Archive - Apr 2010

Yes that's right. I expect 200+ billion Slugs to die over the next three years. It might cause interest rates to rise a bit (more). Another buyer bites the dust.

What a difference a day makes. First Cramer was firmly planted in the Steve Liesman camp, who in turn for the past week has been moonlighting as the semi-official Goldman PR manager, in "leaking" every piece of useless "absolving" information (a job only secondary in worthlessness to that of worst financial stock analyst ever Dick Bove who has been buying Goldman all the day down from $185), however now after actually doing some thinking, the troubled theStreet.com owner who himself is no stranger to SEC investigations, has diametrically changed his tune. In this morning's edition of "Morning Joe" on MSNBC, Cramer said: "What makes this worse than most situations is that it’s entirely possible this young guy, who’s now holding the whole firm hostage, Fabrice Tourre – it’s entirely possible that he sold it fraudulently. If he did, then Goldman has no defense. So, what I would emphasize at this particular moment is that this guy is way too powerful. The hearings are going to go badly. Goldman knew they were going to have a Wells Notice, knew they were going to get prosecuted. They didn’t reveal it. It was totally material. Again they did that wrong.” But we thought that according to "GAMECHANGING" information which you yourself Jim broke, Goldman was ok: after all they lost "money on the deal", a conclusion so moronic it immediately led to derisive ridicule from fringe blog Zero Hedge. That said, we are pleased to bury the hatchet - after all even former Goldmanite and seasned CNBSer Jim now agrees that the vampire squid is in deep shit.

We promised we would update the US Treasury individual tax withholdings comparison between 2009 and 2010 by 4 week bucket. Week 16 data is now out and the result is below. It speaks for itself. As for withheld corporate tax, we would discuss that too... if there was anything to discuss.

Oil prices dropped on Monday as traders reacted to an embarassment of riches. Because the economic news has been so good recently – so good that it has eclipsed the market’s recent, poor fundamentals – investors decided to take profits on Monday, out of fear that the Federal Reserve might indicate it is nearer to raising interest rates, soon. Most economists tend to feel that any interest rate hike would be awfully premature, but investors were discounting the probability/possibility on Monday and their conclusion was that the odds had increased on the Fed ramping up its hawkish language, even if no one really expects rates to be increased here and now.

“At this hearing, we will examine important policy questions that have arisen from the Greek debt crisis,” said Chairman Kanjorski. “Going forward, there could be important implications for the issuance of all government debt, especially when bankers act as casino operators by first helping governments to issue bonds and then facilitating bets against the failure of that debt. Some, particularly in Europe, have additionally raised questions about the accuracy of disclosures of government indebtedness and the transparency of credit default swaps on these obligations. This regrettable situation could also ultimately lead to real repercussions for the European Union and the global economy. I look forward to exploring each of these matters at this hearing. Congress, moreover, has pending legislation aimed at better regulating derivatives, including credit default swaps. As we work to finalize the Wall Street reform bill, this hearing will help us to determine whether we should do even more to shine a light on this dark corner of our financial markets.”

The Goldman "Conviction Buy" Criteria list: if XYZ drops out of upward channel, then dump. Enter Google. The Fast Momo Brigade just ordered an XXL dose of incontinence products: "We remove Google shares from the Americas Conviction Buy List due to recent underperformance following in-line 1Q results. We remain Buyrated given: (1) Shares are attractive at around 16X our 2011E EPS/FCF, (2) our forecast for multi-year mid-teens revenue and earnings growth, and (3) structural upside from global search penetration catching up to US/UK levels, and from Google moving toward Yahoo! in display share. Since adding Google to the Conviction Buy List on August 19, 2009, shares are up 23%, vs. the S&P 500 up 22%. Over the past year, Google shares are up 42%, vs. the S&P 500 up 43%."

Zero Hedge deconstructs every lie and prevarication in Lloyd Blankfein's prepared statement ahead of tomorrow's Senate Hearing on "Wall Street and the Financial Crisis"

Last Friday was the first 90% Downside Day since February, sentiment gauges are as bullish as they’ve been since the “calm before the storm,”, the CBOE equity put/call ratio is at extremes last seen in August of 2000, stocks are the most overbought since the rally began in March 2009, we’ve gotten within spitting distance of “The Lehman Gap,” volatility is back to complacent levels, and by Jeffrey Saut’s count, last Thursday was session 34 in the “buying stampede” that began on February 26th (rarely do such skeins last more than 30 sessions).

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 26/04/10

The rush for money debasement around the world has escaped nobody's attention, and as a result the one undilutable commodity (unless everyone demands physical delivery at the same time) gold has seen investors around the world scramble to get their hands on the commodity, either in physical form or via ETFs. The World Gold Council has released its Q1 2010 update, according to which "Investors bought 5.6 net tonnes of gold via exchange traded funds (ETFs) in Q1 2010." This has brought the total amount of gold in monitored ETFs hit a new record of 1,768 tonnes ($63.4 billion worth of the shiny metal). Some more on the unquenchable demand for gold: "GFMS reports that the over-the-counter market saw a moderate increase in net demand during the first quarter. Meanwhile, previously existing long positions have generally continued to be very firmly held. Net long positions on gold futures contracts, a proxy for the more speculative investment, fell from the highs experienced in Q4 2009, but they remain high by historical standards." Despite the persistently high price of gold, and despite the strength of the dollar over the past quarter, demand for gold is not going away.

The pressure is on the 19-year old motion-chasing "portfolio managers" at TIAA-CREF, CalPers, Harvard Endowment, Gates Foundation, et al to buy whatever is going up and sell losers immediately, and continue looking in the garbage bins for more "alpha" to goose returns.

MBO (Buffet BO) next? Just headlines from Dow Jones right now.

UBS' Investment Research goes for broke (and not in a good bank/bad bank SNB bailed out way either) with its most recent Market Outlook: the bank which at this point is fighting tooth and nail to prevent client departures and deposit withdrawals is instead focusing on predicting the future, and the future rocks. To wit: "Over the past several months, economic activity and earnings results have come in better than expected. As a result, we are increasing our 2010 and 2011 S&P 500 operating EPS estimates to $90 and $100, respectively, from $83 and $92. 2010 EPS improvement should be driven by margin expansion and easy comps. 2011 should be more of a revenue story." Forget that a few months ago 2010 was supposed to be a "revenue story." And when the revenue story does not materialize in 2011, UBS will simple say 2099 may be finally the year in which CAT's revenues will be greater than its earnings. Yawn: the only thing that matters is whether or not Bernanke will keep ploughing on with negative real rates, and whether the PDs will continue the shell covert monetization games, thanks to which Bid To Covers on 1 Minute CMB Bills will soon hit infinity. The excess cash sure isn't going to come from Money Markets: at YTD rates of depletion, there should be no actual cash left in the system within 12 months.

Eleven indicted Somali pirates dropped a bombshell in a U.S. court today, revealing that their entire piracy operation is a subsidiary of banking giant Goldman Sachs. There was an audible gasp in court when the leader of the pirates announced, "We are doing God's work. We work for Lloyd Blankfein. We were functioning as investment bankers, only every day was casual Friday," the pirate said.