Archive - Feb 4, 2010 - Story

Who would have thought that the much anticipated European contagion would actually arrive. It was priced in right? Algos and correlation desks are flabbergasted that this is one situtation that the Fed apparently is helpless with. And if it does, it would only be dollar positive and stock market negative. Indeed, regarding the first, the dollar is now back to July 2009 levels. Regarding the second, ES takes out the 1085 support to the downside with much conviction. We have previously discussed where next technical support levels are (hint: lower).

A new loan BWIC has been circling the market, this one for just over $280 million, as another small portfolio of loans needs to find a new owner. The biggest positions include Transdigm TL $5.3 million, Georgia-Pac TLB $5.1 million, Dean Foods TLB $5.1 million, Celanese TL $4.9 million and AMC Entertainment TL $4.9 million. We have yet to hear if the trader organizing this particular auction has reported in sick. All bids are due at 11:30 am today to your favorite loan salesman.

A unique look at bond behavior will serve to illustrate how risk is lowered in holding long Treasuries for the coming year.

• We hope you bought some: US CDS widest (why do they keep saying highest) since April (Reuters)
• Pesek: Biggest bubble in history is growing every day (Bloomberg)
• Weil: Obama's $6.3 trillion scam is America's shame (Bloomberg)
• Portugal, Spain lead worldwide decline in stocks, dollar gains. Why, oh why, can't every currency be a reserve currency? (Bloomberg)
• Roubini: The ticking US fiscal time bomb (Forbes)
• GMAC reports record loss on home mortgage defaults (Bloomberg)
• Micro investment bank Imperial Capital shelves plans to go public at a ludicrous 4.69 times net tangible assets per
  share (3x more than prevailing 1.52
  times). More importantly, everyone is expecting the IPO of Hustler affiliate, porn site AdultFriendFinder (Bloomberg)

Initial claims just made a negative U-turn and posted their first weekly increase since the beneficial inflection point. After new home sales and NAHB, is the initial claims double dip next? This week's number of 480,000 was 25,000 worse than expected, and 8,000 thousand worse than last week's 472,000. The 4-week average rose to 11,750 to 468,750. According to the Labor Department this was a straightforward report with "nothing unusual" and no states estimated. Unadjusted claims rose 28,234 to 530,405. Continuing claims increased by 2,000 on a SA basis, to 4.6 million and by 62,784 NSA to 5.7 million. EUCs surged once again to 281,442 for a new total of 5,632,219. Extended benefits claims fell 39,129 to 222,833 as ever increasing numbers of people roll off extended benefit eligibility.

Seems like the speed and acceleration of profitability is non-stop at Toyota; despite a myriad of product recalls failing to stop the all-mighty Japanese automaker.

Okay, okay... Bad pun. Or was that a metaphor?

Fourth quarter, Toyota posts a net profit of some 153.2 billion yen, $1.7 billion dollars...

But could this be one of the last profitable quarters in a long while for the troubled automaker? The Japanese remain optimisitc!

Contagion is here. Portugal and Greece default risks are now racing whose CDS can hit 500 first... Then 1,000... Forget the bond vigilantes: the sovereign default vigilantes just called Almunia's bluff. At last check SovX was flirting with the record century mark, Greece was almost back to record wides with some bids of 410 bps floating around, while Portugal, which is today's whipping boy, exploded to 215 bps. We eagerly await to see which other country will join the CDS ballet. Almunia is now openly waging a two-front war, which will soon become multi. The last time this happened to a European, the results were not that good.

RANsquawk 4th February Morning Briefing - Stocks, Bonds, FX etc.

RANsquawk 4th February Morning Briefing - Stocks, Bonds, FX etc.

Zero Hedge embraces contrarian analysis. But its readers tend to be exaggeratedly and stubbornly critical of any opinion contrarian to the "ZH consensus". One of the most fallacious application of this proclivity is the never-ending attacks on TBTF banks, and the blame put on them for causing the current financial mess. We disagree with this myopic train of thought. Although banks have their share of criminality to pursue and prosecute, is the main blame argument posed against them merely the age-old straw man fallacy manifest?

Are exogenous events on the real economy about to bring a round 2 of the eurodollar short squeeze, and will the newly-instituted USD-funded carry trade amplify the effects of the unwind?