Archive - Feb 1, 2010 - Story

In response to The Times' article on Lloyd's alleged $100 million bonus, Goldman has sent out an email early Monday in which it refutes the number and claims the whole story is "speculative nonsense." As the Dow Jones reports, Goldman's email appeals to everyone's heartstrings in realizing just what a generous, competitor-friendly, bailout-free and, in a word, godly organization it truly is:

"Everything Goldman Sachs has said and done in terms of compensation this year gives the lie to The Times story," the spokesman said. He added that Blankfein received no bonus in 2008, and that Goldman's ratio of compensation and benefits to net revenue in 2009 was the lowest in its
history as a public company.

Goldman has yet to state if the actual bonus number is lower or higher.

At last check Amazon stock was preparing to finally fill that gap down to $100. The reason: investor concern over what the settlement with Macmillan will mean for the company's top and bottom line, and how AMZN's weakness could transfer over to negotiations with other publishing houses. Goldman, always one to jump in the fray, and still sticking with its $160 price target (or a cheap 34x the firm's 2011 EPS estimate) provides the following color.

Tracy Alloway at FT Alphaville has caught what has got to be a glitch in the Bernanke matrix. The Federal Reserve, in what one can assume is likely a very critical resource for bank directors, says that while newly appointed Bank Directors may have such mission critical skills as "basic management experience and skills, an inquisitive attitude, and a willingness to commit time and energy to bank matters" they likely miss "a basic knowledge of banking and what to consider in overseeing a bank." Well thank goodness the Fed is there with this critical 5-minute guide in providing bank directors with all the information they need on how to to run a bank. And they wonder why some are skeptical about the soundness of the bank system.

Correction: due to a data compilation error, the ratio of buys to sell was actually lower: 3.8x. Still, The big bulk buys pushed the ratio to a favorable buying balance. Absent the three big block buys, the balance of the buys accounted for only$10 million.

In one of the more dramatic comebacks seen in the past year, insider buying has finally surpassed insider selling, and that by a wide margin. In the prior week insiders bought $390 million worth of stock while selling just $103 million. Yet the bulk of the buying was concentrated in 3 bulk purchases: MatlinPatterson's acquisition of $300 million worth of FlagStar Bancorp (which judging by its stock price isn't doing all that hot to date - may be worth a second look), Orbitz Worldwide Director Paul Schorr's purchase of $50 million in OWW stock and Intermune direct Jonathan Leff's purchase of $30 million worth of intermune. Aside from these transactions there were no major notable buys or sells: the largest sale was a $6 million sale of DeVry stock by 10% owner Dennis Kellner.

The January Manufacturing ISM follows on the heels of the red-hot GDP number, and blows out all expectations, coming in at 58.4, higher than even the higher end of the range, which was between 53.5 and 58.0. As is well known, a reading above 50 indicates expansion. December Mfg ISM was revised down from 55.9 to 54.9 due to a index rebalancing. Every index in the January ISM report came out at a better reading than December.

The wild west days of social networking as a platform for stock tips and under the radar information exchange may be coming to an end. Or at least FINRA is finally realizing that there is more to stock manipulation than meets the eye, and in a radical change in policy (which up to now had been non-existent on the matter), FINRA will start policing and pouring through tweets, after announcing that "securities firms must keep copies of all business-related communications on social networks, whether those communications are official or from associated persons." Yet indicating just how woefully behind the times the SEC's much-feebler cousin is, FINRA has admitted that "the technology to grab those messages might not exist." The reason why FINRA should be concerned, as Securities Industry News highlights is that "Every Wall Street company – except possibly the smallest ones – have employees using social networks, creating potential liability problems for their employers, for whom they might not be speaking. However, many firms are also actively using these new platforms themselves, to reach out to customers, the general public, and potential new recruits."

RANsquawk 1st February US Morning Briefing - Stocks, Bonds, FX etc.

As we highlighted previously, any investors who had gone long the Brazilian Real (BRL) in January, funding this position with either USD or JPY shorts, had their face ripped off after a loss of anywhere between 7 and 9% in one month (don't annualize that). But instead of covering, here is Goldman with advice on why Einstein's definition of idiocy is for chums. The firm has just come out with a trading call (remember all that huddle stuff?) telling investors to go short $/BRL "on better macro data and hawkish BACEN February 1, 2010." Who knows, maybe mean reversion will work this month. Goldman's target: 1.75 and a stop above 1.94.

In a titanic call that the puking Charles Schwab E-Trade baby could probably make with its eyes closed, JP Morgan comes out this morning with the conclusion that investors should buy the market unless things turn bad. Isn't that kinda analogous to an analyst saying if the Dow is at 36,000 on December 31, you should have bought. And vice versa. At least JPM analysts Mislav Matejka and Emmanuel Cau admit that investor confidence is slipping. So in an attempt to prop it up, they present the following puff piece with content which everybody who has the pleasure of watching CNBC now and then, is all too aware of.

• A collosal failure of governance: the reappointment of Ben Bernanke (Baseline Scenario)
• As expected, Swiss National Bank interevened in CHF on Friday (FT)
• Following up on Euro-decline observations from the weekend, Euro proving no reserve asset as central banks shift (Bloomberg)
• $3.8 trillion budget to be released accounts for another $100 billion stimulus, proposes new record deficit (Bloomberg, Reuters, WSJ)
• Subpoena the Fed (Cumberland)
• Goldman monopolizing market flow information? No way... Front-running the markets and the sickness unto death (Jesse)
• A growing share of Americans' income comes from the government (Financial Armageddon)

• Annual inflation rate in 16 countries that use the euro rose to an 11-month high of 1%.
• Asian stocks fall as China manufacturing reports spur tightening concerns.
• Australian borrowing for home- buying fell to a five-year low last month on higher lending rates.
• China’s manufacturing expanded at second-fastest pace since 2008 in Jan, helped by exports.
• China's stocks slide to four-month low on tightening concern.
• Dubai world silence on debt standstill evaporates bailout rally.
• Euro proving no reserve alternative as Central Banks lead shift in assets.
• European stock markets started February on a negative note following Friday's US decline.

January 2010 is now over and we have a tightening PBOC, a Greek sovereign debt crisis, a rallying USD, declining risk assets, and risk aversion. Here's some macro insight filtered through some technical analysis for timing precision from your favorite college undergrad market analyst.

RANsquawk 1st February Morning Briefing - Stocks, Bonds, FX etc.