- Norway Buys Greek Debt as Sovereign Wealth Fund Sees No Default (Bloomberg), and in two years those responsible for the decision will be sued for criminal negligence; In other news ECB funding to Greek banks stays within €0.3 billion of all time high at €95.9 billion. Perhaps Norway meant buying ECB bonds?
- Funniest self-serving statement of the year: Greece Says Bonds Now an 'Opportunity' as Budget Deficit Falls (Bloomberg)... as opposed to yesterday when they were a catastrophic investment. Also not mentioned was the austerity is really working as Greek industrial production plunges far below expectations
- And guess what - more QE coming to a broke Europe near you: BOE Mulls ‘Second Wave’ of Bond Buying as Rebound Ebbs (Bloomberg)
- Base metals overnight flash crash in China (Reuters)
- OECD Says Slowdown `More Pronounced' Than Anticipated (Bloomberg)
- European Crisis Flares Up in Ireland (WSJ)
- A recent uptick in insider buying is normally considered a positive for the stock market, but it may be misleading for investors (Reuters)
- Japan Plans to Seek Discussions With China on Bond Purchases (Bloomberg)
John Taylor Comments On The End Of Bismarkism, Says Greece Is Doomed, And The Euro Will Not Replace DollarSubmitted by Tyler Durden on 09/09/2010 - 08:03
On one hand you have the Greek finance minister uttering the most self-serving statement of the year, saying Greek bonds are no longer something to fear (even as Greek industrial production falls 8.6% on expectations of -5.7%), on the other you have John Taylor saying that "unless a miracle takes place, the Greek situation will deteriorate and other countries will follow in the next few years." That's fine: G-Pap is currently taking advanced transmogrification lessons as the local alchemy university - even miracle workers have to start somewhere.
- Afghan president's brother made $800K in Dubai using loan tied to Kabul Bank.
- Asia stocks up, SKorea unexpectedly leaves key rate at 2.25% as recovery slows.
- Australian employers' hiring for August exceeds estimates; Currency gains.
- BOE mulls 'second wave' of bond buying as rebound ebbs.
- China trade surplus may top $20B, stoking tension over yuan policy.
- China's stocks decline most in 2 weeks on concern about new property curbs.
- Euro slides to $1.2693.
- Norway buys Greek debt as sovereign wealth fund sees no default.
The trade balance, jobless claims, and the Fed’s balance sheet….
RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 09/09/10
Having worked for a big box retailer for 14 years, I understand the dynamics of a high growth rollout of stores as a key to increasing market share and profits. Some of the best retail names in the US have practiced the identical strategy of concentrating many stores in each market to drive the small competitors out of business. This strategy worked wonders for Lowes, Wal-Mart, Target and Kohl’s during the early part of this decade. The combination of solid same store sales and opening new stores is a fantastic combination during good times. The results actually make the CEOs of these companies think they are brilliant. Their store expansion models based on rosy assumptions are followed like they can’t go wrong. What these CEOs didn’t realize was that their expansion plans were based on lies and frauds. If they had advisors who could give them a reality check, they could have avoided the massive downsizing that awaits them. Their hubris didn’t leave room for a reality check. The population of the US has grown from 281 million in 2000 to approximately 308 million today. We’ve had a 10% population increase in 10 years. Consumer expenditures have grown from $6.7 trillion in 2000 to $10.3 trillion today. This is a 54% increase over the course of the decade. Amazingly, real average weekly earnings have only gone up by 6% in the last decade.
"I Am Jim Cramer And I Approve Of The President's Message (Because The Market Moved Up By 3 Points)"Submitted by Tyler Durden on 09/08/2010 - 23:23
There are women (and men) who will do anything for a price. Then there is Jim Cramer who will go from hating Obama (and the impact of his policies on the market, all the while misinterpreting such impact: i.e. the brilliant "Passage of the healthcare bill means a double dip is coming", and other such pearls), to loving the president, in the span of 40 minutes just so long as the market does not vommit for the duration of a teleprompted address. And the master of momo mediocrity may want to sit down with his "Stop Trading" friend Erin Burnett so two can clarify the official CNBC stance on Obama and his policies: Burnett: "I think the problem is you have the fastest job creation in this recovery than you have in any recession in 25 years... Technically speaking this recovery has not been tepid." Cramer: "I can show you chapter and verse how this is the weakest post-recovery environment since World War II." Sigh. Then again, if it makes for good theater, and the filling of some free ad slots in another Nielsen-rating impaired cable station, so much the better.
Zero Hedge is happy to announce its most recent collaboration, this time with Atlantic Capital Management, whose special reports we will post in the future on a periodic basis. We start off with the September report , which is divided into three parts: Part 1 – The Economy Can Go From Bad to Worse, Part 2 - Self-Similarity (on High Frequency Trading and fractal systems), and Part 3 - The Myth of Valuations. We hope you find the report as interesting and informative as did we.
Recently, we have had a number of queries about real estate. And no wonder. For starters, real estate prices have come down. Plus, in an environment with next to zero interest rates, the idea of possibly picking up some income-producing property on the cheap holds a certain appeal to some. Then there’s the fact that real estate is very much a “tangible” – and so should hold up reasonably well, should the fiat currency system come undone, as we expect it will before this crisis is over. The following, from reader and correspondent Ross, considers the issue of home buying from an interesting angle. - Caser Research
ECR Research Says That The Point Of Recognition Is Approaching As The World Realizes Ben Bernanke Is NakedSubmitted by Tyler Durden on 09/08/2010 - 18:33
In recent decades, we have become increasingly accustomed to central banks coming to the rescue when stock prices and the economy slide too far. Despite the fact that economies everywhere have been stimulated fiscally and monetarily on a large scale since the outbreak of the credit crisis, the recovery has only been modest. Worse still, the recovery in the US has already clearly declined again and it looks as if this will shortly happen in Europe, too. On the basis of experience over the past few decades, the assumption is that central banks will come to the aid once more. Especially as it is evident that we cannot expect much further help from the fiscal quarter. In theory, central banks are certainly capable of helping. In practice, however, in our view they no longer have much room to maneuver. After all, the concern is that if monetary policy is loosened much further confidence in the central banks will be lost. That swiftly leads to a currency crisis and soaring long-term interest rates. In other words, a disaster for the economy.Assuming that there, indeed, turns out to be little room left for the monetary authorities, then we foresee the S&P 500 index rapidly falling below the crucial 1,010 level. In our view, this will be accompanied by EUR/USD falling over the coming months to quarters towards approximately parity. We then also envisage yields on 10-year US and German Treasuries falling further by around 0.75% before soaring due to fears of further deteriorating public finances. - ECR Research
Retail Capitulation: Stock Outflows Surge By Over $7.5 Billion In 18th Consecutive Week Of Record Stock Market BoycottSubmitted by Tyler Durden on 09/08/2010 - 17:49
This is getting really ridiculous. In the week ended September 1, domestic equity mutual funds saw a near record $9.5 billion in outflows: the biggest one week outflow in 2010 since the $13.4 billion redeemed in the Flash Crash week. The trend developing is simple: retail investors withdraw increasingly greater numbers in weeks in which the market is down even a little, and withdraw just a little in weeks in which the low-volume melt up presents them with an opportunity to get out at a better price level. Of course, the common thread is that as we have said for 18 consecutive weeks, retail just wants out. And now that, courtesy of Mary Schapiro, retail has finally put two and two together, and knows that even the regulators are concerned about redemptions, which are perceived by the SEC as being a function of distrust in market structure, we now fully expect more and more redemptions. Year to Date the total pulled out is a whopping $64 billion, incidentally with both inflows and the market having peaked at the same time in April. On thr other hand, if the market were tracking mutual fund redemptions (whose net liquidity is now down to just 3.5% of assets and getting worse by the day), the S&P would be in the 900 range. Once the destructive impact of the Fed's daily meddling in the stock market is eliminated, it will get there. The longer stocks are artificially held up at current artificial levels, the greater the crash when reality and anti-gravity finally meet.
The third quarter will close in 16 market days and unfortunately for the TBTFs this means that Q3 will be the most disappointing quarter in years, unless market volume picks up dramatically in the next 3 weeks. Alas, due to the double whammy of the flattest yield curve in years, and the wholesale dereliction of stock trading by retail and other investor classes, the recently key profit drivers for Wall Street banks will be most disappointing. Since M&A has not picked up, banks will be hoping that underwriting advisory can fill in the hole. Alas, IPOs never managed to get out of the gate, which means the fate of EPS targets being met lies in IG and HY bond issuance proceeds. However, with underwriting proceeds of just 1% in the case of the former, it will take a lot for this category to recoup even a small portion of lost revenue in the much more profitable market making/flow/prop category. Lastly, the old trick of reducing NPL provisions will not work this time. All in all, if you run into your banks CEO/CFO/COO, stay out of their way: most likely they are not having a good day.
More Decoupling: Goldman Continues Bashing The USD, Sees Short-Term Dollar Strength Followed By QE And A PlungeSubmitted by Tyler Durden on 09/08/2010 - 16:53
Goldman's Tom Stolper, in the firm's monthly FX Global Viewpoint, is once again bringing up the theme of a biphasic future in the FX world (and thus, in macro in general), which will see an initial bout of strength for the dollar, which would result in a EURUSD all the way down to 1.22 in 3 months, followed by domestic QE and accentuation of US weakness, which would in turn jettison the dollar, and spike the EURUSD to 1.35 and 1.38 in 6 and 12 months. More importantly, the overarching theme of increasing pessimism and general dread in the writings of Goldman research analysts is becoming ever more palpable, having first originated in the works of the firm's economists, and now shifting to salespeople and product strategists. This in itself would be sufficient to make people believe that Goldman has truly turned bearish, although numerous reports out of the open outcry pit that Goldman's rep repeatedly kept forcing shorts at 1,100 to cover their positions during the day, seems to detract from this particular theory... At least in the short-term.
RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 08/09/10
Ever wonder how Moody's keeps itself busy in all the free time it has when it is not focusing on how to break the news that the US is really a B-rated credit? Here it is: the rating agency is now focusing on the ratings of villages (in this case the Village of Johnson City) with $8.1 million in debt and 14k citizens. And, not too surprisingly, a village somewhere in the bowels of upstate New York was just downgraded from A1 to A3. As to when Moody's will get back to providing a fair and honest rating on he insolvent developed world, they will get back to you.