation
What are the Credit Markets Telling Us?
by Chris Puplava

Over the course of the past two months we have witnessed some stabilization in the financial markets as stocks have staged a strong rally and credit spreads have come down. While we have seen stabilization in the financial markets since the March lows the stabilization process actually began after the October 2008 panic lows. After the collapse of Lehman the markets came unglued and the Federal Reserve and Treasury worked over time creating lending facility after lending facility to ease the various sectors of the financial markets, and looking back, one would have to conclude they have largely been successful. But the question that lies ahead of us is whether or not their financial efforts will gain economic traction. Basically, do the recent green shoots have roots?


One of the areas that I have been monitoring closely over the last several months in terms of gauging the anxiety of the markets as well as the force of deleveraging is the currency markets. The collapse of Lehman led to the unwinding of the yen carry trade in which cheaply borrowed yen was used to invest in higher yielding currencies. As the deleveraging process gained force the euro gave back in two months what it had gained in six years in terms of purchasing power relative to the yen. While the weakening of the euro relative to the yen was an early warning heading into the market collapse late last year, the stabilization and strength in the euro relative to the yen this year was an early warning of a coming market advance. As a break below the 200 day moving average (200d MA) was a warning of market stress, a break above the 200d MA is likely indicating greater stabilization in the currency markets and signs of easing in investors fears.


It appears the easing of investors fears has been justified given the easing in the credit markets. For example, the Feds Senior Loan Officer Opinion Survey for April hit the street on Monday and showed that the peak in tightening in the credit markets is probably behind us. The center of the current crisis has been housing, and the Feds survey shows that the net percentage of banks tightening standards for mortgage loans decreased significantly in the first quarter of the year with a slight uptick in the recent quarter, though still well below the wide tightening seen at the end of 2008. Accompanied with the easing in lending standards has been a rising trend in mortgage demand as the net percentage of banks reporting stronger demand has improved and actually turned positive for prime mortgages in the second quarter.
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  -STOCK MARKET WATCH, Thursday May 7 ozymandius  May-07-09 04:46 AM   #0 
  - Market Observation  ozymandius   May-07-09 04:51 AM   #1 
  - "I Have Nothing Up My Sleeve..."  Demeter   May-07-09 06:25 AM   #21 
  - Today's Reports  ozymandius   May-07-09 04:53 AM   #2 
  - Initial Claims @ 601,000 - last wk rev'd up 4k  UpInArms   May-07-09 07:36 AM   #33 
  - And the futures crowd goes wild! We're in the money, we're in the money. We've got a lot of what it  54anickel   May-07-09 08:15 AM   #42 
  - Why do you post that ongoing jobless claim number?  Pale Blue Dot   May-07-09 08:17 AM   #43 
     - Exactly  CatholicEdHead   May-07-09 09:25 AM   #47 
     - It's been a standing joke for a long time in the SMW most gubbermint reports are.  54anickel   May-07-09 10:39 AM   #51 
  - U.S. March consumer credit falls record $11.1 bln - down 5.2% annual rate  UpInArms   May-07-09 05:52 PM   #92 
  - Oil rises to six-month high near $58 in Asia  ozymandius   May-07-09 04:57 AM   #3 
  - Ted Rall  ozymandius   May-07-09 05:04 AM   #4 
  - Wow. That cartoon says a mouthful...  TeeYiYi   May-07-09 05:03 PM   #90 
     - Well, That's What We're Here For  Demeter   May-07-09 10:37 PM   #103 
        - Thank you Demeter . . .  TeeYiYi   May-07-09 11:08 PM   #105 
           - Also Provide Refuge For Insomniacs!  Demeter   May-07-09 11:12 PM   #107 
  - Nintendo Forecasts Miss Estimates as Wii Sales Slow  ozymandius   May-07-09 05:08 AM   #5 
  - What happens when everybody already has one?  Tansy_Gold   May-07-09 06:22 AM   #20 
  - 491,000 to 580,000 jobs lost in April?  Dr.Phool   May-07-09 05:11 AM   #6 
  - Well, of course, this is cause for celebration.  ozymandius   May-07-09 05:15 AM   #8 
  - Just a slight updraft in the turbulence.  Dr.Phool   May-07-09 05:20 AM   #10 
     - It's just astonishing to me how this logic works.  ozymandius   May-07-09 05:26 AM   #11 
        - I said the very same thing on the last jobs report....  AnneD   May-07-09 03:20 PM   #77 
           - True, but a deceleration of job losses will have to come  Lucky Luciano   May-07-09 03:26 PM   #78 
  - U.S. April Job Cuts Rise 47% From a Year Ago, Challenger Says  Dr.Phool   May-07-09 05:16 AM   #9 
     - The Real Unemployment Report  Dr.Phool   May-07-09 05:55 AM   #15 
        - This data emphasizes the unseriousness of the banks' stress tests.  ozymandius   May-07-09 06:02 AM   #17 
  - Billionaire Donors Split With Obama on Law That May Hurt Hotels  ozymandius   May-07-09 05:13 AM   #7 
  - Good morning Ozy.  Dr.Phool   May-07-09 05:26 AM   #12 
     - Good morning.  ozymandius   May-07-09 05:44 AM   #13 
        - Quote From "1776"  Demeter   May-07-09 06:31 AM   #23 
           - Morning Marketeers....  AnneD   May-07-09 08:29 AM   #45 
              - Okay, You Got It. Dirty Harry It Is  Demeter   May-07-09 10:46 AM   #53 
                 - Go Ahead, Make My Day  DemReadingDU   May-07-09 10:53 AM   #55 
                    - Naaa.... A Few Dollars More. That was a bank robbery and rape. Almost as larcenous  Joe Chi Minh   May-07-09 02:10 PM   #65 
                       - Well,  AnneD   May-07-09 03:16 PM   #75 
                          - My favourite's Lee Van Cleef, actually.Colonel Douglas Mortimer,  Joe Chi Minh   May-07-09 04:07 PM   #82 
                          - Clint Is a Much Better Actor When He DOESN'T Have Dialog  Demeter   May-07-09 04:44 PM   #87 
                             - Rowdy Yates  DemReadingDU   May-07-09 05:49 PM   #91 
                                - I had my first crush...  AnneD   May-07-09 06:27 PM   #95 
  - Regulators put bank CEOs on notice  ozymandius   May-07-09 05:50 AM   #14 
  - Government: Stress Test Results to be released at 5 PM ET (after markets close, of course)  ozymandius   May-07-09 05:57 AM   #16 
  - Bet You a Nickel It Doesn't Happen  Demeter   May-07-09 06:34 AM   #25 
  - Those stress tests will be whatever they want them to be  DemReadingDU   May-07-09 06:48 AM   #28 
  - "Sufficient Experise", in raising funds.  Dr.Phool   May-07-09 06:03 AM   #18 
  - I'll think we all get a box of those Italian suppositories....  AnneD   May-07-09 03:36 PM   #79 
     - That Kentucky Jelly sucks.  Dr.Phool   May-07-09 03:53 PM   #80 
        - I hear ya Dr.P! I assumed it was Kiwi Fruit due to the name on the label...  Hugin   May-07-09 04:20 PM   #85 
        - Don't laugh...  AnneD   May-07-09 05:53 PM   #93 
           - True story.  Hugin   May-07-09 10:06 PM   #102 
              - Wonder what it is worth on the black market.......  AnneD   May-08-09 07:43 AM   #108 
  - Leaked info on which bank needs how much money  ozymandius   May-07-09 06:06 AM   #19 
  - Fifth Third and KeyCorp need the same amount?  DemReadingDU   May-07-09 06:54 AM   #30 
  - And So Valuable  Demeter   May-07-09 06:33 AM   #24 
  - Debt: 05/05/2009 11,227,464,371,841.48 (UP 7,494,388,827.79) (Tiny debt rise.)  Festivito   May-07-09 06:30 AM   #22 
  - Debt: 05/06/2009 11,226,807,485,330.04 (DOWN 656,886,511.44) (Tiny debt fall.)  Festivito   May-07-09 07:06 PM   #96 
  - AIG to post $5 billion loss: source  Demeter   May-07-09 06:36 AM   #26 
  - Okay, three things for today and I'm outta here...  Hugin   May-07-09 08:09 AM   #41 
  - I Like This Cartoon Better  Demeter   May-07-09 06:43 AM   #27 
  - How the boss absconded with your benefits.  Demeter   May-07-09 06:51 AM   #29 
  - Bernanke's Crystal Ball  Demeter   May-07-09 07:03 AM   #32 
  - Bwahaha!!! I LOVE that Dilbert toon in your link. Made my day! n/t  54anickel   May-07-09 07:52 AM   #35 
     - It Has Become MY Life Plan As Well  Demeter   May-07-09 07:56 AM   #36 
        - A very good plan indeed! Best wishes on that journey. That center goal is a bit tough especially  54anickel   May-07-09 08:26 AM   #44 
           - Let's See......  AnneD   May-07-09 04:02 PM   #81 
  - dollar watch  UpInArms   May-07-09 06:57 AM   #31 
  - Defeating Homeowners: A Pyrrhic Victory for the Bankers  Demeter   May-07-09 07:51 AM   #34 
  - Just some raw data  Tansy_Gold   May-07-09 08:04 AM   #39 
  - Grim Indeed! Good Morning Tansy!  Demeter   May-07-09 08:05 AM   #40 
     - You don't wanna know :-(  Tansy_Gold   May-07-09 09:44 AM   #48 
        - Have you tried writing a LTTE?  Hugin   May-07-09 09:56 AM   #49 
        - Proper posture is indeed essential.  Tansy_Gold   May-07-09 10:16 AM   #50 
           - How about all of this modern medical terminology, eh?  Hugin   May-07-09 11:06 AM   #57 
        - One of Those Kneeling Type Chairs?  Demeter   May-07-09 10:50 AM   #54 
        - Unfortunately, they don't work for transcription  Tansy_Gold   May-07-09 11:52 AM   #59 
           - ...  Hugin   May-07-09 12:00 PM   #60 
        - Surely they have shorter chairs.  tclambert   May-07-09 12:04 PM   #61 
           - It's the whole ensemble, tc  Tansy_Gold   May-07-09 02:44 PM   #72 
  - The author of this article seems unaware of the money in CDSs and  Hugin   May-07-09 08:57 AM   #46 
  - Yeah. Someone brought this up yesterday . I think it was  Tansy_Gold   May-07-09 10:44 AM   #52 
     - They're On Back Order, in France  Demeter   May-07-09 04:49 PM   #88 
  - That was the most shameful display by alleged Democrats...  AnneD   May-07-09 04:15 PM   #84 
  - Reviving Pecora's Ghost  Demeter   May-07-09 07:58 AM   #37 
  - One subtle thing this article points out.......  AnneD   May-07-09 06:24 PM   #94 
     - The revolution becomes an evolution  Tansy_Gold   May-07-09 11:09 PM   #106 
        - Thanks for the resources....  AnneD   May-08-09 08:30 AM   #109 
  - GM posts $6bn loss as bankruptcy looms  Demeter   May-07-09 08:02 AM   #38 
  - Forbes says the NYSE is gonna drop GM from the Dow Jones Industrial Index.  tclambert   May-07-09 03:11 PM   #73 
  - Crossposted  Demeter   May-07-09 11:00 AM   #56 
  - The more I think about this, there's probably CDS involved  DemReadingDU   May-07-09 11:51 AM   #58 
  - This reminds me of It a Wonderful Life  MARALE   May-07-09 01:32 PM   #63 
  - Simon Johnson on whitewash (stress tests)  Dr.Phool   May-07-09 01:28 PM   #62 
  - Comfortably Numb.  TheWatcher   May-07-09 01:47 PM   #64 
  - or uncomfortably numb in their cognitive dissonance  TheMachineWins   May-07-09 02:18 PM   #66 
  - GD -- enter at your own risk --  Tansy_Gold   May-07-09 02:40 PM   #71 
  - and I am extremely grateful for that.  Irish Girl   May-07-09 04:38 PM   #86 
  - Oh Dear GOD I saw that TMW.  TheWatcher   May-07-09 07:19 PM   #98 
  - People have become zombies  DemReadingDU   May-07-09 02:19 PM   #67 
  - Then zombie banks make perfect sense.  tclambert   May-07-09 02:39 PM   #70 
  - Breathtaking post (as usual), TheWatcher.  Hugin   May-07-09 02:24 PM   #68 
  - I am, Hugin.  TheWatcher   May-07-09 07:07 PM   #97 
     - Both are very frightening  DemReadingDU   May-07-09 07:20 PM   #99 
     - It's Stockholm Syndrome.  ozymandius   May-07-09 09:42 PM   #101 
     - It's Such A Relief to Get the Drooling Idiot and Dr. Strangelove Out  Demeter   May-07-09 10:46 PM   #104 
  - Tocqueville said it well.  ozymandius   May-07-09 09:38 PM   #100 
  - Wal-Mart's Move To Drop Sales Reports Has Broad Ramifications (WSJ (I know... I know....))  Hugin   May-07-09 02:32 PM   #69 
  - Wells Fargo to issue $6B in common stock.  Lucky Luciano   May-07-09 03:15 PM   #74 
  - More FBI agents sought to probe financial crimes  tclambert   May-07-09 03:18 PM   #76 
  - Eurozone interest rates cut to 1% (and key ECB decisions on "extraordinary" measures)  BelgianMadCow   May-07-09 04:13 PM   #83 
     - It"s All Electronic Now--No Presses, Paper or Ink Needed  Demeter   May-07-09 04:54 PM   #89 

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