Thursday, May 14, 2009

Summary, Futures and the Tan Man

by Bill McBride on 5/14/2009 12:11:00 AM

Here is a summary for Wednesday:

  • The Obama administration proposed new rules for derivatives, from the NY Times: Obama Urges Rules on Investments Tied to Crisis
    The administration asked Congress to move quickly on legislation that would allow federal oversight of many kinds of exotic instruments, including credit-default swaps ... The Treasury secretary, Timothy F. Geithner, said the measure should require swaps and other types of derivatives to be traded on exchanges or clearinghouses and backed by capital reserves, much like the capital cushions that banks must set aside in case a borrower defaults on a loan. ...

    The proposal will probably force many types of derivatives into the open, reducing the role of the so-called shadow banking system that has arisen around them.
  • Retail sales declined in April. No Green Shoots here.

  • The Manufacturing and Trade Inventories and Sales report showed the inventory correction has a ways to go.

  • There is a new research paper on Mortgage Equity Withdrawal (MEW) suggesting the high levels of MEW contributed to the low saving rate. Since the Home ATM is now closed, the saving rate will rise further - and that will keep pressure on the growth of personal consumption expenditures (PCE).

  • From CNBC: SEC Staff Recommends Charges Against Mozilo
    [T]he SEC sent a "Wells" notice to Mozilo weeks ago alerting him of the planned charges, which included alleged violations of insider-trading laws, as well as failing to disclose material information to shareholders.
    The U.S. futures are off slightly tonight:

    CBOT mini-sized Dow

    Futures from barchart.com

    CME Globex Flash Quotes

    And the Asian markets are mostly off 1% to 3%.

    Best to all.