Did Anyone Get That Number

Of that bus that rolled over Wall Street trader’s this week. For those that read this site on a regular basis then the past five days should have come at no surprise and the loss of 700 billion from the value of equities this week should barely raise an eyebrow. Personally I would have liked to have seen the streets flowing a little more red but I may get that wish on Monday. Beware of what one wishes for….it just might come true. Lost in all the hooplah over the manufactured debt ceiling crisis were the real issues that we are dealing with. Last quarter’s revision of GDP was shocking…..down to 0.4% and this quarters GDP of 1.3% (also to be revised later) reflect a dying economy.

“Economic growth … was much weaker than the government
had previously estimated and this opens the door for
potentially another round of quantitative easing from the
Federal Reserve,” said Gary Thayer, chief macro strategist at
Wells Fargo Advisors in St. Louis. “Therefore, the bond market
responded positively to the weak GDP number while the dollar
weakened.” The data showed the U.S. economy in greater danger of
dipping into another recession than many had thought. “The problem in the second quarter was very, very
restrained consumer spending,” said Pierre Ellis, senior
economist at Decision Economics in New York. “A revival in
consumer spending is critical to keeping us out of recession.

Ok then what do we take away from this week’s action. The economy is weakening but most of the peeps are having their attention focused by the MSM on the circus in D.C. …… WHY? Several possible explanations. One that is obvious is the increase in the value of treasuries …..certainly beneficial for the holders of this debt. Particularly if you are wanting to exit these positions under cover of crisis. Turn up the noise and and pull out the chain saws. By the time the noise subsides a lot of bonds can be moved. Good things happen to those that make them happen.

It might work like this: Bloomberg reported that Mike Feroli, Chief Economist for JP Morgan Chase, who said that the Fed has a contingency plan (right there you had better stop) in case Congress doesn’t act on the debt. It would allow “certain” banks and financial institutions to exchange their Treasuries for green Cash from the FED. My my my….how convenient…. Crisis=Premium Treasury prices=cash into selected Banks…..ouila…….QE 2.75….. get ready Freddy…..I smell MONEY!! Now guess where these selected banks are…..here is a hint….don’t forget “contagion”.

Of course this is only conjecture and one should not make trading decisions based on this but you might want to examine this over the weekend….enjoy your weekend See ya Sunday night after the weekend theatrics and the futures open.

Read more at Great Depression 2