Archive - Apr 29, 2010

Hands down, our favorite quote on investor’s lack of historical memory comes from Jeremy Grantham who said: “We will learn an enormous amount in the very short term, quite a bit in the medium term and absolutely nothing in the long term. That would be the historical precedent.” In this spirit, we highlight the lessons that should have been learned from the turmoil of 2008, complements of Seth Klarman. The excerpt below is from his annual letter. While most market participants have immediately forgotten these lessons, more prudent investors (who may still suffer from short term memory loss) should consider dusting this list off on an annual basis!

Zero Hedge fully endorses David Rosenberg's latest call: Ban The Bailout

First we have governments bailing out banks (and auto companies and mortgage providers), homeowner debtors, and now we have governments bailing out governments. When does someone finally say — enough is enough!
Look, Greece is not going to “fail”. They are going to default. There will be a debt restructuring. And there will be some recovery. Bondholders will take a haircut — why shouldn’t they? Why should Angela Merkel care if German banks own Greek bonds? Greece has been in default in its recent 200-year history almost half the time. So has most of Latin America come to think of it. What about Russia?

• Must read: Lombard Street believes that the major if not only buyers of the current rally are investment banks themselves, perpetuating biggest "pulling oneself out by the bootstraps" con game in history (FT)
• As Basis Yield Alpha Fund seeks compensation over its Timberwolf losses, Goldman pressed for CDO settlemetn (FT)
• FTW: European confidence improves to two year high (Bloomberg) on what? Expectations of EMU unraveling
• Greenwich Street Capital refused to be "first" ACA, saw Paulson deal as too risky (WSJ)
• Already holding junk, Germany hesitates (NYT)
• Baidu says sales to beat estimates on Google China "semi exit" (Bloomberg)
• Simon Johnson: To save the Eurozone: $1 trillion, ECB reform, and a new head for the IMF (Baseline Scenario)
• Fed can't delay market storm (MarketWatch)
• So as expected it was all just a ploy to get more porn download bandwidth: SEC Schapiro touts Goldman suit while seeking funds (Bloomberg)

European pension funds hired more fund managers in 2009 than in the previous year to take advantage of bargains in crisis-hit asset classes, a study by Mercer said on Tuesday. And PE shop Candover, which has been slashing costs in the face of a cash shortage, is in talks with the Alberta Investment Management Company (Aimco). Despite the flows and deals, I doubt PE will stage a serious comeback.

Ponzi's are not just of Italian origin!

Goldman employees have incriminated the company in the quest for compensation, but I have the solution...

In breaking all ties with reality, the IMF has decided that not only will US taxpayer money be freely abused to rescue a profligate Greece, but that money will be effectively junior to existing claims, in essence making it some MC Escher DIP reverse DIP nightmare. Basically US taxpayers will be Last In, Last Out, and will recover any proceeds only after existing creditors get paid out. Pardon us, but this is bloody ridiculous. When will someone in the mainstream media start focusing on this??? Americans are getting the short end of the stick, and nobody in this country knows or cares about it.This is more billions that will be promptly paid and never recovered.

• Asian currencies gain, bond risk drops after Fed pledges to keep rates low.
• Asian stock markets little lower, on concerns of a spread of sovereign debt risk in Europe.
• Australia raises excise duty on tobacco by 25%, ends advertising.
• Australia poised to force tobacco companies to sell cigarettes in plain packs, a world first.
• Brazil lifts benchmark rate to 9.5% from 8.75%.
• European stocks rise after the IMF promises to increase the aid for Greece to 120B euros.
• Fed restated their intention to keep benchmark interest rate near zero for “extended period”.
• Global stock markets mixed as European debt crisis continues to unsettle investors.

The ongoing Greek debt crisis has revived the old arguments that all national governments need monetary sovereignty. So, what if Greece had stayed with the Drachma, and never switched to the euro? Would this debt crisis be averted?

RANsquawk European Morning Briefing - Stocks, Bonds, FX 29/04/10

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 29/04/10

What's another $100b matter at this point?