Archive - Oct 14, 2009

A new study out of NYU Stern School of Business finds what many have known intuitively for years: namely that a material portion of hedge fund managers (over 20%) routinely misrepresent or outright lie about their funds and associated performance.

"We continue to feel that Holiday 2009 revenues will be modestly down, and profits will be up, from 2008s, with any surprises most likely to occur on the downside. There do not appear to be any macroeconomic forces at work that would lead us to conclude that the consumer will be better positioned to spend during the balance of 2009 than he/she was during the similar period of 2008. A key factor that we will focus on will be third quarter-ending inventory levels. Although they will most certainly be down from 2008 levels, they may not have fallen enough to avoid the rampant pre-Christmas discounting that took place in 2008." - Moody's

Amid a bankruptcy, massive restructuring, brand failures and division sales, General Motors aims to grow faster than China’s entire auto market in 2010, according to its China chief Kevin Wale. Having outperformed China’s overall market thus far, during the first three quarters of 2009- 2010 is bound to be a banner year? Right? Right.

"We believe you are seeing several hundred additional smaller regional based banks go-- you know, not make it..." - JPMorgan

Developing story per the WSJ: In what could become a repeat of the New York State pension fiasco, the fund's California brethren at Calpers are now launchinga "special review" of fees paid by money managers to placement agents. Usually where there is smoke... As Zero Hedge has disclosed previously, some of the most prominent private equity firms have for years been recipients of Calpers' generosity. It will be interesting if more kickbacks to and fro these entities is uncovered as a result of the review.

The media billionaire mogul, Sumner Redstone, through his holding company National Amusements Inc., plans to sell-down stakes in CBS and Viacom Inc. to pay-off debt. Alleviating concerns amid a $500 million debt payment coming later in the month.

With the New York's Stuy Town implosion getting picked up by the Wall Street Journal months after being written about on Zero Hedge, the question now is what the next landmark property to go bankrupt will be. According to Real Estate Alert, the iconic Union Square W Hotel may just be it. The hotel, which was acquired by Dubai's troubled sovereign wealth fund, Istithmar, for $285 million in 2006 (one of the few acquisitions of a hotel at a price of more than $1 million per room) has been bleeding cash lately after room rates have declined by 24%. The result has been an inability for the owner to even meet debt service obligations: a sure sign the current balance sheet is doomed, with an outright default just a matter of time.

After making repeated killings as a short (and being compensated for it), John Paulson is now actively looking for undervalued long opportunities (that are not misreported by the NYPost). Such seems to be the reasoning behind his latest disclosed involvement in insurer Conseco, where he is now the proud owner of 9.9% of the common stock after a $280 million investment.

"This administration without any experience is doing more damage than is easy to assess at the moment, but I can tell you I am sure that we are moving in the wrong direction and i say that as half a democrat and half a republican. What we are seeing now just doesn't make sense. The priorities have all been inverted." - Steve Wynn

Earnings are coming in higher than expected not surprisingly. Some of the details though such as margin for Intel are trully better than what was baked in. On the day we are getting close to the topside resistance trend joining recent highs around 1,087/1,088. Above that the topside of the expanding triangle is resistance at about 1,100, but given divergence I would rather expect ranging between 1,077 and 1,087 during the day before the next wave of earnings barring any data coming way off line one way or the other. There is a minor resistance around 1,071 below that, but should we break 1,077 the real support comes in at 1,065.

• JPMorgan reports better than expected results, loan losses increase (AP)
• Japan bond optimism at 8-month high as growth prospects before second largest economy wane (Bloomberg)
• China to curb steel production to reduce oversupply (Bloomberg, h/t deadhead)
• Geithner aides reaped millions working for banks (Bloomberg, h/t donald)
• Don't reinflate the old bubbles (WaPo)
• Dollar slumps to 14 month low (Reuters)

• Bank of Japan holds rate at 0.1%, doesn't comment on ending credit steps.
• Baucus Health Overhaul plan is passed by Senate panel with Snowe's support.
• China to curb steel output to reduce oversupply: Wuhan, China's third-largest mill.
• China's exports drop by least in nine months as global economy strengthens.
• China's central bank says foreign reserves hit record high $2.273T shortly.
• China shares rise on hopes for better 3Q corporate earnings, led by financials, property.

One of the quandaries of running a subscription service is that
when you have some really juicy stuff, you inherently limit the
audience that you are able to reach. Normally, this isn't that big a
deal. When you believe that there is a mass cover up aiming to prop up
the largest cadre of zombie, insolvent companies in modern history it
becomes a much bigger deal. This leads me to distribute a significant
amount of research for free.