Archive - 2010 - Blog entry

The market action today makes me wonder if FX intervention is in the cards. A long shot that might happen.

One of the regular reporters on CNBC was comparing Greece to the subprime "crisis" of 2007, in that "investors" (I am sure that term is being used very loosely) are not going to make the same mistake as they did in 2007 by underestimating the "contagion" that subprime contained.

I feel compelled to correct him.

The more I look into the China, the stronger the short thesis becomes. With my China shorts performing quite well as they are, I have decided to spread the thesis around.

One of these things is not like the other...

The trends below bear watching as they served as important leading indicator of things to come in 2008.

Unemployment isn't falling below 9% for at least a year. Those jobs exported to China aren’t coming back. Consumer spending is unsustainable. The loopholes in the proposed financial regulations are big enough for bankers to drive their Ferraris through. Trouble for Obama in November.

5.7% GDP growth for Q4 2009 is a phantom. Understand that a normal part of the business cycle is to replenish shelves when retailers realize that 90% (or 84%, depending on what you believe) of Americans are working and buy some stuff. But the fundamentals are still bad. It's just the foam off the stimulus brew.

James Bullard,president of the Federal Reserve Bank of St Louis, told the FT that the US has escaped the danger of a Japanese-style deflationary trap. He may be right, for now...

Just another good news story. The Feds are doing the right thing on loan mods. They will be accelerating the process. The unintended consequence will be that defaults and foreclosures will have to rise. When? About 5 months from now.

Just when all seemed hopeless, the good people at the Financial Services Roundtable are here to educate one and all. Members of the ZeroHedge community should all attend. Who Should Attend? All new congressional staffers and Capitol Hill staffers who have recently added financial service issues to their portfolio, as well as, the seasoned staffer and who wants to learn more about the major areas of importance impacting our nation and economy. Hurrah! RSVP for one or the entire FSU educational series contact Vince Randulov vince@fsround.org or 202.589.2421. Questions may be directed to Brenda Bowen brenda@fsround.org or 202.589.2420.

As mentioned in my previous posts, I have been engaged in a discussion of the valuation of Goldman Sachs and investment banks in general. Here is how it has played out.

Global pension assets hit the $23 trillion mark and now amount to 70% of the average global gross domestic product, down from 76% a decade earlier. While the increase in pension assets in 2009 is encouraging, the same structural issues that plagued the pension industry before the crisis are still present, leaving them exposed to further downside risk when the tide shifts back.

Is “Trader Mark” the harbinger of a pioneering, disruptive, guerilla type of manager who may set the traditional mutual fund industry back on its ear? Welcome to the “homemade” mutual fund business. An exclusive interview with the founder of www.fundmymutualfind.com . Where sheer grit, imagination, and a reasonable fluency in html will get you. (ATHR), (ASIA), (DRWI), (BRF), (RSX), (IDX), (EWA), (VNM),

The new guy at FHFA Edward DeMarco has some moxie. I think he has dished up a tough question to the 'deciders'. His question begs an answer from Weak Tim. Silence.....

Senator Corker challenged Mr. Volcker's stance in today's congressional hearings on the Volker Rule by saying that no financial holding company that had a commercial bank failed while performing proprietary trading. It appears as if Mr. Corker may have received his information from the banking lobby, and did not do his own homework.
Let's reference the largest commercial bank/thrift failure of all...

In recent days, a spate of announcements on infrastructure deals have hit the wires. Cash strapped governments are increasingly looking to pensions to fund long-term infrastructure projects...and many are heeding the call.