Rollover

---

Rollover

The current market condition - low volume and no volatility - is so bad one might think it couldnít get any worse. Sadly, I do not think thatís true. Starting Thursday the quarterly roll over from September to December begins: December is now ìtop step.î At this time volume is split between the current contract of September and the new contract of December; thus trading volume, and most likely volatility, will continue to deteriorate until at least next Tuesday. Since the September contract doesnít expire until next Friday, volume may be bad all the way through the end of next week.

There was a bit of news today coming out of Europe and the Federal Reserve via the Beige Book.

---------------------------------------------------------------------------------------The news out of Europe seemed like Greece all over again because another country is in trouble. Today it was Ireland which has been in trouble for multiple months now, if not well over a year, but things are getting worse. Here is ZeroHedgeís thoughts on the issueÖA new report in the Irish Times discusses how Irish Nationwide, where incidentally sovereign CDS spreads just hit a fresh all time wide record north of 400 bps, discusses how the insolvent bank, in a supreme example of just how prevalent ponziness has become in the current Central Bank subsidized environment, is now issuing bondsÖ to itself. In a circular issuance scheme that would make the Greek finance minister blush with envy, ìIrish Nationwide has issued Ä4 billion of Government-guaranteed bonds effectively to itself. It can use the bonds to draw Ä4 billion in funding from the European Central to help tide it over a key refinancing period later this month.î At its core, the scheme is nothing new, having been used repeatedly by Europeís most bankrupt countries, although the small scale in this case, and the blatant inability to even cover up the circularity has many worried that if the ECB needs to step in for such ìmodestî amounts to preserve bank solvency, it is all pretty much just a matter of time before it is game over for Irelandís banks. And elsewhere, confirming that defaults are imminent, the CFO of Anglo-Irish has just said it would be a disaster to default on its bonds. He is, of course, absolutely correct.

From the Fedís Beige Book we readÖîReports from the twelve Federal Reserve Districts suggested continued growth in national economic activity during the reporting period of mid-July through the end of August, but with widespread signs of a deceleration compared with preceding periods. Economic growth at a modest pace was the most common characterization of overall conditions, as provided by the five western Districts of St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. The reports from Boston and Cleveland also pointed to positive developments or net improvements compared with the previous reporting period. However, the remaining Districts of New York, Philadelphia, Richmond, Atlanta, and Chicago all highlighted mixed conditions or deceleration in overall economic activity.î

With those two bearish bits of news the Dow closed UP 46.32 points.

Trade well and follow the trend, not the so-called ìexperts.î


"

---

View Larry Levin's post archive >