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Random Thoughts: The Central Bank Liquidity Effort

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The central banks headline headline was good for a quick 2% and begged the question as to who knew what and when?

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  • Throughout FOMC Tuesday, I was thinking to myself "Self, they're gonna cut 25 and 25 and the knee-jerk will be lower, particularly with BKX 100-101 directly above." That we got (although I didn't bank it) and now, once again, we've seen that the first move was the false move.

  • Wait, but why did we walk into jiggy green futures? All sorts of chatter that "they" are on the case as Hank and Ben "continue to sift through options."

  • Indeed, according to this morning's WSJ, "A variety of steps, widely discussed in the markets, are likely to be on the table, including another cut in the discount rate, longer-term loans to money-market dealers, easier collateral rules for loans from the Fed, and other steps last taken in 1999 to alleviate funding pressures ahead of the year 2000; Changes in the discount rate can be made by the Fed board in Washington without the approval of the entire 17-member policy-making FOMC"

  • And just like that, shortly before the opening, "the" news hit that the Fed, ECB, and central banks have created a worldwide effort to add invisible liquidity to the marketplace.

  • That headline was good for a quick deuce (2%) and begged the question as to who knew what and when?

  • Band-Aid on a broken bone? More like heroin for a headache! The Fed continues to change the rules of engagement in the middle of the match. That's grounds for a flag-or an uprising-but it also warrants respect. We're just pawns in the game and the goal is to stay in it.

  • What's it all mean? Pepe Depew's 5 Things breaks it down in a way we can all understand.

  • Meanwhile, back at the ranch (or, what used to be the ranch), 1,082,712 homes entered the foreclosure process in the first 11 months of the year, up 93%--93%--from the same time last year.

  • Me? I'm going for the world's record for most consecutive days eating chicken noodle soup.

  • "The Bank of America (BAC) consumer credit headline is probably the most important one from my perspective since it seems all economists and portfolio managers have accepted the idea that this credit bust is a mortgage based bust and not one within other credit markets. This gives the lie to that assumption. The move from 'subprime' to other things like credit card, auto loans, etc. will kick off a huge shift in the way the debate is played out in the media." Professor Scott Reamer on today's Buzz.

  • Warning! This video may plant a tune (and some odd images) into your Hump Day mindset!

  • The Ruh-roh's in today's tape? Bank of America (BAC), JP Morgan (JPM), Citigroup (C), Lehman Brothers (LEH), Fannie Mae (FNM), Freddie Mac (FRE), AIG (AIG) and---holy cow--Red Bank, NJ (BKX –1.5%).

  • The Cliff Branch? 2:1 positive internals, along with well bid energy, metals and beta.

  • Thataway? IF we reverse lower, it's game over... but I can't imagine they will let that happen.

  • Him doesn't like it when you talk like that.

  • It's a good thing I don't work for Him.

  • Structurally, today's news does help. It's important to remember that regardless of whether or not you agree with it. Remember, the market is always right.

  • Risk definition, both ways, is an absolute must here. Please and thank you.

  • Let's get physical, physical...


R.P.

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