Archive - Feb 6, 2010
Morgan Stanley Joins Zero Hedge In Calling For Future Bund Weakness
Submitted by Tyler Durden on 02/06/2010 16:42 -0500Zero Hedge has long been bearish on the prospects for the German Bund, whose yields at 50-year record lows, can only go up. Couple this with German CDS which still inexplicably trades inside of the US, and the fact that the PIIGS fallout is certain to wreak fiscal and/or monetary havoc on the core of the Euro zone, or alternative a favorable resolution is sure to end the Bund flight to safety trade. We have discussed both Bund short and German CDS long positions for those readers who can establish such exposure. Yesterday afternoon, Morgan Stanley's European Interest Rate Strategist came out with a Bund short call along precisely the same fault lines that we have uncovered in Europe's shifting te(c|u)tonic lines.
Unemployment Falls to 9.7% (Did it Really?)
Submitted by Econophile on 02/06/2010 16:36 -0500It's very hard to tell if this increase in employment is real, a temporary bump from stimulus, or a fiction arising from incorrect assumptions used by the BLS. Here's how to read the numbers.
Art Cashin: Market Commentary - An Encore Presentation
Submitted by Tyler Durden on 02/06/2010 16:01 -0500"The “easy” part of the reflex rally is over. The market has a couple of options on where it heads next. They range all the way from resuming the January selloff to resuming the December rally. This window of uncertainty could last until about Tuesday. The market should show its hand by then. For today, the napkins again suggest early resistance at 1102/1105 with critical backup at 1112/1115. Support again looks like 1087/1092. The fall back from there would be 1070/1075. Breaking below 1070 could put the bears back in control." - Art Cashin
Charting Europe's Crisis - Part 1
Submitted by Tyler Durden on 02/06/2010 15:41 -0500
With Europe finally regaining its rightful place as the epicenter of the peripheral economic crisis, it is time we shift focus, albeit briefly, from America and its increasing cadre of troubles, to those of the Euro area. Below we present some of the key charts and observations that will frame the imminent [bail out|default] of a whole host of minor EMU and EU countries.
Guest Post: Carry Trade 2 - Extremely Long Dollar Love
Submitted by Tyler Durden on 02/06/2010 12:52 -0500Revolutions happen when broken parts of existing structures reassemble themselves in novel ways. Today’s Japanese carry trade will become something completely new: currency jettison. This coming Yen carry trade is going to fundamentally change Japan. Next time, Miho Maejima won’t be hungry for yield. She has no yen for it: the carry trade will be driven by exchange rate volatility hedging. She’ll handcuff the government to the bedpost and go for full-on dollarization. When she does, shorting yen is the best trick on the planet. Dollarization to control currency volatility happens a lot. It is not even a radically new event in Japan, but it will go viral and mutate into a radically new species of carry trade. The utter abandonment of the yen to de-risk will end any return crash. And the Japanese semi-democracy (that designation applies to all nations, not just Japan) must allow it to happen. Aging pensioners are both creditors and voters: the only possible adjustment they can make to the coming sovereign crisis is by getting entirely out of yen.
Guest Post: The Jobs Plan We'd Get If Leading Innovation Scholars And Growth Economists Weren't Being Volckerized -- Part 1
Submitted by Tyler Durden on 02/06/2010 12:11 -0500The Jobs Plan we'd get would leverage America's advantages to make America the Silicon Valley of the global market for customized education (CE). Understanding why we'd get this plan starts with knowing that popular online markets for CE can be expected to catalyze the creation of many jobs.
Weekly Chartology
Submitted by Tyler Durden on 02/06/2010 11:56 -0500Recapping the week that just ended, in a few easy bullets (with the requisite spin) and charts, from Goldman Sachs.
Performance
S&P 500 fell -1.9% this week. The Financials sector was the worst performing sector, falling - 3.5%. Consumer Discretionary was the best performing sector, falling just 80 bps. We expect S&P 500 to rise to 1300 by mid-year (+22.3%), before ending 2010 at 1250 (+17.6%).
S&P 500 earnings
Our top-down EPS forecast of $76 and $90 for 2010 and 2011 reflect +33% and +20% growth, respectively. Our pre-provision and write-down EPS forecasts are $81 for 2010 and $91 for 2011. Bottom-up consensus forecasts a 39% increase in 2010 to $79, and a 20% increase in 2011 to $95.
Valuation
Top-down, the S&P 500 trades at an NTM P/E of 14.0X (13.1X on pre-provision EPS). Bottom-up, it trades at NTM P/E of 13.6X and LTM P/B of 2.2X.
Ever Go Drinking on Thursday and Awake CSIQ on Saturday with an STD (solar transmitted disease) ?
Submitted by Chopshop on 02/06/2010 06:17 -0500Ever go drinking on Thursday and awake CSIQ on Saturday ... the unbeknownst shareholder of some Chinese micro / small-cap spec-crap ? If it occurred between February and December of 2006, you may have been a victim; you may have been electronically raped. Since CSIQ' IPO wasn't until 11.09.06, below is: (1) a daily & weekly snapshot (spanning 2006) of one of my all-time favorite-st pieces of Chinagra crap ~ the shell holding company known as SEED, whose accounting extraordinaire is matched only by the protectionism afforded its sector by Beijing bureaucrats; (2) the DoJ press release (2.5.10) in toto.
Another Freaky Friday?
Submitted by Leo Kolivakis on 02/06/2010 00:23 -0500While it was another freaky Friday on Wall Street, I'd say the US jobs report was encouraging as was the price action in the stock market. Things are slowly getting better, but the pace of job growth is painfully slow. However, as the recovery gains steam, job growth will follow. It's only a matter of time now.





