September 2008

Last week we learned that a giant, financial meteor was hurtling toward earth.   It's trajectory was steered right at the American balance sheet.   Fear grew that it would have a massive impact on the financial markets and the entire consumer-led economy.   Bank shares tumbled.   Money was quickly pulled from money market accounts.  Treasuries soared.   Near panic ensued at the highest ... read more

This was just realized by Senator Jim Bunning's office: WASHINGTON, D.C. -- U.S. Senator Jim Bunning today issued the following statement regarding the Treasury Department’s bailout of Wall Street. “Instead of celebrating the Fourth of July next year Americans will be celebrating Bastille Day; the free market for all intents and purposes is dead in America,” said ... read more

We did this on the show today.    A basic, brief primer on what's happened: ... read more

Perhaps lost in the discussion of Treasury Secretary Hank Paulson's outline of the financial rescue package was this quick statement in his speech: As we all know, lax lending practices earlier this decade led to irresponsible lending and irresponsible borrowing.  (emphasis mine) This simply put too many families into mortgages they could not afford.  We are ... read more

Traders screen  with fake headlines being sent around today.    Funny in a sad way.           ... read more

Welcome to the occupation. The stock market will soar today.   But whatever the Dow does, it doesn't remove the fact that this is a dark day in the history of American financial markets.    The government is ready to announce the mother of all bailouts.   Preparations are made for the creation of a new super-entity such as the Resolution Trust Company - RTC - that was created in 1989 ... read more

Below is part of an email sent from a trading desk today.  Sums up the mood and feel of the market from an insiders perspective.  I highlighted some of the key takeaways and added thoughts in parentheses. ------------------ Putting out a regular Derivatives Weekly in its standard format would seem like having the band play familiar songs as the titanic sank. Things are out of whack and ... read more

The run for the least risky assets - cash and treasury bills - continues.   Today Putnam announced it is closing a money market fund due to "significant redemption pressure" (see release below).    This demonstrates what I wrote about yesterday and what we lead with on the show.   Institutional investors are scared and are moving to cash.   They are also buying short-term treasury bills ... read more

The big story today likely to be the money fund and Treasury bill (T-bill) market.   The T-bill market has gotten expensive it's because being viewed as the last safe haven.   Now it can cost you more than $1 to buy a $1 T-bill.    Its also the reason that the 10-year Treasury yield has dropped so rapidly recently.   These are being viewed as the "sock drawer" for institutional ... read more

The massive numbers involved in the AIG debacle--$85 billion in loans, $1.1 trillion in assets--are staggering.  But it's a tiny figure--$0.03--which may have had the biggest impact. Three cents is the amount the value of a dollar has fallen in the money market fund Primary Fund.   Each dollar investors have in that fund are now worth just 97 ... read more