Slow Start

by Larry Levin

Monday was not a good start to the week. Those who were looking for either a resumption of last Thursday's rally or just good trading action regardless of the direction were equally disappointed. Today's price action was, in a word: fetid. Only after an entire day of vicious price reversals did the market settle lower, with the S&P off 2.58% and the Dow lower by 223.73 points.

In a report before the open the National Association for Business Economics (NABE) said that the U.S. is headed for a prolonged recession dragging into 2009. A total of 96% of the economists surveyed by NABE believe that a recession has already begun.

Although the organization believes a contraction in real GDP of 2.6% is in the cards for the fourth quarter, with the weakness carrying well into next year, it is somewhat less calamitous than other estimates. I have read some estimates that the fourth quarter real GDP could be as low as -5%.

Speaking of recessions, the news out of Japan this morning didn't help much. Japan is once again officially in a recession.

Citigroup was in the news today - it announced massive layoffs of 53,000 employees in the coming quarters. The company said total headcount is being reduced by 20% from its peak of 375,000 at the end of 2007; the company had already announced in October that it was eliminating about 22,000 jobs from those levels. The mega-bank has posted four straight quarterly losses, including a loss of $2.8 billion during the third quarter.

In the executive suites of Citigroup, however, the titans of financial alchemy are wrestling with another issue: bonuses. How it can even be up for discussion is beyond my comprehension. Bonuses? For what? Does Citigroup have an internal policy for rewarding incompetence? If so, I know a few others who would fit in well like; W, Hank Paulson, and Ben Bernanke.

Seriously though, how can the board of directors even mull it over when Citigroup's share price is now trading below $9 when just last year it traded at $56? The mere thought is shameful.



Previous Day's Trading Room Results:

Trade Date: 11/17/08

E-Mini S&P Trades*
(before fees and commissions):


1) OTF sell @ 10:05am at 856.50 = -2.00 (1 lot)

2) FT buy @ 10:20am at 857.00 = b/e (1 lot)

3) Engf buy @ 10:35am at 856.75 = -2.25 (1 lot)

4) Algorithm positions (8)...combined daily total...-6.25

ZB (30 Year Bond) Trades*
(before fees and commissions):


1) No trades today.



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