Archive - Mar 2010 - Story

• Tim Geithner to be grilled in Congress (along with Dick Fuld of course) over Lehman examiner report (FT)
• Lloyd Blankfein's son, Jonathan Blankfein, made $155,000 last year at Goldman Sachs(Dealbook)
• Greek Spread to Bunds wider by 25 bps, 10 year at widest since February 23, Greek stocks down 3.5%, as Greece misinformation rollercoaster starts yet another week (Bloomberg)
• Moment of truth for Europe's common currency (Der Spiegel) - nothing too new, a few pretty charts much discussed previously on ZH
• We should not be saved from our own stupidity (FT)
• Buffett bonds yielding less than Obama's (Bloomberg)

• Asian shares mostly down; India's RBI's rate hike dampens demand.
• Bernanke says taxpayers shouldn't bear cost of dismantling financial firms
• China cautioned US against citing its currency as a reason for imposing trade sanctions.
• Historic health overhaul bill passes; Democrats clinch win in 219-212 House vote.
• IMF's Lipsky says advanced economies are facing 'acute' debt challenges.
• Merkel: Greece doesn't need financial help.
• Aetna reaffirms 2010 targets, says 2010 results "are off to a good start."

RANsquawk 22nd March Morning Briefing - Stocks, Bonds, FX etc.

In April of 1994, Bill Clinton nominated to the federal bench one Denise Cote, formerly an editor of the Columbia Law Review, and the first woman to serve in the U.S. Attorney's Office as the Chief of the Southern District of New York Criminal Division. Cote pulled the federal securities case against WorldCom's officers and directors. And on March 18th of this year, Cote issued an opinion and order baring Zero Hedge partner TheFlyOnTheWall.com from reporting immediately on equity research reports from the big banks, not to mention awarding damages and attorney's fees in an amount to be determined later. It seems (brace yourself) that TheFlyOnTheWall.com had been something of an authority on equity research recommendations from Wall Street and regularly reported to its active newsfeed the 10,000 foot versions thereof with characteristic Super Fly speed.

The DXY is ripping, and is about to break out of recent resistance levels. News out of Europe that no bailout of Greece is to be expected, further compounded by some serious doom and gloom out of Evans-Pritchard about the EMU and the euro in general, means that the euro will soon make a date with the one point two-handle. This is certainly not good for Goldman clients who just one week ago bought into Goldman's pitch of going long the EURUSD, with a 1.35 stop. Looks like that stop is about to be breached.

Jim Cramer may be in hot water with the SEC over his theStreet.com, and he may be a mouthpiece for the biggest ponzi enabling organization the developed world has ever seen, however, he did have some interesting and spot-on observations on the just passed health care bill. In a nutshell, and for once we agree with Cramer, if futures are not limit down right now, it is because of the same bidding hand that has kept the market going straight up at a 30 degree angle for the past year.

We previously discussed the curious phenomenon of increasing individual tax refunds handed out by the US Treasury, despite record weak tax withholdings, and speculated that the Treasury's generosity, which is very much unfounded, is one of the main reasons for the consumer "outperformance" year to date, due to the excess money obtained by US consumers courtesy of what appears an oddly lax Internal Revenue Service. We won't speculate on the secondary implications of governmental cash flows to and from taxpayers, and instead will focus on actually following the cash. The conclusion is simple: even as the IRS has paid out far more in refunds in 2010 versus 2009, the difference in gross tax withholdings between 2009 and 2010 is at year highs. The government can not afford to pay refunds, yet does so at an alarming pace. The net difference (withholdings net of refunds) for just the first 10 weeks of 2010 is already at a ($42.7) billion cumulative number: a new 2010 high.

Last week was nothing special as stock market continued to drift higher on light volume and the Volatility Index (VIX) reaching a new multi-year low. This mix of higher prices on light volume, multi year lows in the VIX and an overbought market paints a clear picture to a market technician – Be Ready for a Pullback! Last Wednesday I sent out a report covering sector rotation comparing the price performance of these sectors from the January peak with last weeks price action. It was very interesting and it pointed to a sharp sell off Thursday or Friday.

Crude oil futures kept falling back from highs even though speculative funds increased their bets that prices are headed higher. The benchmark West Texas Intermediate contract ended the week at $80.68 a barrel, after nearing $83 earlier in the week, compared to $81.24 a week ago. Saudi Arabia’s oil minister, Ali Naimi, made it clear once again on Tuesday that the world’s largest oil producer prefers a range of $70 to $80 for oil prices. Speaking to journalists in Vienna prior to and OPEC meeting, Naimi said the oil-exporting group, which accounts for 40% of daily oil consumption, won’t let tight supplies push prices too high.

Over the past two years, one of the most salient topics of discussion has been America's collapse into a Chinese state of economic disclosure - limited, opaque, and, at worst, fraudulent. Due to Zero Hedge's extremely "eclectic" selection of readers who are professionals in a variety of industries, we would like to take the opportunity to hear from all of you on what the true state of the US economy is where you are - be it (un)employment, inventories, overall business conditions, moods, general supply and demand, etc. Consider it an objective, crowd-sourced, non-manipulated business perspective.

Even as the Lehman scapegoating campaign is on in full force, there is little doubt that the man who somehow was in the middle of virtually everything, was not Dick Fuld, or any of the bevy of rotating Lehman CFOs, but Lehman's very much under the radar Global Product Controller, Gerard Reilly. Reilly was the point man on Repo 105, the point person for E&Y's "investigation" into the Matthew Lee whistleblower campaign, Lehman's Level 2 and Level 3 asset valuation, the brain behind the idea to spin off Lehman's commercial real estate business, Lehman's Archstone investment, and likely so much more. Reilly stayed on at Lehman, solid as a rock, even as the CFO's above him rotated one after another. Tragically, on December 29, 2008, a 44-year old Gerald [sic] Reilly died while skiing alone on New York's Whiteface mountain, while on a trip with his wife, 4 small children, and two other families.

Crony Capitalist tendencies do not discriminate with respect to "side of the aisle."  The left has been as busily handing out delicious treats to its favored students as the right.  Tacking on a reverse bill of attainder cleverly (or not so cleverly) disguised in prose designed to deter key word searches and in order to slip cash to a friend of a friend is as American as reality shows.  Accordingly, the somber faces of Zero Hedge readers should register exactly no surprise whatsoever on learning that the Health Care Swill harbors a series of such glory hole surprises.

"Given the volatile sideways nature of the marketplace, the S&P 500 has the
potential to be above 1,400 points and below 900 points at least one more time
over the next 3 to 6 years. To date we have witnessed two bear markets with
gyrations of approximately 47% and 56%, and would expect at least one more bear
market to arrive before it may be safe to fully venture out unprotected in the woods
again." - Sprott Opportunities Hedge Fund

Bernanke's ludicrous monetary policy has forced financial companies to relever to mid-2000 levels. A recent CLO has broken the 12 month quiet period in the structured finance universe, and finally made it all too clear that bankers and asset managers have no idea what to do with all the free extra money lying around, earning nothing on the short end of the curve. Furthermore, with rampant M&A rumors every day (of which 90% are patently false) private equity must be getting nervous. As we all know, with great free money comes great irresponsibility to do really dumb things, better known as LBOs. We analyze the imminent tidal wave of going private deals, which, if Bernanke keeps ZIRP for another year as is widely expected, is just around the corner, and that the record TXU LBO of 2007 will be promptly surpassed, in both size and idiocy. Oh well, if you can't beat them, join them. We present some of the most profitable ways to play the LBO wave of 2010, and no, it does not mean tracking down Moody's Deep Shah and buying stocks 24 hours ahead of the announcement, in expectation of a 20% pop.