Archive - Jan 25, 2010 - Story

"We're a big country, and we'd better pull for big business - not against it. We'd better remember that "what's good for business is good for America." If we don't, and if big business isn't allowed to thrive, wondering about the shape of the coming recovery or the outlook for security prices in 2010 will amount to nothing more than "rearranging the deck chairs on the Titanic." - Howard Marks, Oaktree, January 21

So much for a pick up in Q4 revenues. With 20% of the S&P companies reporting, revenues ex-Fins (a vertical yield curve will do miracles for bank revenues - will this continue for ever? and what happens if and when the curve flattens...) are actually down 0.57% compared to the prior year. Expectations for future revenues ex-Fins jump to the 10% ballpark YoY for the next 3 quarters. Without a new stimulus, where will the money to push these revenues come from?

Goldman's "go to" bull, Jim O'Neill, starting to get decidedly bearish. Also, as if economic commentary interspersed with soccer from Janjuah wasn't enough, O'Neill is here to offer the Red Devil perspective.

Most recent Bernanke reconfirmation vote tally: YES - 35; NO - 17; UNDECIDED - 29;

By Party:

Democrats: YES - 24; NO - 5; UNDECIDED - 17

Republicans: YES - 11; NO - 12; UNDECIDED - 12

The one most promising legacy out of the greatest corporate con early in the last decade, which by the way was Enron for those of you who may not have been born yet, will undoutedly be its lobbying power. As Politico notes: "Possible successors to Bernanke include three people currently advising Obama on the economy, former Fed chief Paul Volcker, Larry Summers and Christina Romer. Kohn was traveling in Europe at the end of the week on Fed business, but strategy on the Bernanke confirmation was being led by former Enron lobbyist Linda Robertson, who is viewed as an effective advocate for the banking chief on Capitol Hill." One con lobbying for another con: what a swell summation of the sad state of affairs in this once great country.

Insider selling for the prior week declined from $418 million to just $99 million, as buying accelerated from $18 million to $41 million. The bulk of the purchases, or $38 million, occurred in two names: Cedar Fair and Texas Instruments. In the first, Q Funding, presumably an entity with a big fascination by T.S. Eliot, as its funding vehicles are called J Alfred Onshore and Prufrock Onshore, bought $13.5 million worth of FUN shares. This may mark the first time in history when a hedge fund manager is actually edumacated and doesn't name their funds for a cloud formation, or a Greek letter. The other big buyer was Longleaf Partners which bought about $25 million of Texas Instruments. In the selling category, investors in Broadwind Energy may consider dumping, as both the CEO and Jeff Gendell offloaded about $40 million worth of stock on the 21st.

December existing homes sales dropped to a 5.45 million SAAR, down a whopping 16.7%, which was the wost monthly decline in history, compared to November's unrevised 6.450 million, missing both the consensus of a 10% decline to 5.9 million, as well as Goldman's bear case of -15%. Just as with the auto SAAR,with the government housing, this is yet another data series that is completely meaningless.

A topic we have been investigating recently has been the sudden surge in direct bidding, at least as it pertains to the near end of the Treasury curve, and what the identity of the actual entity doing the buying may be. Explanations offered have ranged from China and Petrodollar accounts buying covertly, to primary dealers ramping up their activity to justify to the Fed that they are worthy for admission, all the way to the Fed conducting yet more 'under the radar' QE purchases. Today we present the opinion from Barclays, which provides another, fourth, view on things, theirs being the most benign one, namely that plain vanilla accounts have been purchasing Treasuries via the direct bid.

"Apologies for the extended silence as I was travelling in Asia. I will be back later with a broad update on markets as there is a lot to talk about. Quickly first in fixed income we have a potential evening star in formation. As can be seen on the 30-minute chart we are leaning on channel support, and a close below 117-19+ would validate the candle-stick pattern at the daily level. There is little divergence in the indicators but if this rally was a correction within the bear trend then it is often-times the case that the market reverses without much warning. 118-10 is the major resistance above, and 117-03 should be support here in the short-term. As long as 118-10 is not violated we keep an eye on the long term support at 114-01 now." - Nic Lenoir

• Samuelson: China's $2.4 trillion global grip (RCM)
• Game over Tishman Speyer: look for CRE CMBS numbers to plunge next month (Bloomberg, WSJ)
• More Bernanke-fail threats for the peasantry: fire and brimstone, Geithner edition (Politico)
• Obama's bank plan could level high-frequency field (Reuters)
• UBS tax ruling by Swiss court may prompt new U.S. legal battle (Bloomberg)
• Goldman to cap London partners' compensation at 1 million pounds (Bloomberg)

• Asian stocks fall for sixth day on Obama plan to curb banks, Yen weakens.
• Bank of Japan said to be open to expanding Emergency loans, bond purchases.
• China property data may 'under-represent’ bubble risks, World Bank says.
• German consumer confidence declined for a fourth month in a row.
• Gold futures climbed as much as $10/oz on weak USD.
• Nymex crude oil futures slightly higher at $74/bbl helped by a weaker U.S. dollar.

Update: The book has now closed for European Orders at €23 Billion in orders

• Greece 5yr €uro Benchmark – Books > €11bn/Spread revised
• Issuer: The Hellenic Republic A2 neg/ BBB+ neg/ BBB+ neg RegS / 144A
• Amount: €uro Benchmark Cpn: tbc % ann, act/act
• Settlement: t+5 (tbc) Maturity: 20 August 2015 (5 years)
• PriceGuide: MidSwaps + 350/365bps ****
• Leads: CS, DB, Eurobank EFG, GS, MS & NBG + coleads B&D: DB (duration manager) Timing:
• Books open, pricing no later than mid week

RANsquawk 25th January Morning Briefing - Stocks, Bonds, FX etc.