Archive - Jan 7, 2011

And fluoride lowers IQ ...

The man Time Magazine named the Person of the Year in 2009, just stood in front of America and said that there realistically won’t be jobs growth during his era as the nation’s Chief Central Banker. What he didn’t highlight is that total jobs in America during his 10 year tour as Chairman of the Federal Reserve, is expected to be negative.

The employment situation is still very bad. It brings up the specter of long-term structural employment in our economy. Job growth is still weak, buoyed by temp and health care workers. There are some positives in this report but job growth is still insufficient to overcome layoffs and a growing labor force.

Who says the xtranormal bubble has popped? Today we present the latest "bearish" cartoon with one particular take on Chinese currency manipulation. While we don't necessarily agree with the argument that Chinese monetary policy is the "single most protectionist policy in the world" as China is merely holding up a mirror to the Fed's own monetary tools, it does provide some entertaining perspectives. On the other hand, the observation that China takes 6,000 jobs for every billion dollars in incremental trade deficit, is spot on.

Abigail Doolittle of Peaks Theories submits: "While I fully expect Treasurys to decline further this year, I think it will come in a volatile and range bound manner and at this moment there are some technical reasons to believe that we may see Treasurys rally in the coming weeks." Here's why...

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 07/01/11

That total consumer credit increased modestly and in line with expectations in November, exclusively on the back of non-revolving credit, used for such purchases as cars financed and sold by recently IPOed makers of shitty cars, and student loans, the most recent entrant in the $1 trillion + never to be repaid market, is not surprising: after all, GM had to finance its dealers to hoard its channel stuffed inventory of 500k+ cars as discussed previously. What is even less surprising, is that the credit that does matter, the revolving variety, used for credit card purchases of everyday items which are increasing in price every single day courtesy of the Fed's monetary policy, declined once again, more specifically the 27th consecutive time. In other words, in November revolving credit decreased by $4.2 billion, which non-revolving credit increased by $1.3, a drop of $5.7 billion from October's revised $7 billion which surged on the back of $12.4 billion in non-revolving credit.

This is for all of you who are stuck sitting in the snow storm...

The Power Elite which has been raised to occupy the privileged seats of political and financial power in America has a skillset limited to navigating the world of privilege... No wonder the U.S. is imploding--its State and financial Elites believe their mediocre groupthink is actually brilliant. That self-serving self-deception and hubris has cost us dearly, and will continue to do so.

Earlier
this week we saw reports that “Beijing
authorities plan to build a "seven-star hotel" modelled after Dubai's
Burj Khalifa -- the world's tallest building -- in a $1.3 billion joint project
with Saudi Arabia.”  Yes, the same
building that symbolized Dubai’s $20-plus billion in malinvestments and
required a bailout by Abu Dhabi. 

Bruce Berkowitz, recently notorious for taking the other side of David Einhorn's St Joe short position, but also with long positions in such governmental recovery cases of bankrupt basket case firms such as AIG and MBIA, released his thank you letter, after generating a 25.5% return. His two top receipients of gratitude: the government and Goldman Sachs. Pretty much explains everything about whom to thank when you want to outperform the market. It should also explain which particular centrally planned regime and fixed income monopoly one must never raise their voice against, if one doesn't want to be 'GM senior bondholdered.'

Reuters reports that Portugal is in the process of making a private placement of bonds, without announcing details on size or the buyer. Our guess: buyer is China, and size is about €1 billion (recall that recently China told Spain it would buy about €6 billion from the three PIIGieS each). We will keep you updated, but this is a revolutionary change in the way bonds are sold to investors as it bypasses the traditional dutch approach entirely. As such, we would not be at all surprised if Goldman is the underwriter. After all this is basically a 144A transaction (although unlike in facebook there is no need for an SPV), and since there is no noise associated with a public offering, the buyer and seller can both pretend things are great until everything collapses in the inevitable post house of cards rubble.

What is going on?

Ever wonder where all the money for equity inflows came from? Here's the answer: with all the money saved from participating in the Supplemental Nutrition Assistance Program, better known as foodstamps, which in October hit a brand new record, 43.2 million Americans decided to join in on this "wealth effect" they had been hearing so much about and buy Apple stock. After all 190 hedge funds are doing it: and there is no way that 190 hedge funds can possibly be wrong. As a result, the chart below shows our nation's pending wealth effect in its full glory. Just think: 43.2 millionaire in waiting. Just consider the guaranteed explosion to money velocity...

First it was birds, then fish. Not it's crabs. For those with a keen eye for patterns, this apocalypse "thing" appears to be crawling along the signs of the zodiac. Next up: thousands of dead lions and soon after, virgins. Ergo New York is safe. Joking aside, the reason for this latest mass death is hypothermia. So good of BP to do its best to "adjust" the global climate. Luckily, $10 billion will be more than sufficient to recreate entire ecosystems by the time the full impact of the oil spill is uncovered.