Archive - Dec 2010

Those fabulous Bernanke Bears have a great discussion about the merits of BAC, listening to WikiLeaks and investing in NFLX.

Today was the perfect opportunity for GS to come with a revised much more bullish forecast for the economy. The nature of the arguments advanced seemed a bit suspect: basically foreign demand and public demand will more than make up the lack of private demand. That is excellent news but it may somehow miss out on the fact most governments in Europe are going to keep cutting drastically public spending, there are certainly new members in Congress trying make the country lean that way as well, and the brilliant Albert Edwards' chart on Chinese leading indicators is not exactly positive. Unfortunately now growth forecasts are becoming as volatile as the markets: it's the tail wagging the dog. The Fed must be proud in succeeding in having the S&P dictating the economy instead of following it. - Nic Lenoir

Personally I do not think the fundamentals have changed one bit. Certainly the private sector has surprised in November to the upside as people trampled their way to Black Friday bargains, but from there to extrapolate +3.7% growth in 2012 is more than an exageration. Probably more a good opportunity to short squeeze those who sold equities realizing Greece was only the tip of the European iceberg, with the help of $8Bn more in cash provided by the Fed.

In a sad twist of fate for Comcast, its recent business channel acquisition, which numerous independent reports have alleged has become nothing but a prattling brown-nosing drone for the administration, spewing forth an endless barrage of mindnumbing propaganda, is seeing an ever increasing plunge in its viewership (which arguably validates said independent reports) which in November dropped to 47 in the demo, a 36% slide from a year earlier. Nowhere is this more obvious than in what's left of the audience of the original CNBC icon: Maria Bartiromo. The once jet-setting, and now merely setting money honey, whose Closing Bell slot starts at 4PM, has stooped to having the dubious reputation of being in possession of the weakest 25-54 demo among all of CNBC's November viewership, at just 41K per Nielsen's, a massive 51% drop from November 2009, and a 11% drop from October, it seems CNBC's ever sparser viewers have decided that even icons have a useful shelf life. But that's ok: we are confident that once the next round of CNBC "business rationalizations" takes place shortly once the NBC Universal transaction formally closes, the $ Honey will be able to fall back on the proceeds from her latest bestseller: "The Weekend That Changed Wall Street: An Eyewitness Account", which since publication on September 7, has blitzed almost to top of the charts and currently languishes in the much coveted spot #10,655 of bestsellers.

No matter the amount of propaganda, the amount of manipulation, and Fed intervention, retail refuses to come back to the market. America's love affair with stocks is over, has bypassed the marriage stage and gone straight to the bitter divorce. Per ICI, the week ended November 24 saw $2.6 billion in outflows from domestic equity funds, and a total of over $91 billion year to date.

One may be forgiven to believe that via its FX liquidity swap lines the Fed only bailed out foreign Central Banks, which in turn took the money and funded their own banks. It turns out that is only half the story: we now know the Fed also acted in a secondary bail out capacity, providing over $350 billion in short term funding exclusively to 35 foreign banks, of which the biggest beneficiaries were UBS, Dexia and BNP. Since the funding provided was in the form of ultra-short maturity commercial paper it was essentially equivalent to cash funding. In other words, between October 27, 2008 and August 6, 2009, the Fed spent $350 billion in taxpayer funds to save 35 foreign banks. And here people are wondering if the Fed will ever allow stocks to drop: it is now more than obvious that with all banks leveraging the equity exposure to the point where a market decline would likely start a Lehman-type domino, there is no way that the Brian Sack-led team of traders will allow stocks to drop ever... Until such time nature reasserts itself, the market collapses without GETCO or the PPT being able to catch it, and the Fed is finally wiped out in one way or another.

Hidden deep in today's disappointing GM November sales release is a number that all GM longs may want to quickly forget, or else pay serious attention to. But first, earlier today, GM reported slightly disappointing sales numbers: the newly IPOed company sold 168,739 cars in November, a 11.4% increase to November 2009, which came in below expectations of a 13% rise. That's mostly noise. What isn't, however, is the linear rise in GM's auto inventory safely stashed away at dealers, i.e., unsold. The chart below demonstrates what some may argue is nothing less than a blatant case of channel stuffing. Is it really surprising that GM will resort to such pathetic schemes to boost its top line numbers? Of course not: the government's GDP report demonstrates that this is occurring everywhere in the US economy, courtesy of near record inventory accumulation which two years after the start of the depression refuses to let up, providing a hollow boost to economic numbers as the much anticipated pick up in end demand (sorry Goldman) courtesy of record deleveraging ( Jan, let's discuss the hundreds of billions of leverage lost in the shadow banking system on December 7 shall we?) continues to accelerate.

Even giving the company the benefit of the doubt, and maintaining the stock’s current forward multiple, shares could easily trade down toward the $11 to $16 range based on the midpoint of our estimates highlighted in this report.

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 01/12/10

The Wikileaks ouster lasted all of a few hours. As of right now, the company has switched its DNS to Sweden, from where it continues operating. But not before wikileaks tweeted the following response to Amazon's action: "WikiLeaks tweeted in response: "WikiLeaks servers at Amazon ousted. Free speech the land of the free – fine our $ are now spent to employ people in Europe."

A roundup of reports from around the Web ...

And an update from Reuters: "Amazon.com ceases hosting services for WikiLeaks website - Senator Lieberman" and  "DHS says Amazon has agreed to stop hosting WikiLeaks." Game Over

It seems the days of Wikileaks are over. The Associated Press reports that the website appears to have lost its host. The question now is who will be the next Wikileaks.

A victory lap for the Armageddon crowd. The hard core faithful who suffered a 20-year bear market in hard assets are now wearing better tailored suits.

Politics has a charming way of bringing reality to lame-duck politicians. The Republican gains in the House and Senate have apparently prompted President Obama to do the unthinkable: freeze the pay of civilian federal workers for two years. His constituency is very upset by this apparent betrayal by Obama.

According to the WSJ the US is not discussing a larger IMF contribution to the European Rescue Fund. EURUSD plunging now. The theater continues. And since the market went up on the news, why would anyone expect it should go back down when the news is refuted. The market is now a total and complete travesty.

This isn't new stuff people - that cartoon is 100 years old and we fought against the evils of corporate greed and won at some point but now they've changed tactics and moved onto taking over government and brainwashing the masses so the American people now confuse the good of the corporation with their own welfare when they are, almost by definition - diametrically opposed.