Archive - Jan 2011

Any time you bring the two Pauls together in an interview, and start discussing items such as the debt ceiling, government spending, and monetary policy you know the results will be good. Sure enough, in this rare ABC interview with father and son, the sparks fly, and among the topic touched is the most popular story on Zero Hedge from yesterday, namely President Obama fabulous hypocrisy, who after bashing the debt ceiling as a senator 4 years ago, has bet the outcome of his entire economic policy on maxing out every single credit card available to him. Paul's response: "we have to face the fact that we are bankrupt and we can't pay our bills." Not exactly bedtime material if one's name is Hu Jintao. That said you know the Paul-led interrogation of Bernanke will be something else, even if it is ultimately totally fruitless.

Art Cashin, who lately looks like he is coping with the market's lunacy in a very liquid fashion, pulled a Rosie and basically went medieval on Ben Bernanke and the chairman's now infamous explanation that interest rates are up because they are really down courtesy of Richard Feynman and quantum chromodynamics, in some parallel universe in which QE2 is actually working. In a nutshell, the most famous face on the NYSE has offered to sell the Princetonian a piece of very valuable East River real estate in exchange for agreeing with the BS that the FOMC's committee is dishing out now on an almost daily basis.

Either the republicans have fully adopted a role as the "charade" party, or they are actually serious about believing that by limiting Bernanke to controlling just inflation, the Chairman will actually start acting on behalf of the peasants (note: he won't - he will just ignore the fact that food prices are at an all time record, and focus instead on the ongoing collapse in home prices, which simply means that middle class has less equity and is paying more for staples). Either way, they are not wasting any time. Reuters reports that representative Paul Ryan, the new chairman of the House of Representatives' budget committee, said he will push for legislation paring back the Federal Reserve's mandate to focus solely on controlling inflation, not ensuring full employment. Well, the problem there is that Bernanke will say that instead of doing QE in perpetuity, or until the unemployment rate goes back to 5% (whichever comes first), he will simply print money (pardon, feed primary dealers with infinite 1s and 0s, which in no was have an impact on cotton prices now trading at unheard of levels). More from Reuters: "Republicans have made no secret of their desire to impose more limits on the U.S. central bank and have been critical of it on a number of scores, including its plan to buy an additional $600 billion in government bonds to try to speed up a sluggish economic recovery." As if the same republicans don't realize that the only reason the Fed is buying said additional $600 billion is to monetize their own damn deficit created when they passed the tax cut extension for the rich, now that China's holding of Treasuries have basically not budged in the past year. Well, someone has to monetize all that debt. And as Zero Hedge has been screaming since September, the only reason for QE2 (and QE3 next) is to fund the $3 trillion in budget deficits over the next two years, as nobody else wants it any more.

BofA - “The court should not take the steps outlined in the order because they are unnecessary and will cause a wholesale delay in administering foreclosure cases that is not in the public interest.”

At one point last year Bill Ackman, who had created an entirely separate fund to express his exbuerance in retailer Target, and created a standalone fund PSIV to invest in the same name, was down 99% at the point the fund was unwound. Many had hoped the supposed retail genius' bad luck would end there. Alas, no. Another stock in which Pershing Square now owns 37%, is on the verge of filing bankruptcy. And apparently it can't even afford to hire a decent financial restructuring advisor. According to reports, traditionally creditor-side advisor Jefferies has been retained to represent the company, while Jones Day is legal counsel. Look for a bankruptcy filing in the next week and for another wipe out for Mr Ackman.

Cramer is selling the snake oil, he is selling the hair tonic and he is selling the religion of "Buy High and Sell Higher," which makes him one of the most dangerous men in America.

Perhaps debates about inflation and deflation paint with too broad a brush, or too narrow a focus ...

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 06/01/11

Just crossing the wires now. If this passes, Blythe is most likely toast.

That ACA is suing Goldman over Abacus, as Charlie Gasparino first reported, is not surprising. After all, everyone wants a piece of free lunch, especially when there is a case in the docket. What is however surprising, is that according to plaintiff lawyer Marc Kasowitz, ACA has ‘documents that show Goldman Sachs told ACA Paulson was long on the ABACUS investment.’ If this is indeed the case, this becomes a clear case of fraud, pure and simple, no question about it, with clear intent to misinform, and is not even remotely defensible by Lloyd Blankfein's statement to Carl "Shitty Deal" Levin, that Goldman was merely making markets. If this piece of paper does exist, there is clear intent to misrepresent, and what is stunning is that this never was made clear during the SEC trial. Since we can assume that the SEC had access to this information, and had this been exposed, it would have made settlement virtually impossible as it would have clearly but Goldman in the position of having broken the law, we can merely validate once again, that the SEC is nothing short of Goldman's latest public-private acquisition a la Facebook.

Following this week's ebullient ADP private payrolls report, the sellside has succumbed to an orgiastic frenzy suggesting that tomorrow NFP number may be as high as 580,000 (as reported earlier). While there is no chance on earth of that happening absent all of US data gathering to have been outsourced to Beijing, what is more interesting, is that organizations which track employment trends in real time have found that neither is ADP's optimism justified, nor is there absolutely any basis to expect a blow out NFP number tomorrow. Gallup has found that not only did the unemployment rate increase in December from 9.4% to 9.6%, that disgruntled part-time workers who want full-time work increased from 8.6% to 9.4%, the highest since September, but that the most important metric in a labor force increasingly consisting of part-time workers, underemployment, has surged to 19%, the highest since June!

Some more trouble in Borg paradise? After Steve Jobs' health issues two years ago resulted in one of the biggest selloffs in Apple stock in recent history, is the trouble shifting to the CFO post, currently filled by Peter Oppenheimer? Bloomberg reports: "Apple Inc. approached Blackstone Group LP Chief Financial Officer Laurence Tosi to become its finance chief, three people with knowledge of the matter said." But why? "Steve Dowling, a spokesman for Apple, said the company is “not conducting a CFO search.” Current CFO Peter Oppenheimer “loves the company and is extremely happy in his role,” Dowling said." So someone is not telling the whole story. And that is something Apple fans certainly do not like.

So that's what Timmah's been up to...

After Paulson & Co. was underperforming the market substantially in the middle of 2010, with it Advantage and Recovery funds decidedly negative through Q3, the last minute push in the market to get financials green through the end of 2010 at all costs (literally, now that we know that Fannie, and its "recused" GC Tim Mayopoulos, is sacrificing a few trillion extra in taxpayer capital just to bail out such insolvent mortgage lenders as BofA), resulted in a strong close to the year for man who made billions on Paolo Pellegrini's ideas (and Goldman's client "dedication"). Then again, not very surprisingly, the best performing strategy in Paulson's barbell bet on inflation: the Paulson's Gold fund, which ended the year up about 35%. What will be interesting is finding just how much of BofA Paulson has left at the end of Q3, and whether he has given up on his price target of $30 for the bank which was supposed to be achieved by the end of 2011. Stay tuned on February 15 to find out...

The Christmas holiday shopping reports through December 25 were up for the season as compared to last year. So what. Does that mean economic recovery? I think not.