August 2011

Short Sellers Banned in France, Italy, Ireland, Spain

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Who rules the markets? Not short sellers says France, Spain, Italy and Belgium. They just banned short sales wreaking havoc on their markets, for some banks. Echos of 2008 now abound. In particular, short sellers are focused in on Société Générale, which dropped 20%, betting it might implode.

France, Spain, Italy and Belgium will impose bans on short-selling from today to stabilize markets after European banks including Societe Generale SA hit their lowest level since the credit crisis.

While short-selling can be a valid trading strategy, when used in combination with spreading false market rumors this is clearly abusive. -- European Securities and Markets Authority

Perhaps the short selling ban impending move had much more to do with today's stock market pop up than erroneous claims that a little tick down in initial unemployment claims caused a 423 point Dow increase.

Zerohedge, cynically notes the ban on some banks can be easily circumvents through options puts and calls.

August 26 just went supernova, as this is the day the short selling ban expires, the BEA reports the second, sub 1% GDP revision, and Bernanke presents his 2011 Jackson Hole keynote speech.

Trade Deficit for June 2011 - $53.1 Billion

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The June 2011 U.S. trade deficit increased $2.3 billion to -$53.1 billion. This is a 4.4% monthly increase in the trade deficit. Both imports and exports decreased, showing a slowing of global trade. The trade deficit wasn't this big since October 2008. Exports decreased -$4.1 billion, or -2.34% from last month while imports decreased -$1.9 billion, or 0.83%.

Job JOLTS - Job Openings for June 2011

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JOLTS stands for Job Openings and Labor Turnover Survey. The June 2011 statistics show there were 4.53 official unemployed people hunting for a job to every position available. There were only 3,109,000 job openings for June 2011, almost the same, +2.47%, from the previous month of 3,034,000. The change is flat from last month, an absolutely horrific jobs market.

The IMF evaluate the Chinese government's Five Year Plan and property bubble

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In its latest Article IV country report on China, dated June 27 2011, the IMF reported on the potential for a property bubble, on the state of China’s banks and on the policy measures underpinning the 12th Five Year Plan. It also looked at the international implications stemming from China’s efforts to rebalance its economy by de-emphasising exports and raising domestic consumption. (Another strand to this “rebalancing” is a commitment to supporting the relocation of industries to the interior instead of having them clustered at the seaboard metropolises.)

Rebalancing, in the sense of moving from being export driven to having a much higher domestic consumption component, is something that it is far harder to say than it is to do. The Chinese authorities can, of course, decree anything they want, but that doesn’t always mean that their decrees will play out in the way that they expect.

Cheese Whiz Wisconsin - Do Over Comes Up Short

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cheese whiz
Wisconsin Just Showed Us. You can call a do over on your reactionary votes from 2010. Hate your representative? Completely upset with the jobs crisis, now projected to continue ad infinitum?

Have a recall!

In the largest clustered recall ever, six Wisconsin State Senate Republicans faced a recall election and special interest money poured into the State:

Spending on the nine elections had reached $33 million, most of it from outside special interest groups. Interest group spending has far eclipsed the Wisconsin record of about $20 million set in 2008 elections that covered half the state Senate and all Assembly members.

The fight is over Governor Walker's war against organized labor in Wisconsin, along with his Tea party cohorts. His anti-labor legislation prompted a massive recall effort of State Senators who helped Walker push through his anti-labor agenda. The voter turnout is hitting Presidential election levels.

Sweet Nothings from the Federal Reserve FOMC Statement

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So much for Helicopter Ben swooping in and enacting more quantitative easing. The FOMC statement tells us nothing we don't already know. Nor does the Fed have any more magic bullets. The economy sucks, we have a jobs crisis and about the only thing new is a mid-2013 end date for keeping interest rates extraordinarily low:

The Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent. The Committee currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.

There were three dissenters, out of 10, on the decision to guarantee a low federal funds for a two year time period, preferring no defined time window.

What one can gleam from this is the Federal Reserve now believes this economic malaise will continue for two more years. We've known that but now it's official, the Fed is acknowledging the long, protracted economic disaster which is the new normal of America.

The good news is the Fed at least acknowledges our terrible economy, although their previous GDP, unemployment and growth projections were much happy talk.

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