Archive - Dec 21, 2009

RANsquawk 21st December US Morning Briefing - Stocks, Bonds, FX etc.

• Bad news for Athens: ECB says no bailouts, look for record Greek CDS risk shortly (WSJ)
• Suspected intervention weighs on Swiss franc (FT)
• For stocks, the worst decade ever (WSJ)
• Fund boss made $7 billion in the panic (WSJ)
• Mihskin's brilliance to the forefront again, as Iceland lawmakers reject Icesave bill, another downgrade impending (Bloomberg)
• China now exporting its bubbles: considers extra $200 billion for CIC sovereign wealth fund (Bloomberg)
• Tishman's $5.4 billion boomerang gives Rob Speyer costly lesson (Bloomberg)

You don't put out a fire with gasoline. You don't cure a hangover with vodka. You don't end a headache by banging your head against the wall. Apparently, at least in Washington, you do address a sick banking system by keeping more sick banks open. It's as if I'm in the Twilight Zone...

As from one Englander to another, so from one massive dollar short to another, we next shift to Steven Englander of BarCap and his daily "Dear USD" hate mail. The man who has been obsessively telling his clients to sell dollars as if he was a subsidiary of Goldman Sachs, must have booked some serious L on the recent, and very much expected, dramatic dollar retracement over the past 3 weeks. In his latest "FX for paranoids and hopeless romantics" Englander does point out one relevant item: that the Fed needs EM countries to keep selling the dollar in order to i) keep commodity prices higher, thereby benefitting these very EMs, and ii) to keep commodity price inflation high, in the absence of other forms thereof (wage, non-commodity price, etc). And that is why, Englander hopes and prays, both for his book, and for those of his clients, that Bernanke will keep on talking big all the while printing more and more dollars as ever more wealth is channeled from the middle class to both Wall Street and abroad.

All one really needs to do is to take a look a housing from a bird's eye view, whether adjusted for inflation or not, and it is quite obvious that not only are we still in a housing bubble, but we have a while to go before we reach equilibrium. Those insurer's, lenders, and investors highly levered to residential and commercial real estate had better be prepared for another 30% or so drop.

RANsquawk 21st December Morning Briefing - Stocks, Bonds, FX

If you have a hedge fund in dire need of some managed account TLC, call this man (and get ready for daily multi-hour explanations on why you put "this or that" trade to people who have yet to complete remedial math); if you have a strategy to front run mutual funds which may or may not end amicably with the SEC in the form of a few hundred dollar settlement, call this man; if you are in the market for some barely occupied property at 740 park, call this man; If you are a CDS trader with special Deutsche Bank sales coverage connections, call this man; if you work for RenTec and feel like borrowing some of their strategies and making a mint, call this man (by the time you get the non-compete subpoena you will be sitting on a beach, earning 20%).

All you need to know about the man who heads the big quant shop, er pardon hedge fund, at the soon to be bankrupt 666 Fifth.

RANsquawk 21st December Morning Briefing - Stocks, Bonds, FX etc.

Just as the year end onslaught on the dollar was spearheaded to a climax by Blankfein's minions, so did Europe finally decide to convulse under an unbearable lead of ridiculous mispriced "assets" and vomited up a whole load of troubling financial data, which spread from Greece to Austria to Ireland, setting sovereign CDS to multi month highs. Obviously, this did not help the weak dollar case and cost GS traders a few hundred million.

Last Friday we were stopped out of two tactical trades, long EUR/$ for a potential loss of 1.8% and long GBP/$ for a potential loss of 1.1%. - Goldman Sachs