Bond insurer soap opera continues. MBIA (MBI) announced this morning in their form 10-K that they see material mark to market losses in January. They also stated that they essentially stopped taking on any new business for the time being. It is still amazing that the ratings agencies gave Ambac and MBIA the AAA rating. I wonder what S&P and Moody’s will do now that MBIA has announced "material losses". Will they have to go back to the drawing board and re-evaluate now? Who knows, but I will say that there is a growing belief that the ratings agencies have become a laughing joke.
Ambac ‘bail out’, as reported by CNBC has hit a snag. Apparently over how much money is needed to keep the AAA ratings. No matter how you look at this it remains a huge mess and the long term outlook for the bond insurers still looks bad.
Personal Consumption, spending, and income data came out this morning and it was essentially unchanged. There has been no material change in consumer spending, it remains weak. And income rose only slightly, and when compared to inflation the personal income is getting weaker.
The currency ‘carry trades’ have been unwinding throughout the night with the Japanese Yen continuing to go higher against the US dollar. Overnight the US Dollar hit another new low at 73.58. As the US dollar continues to deteriorate it brings added worry that large foreign investments in the US dollar could begin to pull out as there appears to be no bottom in sight for the dollar at this point.
Futures are down significantly at this time. We remain in our short position on the Dow Jones Industrials.
