Archive - Mar 2010

Is It A Bluff Or Is It Battle Preparation? – Several blogs have picked up on reports that the U.S. may be transferring “bunker-buster bombs” to a base in the Indian Ocean. Here’s a part of a story in the Sunday Herald of Scotland:
Hundreds of powerful US “bunker-buster” bombs are being shipped from California to the British island of Diego Garcia in the Indian Ocean in preparation for a possible attack on Iran. - Art Cashin

Daily charts of EURUSD, USDJPY, USDCHF, GBPUSD, AUDUSD, USDCAD, NZDUSD & USDSGD

One can only marvel at how the U.S. market managed to bounce back in the last hour of trade yesterday — the intraday move in the Dow exceeded 70 points. Yet, once again, volume faltered on the major exchanges. This remains one weird market, and reminds us of the story of the pig farmer — one sells a pig to the other for a dollar only to then have it sold back to him for $1.25 and then sold back to the other farmer for $1.75 and so on and so forth. It’s two pig farmers selling the same pig back and forth and driving the price higher in the interim — until of course, the price dynamics shift into reverse. It’s a great story (courtesy of Doug Behnfield at UBS) and probably apropos to what we are seeing today in this low-volume rally but still impressive comeback from the January lows. - David Rosenberg

Just a headline from Reuters for now:

U.S. SENATE BILL TO BE UNVEILED TUESDAY THREATENS STIFF PENALTIES ON CHINA IF IT DOES NOT REVALUE ITS CURRENCY-CONGRESSIONAL AIDES

We are confident China gets Reuters too.

I’ve seen too much about the “trade everyone should be into”—shorting Treasuries. Let’s break this trade down.

• The economics of the trade is poor
• Even though the Fed is jonesin’ for inflation, there is a bet against the Fed embedded in it on some convoluted level
• It is an extremely crowded trade

The short treasury trade has features that make it a bell-weather for the multi-layered screwdness in which the world finds itself.
On the surface it looks pretty appealing. What with a commitment to being irresponsible on the part of the Fed, and global economic recovery on the other hand. It's a long position on rational economic policy, right?

• Fed may seek to avoid lower inflation as officials debate exit (Bloomberg)
• RenTec (and here) finally in the spotlight (WSJ)
• Just a month late, NYT gets on the case of massive looming HY maturities (NYT), discussed previously here and here
• Rich Chinese communist channel U.S. tea party in tax debate (Bloomberg)
• Shhh... don't call it HFT and maybe the SEC won't look (Themis Trading)
• Five lies about the American economy (Reason)

• Asia stocks rise on speculation Bank of Japan will ease policy.
• Builders in Feb probably broke ground on the fewest U.S. homes since October.
• China plans to keep its foreign trade policies, including the yuan exchange rate, stable.
• China, Japan reduce holdings of US Treasury debt as global demand wanes.
• China plans to keep its foreign trade policies, including the yuan exchange rate, stable.
• Continental Airlines Inc. will start charging for food for economy-class

RANsquawk 16th March Morning Briefing - Stocks, Bonds, FX etc.

I have warned my readers about following myths and legends versus reality and facts several times in the past, particularly as it applies to Goldman Sachs and what I have coined "Name Brand Investing". Very recent developments from Senator Kaufman of Delaware will be putting the spit-shined patina of Wall Street's most powerful bank to the test, as it appears he ain't playin'. Here's the speech from the esteemed Senator from Delaware (yes, the most corporate friendly state in this country), complete with an analysis that you will NEVER see in the mainstream media!!!

RANsquawk 16th March Morning Briefing - Stocks, Bonds, FX etc.

A second deflationary tidal wave may hit the US early as April. The Dow is going to crash, possibly heading for a double bottom at 6,000, and bonds are going up for the rest of the year. Gold has had it for the foreseeable future. First, deflation, then inflation. The greatest trade of your lifetime is setting up. This trend could start tomorrow, or in two years. Blow your entry point, and you’ll get wiped out. Oh, and by the way, crude oil futures are discounting war with Iran by 2013!

Well that didn't take long. China just escalated the verbal quarrel with D.C. by retaliating right back. The Chinese Ministry of Commerce stated earlier that the "US should not seek to boost its exports by forcing other countries to appreciate their currencies." The spokesman for the Chinese Ministry of Commerce Yao Jian also told reporters that the US shouldn't be seeking to "develop its own economy" by forcing other countries to strengthen their currencies. We are holding out breath to see what China's reaction is when Geithner forwards them the petition signed by 130 very much erudite congressmen demanding that Beijing float the CNY immediately (or else America will be more than happy tolive with a 7% 30 year mortgage).

We are confident readers will find numerous appropriate occasions to use this...

It's been eighteen months since AIG collapsed, and Congress has yet to seriously focus on the most important questions: What did they know and when did they know it? "What" refers to the fatal flaws in the collateralized debt obligations, or CDOs, that AIG insured. "They" are the bankers that structured and sold the CDOs, plus the AIG executives who took on the credit risk, plus the rating agencies that handed out AAA ratings. "When" harkens back to 2005 and 2006, when those toxic CDOs were first issued.

“The private equity industry always pitches how constructive it is as an investor force to create jobs and growth,” says Mr. des Pallières. “But there are private equity funds that get rich by breaking companies and making others poor — whether they are creditors, states or employees.”