Archive - Apr 2010 - Story

Not to worry though, other blogs are allegedly saying the criminal case against Goldman is a total "non-event." We'll go with them over a major bank ripping into a major constituent of its own ponzi kabal any day.

The FT reports that "the CFTC fined Moore Capital, the hedge fund led by Louis Bacon, $25m to settle allegations that it attempted to manipulate platinum and palladium prices from November 2007 through to May 2008." If the suit was settled at this near-record fine, one wonders just how bad it would have been had the CFTC allowed this to go to trial. In other news, the PM markets are perfectly unmanipulated and the LBMA has never done anything illegal.

Total PIIGS funding needs (defined as the sum of debt maturities and budget deficits) over the next 3 years: $2 trillion. Total PIIGS funding needs in 2010 alone amount to $600 billion. Total IMF bail out capacity: around $700 billion. Sorry - it simply does not compute.

Schrodinger's Chapter 11 paradox: If the world goes bankrupt in the woods, and nobody hears it happen, did it really go bankrupt?

• Asian stocks advance as earnings improve, Greek debt crisis eases.
• Greece has agreed with the IMF and the EU to take additional austerity measures.
• Japan Household Spending, Wages rise as consumer prices tumble for the 13th month.
• Steel futures in Shanghai heading for biggest monthly drop since January on demand woes.
• UK consumer confidence falls to three-month low as election approaches.
• Yen weakens as Greece aid talks, economic outlook revive demand for yields.
• Barclays' Q1 net rises 29% to $1.7B, helped by growth at its investment banking operations.
• Brazil's Embraer posts Q1 net profit of $35.3M vs. year-ago loss of $23.4M.
• Bristol-Myers' Q1 profit rises 16%, but outlook slips on reform costs.
• China Construction Bank plans to raise $11B in Asia’s biggest-ever rights offer.

Reading a 901 page Goldman document production (cover to cover) at 36,000 feet has proven to be both relaxing and quite productive. Among the plethora of emails, documents and memoranda, we may have stumbled upon something that could prove to be an even "bigger short" for John Paulson than RMBS: a $2 billion position in Bear CDS initiated prior to January 2007, as well as all other financial firms. Additionally, we discover that arguably the world's richest hedge fund manager (for a reason) was prophetically putting on bank counterparty hedges as early late 2006, up to and including Goldman Sachs itself. Most relevantly, in what could be damaging disclosure by Fabrice Tourre, the Frenchman notes that as a result of Paulson's mistrust of Goldman's counterparty risk, the Abacus AC1 deal was structured in a novel way in which "they would be acting as protection buyer, facing the ABACUS SPV (as opposed to a structure where Goldman is protection buyer as is usually the case)." This little legalistic variation could make a world of difference in an Attorney General's hands. It may be time to very carefully read the indenture of AC1 and compare it with those of 2006 and earlier "Abaci."

Time for the media circus to go nuts. The AP reports that the Feds have just opened a criminal probe into Goldman: now it is getting interesting. And everyone was thinking that Eric Holder is a toothless puppet (well, that still has to be refuted).

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 30/04/10

Moody's analyst Sarah Carlson, who by no means is a disgrace to her job, and is fully justified in keeping an A- rating on a country whose 2 Year debt was trading north of 20% until yesterday, when Europe decided to use US tapxayer money to bail out its own, finally finished the special olympics marathon (no pun intended), only a couple of years late. We wonder if any of the Moody's analyst corps will be offered as a (not so virgin) sacrifice to placate the angry gods of Berkshirehathawaya. We hear Buffett has a soft spot for the XX (chromosomes), even if it derives from companies in which he has already decided to liquidate his entire stock position (but slowly... slowly... don't forget uncle Warren is just the nicest guy in the world and would never take advantage of the market's stupidity).

Jan Hatzius, who along with Erik Nielsen, knows what the DOL and the IMF will announce and do about two weeks before the respective agencies do, has come out with his most recent preliminary NFP number. The verdict: +175,000, consisting of 125,000 from the Census. The unemployment rate will remain at 9.7%, unchanged from March's hilarious 9.749% (the gov't just like goldman rounds down the nearest trillion). Still, a bit off from VP Biden's prophecy of half a million jobs created each month "very soon."

The leaders of our industry have poured gasoline on the banking crisis and accelerated it completely out of control. It has gotten to the point where legislators and regulators seem to be doing their best to burn the industry down to the ground to rid it of the evils that caused the crisis in the first place. I put this squarely at the feet of our industry's leaders. They ignored common sense, signs, hints, nudges and flat out requests to curb their risk taking to the point where governments now are proposing rules that not only will force institutional break-ups and hurt our industry, but that very well may cripple the capital formulation engine Main Street needs to generate jobs. Talk about cutting off our proverbial nose to spite our face. All that our industry leaders needed to do was come together, highlight the major gaps that led to the subprime crisis and come up with a solution to solve the most egregious issues. Yes -- in order to keep the industry whole and the world sane, some profitable business would need to be eliminated, sacred cows slaughtered and sacrifices made to appease government leaders and stop the gathering hordes from marching down the Street with torches and pitchforks. - Larry Tabb, founder and CEO, TABB Group

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 29/04/10

Once again, the algospasms have turned many funds into dust as those attempting to short brokerage stocks, REITs, etc. in front of the European implosion are getting killed. Clearly, investors are voting that U.S. commercial real estate is the last bastion of safety, and the primary growth industry in 2011 will be stock trading.

Zero Hedge updates over the next 12 hours will be sporadic as we temporarily shift operations to Europe for closer coverage of the European bailout over the next week or two. We hope to conduct on the ground reporting from Central Europe and at least a few of the PIIGS countries, with Greece certainly playing a prominent role in the itinerary.Once situated, we will resume coverage of relevant events as usual. If readers have any specific focal issues that should be covered (Goldman-led Hedge Fund delegations trying to evaluate the fourth-lien value of the Parthenon, etc.) we are happy to consider and incorporate into our agenda. In the meantime enjoy the taxpayer subsidized, risk-free meltup.

Last week Barry Ritholtz had an excellent post 10 Things You Don’t Know (or were misinformed) About the GS Case in which Barry noted that 99% of the mainstream media commentary regarding the strength of the SEC’s case is, of course, completely uninformed conjecture. I sat down with Barry, who is a lawyer with experience in securities law, to get an insightful take on the SEC’s case against Goldman Sachs.