Archive - Dec 15, 2009

The market rejoices and delights to see the image of Abu Dhabi's merciful hand guided by Sheikh Khalifa bin Zayed Al Nahyan extended to errant cousin Dubai in the form of Sheikh Mohammed bin Rashid Al Maktoum. Once the fingers unclasped a $10 billion cash injection fluttered into outstretched salvation army tins. Bond prices soared. Sighs of relief were heard. Why exactly? $10 billion is a trifle. Also telling is that while the immediate needs of Nakheel PJSC looked something like $4.1 billion, $10 billion was immediately required to keep Dubai from... well who knows what. Dubai isn't struggling. It is totally broke, and $10 billion is a trifle.

• German investor confidence falls for third month, Greece roils markets, CDS spikes from 220 to 247 bps (Bloomberg)
• Producer prices climb more than forecast (Bloomberg)
• Pension fund sues Goldman over pay (Dealbook)
• Clearance sales not good for bottom line shocker: Best Buy lowers Q4 forecast margin, shares drop (Bloomberg)
• Abu Dhabi may demand control after $10 billion Dubai lifeline (Bloomberg)

Cash for Clunkers is long forgotten, and it is now time for another manufacturing stimulus: from 34.6 in September to 24.5 in October to a mere 2.55 most recently. Diffusion data suggested further contraction in margins, evaporation of optimism and an ongoing decline in inventories: the whole 5% of Q4 GDP is becoming a Liesmanian myth.

• Airline loss forecast for 2010 widens to $5.6B on fuel, IATA says.
• Chinese government will target “excessive” growth in property prices in some cities.
• Dubai bonds show more aid needed from Abu Dhabi to repay 2010, 2011 debt.
• German Investor confidence falls as recovery weakens, Greece roils markets.
• Gold futures down $7.90 at $1,115.90 an ounce.
• Major Asian markets decline, Hang Seng falls 1.2% as China developers fall.

If the economy is to recover, the price of Nat Gas will have to move higher. Exxon bet a reasonable portion of the 'ranch' on gas with the XTO deal. I think it is a good bet. Exxon's good news is going to be bad news for everyone else. Same old, same old.

RANsquawk 15th December Morning Briefing - Stocks, Bonds, FX etc.

Ackman from Pershing Square fame has released a very bullish CRE presentation. I stand diametrically opposed to both the conclusions and the analysis in general, thus have created my own comprehensive CRE outlook for 2010 and beyond. Here you have it: A bulls vs bears debate in the CRE space - both of which are quite well documented and allow for rich reading.

Unable to find any compelling valuations among US bank stocks I have taken my search north of the border to find the best of the Canadian banks. Based on my initial research that bank is Toronto-Dominion Bank (NYSE: TD). While it may not be a buy at the current levels, this is certainly a stock to keep an eye on if this incredible market rally ever reverses.

CalPERS may be paying a price for its decision to help financially strapped local California governments. Moody's Investors Service slashed the triple-A rating of CalPERS by three notches to Aa3. But the real story is how CalPERS' private equity and real estate portfolios got decimated last year. Will this influence future credit ratings?

Today there is still an unbelievable opportunity to invest in gold that will disappear over the next several years as this monetary crisis deepens. Despite the general widespread sentiment of Western financial advisers that they have missed the run-up in gold and now it is too late to buy, this is not true at all.