02 October 2008

Some Fantastic

90's music has been dominating my listening choices as of late, and that takes into account my recent alt-country review. With last week's attendance at the My Bloody Valentine show, and today's purchase of Toad the Wet Sprocket tickets, I would say that I've been musically reflective.

With the 90's on the brain, today's clip is Some Fantastic by Barenaked Ladies, from their Bathroom Sessions--YouTube clips of Ed and Steve playing in the loo.

Don't knock performing in bathrooms. The acoustics are often echo-y and forgiving there.

The song's a bit silly, and witty. The chorus part (Bye, bye, self-respect...) elevates the song for me from a bit of a joke into something tinged with regret. Silly and sad intertwined.

Fantastic news from the grown-ups in the Senate. 74 votes in favor of the bailout. 80 would have been more forceful, but 74 is filibuster-proof, and the leadership of both parties supported the legislation, so hopefully the House will fall in line.

Now onto a couple of things I read today that mattered:

Hank Greenberg wants to bid on AIG assets:

Maurice "Hank" Greenberg, the former chief executive of American International Group Inc. is seeking the opportunity to bid on any assets that the embattled insurer is planning to sell, according to a report Wednesday in The Wall Street Journal. Greenberg sent a letter dated Monday to current CEO Edward Liddy, who is expected to update investors on Friday, according to the report. An AIG spokesman confirmed receipt of the letter and said the company is "open to all reasonable expressions of interest," the report said.

The credit crisis is seizing up the municipal bond market:

The sudden loss of credit, one of the ripple effects of the current financial turmoil, is affecting local governments in all parts of the country, rich and poor alike. In New York, a real estate boom has suddenly gone bust. Washington has shelved a planned bond offering to pay for terminal expansion and parking garages already under construction at Dulles and Reagan National Airports.

Billings, Mont., is struggling to come up with $70 million more for a new emergency room. And Maine has been unable to raise $50 million for highway repairs.

"We really are in terra incognita here," said Robert O. Lenna, executive director of the Maine Municipal Bond Bank, which helps that state's towns and school districts raise money. He said he had worked in public finance for 34 years and had never seen credit evaporate so completely.

Maine had already begun some of its road work when the bond markets stopped functioning, so now it is scrambling for bank loans to keep the dump trucks rolling. If money does not start flowing soon, Mr. Lenna said, Maine will have to cancel some of its road and bridge projects.

The only alternative would be what New York City did on Monday: Go into the locked-up markets and whip up demand by offering to pay investors a very high return.

Analysts said the dysfunction in the municipal bond markets appeared to signal the end of an era of relatively cheap money for governments and, probably, the start of an era of tough choices for communities. When the market starts moving again, they said, it will look a lot like the municipal bond market of 10 years ago, before the arrival of financial wizardry in the form of structured-finance products, which lowered borrowing costs but added big new risks. Instead, governments will probably be issuing plain-vanilla bonds with fixed rates of interest, higher than they are accustomed to.
Yesterday, I pointed out a few metrics that are useful for spotting market extremes, perhaps even tops and bottoms: the VIX, and the number of S&P 500 stocks or Dow components trading above their 50-day moving averages.

How did each of those metrics look today?

The VIX inched its way toward 40.
82 out of 500 or 16.4% of the S&P 500 are trading above their 50DMA.
Ten Dow components (that would be one-third) are trading above their 50DMA.

The VIX is still very high, reflecting significant uncertainty in the market. The relative high number of Dow components trading above their 50DMA mostly reflects how terribly Dow stocks have performed. Alcoa, GM, Boeing, etc. have ugly charts, while Bank of America and JPMorganChase have purtied themselves up over the last two months.

I will be watching the markets tomorrow morning, and will lighten up some long positions only if provoked.

The market takes second stage tomorrow afternoon as I head down to Philly, hoping a sequel to the Phils first playoff victory since 1993 follows the same plot lines, with Brett Myers in Cole Hamels role.

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