Archive - Mar 17, 2010

After a decade in the penalty box, is the son of the Dotcom Bubble returning? The industry represents the last, best hope that America has for competing globally. Tech companies are among the few that make things foreigners want to buy. Foreign stocks wearing cowboy hats and pearl snap buttoned shirts There will be product shortages and much higher prices in any recovery. (CSCO), (JNPR), (JDSU), (SNDK), (MU), (ASML).

We comb through today's key Q&A by Ron Paul, Brad Sherman, Spencer Bacchus and Scott Garrett to find all the relevant instances in which Ben Bernanke either a) pleads the fifth, b) provides reasons to doubt his sanity, c) confuses what monetary policy is all about (not to mention cause and effect), d) forces Zero Hedge to send an Econ 101 textbook to the Marriner Eccles building c/o Ben Shalom Bernanke, or, e) lies outright.

One of the world's largest pension funds is suing Bank of America for more than $90m over its 2008 takeover of Merrill Lynch, claiming the banking giant failed to disclose the full extent of losses at the US investment bank. It's about time pensions got tough, but is it too little, too late?

A lot of people theorize or blog about the future of media. However, a handful of people actually walk the walk. One such person is Larry Kramer.

Larry spent 20 years as a reporter and editor at the San Francisco Examiner, the Washington Post, and the Times of Trenton. However, during the tech boom in the 90s, Larry seized the opportunity to become a successful media entrepreneur when he founded MarketWatch and managed the company as Chairman and CEO.

What is $50 billion between a couple of psychopaths? It's basically “a drop in the ocean” according to Max Abelson's account of how the Repo 105 fiasco is seen by the other side. Several ex-Lehman bankers speak off the record in "The repo men's new Lehman shrug" and confirm that not only is Wall Street terminally deluded in its own self-importance, but that basically everyone in finance is a megalomaniac, with no sense of relative worth, or any worth, for that matter, unless it goes straight into their back pocket. “I’m like, whatever" says London managing director #1, when asked what his reaction to the Repo 105 disclosure is. So when is it not "whatever?" $500 billion? $500 trillion? In its pursuit of finding ever more complex ways of defrauding the middle class silly (without the latter even being aware its share of net global wealth is about to decline from 1% to half that), Wall Street's bankers have passed the clinical psychopathology barrier, and will stop at nothing to destroy the wealth of everyone else not only with impunity, but with a smirk and a smile. Now that's net worth change you can believe in.

I recently provided evidence that banks create credit out of thin air.I've just found two more pieces of evidence ...

Seek and ye shall find. Never has this been more true than combing through theStreet's (much delayed if at all available) financials. As investors may have been digging through the company's SEC reports to find out just what the financial website's unadjusted EBITDA is (hint: much, much less than its "adjusted" cousin), one stumbles upon this gem just filed in today's Form 12B-25:

As a result of the need for the Company and its independent registered public accounting firm to focus attention on matters related to the Company's previously-announced review of the accounting in its former Promotions.com subsidiary, which subsidiary the Company sold in December 2009 -- including matters related to the preparation and filing by the Company in February 2010 of a Form 10-K/A for the year ended December 31, 2008, a Form 10-Q/A for the quarter ended March 31, 2009 and Forms 10-Q for the quarters ended June 30, 2009 and September 30, 2009, respectively, and matters related to an investigation commenced by Securities and Exchange Commission in March 2010 -- the Company requires additional time  to prepare its financial statements, assess its internal controls and file its Form 10-K for the year ended December 31, 2009 ("2009 Form 10-K"). 

Oops. We can't wait to see how Mr. Cramer will explain to the Mad Money faithful this particular twist on the hangover of the show's five year birthday bash. Also, we wonder if CNBC will finally cancel the ludicrous Jim "truth" Cramer campaign once this news breaks. We doubt it- in the quest for evaporating eyeballs, all is fair.

Germany is openly saying what we all really know, Greece is probably !@#!$%. The problem is, how can Greece go down without pulling half the Euro zone with it? The Greek tragedy saga is much worse than the mainstream media is making it out to be. Reference my annotation on today's Bloomberg article...

Another day, another meltup. Regional banks on a meltup, junker community banks getting squeezed, REITs and retail stocks up like 20 days in a row, fueled by the Perpetual Motion "Wash, Rinse, Repeat" machine.

Today will be day 12 of 13 (or something just as silly) that the market has been melting up on no volume: yet another truly ridiculous statistic in the anals of momoism. As David Rosenberg points out: "the market has been able to digest California, Dubai, and Greece" - and this has all been offset by what? Merely promises of ever increasing liquidity and bailouts by the Fed, first domestically, and soon internationally. Have people really forgotten yet again that this is precisely what got us on the verge of a historic collapse in the first place? Yes, the Fed bailed capitalism out last time around (with about 3 hours to spare), but this time it has gone dodecatuple all in, and unless intelligent, and very rich life, on Mars is discovered pretty quickly, this will all end in ruins (certainly those of the Marriner Eccles building).

Due to some upcoming travel, posting over the next few days will be somewhat sporadic. We will attempt to provide recap thoughts on any major developments, although we have a sense the task will be pretty much comparable to the job of a weatherman in San Diego: "The market was... up. Back to you." Please use this post as an open thread for items of relevance. We leave you with this video in which Bruce Caldwell, a Professor of Economics and the Director of the Center for the History of Political Economy at Duke University and expert "Austrian," discusses a very relevant topic for our day and age: Friedrich Hayek's observations on the Road to Serfdom.

Today Ben Bernake and Paul Volcker will lead Panel 1 at a hearing of the House Financial Services Committee on "Examining the Link Between Fed Bank Supervision and Monetary Policy." With the just announced news that the Volcker Plan is dead after all, we fully expect this to be the last public appearance of the former Fed chairman before he is stuffed back in the closet for good. After all with 8.33 bid to cover for 1 year Ukranian bonds what can go wrong?

The hearing can be seen live at 2 PM eastern at the following link.

Market pundits scrambled to fill up air time by attributing the market movement to this data or that comment. The market rally catalyst was quite singular however. As rumors spread of a firmed up Greek rescue package, and the S&P suggested it was shifting Greece out of ICU, the Euro soared. It spiked 0.7% which is a significant move in the currency arena. The result was immediately evident and dramatic. Gold spiked $20 and oil shot up over $2. Those moves came long before the FOMC statement. Those moves were not influenced by some piece of economic data. Those moves were not the result of some shift on the outlook for the President’s health plan. Those moves were the direct result of the jump in the Euro and the correspondent weakening of the dollar. We believe that the Euro/Dollar move was also the primary catalyst in the stock market. Given the action in gold and oil, the stock market’s reaction was rather mute. With such a strong tailwind, you might have expected something like a 100/150 point move in the Dow. The real question on stocks was what was holding stocks back given the currency boost.

• China in Midst of ‘Greatest Bubble in History,’ ex-LTCM General Counsel Rickards Says (Bloomberg) (click here for recent extended interview with Rickards)
• Coal beats solar as analysts favor Peabody while subsidies drop (Bloomberg)
• Steve Forbes on Fannie and Freddie: Ugly beasts loom again (Forbes)
• Feldstein Sees Greece Euro-Exit Pressures as Deficit Plan Fails (Bloomberg)
• Evans-Pritchard: The proposed EU Greek bail-out cannot simply bypass German law (Telegraph)
• Deflation: Producer prices post biggest drop in 7 months (Reuters)
• Ex-Lehman boss sees vindication in Examiner's report (Post)
• Hussman: Ordinary outcomes in extraordinary recklessness (Hussman Funds)

• Asian stocks, commodity prices rise on Fed rate pledge, BOJ lending expansion.
• Bank of Japan doubles credit program to $222B, holds interest rate.
• BoJ loosens monetary policy, increasing low-interest loans available to the money market.
• India may create sovereign wealth fund to help state entities to acquire overseas energy assets.
• OPEC Ministers poised to keep output steady with Oil over $80/bbl.
• World Bank raised its forecast for China's growth this year to 9.5%.