Archive - Dec 17, 2009
Morgan Stanley, Real Estate, Bad Deals, and Blogs
Submitted by Reggie Middleton on 12/17/2009 23:05 -0500At least a few MDs at Morgan Stanley DO read my blog, but it is obvious that the guys in the real estate division don't. Early in 2008 I named Morgan Stanley the "The Riskiest Bank on the Street". The following is one of the reasons why.
The Pension Debate?
Submitted by Leo Kolivakis on 12/17/2009 22:53 -0500In Whitehorse on Thursday, Canada’s finance ministers met to discuss the future of Canada’s pension system. No agreements are expected on how to enhance Canadians’ retirement savings. A pension summit is expected to take place later this year, but the public already knows what it wants: to retire with dignity.
The Dark Gray Swan: No More Foreign Dollars With Which To Buy US Treasuries
Submitted by Tyler Durden on 12/17/2009 21:31 -0500Could the next black/green/dark gray swan be so obvious that it has avoided everyone? Well, except for the deputy governor of the Bank of China, who just gave the world a startling reminder of economics 101, when he said that it is "getting harder for governments to buy United States Treasuries because the US's shrinking current-account gap is reducing the supply of dollars overseas." Oops.
A Market Crash by Jobless Recovery?
Submitted by asiablues on 12/17/2009 19:52 -0500Could a prolonged high unemployment rate, typified by the much touted "Jobless Recovery", cause a market crash in the not so distant future?
PIMCO Sells $26.5 Billion In Treasuries And MBS In November, Goes To Cash
Submitted by Tyler Durden on 12/17/2009 19:23 -0500
Pimco's flagship Total Return Fund released its November data: the fund continues liquidating its MBS holdings, selling another $7 billion in November (after dumping $10 billion in October), and bringing the total to the lowest it has held of this security, at $23.9 billion. Keep in mind TRF held just under $120 billion of Mortgage Securities in February: a nearly $100 billion reduction. Thank you Ben Bernanke Bid. Mortgages are not the only class getting cleansed by Gross: the world's biggest bond fund also sold $20 billion of Treasuries, bringing its govvy holdings to $101.7 billion, down from $121.3 billion in November. The biggest beneficiary: cash, which increased from a net short position of -$13.5 billion to $14 billion. And in the meantime, the fund still made a boatload: total AUM in TRF increased from $192.6 billion to $199.4 Gross is sticking to his pessimistic view and liquidating. Who is buying?
FTU: Fibozachi Technical Update - 12.17.09
Submitted by Fibozachi on 12/17/2009 19:00 -0500In this 12.17.09 edition of the Fibozachi Technical Update (FTU), we present detailed technical profiles of the US Dollar Index, Gold Futures, Silver Futures, the VIX (CBOE Volatility Index) and the S&P 500 Cash ...
FINRA Initiates Probe Into Goldman's "Trading Huddle" And Comparable Practices By Other Wall Street Firms
Submitted by Tyler Durden on 12/17/2009 18:53 -0500Could it be that the regulators are finally set on doing the one thing they are paid to do, i.e. regulatoring? Perhaps, especially when they are presented with all the data on a silver platter, as the WSJ did some time ago. The same WSJ reports that FINRA has now started a probe into the practice known as "trading huddles" which is merely another phrase for providing the best, most actionable data to one's preferential clients, and also a very politically correct and polite way of allegedly endorsing front-running.
Options Exchanges Seek To Evaluate And Manage Role Of HFT Traders
Submitted by Tyler Durden on 12/17/2009 18:39 -0500With the role of HFT in stocks being actively investigated thanks to Senator Kaufman's ongoing crusade against a two-tiered market, the spotlight has shifted toward High Frequency Trading strategies in options, where now the exchanges themselves are evaluating whether HFT traders are benefiting from their two-tiered role as both a preferential customer and a market maker, however one, having no obligations to create a market, when things turn ugly. A report by Dow Jones titled "Influx Of High-Frequency Traders Prompt New Rules In Options" notes that "options exchanges are drafting new policies to address the ever-expanding role of high-frequency traders in their markets. The policies aim to eliminate some of the advantages that high-frequency traders currently have over professional options market-makers, representing an attempt by the exchanges to level the playing field between these two huge players in the options market and to maintain the orderly functioning of the market." As more transparency is shone on every market dominated by this now-pervasive paradigm, especially with regulators woefully behind the curve, the latest development in the ongoing unmasking of various HFT strategies will only benefit the broader markets.
Democratic Senator Jeff Merkley Breaks Party Rank, Lays Out The Case Against Bernanke
Submitted by Tyler Durden on 12/17/2009 18:00 -0500"Dr. Bernanke is a dedicated and honorable public servant...however those factors in my mind do not outweigh my concerns on regulation and rebuilding the economy... Dr. Bernanke's approach helped set our economic house on fire. That fire has destroyed the jobs, the healthcare, the retirement savings, of millions of American working families. Since then Dr. Bernanke has shown himself to be quite adroit with the fire hose, helping to put that fire out. But as we look to the future, and we look beyond the stage of putting the fire out, I think we need to look to leadership that will be adept at rebuilding our economic house." - Sen. Merkley
Federal Reserve Balance Sheet Update: Week Of December 16 - Record Highs
Submitted by Tyler Durden on 12/17/2009 17:38 -0500
The Fed's balance sheet assets are back to all time highs at $2.2 trillion, while the "collateralization" of the dollar with MBS/agencies hits an all time low of 89.7%. Look for the dollar to be backed by increasingly less valuable securities.
Is TCW Set To Become A Ghost Town?
Submitted by Tyler Durden on 12/17/2009 16:48 -0500More on the ongoing drama in the Los Angeles fixed income soap opera.
Waiting For A Nuclear Bomb
Submitted by RobotTrader on 12/17/2009 15:44 -0500Markets are grinding around sideways, meanwhile most participants are waiting to see if a nuclear bomb is going to go off between now and the end of the year. As usual, money is fleeing back into dollars, bonds, and REITs, the typical safe havens during a brewing "crisis".
How To Lose 14% In Less Than Three Days?
Submitted by Tyler Durden on 12/17/2009 15:41 -0500Just listen to CNBC
Citi Is 47% Of All NYSE Volume
Submitted by Tyler Durden on 12/17/2009 15:20 -0500
Thank god for that secondary, or else there would be no volume in the market today. No, seriously. Courtesy of the biggest and most botched secondary offering in history (you are welcome overpaid Citi bonus recipients), and thanks to Goldman et al buying up every share that has a $3.1x handle (we'll see how long that continues: after all someone has been loading up on Citi CDS to the gills) Citi accounts for 47% of all NYSE volume. Add the other fins, and the HFT are running straight out of luck. Watch for the cannibalization among the high frequency scalpers to start in earnest very soon.
Guest Post: Thoughts On The Long-Term Equity Cycle
Submitted by Tyler Durden on 12/17/2009 14:54 -0500
My thoughts on the long-term debt cycle (trying to ignore the impact of the credit crisis specifically). The idea is that if you follow the cycle of the relationship of debt to equity, a better understanding of how debt and equity lead and lag one another through the cycle. Furthermore, I think it can highlight how risk aversion at the tails may put a floor on spreads in the short-term and implicitly a cap on equity valuations. This chart can be done in P/E ratio-land (but given the current silliness in valuations provides little insight), though we suggest trying to build the same chart with the Shiller longer-term P/Es (hint hint).







