Archive - Sep 23, 2010

The biggest melting ice cube (since Movie Gallery) has just melted: Blockbuster finally accepted the inevitable and filed for Chapter 11 in New York Southern (Case 10-14997, legal: Weil Gotshal, CRO: Alvarez & Marsal). As part of the "pre-arranged" (but not "pre-negotiated") bankruptcy process, "the recapitalization plan would substantially reduce the Company's indebtedness -- from nearly $1 billion currently to an estimated $100 million or less when implemented." The Company has secured a commitment of $125 million in new "debtor-in-possession" (DIP) financing from the Senior Noteholders, chief among who is Carl Icahn, who has built up a major stake in the company's $675 million Sr. Secured notes, which will be converted into post-reorg equity. As the attached affidavit demonstrates, the company had 3,306 total video stores in the US (including franchises), and 2,333 international ones. We are confident that the company's renegotiation of lease payments much lower will only force REITs to surge to all time astronomical highs, because after all, who needs cash flow?

Fiat Currencies are circling the drain boys and girls. How else can you explain Stocks, Bonds, and Gold going up while the dollar craps the bed? You cannot fight the fed. Just position yourself for the pop in the liquidity bubble. Perhaps a minor bout of Hyper-Inflation would cure this. Anyway, we are rolling some Gold profits into Grains now.

• Wen Says 20% Gain in Yuan Would Cause Social Upheaval (Bloomberg)
• Amid Tension, China Blocks Vital Exports to Japan (NYT)
• Is the PBoC Deregulating Chinese Bank Deposit Rates? (Seeking Alpha)
• The "Deleveraging" Deception (Michael Pento)
• German Union Mobilizes Over Pay to Avert "One-Leg" Recovery (Bloomberg)
• Waaaaah Street: Executives, Emotion, and Outbursts of Obama Rage (NY Observer)
• Retirees Duped by Derivatives With Structured Notes Sale Surge (Bloomberg)
• Did the Fed Really Say Inflation Isn't High Enough? (Minyanville)

I was pushing longs at 1040. Now I think 1150 will mark the top. For a while.

Initial claims not only missed consensus by 15K, jumping by 13K to 465K, but the previous number was of course revised higher from 450K to 453K. And a far bigger revision was in the continuin claims number, where the previous print was pushed higher from 4,485K to 4,537K. The current weekly number of 4,489K missed expectations of 4,473K nonetheless. Once again the BLS' endless "downward" revisions to prior economic data continue to misrepresent the economic at T-0 with impunity. But who cares about truth when patently wrong headlines is all that matters to the binary pirates. The only "good" news: EUC and Extended claims recipients jumped by over 200K in the past week, somewhat countering the prior week's plunge by over half a million as ever more claimants exhaust their full 99 weeks of various Tier benefits.

Another reason why Angela Merkel is furiously contemplated just how to kill the EUR next, was this morning's German manufacturing PMI which came at a far wear weaker than expected 55.3 (on expectations of 57.6). Same thing with the services PMI which missed a consensus reading of 57.0 to land at 54.6. Even Goldman's Dirk Schumacher who has long been screeching about the imminent second coming of the Sun King who will make all things well, is starting to realize that in the central bank FX game, economic outlooks now change intervention to intervention.

Irish bond spreads are back in the spotlight, with Bund spreads jumping by over 20 bps  to over 415 bps, although not on the heels of a failed auction (the country did auction off €400 million in February and April 2011 bills earlier, which was less than sought), but rather on news that Ireland is the first country in Europe to officially double dip back into negative growth. Ireland was also the first European country to dip into recession what may seem like an eternity ago. The stunner is just how vast the difference between the expected and the actual economic reality was. As BBC reports: "The Irish economy shrank in the second quarter
from the previous three months, surprising analysts who had been
expecting growth. Gross domestic product (GDP) fell 1.2%, the Central
Statistics Office said. It also revised down its measure of growth in
the first quarter to 2.2% from 2.7%." So poor Ireland not only has to deal with a drunk PM, insolvent bank system, and, what is not surprising a new economic crunch, but what is far more concerning, a Department of Truth and Unicorns, which is unable to lie its teeth off and paint a rosy picture when the feces are already in process of being fanned.

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 23/09/10

Why S&P 1150 is a more significant level to watch than you may think.

Retail Traders as a herd are wrong...most of the time (sorry guys its true).

This daily report is designed to help traders find opportunities to trade against this group. The premise is very simple we are looking for 66% of retail traders to be trading either long or short a currency pair, we then look for opportunities to fade (trade against) this group. For example if 72.99% of traders are long the USD/CHF we look for opportunities to short that pair.

"Incentives are part of total compensation and critical to the fund's long-term success as well as recruitment and retention of skilled investment professionals," Pacheco said in an e-mail.