Archive - 2010

PPIP is even worse than I thought ...

Well, despite some brutal holiday travel, international airports, flight delays and exciting weather for our psychotically committed staff, the machine rolled on (albeit a bit more slowly) at Zero Hedge. So if you were off coping with in-laws and children not-your-own with as much liquor as you could consume, you might have missed out on quite a lot. Don't worry. We have the cliff notes for you here, and we've got things revved up again for 2010. So take a quick look at the past week or so, and then brace yourself for the months to come. We've got a wealth of things planned for you. It promises to be a rather interesting year.

After last year's debacle, most hedge funds feel lucky to still be alive. After suffering through the steepest, fastest bear market in history, many lessons were learned. And I'm guessing that many hedge fund gamblers are starting out in January with some New Year's trading resolutions.

At this point is the United States even capable of permitting bubbles to deflate without a massive run-up to a desperate crash? Probably not.

Someone in France has seen "Heat" too many times.

RANsquawk 4th January US Morning Briefing - Stocks, Bonds, FX etc.

RANsquawk 4th January Morning Briefing - Stocks, Bonds, FX etc.

Inside Beltwayistan, a number of Bushevik oil patch zombies still roam the recession-blasted landscape mindlessly chanting their Caspian mantra, "Happiness is multiple pipelines" - with the caveat that they flow westwards and bypass both Russia and Iran. They've now added a new word to their vocabulary, "Nabucco," and worse, have bitten a number of Obama administration officials and visiting European politicians, who have joined their shuffling ranks.

US Troops accused of executing children, can't photograph Xmas lights in Orwell's Britain, Soros suggests gold-backed SDR collateral wealth transfer, Ireland goes cashless to harvest souls, UK State can invade homes for eco-friendliness, Pakistani volleyball explodes into 2010.

The implications of a looming “W.” The risk of economic Armageddon is still out there. Please pass the Xanax.

• Martin Whitman to relinquish Third Avenue Chief Investment slot. (End of an era) [reuters]
• Greece prepares fiscal plan for EU.  (Write "I will not forge GDP numbers" 200 times first) [bbc news]
• Burj Dubai occupancy may reach 75 percent this year.  (And Dubai's GDP growth may reach 75 percent too).  [bloomberg]
• Bernanke: "Low rates didn't inflate housing bubble." (Alan: "Check is in the mail Ben!") [bloomberg]

Bernanke gave us an insight into his thinking this weekend. If you think he is going to get tough this year with monetary policy you can forget it. The Carry Trade is alive and well folks....

"For interest rate exposure, or duration, we are currently cutting back in the U.S. and U.K. because, as mentioned before, supply and demand dynamics are likely to be negatively affected as borrowing rises and central bank buying declines...With corporate bonds, we are becoming a bit more cautious than we have been. In the third and fourth quarters of 2009, we believed the massive narrowing of spreads we saw in the second quarter wouldn’t go much further. We weren’t necessarily selling credit on any scale, but we’d reduced buying....In agency MBS, we are underweight, having reduced our exposure as the Fed’s buying programs have dramatically tightened spreads...we are underweight TIPS versus the benchmark, reflecting our view that risks are currently weighted toward a disinflationary environment." Paul McCulley

Ben Bernanke delivered a speech yesterday that could mark a turning point in the Fed's views on and handling of potential asset bubbles. Despite Helicopter Ben's usual attempts to blame everyone else but the Fed for the housing bubble, at the very end of the talk Bernanke actually suggested that the Fed would consider using monetary policy to combat asset bubbles. What a start to 2010.

Could be ...