Archive - Aug 2009

With normalized cover page headlines like these:

• Robust S&P 500 EPS growth expected for 2010 and 2011
• S&P 500 EPS recovery to outpace the US GDP recovery
• Financials to contribute to EPS growth in 2010 and 2011
• Normalized S&P 500 EPS is above our 2009E and 2010E EPS
• Our normalized EPS supports a strategically bullish stance

is there any wonder how happy Bernstein and Rosenberg must have been to go to work every day?

The Congressional Budget Office released its preliminary July 2009 budget numbers - the budget deficit is now expected to be $181 billion, an 80% increase compared to the July 2008 deficit of $101 billion.

In a sign of HFT's encroaching dominance in the market, and the changing equity market liquidity provisioning landscape, Dutch specialist firm Van Der Moolen earlier filed for protection from creditors, the European equivalent of a chapter 11 filing. As expected, the monopoly of the "very few" is starting to eat the peripheral players.

• Today's CRE green shoot - Maguire properties warns of loan defaults, prepares to hand over 7 buildings with over $1 billion in associated debt to creditors (WSJ)
• Poorer consumers are worst affected as banks make $38 billion in overdraft fees (FT)
• Effort to rein in pay on Wall Street hits "guaranteed bonuses" hurdle (NYT)
• Aluminum joins oil in speculator ranks - price rises despite falling demand (FT)
• GDP RIP (NYT)

• One million flee as typhoon hits China's eastern coast.
• Asian stock markets rose Monday after a better-than-expected US jobs report.
• Australia's central bank signaled it will start raising interest rates.
• Economy isn't strong enough to support a long-running stock, bond recovery: cons. view.
• China accuses Rio Tinto of deceit; says Co's actions led to $102B in overcharges.
• China home prices rise in July for 2nd month; up 1 percent amid stimulus spending.

Fresh Monday morning UK and Europe highlights.

Could the relatively new real-time limit order book development in financial markets be what is driving Goldman et al's high trading profits?

Clunkers is a big success. But that depends on how you define success. A lot of cars will be sold, but most of this consumption will be financed by the private sector. As an economic stimulus it does very little for us.

With the ban of Flash orders in equity markets now practically a done deal, politicians, and hopefully regulators, will start focusing their attention on Flash derivative products which facilitate not only a two tiered market but potential market abuse by the priliged few who have access to advance looks in assorted securities classes.

Dozens of frenzied calls between Hank Paulson and Lloyd Blankfein in September 2008 probably just mean the two Goldmanites were in love.

• Paulson's calls to Goldman tested ethics during crisis (NYT)
• Satyajit Das: Mixed Metaphors (Evro Intelligence Part 1, Part 2 h/t Paul)
• Rio Tinto spying cost China steelmakers $102 billion (Bloomberg)
• IMF puts total cost of crisis at $11.9 trillion (Telegraph)
• Economic bottom calls: willful ignorance (Market Ticker)
• For private equity, a very public disaster (NYT)

Many of you have asked us about the purpose of "Radio Zero." All of us have avoided answering. What is true, is that there are some surprises in store for our readers down the line. Unfortunately, revealing them at this point would do definitional violence to the word "surprise." We can, however, reveal to you that a fully-functioning sound studio and streaming audio server is a key component of our plans.

To wit: Studio Zero.

Zero Hedge presents its statistical findings regarding US Treasury Auctions and Permanent Open Market Operations

Much has been said by Tyler & Co. that someone is “selling vol” wholesale, while the market is meandering. But, if the market chops around sideways in a tight range—like it did in May and June—implied vol will decline as realized vols decline. No way to arb between the two, but typically that is how it works.

• Here we go: Geithner formally asks Congress to lift $12.1 trillion statutory debt limit, saying it could be breached as early as October, Amex Centurion happy to comply (Reuters)
• Totally unrelated - psychopaths have faulty brain connections, scientists say (Reuters)
• Must read: Deleveraging the U.S. Economy (Comstock Partners, h/t Vince)
• Health debate turns hostile at town hall meeting (NYT)
• Healthcare critics make childish claims, Obama says (Reuters)
• The history of the stock market (Mint)