EuroControl reports that of 28,000 European flights expected on Monday, just 8-9,000 will actually take off: 70% cancellations for third day in a row, five days of major air traffic disruptions. At what point will this impact Obama's bold New Export Economy plan?
The crisis everyone forgot just got worse than ever. And now that European and IMF rescuers are unable to get to Greece by air courtesy of Iceland's floating fiberglass factory, Greek 3 year just hit an all time record wide spread of 652 bps, even as the 10 Year is trading a 470 bps to Bunds or a 7.8% yield. Sorry G-Pap, no more guns or fire extinguishers.
And some more views on Iceland: "What if it spreads to the “big one”? Historically, eruptions of Eyjafjallajökull have often preceded eruptions by the bigger Mount Katla because there apparently are “eruptions channels” between the two. Katla’s last eruption was in 1918. Environmentalists believe that an eruption by Katla could lead to the melting of glaciers and flooding in Iceland as well as greater and more dense clouds down over Europe causing a negative impact on several sectors, particularly agriculture. The Geological office of the U.S. Interior Department says that “ash fall can have serious detrimental effects on agricultural crops and livestock depending mainly on ash thickness, the type and growing condition of a crop."
- Thomas Hoenig op-ed: Keep the Fed on Main Street (NYT)
- Internal Goldman inquiry found Fab Fab to be in the clear, probably will not fire the Frenchman, as the SEC's probe commenced in August 2008 (FT)
- Weil: Goldman's Abacus spin dodges the big question (Bloomberg)
- Lowenstein: Goldman's staged explosion deserves apology (Bloomberg)
- Schroeder: Buffet rented good name to Goldman too cheap (Bloomberg)
- Radioshack sale rumors getting more aggressive, someone really needs to dump their position: Shack sale talk heats as CEO eyes pay'Day' (NYPost)
- Citi, with a meaningless market cap, beats meaningless estimates on lower writedowns as FASB 157 is a long lost memory and mark to myth is the norm (Bloomberg)
- Asian stocks fall the most in two months on Goldman Sachs probe.
- China’s currency appreciation may help it to overtake Japan.
- China told banks to stop loans for third-home purchases in cities.
- EU and IMF to discuss new austerity steps.
- European shares lower, airline shares fall.
- Home sales, goods orders probably rose, showing US recovery sustainable.
- SEC, after Goldman, to investigate other firms that may have mislead investors.
RANsquawk 19th April European Morning Briefing - Stocks, Bonds, FX
The One Last Ethical Bank? Bear Stearns Just Said No To The Goldman-Paulson Scheme, Did Not Pass "Ethics Standards"Submitted by Tyler Durden on 04/19/2010 - 00:38
Surprises these days come from everywhere: one day we find that some of the wealthiest hedge fund managers are only so thanks to clever schemes involving the enabling of investment banks who have the biggest rolodex of "putzes," finding the last remaining "greater fools" available, another day we discover that a deal that Goldman had no qualms about, was passed on by what may well have been the last remaining ethical bank, Bear Stearns. Greg Zuckerman, as pointed out by Wall Street Manna, in his book "The Greatest Trade Ever" describes Paulson's meetings with Goldman, Bear and Deutsche to "ask if they could create CDOs that Paulson & Co. could essentially bet against. Ironically, it was Bear Stearns that rejected the offer: "[Bear Stearns trader Scott Eichel] worried that Paulson would want especially ugly mortgages for the CDOs, like a bettor asking a football owner to bench a star quarterback to improve the odds of his wager against the team ... he felt it would be improper." Eichel told Zuckerman, " 'It didn't pass our ethics standards; it was a reputation issue, and it didn't pass our moral compass." Sure enough, Goldman et al (allegedly) took down Bear shortly thereafter, and gave it away to Jamie Dimon for pennies on the dollar. In the world of Wall Street, where everyone tries to destroy the dumbest, those who play by some ethical historical rulebook all end up seeing a "run" on their liquidity sooner or later.
Former Outdoorsman, Goldmanite And "Chump" Neil Kashkari Discusses PIMCO's Equity World Domination StrategySubmitted by Tyler Durden on 04/19/2010 - 00:07
A former Goldmanite who failed to bail out the world and was called a Chump by Elijah Cummings, proceeded to chopped down trees for kindling and fight off bears in the backwoods, is now stuck peddling a second-tier equity product for a bond fund. The world sure is messed up.
One of the most ludicrous claims over the past few days has been that the shady aspect of Goldman's mortgage unit operations began and ended with Fabrice Tourre, as per the SEC's complaint. The NYT's Louise Story has just disclosed the far too obvious: "By early 2007, Goldman’s mortgage unit had become a hive of intense activity. By then, the business had captured the attention of senior management. In addition to Mr. Blankfein, Gary D. Cohn, Goldman’s president, and David A. Viniar, the chief financial officer, visited the mortgage unit frequently, often for hours at a time." Louise presents a comprehensive analysis of the chronological shift in mood over US real estate among Goldman's ranks, in which it become obvious that the very heads of Goldman were instrumental in making the critical decision to part ways with Wall Street's optimistic groupthink, driven primarily by the input of Goldman salesmen who listened to hedge funds and advised the firm's executives and analysts (coupled with the input of Tourre and Egol) that some of the "smartest" money was turning bearish on real estate as early as 2006.
On April 13 we pointed out that Citi put on a long EURUSD recommendation with a 1.349 stop. The cynics in us were confident that this was merely a way for Citi to dump its EUR book.
[Citi] has just issued a long EURUSD call at 1.359. The call by technical
analyst Aron Gera, proposes a stop at 1.349. In other words it is now
Citi's turn to offload its EUR book. Gera's recommendation is based on
technical analysis, which, in the form of momentum chasing, is all that
seems to work these days. Aron thinks the EUR could surge to an 11-week
high, even as the GBPUSD could jump as high as 1.5966 alongside EUR
Mission accomplised. The euro is plunging (last at 1.346, just barely above the 1.345 option barrier) as Shanghai is dropping, Japan is not doing all that well, and half the world is lining up to sue Goldman Sachs. A surging dollar will do nothing to help a market that has just had its first reacquaintance with risk after three months (sorry Bernanke, even endless liquidity is not omnipotent). At least Citi managed to sucker in a couple of its best clients. Will these clients now sue Citi if they found out that Citi was, gasp, shorting the EUR against them?
"Although Goldman Sachs held various positions in residential mortgage-related products in 2007, our short positions were not a 'bet against our clients.'"
That claim, from Goldman's letter to its shareholders,
is easily refuted. The S.E.C. has brought fraud charges on one of
Goldman deals known as synthetic subprime mezzanine collateralized debt
obligations, or CDOs. While most of these deals remain shrouded in
secrecy, one of them, Anderson Mezzanine Funding 2007, Ltd.
lays out its blueprint in sufficient detail so that we can pinpoint how
and why this transaction's failure was never in doubt.
"And then the Volcano. Needless to say, at this early stage it is very difficult to say anything meaningful about the effect on the European economy, but here are my very preliminary thoughts (surely subject to possibly significant revisions): First, if the disruption to air traffic is contained to a week or less, then I think the total effect will be minimal. My guess would be that the effect on Q2 GDP would be within a rounding error (of 0.1pc) around our +0.8pc qoq forecast. Off the top of my head, air transportation is no more than some 0.1 pc of European GDP, and one would assume that a lot of what's been lost in the air will be made up in coming weeks. Also, ground transportation is having a field day, as illustrated by the fact that all trains out of Florence was fully booked for the next 3 days and none of the car rental companies had cars available for the next 9 days." Erik Nielsen, Goldman Sachs
A day before the GS news broke, we pointed out that the market is poised for a correction at least based on Fib. Sure enough, the ludicrous non-stop rally from the February lows topped at exactly a 61.8% extension of the previous sell-off (1211.6). Was the Goldman news predicated by the SEC's religious following of Fibonacci signals? Is the 100% Fib retracement next (1144)?
Watch volcanic ash diffusion in super slo-mo, as EuroControl reports: "At the current time, air traffic control services are not being provided to civil aircraft in the major part of European airspace. This includes Austria, Belgium, Croatia, the Czech Republic, Denmark, Estonia, Finland, most of France, most of Germany, Hungary, Ireland, northern Italy, the Netherlands, Norway, Poland, Romania, Serbia, Slovenia, Slovakia, north Spain, Sweden, Switzerland, Ukraine and the UK."
"[Goldman] designed something intentionally complex that's basically a mechanism of transferring money from you to John Paulson. John Paulson, it is true, has not been charged with anything. But he was involved in designing the security. For all we know right now it was probably his idea and if he walks away without being charged, it shows how broken our system is." This is Simon Johnson discussing the Goldman fraud charges on Friday night with Bill Maher. Could the public's attention now be shifting ever more toward those top performing hedge fund managers who year after year made billions, and instead of praising them for their acumen, are now seeing a sentiment shift toward one of wealth merely as a result of massive criminal collusion between the hedge funds and the big banks... well big bank, cause Goldman is really all that's left of the traditional broker/dealer complex. Which once again invokes our long-standing point: the DOJ should immediately break up Goldman Sachs into many smaller entities, due to the firm's unquestionable (allegedly) criminal monopolistic impact on the marketplace. Christine Varney - wake the #&$* up! And whatever happened to that FBI investigation into SAC? Will Stevie Cohen be next as the mid-term elections approach and the public demands blood from someone?