Archive - Nov 5, 2009

Among the names listed are Zvi Goffer, Arthur Cutillo, Jason Goldfarb, Craig Drimal, Emanuel Goffer, Michael Kimelman and David Plate. Full complaint enclosed. Some of the illegal actions highlighted include the purchase of 710,000 shares of 3-Com by the seven. Also, the Hilton LBO once again is prominently featured as one of the misdeeds. In other news, Moody's just can't catch a break: although if they are set on sucking as a rating agency, at least they can be terrific as an information leak.

One of the key departures by the FOMC yesterday in comparison to prior rate statements, was providing a glimpse into what the specific economic conditions are that warrant continued "exceptionally" low rates. Among these the Fed outlined "low rates of resource utilization, subdued inflation trends, and stable inflation expectations"- so long as there is no perceived change to any of these, expect rates to persist in the 0-25 bps zone. Goldman provides some valuable insight on how to interpret these three key considerations by the Fed.

In our latest piece (within a series of analyses that detail both the technical and fundamental landscapes of gold, silver, copper, oil, the CRB (Commodity Index), the US Dollar, the EURO and the remaining major currencies of the G8 in relation to one another), we at Fibozachi present an initial look into the technical composition of gold.

New stocks implicated in insider trading scheme include 3-Com and Avaya. More to come. Attached is an overview of Rick Schottenfeld's hedge fund.

• This is just the beginning: Bank of England extends Quantitative Easing by 25 billion pounds to 200 billion, holds rates steady, wishes it could push rates to -50% (Reuters)
• ECB holds rates, clues on withdrawal sought (Reuters)
• No Solitaire was played in Q3 - worker productivity jumps 9.5% in Q3, while unit labor costs fall 5.2%, in other news, this year your bonus is your job, like last year (Bloomberg, AP)
• From the wrist slap department: UBS fined 8 million pounds by UK regulator for unauthorized trades (Bloomberg)
• Professor Colander tells Congress economic models are flawed (Wall St. Cheat Sheet)
• John Crudele: Obama's gibberish on jobs makes my job easy (NY Post)

We would like to highlight in US treasuries the 10Y future support at 117. This is the neckline of a H&S pattern within the right should of a bigger picture H&S pattern with neckline and crucial long term support at 113-15. We very much expect to test 117 over the next few sessions, and the daily chart shows how the 200-dma has been resistance and envelop on the upside recently and is guiding us lower after the recent retest. It is worth noting that the relatively dovish statement by the Fed yesterday in light of some expectations by a few market participants of a more hawkish stance led to some steepening and selling in the long end. Overall ever since the Fed has announced the quantitative easing measures we have seen on many occasions the market eact negatively to it in the long end. Part of it used to be dealers and fast money accounts buying ahead of the Fed and selling back on the follow only to buy back lower later. But some of it stems rom the short-USD carry trade which has also led to some selling in the long end. Today was a perfect example, and we feel more selling is highly possible over the next few sessions especially if risky assets behave positively. A hold of 117 is crucial, as a failure to do so would lead to a 45bps move higher in yields most likely.

CNBC reports. Unclear at this point if the arrests are related to Galleon. Identities so far unknown. Should make the paranoia in the rest of the hedge fund world reach 5mg Geodon prescription levels. Details from the WSJ: "The New York office of the FBI said the individuals were primarily taken into custody in New York. One person was arrested in New Jersey and one person was arrested in Connecticut."

• Asian stocks fall as South Korea fuels growth concern.
• China shares rise for 5th day to 12-week high, extending gains on recovery hopes.
• Congress giving homebuyers a $6,500 tax break.
• Fed signals return to growth alone doesn't warrant interest-rate increase.
• Oil prices slipped below $80 a barrel Thursday in Asia as the U.S. dollar strengthened.
• US, EU ask WTO to probe Chinese export curbs on 'critical' raw materials.

For a change, this week I decided to only comment on links that suggest that everything in the world is rosy and that the US is already in the middle of an impressively sound V-shaped recovery. Too bad I couldn’t find anyone who argued either of those points credibly. Oh well, guess everyone will have to settle for yet another dose of reality.