SP Futures Hourly Chart at Noon

It is important to remember that this is a 'triple witching' week with options expiring on Friday. In markets such as this in particular it is a week of shenanigans as the bigger house players squeeze the option punters who are essentially speculating with too much leverage. March is a big expiration.

We also have the Fed in a two day FOMC meeting with their announcement tomorrow at 2:15 EDT.

The uptrend has held so far. The first chart shows the hourly action up close, and the second chart shows the same scenario but within the context of the bigger picture.

This feels like a technical rally. And surely there is no recovery in the real economy six months out, which is what is required to justify a sustained market uptrend and a new bull market.

Although Ben Bernanke has made noises about a possible recovery at the end of this year, we would file that with his other economic pronouncements about the credit crisis being confined to subprime and so forth. He is constantly talking his book, which demands a rosy recovery. He won't get it.

There will be no recovery in our nation until there is significant reform enacted to bring our economy back into balance. The financial system, gone off the track with gambling, is draining our energy away from real productive efforts, acting as a hidden by substantial tax on the quality of our growth.




A view of the above chart within the greater context of this rally.

Senator Grassley: Throw AIG to the Wolves (and Ignore Us)

"You can fool some of the people all of the time, and all of the people some of the time,
but you can not fool all of the people all of the time."
Abraham Lincoln

But you can bloody well try.

Senator Grassley is a ranking member of the Senate Finance Committe. As such, he presided over a decade of erosion of safeguards and balance in our financial system.

He is also a member of a political party and a government that had the lead in ruining our country, undermining the Constitution, and allowing financial racketeers like AIG to flourish.

The fellows at AIG are indeed amoral pigs, and they make no pretentions to be otherwise, whereas Chuck Grassley and his ilk are venal hypocrites who are attempting to deflect attention from their own significant role in the current financial crisis, and a disastrous foreign policy conducted under false pretenses for the enrichment of private interests and corporations.

Those who take his pious pronouncements seriously are born to be shorn, over and over, again and again.

"I don't know whether the [$165 million in bonuses] is an issue as much as just the chutzpah of the people running AIG," Grassley said. "That they could thumb their nose at the taxpayers, it's more that.

"The attitude of these corporate executives and bank executives, and most of them are in New York, that somehow they're not responsible for their company going into the tank," he said.

"I suggest, you know, obviously maybe they ought to be removed, but I would suggest that the first thing that would make me feel a little bit better towards them [is] if they would follow the Japanese example and come before the American people and take that deep bow and say I'm sorry and then either do one of two things: resign or go commit suicide."

FASB to Make Dramatically Favorable Changes in Mark to Market Rules

It looks likea return to mark-to-assumptions is in the cards. The prospective rule change is targeted at large banking institutions with hold-to-maturity MBS portfolios.

This rule change will be generally known as marked-to-official-policy accounting, wherein our desired objectives are achieved by definitional manipulation and corporate decree. This is consistent with our national currency.

If the holder of a financial asset cannot obtain an active price, they can assume the cash flows will be maintained to maturity and value the asset based on that.

This is not decided yet, but we would imagine FASB is under intense pressure from the federal government and the banking lobby.


FASB to Propose Improvements to Mark-to-Market and OTTI
The American Banker
March 16, 2009

The Financial Accounting Standards Board agreed today to propose alternatives for improving mark-to-market accounting in illiquid markets and for “other-than-temporary-impairment” (OTTI). ABA has been requesting improvements to these mark-to-market issues for the past year and for improvements to OTTI for many years.

Mark-to-Market.

The proposal for estimating market values will take into consideration whether there is an active market (such as the number of recent transactions, whether price quotes are based on current information, whether price quotes vary substantially, etc.). If there is not an active market, then the quoted price is a distressed transaction unless certain other conditions exist. For distressed transaction prices, “Level 3” techniques (such as present values of future cash flows) are used instead of the distressed prices and should reflect an orderly transaction between market participants, including a reasonable profit margin for uncertainty in a non-distressed situation.

Other-Than-Temporary-Impairment.

FASB will also propose that the full market loss continue to be reported through earnings (and capital) only if the entity intends to sell or will be required to sell the security prior to its recovery. For all other OTTI, the amount of market loss will be split between the credit portion of the loss, which will be reported in earnings, and the remainder of the loss, which will be reported in “other comprehensive income.”

Effective Date and Comment Period.

The proposed effective date is for periods ending after March 15, 2009. However, FASB is concerned that some may not be able to prepare the information in time for March 31, 2009, reporting, and will request comments on whether it should be effective for periods ending after June 15, 2009, with early adoption (for March 31, 2009) permitted. Comments are due April 1, and FASB hopes to make its final decision on April 2.

Alcoa Slashes Dividend from .17 to .03 Per Share

Alcoa is also planning new offerings of common and preferred stock to raise capital.

Too bad they are not a bank.