Global Market Comments for October 7, 2008 1) There was a pretty dramatic improvement in credit spreads today after the Fed announced its entry into the commercial paper market. We saw it in LIBOR, TED spreads, and a stronger euro. One month Treasury yields rocketed up to 0.35%. The Fed is now massively flooding every [...]

Global Market Comments for October 6, 2008 1) Treasury Secretary Hank Paulson stood on the roof of the House and screamed fire!, frightening 58 congressmen into changing their votes to pass the bail out bill. Unfortunately, the rest of the country heard him along with Bush, who warned Americans several times last week that we [...]

Global Market Comments for October 3, 2008 1) The September non farm payroll came in at 159,000, worse than even the most dire estimates, and the unemployment rate jumped to 6.1%. Q3 will now almost certainly come in with a negative GDP, the new jobs figure indicating a -0.5% rate, delivering a body blow to [...]

Global Market Comments for October 2, 2008 1) One month T-bills are at 0.50%. The credit markets are still locked. If the house bill fails, the Dow will drop another 1,000 very quickly. Even if the bill passes, traders are starting to realize that it may bail out the banks, but not the economy or [...]

Global Market Comments for October 1, 2008 1) The democrats are going to get the bail out bill through by turning it into a Christmas tree with presents for all of the wavering members. So far on the list: subsidies for mental health, alternative energy, makers of US based wooden arrows, and a tax cut [...]

Global Market Comments for September 30, 2008 1) The Bail Out Bill II will be voted on Thursday. That took the Dow up 485. 2) Three month LIBOR hit 7% overnight, a 500 bp premium to Fed funds. During the 1987 stock market crash the premium only got up to 200 bp. Mortgage backed securities [...]

Global Market Comments for September 26, 2008 1) The government seized WAMU and sold it to JP Morgan without even telling WAMU's senior management because they were all on a plane to meet with a potential buyer. Common, preferred, and debt holders were all wiped out. Morgan immediately wrote off $31 billion of WAMU's debt, [...]

Global Market Comments for September 25, 2008 1) Those who work in the financial industry see the world ending on their screens, then walk outside and see people and cars on the street, shops doing business, the sun shining, and everything appearing normal. It's surreal. Many businesses and banks are months away from shutting down [...]

Global Market Comments for September 24, 2008 1) Congress plays the fiddle while the economy burns. Bernanke is warning that the US may enter a decade of sub par growth, as Japan endured during the nineties. 2) Bill Gross at Pimco, the country's largest bond fund manager, has calculated that the government could make a [...]

Global Market Comments for September 23, 2008 1) Yesterday was a real 'Sell the US' day. Stocks, bonds, and the dollar all fell big, a very rare occurrence. It shows you that foreigners were making large scale withdrawals of capital from the US, not wanting to get caught up in the Fall of the Roman [...]

Global Market Comments for September 22, 2008 1) Prices on 30 year T-bonds have plunged an unprecedented 8 points in two days, taking the yield up from 3.90% to 4.6%. Please see my comment last Thursday that bonds were a screaming short at 124. With all of the bail outs, the national debt has effectively [...]

Global Market Comments for September 19, 2008 1) The Treasury announced a blockbuster rescue package which has triggered a global buying panic, but without the details. It is creating an RTC type entity which will buy distressed assets from the banks. Short selling has been banned in 799 financial stocks. Restrictions have been lifted on [...]

Global Market Comments for September 18, 2008 1) Now is the best time ever to start a hedge fund. It is like going into the insurance business the day after the 100 year flood. All of the model busting worst case scenarios have happened. Dow up 450 on RTC type bail out rumor. 2) The [...]

Global Market Comments for September 17, 2008 Note: If world ends, there will be no comment for September 18. 1) The government nationalized AIG, taking 79.9% of the stock in exchange for an $85 billion bridge loan. The trillion dollar company provides 18% of the life insurance in the US. This is a steal for [...]

Global Market Comments for September 16, 2008 1) The fallout is still reverberating from the Lehman (LEH) bankruptcy. Wells Fargo (WFC) announced it took a $109 million hit on LEH preferred. Their initial investment was certainly a lot more than that. George Soros also took a hit. Banks all over Asia announced $100 million plus [...]