Archive - Nov 2009 - Story

CBS reports that the Justice department has submitted a subpoena request to Indymedia.us demanding the site turn over all reader visit details on June 25, 2008. Furthermore, the Justice Department had demanded that the site do so without even disclosing the existence of the subpoena. Without even bringing up the question of just how far into the "1984" rabbit hole our society has gone based on this development, this situation raises numerous questions about the anonymity of not onlyInternet browsing (at least that based in the US), but the transacting in visitor records behind the scenes. If this one case has made it to the public, one wonders how many other comparable gag order-cum-subpoeans the Justice Department has sent out to other websites?

With content about to become valuable once again, courtesy of Murdoch's initiative to make relevant information scarce (and Google inaccessible), M&A fever is gradually picking up in the media space. The latest development comes from The Wrap which reports that Hollywood Reporter and several other Nielsen Company publications are set to be sold to privately held News Communications (note: not Corp). Other publications on the block include Billboard, Backstage, Adweek, Brandweek, Mediaweek and Editor & Publisher. What is odd is that the entire package, which focuses on the B-to-B crowd, has seen a dramatic drop off in revenue and net income, courtesy of what once was branded a recession, and now is merely yet another Fed inflated omni-asset bubble. As such it is very unlikely that the Nielsen PE sponsors, which acquired the firm in 2006, will make much if any profit on the divestiture.

As we pointed out recently, excess reserves at banking institutions have hit yet another all time record over $1 trillion, courtesy not just of the Fed's burgeoning reliquification efforts via direct asset purchases, but also due to its strategy to wind down the SFP program, and keep the Federal debt level under the legal cap, thereby providing even more liquidity to banks, to the tune of$185 billion. Yet if you thought that this inability to pass liquidity over into the broader currency pool was something to be concerned about (you know, that whole lending to consumers thing), you were wrong. Or so claims Goldman Sachs in this extended expose on why central planning is in fact good for Communist America. Also, for anyone who still doesn't understand how modern Fed-subsidized cash hoarding works, this primer should explain it all.

The CRE crisis will hit a pinnacle when $500-700 billion of re-equitization becomes needed in a few years. Where that equity will come from is unknown as the US will need a lot of foreign investors to achieve this equity bubble reflation, and they are not there due to a foreigner-unfriendly investment regime.

And another one for the idiot anals of the Obama administration. After taking over the biggest nationalization in history (with the exception of the GSE's but those are a special case), and being paid to run a zombie bankrupt company instead of saving everyone a few dollars and packing it in, Robert Benmosche, who became CEO of AIG a mere three months ago, has threatened to quit in protest to stern governmental compensation oversight. At least Benmosche made some very powerful enemies during his short time in the hot seat, including the NY AG. Perhaps Ken Lewis will consider the corner office position once Mr. Benmosche returns to his palatial Croatian estate. Unless, of course, the lawsuit against the former BofA CEO does not go quite as well as expected. Ironically, running AIG out of jail cell would be the crowning achievement of what the current version of capitalism is all about.

A startling observation out of David Rosenberg is that with the current unemployment number (whatever it may be: 10.2%, 17.5%, 90%), even assuming an end to workforce outflows, there is a buffer equivalent to almost 11 million people, consisting of increased worker productivity and massive newly-created temporary positions, that can be drawn upon before even one person of those laid off recently, has to be rehired. This is disastrous for the Obama administration, especially at a time when it is actively speculating on Stimulus #2 in order to spur any kind of job creation ahead of mid-term elections.

• Goerge Soros: A new world architecture (Project Syndicate)
• Under attack, Fed chief studies politics (NYT)
• The real threat to Fed independence (WSJ)
• Bank of England to keep the heroin IV drip: King says BOE has "open mind" on more bond purchases (Bloomberg)
• Yet somehow, global confidence dips as policy makers begin exit strategies (Bloomberg)
• Hypocrite (lecteur) Geithner yaps about strong dollar policy, glances nervously at gold ticker every 15 seconds (FT, Reuters)
• Greatest trade ever: Paulson's $15 billion (Newsweek)

Gold hits another all time high of $1,117.82 an ounce. At this point the Fed must decide if the opportunity cost of the equity bubble and a few more S&P points is worth destabilizing the entire monetary system. Knowing the Chairman's M.O., the answer is an unequivocal yes, especially if it involves destroying the dollar's value

• Asian stocks, currencies rise on Japan, China economic data; gold advances.
• China's industrial production output grew 16.1% in October, its fastest pace in more than a year.
• Job openings in U.S. remain close to record-lows
• Oil prices fell $79 a barrel in Asia amid rising U.S. oil inventories and a weaker dollar
• Swiss rules to tie bonuses to profit will apply only to the nation’s 12 largest banks
• Unfilled positions climb to most since June as US companies delay hiring.
• USDA trimmed its production forecast and raised its price outlook for crops.
• Adobe to cut about 680 full-time positions or about 9% of its total work force.

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."