July’s total average volume of 6.2 billion shares traded a day was the lowest since June 2007, according to Ana Avramovic at Credit Cruisse. Perhaps even more eye opening is how “decidedly back-loaded” some of the volume patterns have become this summer, on both a weekly and daily basis.
Since Memorial Day, daily volume has been higher on Thursdays and Fridays than during the first three days of the trading week. On a daily basis, a flurry of activity is typically picking up toward the end of a trading session.
“Intraday volumes have become so concentrated at the end of the day that nearly 10% of the day’s volume happens in the last 10 minutes now,” Avramovic says.
Charts of declining volume and some more in this WSJ article.
The slowmotion fall of the “perfect” economy should receive more attention. From Macrobusiness.
A recent staff report by the International Monetary Fund (IMF) shows an estimate of capacity utilisation in China. Interestingly, according to IMF’s estimation, China has been operating below capacity (albeit not unreasonably) even at the peak right before the 2008/09 financial crisis, and that was supported by external demand which no longer quite exists now. China has built even more capacity since then, which is able to serve the demand from a global economy does not exist. Capacity utilisation has dropped from about 80% before the crisis to a mere 60% in 2011. That compares with about 78.9% for the US currently for total industry (which is not very high by US’s historical average), and 66.8% at the financial crisis trough according to the Federal Reserve. In other words, current capacity utilisation in China appears to be even lower than that of the US during the 2008/09 financial crisis. (Full artcle here).
Guest post by Azizonomics.
In attempting to stimulate risk appetite by taking “safe” assets out of the market, the Fed has actually achieved precisely the opposite of stimulating productive investment. First, it has turned bond markets into a race to the bottom as bond flippers end up piling into the very assets that the Fed is trying to discourage ownership of — because what’s the point of holding bonds to their maturity when the Fed will jump in at an even lower price floor, thus assuring the bond flippers of a profit? Second it has energised other safe asset markets (such as gold) as longer term investors look for alternatives to preserve their purchasing power in the context of a global economic depression.
The Fed is firing at the wrong target; the real problem — the thing that is causing investors to scramble for safe assets — is an economic depression brought on by (among other non-monetary causes) the deleveraging costs of an unsustainable debt bubble. Without addressing the problem of excess total debt, the Fed is firing blanks.
However, there seems little prospect that the Fed will listen to the debt-watchers who actually predicted the crisis. The likelihood is that the Fed will continue to attempt to take safe assets out of the market. And after treasuries, what will the Fed try to take out of the market?