US Equity Markets Look Dangerously Wobbly As Insiders Sell In Record Numbers

"Investors Intelligence's latest survey of advisory services showed an impressive 51% bullish and a meager 19% bearish...the spread hasn't been that wide since November 2007." Alan Abelson, Barrons, Aug. 29, 2009

Next week we move into September, the riskiest month of the year for financial markets, with the federals escalating preparations for a flu pandemic, while Congress considers legislation providing a 'kill switch' on the Internet for President Obama to use in the event of 'an emergency.' There are widespread rumours of a bank holiday lasting one week after a market meltdown begins in the US, during which the banks would be restructured.

Risky times indeed, and those in the best position to know what is happening behind the scenes are hitting the exits in record numbers right now, running to cash, and hard assets and currencies.

As TrimTabs reports in the attached news release, insider selling is reaching record levels, even as more speculators borrow to go long stocks. There are some obvious bubbles already formed in certain insolvent financial stocks like AIG, with disinformation rampant in the Wall Street demimonde.

The Obama Economics and Regulatory Team, in conjunction with the Federal Reserve, have accomplished no serious reform of the fiancial system. They have enabled the type of market inefficiency, soft fraud and price manipulation that is undermining global confidence in the integrity of US markets and financial products. And they have advanced a proposal to consolidate a huge amount of regulatory power under the Federal Reserve, a private banking agency that was at the root of our unfolding financial crisis.

The time has passed when Obama could have pointed to the past mistakes of his predecessors as the fault for our problems. Thanks to Tim Geithner, Barney Frank, and Larry Summers he now owns the financial crisis, and the coverups, policy errors, scandals, conflicts of interest and bailouts that have occurred since he has taken office. His reappointment of Ben Bernanke as Federal Reserve chairman most surely tied a bow on his ownership package for the crisis, which is in danger of becoming his 'financial New Orleans.'

Wall Street insiders and their enablers pig out on public money while the nation suffers. This is not change, this is business as usual.

TrimTabs
Insider Trading and Investor Sentiment Signaling U.S. Stock Market Top

Insider Selling in August Soars to 30.6 Times Insider Buying, Highest Level Since TrimTabs Began Tracking in 2004. NYSE Short Interest Plunges 10.3%, While Margin Debt Spikes 5.9%

SAUSALITO, Calif., Aug. 28 /PRNewswire/ -- TrimTabs Investment Research reported that selling by corporate insiders in August has surged to $6.1 billion, the highest amount since May 2008. The ratio of insider selling to insider buying hit 30.6, the highest level since TrimTabs began tracking the data in 2004.

"The best-informed market participants are sending a clear signal that the party on Wall Street is going to end soon," said Charles Biderman, CEO of TrimTabs.

TrimTabs' data on insider transactions is based on daily filings of Form 4, which corporate officers, directors, and major holders are required to file with the Securities and Exchange Commission.

In a research note, TrimTabs explained that insider activity is not the only sign the rally is about to end. The TrimTabs Demand Index, which tracks 18 fund flow and sentiment indicators, has turned very bearish for the first time since March.

For example, short interest on NYSE stocks plummeted by 10.3% in the second half of July and margin debt on all US listed stocks spiked 5.9% in July, while 51.6% of advisors surveyed by Investors Intelligence are bullish, the highest level since December 2007.

"When corporate insiders are bailing, the shorts are covering and investors are borrowing to buy, it generally pays to be a seller rather than a buyer of stock," said Biderman.

TrimTabs also reports that the actions of U.S. public companies have been bearish. In the past four months, companies have been net sellers of a record $105.2 billion in shares.

"Investors who think the U.S. economy is recovering are going to get a big shock this fall," said Biderman. "Companies and corporate insiders are signaling that the economy is in much worse shape than conventional wisdom believes."

TrimTabs Investment Research is the only independent research service that publishes detailed daily coverage of U.S. stock market liquidity--including mutual fund flows and exchange-traded fund flows--as well as weekly withheld income and employment tax collections. Founded by Charles Biderman, TrimTabs has provided institutional investors with trading strategies since 1990. For more information, please visit www.TrimTabs.com.

Where Are the World's Safest Banks?

The primary functions of the Federal Reserve Bank as a regulator is to maintain the integrity of the US banking system. It is also the responsibility of the Federal Open Market Committee to oversee the management of the United States Money Supply.

In this annual list by Global Finance, not one US bank is in the top 30 of the Safest Fifty Banks in the world.

It was the poor regulation of the banking system, and the reckless management of the money supply, that has brought the US, and by extension of the dollar contagion, a greater part of the world, to the financial crisis which threatens the global economy today.

Would this imply that we should give the Fed the latitude to regulate more elements of the US financial sector, elements with which it has little or no experience and certainly no successful track record?

The US must reform its financial system and restore a balance to its economy. The rest of the world must take strong measures to guard against a potentially disastrous currency crisis should the US fail to successfully reform.


Global Finance
The World's 50 Safest Banks

New York, August 25, 2009 — With bank stability still high on corporate and investor agendas,Global Finance publishes its 18th annual list of the world’s safest banks. After two tumultuous years that saw many of the world’s most respected banks drop out of the top-50 safest banks list, the dust appears to be settling. Those banks that kept an iron grip on their risk exposure before the financial crisis blew up have consistently topped the table and maintain their standing among the top echelon in this year’s ranking.

The Top Banks (until you find a US bank) Are:

1. KFW (Germany)
2. Caisse des Depots et Consignations (CDC) (France)
3. Bank Nederlands Gemeenten (BNG) (Netherlands)
4. Landwirtschaftliche Rentenbank (Germany
5. Zuercher Kantonalbank (Switzerland)
6. Rabobank Group (Netherlands)
7. Landeskreditbank Baden-Wuerttemberg-Foerderbank (Germany)
8. NRW. Bank (Germany)
9. BNP Paribas (France)
10. Royal Bank of Canada (Canada)
11. National Australia Bank (Australia)
12. Commonwealth Bank of Australia (Australia)
13. Banco Santander (Spain)
14. Toronto-Dominion Bank (Canada)
15. Australia & New Zealand Banking Group (Australia)
16. Westpac Banking Corporation (Australia)
17. ASB Bank Limited (New Zealand)
18. HSBC Holdings plc (United Kingdom)
19. Credit Agricole S.A. (France)
20. Banco Bilbao Vizcaya Argentaria (BBVA) (Spain)
21. Nordea Bank AB (publ) (Sweden)
22. Scotiabank (Canada)
23. Svenska Handelsbanken (Sweden)
24. DBS Bank (Singapore)
25. Banco Espanol de Credito S.A. (Banesto) (Spain)
26. Caisse centrale Desjardins (Canada)
27. Pohjola Bank (Finland)
28. Deutsche Bank AG (Germany)
29. Intesa Sanpaolo (Italy)
30. Caja de Ahorros y Pensiones de Barcelona (la Caixa) (Spain)
31. Bank of Montreal (Canada)
32. The Bank of New York Mellon Corporation (United States)

You may read the rest of the list, and the method by which safe banks were selected, here.

When at First You Don't Succeed ---- Make It Up

This morning the spokesmodels for Wall Street on Bloomberg Television were touting the 'better than expected' unemployment claims figures.

They came in at 'only 570,000.'

Wait a minute. That does not seem right. Have another cup of coffee and look up the figures.

The consensus of expectations was 565,000. The actual was 570,000. That's better?

Betty Liu went on to explain, 'they are better than expected because they fell from the week before.' The prior week's figures were revised from 576,000 to 580,000.

In her defense, she just says what they put in front of her. I wonder if the same can be said for Obama.

We're not in Kansas anymore.

Fed Official: Real US Unemployment Rate is 16%

Dennis Lockhart may be expressing his own views, but the figure of 16% he quotes is nothing more than the Bureau of Labor Statistics "U-6" measure of unemployment.

U-6 Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons,economic reasons, as a percent of the civilian labor force plus all marginally attached workers.

Here is a chart showing the 'official' U3 measure of unemployment and the U6 alternate measure. The chart also includes the unofficial unemployment rate projection done by John Williams of Shadowstats.com.



It appears that Dennis wanted to take this occasion to say that things were SO bad that there is little use in applying any sort of stimulus to the public, although there is plenty of stimulus required for the banks.

Breitbart
Real US unemployment rate at 16 pct: Fed official
Aug 26 02:25 PM US/Eastern

The real US unemployment rate is 16 percent if persons who have dropped out of the labor pool and those working less than they would like are counted, a Federal Reserve official said Wednesday.

"If one considers the people who would like a job but have stopped looking -- so-called discouraged workers -- and those who are working fewer hours than they want, the unemployment rate would move from the official 9.4 percent to 16 percent, said Atlanta Fed chief Dennis Lockhart.

He underscored that he was expressing his own views, which did "do not necessarily reflect those of my colleagues on the Federal Open Market Committee," the policy-setting body of the central bank.

Lockhart pointed out in a speech to a chamber of commerce in Chattanooga, Tennessee that those two categories of people are not taken into account in the Labor Department's monthly report on the unemployment rate. The official July jobless rate was 9.4 percent.

Lockhart, who heads the Atlanta, Georgia, division of the Fed, is the first central bank official to acknowledge the depth of unemployment amid the worst US recession since the Great Depression.

Lockhart said the US economy was improving but "still fragile," and the beginning stages of a sluggish recovery were underway.

"My forecast for a slow recovery implies a protracted period of high unemployment," he said, adding that it would be difficult to stimulate jobs through additional public spending. (How about Bank bailouts and bonsues? Plenty of room to add more, right? - Jesse)

"Further fiscal stimulus has been mentioned, but the full effects of the first stimulus package are not yet clear, and the concern over adding to the federal deficit and the resulting national debt is warranted," he said.

President Barack Obama's administration has resisted calls for more public spending, arguing that the 787-billion-dollar stimulus passed in February needs time to work its way through the economy.

Lockhart noted that construction and manufacturing had been particularly hard hit in the recession that began in December 2007 and predicted some jobs were gone for good.

Prior to the recession, he said, construction and manufacturing combined accounted for slightly more than 15 percent of employment. But during the recession, their job losses made up more than 40 percent of all US job losses.

"In my view, it is unlikely that we will see a return of jobs lost in certain sectors, such as manufacturing," he said. (Yep that's it. Manufacturing is dead, forever. Never to return. - Jesse)

"In a similar vein, the recession has been so deep in construction that a reallocation of workers is likely to happen -- even if not permanent."

Payroll employment has fallen by 6.7 million since the recession began.