Archive - Apr 2010

• 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.

Morgan Stanley closed this deal in June, 2007 at the point when the residential markets were crashing. It defies the imagination why they would at this critical moment raise and commit $8.8 billion to the commercial real estate market. What were they thinking? Hint: fees.

And why not - after all it's all the rage among those waiting in line for iPads so they can be first to buy "The Steve Jobs Guide for Deadbeat Dummies Trying To Learn To Read Good." Now that Obama has given his blessing to an entire generation of Americans to tear up contracts (very appropriate coming from a contract law professor), the follow up to moral hazard is resulting in not just individuals and companies, but entire nations simply opting out of paying their dues. Evans-Pritchard reports that after today's ludicrous rates on 3 and 6 month Bills the tide may be turning in Greece, with both parties in the country finally realizing its creditors will do everything in their power to bleed it dry, at "usurious" rates. With economic growth negative for a decade and debt interests quite certainly positive, the marginal difference will destroy not only economic output, but sink Greece ever more in debt, as existing creditors fund capital shortfalls at maturity (or default) by ever increasing interest rates. Greece has the option to stop funneling domestic capital to Germany later (inevitable) or sooner (if it finally makes the right decision).

I'm about half convinced on this lady. I'd like to get convinced on the other half.

"The government's debt cannot grow indefinitely at a rate much faster than the economy itself grows, so ultimately, something has got to change — either taxes are raised, spending is reduced, or the real value of the debt is eroded through an increase in inflation, an outcome the Federal Reserve is committed to preventing." - Jeffrey Lacker, Richmond Fed

Finally, some good news on the pension front. The Healthcare of Ontario Pension Plan (HOOPP) recorded a 15% rate-of-return for the year ending Dec. 31, 2009. Not only has the plan hit a record high of C$31.1-billion of assets-under-management, but it is now 102% funded, which means its 250,000 employees and retirees can breath a sigh of relief that they won’t see any benefit cuts or contribution increases for the foreseeable future. Larger public pension funds should take notice. HOOPP is running HOOPPs around the competition.

The following article is the first of three examining the recent unrest in Kyrgyzstan and its implications. Part 2 tomorrow will deal with the regional fallout from the “Tulip Revolution V2.0” and Part 3 will examine in detail Washington’s highest priority in Kyrgyzstan - its ongoing access to the Manas Transit Center airbase. The extraordinary events of last week in Kyrgyzstan, which saw the overthrow of President Kurmanbek Bakiyev’s administration by a popular uprising and its replacement by a provisional government have been portrayed by many in the "Beltway-istan" (Washington DC) as the latest tussle betwixt Russia and the U.S. in the ‘Great Game” for influence in the post-Soviet space. The truth is considerably more complex, however, and like a set of Russian matruishka nesting dolls, the further one digs, the more the complex realities of the situation emerge. While Moscow and Washington’s rivalry for influence with the interim leader, 59-year-old former diplomat Rosa Otambaeyva’s administration is indeed paramount, there are other players watching the debacle, from local superpowers China and India to neighboring “Stans” Tajikistan, Kazakhstan and Uzbekistan. Any final disposition of the problems emerging from the “Tulip Revolution - Part Two” will have to include consideration of these factors beyond the U.S.-Russian struggle for influence in the post-Soviet space.

A second whistleblower speaks. As the topic of physical delivery has gained prominent attention recently, it is crucial to complete the circle and show how this weakest link in the PM market is (ab)used by the big boys: Phibro and Warren Buffet. Pay particular attention to the analogues between the methods employed in the 90's commodity market and how the PM (and equity) market is being gamed currently. And to think that each new generation of traders believes it has discovered something new...

G-Pap, in an interview with Greek TV has just gone all in on his bluff, and has said that 'no EU state will block Greece's potential tapping an EU/IMF aid deal if the European Commission and European Central Bank issue a positive recommendation that it should be used." This leads us to believe that European opposition is mounting and that G-Pap is merely trying to preempt the vote down on Greek aid now that it has been revealed that several countries will need to hold "referendums" on whether this aid is in fact permitted (here's looking at Italy and Germany). What is more critical is that the PM has said "that Athens would never announce a "red line" at which it would decide to invoke the mechanism." That's perfectly understandable as not only is Greece way beyond the red line as is, but in the game of sovereign chicken, it will be the bondvigilantes who will always have the upper hand in calling Greece's bluff. And with statements like these we wouldn't be at all surprised to see another blow out in GGB spreads tomorrow, to continue the widening we started to see late in the day today.

There is very little chance that economists will improve their models because ...

A month ago Goldman told its clients to go long the EURUSD with a 1.35 stop. The stop was triggered within a week. Then the firm flipflopped and followed up with a diametrically opposite call. That call was also stopped within a few days. Goldman learned its lesson. But not Citi: the nationalized firm, whose stock, together with that of bankrupt Ambac, has just issued a long EURUSD call at 1.359. The call by technical analyst Aron Gera, proposes a stop at 1.349. In other words it is now Citi's turn to offload its EUR book. Gera's recommendation is based on technical analysis, which, in the form of momentum chasing, is all that seems to work these days. Aron thinks the EUR could surge to an 11-week high, even as the GBPUSD could jump as high as 1.5966 alongside EUR strength.

RANsquawk 13th April Market Wrap Up - Stocks, Bonds, FX etc.

Another day where the problems of the PIIGS, gyrating interest rates, skyrocketing unemployment and vacancies, imploding housing starts, and other assorted ills are totally shucked off by the favored "must own" sectors: REITs, retail, and financials.