Sunday, January 31, 2010

Interesting week...

Many people are pointing to the resilience of the market this past week (the Dow only lost 100 pts!), but take a look at the broader markets. The S&P is back at levels last seen in September and the Nasdaq has shed 7.5% in about a week and a half.

The technicians have told me that 1038 is another "support" level for the S&P 500 and while I generally regard this to be as reasonable as picking stocks based on the CEO's astrological sign, when EVERY is watching the same data it increases it's validity.

I was really struck by the passionate defense of the GDP number throughout the MSM. Kudos to the CBS morning show for highlighting that ex-inventory adjustments the GDP number was disappointing and that many leading indicators within the GDP report were weakening. I think it really speaks to the power that web-based financial reporting is having on the markets. About 10 years ago when a report hit the wire, I could tell you that it was a weak report but the headline was good so the market will trade up today while CNBC touts the report and down tomorrow when the analysts dissect the report and talk to the salespeople. This was a very predictable pattern. When Friday's GDP number hit the web the market traded up almost 1% but within an hour most blogs were peeling back the layers of the onion and the market started it's slow reversal. The length of time it takes for a report to be dissected on the web has gone from days to minutes given the number of underemployed analysts sitting on their hands in Bernardsville, Greenwich, Short Hills and Clayton :)

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Wow, I don't think you can understate the importance of this statement - Aramco CEO says China has overtaken US as its biggest customer.

"Saudi Arabian Oil Co., the world’s biggest crude producer, is exporting about 1 million barrels a day to China, more than to the U.S., Chief Executive Officer Khalid al-Falih said.

“We are already exporting more to China than to the U.S.,” he said today in an interview in Davos, Switzerland. “We are prudent and careful about where to invest but our eyes are focused on China and we will continue to look for all opportunities.”

The U.S. imported 1.014 million barrels of oil a day from Saudi Arabia in the nine months through September, according to the Energy Information Administration. China and Saudi Arabia aim to boost trade 50 percent to $60 billion by 2015, the state- owned Saudi Press Agency reported this month, citing Chinese Trade Minister Chen Deming."

I'm of the opinion that China is bubbly right now, but this is an interesting data point.

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Well, this might not end well for someone.... The Special Investigator Group for TARP "has opened 86 and has 77 ongoing criminal and civil investigations. These investigations include complex issues concerning suspected TARP fraud, accounting fraud, securities fraud, insider trading, bank fraud, mortgage fraud, mortgage servicer misconduct, fraudulent advance-fee schemes, public corruption, false statements, obstruction of justice, money laundering, and tax-related investigations."

How many politicians are crossing their fingers that the 77 cases do not involve companies or individuals that made contributions to their campaigns in the past. Can you imagine the 2010 election ads? Senator XYZ took money from John Smith who allegedly committed TARP fraud....

Yikes!

It's going to be another interesting jobs report this coming week. The data has to be smoothed for seasonal adjustments (January normally reports huge job losses as the post-holiday layoffs commence) and there will be a monstrous adjustment to reflect all of the "phantom" birth/death jobs that have been added over the past year.

Cheers!

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