Archive - Jan 27, 2011

Moody's is taking a closer look at states' unfunded pension liabilities..

More than any other man, John D. Rockefeller changed the face of American business. His focus on cost cutting, cash flow and balance sheet strength, combined with his unbridled ambition to control not only every level of oil production at his company, but indeed the entire oil industry itself, wrote the playbook by which all multinational corporations operate today.

Optimism is so important that Merrill Lynch, one of the oldest firms on Wall Street adopted a “bull” as their logo and the phrase “be bullish” as their mantra. [Editors note: despite Merrill Lynch’s best attempts of providing uplifting advice to America and the World, they’ll remain as one of the poster children for the 2008 market collapse. I guess being eternally bullish didn’t exactly workout for the mighty Merrill Lynch]. Ok, Merrill Lynch was obviously married to positive thinking. But should everyone on Wall Street be painted with the same brush? We’ll let the numbers speak for themselves as we examine the success of the professional World of economists.

Earlier today a friend hit me up on bbm from the bar at JFK Airport to tell me the bartender was giving him stock tips. If the guy's working the bar, the airport bar, surely he's an expert stock jockey, no?

Per assorted tweets from the country that is only second (but certainly not last) in experiencing first hand the Genocidal one's monetary policies, the Egyptian government has now effectively shut down the internet, text messaging and possibly land lines -link. This includes Facebook and Twitter. Ironically this act of desperation in Egypt which seeks to prevent the ongoing televising of the revolution, would be precisely the match that would set off America on a certain path to revolution: not ongoing banker rape, not Primary Dealers stealing from babies, not Greek president G-Pap robbing your wallet... merely a shutdown of Facebook and Twitter (and possibly cable) and 300 million well-armed American will promptly go apeshit.

And so Chicago politics continues in the good old fashion way. From the Illinois Supreme Court: "Given the record before us, it is simply not possible to find clearly erroneous the Board’s determination that the objectors failed to prove that the candidate had abandoned his Chicago residence. We therefore reverse the decision of the appellate court and affirm the decision of the circuit court, which confirmed the Board’s decision. So there will be no mistake, let us be entirely clear. This court’s decision is based on the following and only on the following: (1) what it means to be a resident for election purposes was clearly established long ago, and Illinois law has been consistent on the matter since at least the 19th Century; (2) the novel standard adopted by the appellate court majority is without any foundation in Illinois law; (3) the Board’s factual findings were not against the manifest weight of the evidence; and (4) the Board’s decision was not clearly erroneous."

Desperation kitchen sink anyone? The M2, which up until now was merely diagonal, is about to go parabolic. In the week ending 1/17/2011, Seasonally Adjusted M2 surged by $46.6 billion, the biggest weekly increase in the broadest tracked monetary aggregate (ever since the cost-cutting associated with discontinuing the M3) since 2008. One look at the chart below indicates precisely what is fueling the endless market ramp. Furthermore, for those who realize there is a 93% correlation between M2 and gold, we would certainly recommend putting on the M2/Gold convergence trade on.

And there you have it: blame that shocker of a non-recurring event known as snow in December. Someone should explain to Jeff Bezos that Amazon benefits from record snowfalls. It sure would inspire some confidence in shareholders if the CEO actually knew that he was running an online retailer. Did someone dissolve crazy pills and forget to tell us about it? When will someone finally blame fiscal and monetary policy (all QE1, Lite and 2 of it), for one-time, non-recurring $4.5 trillion in stimulus? We dread to imagine what Stay Puft marshmallow man will materialize if it ever snows on the Abominable Chairman's printers...

If nothing else disturbs you while you buy your NFLX today – that last one should. Rich folks in an industrialized nation trying to go to the theater in their limo and being attacked by an angry mob.

"The world has paid with tens of millions of unemployed, who
were in no way to blame and who paid for everything. It caused a lot of anger. Too much is too much. The world was stupefied to see one of five biggest U.S. banks collapse like a house of cards. We saw that for the last 10 years, major institutions in which we thought we could trust had done things which had nothing to do with simple common sense. That's what happened... There is an ocean between flexibility and the scandal we saw.  So if people present me as obsessed with regulation,
it's because there is a need for regulation. I don't contest the principle of securitisation, but when
one offshore country guaranteed 700 times its GDP, are we in the
market economy or in a madhouse? Bonuses don't bother me, provided there are also ...
draw-downs when there are losses. When things don't work, you
can never find anyone responsible. Those who got bumper bonuses
for seven years should have made losses in 2008 when things
collapsed." - Nicolas Sarkozy

"I see more inflation and more currency turmoil as we go forward. There are huge debt imbalances in the world. U.S. is the largest debtor nation in the world and all the assets are in Asia. The largest creditors in the world are China, Korea, Japan, Taiwan, Hong Kong, Singapore – this is where the assets are and the debts are in the West. Those imbalances have to be resolved. They frequently lead to more currency turmoil. We’ll see more inflation, we’ll see more governments fall. We just saw Tunisia fall – more are coming because the world is going to continue to have these problems, and especially inflation that is going to cause more social unrest."

All one can say is oops. That margin compression sure does suck:

Q4 EPS USD 0.91 vs. Exp. USD 0.88

Q4 net sales USD 12.95bln vs. Exp. USD 13.03bln

Net sales are expected to be between $9.1 billion and $9.9 billion, or
to grow between 28% and 39% compared with first quarter 2010

Operating income is expected to be between $260 million and $385
million

We have yet to see snow being blamed for the After Hour stock collapse

Oopsie

Sarky and Jamie in the ring...