check out the blog at www.petergreene.net
for updates now
posted by Peter Greene
At the Money: The Data Behind America’s Wealthy
13 hours ago
Monday, November 30, 2009
Wednesday, September 16, 2009
Industrial Production - Rewind
As expected, the August rise in industrial production was led by another jump in output of motor vehicles and parts, up almost 6% on the month. But non-auto manufacturing production also strengthened in August, managing its best turnout since the recession began excluding last October, when manufacturing rose following a disruption from hurricanes and a Boeing strike. Although the ISM manufacturing survey is not a precise guide to factory output, the latest readings suggests the pickup in activity is becoming more widespread as inventory cuts moderate and domestic business investment and exports turn higher.
The main driver of the recovery has been that businesses are raising output to close the gap with sales. Production was cut very deeply early in the year, when businesses were assuming a continued fall in demand. With sales firming at a much higher level than anticipated and, more recently, returning to growth, manufacturers are scrambling to raise output and the automotive-led moderation in the pace of inventory liquidation is now giving way to a similar pattern across other industries.
Although the turnaround in manufacturing has generally been stronger than anticipated, at the current pace of growth in industrial production, it would still take around two-three years for capacity utilization to rise to its prerecession level of around 79%. Since this recession has been especially deep and slack is unusually large, the case for low inflation and low policy rates in 2010 is a strong one but may not hold past that.
From Fusion research by Doug Lomma
posted by Peter Greene
The main driver of the recovery has been that businesses are raising output to close the gap with sales. Production was cut very deeply early in the year, when businesses were assuming a continued fall in demand. With sales firming at a much higher level than anticipated and, more recently, returning to growth, manufacturers are scrambling to raise output and the automotive-led moderation in the pace of inventory liquidation is now giving way to a similar pattern across other industries.
Although the turnaround in manufacturing has generally been stronger than anticipated, at the current pace of growth in industrial production, it would still take around two-three years for capacity utilization to rise to its prerecession level of around 79%. Since this recession has been especially deep and slack is unusually large, the case for low inflation and low policy rates in 2010 is a strong one but may not hold past that.
From Fusion research by Doug Lomma
posted by Peter Greene
Wednesday, August 19, 2009
Old Guy Joke
An elderly gent was invited to an old friend's home for dinner one evening. He was impressed by the way his buddy preceded every request to his wife with endearing terms such as: Darling, Honey, My Love, Pumpkin, Sweetheart, etc.
The couple had been married almost 70 years and, clearly, they were still very much in love.
While the wife was in the kitchen, the man leaned over to his host, and said: "I think it's wonderful that, after all these years, you still call your wife those loving pet names."
The old man hung his head. "I have to tell you the truth," he said. "Her name slipped my mind about 10 years a go, -- and I'm scared to death to ask the old bitch what it is."
This is going around the desks today
posted by Peter Greene
The couple had been married almost 70 years and, clearly, they were still very much in love.
While the wife was in the kitchen, the man leaned over to his host, and said: "I think it's wonderful that, after all these years, you still call your wife those loving pet names."
The old man hung his head. "I have to tell you the truth," he said. "Her name slipped my mind about 10 years a go, -- and I'm scared to death to ask the old bitch what it is."
This is going around the desks today
posted by Peter Greene
Government Healthcare Failing Worldwide
Why should we be copying Government Healthcare...Look at this article about how Canada's system is breaking down and looking for a private option to save it...We have a private system now, learn from the neighbours in the north and stop this BEFORE we are in the same boat
Overhauling health-care system tops agenda at annual meeting of Canada's doctors
By Jennifer Graham (CP) – 3 days ago
SASKATOON — The incoming president of the Canadian Medical Association says this country's health-care system is sick and doctors need to develop a plan to cure it.
Dr. Anne Doig says patients are getting less than optimal care and she adds that physicians from across the country - who will gather in Saskatoon on Sunday for their annual meeting - recognize that changes must be made.
"We all agree that the system is imploding, we all agree that things are more precarious than perhaps Canadians realize," Doing said in an interview with The Canadian Press.
"We know that there must be change," she said. "We're all running flat out, we're all just trying to stay ahead of the immediate day-to-day demands."
The pitch for change at the conference is to start with a presentation from Dr. Robert Ouellet, the current president of the CMA, who has said there's a critical need to make Canada's health-care system patient-centred. He will present details from his fact-finding trip to Europe in January, where he met with health groups in England, Denmark, Belgium, Netherlands and France.
His thoughts on the issue are already clear. Ouellet has been saying since his return that "a health-care revolution has passed us by," that it's possible to make wait lists disappear while maintaining universal coverage and "that competition should be welcomed, not feared."
In other words, Ouellet believes there could be a role for private health-care delivery within the public system.
He has also said the Canadian system could be restructured to focus on patients if hospitals and other health-care institutions received funding based on the patients they treat, instead of an annual, lump-sum budget. This "activity-based funding" would be an incentive to provide more efficient care, he has said.
Doig says she doesn't know what a proposed "blueprint" toward patient-centred care might look like when the meeting wraps up Wednesday. She'd like to emerge with clear directions about where the association should focus efforts to direct change over the next few years. She also wants to see short-term, medium-term and long-term goals laid out.
"A short-term achievable goal would be to accelerate the process of getting electronic medical records into physicians' offices," she said. "That's one I think ought to be a priority and ought to be achievable."
A long-term goal would be getting health systems "talking to each other," so information can be quickly shared to help patients.
Doig, who has had a full-time family practice in Saskatoon for 30 years, acknowledges that when physicians have talked about changing the health-care system in the past, they've been accused of wanting an American-style structure. She insists that's not the case.
"It's not about choosing between an American system or a Canadian system," said Doig. "The whole thing is about looking at what other people do."
"That's called looking at the evidence, looking at how care is delivered and how care is paid for all around us (and) then saying 'Well, OK, that's good information. How do we make all of that work in the Canadian context? What do the Canadian people want?' "
Doig says there are some "very good things" about Canada's health-care system, but she points out that many people have stories about times when things didn't go well for them or their family.
"(Canadians) have to understand that the system that we have right now - if it keeps on going without change - is not sustainable," said Doig.
"They have to look at the evidence that's being presented and will be presented at (the meeting) and realize what Canada's doctors are trying to tell you, that you can get better care than what you're getting and we all have to participate in the discussion around how do we do that and of course how do we pay for it."
Copyright © 2009 The Canadian Press. All rights reserved.
posted by Peter Greene
Overhauling health-care system tops agenda at annual meeting of Canada's doctors
By Jennifer Graham (CP) – 3 days ago
SASKATOON — The incoming president of the Canadian Medical Association says this country's health-care system is sick and doctors need to develop a plan to cure it.
Dr. Anne Doig says patients are getting less than optimal care and she adds that physicians from across the country - who will gather in Saskatoon on Sunday for their annual meeting - recognize that changes must be made.
"We all agree that the system is imploding, we all agree that things are more precarious than perhaps Canadians realize," Doing said in an interview with The Canadian Press.
"We know that there must be change," she said. "We're all running flat out, we're all just trying to stay ahead of the immediate day-to-day demands."
The pitch for change at the conference is to start with a presentation from Dr. Robert Ouellet, the current president of the CMA, who has said there's a critical need to make Canada's health-care system patient-centred. He will present details from his fact-finding trip to Europe in January, where he met with health groups in England, Denmark, Belgium, Netherlands and France.
His thoughts on the issue are already clear. Ouellet has been saying since his return that "a health-care revolution has passed us by," that it's possible to make wait lists disappear while maintaining universal coverage and "that competition should be welcomed, not feared."
In other words, Ouellet believes there could be a role for private health-care delivery within the public system.
He has also said the Canadian system could be restructured to focus on patients if hospitals and other health-care institutions received funding based on the patients they treat, instead of an annual, lump-sum budget. This "activity-based funding" would be an incentive to provide more efficient care, he has said.
Doig says she doesn't know what a proposed "blueprint" toward patient-centred care might look like when the meeting wraps up Wednesday. She'd like to emerge with clear directions about where the association should focus efforts to direct change over the next few years. She also wants to see short-term, medium-term and long-term goals laid out.
"A short-term achievable goal would be to accelerate the process of getting electronic medical records into physicians' offices," she said. "That's one I think ought to be a priority and ought to be achievable."
A long-term goal would be getting health systems "talking to each other," so information can be quickly shared to help patients.
Doig, who has had a full-time family practice in Saskatoon for 30 years, acknowledges that when physicians have talked about changing the health-care system in the past, they've been accused of wanting an American-style structure. She insists that's not the case.
"It's not about choosing between an American system or a Canadian system," said Doig. "The whole thing is about looking at what other people do."
"That's called looking at the evidence, looking at how care is delivered and how care is paid for all around us (and) then saying 'Well, OK, that's good information. How do we make all of that work in the Canadian context? What do the Canadian people want?' "
Doig says there are some "very good things" about Canada's health-care system, but she points out that many people have stories about times when things didn't go well for them or their family.
"(Canadians) have to understand that the system that we have right now - if it keeps on going without change - is not sustainable," said Doig.
"They have to look at the evidence that's being presented and will be presented at (the meeting) and realize what Canada's doctors are trying to tell you, that you can get better care than what you're getting and we all have to participate in the discussion around how do we do that and of course how do we pay for it."
Copyright © 2009 The Canadian Press. All rights reserved.
posted by Peter Greene
Tuesday, August 18, 2009
Firm's S&P note
As seen in the S&P 500 research note the index ran into resistance at the 1,020 level but this is still well above its recent range breakout spot near the 950/930 area. So at this point while prices are drifting keeping things in perspective we are still in the middle of a higher level trader range (930/950 to 1,020) after spending the earlier part of the summer locked in the 850 to 950/930 range.
The recent weakness is a combination of the late summer doldrums and a mean reversion of the S&P 500’s 15.20 % run up (measured from its’ recent high from its low on 7/10). Anecdotal sentiment has investors still doubting the rally, under invested and extremely cautious. While this kind of sentiment exists it is hard to expect anything more than a minor pullback (5% – 7 %).
While late summer and fall seasonality trends typically line up in the negative return camp it appears that so many investors are relying on it as gospel that maybe it won’t happen this year.
posted by Peter Greene
The recent weakness is a combination of the late summer doldrums and a mean reversion of the S&P 500’s 15.20 % run up (measured from its’ recent high from its low on 7/10). Anecdotal sentiment has investors still doubting the rally, under invested and extremely cautious. While this kind of sentiment exists it is hard to expect anything more than a minor pullback (5% – 7 %).
While late summer and fall seasonality trends typically line up in the negative return camp it appears that so many investors are relying on it as gospel that maybe it won’t happen this year.
posted by Peter Greene
Monday, August 17, 2009
Firm's morning comments
Markets look to open weaker this morning as investors worry stocks have come too far, too fast. The headline story on CNN.com reads, Stocks headed for sharp fall while on Yahoo Finance their lead story reads Stocks Futures Point to Plunge on Wall Street. All of it sounds a bit dramatic if you ask me, but that is what the media is about reporting what is happening not what may happen.
Certainly given we are in the late summer vacation season and stocks have had a good run in July there is the likelihood for a pullback, However is it anything more at this point than just a retrenchment of the recent rally or are we really headed for a plunge or a sharp fall ? Again it seems a bit premature and dramatic to say that at this juncture. Stocks ebb and flow. Traders overreact on the upside and the downside.
Under the surface of these silly headlines things still remain pretty much the same; liquidity is very strong, investors by and large remain under invested even after a rally of significant magnitude, sentiment while a bit more bullish is not a problem yet and valuations while richer than they were say a few months back still remain constructive.
Actually the headline that caught our eye this morning the most was CalSTRS (The California State Teachers Retirement Fund) is reducing exposure to equities into this rally. Now while we are sure there are many smart people at CalSTRS the fact that they are reducing equities actually makes us more comfortable that the bull trend will resume after a pause. After all CalSTRS like many pensions preached the passive BUY and HOLD strategy forever and got burnt in 2001/2002 and again in 2008 so they do not actually have a great history when it comes to making investment decisions. Now after all these years they are changing their investment mantra and trying to be proactive. Ironically this sounds like a reactive decision after years of making bad moves.
This headline just becomes another part of the sentiment puzzle which outlines how investors keep doubting the recovery and remain scared of stocks. While there are obvious issues about the tenure and durability of the recovery the more doubting thomases that line up the more likely the market is to confound them. There is a reason the old adage, the market exists to confound the majority and reward the minority has been around for a long time - because it typically holds true !
Expect some weakness near term - support on the S&P 500 remains below the market in the 950 area.
Look for a more detailed technical note tomorrow.
posted by Peter Greene
Certainly given we are in the late summer vacation season and stocks have had a good run in July there is the likelihood for a pullback, However is it anything more at this point than just a retrenchment of the recent rally or are we really headed for a plunge or a sharp fall ? Again it seems a bit premature and dramatic to say that at this juncture. Stocks ebb and flow. Traders overreact on the upside and the downside.
Under the surface of these silly headlines things still remain pretty much the same; liquidity is very strong, investors by and large remain under invested even after a rally of significant magnitude, sentiment while a bit more bullish is not a problem yet and valuations while richer than they were say a few months back still remain constructive.
Actually the headline that caught our eye this morning the most was CalSTRS (The California State Teachers Retirement Fund) is reducing exposure to equities into this rally. Now while we are sure there are many smart people at CalSTRS the fact that they are reducing equities actually makes us more comfortable that the bull trend will resume after a pause. After all CalSTRS like many pensions preached the passive BUY and HOLD strategy forever and got burnt in 2001/2002 and again in 2008 so they do not actually have a great history when it comes to making investment decisions. Now after all these years they are changing their investment mantra and trying to be proactive. Ironically this sounds like a reactive decision after years of making bad moves.
This headline just becomes another part of the sentiment puzzle which outlines how investors keep doubting the recovery and remain scared of stocks. While there are obvious issues about the tenure and durability of the recovery the more doubting thomases that line up the more likely the market is to confound them. There is a reason the old adage, the market exists to confound the majority and reward the minority has been around for a long time - because it typically holds true !
Expect some weakness near term - support on the S&P 500 remains below the market in the 950 area.
Look for a more detailed technical note tomorrow.
posted by Peter Greene
Wednesday, August 12, 2009
FOMC Overview from the firm
In contrast with the last FOMC meeting, the August meeting should provide a forward-looking statement that will signal the central bank's next step toward winding down its quantitative easing program.
Some salient points:
· U.S. monetary policy will remain on hold for an extended period.
· The Federal Reserve is not monetizing the federal debt.
· The commercial real estate sector is a growing concern.
The Fed will acknowledge improvement in the economy and the probability of stronger than expected growth in the third quarter, but carefully outline downside risks to both growth and inflation. The committee will maintain its commitment to keeping rates low for an extended period. Policy normalization will be difficult. Improving financial conditions and the pickup in real activity have stimulated demand for an early exit from financial markets. The timing, pace and sequence of policy normalization will have important implications for asset markets. The Fed is aware of the policy missteps it made in 1937, and those of the Japanese central bank in 1997 and 2000 that prematurely terminated economic recoveries.
Deflationary risk, potential problems in the commercial real estate sector and more stress in financial markets should cause policy normalization to proceed in a drawn-out fashion. Moreover, the risk that domestic political tensions will constrain future fiscal stimulus should ensure the central bank moves carefully before articulating an explicit exit strategy.
The FOMC acknowledged in its June minutes that it did not extend its asset purchase program out of fear this would be interpreted as a monetization of U.S. federal debt. The normalization of financial markets has given the central bank leeway to let some of its temporary liquidity programs expire. The Fed is likely to address its $300 billion asset purchase program which is about to expire. The Fed has purchased $243 billion in medium- to long-term Treasuries since the March 18 FOMC meeting. Although the program will end, one would expect the statement will provide enough space for the central bank to re-enter markets again should the financial sector experience more turmoil in the near term.
Some Risks - End the TARP but extend the TALF?
The FOMC will note the improvement but also emphasize risks to the spending outlook. While the improvement in productivity is desirable, firms obtained it by squeezing more out of a reduced workforce. Employee hours fell 7.6% in the second quarter. Outside of a modest increase in hours worked inside the July payroll data, the prospects for wage stabilization remain difficult.
Moreover, the increased prospects for growth in the current quarter come with a risk. The policy success of the auto subsidies is likely to shift consumption that would have occurred over the next several months to the current quarter. In addition, the inventory restocking contains its own risk. It is not yet certain that demand, due to the decline in wage income, is sufficient to absorb the increase in production observed in the current quarter.
Other risks include the shutdown of the $700 billion CMBS market since September 2008. In June, the central bank expanded its Term Asset-Backed Securities Loan Facility to include up to $100 billion in commercial mortgage-backed assets. While the asset purchase program will be allowed to expire, it is increasingly likely that the TALF program will have to be extended to address issues in the commercial mortgage-backed securities market.
Thus, the Fed will be reluctant to rule out additional liquidity measures to address possible turmoil in commercial real estate or additional stress in the banking industry. Commercial real estate prices fell 27% on an annualized basis through March 31 of this year. In contrast with the TED spread and Libor rates, options-adjusted CMBS spreads over Treasuries remain near levels seen at the peak of the crisis. Falling prices and an inability to roll over CMBS may require further unorthodox steps from the central bank.
posted by Peter Greene
Some salient points:
· U.S. monetary policy will remain on hold for an extended period.
· The Federal Reserve is not monetizing the federal debt.
· The commercial real estate sector is a growing concern.
The Fed will acknowledge improvement in the economy and the probability of stronger than expected growth in the third quarter, but carefully outline downside risks to both growth and inflation. The committee will maintain its commitment to keeping rates low for an extended period. Policy normalization will be difficult. Improving financial conditions and the pickup in real activity have stimulated demand for an early exit from financial markets. The timing, pace and sequence of policy normalization will have important implications for asset markets. The Fed is aware of the policy missteps it made in 1937, and those of the Japanese central bank in 1997 and 2000 that prematurely terminated economic recoveries.
Deflationary risk, potential problems in the commercial real estate sector and more stress in financial markets should cause policy normalization to proceed in a drawn-out fashion. Moreover, the risk that domestic political tensions will constrain future fiscal stimulus should ensure the central bank moves carefully before articulating an explicit exit strategy.
The FOMC acknowledged in its June minutes that it did not extend its asset purchase program out of fear this would be interpreted as a monetization of U.S. federal debt. The normalization of financial markets has given the central bank leeway to let some of its temporary liquidity programs expire. The Fed is likely to address its $300 billion asset purchase program which is about to expire. The Fed has purchased $243 billion in medium- to long-term Treasuries since the March 18 FOMC meeting. Although the program will end, one would expect the statement will provide enough space for the central bank to re-enter markets again should the financial sector experience more turmoil in the near term.
Some Risks - End the TARP but extend the TALF?
The FOMC will note the improvement but also emphasize risks to the spending outlook. While the improvement in productivity is desirable, firms obtained it by squeezing more out of a reduced workforce. Employee hours fell 7.6% in the second quarter. Outside of a modest increase in hours worked inside the July payroll data, the prospects for wage stabilization remain difficult.
Moreover, the increased prospects for growth in the current quarter come with a risk. The policy success of the auto subsidies is likely to shift consumption that would have occurred over the next several months to the current quarter. In addition, the inventory restocking contains its own risk. It is not yet certain that demand, due to the decline in wage income, is sufficient to absorb the increase in production observed in the current quarter.
Other risks include the shutdown of the $700 billion CMBS market since September 2008. In June, the central bank expanded its Term Asset-Backed Securities Loan Facility to include up to $100 billion in commercial mortgage-backed assets. While the asset purchase program will be allowed to expire, it is increasingly likely that the TALF program will have to be extended to address issues in the commercial mortgage-backed securities market.
Thus, the Fed will be reluctant to rule out additional liquidity measures to address possible turmoil in commercial real estate or additional stress in the banking industry. Commercial real estate prices fell 27% on an annualized basis through March 31 of this year. In contrast with the TED spread and Libor rates, options-adjusted CMBS spreads over Treasuries remain near levels seen at the peak of the crisis. Falling prices and an inability to roll over CMBS may require further unorthodox steps from the central bank.
posted by Peter Greene
Wednesday, August 5, 2009
Recent firm morning note
Almost like a broken record for the last two weeks we have proposed the idea that the market would keep working higher because investor sentiment was more cautious or doubting than embracing suggestive that many investors still had not deployed a lot of capital.
Over the last several trading sessions this thesis has played out. However what is even more encouraging now is this rally has started to broaden out more. Originally it was predominantly tech and commodity based names leading the charge however in the last few sessions the banks and the cyclicals are starting to catch a bid again as are the transports.
Internals on yesterday's advance once again had a bullish tone with up to down volume on the NASDAQ scoring a ratio of 5.2 to 1, with nearly 2.5 stocks advancing for every one that declined. Over on the NYSE the internals were even stronger with up volume besting down volume by a ratio of 8.69 to 1 with 4.75 stocks advancing to every one that declined.
As the rally has accelerated more aggressively of late the total equity/index put call ratio has slipped suggesting more calls are being purchased than puts. This is not an overly bullish backdrop, however it is a shorter-term indicator as opposed to a more secular indicator. Additionally AAII Bull Sentiment also rose recently to a reading of 47 % last week. While neither of these numbers are alarming just yet as they continue to rise so does the probability of a pullback.
However the overwhelmingly positive market breadth figures and bullish sideline liquidity trump sentiment for the time being and pullbacks remain buying opportunities until sideline cash dries up.
Today we will get another look at AAII Bull Sentiment figures and are expecting a bit of a spike. With the summer vacation schedule picking up steam the market could pause here a bit as for Portfolio managers, the largest net buyers of equities take a temporary siesta.
posted by Peter Greene
Over the last several trading sessions this thesis has played out. However what is even more encouraging now is this rally has started to broaden out more. Originally it was predominantly tech and commodity based names leading the charge however in the last few sessions the banks and the cyclicals are starting to catch a bid again as are the transports.
Internals on yesterday's advance once again had a bullish tone with up to down volume on the NASDAQ scoring a ratio of 5.2 to 1, with nearly 2.5 stocks advancing for every one that declined. Over on the NYSE the internals were even stronger with up volume besting down volume by a ratio of 8.69 to 1 with 4.75 stocks advancing to every one that declined.
As the rally has accelerated more aggressively of late the total equity/index put call ratio has slipped suggesting more calls are being purchased than puts. This is not an overly bullish backdrop, however it is a shorter-term indicator as opposed to a more secular indicator. Additionally AAII Bull Sentiment also rose recently to a reading of 47 % last week. While neither of these numbers are alarming just yet as they continue to rise so does the probability of a pullback.
However the overwhelmingly positive market breadth figures and bullish sideline liquidity trump sentiment for the time being and pullbacks remain buying opportunities until sideline cash dries up.
Today we will get another look at AAII Bull Sentiment figures and are expecting a bit of a spike. With the summer vacation schedule picking up steam the market could pause here a bit as for Portfolio managers, the largest net buyers of equities take a temporary siesta.
posted by Peter Greene
Thursday, July 30, 2009
ALL THE KINGS MEN
Great Article in The Washington Post
Obama's 32 Czars
By Eric CantorThursday, July 30, 2009
"The biggest problems that we're facing right now have to do with George Bush trying to bring more and more power into the executive branch and not go through Congress at all. And that's what I intend to reverse when I'm president of the United States." -- Sen. Barack Obama, March 31, 2008
To say President Obama failed to follow through on this promise is an understatement. By appointing a virtual army of "czars" -- each wholly unaccountable to Congress yet tasked with spearheading major policy efforts for the White House -- in his first six months, the president has embarked on an end-run around the legislative branch of historic proportions.
To be sure, the appointment of a few special officers to play a constructive role in a given administration is nothing new. What is new is the elevation of so many czars, with so much authority on endless policy fronts. Vesting such broad authority in the hands of people not subjected to Senate confirmation and congressional oversight poses a grave threat to our system of checks and balances.
At last count, there were at least 32 active czars that we knew of, meaning the current administration has more czars than Imperial Russia.
The administration has a Mideast peace czar (not to be confused with the Mideast policy czar), a Sudan czar and a Guantanamo closure czar. Then there's the green jobs czar, sometimes in conflict with the energy czar, who talks to the technology czar, who sometimes crosses paths with the urban affairs czar. We mustn't forget the Great Lakes czar or the WMD czar, who no doubt works hand in hand with the terrorism czar. The stimulus accountability czar is going through a rough time right now, as is the TARP czar -- but thankfully they have to answer to the government performance czar. And seemingly everyone falls under the auspices of the information czar. In a government full of duplicative bureaucracies, adding more layers with overlapping responsibilities hardly seems the way to go.
Even Democratic Sen. Robert Byrd (W.Va.) was fearful enough to pen a letter to President Obama in February highlighting his concerns with the administration's tactics. The Constitution mandates that the Senate confirm Cabinet-level department heads and other appointees in positions of authority -- known as "principal officers." This gives Congress -- elected by the people -- the power to compel executive decision-makers to testify and be held accountable by someone other than the president. It also ensures that key appointees cannot claim executive privilege when subpoenaed to come before Congress.
As we move forward, proper oversight of the growing lineup of czars is essential. From orchestrating bailouts to making industrial policies to moving toward government-run national health care, Washington seems intent on sailing into uncharted waters -- and the czars are often steering the ship.
The car czar, who stepped down this month amid controversy over his former firm's role in a scandal, had been managing government's recent takeover of a huge swath of the domestic auto industry and making decisions for auto companies. The pay czar -- also known in White House circles as the "special master for compensation" -- has the power to reject or accept any current and future compensation for the top 100 earners at companies that received, in some cases under pressure, money from the Troubled Assets Relief Program. In the coming months he will decide the fate of $235 million in pending retention bonuses at AIG. And the health czar, meanwhile, has become as influential as perhaps anyone in the Obama administration, spearheading White House negotiations with doctors, hospitals and other health providers. She will play a key role in determining which medicines, treatments and cures are deemed necessary for the public.
The point here is not that President Obama's reliance on czars is illegal (although it does raise significant, unresolved constitutional issues). Nor is it that these czars are bad people. It's that we have not been able to vet them, and that we have no idea what they're doing. It's that candidate Obama made a pledge to keep Congress in the light. Yet less than six months after his inauguration, the president appears intent to keep Congress more and more in the dark. Dozens of czars at a time.
The writer, a Republican from Virginia, is the House minority whip
posted by Peter Greene
Obama's 32 Czars
By Eric CantorThursday, July 30, 2009
"The biggest problems that we're facing right now have to do with George Bush trying to bring more and more power into the executive branch and not go through Congress at all. And that's what I intend to reverse when I'm president of the United States." -- Sen. Barack Obama, March 31, 2008
To say President Obama failed to follow through on this promise is an understatement. By appointing a virtual army of "czars" -- each wholly unaccountable to Congress yet tasked with spearheading major policy efforts for the White House -- in his first six months, the president has embarked on an end-run around the legislative branch of historic proportions.
To be sure, the appointment of a few special officers to play a constructive role in a given administration is nothing new. What is new is the elevation of so many czars, with so much authority on endless policy fronts. Vesting such broad authority in the hands of people not subjected to Senate confirmation and congressional oversight poses a grave threat to our system of checks and balances.
At last count, there were at least 32 active czars that we knew of, meaning the current administration has more czars than Imperial Russia.
The administration has a Mideast peace czar (not to be confused with the Mideast policy czar), a Sudan czar and a Guantanamo closure czar. Then there's the green jobs czar, sometimes in conflict with the energy czar, who talks to the technology czar, who sometimes crosses paths with the urban affairs czar. We mustn't forget the Great Lakes czar or the WMD czar, who no doubt works hand in hand with the terrorism czar. The stimulus accountability czar is going through a rough time right now, as is the TARP czar -- but thankfully they have to answer to the government performance czar. And seemingly everyone falls under the auspices of the information czar. In a government full of duplicative bureaucracies, adding more layers with overlapping responsibilities hardly seems the way to go.
Even Democratic Sen. Robert Byrd (W.Va.) was fearful enough to pen a letter to President Obama in February highlighting his concerns with the administration's tactics. The Constitution mandates that the Senate confirm Cabinet-level department heads and other appointees in positions of authority -- known as "principal officers." This gives Congress -- elected by the people -- the power to compel executive decision-makers to testify and be held accountable by someone other than the president. It also ensures that key appointees cannot claim executive privilege when subpoenaed to come before Congress.
As we move forward, proper oversight of the growing lineup of czars is essential. From orchestrating bailouts to making industrial policies to moving toward government-run national health care, Washington seems intent on sailing into uncharted waters -- and the czars are often steering the ship.
The car czar, who stepped down this month amid controversy over his former firm's role in a scandal, had been managing government's recent takeover of a huge swath of the domestic auto industry and making decisions for auto companies. The pay czar -- also known in White House circles as the "special master for compensation" -- has the power to reject or accept any current and future compensation for the top 100 earners at companies that received, in some cases under pressure, money from the Troubled Assets Relief Program. In the coming months he will decide the fate of $235 million in pending retention bonuses at AIG. And the health czar, meanwhile, has become as influential as perhaps anyone in the Obama administration, spearheading White House negotiations with doctors, hospitals and other health providers. She will play a key role in determining which medicines, treatments and cures are deemed necessary for the public.
The point here is not that President Obama's reliance on czars is illegal (although it does raise significant, unresolved constitutional issues). Nor is it that these czars are bad people. It's that we have not been able to vet them, and that we have no idea what they're doing. It's that candidate Obama made a pledge to keep Congress in the light. Yet less than six months after his inauguration, the president appears intent to keep Congress more and more in the dark. Dozens of czars at a time.
The writer, a Republican from Virginia, is the House minority whip
posted by Peter Greene
Tuesday, July 14, 2009
Firm's S&P morning note
The S&P 500 bounced from aggressively from the lower support area we highlighted in yesterday's S&P 500 note. We still believe the summer will be choppy and we could remain range bound for quite a bit of time. It is also possible we could see some semblance of a retest later this summer or as we approach the fall.That said yesterday's bounce had some vigor to it particularly on the NYSE where up volume beat down volume by a ratio of 10:1 and advancers bested decliners by a 4.5:1 margin.The NASDAQ was close to the task on the up to down volume camp with a 6.45 to 1 ratio, however it has less participation than the NYSE with only 2.7 stocks advancing for every one that declined. While these internals may suggest we can push a bit higher up into the range, we think given seasonal summer weakness the tape won't reward those with multi-month holding periods like it did from March to June, but will favor active trading.As long as the S&P 500 stays above Friday's lows the market still gets the benefit of the doubt.
Best.
posted by Peter Greene
Best.
posted by Peter Greene
Monday, July 13, 2009
S&P comments from the firm
As in the attached research note on the S&P 500, the index is sitting at the lower end of its support zone. Given the index is already qualified as oversold (ie. down 8% from its’ peak) it is even more important that it hold. If the rally off the bottom is still intact then an 8 % sell-off to support should be met with enthusiasm by buyers. If buying doesn’t materialize down here then that tells you a lot about the psychology of traders and then we would likely see the market continue to drift lower. It is really important for the bull argument that the market make some sort of stand here.
Given the summer months and many pm’s and traders hitting peak vacation time (July to August) we would expect trading volumes to taper off a bit making liquidity a bit of an issue.
posted by Peter Greene
Given the summer months and many pm’s and traders hitting peak vacation time (July to August) we would expect trading volumes to taper off a bit making liquidity a bit of an issue.
posted by Peter Greene
Wednesday, July 8, 2009
Consumer credit at 3PM
So the next economic number that may put a wrench in the market is the Consumer Credit number released at 3pm Wednesday. Survey numbers say -8.5 Billion with prior month -15.7 Billion...Will this move us for the close, short answer is YES---market pros will use "any" excuse to trade the news....
Also big news today is Alcoa earnings-always big but for some reason everyone is jumping all over their earnings as a was to tell ALL future earnings for the quarter. Kind of dumb but true.
Below is a quick note from my firm on Consumer Credit:
Total consumer credit balances are shrinking at an aggressive pace. According to the Federal
Reserve, a majority of banks are still tightening their lending standards for consumer loans
and credit cards. Meanwhile, consumer spending is slipping again after an unexpected increase
earlier in the year.
Revolving credit balances are falling at a steadily increasing rate. Consumer spending has slipped in
recent months, although it is still holding up much better than it was in late 2008. Consumers also have
more cash to work with thanks to several months of greater savings, increased transfer payments from
the government, and payroll tax credits. These factors have lessened the need for credit cards, while
consumers also try to dig themselves out of debt.
Non-revolving credit balances are also shrinking, but the recent rate of decline has been slower and
steadier than it has for revolving credit. New vehicle sales remain extremely weak but seem to have
found a floor at an annualized sales rate of about 9 million units. Demand for new non-revolving lines of
credit is very weak, while current borrowers are steadily paying off their existing balances. Consumer
delinquency rates for auto loans remain much lower than they are for other types of credit.
Total consumer credit balances are expected to gradually decline over the months ahead. In particular,
revolving credit balances will fall steadily as consumers hold more cash and look to reduce their debt.
Consumers are not expected to significantly increase spending or their demand for credit until the labor
market begins to firm up in 2010 or beyond. On the upside, reducing credit utilization during this severe
recession will help consumers avoid a longer-term de
.bmp)
cline in credit quality.posted by Peter Greene
S&P review from firm
As seen in the attached research report the S&P 500 Index recently slammed into a convergence of resistance and a downtrend line. After needing a near 44 % rally from the lows just to trade up to the aforementioned resistance area it was hard to imagine the S&P 500 would just blast up though that level. Add to the mix that we recently entered a period that is historically weak for stocks and it makes sense why prices have corrected of late. As we have said a few times recently in other S&P 500 updates the index has most likely set its high point for a while and was likely at best to trade range bound or realistically lower for a while. We also suggested and continue to suggest that stops on remaining long holdings be adjusted/tightened and long exposure be reduced for the time being.
Since the dawn of the markets most if not all bottoming processes have had some sort of testing process after
setting an initial low. In 2002 for instance (our most recent low prior to March of 2008) the S&P 500 tested the
lows on 3 separate occasions (red arrows) before the final lows were ultimately set. So to expect this time things
would be different doesn’t make much sense.
There will be short-term trading opportunities that present themselves during the remainder of the
summer and into the fall however we don’t see any directional bull trend re-establishing itself before
some sort of retest sequence. The only thing that would change this outlook is a high volume move on
strong internals back above the recent highs.
posted by Peter Greene
Since the dawn of the markets most if not all bottoming processes have had some sort of testing process after
setting an initial low. In 2002 for instance (our most recent low prior to March of 2008) the S&P 500 tested the
lows on 3 separate occasions (red arrows) before the final lows were ultimately set. So to expect this time things
would be different doesn’t make much sense.
There will be short-term trading opportunities that present themselves during the remainder of the
summer and into the fall however we don’t see any directional bull trend re-establishing itself before
some sort of retest sequence. The only thing that would change this outlook is a high volume move on
strong internals back above the recent highs.
posted by Peter Greene
Monday, July 6, 2009
Firm's S&P levels
As seen in the attached research note the S&P 500 has been capped by resistance at the 950 level. As we had said in earlier S&P 500 notes we expect this level to mark a high water mark for a good period of time as we enter the seasonally weak period of the mid to latter summer. How deep of a correction we get will depend on the ability of the S&P 500 to hold support near the 875 level.
The best case scenario is we stay locked in a trading range between 950 and 875, while the more alarming scenario is we break back below the 875 region and we have a deeper sell-off as part of a retest of the lows.
posted by Peter Greene
The best case scenario is we stay locked in a trading range between 950 and 875, while the more alarming scenario is we break back below the 875 region and we have a deeper sell-off as part of a retest of the lows.
posted by Peter Greene
Tuesday, June 30, 2009
ISM Chig. and 1 day S&P returns
This chart represents 1d S&P returns on release day for the ISM-Chicago figure. Returns are relatively normal during longer periods of expansion/contraction. But during periods of uncertainty, such as now, returns are volatile on the day of release and tougher to predict. Its sensitivity to Midwest auto manufacturing cycles is likely the current issue to decipher.
posted by Peter Greene
Monday, June 29, 2009
Firm's Oil comments
Crude Oil Weekly Report
Oil was a flat line as the market got pulled in different directions on a confusing mix of market fundamentals. Once again the Chinese are calling for a global currency so they can loosen their dependence on the dollar and talk of more big purchases of oil yet at the same time we have Bank of China Governor Zhou Xiaochuan playing down dollar worries by saying that China’s foreign exchange reserve policy is stable. That kind of talk may give the dollar a boost but the other key question for the oil market is whether or not the Chinese are going to continue their recent strong buying in oil.
Well the answer to that question is probably yes. Over the weekend it was reported that China plans to increase strategic crude oil reserves by 60 percent to 270 million barrels during the next five years by the Nikkei English News citing an unidentified official from China’s National Energy Administration. According to the report China will spend 30 billion yuan ($4.39 billion) for stockpiling facilities with a capacity to hold 169 million barrels. China Petrochemical Corp., China National Petroleum Corp. and other companies will construct and use the storage sites. If China continues to strengthen its reserve then oil will be bought on pullbacks. This should help provide some long term support.
Technicals: Because this is our initial piece on Oil, we decided to show a broader view of the USO (United States Oil Fund, LP) – our proxy ETF for the general crude contract. For the most part, the chart above represents a huge rounding type bottom. Notice the heavy volume at the trough – this is showing the type of volatile activity where money moves from weak hands to strong hands. This is most likely representative of oil bulls finally giving up after buying at much higher prices and new investors popping in feeling that oil was undervalued. Over short term, USO may linger but should eventually retest the $40 region and eclipse that to target the $55/$60 region over the more intermediate term.
posted by Peter Greene
Oil was a flat line as the market got pulled in different directions on a confusing mix of market fundamentals. Once again the Chinese are calling for a global currency so they can loosen their dependence on the dollar and talk of more big purchases of oil yet at the same time we have Bank of China Governor Zhou Xiaochuan playing down dollar worries by saying that China’s foreign exchange reserve policy is stable. That kind of talk may give the dollar a boost but the other key question for the oil market is whether or not the Chinese are going to continue their recent strong buying in oil.
Well the answer to that question is probably yes. Over the weekend it was reported that China plans to increase strategic crude oil reserves by 60 percent to 270 million barrels during the next five years by the Nikkei English News citing an unidentified official from China’s National Energy Administration. According to the report China will spend 30 billion yuan ($4.39 billion) for stockpiling facilities with a capacity to hold 169 million barrels. China Petrochemical Corp., China National Petroleum Corp. and other companies will construct and use the storage sites. If China continues to strengthen its reserve then oil will be bought on pullbacks. This should help provide some long term support.
Technicals: Because this is our initial piece on Oil, we decided to show a broader view of the USO (United States Oil Fund, LP) – our proxy ETF for the general crude contract. For the most part, the chart above represents a huge rounding type bottom. Notice the heavy volume at the trough – this is showing the type of volatile activity where money moves from weak hands to strong hands. This is most likely representative of oil bulls finally giving up after buying at much higher prices and new investors popping in feeling that oil was undervalued. Over short term, USO may linger but should eventually retest the $40 region and eclipse that to target the $55/$60 region over the more intermediate term.
posted by Peter Greene
Madoff to Jail
Bernie had no friends, no character witnesses, nobody no family . With that the judge gave him the maximum 150 years....
Still can't believe this guy is still lying and not helping anything in the investigation...This guy is the lowest piece of scum ever.
posted by Peter Greene
Still can't believe this guy is still lying and not helping anything in the investigation...This guy is the lowest piece of scum ever.
posted by Peter Greene
Firm's S&P note
This week’s trading on the S&P 500 should tell us a lot about the market. The questions likely answered this week are the following: Is this just a pause that refreshes and prices work higher or are we entering into a corrective phase commensurate with the typical seasonal summer weakness ?
As seen in the attached note the market is equally conflicted with this idea as well as the S&P 500 has been fairly directionless since early May oscillating a few percentage points above and below the 920 level. To gain some direction (up or down) the index needs to either break above 923 or below 875 (key intermediate term support).
Sentiment remains the markets friend as most sentiment measures suggest that investors have not endorsed the current rally.
posted by Peter Greene
As seen in the attached note the market is equally conflicted with this idea as well as the S&P 500 has been fairly directionless since early May oscillating a few percentage points above and below the 920 level. To gain some direction (up or down) the index needs to either break above 923 or below 875 (key intermediate term support).
Sentiment remains the markets friend as most sentiment measures suggest that investors have not endorsed the current rally.
posted by Peter Greene
Firm's Gold Comments
June 29, 2009
Gold Market Weekly Report
Last week, spot gold closed at $939.60 per ounce up $5.55 or 0.59 percent. Gold equities, as measured by the XAU Gold & Silver Index (11) rose by 1.52 percent for the week. The U.S. Trade-Weighted Dollar Index (12) fell by 0.54 percent.
Salient Research Points:
• Gold’s investment appeal resurfaced as the dollar came under renewed pressure after China’s central bank reiterated a call to lessen the dollar's role as the world's currency. The European Central Bank’s liquidity injection of 442 billion euros pushed money market rates and Libor to record lows. This marked the first week in four that gold prices recorded a gain.
• Contrary to market expectations, many analysts believe the Federal Reserve is unlikely to begin rate normalization in 2009 because of a negative output gap and tight levels of credit. RGE analysts said that in order to tame rising Treasury yields, the Federal Open Market Committee may later expand quantitative easing.
The chart at right shows what looks to be an ascending triangle forming in the GLD (streetTRACKS Gold Trust Shares). It has successfully held the lower line at the 92.00 region and, with continued dollar weakness, will likely retest the top trendline near 96-97 area. A clear break there will obviously send the metal to new highs likely snapping the previous peaks at 98.99 and 100.44 with ease. Using a pattern price projection, the 112-115 region should be attainable.
posted by Peter Greene
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