Archive - Apr 14, 2010

Click here for a webcast of the Joint Economic Committee's Q&A with Ben Bernanke live and commercial free. Note - there is no mention of "extended period" in Bernanke's prepared remarks. Watch for a discussion of just that, as well as questions on asset sales, debt levels, GSEs, inflation, and, of course, when interest rates will be raised. Full Bernanke testimony in which he sees a "moderate recovery."

Click here for a webcast of the Joint Economic Committee's Q&A with Ben Bernanke live and commercial free. Note - there is no mention of "extended period" in Bernanke's prepared remarks. Watch for a discussion of just that, as well as questions on asset sales, debt levels, GSEs, inflation, and, of course, when interest rates will be raised. Full Bernanke testimony in which the Chairman sees a "moderate recovery."

SocGen's Dylan Grice is out with another must read report summarizing the Greek situation: in short, so much time and effort is injected in preserving the Greek status quo (so far unsuccessfully, even after 4 rounds of bailouts) as it is small enough that it could, in theory at least, be helped. If it goes, the next countries to follow will be simply too big to be bailed out. Just recall the $500 billion expansion in the IMF's NAB. The world is slowly realizing the dominoes can not be stopped, and as much capital must be locked away as possible in advance of the next major risk flaring episode. Which is also why stocks are currently going to the moon: the resultant crash in the stock market once the reality of just how ugly the global mess is will lead to large double digit drop in the market. Which is why getting to the highest possible level from which to plunge makes all the sense in the world...

Have the problems at the troubled stock peddler just gotten too much for the existing management team? A better title for the job posting would have been "Will Trade EBITDA Adjustments For Food."

As we expected last night, G-Pap's latest round of commentary was certain to set off fireworks in today's bond arena. Sure enough, at last check the 10 Year spread to Bunds had blown out by 40 bps to almost 400 bps, this is approaching the record wides seen during the duration of the entire crisis. As usual, the collateral damage is a drop in the ASE which was about 2% lower for the day, as well as Greek banks, mostly in the red. The primary source for the weakness was Moody's (which is now about 4notches behind Fitch) statement that "there is a 50% chance that Greece's credit rating could receive another downgrade in the next 12 to 18 months if fiscal consolidation falls short of goals. If Athens falls short of perfection, the Greek rating will be downgraded, a Moody's spokesman said" as reported by the WSJ. Additionally, a new round of strike is once again paralyzing the country. And confirming our observations that the half-life of any good news out of Greece is now less than 24 hours is Brown Brothers Harriman, which sent out a note to clients saying: "The afterglow of yesterday's Greek T-bill auction has faded." Lastly, CDS are back over 400 bps. The "speculators" are closing in on the kill... or at least the formal announcement of the bailout mechanism's activation by G-Pap. The loaded fire extinguisher is about to become a loaded gun, to be used shortly in a fatal game of Greek roulette (Russian roulette variation, where all the chambers are loaded).

From the Census Bureau: "The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $363.2 billion, an increase of 1.6 percent (±0.5%) from the previous month and 7.6 percent (±0.5%) above March 2009." The biggest component to the increase in March was the traditionally noisy and excluded Motor Vehicle and Parts Dealers, which increased from $53.4 billion to $69.9 billion. What we find surprising is that in light of all the rage over tech, sales at Electronic and Appliance Stores declined by -1.3% from $8.4 billion to $8.3 billion. How this is possible with ever increasing "strategic" mortgage defaults is beyond us. We can't wait to see the latest consumer savings ratedata.

• Market should prepare for autumn rate "exit" (Reuters)
• In the meantime, using the diagonal curve, JP Morgan net rises 55% on fixed income, provision cut (Bloomberg, Investor Presentation)
• CIT bond comeback sets stage for debt sale (Bloomberg)
• Unless pension costs can be brought under control, the city may face bankruptcy (LA Times)
• Contrarian alert: everybody hates Treasuries (Barrons)
• German roots of Greek crisis remain (Guardian)
• Yes 47% of households owe no taxes (NYT)

Add bad banks, high NPA to GDP ratios, dramatically overly optimistic growth assumptions, and unrealistic perspectives on taxation, and you get a capital "I" in the PIIGS acronym!

Reuters reports that according to two "sources" the Chinese economy grew at a 11.9% rate in Q1, compared to expectations of 11.5%. Of course, the rate of growth is 10 bps below where the economy is considered to be in the official redline, and rates hikes become inevitable. And even as the economy surges, inflation is somehow supposed to come in under expectations: "Consumer price inflation in March was roughly 2.4 percent, one of the sources said. That would be a deceleration from the 2.7 percent rate in February and below forecasts of 2.6 percent." As the source of the leak appears to have been greenlighted by China, we should expect the daytrading algos which trade only on leak catalysts, to have a field day frontrunning each other on all Chinese issues, as they leave the Ambac corpse behind. "The numbers heard by Reuters matched those reported earlier on Wednesday by China Business News, a Chinese-language newspaper which cited an unidentified source."

• China to increase gasoline and diesel prices by as much as 4.6 percent starting today.
• China’s property prices rose 11.7% - record pace in March.
• China's Hu rebuffs Obama on yuan, says Beijing will act in line with domestic interests.
• Nikkei rises 0.4% as Intel boosts tech stocks.
• Singapore Dollar surges, Asian stocks climb as global growth accelerates.
• Singapore unexpectedly revalued its currency, after govt raised forecasts for economic growth and inflation.
• US economy will probably expand at a moderate pace for the rest of this year -Lacker
• Yen weakens for 5th day versus Euro on global recovery signs.

RANsquawk 14th April Morning Briefing - Stocks, Bonds, FX

RANsquawk 14th April Morning Briefing - Stocks, Bonds, FX etc.