Archive - Nov 18, 2010 - Story

One of the most popular American sayings between the 1940’s and the 1970’s was “there is no such thing as a free lunch.” Somehow that phrase and the pithy concept behind it seemed to have dropped from common parlance in the last twenty years to be replaced by the idea of “win, win.” Win, win still has many adherents but its days as the global credo are dwindling down toward zero. During the next few years ‘no free lunch’ should roar back in vogue, especially in the Eurozone. The euro brought tremendous benefits to almost all Europeans over the past decade, but there is no free lunch, and now someone has to pay for all the good times. The question is: who? This simple query is behind the millions of man/woman hours of meetings and writing that has been, is, and will be spent trying to parcel out the costs. Remembering that hundreds of millions of people gained a great deal for many years, the costs will be huge and they will be drawn out for at least a decade as well. All those who are in the markets’ sight as likely payors will pose as victims with much gnashing of teeth, at a minimum, and violence at a maximum. The scene is only just being set and there will be many plot twists before we reach the denouement, but we can sketch an early draft of those groups that will struggle mightily to avoid the brunt of the previous euphoria.

Initial jobless claims come at 439K, up 2K from an upward revised (no surprise) prior 437K (was 435K), and just shy of expectations of 441K. Continuing claims come at 4.295MM compared to 4.343 MM in the prior week (revised from 4,301MM to 4,343MM). As there was a holiday in the prior week, the BLS noted that the level of estimates was once again high. In other words 20% of the data was estimated due to Veteran's Day. And since we refuse to let the BLS off the statistically irrelevant hook, here is the latest revision schedule on initial and continuing claims. Do the math.

• Fed Orders 2nd Round of Stress Tests  (WSJ), translation: more capital raises for Bank of America, Wells Fargo and Citi.
• Lenihan Says Ireland May Ask for Bank Package as Bailout Nears (Bloomberg)
• One in 20 Irish Mortgages in Arrears (FT)
• China Vows to Tame Inflation (Reuters)
• Korea to Revive Tax on Foreigners' Bond Holdings to Slow Capital Inflows (Bloomberg)
• IMF Says HK Currency Peg Boosting Property Prices (FT)
• India Microcredit Faces Collapse From Defaults (NYT)
• Vilsack: Food Costs Won't Surge  (WSJ)
• Failed Models and the Real Costs of QE2 (Economics21)
• California Shrinks Planned Tax-Exempt Sale, Expands Taxable (Bond Buyer)

• Asian stocks rebound as commodities climb, China government acts on prices.
• BoE plans to adopt a less-intrusive approach to overseeing U.K. banks.
• Euro climbs versus Yen, Dollar on optimism Ireland aid to calm debt market.
• IMF warns of Hong Kong housing-bubble risks.
• Irish talks turn to government bailout as EU officials join IMF in Dublin.
• Moscow approves $32B sale of state assets; disposals to help cover budget deficit.

In attempting to validate today's futures ramp, brought to your courtesy of government motors and The Sack, Goldman presents the main tangential factors, good enough for a media headline and adjoining irrelevant plotline. Amusing nonetheless.

We start with a typical third Thursday of the month—claims, Philly Fed, and leading indicators—then pile on with mortgage delinquencies and five Fed speakers. Today's POMO focuses on bonds due 5/31/2013 – 11/15/2014

RANsquawk European Morning Briefing - Stocks, Bonds, FX – 18/11/10

The Yukon is well endowed with a number of mineral resources, including lead, zinc, silver, gold, tungsten, and copper. As of 2009, it had 84 mineral deposits with established reserves and resources, and 2,700 known mineral occurrences. Much of this natural wealth, however, is spread across areas with little exploration history. Aware of mining’s economic importance, the Yukon government is offering various financial incentives to continue drawing investment capital and exploration effort to the region. These incentives, combined with a stable business climate, were quite successful in making the Yukon one of the world’s best places to explore.