Archive - Oct 2009

"The IMF’s Q2 COFER data show that central banks are increasingly reluctant to accumulate USDs. EM central banks appear much more aggressive than in the past in shifting out of the USD into other G10 currencies. This makes it likely that USD pressures will mount as, increasingly, the currency’s buyers of last resort are reticent buyers." - Barclays Capital

In a decision as shocking as Friday's surprise peace prize win, President Obama failed to win the Nobel Memorial Prize in Economic Sciences Monday.

While few observers think Obama has done anything for world peace in the nearly nine months he's been in office, the same clearly can't be said for economics.

The president has worked tirelessly since even before his inauguration to wrest control of the U.S. economy from failed free markets, and the evil CEOs who profit from them, and to turn it over to wise, fair and benevolent bureaucrats.

Some ominous moves out of the Hang Send and the Shanghai Composite overnight which may have everything to do with the latest piece from Caijing, which notes that according to banking sources September lending by China's four largest banks was the lowest so far this year at a paltry 110 billion yuan (from 166 billion in August), while the Bank of China disbursed a miserly 3 billion down from 72.2 billion in August.

• Watch for another 2009 market high today with no market volume
• Sunoco, Valero shut refineries as winter no match for fuel glut (Bloomberg) even as oil goes higher (Reuters)
• Iceland shrinks 8% as prices increase 11% in deepest recession (Bloomberg)
• Writedowns on mortgage servicing make even JPMorgan vulnerable (Bloomberg, h/t Paul)
• A path to downward mobility (WaPo)
• Mating in London means 4,000 people meet over price for metals (Bloomberg)

• Asian stock markets mixed on Monday before a string of US earnings reports this week.
• Australia to expand lifeline for residential mortgage-backed securities by $7.2B.
• British PM Gordon Brown to announce sell-off of public assets.
• Central banks flush with record reserves are snubbing dollars in favor of euros, yen.
• China shares mixed on profit-taking and pressure of IPOs.
• Crude oil rises for third day as demand may increase on economic recovery.
• Oil rises above $72 as investors eye US company earnings this week.
• Derivatives regulation proposals in US House move closer to Obama's plan.

A California Court case is headed for a resolution. It looks like AIG is the loser. But that means the taxpayers will suffer. If the case is overturned then the taxpayers will suffer. Another no win situation for the folks writing the checks.

Go long Gannett at your own peril (although the short squeeze has a little more to play out so you are probably cool for a few more days). According to the Minneapolis Star Tribune, in a memo submitted to staff on Friday, "USA Today publisher David Hunke said the average circulation at the Gannett Co.-owned newspaper was 1.88 million from April through September. That marks a loss of 398,000 copies, or 17 percent, from the same period the year before at the newspaper, which is printed on weekdays only." The reason for this unprecedented drop, which will put the paper in second position behind a growing Wall Street Journal, is the "growth of online news and the slump in travel pummel the newspaper."

First Steve Jobs and now Bruce Wasserstein? The head of Apple has had his share of disclosure issues regarding his health, which recently culminated with an (accelerated) liver transplant. It appears the CEO of Lazard could be next up on the health rumor pole. According to Bloomberg, Wasserstein "is in a “serious” condition after being hospitalized for an irregular heartbeat." The investment bank has added that it would "not be providing additional updates at this time." Could this confirm rumors from over 3 years ago that all is not as good with its CEO as Lazard would like to make it seem?

Like him or hate him, the author of The Black Swan does provide a unique and interesting perspective. Here is his entire presentation to the Long Now foundation from early 2008, a few short months before everything starting collapsing, and, in many ways some would say, proving him right. Of particular note: Taleb's personal disdain for "experts" of all sorts, is second only to that of Buffett and Munger.

On Sept. 4, the NYMEX October futures contract for natural gas closed at $2.73/mmbtu, a 7-year low, as the ratio of oil to natural gas prices ballooned to 25-to-1, compared to its energy conversion ratio of 6-to-1.

Now, just one month later, natural gas has rebounded 75% to close at $4.77/mmbtu for NYMEX November delivery last Friday on record high levels of natural gas in storage, leaving investors to wonder if prices have bottomed out and it's time to jump back into the market, or if the sector is dead.

The cremation of the dollar is spreading as other Central Banks realize what a nifty trick currency devaluation is. The BBC notes that tomorrow the CEBR (Centre for Economics and Business Research) will present a new forecast which calls for the BOE rate to remain at 0.5% until 2011, and to hit 2% in 2014 at the earliest. Furthermore, the pound will be the next carry currency, as it is now expected to drop to $1.40, and below €1. The culprit is the same as in the US: out of control budgets, which will be "moderated" by tax rises (precisely the thing Goldman was warning against earlier) and spending cuts. And, lastly, the CEBR sees the UK's QE program increasing by nearly 50% from £175 billion to £250.

This weekend’s WSJ interview with Lloyd Blankfein of Goldman Sachs by Holman W. Jenkins, Jr. is worthy of commentary by both sides of the Goldman fence: those that subscribe to the theory that Goldman is the Matt Taibbi coined “..great vampire squid..” or those that have taken Mr. Blankfein’s recent public apology to heart and have accepted his words that “…Goldman wants to be a force for good…”.

The last part of the Max Keiser interview with Janet Tavakoli. All relevant topics covered.

"Over the full ten-year period, we now see the deficit cumulating to $10½trn, up from $9trn previously." - Goldman Sachs

There's been a coup.