Archive - Dec 7, 2010 - Story

Those who are about to spend another 20% of their paychecks to cover the cost of surging food and gas prices, salute the wealth effect. For everyone else, there is the discount window. WTI Crude has just passed $90.57 (and at last check was at the highest it has been since mid-2008). We hope Ben Bernanke has plans how to deal with oil passing $100 (to the upside) - at today's rate of dollar devaluation, that target should be taken out by the end of the month. And in addition to supermarkets, next up one can safely cross out all companies that use petroleum distillates in the COGS. In fact, everything that worked in the spring of 2008 as the bubble was on the verge of blowing up last time, should work all too well. And back then we didn't even have a daily POMO...

Now that risk assets once again are trading purely on monetary stimulus vapors, and broad dollar weakness, we expect that precious metals will continue generating better beta than the S&P. Sure enough, this morning silver is up nearly 2%, with gold spot also just passing an all time high of 1,428.85. At this point every uptick in stocks is offset by a grater loss in purchasing power, and after various commodities opened limit up earlier, it is only a matter of time before the hot topic of mid-November: margin collapse, is back on the radar screen. But, as always, at least the wealthiest 1% of America which has the bulk of its net worth in the stock market, and recently, in gold, is making off like a bandit.

• Draconian Budget Set to Pass After Lowry Gives His Backing (Irish Times)
• Euro Collapse 'Possible' Amid Deepening Divisions Over Bail-out (Telegraph)
• China Outstrips Fed With Liquidity Risking 2011 Inflation Spike (Bloomberg)
• Deal Struck on Tax Package (WSJ)
• Dublin Woos MPs Ahead of Budget Vote (FT)
• China Buys Most Korean Bonds in 6 Months as Won Falls (Bloomberg)
• EU Rules Out Immediate Aid Boost, Banks on ECB to Fight Crisis (Bloomberg)
• The theatrical farce continues: Obama Summons CEOs to White House for Talks Amid Change (Bloomberg)

• Technologies AG, maker of grinding tools, for about $448M.
• Advantest Corp. makes a buyout proposal to Verigy Ltd. worth nearly $730M.
• Autoliv has $1B for Japan acquisitions as car production rebounds.
• AutoZone's Nov. net income rises from $143M to $172M.
• Bio-Rad announces pricing of public offering of $425M senior notes; to repay old debt.
• BP said to weigh sale of some North Sea assets to fund Gulf spill clean-up.
• Dollar General's Q3 net jumped 69% to $128.1M helped by 10% rise in sales to $3.22B.

As of 9:30 am GMT, Julian Assange is no longer a free man. Bloomberg reports that the Wikileaks founder was arrested by London police over rape allegations made in Sweden. "Assange, 39, was arrested “by appointment” today at 9:30 a.m. after an international request by Swedish police for the Australian’s detention, a Metropolitan Police spokesman said today in a phone interview. He is to appear at City of Westminster Magistrate’s Court at 2 p.m. today, a court official said... The arrest follows a European arrest warrant on one count of unlawful coercion, two counts of sexual molestation and one count of rape allegedly committed in August 2010, the police’s extradition unit said in an e-mailed statement.The arrest warrant was sought by prosecutor Marianne Ny, who said she had been unable to question Assange. Ny started her investigation on Sep. 1 after Stockholm-based Chief Public Prosecutor Eva Finne dropped the rape charge and reduced the molestation charges. A lawyer for the two alleged victims in the case had appealed Finne’s decision." Of course the only thing that is on people's minds is whether (and when) the Australian will release the decryption code to the 1.4 GB torrent file that among other things, may contain data that will "bury" Bank of America. In other news, score one for having unprotected sex with free speech.

As a reminder today is the day when Europeans are supposed to withdraw money from their bank, not necessarily in a beneficial manner. And maybe the action is already having an impact with the Bank of Ireland apparently the first casualty. BBC reports: "Customers of one of Ireland's largest banks have been unable to access their cash accounts through ATMs or online. The Bank of Ireland said it became aware at 1000 GMT on
Tuesday that ATMs were not working and customers were unable to make
online transactions. A spokesperson said the fault lay with the bank's internal system and engineers were working to restore normal services." And by bank's internal system presumably one meant lack of money...Perhaps Eric Cantona will have the last laugh after all.

RANsquawk European Morning Briefing - Stocks, Bonds, FX – 07/12/10