Daily Commentary

Heretofore, the technical demand for credit has allowed the market to be somewhat impervious to bad news.  This morning, there is a crack in that resiliency as a trio of bad headlines have spreads wider this morning.  The Fed's negative outlook, new credit card regulations that could hinder profits at the banks and S&P putting the UK's AAA rating on 'outlook negative' are today's culprits.

This holiday shortened week has predictably, and thankfully, had light issuance; yesterday saw only ~$1B in deals with none on tap for today so far.  That being said, secondary volume was very heavy yesterday with the 'dealer sell' vs 'dealer buy' ratio stubbornly high.  

I think most investors can be happy with the progress of bank capital raising.  Remember, only the plans are due by June 6th...yet half the capital has already been raised in only 2 weeks.  The WSJ has a very interesting interactive graphic showing the various capital ratios at pre-crisis levels, a baseline and an adverse scenario.  Be sure to click through all 3.

I regularly mention the negative basis of the market.  I was encouraged to see that that very same metric is watched by the Fed's Open Market Committee (FOMC).  While participants are well aware of the difficulty, equity investors should note that even the Fed can only estimate bid/ask spreads in the corporate market.   

Love him or hate him....everyone has an opinion of Jim Cramer.  This NYTimes article notes a study that his stock picks have outperformed.