Archive - Feb 2010

• The deflationist: a profile of Paul Krugman (New Yorker)
• China new village makes Chanos see Dubai times 1,000 (Bloomberg)
• Goldman cranks up p.r. engine to turn sinner into saint (Post)
• Hey recovery.gov, The "stimulus" actually raised unemployment (IBD)
• Another one jumps on the bandwagon - Nathaniel Rotschild calls for ban on sovereign CDS (Les Echos (in french), via DealBook)
• Euro worst to come as Greece hammerlocks ECB on rates (Bloomberg)

• Asian stocks, oil advance as US interest rate concern eases; Yen weakens.
• China mustn't "bow before external pressures" on trade policy: Chinese Trade Ministry.
• China received $8.13B in foreign direct investment in January, up about 7.8%.
• Crude oil rises above $80 on speculation economic recovery to spur demand.
• U.S. consumer prices rose 0.2% in January, less than economists forecast
• World markets recover from drop following Fed move
• Yuan strengthened the most in 11 months on speculation govt will allow more flexibility.
• Aramco and Total said to hire bankers to sell Sukuk for Saudi Jubail refinery

RANsquawk 22nd February Morning Briefing - Stocks, Bonds, FX etc.

We ran an interview with our friend Yves Smith of Naked Capitalism today. She has done an excellent job of describing how the intellectual ghetto that was once financial economics has helped to destroy the world of investing and involuntarily turn us all into day traders. The full text follows below. -- Chris

While anal-ytic 'debate' about whether Chinese real estate prices have reached nose-bleed territory continues in merry-go-round circle-jerk fashion, there is only one (very simple) question to ask:

is this the kickoff to a new bull market in Chinese RE or a terminal throw-over (cause there ain't anything in between) ?

RANsquawk 22nd February Morning Briefing - Stocks, Bonds, FX etc.

In this installment of the Pan-European Sovereign Debt Crisis, I illustrate the potential contagion effects of the portion of Europe that is in a flat out Depression. Yes, Depression! There are quite a few strategic banks that have significant claims on this region, as well as Greece. Just imagine the potential consequences if all of the stars aren't aligned properly...

And with that Japan joins the competitive devaluation currency race, in which both the SNB and Federal Reserve have a substantial head start (the euro and the fat Brussels bureaucrats are in a ouzo daze, with no clue what the hell is going on). Speaking before lawmakers BOJ governor Masaaki Shirakawa, who recently said Japan was powerless to fight deflation on its own, has changed his tune, and today said that Japan will print the kitchen sink if it has to to beat "stubborn deflation." In a speech before the Lower House Budget Committee Shirakawa said that not only will Japan continue monetizing its debt (at least unlike Bernanke, he admits it), but that they will happily accelerate this action if it means killing the Yen and creating a glimmer of hope for inflation. Carry traders everywhere rejoice.

Some big governors on TV. What do they propose? Spend an additional $350b a year, that we don't happen to have. When will the bond market say no to all of this? Sooner than Ed and Arnie know.

It's good that the rest of the economy is humming along, and the whole record unemployment thing is under control, cause we were wondering when the president would refocus his efforts on such mission critical things as having the government determine health insurance rates. Apparently the answer to the last question is tomorrow. According to the NYT, "Obama will propose on Monday giving the federal government new power to block excessive rate increases by health insurance companies, as he rolls out comprehensive legislation to revamp the nation’s health care system, White House officials said."

You read about it here a week ago. Now read about it in the Wall Street Journal.

The investor sentiment data is consistent with a market that is in bounce mode.

There should be no shock here- you know the deal. Toyota, big, popular and profitable... And Japanese. Congress is investigating- it was just a matter of days before they found something juicy.

Gold typically has the strongest inverse correlation with the US Dollar. In the last month, however, the trend has broken with gold trending inversely with Euro and positively with Dollar. Will this new trend hold and for how long?

In this interview with the BBC's Andrew Marr, Greek Prime Minister George Papandreou makes it clear that Greece has enough cash to get it through another 30 days (and likely less), or to last it thought "Mid-March." While this statement was likely supposed to remove pressure from expectations that Greece will auction off another €5 billion this week, which as we disclosed previously will most likely not happen, this revelation will likely not achieve the required goal. It has been well known for a long-time that Greek bond maturities culminate with €16.7 billion over April and May. Specifically, there is €8.22 billion maturing on April 20. The fact that there is a lag time of at least a month between when Greece should be rolling maturities and actually in need of funding, will likely be taken as a sign of additional weakness, as spending apparently has not moderated by one bit. This means that Greece will now have to raise double the amount as it approaches the funding deadline when taking into account the natural deficit generated between mid-March and April 20. How happy the EU, and Germany in particular, will be with this disclosure will be seen in tomorrow's Greek CDS market.