Archive - Nov 10, 2009 - Story

Greenspan's glasses though: totally the same. Literally. Same pair.

Just when it seemed that all the stops had been pulled on the REIT juggernaut and nothing else would be able to surprise to the upside, save for Vornado finding an ancient Mayan city made of 24k gold in its back yard, after we read the attached research report on US REITs from Goldman analyst Jonathan Habermann, we have a dead taste in our mouth. The reason for that is we believe Goldman is within 2-4 weeks of upgrading the entire REIT space to something comparable to a Conviction Buy (not sure if that is possible for an entire industry, but we are confident GS will find a way).

A very much... welcoming...Margaret Brennan discusses Niall Ferguson's opinion on the dollar, and his Fed policy outlook. Aside from the red dress, notable items include Niall's very astute observation that "Chimerica," which for all intents and purposes is a megalith sovereign, joined at the hip, and whose existence is predicated on the "non-defection" of the significant other in perpetuity, will continue to shift the pain of adjustment on the "developed world." Some very critical thoughts on why Europe and Japan are more than happy to be on the receiving end of the K-Y in the currency department so long as their markets obtain the benefit of the appreciating S&P.

Remember the equity market yesterday: total, insane, low-volume melt up? One would think CDS would be blue blue blue. Well, here is what happened across NA IG CDX land.(and yes, no surprises).

Spreads were mixed to slightly tighter in the major indices today despite negative breadth in single-names. HY outperformed IG as both indices saw inside days amid low volumes pre-holiday tomorrow. Financials outperformed non-financials but the financials were off their best levels by the close (as we suspect some concerns over Bair's Basel II Bumblings started to be taken seriously).

"The futures are getting gunned on massive volume without any coinciding volume in SPY. This means an institution is jamming the futures higher knowing that they can drive the market higher on no volume."

and

"The results of low transaction-cost Casino Capitalism are that short-term, high-frequency traders are squeezing out long-term investors, the listed market for public companies is in decline, and this decline is taking the U.S. economy with it."

Question: When is it ok to cook the books of a public company?

Despite the outright collapse of ABK and MBIA, two more failed financial gamblers today, investors continued to push stocks higher, solely on the backs of AAPL, GOOG, PCLN, and BIDU. Its been quite amazing that this is the first bubble in world history that was actually able to repeat itself within the span of 18 months. Kindleberger will have to re-write his "Manias, Panics and Crashes" book to document this absurdity.

Dear Mr. Kotz:

Enclosed please find our invoice for services.

- Zero Hedge

Let's do the math: the US Gov't needs to roll about $5 trillion (and increasing) every year, Commercial Real Estate has a $3 trillion refi cliff around 2014 and the banking system has a $7 trillion roll maturity by 2012. In other words at or about 2012, or at the time Barack Obama is sure to be enjoying record approval ratings (high or low, your choice) courtesy of 30% unemployment, the American economy will be straddled with not just the ongoing burden of issuing about $2 trillion in debt each year to finance what can only be characterized as a budget concocted by the most hard-core, raving lunatics in the Federal Insane Asylum Reserve, but will have to deal with roughly $15 trillion of rolling maturities.

Can someone please stop the endless cha-ching noises coming out of Julian Robertson's offices already? What's that? Ok, so...apparently absent some sodomy involving bond vigilantes and the inhabitants of the Marriner S. Eccles buildling, nothing can be done.

Perhaps gold investors are suffering the blues of too much good news since breaking out to the upside, north of the magic 1,000$ an ounce. Inflation being the big macroeconomic risk that everyone is looking for, might just be the real disappointment. For most of the last three decades we have been conditioned to drive/manage by looking in the rear view mirror. The last big black swan event of the 70’s related to the interest rate spike never replayed itself out a second time around. In the years ahead the unexpected might just be the norm and an extraordinary event could actually lead us to a hyper-deflationary black swan.

One of the primary underthemes these days in the regulatory and academic community is the discussion of not just whether or not to break up Goldman (moot: the company has no place continuing to exist in its current form which is essentially a Holding Company for the Federal Reserve, Treasury, the White House, Congress and the Senate), but how to do it. Apparently, Goldman's apparatchiks have realized that the tide of public anger is shifting from a broad, blind anger aimed at the generic concept of "Goldman Sachs", into a definitive policy approach that recommends the immediate tear up of Goldman into various, less than monopolist organizations (Ma Bell ring a...well, bell?). It is impending for the "greater good" of the country and society that this debate becomes front and center immediately. After all, the suddenly very devout oracular priests at the top floor of One New York Plaza must be fully aware of the scripture prophesying that when the oceanic ecosystem would be threatened by one omnipotent, middleclassovorous squid, the vengeful god proceeded to smite it with great vengeance and furious anger (or something like that - we hope to stand corrected by the one "true" intermediary of God's real message these days: Goldman Sachs).

• Yields 3.47% vs. Exp. 3.475%
• Bid-To-Cover 2.81 vs. Avg. 2.83 (Prev. 3.01)
• Indirects 47.3% vs. Avg 40.78% (Prev. 47.24%)
• Indirect Bid-To-Cover 1.51
• Alloted high 82.49%
• Directs at 4.5% of Total accepted

It will surprise no one, we expect, to learn that we considered the notion that Chrysler or GM would somehow remake themselves into "green automakers" overnight (in the auto business this translates to "several decades") the insane ramblings of redistribution-rationalists.