Tuesday, August 10, 2010

Emini Futures Trading / Freddie Fannie and the Fed Up


Not that I am looking for a gift, but I am looking for what may be credited to your account.
Phillipians 4:17

Forgive or Foreclose?
As a Reuters blog ("An August Surprise from Obama?" ) wrote, a mortgage-forgiveness "Hail Mary" pass could put hundreds of dollars a month into pockets of some of the 15 million underwater homeowners with negative equity totaling $800 billion. That would come 100 days before November's election in which Democrats face even bigger than usual midterm losses with President Obama's approval ratings languishing at lows. All without additional "stimulus" funds that would expand the federal deficit.

Sounds like a great idea, win-win for everybody. Except for the unfortunate principle of economics known as TANSTAAFL—There Ain't No Such Thing as a Free Lunch. And the Treasury denied Thursday that any such changes are afoot. (more)

Since the 2008 financial crisis the Chinese housing market has skyrocketed 60%. There are now 65 million vacant housing units. The question is no longer whether there's a Chinese housing bubble, but when will it pop. There's one thing that bubbles always do: pop!

The price of land in and around Beijing has gone up by a factor of nine in the last few years. Delusion isn't just for Americans anymore. The Chinese authorities have printed and instructed the banks to make loans for shopping malls, apartment buildings, office towers, and condo towers. Average citizens have bought as many as five condos. Everyone knows that real estate only goes up. Their $585 billion stimulus package was used to build entire cities that sit unoccupied. The 2.2-million-square-foot South China Mall, with room for 2,100 stores, sits completely vacant. The Chinese have taken the concept of "bridges to nowhere" to a new level.

The mother of all bubbles will pop. Only the timing is in doubt. Based on history, the Chinese real estate bubble is in search of a pin. (more)

Joe Weisenthal | Aug. 10, 2010, 4:00 PM

Despite the beginning of quantitative easing 2.0, stocks still fell markedly.
But first, the scoreboard:
Dow: -57
S&P 500: -6.6
And now, the top stories:
  • The tone was set overnight when China announced that it's imports had grown far less than had been expected. The Shanghai Composite plunged by more than 3%, a move that brought the rest of the world down with it. European markets and US futures both headed lower. The yen and the dollar both perked up.
  • The early hours were very quiet, with almost all of the talk centered around the release of FOMC minutes at 2:15. Stocks remained solidly in the red throughout the day. The one econ number of the morning was productivity, which unexpectedly dived, possibly portending bad news for stocks.
  • Finally, at 2:15 the Fed made its move. Quantitative easing will begin modestly, via a decision not to let the Fed balance sheet naturally shrink. The Fed balance sheet will be fixed at just over $2 trillion.
  • Some other top stories of the day? The House (as expected) approved a $26 billion bailout of the states. Russian wildfires continue to burn, choking Moscow with smog.

Weekly Trading Zones / Daily Results
S&P 500 Emini Futures / ES

DOW Emini Futures / YM

Pray Hard & Trade Safe!

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