Archive - Mar 29, 2010

madhedgefundtrader's picture

Lumber is On Fire





Guess what the top performing asset of 2010 has been? Decades of production downsizing, huge Chinese buying, and waning competition from Canada because of a strong loonie, conspire to take lumber up a blistering 39.9% YTD. (WY), (LPX), (CUT).

 

Leo Kolivakis's picture

Are Pension Liabilities Set to Explode?





The General Accounting Standards Board, or GASB, is likely to move toward changes that would increase the pension liability that local governments display on balance sheets by tens of billions of dollars. If the modifications are approved, many already cash-strapped states and municipalities would likely have to increase the amount they are supposed to pay annually to their pension funds to help cover the shortfall. As if that isn't bad enough, federal criminal investigators are looking into possible wrongdoing involving investment transactions of public pension funds including Calpers, the nation's biggest public pension fund. How many more pension bombs are set to explode?

 

Tyler Durden's picture

The End Of The Carry Trade?





Do these observations imply upcoming curve flattening?

 

Tyler Durden's picture

Full Lehman 2010 High Yield Conference Presentation Deck





If you were one of the unlucky few caught exposing Barclays' shenanigans over the past year while acquiring Lehman at subfiresale prices (and being sued for that now), you probably were not invited to the annual Lehman Brothers (yes, that's how it will always be know, and always with Brad Rogoff leading the charge) HY conference, this year held at the Phoenician in Scottsdale, AZ. On the other hand, even if you were invited, but like quite a few people, spent all your time in Jenna Jameson's Babe's Cabaret, and need to send your boss a summary of all you"learned" you must be about as pleased as Tim Geithner at a Tax Cheats Anonymous meeting. Fear not - here is the full presentation deck, chock full of cool stuff stuff, pretty graphs and bullish, bullisher, bullishest ideas. So buy all the worst junk before the market crashes again and Lehman still has gobs of crap paper on their books. Cause this time the Repo 105 reacharound just ain't gonna cut it.

 

Tyler Durden's picture

Global Macro Update





Following our update last week, Gold has continued its appreciation today. Overall commodities and emerging markets were the main driver. The key chart today is copper which broke out to make new highs on the year (and since August 2008 for that matter). Given what we have been stressing on the triangle observed in the Shanghai composite and AUDCAD, this could be a major development. In parallel to this break in Copper, AUDCAD actually broke out of its triangle to the upside. Two things to keep in mind though:

a/ Flase breaks for triangle are extremely frequent

b/ Copper had a major false break into new highs in July 08 before experiencing a virtually uninterrupted 70% sell-off

- Nic Lenoir, ICAP

 

Tyler Durden's picture

Google Announces China Is Now Partially Blocking Mobile Services





China may have just taken the first retaliatory step against Google, after the search enginge decided to relocated its service out of Hong Kong. As the website created by Google to keep track of Mainland China service availability indicates, mobile services for the first time have become partially blocked on March 28.

 

Tyler Durden's picture

March 29, 2010 Total Debt Subject To Limit: $12,629,674,000,000





March 29, 2010 Total US Debt Subject To Limit: $12,629,674,000,000.

Total debt at the beginning of March: $12,383,717,000,000

Net debt (includes Trust Funds and marketable debt) issuance month to date: $246 billion

  • Net Bills issued: $107 billion
  • Net Notes issued: $138 billion
  • Net Bonds issued: $13 billion

Debt limit: $14,294,000,000,000.

Debt capacity: $1.665 trillion and dropping. At $220 million per month in net new issuance as projeced by the CBO, this will last the US just under 8 months.

 

Tyler Durden's picture

Here Is Your Latest Dose Of Xanax From Man U Board Member, BRIC Inventor And Goldmanite (In That Order) Jim O'Neill





I am back from yet more travel, this time a couple of days in Florida, and a quick 24 hours on the –rainy- shores of Lake Como at the Spring Ambrosetti forum. Of note: the state of the world/me being an optimist. Judging by the mood of people at Ambrosetti, and the nature of the questions and comments I received on both the two panels I was on, and separately in conversation, people continue to think my optimism is , sort of nuts. At the heart of it, people simply find it impossible to believe that global demand can remain above 4pct-ish if the US is struggling. There is one major dilemma with this, substantially held view, it is called “ the evidence”. - Jim O'Neill

 

Tyler Durden's picture

Here Is Why Companies Are Hoarding Cash And Why They Will Not Let It Go Any Time Soon





Much ink has been spilled over the topic of surging corporate cash holdings. In fact today, DB's Chief Strategist Binky Chadha wrote an extended report called "Buying Firms Who Will Raise Payouts" discussing why investors should run, not walk, and buy all the companies that he has mentioned in his report, which is basically a CapIQ screen of all names that have seen their cash holdings spike over the past 2 years. The report has some pretty charts, the main one demonstrating that the cash and short term investments in the S&P 500 ex fins has increased by 30%. Binky's argument: these are the companies which will spend all this "excess" cash on such sundry as dividends, stock buybacks, CapEx, M&A, etc., all wonderful things which in a normal environment will certainly grow revenues and EPS. Binky would be completely correct if it weren't for one simple thing. Taxes. With apologies for bursting Mr. Chadha's bubble, there is not one mention of the word "tax" nor the fact that as companies have been pumping up their cash balances, their corporate tax outflows have plummeted. Well guess what: net corporate tax withholdings by the US government have declined by exactly the amount that cash has grown by. It is extremely naive to assume that in an environment in which Obama is preparing to hike not only individual taxes but corporate taxes as well, that the current LTM net tax withholdings (which incidentally are at all time TTM lows of $90 billion), will not go back up to their historical average of $400 billion. Glaring Binky report oversight #2: the amount by which corporate tax has declined ($300 billion) is precisely the amount by which cash and ST investment has risen ($300 billion). Companies are not going to use the cash for all much-fabled stock price boosting activities noted in the Chadha report. Instead, they are merely preparing for the massive tax hikes which will soon hit them all, as the administration realizes that it must tax the crap out of the S&P companies that have reaped the benefits of the 80% S&P rally. Sorry Binky: pretty charts though.

 

Tyler Durden's picture

Geithner On Picking Morgan Stanley For Citi Underwriter: "That's Not A Decision I Can Speak To"





When asked by Maria Bartiromo on why Morgan Stanley was picked to sell the Tsy's Citi stake, Geithner replies: "That's not a decision i can speak to. We have a good team of people who looked at the competition carefully and made a good judgment." Is Blankfein officially isolated by the administration now? We wonder when Goldman will look at the market carefully and decide to make the good judgment it is time to buy (i.e., for Goldman's prop desk to sell). Also, on whether the UST will be selling its AIG stake (Goldman's ears perking up here): response meanders [thank god Paulson is not trying to avoid the topic here], but no firm committment.

 

RobotTrader's picture

A Whole Lot of Nuthin' Going On





Pretty much a boring day, as the fundies are now fully engaged in quarter end markup operations, where the last .001% of cash reserves held in the funds are used to buy more shares of the "must own" stocks.

 

Tyler Durden's picture

Let The Churn In QQQQ, Citi And Bank of America Hit Infinity: ISE To Offer Special Rebates For Liquidity Providers In These Three Names





Today, one quarter of the volume in the market is attributable to trading in Citi shares. This is simply a ridiculous statistic, and shows that the broader equity market, which merely trades based on the momentum of one stock, is and has been busted for about a year, when we first wrote about this phenomenon. Yet this insane churn is not enough for some: The ISE has just announced it is introducing a "Modified Maker/Taker Fee Schedule" for the three most actively traded options products on its exchange: QQQQ, C, and BAC. In essence, the ISE will provide even greater rebates to "liquidity providers" in these three stocks. The entire market will soon consists of exactly two companies (both of which are wards of the state) and one ETF, as liquidity finds the path of least resistance and greatest (evaporating) profit margins. This is what "liquidity" in the market has become. And all the while, the latest DMM, GETCO, which is certainly not frontrunning its prop positions based on massive NYSE flow traffic, is laughing all the way to the bank.

 

Tyler Durden's picture

Full SEC Letter Demanding Repo 105 Disclosures From Financial Firm CFOs





Dear Chief Financial Officer:

We are currently reviewing your Form 10-K for fiscal year ended__. In our effort to better understand the decisions you made in determining the accounting for certain of your repurchase agreements, securities lending transactions, or other transactions involving the transfer of financial assets with an obligation to repurchase the transferred assets, we ask that you provide us with information relating to those decisions and your disclosure.

With regard to your repurchase agreements, please tell us whether you account for any of those agreements as sales for accounting purposes in your financial statements. If you do, we ask that you:

 

Tyler Durden's picture

Is Goldman's Image Problem The Reason Why The Treasury Picked Morgan Stanley To Sell Its Citi Stake? Gasparino Says Yes





Charlie Gasparino who last week interviewed John Mack (and, we contend, failed to ask any truly provocative questions especially as pertains to MS' record prop trading losses), contends that the reason why Morgan Stanley was picked over GS in selling the Treasury's shopping Citi stake, even as Pandit's firm is set to quadruple and become the most valuable worthless company in the world (with one quadrillion outstanding shares, and a projected price per share of $16, well you do the math), is Goldman's increasingly shaky public image. And that the firm's negative perception may ultimately alienate more investment banking clients who wish to avoid the "fallout of working with Goldman."

 

Tyler Durden's picture

SEC Sending Letters To 24 Large Financial Firms Demanding Repo Agreement Disclosure





Here come the Repo 105 disclosure consequences... And the SEC is only about 5 years behind the curve as always.

SEC SENDING LETTERS TO 24 LARGE FIN FIRMS RE REPO AGREEMNTS
SEC: WANT SPECIFIC INFO RE FIRMS REPO ACCOUNTING, DISCLOSURE
SEC: SENDING LETTER TO 'CLOSE TO TWO DOZEN' LARGE FIN FIRMS

We are fairly confident all the 18 Primary Dealers are on this list (not to mention the key TBTF Prop Trading firms).

 
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