Friday, December 10, 2010
Tentative Outright Treasury Operation Schedule
The FED posted the tentative schedule for upcoming POMO (Permanent Open Market Operation) schedule which, on the low side, the FED would purchase $88.5 billion and on the high side $119.5 billion by January 11th 2011. Taking a midrange view we can count on approx $104 billion to be printed.
Thursday, December 9, 2010
FED POMO Purchase Update
The Fed performed another POMO (Permanent Open Market Operation) purchase of $8.309 billion dollars. This brings the cumulative total since August 17th 2010 to $178.985 billion dollars and the cumulative total since November 3rd 2010 (when the FED announced printing $600 or really $900 billion by June 2011) to $114.525 billion dollars.
| Operation Date: | 12/09/2010 |
| Operation Type: | Outright Coupon Purchase |
| Release Time: | 10:15 AM |
| Close Time: | 11:00 AM |
| Settlement Date: | 12/10/2010 |
| Maturity/Call Date Range: | 06/30/2016 - 11/30/2017 |
| Total Par Amt Accepted (mlns) : | $8,309 |
| Total Par Amt Submitted (mlns) : | $33,126 |
Weekly Initial Unemployment Claims
Last weeks Initial Claims were released today showing better than expected numbers. Initial Unemployment Claims are the number of people that applied for unemployment insurance for the first time last week. The forecast called for a number of 426k and the actual headline number came in at 421k beating last weeks revised number by 438K.
Revisions in delta have stayed pretty steady with a variance of about 2k lately. So it is a safe bet to take the headline number and add 2k to it to come up with a number closer to what Intial Claims really are. If we do this then the number is around 423k which is still an improvement, but we are still in the Christmas spending season with temporary jobs which distort the picture.
Wednesday, December 8, 2010
Weekly Fund Flows
This weeks fund flows showed a continual outflow of money from Domestic stocks. This week $1.801 billion dollars flowed out of domestic stocks with $1.848 billion dollars flowing into foreign stocks. The municipal bond sell off continued, but at a lower intensity as $61 million left muni bonds this past week.
FED POMO Purchase Update
The FED executed another POMO (Permanent Open Market Operation) purchase in the amount of $1.630 billion dollars. This brings the total since 17 August 2010 to $170.676 billion dollars and the total since 3 Nov 2010 (the time the FED announced printing 600 billion more) to $106.216 billion dollars.
| Operation Date: | 12/08/2010 |
| Operation Type: | Outright TIPS Purchase |
| Release Time: | 10:15 AM |
| Close Time: | 11:00 AM |
| Settlement Date: | 12/09/2010 |
| Maturity/Call Date Range: | 07/15/2012 - 02/15/2040 |
| Total Par Amt Accepted (mlns) : | $1,630 |
| Total Par Amt Submitted (mlns) : | $6,149 |
Tuesday, December 7, 2010
FED POMO Update
The FED performed another POMO (Permanent Open Market Operation) purchase today in the amount of $6.810 billion dollars. This brings the cumulative amount since August 17th 2010 to $169.046 billion dollars and since November 3rd announcement of that he will print $600 billion dollars by Jun 2011 the cumulative total is $104.586 billion dollars.
| Operation Date: | 12/07/2010 |
| Operation Type: | Outright Coupon Purchase |
| Release Time: | 10:15 AM |
| Close Time: | 11:00 AM |
| Settlement Date: | 12/08/2010 |
| Maturity/Call Date Range: | 12/31/2014 - 05/31/2016 |
| Total Par Amt Accepted (mlns) : | $6,810 |
| Total Par Amt Submitted (mlns) : | $16,424 |
Ben Bernanke's 60 minutes "We're not printing money"
Here is the 60 minutes interview with the Federal Reserve head Ben Bernanke. He makes the statement "We're not printing money" which I find pretty funny.
If were not printing money can somebody tell me what all these accellerated POMO purchases are (they are printing money). He says money is not being printed cause money supply is abating, but Money supply is abating due to defaults on mortgages, credit and the paying down of debt as well. So as he prints billions, billions are coming out of the money supply as well (not this simplistic, but you get the picture).
This looks like money printing to me. He makes statements that small businesses are not borrowing cause they are in trouble, but what I have heard through several interviews, is that only the stable small businesses are not borrowing as they know debt will crush them. Small businesses that are in trouble are the ones trying to borrow money and they don't qualify (as well they shouldn't). Ben says inflation is not happening, that it is actually deflation. Well I would say it is stagflation, food, energy and clothes (must haves) are going up, it is only housing (big surprise there) and the stuff we don't need to sustain life (i.e. the crap) is what is deflating.
He says that we most likely won't have a double dip, yet Chris Whalen points out that since 2007 we have had approx 4.3 million foreclosures and now have approx 11 million in the pipeline. It was the housing market and the impact on the credit market due to this (there are other factors as well and they are still in play).
2011 Tax Cuts
The Obama administration and senate are close to a deal on the Tax extensions, which will cost Americans approx $900 billion over 2 years and financed by debt. Included in the deal on the table are the following:
- Extension of tax rates for all for 2 years.
- Extension of unemployment insurance for 14 months (A source says this does not include the current 99ers that already expired).
- 2% reduction of the 6.2% social security tax on all wage earners for 1 year.
- $1,000 child tax credit extended for two years and an expansion of the earned income tax credit
- Estate Tax compromise, which includes an exemption under $5 million and 35% tax over that for 2 years.
- Extend the college tuition tax credit for some families
- 100% write-off of outdated equipment
- AMT adjustment for 21 million families (doesn't say who falls into that bracket)
- Top rate of 15 percent on capital gains and dividends would remain in place for two years
Source: Huffingtonpost, NYTimes and CalculatedRisk
Mondays FED POMO Purchase
Monday December 6th 2010 the FED performed another POMO (Permanent Open Market Operation) purchase in the amount of $2.044 billion dollars. This brings the grand total since August 17th 2010 to $162.236 billion dollars and $97.776 since November 3rd when the FED decided to expand purchases to $600 billion by June 2011 ($502.224 to go).
| Operation Date: | 12/06/2010 |
| Operation Type: | Outright Coupon Purchase |
| Release Time: | 10:15 AM |
| Close Time: | 11:00 AM |
| Settlement Date: | 12/07/2010 |
| Maturity/Call Date Range: | 08/15/2028 - 11/15/2040 |
| Total Par Amt Accepted (mlns) : | $2,044 |
| Total Par Amt Submitted (mlns) : | $10,247 |
Sunday, December 5, 2010
David Stockman on Jobs
Finally a guy who aligns with what I have been saying for a while now, bring back manufacturing and agriculture to America, Housing cannot be the growth machine for America any more. The housing gamble is over. About 3 minutes into this clip is where David Stockman starts.
Weekly King World News Interviews
This weeks KWN interviews include guests like Nigel Farrage, David Kotok, John Hathaway, Jim Rickards and Art Cashin. Nigel Farage gives a great speech to the EU that you just cannot miss.
Nigel Farage - Covers the speech Nigel gave at the European Parliment. Nigel discusses the Euro and its possible collapse due to Greece and Ireland bailouts and the upcoming possibility of Portugal and Spain requiring a bailout. Nigel points out that most of the EU is stuck in inflation, but Ireland and Greece is stuck in deflation which will lead to a Grimm future for those countries.
David Kotok - Discusses municipal security issues and the states and cities challenges in the municipal bond market. David talks about cities in the U.S. that are facing bankruptcies and are looking for the courts to make decisions on the debt cause they don't want to take fiscal discipline to remedy the situation.
John Hathaway - Discusses why gold started heading higher Friday is because there doesn't seem to be any end to the printing and bailouts in the U.S. and Europe. Also, Europe is now going down a path to larger problems in the banking systems. John believes we are now past the point of no return in this crisis and we aren't getting out of paper money devaluating.
Jim Rickards - Discusses China and the FED putting their cards on the table about Monetary policy and that China is announcing that they will acquire Gold to hedge against the FED's printing to ensure the world they will not over-rely on the U.S. paper. This is a part I of a 2 part series.
Art Cashin - Discusses how energy and food prices may inflate higher next year which will impact the economic recovery. He also discusses how we came very close to martial law in the past financial crisis and that we are headed for another banking crises going forward.
Weekly M1 and M2 Money Supply Update
This weeks M1/M2 money supply showed M1 had a slight increase of 1.02% year over year and M2 an increase of 0.12% after M1 had contracted -4.38% year over year and M2 -0.04% per year.
Banks that Received Emergency Loans From the Fed
During the financial meltdown the FED issues more than 21,000 loans and deals to the banks to bail them out of their financial mess. Some banks said they never needed the loans as they were on solid financial ground. As you can see from this chart, they clearly did need the bailout, with Citigroup leading the pack in the number of loans/deals and the amount of money. Our friends at Goldman Sachs, whom has given record bonuses during this mess, took 138 loans/deals for $782,328 billion dollars. Goldman gave out $5 billion in bonuses this year for people that did just 3 months worth of work (article here). I guess the joke is on us the American Tax Payers, cause they are laughing all the way to the bank with our money.
2009 bonuses were much higher between $19 and $20 billion ( ref article). This extraction of money from the Middle class in America to the rich seems to have no end or moral governance.
Weekly Unofficial Problem Bank List
CalculatedRisk has released the latest "Unofficial Problem Bank List" which revealed the total number of institutions on the problem bank list is at 920. There were 2 institutions added and one removed due to duplication. The two institutions that was added were the First Community Bank of Glasgow, MT and Monadnock Community Bank, Peterborough, NH. The List includes 920 institutions with a total asset value of $410.3 billion dollars. [ Read More... ]
Weekly FDIC Bank Failures
This week we had no bank failures, which is quite refreshing. This keeps the number of bank failures for the year to 150, which has surpassed 2009's by 10 institutions so far. We'll see what happens in the last few weeks of this year.
Monthly Non-Farm Payrolls
Novembers Non-Farm Payrolls number was worse than expected even though a positive number. Non-Farm Payrolls are the change in the number of employed people during the previous month, excluding the farming industry. The forecasted number called for 143k, but the actual headline number came in at 39k. The previous months (October) number was 179k, so this months number was a bitter disappointment in the wake of the Christmas hiring season and the hype of the main media's "all is well in jobs" message.
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