Archive - Oct 2009 - Story

Developing story per WSJ. LAZ halted. And yet again, questions for the SEC on companies reporting potentially misleading health information on key individuals.

Ever more investors are fleeing from not just the 30 year Treasury but the 10 year as well. Money is rapidly congregating in the whatever yields the sub 10 year space is providing. The fact thatthe upcoming QE 2.0 liquidity and housing stimulus does not contemplate UST purchases is definitely not helping.

"With respect to the large-scale asset purchase programs, some members thought that an increase in the maximum amount of the Committee's purchases of agency MBS could help to reduce economic slack more quickly than in the baseline outlook." - Fed on The Upcoming Quantitative Easing 2.0

Another great representation of the amazing loss of purchasing power by the US public are today's oblivious statements about the Dow at 10,000. While in absolute terms the Dow may cross whatever the Fed thinks is a necessary and sufficient mark before QE begins to taper off (Dow crosses 10k just as Treasury purchases expire), the truth is that over the past 10 years (the last time the DJIA was at 10,000) the dollar has lost 25% of its value. Therefore, we present the Dow over the last decade indexed for the DXY, which has dropped from 100 to about 75. On a real basis (not nominal) the Dow at 10,000 ten years ago is equivalent to 7,537 today! In other words, not only have we had a lost decade for all those who focus on the absolute flatness of the DJIA, but it is also a decade where the US Consumer has lost 25% of purchasing power from the perspective of stocks! You won't hear this fact on the MSM.

JPMorgan disclosed today that it has provisioned $8.785 billion for compensation for the 9 months ended September 30. Based on the 24,828 employees currently working for Jamie Dimon, this implies an accrual of $353,834 per employee (this excludes the accrual to be set aside in Q4). The number is a 34% increase over the prior year period, and represents 38% of revenues for the first nine months of the year. Run rated, the median JPM employee should expect to make $471,779.

A new study out of NYU Stern School of Business finds what many have known intuitively for years: namely that a material portion of hedge fund managers (over 20%) routinely misrepresent or outright lie about their funds and associated performance.

"We continue to feel that Holiday 2009 revenues will be modestly down, and profits will be up, from 2008s, with any surprises most likely to occur on the downside. There do not appear to be any macroeconomic forces at work that would lead us to conclude that the consumer will be better positioned to spend during the balance of 2009 than he/she was during the similar period of 2008. A key factor that we will focus on will be third quarter-ending inventory levels. Although they will most certainly be down from 2008 levels, they may not have fallen enough to avoid the rampant pre-Christmas discounting that took place in 2008." - Moody's

Amid a bankruptcy, massive restructuring, brand failures and division sales, General Motors aims to grow faster than China’s entire auto market in 2010, according to its China chief Kevin Wale. Having outperformed China’s overall market thus far, during the first three quarters of 2009- 2010 is bound to be a banner year? Right? Right.

"We believe you are seeing several hundred additional smaller regional based banks go-- you know, not make it..." - JPMorgan

Developing story per the WSJ: In what could become a repeat of the New York State pension fiasco, the fund's California brethren at Calpers are now launchinga "special review" of fees paid by money managers to placement agents. Usually where there is smoke... As Zero Hedge has disclosed previously, some of the most prominent private equity firms have for years been recipients of Calpers' generosity. It will be interesting if more kickbacks to and fro these entities is uncovered as a result of the review.

The media billionaire mogul, Sumner Redstone, through his holding company National Amusements Inc., plans to sell-down stakes in CBS and Viacom Inc. to pay-off debt. Alleviating concerns amid a $500 million debt payment coming later in the month.

With the New York's Stuy Town implosion getting picked up by the Wall Street Journal months after being written about on Zero Hedge, the question now is what the next landmark property to go bankrupt will be. According to Real Estate Alert, the iconic Union Square W Hotel may just be it. The hotel, which was acquired by Dubai's troubled sovereign wealth fund, Istithmar, for $285 million in 2006 (one of the few acquisitions of a hotel at a price of more than $1 million per room) has been bleeding cash lately after room rates have declined by 24%. The result has been an inability for the owner to even meet debt service obligations: a sure sign the current balance sheet is doomed, with an outright default just a matter of time.

After making repeated killings as a short (and being compensated for it), John Paulson is now actively looking for undervalued long opportunities (that are not misreported by the NYPost). Such seems to be the reasoning behind his latest disclosed involvement in insurer Conseco, where he is now the proud owner of 9.9% of the common stock after a $280 million investment.

"This administration without any experience is doing more damage than is easy to assess at the moment, but I can tell you I am sure that we are moving in the wrong direction and i say that as half a democrat and half a republican. What we are seeing now just doesn't make sense. The priorities have all been inverted." - Steve Wynn

Earnings are coming in higher than expected not surprisingly. Some of the details though such as margin for Intel are trully better than what was baked in. On the day we are getting close to the topside resistance trend joining recent highs around 1,087/1,088. Above that the topside of the expanding triangle is resistance at about 1,100, but given divergence I would rather expect ranging between 1,077 and 1,087 during the day before the next wave of earnings barring any data coming way off line one way or the other. There is a minor resistance around 1,071 below that, but should we break 1,077 the real support comes in at 1,065.