Archive - Jan 2010 - Blog entry

Frustrated with hedge funds and private-equity investments, public pension funds are turning to one of the oldest investment strategies—using borrowed money to boost performance...

Another reason for markets to puke. The GDP report. There are very high expectations. Hang on if reality falls short.

In an often defiant tone, President Obama insisted that as far as he is concerned the era of “Big Government” is not only still here to stay, but needs to be dramatically expanded -- even if some recent elections and public opinion polls suggest that a growing number of Americans are leery of moving further in this direction.

In the face of Obama's determination to push for more “change” down the path of expanding political paternalism, one imagines what Stinky BO might have said in the State of the Union address if he had chosen to propose the type of (Austrian Liquidity Theory) change that really would have meant greater freedom and opportunity for the American people.

(courtesy of Northwood University & the Mises Institute) What he could have said might have been something like the following:

The vote was as shoo-in all the way. There was some noise but it did not amount to much. Bernanke has too many friends for a Senate slap down. One of them is Alan Blinder. Let's just say we don't agree.

The Chinese economy must be getting out of control, because the Chinese government is doing the unthinkable: It is desperately trying to put the brakes on the economy. When you pump a stimulus package that represents 14% of GDP through a fire hose into an economy, which was already on shaky bubble foundation, in a very short time you’ll have some serious unintended consequences -- you’ll get super bubbles.

Of particular note is the difference between some readers perception of the Suntrust results and mine. If you take a close look at the results, you will see credit performance and asset quality is still deteriorating. The perception of a reprieve or moderation is potentially misleading due to the fact that Suntrust (like most other large banks) is actively shrinking their loan portfolio and transferring bad assets from one category to another.

To the credit of the CEO, he actually appears to tell it like it is and does not appear to be on a marketing binge to sugarcoat reality.

RealtyTrac has new numbers out. More bad news in my opinion. The trend is continuing and this trend is not our 'friend'.

In his first State of the Union speech in 2010, President Barack Obama carefully chose his words in calling for a new jobs bill to stimulate real organic economic growth. However, politicians have always been extremely deft about making speeches that present a united front with the people against corruption, while often hammering out legislation behind closed doors that ensures no real change will ever occur. To determine if the wool is being pulled over our eyes once again, let’s turn to the actual text of President Obama’s State of the Union speech.

Where is all this leverage? Prime brokers now play hard ball. If you want to short a highly volatile stock, expect to pledge your first born child as collateral. The eminent doctor is increasingly looking like a one hit wonder. We are going to die from ice, not fire, and of boredom, not from cardiac arrest.

China has created a new housing bubble. Here are some excellent reports on what the bubble looks like and some ominous glimpses on how it may end. Like all bubbles it will burst and the economic fallout will impact China's economy and the U.S.'s. The frenzy indicates that the blow-up will occur soon.

As President Obama addressed the nation, the Lords of finance were out defending the private equity industry. They stand to gain the most if financial reforms pass...

Bottom line: A "yes" vote for Chairman Bernanke raises the likelihood of defeat for every member of the Senate standing for election in 2010 and 2012. And in any event, the rising tide of popular unhappiness with Washington and Wall Street promises to remake the American political landscape in a way not seen in the post WW II era. The comfortable assumption of stability in American political life is about to be replaced by instability and change, but that is what democracy is all about.

In this 1.27.10 edition of the Fibozachi Technical Update (FTU), we present 15 technical profiles of the:

(1) S&P 500 E-mini contract (ES); (2) VIX (CBOE Volatility Index); (3) NYSE VOLD; (4) NYSE TICK; (5) US Dollar Index (DXY); (6) Crude Oil Futures (CL); (7) Gold Futures (GC); (8) Silver Futures (SI).

A discussion of the cash flows of Agency MBS and what it means to Fed policy. It might be the basis of QE 2.0 Lite. Also a side story on how Big Ben juiced the market in March/April of last year. Just another one of those things that were done to put some money on the 'Street'.

My suspicions regarding CAT were right on point last year. Unfortunately, the suspiciously engineered "feeling" bear market rally made it very difficult to profit from being right. I still have an OTM position on them. Let's see what comes of it.