King Report: Thanks for the bailout; here’s your lovely parting gift



The WSJ: Wall Street Pay Approaches 2007’s Records Will Ben, Hank, Little Timmy and Congressional leaders explain to the American people how it is possible for Wall Street to have near record remuneration AFTER the US taxpayers were put on the hook for about $12 trillion of guarantees to The Street? And will they explain to Americans that while Street insiders ‘earn’ record pay they must suffer a severe recession or depression, possibly record future inflation, collapsing home values, job losses and an income contraction?

Zero Hedge: NYSE Halts Transparency, Feels Goldman Program Trading Disclosure Is Unnecessary. The Exchange has filed with the SEC to implement the decommissioning of the DPTR requirement following the July 10, 2009 trade date…

From the memo: The New York Stock Exchange LLC (“NYSE”) will be decommissioning the
requirement to report program trading activity via the Daily Program Trading Report (“DPTR”), which was previously approved by the Securities and Exchange Commission (the “Commission”).1The last trade date for which member organizations will be required to file the DPTR with the Exchange will be July 10, 2009 and therefore the last required date to submit the DPTR will be July 14, 2009.

Anyone think that Goldman put pressure on the NYSE to halt embarrassing disclosures?

More from Zero Hedge on Government Sachs: Is Goldman Legally Frontrunning Its Clients?
Everyone who is anyone on Wall Street has at some point used the Goldman 360 portal whether for research, news, keeping a track of prime brokerage portfolio or, disturbingly, for trading, via the REDI Plus 9.0 platform (now loaded with enhanced algo trading features to make life for you, dear soon to be frontran Goldman client, so much easier). A second widely accepted Wall Street concept is that a disclaimer is the last thing that anyone reads, if ever. Yet after taking a close look at the Goldman disclaimer for the 360 portal, which is an umbrella waiver or all downstream websites, including REDI, one discovers the following gem:

Monitoring by GS: Your use of the products and services on this Web site may be monitored by GS, and that the resultant information may be used by GS for its internal business purposes or in accordance with the rules of any applicable regulatory or self-regulatory organization.

One second: by using Goldman 360 a client voluntarily allows Goldman to provide keystroke by keystroke data of everything the client does, even if that includes launching trades via REDI, to Goldman for the internal business purposes. The third thing everyone on Wall Street agrees on is that “internal business purposes” usually (and in Goldman’s case, almost exclusively) means proprietary trading.

Bloomberg News: JP Morgan Raises Credit Card Monthly Minimum Payments [Thanks for the bailout; here’s your lovely parting gift, Mr. & Ms. Taxpayer.]  Citibank has already hiked credit card rates. The cost of credit is increasing for consumers. Is this how recoveries start? Is this a sign that the worst is over?

Stocks rallied on Wednesday because 16 of the past 19 years stocks rallied on July 1; and SF Fed Prez Yellen said she fears inflation will be too low. Traders quickly surmised that Yellen’s comment(s) suggest there will be no Fed rate hikes for the foreseeable future; and the Fed wants asset to inflate.

Yellen’s comments also imply the economy will struggle or worsen for the foreseeable future. But traders and the Street are living on hope and hype so Yellen provided them the excuse to pour into stocks. Ms. Yellen’s comments include: “The predominant risk is that inflation will be too low, not too high, over the next several years.”

– “With unemployment already substantial and likely to rise further, the downward pressure on wages and prices should continue and could intensify.”

– “The evidence is clear that the economy has substantial slack and we are far from the kinds of unemployment rates that would make inflation a danger.”

– “If the economy fails to recover soon, it is conceivable that this very low inflation could turn into outright deflation. Worse still, if deflation were to intensify, we could find ourselves in a devastating spiral in which prices fall at an ever-faster pace and economic activity sinks more and more.”

China becomes very unhappy when Fed officials bray dovish. Its response to Ms. Yellen’s dovish comments was swift and clear. China requests reserve currency debate at G8 – sources. The dollar tanked; gold and stocks surged after the China headline hit the tape.

After the morning stock surge, traders and investors refocused on economic fundamentals, which took another hit when ADP reported its June data as a decline of 473k jobs. -394k was expected.

The ISM at 44.8 was 0.1 worse than expected; and Prices Paid at 50 was 3 points worse than
expected…Construction spending in May declined 0.9%; -0.6% was expected.

The ugly economic data and lack of ‘real’ stock buying cut stock gains by half in the afternoon.

Reuters: GM tells judge that asset sale is its “only option” — General Motors Corp has no choice but to sell its assets to a group led by the U.S. government if it is to survive, a lawyer for the bankrupt carmaker argued in bankruptcy court in Manhattan on Wednesday.

Some pundits, analysts and fin media types reported that June US auto sales suggest the worst is over.
Here’s the year/year data; you decide:

GM June sales -33.6%; May is -29% (GM says June is 10% than May m/m)
Toyota June Sales -32%
Chrysler June Sales -42%
Ford June Sales -11% (will increase Q3 production to 485k vehicles)
Daimler June Sales -26.5%

BN: U.S. Auto Sales Slide as GM, Toyota Miss Estimates. The WSJ: Car Makers See End to Sales Slide The three biggest car makers in America called a bottom to the long decline in U.S. auto sales as the industry reported its smallest monthly sales drop this year.

WSJ: New-vehicle sales in June fell 28% from a year earlier to 860,000 cars and light trucks, according to the market-research firm Autodata Corp. That would be the smallest decline in any month this year.

We made an analogy many weeks ago but we feel compelled to use it again. If a person has a sudden severe injury and quickly loses 3 quarters of blood, the remaining two quarters will be lost at a slower rate– a positive second derivative. But it does not signal recovery, let alone a return to normalcy.

Bloomberg: As many as one in five U.S. hotel loans may default through 2010 as the recession means companies are spending less on travel and perks, according to University of California economist Kenneth Rosen.

Today should be a snooze after the early activity flurry that will be driven by the June Employment Report. As we often note, it is imperative to scrutinize the details of the report to glean a more accurate employment picture. The Birth/Death Model, seasonal adjustments, the U6 and workweek are important metrics to examine.

Expected economic data: NFP -365k, rate 9.6%, manufacturing -150k, wages 0.1%, workweek 33.1; Initial Jobless Claims 615k, Continuing Claims 6.74m; Factory Orders 0.9%


A happy and safe 4th to all!

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