Archive - Jul 2010 - Blog entry

It is hot. And it is hazy. This is a different Hazy. One who may, or may not, be hot.

If you closely read the commercial bank Q2 reports, their loan activity continues to decline which shows that out in the trenches, credit continues to contract.

Tempt me all you want, you seductive vixen. A weak summer rally in a bear market, something to be avoided like the clap. Change your slumming ways, and I might take a second look. A surreptitious visit to the local free clinic might help too.

CNBC (the world’s biggest Goldman cheerleader) reports “Goldman Sachs’ Revenue Falls, but Profit Beats Views” even as Bloomberg reports “Goldman Sachs Profit Falls 82%, Misses Estimates on Trading-Revenue Drop”. Whoah… It’s hard to get a straight answer out of these news guys, ain’t it?

Maine legislators have prepared a detailed plan for shifting state employees into Social Security and are considering whether to adopt it. They acknowledge it will not solve their problem in the short term but see long-term advantages. And it's not just Maine. Can Social Security withstand the onslaught of underfunded state pension funds?

Investors are understandably scared of the sovereign debt crisis unfolding in Europe. Amid their angst, however, they are ignoring a more likely, and significantly larger, debt catastrophe that is about to hit the nation with the second-largest economy in the world — Japan. Two decades of stimulative, low-interest-rate fiscal policy have made Japan the most indebted nation in the developed world, and as new Prime Minister Naoto Kan recently said, in his first address to Parliament, that situation is not sustainable. Japan has little choice but to raise interest rates substantially, with dire consequences far beyond its shores.

Commodity trading and hedging recommendations dated July 15 by Goldman Sachs.

6 degrees of Larry Summers and Tim Geithner ...

I'm looking forward to tomorrow. They say it will be hot in D.C.

Two good leading indicators have turned south: ECRI and Consumer Metrics Institute.

UPDATED

Will there be an overshoot to the all time high of ¥79.5? Looking at the fundamentals, you would not pick Japan to possess one of the world’s most virile currencies. The reason is simple: the fundamentals are so poor, that no one owns the yen, and therefore, can’t sell it. Central bank holdings of the Japanese currency have been plummeting for years. Japan’s notoriously anemic long term growth rate of a minuscule 1% hasn’t exactly seduced managers to pack their portfolio with yen assets. (FXY), (YCS).

The story of a 15% price swing in ATP Oil and Gas's (ATPG) stocks due to a $450-million math error by a JP Morgan (JPM) analyst probably has prompted some to question the value and validity of analysts' forecasts. A study by McKinsey Quarterly published in April should provide some insight.

Toronto-based Onex and the CPPIB have not launched a formal bid but have proposed a deal, worth more than $4-billion, for Tomkins PLC. Due diligence on the company is now “at an advanced stage,” Tomkins said in a statement Monday.