Goldman President Cohn Says "No Indication Goldman Is Close To Settling With SEC"

This is certainly not going to help the firm's plunging stock today. And some more from Cohn: "Goldman continues to serve its clients. Clients are very loyal." Again, Gary, where are they going to go? Luckily Goldman has a fixed income sales and trading anti-trust exemption so, yes, they will be there for as long as Goldman is not officially found to be a monopoly. And lastly, Cohn, when discussing the Volcker rule, says "it is unclear." On the contrary, we think it is pretty clear. What is even clearer is the massive impact on Goldman's EPS should it pass. But isn't prop only 10% of Goldman's revenues? Goldman should be perfectly viable even if it has to spin off prop, and continue to rake in quarter after quarteer without a single trading day loss. Right Gary?

Guest Post: High Hurricane Activity Threatens Gulf Oil Production, Cleanup Efforts

As hurricane season begins in the Caribbean and Gulf of Mexico, forecasters are predicting higher-than-usual activity that could disrupt oil and gas production in the Gulf and hinder efforts to clean up the Deepwater Horizon oil spill.

The U.S. Energy Information Administration said Tuesday that forecast hurricane activity could reduce Gulf oil production by 26 million barrels and natural gas production by 166 billion cubic feet. This compares with the median reduction of 5.8 million barrels of oil and 39.5 billion cubic feet of gas in a typical hurricane season.

Guest Post: Bank Exposure To Bulgarian And Romanian Sovereign Risk

Time to buy some peripheral European CDS - As our friends at Kerrisdale Capital point out, "There’s been a lot of talk recently about Hungary following in Greece’s footsteps and potentially defaulting on its debt. Bulgaria and Romania are two other weak economies in Eastern Europe, and the chart below shows bank exposure by country to Bulgaria, Romania, Hungary and Greece. The situation in Greece could make it difficult for Bulgaria and Romania to roll over their debt, an event which would in itself reduce the value of Greece’s assets, creating further difficulty for Bulgaria and Romania."

Republicans Seek To Prevent Strategic Defaulters From Getting Taxpayer Bailouts

The recently ubiquitous phenomenon of homeowners strategically defaulting on their mortgage, and using the proceeds to "buy season tickets to Disneyland…take a Carnival cruise to Mexico…” and go out to dinner more often" and generally boost "consumption" has received wide media attention if not societal condemnation... Yet. Republicans have launched a Motion To Recommit HR 5062 which would amend the bill to "prohibit individuals who strategically default on their mortgage from accessing the FHA program and protect taxpayers from financing a bailout of FHA programs." We doubt this proposal will be accepted lightly by Washington which is now convinced that since the rest of the world is collapsing and it can issue debt with impunity, the much coveted and thermodynamically impossible free lunch is finally here.

Guest Post: The Road To Perdition – With Keith McCullough Of Hedgeye Risk Management

Over the next 3-6 months, US debt obligations will start maturing. Although the mainstream media is not yet focusing on the coming crisis, Keith McCullough from Hedgeye Risk Management and a contributor to Bloomberg says we need to prepare for the road to perdition. I caught up with Keith to discuss three hot topics for our Wall St. Cheat Sheet podcast: 1) The imminent US debt maturities; 2) Whether we can expect to repeat Japan’s lost decade(s); and, 3) What the Federal Reserve needs to do to set us back on the path to prosperity.

Euro Surges In Wake Of Goldman EURUSD Downgrade, Prop Buying

Yesterday, we wrote: "Full blown capitulation from the Goldman FX (strategic not tactical)
team: the firm goes from a $1.35 target on EURUSD to $1.15. Score one
more golden star for Goldman-Client relations. On the other hand,
Thomas Stolper is officially advising clients to sell their euros to
Goldman. There is no clearer signal to buy the beaten down currency." This was at a EURUSD of 1.1950. Sure enough, just over 12 hours later, the EURUSD hit 1.2133 (and dragging the little computerized gimmick known as the stock market with it). Goldman's "prognostication" track record is starting to challenge that of the head seer Bernanke himself. At least doing the opposite of what Goldman advises its clients continues to yield a 100% win percentage.

Jeffrey Sachs Sees The Light? Columbia Professor Bashes Keynesian Policies

A few weeks ago Zero Hedge offered a modest critique of Jeffrey Sachs after his disastrous performance in a round table debate with Hugh Hendry and Gillian Tett, in which the Columbia professor came out sounding as clueless as a first year economics major. It now appears that Mr. Sachs may be attempting to atone for his myopia memorialized by the BBC, in the following FT Op-Ed in which he unabashedly lashes out at Keynesianism. In it we read: "Mainstream Keynesian economics is facing its last hurrah. The global fiscal stimulus championed last year by the Obama administration is coming undone, repudiated by the same Group of 20 that endorsed it last year. Now, against a backdrop of a widening sovereign debt crisis, we need to abandon short-term thinking in favour of the long-term investments needed for sustained recovery." Such words of caution from a man who as recently as two weeks ago was encouraging precisely the very steps he is now purporting to be against. Nonetheless, we greet with open arms this most recent act of contrition by yet another economist who leaves the warm innards of the corpse of the economic false religion, and finally sees the light. Welcome Jeffrey.