Archive - Dec 2010 - Story

• 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

Paulson is now in stock dumping mode. Whether it is on a name by name basis or wholesale is unknown right now, and will need to wait until February 15 for confirmation, although we are confident that what Paulson & Co.'s 8 different funds/accounts are doing in Cheniere Energy (LNG) in the past 10 trading days is indicative of a broad based portfolio profit-taking, that has started on November 16 and is ongoing through today. As Paulson had a sizable stake in LNG, he was obliged to file 13D's. That is not the case in most of his other positions. And courtesy of the last two 13-D (here and here), we have a glimpse of what an active dump looks like for John Paulson. Between 7 different funds and separately managed accounts, Paulson has taken his stake in the firm from 7.5 million shares to just over 2.8 million. On the first day of the dump, Paulson sold 2 million shares, representing 20% of the ADV, as the VWAP algo was working overdrive. Subsequently, Paulson sold slightly less, averaging just under 500,000 shares a day, and representing less and less of the average daily volume, until we another volume pick up today, when the selling popped to a 4 day high. Altogether one fund's selling was responsible for 12.4% of the average volume in the stock in the past two business weeks. It seems Paulson believes he has overstayed his welcome in the LNG terminal operator, in which he built up an initial 4.7 million share stake in the June 30, 2008 quarter at around $5.50/share, and then buying another 2.8 million shares in the end of 2008 at a far lower price. Then as a result of the recent surge in the name, he has decided to bail. As noted earlier, we are confident this is not an isolated case of derisking, and is likely matched by many other Paulson positions, especially in winning names in which the billionaire is now locking in profits.

Hearing The Bernanke fiction that he is 100 percent certain he can stop hyperinflation was as reassuring as hearing his continued commitment to continue Quantitative Easing. I know hyperinflation is ugly. I know stopping this train wreck years ago would have been the correct thing to do. The fact is – we are beyond any fix. Things like cutting government spending will only increase unemployment. We are bankrupt when: What we take in with taxes doesn’t pay the bills. When we borrow and that and the taxes still don’t pay the bills. Now we counterfeit so we don’t default. Game over! I know re-valuing the dollar would have been faster and less painful. But the facts are that we have a professor who studied the Great Depression and if he doesn’t know that housing prices declined, or that there is massive inflation now, or that unemployment is at “depressionary” levels - then we have to realize that correcting what he messed up isn’t going to happen. The guy is either working for an elite few – or, more likely – he’s an economic imbecile.

The current divergence in the AUDJPY-ES pair is reminding us of the great divergences seen in the during the summer just after the temporary DE Shaw stat arb desk unwind threw every correlation pair out of whack for hours. And with the telecom and commodity subsectors of the CSI undergoing a drubbing, we are confident that the AUD, especially following the earlier lack of action by the RBA, will continue to face ongoing weakness. And sooner or later that means that dollar funded shorts (USDJPY/AUDUSD) which have been the primary source of purchasing power in the US market, will need to be unwound. In the meantime, a compression trade here seems quite attractive.

I have been mentioning lately that precious metals, particularly gold, are behaving more as FX or rates products rather than commodity metals, and this is obviously due to monetary policy.

To all those who are considering buying the futures on the long-ago priced in news of the tax cut extension, we would like to caution that according to the state-run China Securities Journal (which is the same as prophet Jon Hilsenrath telling the great unwashed what the Printing God is about to do with near 99.9% accuracy), China will raise interest rates this weekend. Some additional color from Dow Jones: "Given the central bank set a precedent by raising interest rates right before the release of the consumer price index (previously), there's a 'sensitive policy window' before and after this weekend." If the hike is confirmed (and it is in line with our expectations, that China will hike first before it revalues the CNY any more) look for the greatest marginal credit bubble to promptly collapse, dragging down the US and EU with it, proving that all those who are preaching that Decoupling 2.0 is so different this time, are as always, merely Econ Ph.D.'s.

The latest from Reuters, on the late news that Obama will both extend Unemployment Insurance for 13 months, and extend the Bush tax cuts for 2 years:

• Obama: has reached a framework for compromise with Republicans to extend all Bush tax cuts for two years
• Obama: compromise also calls for extending jobless benefits for 13 months, and calls for 2% payroll tax cuts next year, and for extension of estate tax
• Obama: says compromise is an essential step on the road to economic recovery
• Obama: he is confident that Congress will ultimately ‘do the right thing’

We just hope that the prostituting administration will finally float the one proposal we have all been waiting for: free blow jobs for everyone in
perpetuity, funded by the Federal Reserve's monetization of the Sinking
Hooker fund.

From the WSJ: "White House proposes temporary payroll tax reduction. The 6.2% Social Security tax would drop to 4.2% for workers for one year." Unclear if this is on top of any additional Bush tax cut extensions. It is amazing that it took D.C. only 1 month to forget that the people are sick and tired of reckless deficit spending (today's debt: 13,833,512,000,000) and will vote out all corrupt idiots who merely pass the hot debt potato to the next generation.

One of the Fed's more arrogant former apparatchiks (of the "100% confidence" interval) Larry Meyer, currently at expert network Macroeconomic Advisors which is used by the likes of Pimco to get inside information on what the Fed will do at its upcoming meetings, appeared on CNBC earlier and attempted to school David Einhorn on "Economics 101." What ensued was yet another confirmation that these Ph.D's (a term we always use in the most pejorative, NC-17 context possible) who destroyed the world, have absolutely no idea what the hell they talk about, and make up bullshit scenarios on the fly. Luckily, it has gotten to a point where every incremental statement catches them in one lie or another. It has become grotesquely comic to watch their faces (as in Bernanke of 60 Minutes infamy) squirm as they realize that the end of the system they created and subsequently destroyed, is near.

The inevitable moment for the Wikileaks founder has arrived: the Telegraph is reporting that Julian Assange will hand himself in to police - possibly as early as Tuesday - after a fresh European Arrest Warrant was issued by the Swedish authorities. "Mr Assange is expected to voluntarily attend a police station within the next 24 hours, and will then appear in a magistrates’ court. He is wanted over allegations of sexual assault in Sweden." We hope this means the imminent release of the decyprion key of the torrent file (which can be downloaded here) which is supposed to be Assange's insurance policy. On the other hand, it could an insurance policy on his life, not his freedom so well we monitor.

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 06/12/10

Fresh all time nominal high in spot gold: $1,427.01