Brainstorming Wednesday

0. Some unusual and contradicting activities make me think

a) for a few days the ISE -Index produces unusual high put activity for a top which confirms on one hand that we are not done yet as too many are waiting for a correction. That is also puzzling as in the forward VIX future we have a lot of buying activity as it trades at a rich premium – that is not good for the top scenario (except the case that Goldman and JP Morgan are buying).

b) on the other hand we had unusual activity at the low as well as extreme call buying just one day before the low started ( very unusual I have never seen such a thing in over 20 years).

c) Some sentiment indicators are contradicting with Investor Intel at a top level now but Rydex and ISEE MA’s not confirming yet as they are rather neutral.


1. The BDI is an early indicator as it seems turned around in DEC and peaked in June – thats a 3 month lag for the stocks – hence another hint for the SEP top.

The Baltic Dry Index, not exactly a phrase that rolls off an investor’s tongue, is signaling plenty of caution these days about the global economy.

container ship
Elaine Thompson / AP

As a gauge of shipping activity along 20 of the world’s busiest routes, the BDI is a leading economic indicator used by market insiders to gauge demand for goods.

But while it remains a somewhat arcane measure, the recent sharp drop in the index has drawn increased attention, despite the dramatic rise in US equity markets and the accompanying hopes for economic recovery.

It’s been a rough summer for the index, which is not a measure of activity in the Baltics but rather an instrument that traces its name to 1744 and the Virginia and Baltick coffeehouse in London’s financial district. The index is weighted toward activity in the Pacific.

The BDI has tumbled about 43 percent since peaking on June 3. That followed a stunning upturn off a low of 663 on Dec. 5, 2008 to the June 3 high of 4,291.

2. The Obama admin against all this upbeat Goldman like Wallstreet bull market pushers have lowered their economic outlook as they have to win the mid term elections and are getting cautious on blowing out to rosy pictures. I saw Hatzius ( chief economist of Goldman) now the last 2 times on Bloomi TV with his upside revisions and although I am not an expert in reading people it was quite obvious to me that he was very uncomfy with what he said like people who are forced to lie and can not really deal with it.

Excerpt

Economy In Much Worse Shape Than Expected: White House
Published: Tuesday, 25 Aug 2009 | 11:22 AM ET

The US economy will shrink far more than expected this year and will rebound much more slowly than forecast after that, according to a bleak new assessment by the White House Budget Office.

The federal government also faces exploding deficits and mounting debt over the next decade, far worse than what the Obama administration had estimated just a few months ago.

The revised estimates project that the economy will contract by 2.8 percent this year, more than twice what the White House predicted earlier this year.

Obama economic adviser Christina Romer projected that the economy would expand in 2010, but by 2 percent instead of the 3.2 percent growth the White House predicted in May. By 2011, Romer estimated, the economy would be humming at 3.6 percent growth.

Figures released by the White House budget office foresee a cumulative $9 trillion deficit from 2010-2019, $2 trillion more than the administration estimated in May.

3. If the true test of the FED is the market they have failed big time M(o)r(on) Geithner as the market has lost big time the last 10 years – he is really a disgrace for this post as many Obama choices are. The FED is one of the major reasons for this crises and needs to be audited together with all dealings of the Treasury the last 3 years in a full fledged investigation.

Excerpt

Geithner: “Fed Audit Would Be Problematic For The Country”

Submitted by Tyler Durden on 08/25/2009 14:34 -0500

It is the esteemed Treasury Secretary’s opinion, that anything that has to do with demystifying why the Fed is hell bent on destroying the US dollar, killing the middle class, and allowing Lloyd Blankfein to purchase Larry Ellison’s yacht collection, is squarely in the “problematic for the country” camp. Never mind that more than half the country (in fact almost two-thirds) have indirectly voiced their support for HR 1207. But at least it is good to know where Geithner’s allegiances lie, and even better to see how good at totally perverting facts (not just taxes) the SecTres is.

And the punchline: “The true test of the Fed is the market.” Is there a way to give Mr. Geithner an economics test because it seems he might have graduated with a biz-econ degree from Devry.

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~ by behindthematrix on August 26, 2009.

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