Morning Thoughts From Art Cashin

Influence Of Dollar/Euro Mutates Somewhat. Is It Real Or Temporary? – Stocks rose in light volume regaining nearly all of Tuesday’s losses. Crude oil also regained its losses from the prior day. Gold, however, opted out of the traditional troika. Some of the stock gain was attributed to assurances in the Bernanke testimony that rates would remain low for a very long time. Certainly, the timing of the morning rally lent credibility to the Bernanke influence. Stock rose almost vertically around 10:20 as his testimony began. The dollar’s movements showed some muted influence on both stocks and oil. Shortly after stock trading had begun, the dollar weakened from pre-dawn levels. There was an Alice in Wonderland type thesis around the mid-morning softening of the dollar. It occurred as TV screens showed the demonstrations in Greece turning rather ugly. The thinking was that European partners might be more motivated to help, lest the violence worsen and spread to other challenged sovereigns. As the images left the screens, the dollar began to tick back up. - Art Cashin

Greece Deterioration Hits Nitrous: IMF, EU, ECB Find Greek Plan €4.8 Billion Short

Greeks just can't catch a break. Market News reports that a "joint report drafted by the European Commission, the International Monetary Fund and the European Central Bank finds that the calculations contained in Greece's budget plan falls €4.8 billion short of what is needed to meet its deficit cutting objective this year" according to senior Greek government officials. Well, our RBS spin-unadjusted take on this data is bearish to quite bearish for the country's Moody's downgrade prospects, which is the gating factor to utter and total chaos once the GGB are no longer accepted as collateral by the ECB. Not to mention Greece's bond issuance propensity (but anonymous government sources have said about 50 times this week the.bond.is.getting.done), and its Bund spread, which at last check was set to probe recent record wides. In the meantime there is no bank run, repeat NO BANK RUN in Greece.

Blame It On The Snow

Today's ugly initial claims number has already found its scapegoat: excess February snowfall. As the NCDC charts below demonstrate, February 7-13 drought/snow debt levels were certainly material. This has caused reputable firms such as Stone & McCarthy to speculate that weather sensitive jobs, such as construction, have "probably suffered." Yet with ongoing inclement weather, with today's Nor'Easter being no exception, this "non-recurring" component will be a prevalent one for at least 2 more weeks, allowing pundits to provide whatever explanation they wish to recent not so good Insurance Claims patterns.

Ben Bernanke Is Looking Into Goldman "Arrangements With Greece"

"Yes, Senator, I just want to say first of all we are looking into a number of questions relating to Goldman Sachs and other companies and their derivatives arrangements with Greece and this issue as well. As you know credit default swaps are properly used as hedging instruments. The SEC, of course, has been interested in this issue. Obviously using these instruments in a way that potentially destabilizes a company or a country is counterproductive. The SEC will be looking into that. We'll certainly be evaluating what we learn from the activities of the holding companies that we supervise here in the U.S." - Ben Bernanke

Daily Highlights: 2.25.10

• Asian stocks were mostly higher Thursday, lifted by Bernanke's reassurance that interest rates will stay low for some time.
• Euro plunges to lowest level in year against Yen on risks to Greece rating.
• German unemployment rate edges up to 8.7 percent in February.
• India forecasts 8.2% growth next year, giving room for exit from stimulus.
• Japan stocks fall for 3rd day on strong yen; Toyota down despite president's US testimony.
• New home sales plummet 11 percent in January, the 3rd monthly decline in a row.

Guest Post: The Helicopter Departs

The Fed move to raise the discount rate on Feb. 18 has initiated a discussion of the timing of the removal of accommodation. Unfortunately, framing the subject as being relevant to accommodation is a mistake. The implementation of a near zero interest rate policy is just another component of emergency measures used to cure a systemic bank run. The emergency measures need to be viewed completely separate from the setting of a policy rate for economic management purposes. The potential raising of the Fed target rate from near zero to near 1% should not be called a tightening of monetary policy. There exist many harmful side effects of an emergency rate policy.

Goldman Suspends Simon Property Group Rating

Update: Goldman is advising Brookstonefield. Explains it all.

Innocuous... Or something strategic, and Goldman-conflicting, coming down the pipeline? The excuse: "We have suspended our investment rating and price target on Simon Property Group (SPG) because there is not currently a sufficient basis for determining an investment rating or price target for this company. Our previous investment rating and price target are no longer in effect and should not be relied upon." Well that's an odd excuse.