Trader’s Narrative

For economic and market news and to see what interesting reading you may have missed last week, check out the list below. To see it all, go to news.tradersnarrative.com:

• Bill Moyers interviews James K. Galbraith
• Market Is Strong, But Correction Should Continue
• Contrarian analysis remains bullish
• Goldman’s long term borrowing cost 0.92%
• Get a FREE Subscription to SFO Magazine (US residents only)
• EU to break up Lloyds, RBS and Northern Rock
• Schwab Creates Watershed Event with Commission-Free ETFs
• CNN Interviews Robert Shiller on Economic Recovery
• EWI FreeWeek almost over, hurry! Learn more about FreeWeek, and download your free reports here
• Mother of all carry trades faces an inevitable bust
• Four Simple Ways to Fix the Broken System
• Clever fools: Why a high IQ doesn’t mean you’re smart

The above is a small sample, for the complete list, follow the graphic link below to news.tradersnarrative.com:

And remember to check back during the week as there are interesting links added throughout the week. If you are a twitter user, add the news.tradersnarrative.com twitter stream to get new stories in real time.

The Week Ahead:

For economic and market news and to see what interesting reading you may have missed last week, check out the list below. To see it all, go to news.tradersnarrative.com:

• Why the Goldman Sachs-AIG Story Won’t Go Away
• Europe Shows the Way: ING Broken Up
• Wall Street Revalued: Imperfect Markets and Inept Central Bankers
• Get a FREE Subscription to SFO Magazine (US residents only)
• Why Paul Tudor Jones Favors Gold
• Number-Crushing: When Figures Get Personal
• Ten Characteristics I See Among Successful Traders
• FREE 60-page eBook: The Deflation Survival Guide
• Stiglitz: Death Cometh for the Greenback
• George Soros Lectures (video)
• Why Big Banks Should Be Broken Up, But Why White House & Congress Don’t Want To

The above is a small sample, for the complete list, follow the graphic link below to news.tradersnarrative.com:

And remember to check back during the week as there are interesting links added throughout the week. If you are a twitter user, add the news.tradersnarrative.com twitter stream to get new stories in real time.

The Week Ahead:

The US financial system was resuscitated by the largess of the taxpayer. Without any real quid pro quo, transparency nor discussion, they were made whole. Their losses made public while their profits were guaranteed to remain private (as the recent obscene bonuses attest).

So now that the US economy is still on the ropes, fighting for its very survival and in dire need of a liquidity transfusion of its own via the credit markets, where are the banks?

Surely they are pumping the lifeblood they received from the US treasury and the Fed back into large and small businesses that are the engines of growth to allow the economy the same recovery they enjoyed. Right? right? Well, no. In fact, if you assumed that you couldn’t be more wrong.

As you can see from the chart above, bank lending in the US has contracted to an unprecedented degree. You may notice that a contraction of some shape or form happens each time we have a recession (the dark bars). And you would be right. But we are not taking a random walk down Wall Street these days. These are extraordinary times, which required extraordinary measures - whether rightly or wrongly.

So what are the banks doing with all the cash they received from the hard working American Joe and Jane Sixpack?

Hoarding it like a miser:

So we have banks flush with cash, not lending to those who need it and deserve it, but rather sitting on the cash or in Goldman’s case, using it to generate billions of dollars in profit which then is promptly cut in half to be paid as bonuses.

As David Rosenberg of the Toronto boutique firm, Gluskin Sheff posits, this may be why the US government bond market is so subdued:

The banks are deploying the cash in the government bond market, buying a net
$27 billion in the latest week and $130 billion in the past 18 weeks. Meanwhile, cash reserves keep piling up and just reached an all-time high of $1.2 trillion — enough to finance the entire U.S. fiscal deficit. This is a nice back-of-the-door mechanism for how the Fed is monetizing the government’s endless need for money: bolster reserves at the big commercial banks and have these banks buy the bonds that Uncle Sam sells in order to raise the capital needed to fund all the government’s fiscal stimulus measures.

Here is a very long term chart of the US 30 year bond yield:

The Chinese have a saying: ‘May you live in interesting times.‘ All I dare hope is that things don’t get any more interesting than this.

By the way, here is an almost too good to be true offer for my US readers. For a limited time, you can get a complimentary subscription (aka FREE) to SFO magazine (Stocks, Futures, and Options).

It takes less than a minute to sign up and you need to provide some basic information. But as I mentioned, you need to be a resident of the US (because you need to provide a US address). Enjoy!

For economic and market news and to see what interesting reading you may have missed last week, check out the list below. To see it all, go to news.tradersnarrative.com:

• “Deception and Abuse at the Fed”
• Wall St: where massive & repeated failed is rewarded
• Elizabeth Warren speaks truth to power
• How inflation could stay low for a while
• The Warning - PBS Documentary
• Get a FREE Subscription to Futures Magazine (limited time for US residents only)
• Goldman Sachs: “Pay Inequality Helps Everyone”
• Best Books on the Financial Crisis (we’ll have a bookcase before long)
• FREE 60-page eBook: The Deflation Survival Guide
• Wall Street on edge as SEC top cop gets aggressive
• Nouriel Roubini: Big Crash Coming

The above is a small sample, for the complete list, follow the graphic link below to news.tradersnarrative.com:

And remember to check back regularly since there are interesting links added throughout the week. If you are a twitter user, add the news.tradersnarrative.com twitter stream to get new stories in real time.

Week Ahead:

For economic and market news and to see what interesting reading you may have missed last week, check out the list below. To see it all, go to news.tradersnarrative.com:

• “Show me a stupid risk, and I will take it.”
• Galleon Group’s Insider Trading Case
• Head of SEC Enforcement from Government Sachs
• Dow Theory Gurus Don’t Agree
• Get a FREE Subscription to Futures Magazine (limited time for US residents only)
• An emotion mirroring system for traders
• Unmask the Fed
• The Role of Naked Short Selling in the Financial Crisis
• FREE 50-page eBook: The Ultimate Technical Analysis Handbook (lmt time offer)
• New 52 week Highs Expanding Rapidly

The above is a small sample, for the complete list, follow the link to news.tradersnarrative.com:

And remember to check back regularly since there are interesting links added throughout the week. If you are a twitter user, add the news.tradersnarrative.com twitter stream to get new stories in real time.

Is the SEC Back in Business?