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Five Things: Credit Crisis Abating... Debt Crisis Remains


Debt crisis remains; trade deficit poised to decline?; Trading Places Redux and much more.

1) Credit Crisis Abating... Debt Crisis Remains

So who'll bid for a Bible?
A purchaser I crave.
Live while we may, we'll drink today:
There's no drinking in the grave.
- William Gaddis, "The Recognitions"

Indeed. Bible, T-Bond, dollar bill, whiskey; whichever one you choose to worship, the fanatics are just as ugly and hateful on one side as the other. Stumble into any gathering of ye faithful mid-performance and telling one from another is like doing anthropology in a mall food court. It's pure guesswork at best, an entire species characterized by soggy cheese fries and processed fish parts. In this respect, we have reached the point of maximum fungibility.

I began this week fiercely determined to remain awake for long enough after churning out one of these daily columns to closely monitor three days' worth of Treasury auctions; the 3-year, 10-year and 30-year auctions collectively known as "refunding," a queer misnomer that was probably once an inside joke that just happened to stick. So much for that. The action isn't in Treasury funding at all, but corporate issuance.

Yesterday, the following note on Anadarko Petroleum (APC) scrolled across the Bloomberg screen:


But that's not what happened. As it turned out, demand was so strong APC boosted the size of its sale from $750 million to $900 million. As well, the spread (the difference in yield for this debt above Treasuries) estimated to be in the 305-337.5 basis point range, actually came in lower, 295 to 325 basis points.

Ok, that's one company, but all told there were more than $2.2 billion in corporate bonds issued yesterday, and that issuance in spite of a record $71 billion the Treasury is raising over these next couple of days.

This means only one thing, the credit crisis, for now, is abating. It doesn't matter what stocks think, not right now. What matters is that the credit market is seeing new demand for debt issuance. This credit buying will eventually spill over into equities as happened in 2003. Of course, at the end of the day the debt crisis remains, but that's a story for another day.

2) Trade Deficit Poised to Decline

U.S. Trade Deficit Widens as Exports Slump to Lowest Level in Three Years - Bloomberg

"The U.S. trade deficit widened in April for a second month as some of the world's largest economies continued to contract, pushing exports to the lowest level in almost three years."

Sometimes news is News; sometimes it's merely bathroom graffiti. Which isn't to say I haven't gained a mule's yard or two of wisdom off the walls of men's rooms in my day.

By the Hammer of Thor! May it be so.

I am a very private person by nature, so it takes a well-timed convergence of various elements, situations and mental states to lead me to consider walking into public restrooms. I captured that little nugget off a Trinity College men's room in Dublin, Ireland. Glow in the dark ink. Not even dry. And, as usual, I left wondering if perhaps I was not the author of it. That's one reason I always carry a camera.

Where was I? Oh yes, the difference between news and News. A widening U.S. trade deficit is not so much News as graffiti. Bloomberg gets to the kernel of it: "Imports may be first to rebound later this year as the U.S. economy begins to expand, while exports languish until a recovery takes hold among trading partners from Japan to Germany, widening the deficit further."

But, if we look at the U.S. Trade Balance on a monthly chart with DeMark TD Sequential overlaid, we can see two things:

1) a TD Sequential Buy Signal in January, 2008 (meaning, the trade balance should shrink... which it did last year, contributing the most to U.S. economic growth in 30 years).
2) a TD Sell Setup (ImPerfected) appearing on this most recent report (meaning that we still need a move to shrink the trade deficit below $26 billion in the coming months.


3) Trading Places Redux

Beat the Credit Crunch Blues!

"Have you ever dreamt of owning a stunning detached house in its own grounds? How about an Aston Martin to park in the drive and a luxury Sealine 35 Sport for those jaunts along the coast? Give yourself the chance of a lifetime by entering our fabulous competition!"

That's the pitch conjured up by an English equities trader who just wants to make a "difference" in someone's life.

According to, "Here is the City," a London-based financial website, "The trader says that: 'I want another person to live life to the full the way I have, and, with the prizes on offer, the world really would be our winner's oyster. I can't wait to see what a difference it will make. That's all the satisfaction I need'.

Looking good, Billy Ray!

4) Daily Deflation Datapoint

A Minyan made sure we saw this book advertised for sale on eBay (EBAY)...

Ouch. I recently sold my copy on Amazon (WAS: $2,500) for a paltry $599. Talk about deflation.

Of course, that deflationary spiral for a book on hyperinflation pales in comparison to this FREE online version of the text: When Money Dies: The Nightmare of the Weimar Collapse

5) News & Weirdness

Court Clears Chrysler Deal with Fiat
- FT
The straw man setup wins again. Always gotta have a last-minute "conflict" to really sell the deal.

Zipcar Seeks 2010 IPO as Once `Wacky' Car-Sharing Draws Hertz, Enterprise - Bloomberg
Zipcar has grown from a single lime-green VW Bug to a fleet of 6,500 autos and will post its first profit in the third quarter. What is interesting is that Zipcar is another "wacky" service industry trend that will try and follow on the heels of another successful "wacky" service industry IPO, OpenTable (OPEN).

Dept. of Crisis of the Real: Tokyo Firm Rents Fake Family, Friends for Weddings - Reuters
Related: Recently, I opened a fortune cookie that read, "It's easier to make friends than to keep them." Just something to keep in mind if you are my friend.

Thank Bernanke - New York Magazine
James J. Cramer writes: "I'll just come right out and say it: Ben Bernanke will go down as the
greatest Federal Reserve chairman in history."
Maybe by "greatest" he means "last"?

The Drinkable Portfolio - WSJ
"If you had invested $100,000 eight years ago in compiling a typical cellar of the finest wines in the world, your investment today would probably be worth about $230,000." Sure, as long as we don't plunge headfirst into a structural beer market. OK, I apologize for that.
No positions in stocks mentioned.

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