NYSE Short Interest Soars By Most Since March 2009 S&P Lows, Highest Shorting Since June 2010

For anyone wondering why the biggest drivers of intraday moves in the stock market are furious short covering squeezes which have led the S&P to have daily fluctuations that make a mockery of the Fed's prerogative for "price stability", here is your answer. On August 15, short interest in the NYSE soared by over 1 billion shares compared to the end of July: this is the highest gross short interest since June 15, 2010, and the biggest increase biweekly increase in NYSE short interest since the S&P's plunge to 666 in March of 2009. If the central planners pull something out of their sleeve, and the short interest plunges to recent averages in the mid 13 billion share level, expect some even more furious short covering sprees to send the S&P much higher on an intraday basis.

 

 

CMBS Sell Off Continues, Super Dupers Hit Widest Spread Since June 2010

Even as the policy instrument that is the US stock market does its robotic levitation thing on days when it is not plunging (i.e. volume is bigger than average), other, more rational indicators continue to paint a less rosy picture in terms of risk inflection points. The latest of these is CMBS, which as we speculated two weeks ago, has continued to be sold off across all vintages and as of today, the super duper AAA tranche has just hit its widest spreads since June of 2010. The charts below show the spread comparison from two weeks ago for AAA and AJs and the subsequent widening to date.

Dallas Fed Latest Economic Contraction Confirmation; Survey Respondents' Gloom Soars

The second economic disappointment of the day comes from the Dallas Fed, which dropped from -2.0 to -11.4 on expectations of -9.0- this was the 4th consecutive negative print month. The report was, in a word, horrible, with just 2 of the 15 constituent indices posting an increase, and the bulk solidly in the red, led by Unfilled and New Orders which dropped 16.8 and 11.2, respectively: not good for economic growth. On the employment side there was nothing good either, with both employment and hours worked declining by -6.7 and -10.1, respectively. The only components rising were materials Inventories (must.restock.always), and CapEx, up 10.7. The most critical Production index declined by 9.7, just barely positive at 1.1, and the second lowest in 2011, with a worse number before that printing all the way back in 2009. Yet the most descriptive are the responses from the survey respondents themselves: two words "peak gloom." And why not: the ISM will print in the mid 40s and the NFP could well be negative. Which of course will send stocks soaring even higher on QE3 being priced in for the 666th time.

Does Gold Need To Decline For Equities To Stabilize & Rally?

Eric De Groot at Eric De Groot - 35 minutes ago

Does a recovery in equities need to coincide with a decline in gold? Or, as the media often positions it, does "uncertainty" that's driving gold higher need to go away for the equity markets to stabilize and rally? No. The strong correlation between stocks and gold exist not only during recession/depressions (period of great uncertainty) but also economic expansions (periods of perceived... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

Obama Introduces Alan Krueger As Head Of Council Of Economic Advisers

Time for some more rotation of the titanic's deck chairs with the Princeton labor economist taking over Goolsbee. Unfortunately with Geithner still around, there is no risk America will change its current path heading straight into a Double Dip iceberg.

Guest Post: Social Innovation Will Be More Important Than Technological Innovation

The explosive rise and global impact of technological innovation has persuaded us that technology is the ultimate solution to all our problems. This assumption is rarely questioned; it has become like the air, unseen and unexamined. The notion that technological innovation is intrinsically incapable of "fixing" our problems is not just alien to our collective mindset, it is essentially sacreligious. In the current cargo-cult of technology worship, the basic assumption is better engineering can solve every problem. Thus we have two powerful cargo-cults influencing the American economy, society and government: the Keynesian "monetary easing," borrow-and-spend your way to permanent prosperity Cult of the Fed and its Keynesian priesthood, and the cult of technological innovation as the fount of all solutions. The idea that both these cults are the equivalent of the Mayan priesthoods which oversaw the decline and implosion of the Mayan Empire is not just an outlier--it is heresy of the first order. Ironically, perhaps, it is glaringly obvious that both cults will fail because they do not understand the problems and are automatically applying tools that cannot possibly fix what is broken: the three basic principles undergirding the American economy and society are crumbling, though that devolution is mostly hidden from view.





Prepare to Be Forgiven, Ye Mortgage Sinners

Posted by: RickAckerman

Post date: 08/29/2011 - 09:54

Although we waxed skeptical here the other day about Warren Buffett’s just-announced $5 billion stake in Bank of America, we allowed for the possibility that the deal will provide a handsome payoff...

The Great Snore of 2011

Posted by : madhedgefundtrader

Post date: 08/29/2011 - 10:23

The nonevent of the year. The Fed has put off any serious action to repair the sagging economy until the next (FOMC) meeting on September 20-1. The economy is already humming along well enough to...

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