Hey Buddy, Can You Spare a Dime

In the Great Depression the old saying was “Hey brother, can you spare a dime?” Well, things have changed a lot over the last 80 years, and on the streets of the US a dime just doesn't cut it. Many years ago there was a crippled homeless guy who used to hang around near the doors of the Chicago Board of Trade. He knew exactly where to be sitting when the grains closed at 1:15. Traders have always been superstitious, with “lucky” ties and shirts, a lucky trading jacket or even a homeless guy. But this homeless guy was no dummy; for several years he collected thousands of dollars from traders. Traders have always had a soft spot for the needy and this guy knew it. One day after he was done doing his collections he wheelchaired himself back down the street toward the homeless shelter, but little did he know that a runner from the grain room was walking in the same direction. Let's call the homeless guy Larry. When Larry got to the corner he was looking all over the place and then turned the corner a few blocks away from the CBOT. Once the runner got to the corner he saw Larry the homeless guy folding up his wheelchair and putting it into the trunk of his big Cadillac. When the traders on the floor found out, they could not believe they had been duped for so long. Things have changed over the last several years. The CBOT is no longer the Board of Trade, it is now part of the CME Group. And yes, there is still a guy who hangs out just outside where all the traders walk out the door at the end of the day. He is a little gray-haired man with a Southern accent. He probably doesn't make enough to own a Caddie, but he does collect enough to buy some beers and eat well, and on good days I am sure he makes a lot more than that. The world changed after the Great Depression. Cities were built and skyscrapers went up and a nation was built. My desk was not around for the Roaring '20s or the 1929 crash or the Great Depression. We were not around for World War I or II either, but we were around for the 1987 crash and every major stock market event since 1985. We also have been around for a period of spectacular growth. The United States was the No.1 country in the world and Wall Street was the financial capital of the world. That's where all the big banks were, and that's where all the major trading was done. While Wall Street cannot be blamed for everything, it does look like the glory days are now behind us. The days of making millions are gone and the big trading desks of Wall Street either are gone or have been reduced greatly in size. The credit crisis has wiped out millions of jobs across the United States and the poverty rate is on track to rise to the highest level since 1965. It is apparent that more people are losing jobs again and many are descending into poverty every day. 1 in 6 Americans now live below the poverty line. This story really is not about the guy in the wheelchair at the CBOT, is is about the millions of Americans who can't get jobs, a place to sleep or food to eat. Demographers are now saying poverty will remain above the pre-recession level of 12.5% for many more years. Several predict that peak poverty levels — 15% to 16% — will last at least until 2014, due to expiring unemployment benefits, a jobless rate persistently above 6 percent, and weak wage growth. The 2010 poverty level was $22,314 for a family of four, and $11,139 for an individual, based on an official government calculation that includes only cash income, before tax deductions. While my family would have been considered “middle-class,” I know as good as my father was that with 10 kids he never would have been able to keep up. I have been working since I turned 18 and have been out of work for 6 months in my entire life. There are few occupations that are not affected by the wrath of the credit crisis and the floor of the CME Group is not one of them. I do not have the money to retire and maybe never will. I just wonder how long until I am out of a job. … For today: The guys at the desk were talking about a “counter-trend Friday” yesterday (see MrTopStep rules 101) and that could be the call. After 2 or 3 attempts at taking out the 1403.30 high, we could be in for a little profit-taking as we head into the weekend; crude and the EC trading lower could be a precursor to the day's trade. Overall we still think higher, but with the way this works that can change at any minute. As always, keep an eye on the 10-handle rule and please use stops. It's 6:00 a.m. and the ESU is is down 4.75 handles at 1395.75, crude is down 1.09 at 92.27 and the EC is 1.2281, down 19. In Asia 6 out of 11 markets closed lower. In Europe 11 out of 12 are trading lower. Today's headline: “US Stocks Decline on Chinese Data.” Economic calendar: Import-export prices and the treasury budget VOLUME (LOW): 1.17mil ESU and 5.8k SPU traded SPREADS: 0 SPU/Z spreads traded FAIR VALUE: S&P -5.80, Nasdaq -8.30 MrTopStep Closing Print Video: http://www.mrtopstep.com/videos/?id=24044 Thursday's S&P 500 futures wrap-up: US TSY OPTIONS: Sources estimating that 22,600 Sep 10-yr 132 puts have traded early this morning on the screen and 10K in the pit, on the heels of 20K being bought yesterday. Open interest in the Sep 132 puts is the largest among all TYU puts at 122,883 today, -19,819 as of yesterday trade as the strike was liquidated. Consensus is that a West coast money mgr is liquidating one leg of a large 132/136 short strangle position. Likely, the acct has a few more puts to buy as the acct is well known to amass upwards of 80K to 100K in the yld enhancement strategies. Posted yesterday, Wednesday by Jimmy (12:17:54): Bond auction very weak, surprising considering how the yield improved over the last week, just lack of demand from safe-haven bidders due to the comparatively low yields on offer. Thursday's S&P 500 trade started with 243k ESU and 1.4k SPU traded on Globex, trading range 1403.90 – 1393.90 / Wednesday's range 1392.00 – 1400.20, settled 1398.20 up 1.2 handle. This premarket post by Mike_V (08:01:36): 1396.50 KEY TODAY was right on the mark. The RTH's opened 1.5 handles lower at 1396.50 – 1397.00 marking the low on the opening for the third day in a row… complacency? EUBIE (21:07:11): the AUG 144 SPY PUT for next week has traded 150% of its open interest already. After trading up to 1401.50 area as small fade to 1398 held which was followed by a new high at 1402.00, 1402.80 by 9:57CT before fading into the European close as the bonds were holding above their earlier lows, 10yr 133.05 down 10.5 and 30yr 147.17 down 27. At 10:30 the spoos traded down to 1399.50, up to 1400.50 as the euro traded new lows taking the spoos down to retest the opening range/early low by 10:45. EURUSD to session lows one item of note, Otmar Issing told *DJ that Germany should not be blackmailed into lending for past transgressions; notes aid would not solve troubled states woes; and that current borrowing levels are too high Mr. Issing is one of the ‘founding fathers' of the euro so it is possible that his comments were helping the decline. At 10:58 a new daily low of 1395.40 printed and back up to 1400 by 12:00 as the 30yr auction met expectations, rated a “D” by Santelli and matched yesterdays 10yr auction grade. So, what do the bonds do following a bad auction – they rally of course. The bad news was priced in over the last few sessions as the treasuries had lost their bid during the asset reallocation. The surprising thing was the spoos just hovered in the 1399 -1401.50 area for the next two hours and forty five minutes. 1399.50 area was trading as the closing imbalance showed the broader market with a minute $64M to the sell side. Starting at about 2:00CT there was a paper seller every 2 minutes of 16 lots at a time and the same broker sold 300 on the cash close, 1400 traded on the cash close before settling at 1400.60, up 2.4 handles. There are no major releases scheduled for tomorrow = oh boy!