Archive - Oct 2010

Is there any wonder why Buffett loves him so much? With 77% of his holdings at Castle Point invested in financials, there is no surprise why Todd Combs, who has yet to get to the part about diversification in Finance 101, and is the consummate believer in the US ponzi, is the heir apparent to the man who is all about taxpayer funded bailouts of financial investments.

"A disappointing report" as the report itself says. The very much outdated August Case Shiller Index comes at 148.59 compared to 148.91 previously, a sequential deterioration. The growth is just 1.7% Year over Year, compared to 3.18% in July, and a miss of expectations of 2.1%. This is the smallest Y/Y improvement since February. Look for this index to collapse in October when it is reported in December, once the full impact of fraudclosure is digested. In the meantime, the downward inflection point in CS is now very much obvious.

• Fed's `Pit Bull' Takes on Bank of America in BuyBack Battle (Bloomberg) - "Kathy Patrick can be as frightening as a pit bull on steroids."
• High US Unemployment, Chinese Growth May Spur Trade War (WSJ)
• Japan's Igarashi Says Yen Sales Most Effective When 'Surprise' (BusinessWeek)
• Debt Sales Highlight Abnormal Conditions (FT)
• Asia's economic history foretells Chinese slowdown (Reuters), compare to Is China's Growth Rate Destined To Be Cut In Half? (Zero Hedge)
• End Bailouts—No Ifs, Ands, or Buts (BusinessWeek)
• Malcolm Gladwell: Who really rescued General Motors? (New Yorker)
• Meet the leading contender to manage Berkshire's billions (Fortune)
• Greece Likely to Default Within Three Years, El-Erian Says (WSJ)

After all, if the Fed DOES announce such a program, then we are undoubtedly heading into outright trade wars, tariffs, and even MORE currency intervention.True, Bernanke has ultimately got his sights set on destroying the US Dollar. But with global tensions growing, he’s got to walk a fine line between saving Wall Street and pissing off the US’s biggest creditor (and the only country that still owns more US debt than the Fed).

Today, is the first of three last POMOs to be conducted before the November 3 D-Day, on which we will learn how many tens of billions more will be added to the daily POMO monetization. As announced previously, Brian Sach will buy back bonds maturing 2/15/2021 – 8/15/2040, of which many that likely were auctioned off as recently as a week or so ago (we will compare the 2040 Cusips with those from the 10/14 30 Year auction to see just how prompt the Fed is at remonetizing immediately auctioned off bonds once the permitted issues are announced). In the meantime, here is the list of most probably monetization candidates.

• Copper climbs to 27-month high on Dollar concern; Zinc at nine-month peak.
• Home sales picked up in Sept, but long-term picture for housing is growing grimmer.
• Sweden’s Riksbank hikes key interest rate for a third time since July on stronger economy.
• UK growth probably weakened last quarter as BOE keeps 'fingers crossed'.
• US Treasury draws negative yield for first time during 5-year TIPS auction.
• Aaron's posts Q3 EPS of $0.32 (cons $0.30); revs rose 8.9% to $452.2M.
• Amgen's Q3 net income fell 11% on higher operating costs, lower sales of key drugs.

Remember all those lies about how the Greek economy was going to grow and stuff? Here is the truth: the latest Bank of Greece report shows Greek GDP to shrink about 4% this year and unemployment to exceed 12%. And it is enough to blow Greek spreads out by 25 bps and growing. Below are the summary points from the report which is the first step to uncovering the true devastation sweeping the country. Elsewhere, Kathimerini reported that delays in the collection of taxes in Greece may cause a EUR 900mln shortfall in 2010 causing further widening in spreads.

Home prices, consumer confidence, the Richmond Fed index, and one more Fed speech….

That is how Transparency International defines corruption...

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 26/10/10

Here is another fine piece by Hugo Salinas Price in which he argues for the return of the use of the silver coin in American currency. Mr. Salinas Price argues that the US Government must recognize at some point that it is indispensable to the health and continuing existence of the US as we have known it, to restore silver coin into circulation

Retail traders are notoriously wrong at picking market direction/tops and bottoms. Most retail traders very naturally seem to adopt a counter-trend stance and this offers very accurate signals for individuals looking to trade against this group. This daily report is designed to help traders focus their efforts on higher probability pairs. So what are the signals?

Who ya gonna call?

L. Randall Wray (economics professor), Christopher Whalen (banking expert with Institutional Risk Analytics), and William K. Black (professor of economics and law, and the senior regulator during the S & L crisis) explain ...

Despite renewed USD weakness, the pair failed to post substantial gains and after moving above 1.4000 level yet again, edged back towards the mid-1.3900's in the closing hours of trade on Monday. Still, the pair remains in a bullish trend and there is plenty of economic data from both sides of the pond on tap on Tuesday which, given the looming Fed meeting will result in high volatility by the USD and should the data disappoint, would lead to another attempt by the pair to surpass the 1.4100 mark. In terms of technical levels, to the upside 1.4100 remains a crucial psychological level and below, resistance levels are seen at 1.4005 and 1.4050. To the downside, supports levels are seen at the 10DMA at 1.3942, followed by the 21DMA at 1.3843. There is also an intraday option expiry at 1.3800 which is due to expire on Tuesday at 1500BST NY cut.