DRC

• Reinhart and Rogoff: Responding to Our Critics (NYT)
• Differences with centre-right delay Italy's Letta (Reuters)
• Italy's Letta moves forward to shape government (Reuters)
• China’s leaders warn on financial risks (FT)
• Norway oil fund makes big move from bonds to stocks (FT) - worked wonders for the Bank of Israel
• Smuggling milk is the new smuggling heroin in HK: Milk Smugglers Top Heroin Courier Arrests in Hong Kong (BBG)
• RenTec's mean reversion models fail on BOJ lunacy: Yen Bets Don't Add Up for a Fund Giant (WSJ)
• From 'Fabulous Fab' to Grad Student (WSJ)
• BOJ in credibility test as divisions emerge over inflation target (Reuters)
• Boston Bombing Suspect Moved from hospital to prison (WSJ)
• Provopoulos Says ECB May Never Need to Use Bond-Buying Program (BBG) which is good because, legally, it doesn't exist

• US braced as cuts deadline passes (FT)
• U.S. stares down start of steep "automatic" budget cuts (Reuters)
• Yeltsin-Era Tycoons Sell Resources for Distance From Kremlin (BBG)
• Italy's center-left leader rules out coalition with Berlusconi (Reuters)
• Apple Required Executives to Hold Triple Their Salary in Stock (WSJ)
• BOJ Seen Spiking Punchbowl in April Under New Chief Kuroda (BBG)
• Diplomatic fallout from EU bonus cap (FT)
• Italy’s Stalemate Jeopardizes Resolution of Crisis, Finland Says (BBG)
• Chinese trader accused of busting Iran missile embargo (Reuters)
• JPMorgan No. 1 Investment Bank Amid a Flurry of New Deals (BBG)
• Eurotunnel’s Ferry Strategy at Risk as Rivals Cry Foul (BBG)
• Telepathic rats team up across continents (FT)

• Bernanke Wields New Tools to Reduce Unemployment Rate (BBG)
• Home Seizures Rise as Banks Adjust to Foreclosure Flow (BBG)
• EU Backs Release Of Greek Aid (WSJ)
• Democrats Confident They Have 'Cliff' Leverage (WSJ)
• Americans Back Obama Tax-Rate Increase Tied to Entitlement Cuts (BBG)
• Goldman flexes tentacles: Treasury open to Carney radicalism (FT)
• Launch Fuels Asia Security Concerns (WSJ)
• BOJ’s Unlimited Loan Program Seen Open to Use by Hedge Funds (BBG) - there are Japanese hedge funds?
• Abe Set to Face Manufacturing Gloom as Japan Contracts (BBG)
• US and UN condemn N Korea rocket launch (Guardian)
• Eurozone agrees common bank supervisor (FT)
• Berlusconi Adds to Italy Turmoil by Signaling He’d Step Aside (BBG)

Yesterday, Reuters' blogger Felix Salmon in a well-written if somewhat verbose essay, makes the argument that "Greece has the upper hand" in its ongoing negotiations with the ad hoc and official group of creditors. It would be a great analysis if it wasn't for one minor detail. It is wrong. And while that in itself is hardly newsworthy, the fact that, as usual, its conclusion is built upon others' primary research and analysis, including that of the Wall Street Journal, merely reinforces the fact that there is little understanding in the mainstream media of what is actually going on behind the scenes in the Greek negotiations, and thus a comprehension of how prepack (for now) bankruptcy processes operate. Furthermore, since the Greek "case study" will have dramatic implications for not only other instances of sovereign default, many of which are already lining up especially in Europe, but for the sovereign bond market in general, this may be a good time to explain why not only does Greece not have the upper hand, but why an adverse outcome from the 11th hour discussions between the IIF, the ad hoc creditors, Greece, and the Troika, would have monumental consequences for the entire bond market in general.

All you need to read.

In what could be the oddest development in the precious metals market in a long time, the World Gold Council has just unveiled an initiative whose sole purpose if to combat "conflict gold." From the just released notice: "The World Gold Council today announces that, working together with its member companies and the leading gold refiners, it has produced a draft framework of standards designed to combat gold that enables, fuels or finances armed conflict. The draft standards represent a significant, industry-led response to this challenge and are designed to enable miners to produce a stream of newly-mined gold which is certified as ‘conflict free’ on a global basis." While we are confused what exactly is being pursued with this action, aside from the creation of a black market for gold of course, it does seem that the logical end result will be a decline in the total supply of "certified" gold. On the other hand, it will also afford the WGC or any prevailing authority the ability to brand any country it so chooses (Indonesia?) a sourcer of "conflict gold" and effectively clamp down on the production of the yellow metal. Additionally, what better way to deprive a gold sourcing country of massive export revenues than to effectively make their product unsellable in the "legitimate" market. Which then would lead to a surge in fair market value due to supply considerations. Which begs the question: is this the preparation for the "golden" endgame?

• Technologies AG, maker of grinding tools, for about $448M.
• Advantest Corp. makes a buyout proposal to Verigy Ltd. worth nearly $730M.
• Autoliv has $1B for Japan acquisitions as car production rebounds.
• AutoZone's Nov. net income rises from $143M to $172M.
• Bio-Rad announces pricing of public offering of $425M senior notes; to repay old debt.
• BP said to weigh sale of some North Sea assets to fund Gulf spill clean-up.
• Dollar General's Q3 net jumped 69% to $128.1M helped by 10% rise in sales to $3.22B.

• Bernanke says Fed may take more action to curb joblessness.
• Euro Finance Chiefs meet today as Belgium seeks bigger crisis fund.
• Most Asian stocks climb as commodity prices gain; Canon leads drop by exporters.
• Qatar shares surge to 2-year high on winning World Cup 2022 bid.
• US, S Korea, in finalizing a sweeping free-trade agreement.
• White House officials and congressional Republicans closing in on a deal that would extend current income-tax rates for all Americans.
• BofA says it has met condition of Tarp exit; close to raising required $3B via asset sales.

The following is Part I to David DeGraw’s new book, “The Road Through 2012: Revolution or World War III.” This is the second installment to a new seven-part series that we will be posting throughout the next few weeks. You can read the introduction to the book here. To be notified via email of new postings from this series, subscribe here.

As the enormity of the GoM debacle slowly seeps like a tarball into the always somewhat addled brains of the sellside community, the rolling downgrade wave of the oil services and equipment sector is attaining tsunami status. Today's first enlightened soul is Citi's Robin Shoemaker who has obliterated the price targets of virtually all companies in his coverage universe: after the action, the names still barely standing are BHI, CAM, DO, DRC, ESV, FTI, HAL, HERO, HP, NBR, NE, NOV, PDE, PTEN, RDC, RIG, SII, SLB and WFT. Throw in some 74+ mph winds, and things will soon get much, much worse.

With everyone expecting that China will now not be branded a currency manipulator once the delayed Treasury assessment is released in 3 weeks, new developments out of China indicate that the country was merely blowing smoke up the administration in its recent visit to Beijing, by promising the CNY would shortly be gradually revalued. Reuters reports that "Zhao Jinping, the deputy head of foreign trade research with the
Development Research Center (DRC), a think-tank under China's cabinet,
said Beijing was not comfortable enough right now to let the yuan rise
because its export sector had not fully recovered." So much for JPY strength due to a CNY reval. Now the JPY will be strong only because the endless carry trade may be unwinding for other Volcanic/Goldmanic reasons. Also, this certainly looks bad for Obama, as his foreign policy is increasingly perceived as a whole lot of bark and no bite: if Jinping speaks for the broader Chinese establishment (and in China nothing happens by accident) it will be evident that the president is simply incapable of bending our largest creditor to our will... as tends to happen when leverage (literal and metaphoric) is involved.

• Buffett sees US housing recovery by 2011, prices below 'bubble' levels.
• Car makers on Tuesday are expected to report disappointing U.S. sales for February, mainly due to snowstorms.
• China's manufacturing growth slows in Feb, PMI falls from 55.6 in Jan to 52.0.
• Copper rises most in 11 months as Chile earthquake cuts power, halts mines.
• Crude near $80 a barrel after 9.3% monthly rise.
• Europe demands Greece cut budget deficit as Bloc crafts $34B rescue.
• Greece loses Kokusai as investors demand 7% on bonds.

• As banks build capital, Treasury wants TARP to focus on lending.
• Asian stocks fall on Japan deflation, share-sale concern; Dollar, Yen gain.
• China shares retreat on policy uncertainty ahead of government economic meeting.
• China’s 5 largest banks submit plans for raising capital to the industry regulator.
• Fed said to ask stress-tested banks to submit plans for repaying US aid.
• Home resales leaped up 10.1% in October, rising far more than expected.
• Nov. clothing sales weaken vs. 2008's clearance sales, but electronics, online rise.

• Asian stocks, Aussie gain on economy outlook; gold hits record.
• British Prime Minister Gordon Brown calls for Chinese investment.
• Consumer Spending, Home Sales probably rose as US recovery takes root.
• Crude rises from 1-wk low on speculation demand will increase as global economy recovers.
• Electricity sales remained weak in Q3, raising speculation of sluggishness persisting even after the U.S. economy rebounds.
• Europe’s services and manufacturing industries accelerate at the fastest pace in two years in November.
• For the first time in 7 decades, Treasury bills are paying no interest while stocks rise.

- equipment for oil & gas industry
- 2014 @ 97.5 +650bp BB-/B1
- very stable margins, growing
- revenue & ebitda growing constantly
- rel. stable +ive cash flow
- currently very low net debt and good asset coverage
- event risk (i.e. stock buyback, debt-funded acquisition)