Archive - Apr 2010 - Story

• AIG said to insure Goldman's board against investor suits (Bloomberg)
• UK unemployment hits 16 year high - they need to subcontract the BLS (FT)
• Earnings update: Boeing says health costs cut outlook (Bloomberg), AT&T hit by charge (Reuters), Wells misses revenue estimate (Bloomberg), Morgan Stanley posts profit on CDS and bond trading (Bloomberg)
• V-shaped explosion: an eventual inflationary collapse into a "double dip " Greater Recession (Asia Times)
• Richard Rahn: could the US become Argentina (Washington Times)
• Paulson reassures on Goldman role (Reuters, WSJ)
• Goldman says SEC case hinges on actions of one employee (Bloomberg)
• Greece says to agree joint text with IMF, EU by May 15, claims "restructuring talks are nonsense" (Reuters)

• Airlines lost over $1.7 billion from ash cloud disruptions over Europe, industry says.
• Americans see US autos topping Asian competitors.
• Asian stock markets gain on US corporate earnings, jump in oil price.
• Chinese bank watchdog orders quarterly tests on property loans.
• IMF proposes bank tax to fund bail-outs.
• Oil jumps above $84 in Asia as stocks rally on earnings.

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 21/04/10

As was reported first on Zero Hedge yesterday, Greece may now be considering a restructuring. Full press accounts of what is going on in the absence of the usual Greek rumor mill are murky. Reuters is claiming that the IMF portion of Greek aid would amount to €12 billion. In the meantime the market has spoken: the spread is now a fresh new record 522 bps. At this point every single rating agency is expected to downgrade the country.

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 21/04/10

A few weeks ago, I asked Fred Hickey what he would do as chairman of the Federal Reserve. In the remainder of our interview, I asked Fred whether we can avoid recessions in a business cycle, what will happen to the US Dollar, how our creditors are behaving, and what advice he can offer given the new economic environment.

Today's Casablanca moment of the day is brought to you by CalPers. The latest entity to be shocked, SHOCKED, at just what Goldman's standard operating procedure has been for many, many years is none other than the world's largest pension fund, the California Public Employees' Retirement System (and repeat Goldman client), which itself has been having quiet a few problems recently, and not just ethical ones, but more importantly performance related ones. The irony is that were Goldman to close tomorrow, the outcry from all these same hypocritical bandwagoneers would have been ten times louder.

From the tip-bag:

c-bass was a subject of the SEC request.  i don't have any knowledge of what turned up in the search for material on it. 

This is getting interesting.

Dear Attorney General Holder:

While the SEC lacks the authority to act beyond civil actions, the U.S. Department of Justice (DOJ) has the power to file criminal actions against those who commit financial fraud. We ask assurance from you that the U.S. Department of Justice is closely looking at this case and similar cases to further investigate and prosecute the criminals involved in this, and other financially fraudulent acts. Furthermore, if the DOJ is not currently looking into this particular case, we respectfully ask you to ensure that the U.S. Department of Justice immediately open a case on this matter and investigate it with the full authority and power that your agency holds. The American people both demand and deserve justice in the matter of Wall Street banks whom the American taxpayers bailed out, only to see unemployment and housing foreclosures rise.

By 1 PM, the DJIA was up more than 30 points and crude oil prices were up right around $2.00 a barrel. The US dollar was higher against the euro and yen, but precious metals prices were higher. It might be too broad a statement to say that risk appetite has returned, but certain aspects of it did seem to be back in play.
More than anything else, it seemed that investors felt they had over-reacted to the Goldman event on Friday – and even more so on Monday, when there was still left-over selling. A large part of that selling was attributed to the volcano, but it was clearly predicated on Goldman, as well – or we would not have seen such a sharp rally on Tuesday. An additional 24,824 contracts were liquidated on Monday, showing that investors were still getting out of existing positions as the week started.

Spreads tightened in general today with HY outperforming IG as both the major US indices gapped tighter and never made it back to yesterday's tightest levels as the late day charge in risk appetite continued into today. Breadth was largely positive with single-names catching up to yesterday's late day strength.

Some terrific investigative reporting by Matt Goldstein at Reuters discloses that while Lloyd Blankfein is aggressively defending Tourre, claiming the Frenchman did nothing wrong despite earlier reports that he was deregistered by the FSA, and the Telegraph now chiming in he has now in fact been barred in a major setback for Goldman's defense, another Goldman employee who was part of the 18-month SEC investigation, mysteriously departed in June of 2009. The person in question: Gail Kreitman, a 1991 Wharton grad, who had previously worked at Merrill (1997-2003) and Lehman (2003-2006) according to her Finra records, before finally landing at Goldman for a three year stint as a "GS&Co. Sales Rep." Gail had been identified previously in the initial Goldman Wells response, and was named as a person whose sworn testimony may have been the catalyst for the SEC's case against Goldman Sachs. Where the plot really thickens is a cursory glance at the bio of her husband, Jeffrey Toll, who according to Bloomberg is a Co-Founder of now-defunct C-BASS (Credit-Based Asset Servicing and Securitization) a company formed with initial funding by mortgage insurers MTIG and Radian. For those unfamiliar, "C-BASS was a leading issuer, servicer, and investor specializing in credit-sensitive residential mortgage assets. These assets included performing subprime and Alt A, nonperforming, reperforming, second lien and small commercial loans, as well as subordinated and mezzanine RMBS with prime, subprime, Alt A and high LTV collateral" and that "It currently is liquidating its existing portfolio and returning the cash proceeds received to its lenders and investors." One wonders just what Ms. Kreitman did to merit the severance of her ties with Goldman, and whether C-BASS was in any way involved, or whether it had any dealings with Goldman's now infamous mortgage group, ala ACA?

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 20/04/10

The April 19 Consumer Comfort Index number dropped back to -50, a 2010 low, just 4 points from its all-time low in 24 years of weekly polls, -54 in January 2009 and December 2008. 92% of those polled said the national economy’s in bad shape. The silver lining: "just 30 percent say it’s getting even worse, down from recent highs of 36 percent in January and 43 percent last September, much less a towering 82 percent as the economy fell into the abyss in October 2008." 25% said the economy’s getting better, while a little more than 4 in 10 say it’s staying the same: truly abysmal numbers when once look away from the wine and ambrosia flowing at the altar of Steve Jobs.

Charlie Gasparino led an informative discussion with Jim Chanos earlier, in which in addition to the trademark topic of China, the two had a rather poignant tete-a-tete on Lehman, Goldman, pervasive financial fraud, state and local finances, i.e., the muni implosion (the stuff that keeps Chanos most up at night), on shorting US debt, on the Volcker rule and, lastly, on China. While for the most part the interview is boilerplate, what caught our attention is Chanos' reluctance to express his feelings toward Goldman in a monetary fashion: he refuses to short anyone he does business with. Indeed, this is the mentality shared by many. However, while Chanos may or may not be sincere in his reasons, most others would refuse to short Goldman primarily as a result of such activity showing up immediately on Goldman's very own Redi. And the last thing a prime broker account, and client of a monopolist wishes, is to be perceived as a rogue. It also explains why Goldman has been calling up alumni and tell them to be good. This is also one more reason to immediately commence Goldman monopoly proceedings with the ultimate intent of breaking up the organization which is certainly big enough to benefit its employees and shareholders, but far too big to either fail, or to survive in the long run.