C.M.O. 3.6.2009
Credit Market Overview
March 6, 2009
I have heard the current malaise described as the “Great Recession” and a “Contained Depression”. Both of these terms hesitate to put the current socio/economic environment into the same category as the Great Depression and possibly with good reason.
The Bureau of Labor Statistics releases employment numbers for February this morning at 8:30. Estimates range as high as 8% for the unemployment rate and non-farm payrolls could fall as much as 750,000.
Whatever the published number are there are also an additional 1.4MM people receiving government benefits under a new program launched last year and a sub-category I had not heard of until recently, mass layoffs (50 or more people at one time), doubled in January.
These all paint a pretty dire picture of the world as it stands today. The question is how does it really compare with that earlier time in our great Nation’s history?
By 1933, 25% of all Americans were unemployed, and 11,000 of the country’s 25,000 banks had failed. Household income had declined by 40% and home building had shrunk by 80%. Industrial production was down 45%.
I am not saying we’re going there and I’m not saying we’re not. The CEC Strategy has made most of its money on the short side of things since October of 2007 but I probably would have bet the house writing $2.00 puts on Citigroup (C) back then too!
Since we’re relating things to the GD today 6,860 was the level on the Dow that erased 50% of the rise from the 1932 low to the 2007 high. For those having a “slow” morning that’s half of 75 years worth of gains gone in 16 months.
For the S&P fans out there, an uptrend line initiated at the 1982 lows that had provided support for the market since was broken on the first close below 700.
Estimates for when positive growth returns seem similar to those orders you get from people that just can never pull the trigger and are a euphemistic variation on the Good Till Close order with the last word in this case meaning near and not the opposite of open.
This entire debacle has been a study in unexpected consequences. We can only hope the lesson ends soon.
Enjoy the weekend.
Jim Delaney
March 6, 2009
I have heard the current malaise described as the “Great Recession” and a “Contained Depression”. Both of these terms hesitate to put the current socio/economic environment into the same category as the Great Depression and possibly with good reason.
The Bureau of Labor Statistics releases employment numbers for February this morning at 8:30. Estimates range as high as 8% for the unemployment rate and non-farm payrolls could fall as much as 750,000.
Whatever the published number are there are also an additional 1.4MM people receiving government benefits under a new program launched last year and a sub-category I had not heard of until recently, mass layoffs (50 or more people at one time), doubled in January.
These all paint a pretty dire picture of the world as it stands today. The question is how does it really compare with that earlier time in our great Nation’s history?
By 1933, 25% of all Americans were unemployed, and 11,000 of the country’s 25,000 banks had failed. Household income had declined by 40% and home building had shrunk by 80%. Industrial production was down 45%.
I am not saying we’re going there and I’m not saying we’re not. The CEC Strategy has made most of its money on the short side of things since October of 2007 but I probably would have bet the house writing $2.00 puts on Citigroup (C) back then too!
Since we’re relating things to the GD today 6,860 was the level on the Dow that erased 50% of the rise from the 1932 low to the 2007 high. For those having a “slow” morning that’s half of 75 years worth of gains gone in 16 months.
For the S&P fans out there, an uptrend line initiated at the 1982 lows that had provided support for the market since was broken on the first close below 700.
Estimates for when positive growth returns seem similar to those orders you get from people that just can never pull the trigger and are a euphemistic variation on the Good Till Close order with the last word in this case meaning near and not the opposite of open.
This entire debacle has been a study in unexpected consequences. We can only hope the lesson ends soon.
Enjoy the weekend.
Jim Delaney
Labels: CDS, correlation, credit, equity
posted by Jim Delaney at
3:42 AM
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