Archive - Dec 2009

RANsquawk 7th December Morning Briefing - Stocks, Bonds, FX etc.

The magnifying glass has been wiped clean and is re-focused on the under-appreciated, sell side manipulated train wreck that is the commercial real estate space. Goldman has just upgraded the sector and is currently peddling CMBS to to clients who obviously don't believe a thing that I say. I am now provided a peak into a large CRE REIT, down to the property level and will follow up with a look into the CMBS that hold the mortgages behind these properties. Next up, Reggie vs. Goldman, a head to head CRE confrontation...

RANsquawk 7th December Morning Briefing - Stocks, Bonds, FX etc.

The economy will not recover until Ben and Tim are fired ...

Gold prices plunged $80 or 6.5% in less than two trading sessions on the strong and unexpected indication
that the US job market was stabilizing. What was that about? So that prompted an inquiry from a client who
asked me on Friday, why the big drop in gold prices? Why indeed. Here I am reminded of two snail jokes.

To us, the confirmation hearings last week before the Senate Banking Committee only reaffirm in our minds that Benjamin Shalom Bernanke does not deserve a second term as Chairman of the Board of Governors of the Federal Reserve System.

Graham Turner is an outsider. In his view, the Japanese experience offers a frightening glimpse into our future, with deflation, where the prices of assets such as houses and shares are locked into a downward spiral, becoming entrenched. If that happens, conventional policy measures, such as reducing interest rates and pushing through huge increases in government spending, can fail, as indeed they have in Japan.

Gold fell for the first time during last week, off 4% on Friday to $1,162.40 an ounce, the biggest drop since Dec. 1, 2008 after the new U.S. jobs data showed unexpected strength. While gold has some underlying support from central banks and investment funds, there are some indications suggesting gold is moving mostly on momentum, and that a deeper correction may be due.

Zero Hedge is nothing if not about the persistent, even dogged pursuit of unusual (even alarmingly unusual) angles of research.  When our totally uncompensated interns catch a scent wafting noxiously from the halls of power, no social secretary of any station will prevent them running down the source of the malodorous smell.  So when publicity hungry former bailout prodigy Neil Kashkari goes Kaczynski in some "off the map" corner of Nowhere, Nevada County, California, (but not quite so far that a Washington Post reporter is unable to pen a puff-piece on location or too far out of range to get Bloomberg alerts on your Blackberry, or so remote that a search for yourself on Gawker is impossible) Zero Hedge is there.

On the surface, the decrease in unemployment and the increase in factory orders seem encouraging. But if we dig a little deeper, the numbers tell a different story. Much of these "gains" relate to stimulus and aren't real and will dissipate once stimulus wears off.

Wouldn't it be ironic if the market put in a top on the good news that "America is back"?

Reducing risk should be written on your dreidel because Japan is the history of the future.Not just for the United States: the whole world. There are market forces bigger than any government action in play now; and in fact, policy makers trying to save the world have cemented it. Some call it the “new normal”. I call it Japanification: the slow entropy of leverage in semi-controlled reverse. The alternative is to let it all go in one smoldering champagne supernova. But all the hyper money printing and WWII grade stimulus just falls in a financial black hole so strong that not one penny will ever escape.

Everyone is now well aware of the plight of Stuy Town, which has become a set fixture on the front page of the daily press, and is expected to default on its underlying borrowings within a few months at the most. What will happen to the controlling equity, and the tenants at the multiapartment complex, is unknown. It is no surprise that this will be yet another epic failure for the existing owner, Tishman Speyer, which after gobbling up property after property at the peak of the housing market, is all too aware that it is only a matter of time before control is wrested from it not only in the case of Stuy Town but many of its other properties.

And even though everyone "knows" the state of commercial real estate is in free fall, few have been able to pin it down to specific buildings, as property-level data is still very expensive and more often than not, proprietary. In order to bring the full degree of CRE collapse closer to home, and to provide some leads to our MSM-originating readers, we present a detailed analysis of some of the most impacted CRE properties that have yet to make headline news. For that purpose we combed through BarCap's CMBS remittance data for CMBX 4 (2007 vintage), which is broadly considered the peak year for commercial real estate deals and also the very peak of the housing bubble. We expected to find some of the juiciest CRE failures to be in this loan set. We were not disappointed.

Is this a entirely different video than the BBC seems to be reporting on, or are British politics even more full of nuance and nonsense than we have hithertofore given them (substantial) credit for?  See, it sounds to us like the Shadow Chancellor of the Exchequer, George Osborne, just suggested the elimination (or total circumvention) of loss-carry-forwards for UK banks (and foreign banks with UK offices).  That's something coming from a conservative MP, but then, anything to tie Gordon Brown (himself a former Shadow and then actual Chancellor of the Exchequer) into knots by rocking Alistar back on his heels and forcing the purse holder to look anit-populist, yes?  Actually, that's pretty impressive work for a Sunday.

The US Taxpayer has long been the dumbest, richest investor around. You know the kind – a little overweight, with cheery disposition, not understanding how he’s been “over-served” when in slurred speech he thanks the bar tender for the sales receipt on which he signs his name – plus adding a generous gratuity – for his “new good friends”.
With politicians in charge, the “average” person with a job, a family, and a “real” life never had a chance.