Archive - Feb 2010

Moody's, whose inability to downgrade Greece has made the late night credit trader comedy circuit, as a dump below A would be the formal start of the real-deal Greek funding crisis, has decided to project its downgrade insecurities on Europe punching bag Iceland instead: just what the brankrupt country needs. In a press release earlier the Moody's experts note "Moody's Investors Service said today that the breakdown in the talks between the governments of Iceland, the United Kingdom and Netherlands to resolve the Icesave dispute puts the Icelandic government's Baa3 rating under downward pressure." In the meantime, we are curious what the new index of Financial Conditions, created by such objective individuals as Goldman's Hatzius, DB's Hooper, ex-FRBNY's "Napoelon" Mishkin, NYU's Kermit Schoenholtz and Princeton's Mark Watson, says about availability of credit in Greece.

Germany is considering buying Greek bonds through state-owned lender KfW Group, German lawmakers said today. KfW is preparing measures that are part of a European plan to grant Greece as much as 25 billion euros ($34 billion) in aid should the need arise, said four lawmakers, who spoke on the condition of anonymity because the information is confidential....Assistance to Greece should flow through the International Monetary Fund, the most suitable body to offer financial help that’s tied to stringent conditions, the lawmaker said. The IMF should provide more than technical assistance, the lawmaker said, citing aid given to Hungary and Baltic states as examples.

January National Association of Realtors existing home sales came in at consensus busting (to the downside) SAAR of 5.05 million, a 7.2% drop from December's 5.44 million, which in turn was 16% lower than November 6.49 million. January consensus was for 5.5 million. Other data: the biggest deterioration was in the northeast (-10.9% sequentially), total houses sold (-11.1% seq), the months of supply (from 7 to 8), and the decline in both median and average price, coming in at -3.4% and -3.1%, respectively.

The shrinking contango does not bode well for prices. US hedge funds are operating the world’s second largest navy. You could almost walk across the Caribbean without getting your ankles wet. Don’t buy any more oil at these prices than you can use in your salad dressing. The “monetary” demand for oil is on the wane. There is just a pig in the python in that has to be digested. (USO)

In Thursday’s Comments, we wrote that the napkins suggested support in the S&P lay at 1088/1092. The opening plunge took the S&P to a low of 1086 about 15 minutes into the session. That low lasted a nano-second and the index proceeded to churn at the 1088 level for much of the morning. In the same Comments, we said the napkins showed resistance at 1104/1108. The late session rally topped out at 1103.50. For today, we’ll stick with yesterday’s numbers. Support should be 1088/1092 with a critical back up of 1080/1083. Resistance looks like 1104/1108 with backup at 1113/1118. Today – We get GDP revisions and the Chicago PMI. Lots of interest will focus on the 9:55 release of the University of Michigan Confidence number. Will it confirm the steep plunge in Consumer Confidence? At 10:00, we’ll get standing home re-sales, followed by several Fed speakers over the day. - Art Cashin

In March 2008, I published a report titled “Capitalism Takes a Sabbatical.” If only that were the case. I really can’t believe what I just read on Bloomberg News (Obama May Prohibit Home Loan Foreclosures Without HAMP Review). In a nutshell, the White House is considering a tactic that would prevent banks from foreclosing on defaulted homeowners unless they have been screened and rejected by the government’s Home Affordable Modification Program (HAMP). George Orwell must be rolling over in his grave. - David Rosenberg

RANsquawk 26th February US Morning Briefing - Stocks, Bonds, FX etc.

<-This is what Germany thinks of Greece (Focus)

About time someone starting looking at potential criminality here: How Goldman's Stephen Friedman gamed the financial system while at the New York Fed (Nation)

Inventories - the gift that keeps on giving - First GDP revision is higher (Bloomberg)

Lessons from the Fed's past on heading for an exit (FT)

Stevie Cohen trades secrecy for golf with investors lured by 30% returns (Bloomberg)

AIG posts loss on charges tied to rescue, may need more bailouts, shares fall (Bloomberg)

Hey Europe - You happy you complied with Summers/Bernanke and kept euro so high for a year? European economy risks decoupling from global growth recovery (Bloomberg)

As the roadshow was initially scheduled for the second half of February, this implies that the Greek bond offering is, for now, history. Furthermore, no new roadshow data has been set. It is unknown whether this is due to the massive deterioration in Greek financial perceptions over the past week, or if because the government has managed to arrange a private loan with Deutsche Bank (which hopefully does not have a downgrade put trigger as that would be the shortest loan in history).

Greek spreads were about 10 bps tighter earlier after rumors that Deutsche Bank CEO Ackermann's meeting with Greek officials was to set the tone for a €15 billion DB loan to Greece. Even as Eurostat was analyzing the Greek swap info, and Greece announced slightly better than expected January budget data, the country was still forced to delay its bond offering as expected by Zero Hedge, despite consistent disinformation rumors spread by the Greek ministry otherwise.

• Asia stocks, Emerging currencies, metals climb on Asia economic optimism.
• Bernanke says Fed is reviewing Goldman Sachs's arrangements with Greece.
• India's Finance Minister pledges to shrink budget gap as economic growth quickens.
• Obama may ban all foreclosures without review by loan-modification program.
• OPEC output reaches 14-month high in February on Saudi gain, survey shows.
• Sales of previously owned US homes probably rose on tax credit extension.
• Treasuries head for monthly gain on Greece debt concerns, Fed rate outlook.
• Yen declines versus Dollar, Euro amid speculation importers sold currency.

RANsquawk 26th February Morning Briefing - Stocks, Bonds, FX etc.

RANsquawk 26th February Morning Briefing - Stocks, Bonds, FX etc.

If the engineered bear market rally is running off of the FASB generated lies, then we certainly do have another crash coming, don't we? It truly is a damn shame how the financial integrity of this country has been sold to the highest bidder through the most influential lobbyist. Don't they realize they are destroying the essence of what makes the American markets the global leader - the perception of transparency, honest accounting and reliable financial reporting?

Quebec pension-fund manager La Caisse de Dépôt et Placement du Québec generated a return from its investments of 10% in 2009, a sub-par number when compared to other Canadian pension funds but a dramatic turnaround from its catastrophic loss of $40 billion in 2008.