News tidbits from the MSM tainted with actual facts, figures and smart ass opinions from yours truly.
The jocular ukulele-strumming grandpa, who many years ago railed on and on against derivatives (see his 1982 letter here) then subsequently sold billions in notional of index puts against his earlier oh so sincere advice, has been formally subpoenaed, note - not invited, to testify before the Financial Crisis Inquiry Commission on the topic of "Credibility of Credit Ratings, the Investment Decisions Made Based on those Ratings, and the Financial Crisis", side by side with Moody's archvillain CEO Raymond McDaniel, the head of a company in which Buffett has (or is that had?) a huge equity stake, up until MCO's announcement it had received Wells Notice together with a recommendation to strip it of its NRSRO status, when it became obvious that Warren had been selling shares of Moody's in the period between the Notice receipt and announcement. What is most interesting is that Buffett had to be forced to participate in the hearing following a formal subpoena receipt, after he had declined participation on two prior occasions. We wonder, if in addition to unmatched hypocrisy and a guilty conscience, the octogenarian has anything else to hide?
As final salary pensions reach the end of the road in the UK, politicians in Illinois ponder on which pension poison to swallow. Kicking the can down the road is no longer an option...
What do you think those bankers with perfect trading days in Q1 did with all the money they made? As Eli Broad said, "No one wants paper money — they want art.” This is the Fed's gift to these bankers.
If you want to avoid all the red ink in the futures this morning, and dig your head deep in the sand of denial, here is Goldman Sachs to the rescue. As we pointed out a few days ago, Jim O'Neill, who is likely more devastated by Man U's loss of this year's Premiership title than the daily accumulating of new and improved criminal charges against his firm (his response to that, and to anything else: "BRIC"), earlier led a call titled 'Why the World is better than you think.' We have decided to pass, but to avoid being branded non-objective pessimists, we provide our readers with the means to listen to the replay - this way you can get all your 100% RDA Vitamin H1 and Joseph Cohen hot flash..backs all at once.
Activision CEO Robert Kotick can make some mean Modern Warfare games, but that will not be sufficient to get him back on CNBC again. Ever. CNBC's poor Julia Boorstin gets clotheslined (metaphorically, although it would be funny in real life) when she asks Robert whether the American consumer is back on track, no doubt hoping for a fervent yes as the cue cards said. At that point the man whose top line lives and dies by the vagaries of the 18-45 year old's spending habits takes a two second pause and replies: "We don't think so. I think that from a a macroeconomic perspective we definitely are in a challenging time and nothing that we see would give us encouragement that the economy is going to materially change any time soon." At this point the CNBC producer is rabidly screaming to cut to Joseph Cohen, who based on h....er extensive knowledge of stuff, and pets.com, sees the S&P at 1250 shortly, thanks to the US consumer who is now coming back with a vengeance and buying Gulfstreams. At which point someone asks h...er why Goldman's popularity rating is 4%.
Themis Trading's Joe Saluzzi, who still has oddly not be asked to discuss his perspectives on the flaws in not only HFT but broader market structure and topology issues before a congressional commission, is interviewed by Bloomberg (and amusingly Carol Massar, after mocking him the last time around, finally gives him props for having been right all along). Fans of A. Joseph Cohen would be better advised to look elsewhere for their daily dose of Vitamin Hopium. The take home message"It's gonna crumble, it's just a matter of when." Alas, with gold now at $1,241 even lifelong Keynes fanatics are finally throwing in the towel. The time when we could have done something to fix the system is now long gone, courtesy of the administration's waffling for the past two years as instead of getting to the root cause of the last and future crash, it was focused on bailing out bankrupt banks. And in related news, Jim Rogers, joins the Euro death squads, and says that the $1 trillion bailout is the "Nail in the coffin for the euro." As Rogers said in discussing the now failed bailout: "I was stunned. This means that they’ve given up on the euro, they don’t particularly care if they have a sound currency, you have all these countries spending money they don’t have and it’s now going to continue. It’s a political currency and nobody is minding the economics behind the necessities to have a strong currency. I’m afraid it’s going to dissolve. They’re throwing more money at the problem and it’s going to make things worse down the road.”
The noose is tightening, even though one could speculate the one doing the tightening ought to be on the other side of the rope as well. That said, we sure miss the days when Dick Bove used to provide instacommentary on Wells and Goldman, typically of the buy every dip format. That beard makes him look so wise and grizzled... That, or in dire need of grooming.
"Too Big to Fail is Too Big to Regulate"
Goldman: "We expect the S&P 500 to rise to 1300 by mid-year (+8%), before ending 2010 at 1250 (+3%)." And here is why companies will continue to "beat" better than expected stimulus and ZIRP-driven outperformance "investors should note that in most cases analysts have not incorporated the strong 1Q results into full-year 2010 EPS forecasts. A benign interpretation is that analysts want to remain conservative in their profit forecasts to allow future quarters of “beat and raise.” Alternatively, analyst reluctance to raise profit forecasts despite strong results may reflect deeper concerns about the trajectory of the current recovery. In aggregate, 1Q EPS has surprised by 8% but 2Q-4Q estimates have risen by only 1%. Only 42 stocks experienced “Beat and Raise” where post-earnings release upward EPS revisions exceeded the magnitude of the positive
EPS surprise. The companies were concentrated in Information Technology and Consumer Discretionary sectors. In contrast, many Health Care and Financials companies were among the 16 stocks that “Beat and Lowered” and negative share price performance typically followed." And it couldn't possibly be a Goldman report without the words decoupling and BRIC thrown in for very good measure: "The proverbial “de-coupling” of demand is clearly evident in the 2007-09 change in S&P 500 revenue by geography. After adjusting for constituent changes and corporate actions, total sales for US companies fell by 4% during the past two years while sales to BRICs regions – Brazil, Russia, India, and China – surged by 10%." Yet: "S&P 500 firms generated $8.4 trillion in revenues in 2009 and 70% occurred domestically. The foreign share of aggregate US corporate sales has remained relatively static over the past two years."
"[Goldman] designed something intentionally complex that's basically a mechanism of transferring money from you to John Paulson. John Paulson, it is true, has not been charged with anything. But he was involved in designing the security. For all we know right now it was probably his idea and if he walks away without being charged, it shows how broken our system is." This is Simon Johnson discussing the Goldman fraud charges on Friday night with Bill Maher. Could the public's attention now be shifting ever more toward those top performing hedge fund managers who year after year made billions, and instead of praising them for their acumen, are now seeing a sentiment shift toward one of wealth merely as a result of massive criminal collusion between the hedge funds and the big banks... well big bank, cause Goldman is really all that's left of the traditional broker/dealer complex. Which once again invokes our long-standing point: the DOJ should immediately break up Goldman Sachs into many smaller entities, due to the firm's unquestionable (allegedly) criminal monopolistic impact on the marketplace. Christine Varney - wake the #&$* up! And whatever happened to that FBI investigation into SAC? Will Stevie Cohen be next as the mid-term elections approach and the public demands blood from someone?
"The cycles and very simple fundamentals are enough to predict that 2011 will be worse than 2008. The medium-term cycles tell us that there is a very high probability of a serious bout of risk aversion beginning in the next five trading days and continuing into the week of May 3. This is likely to be most apparent in Europe, but it should also impact the equity and commodity markets around the world. The stream of strong economic and corporate news, plus continued benign inflation outside of Asia should assure us of a further risk rally, starting in May and running through July and possibly into early August. This decline after the August peak should be far more serious and we believe it will be the start of a major market rout continuing into the middle of 2011, at a minimum. The deflationary recession that will accompany this market collapse, at least in the developed world, will put extreme pressure on the Eurozone and the EMU structure. The second half of this decade will witness a very different world." John Taylor of FX Concepts, biggest currency hedge fund in the world
The impossible is happening with futures taking a big hit. Can anyone seriously recall when the Fed allowed this to happen last? The question tonight is who over at Liberty 33 is getting sacked (no pun intended) for this gross oversight. Do those people not realize letting the futures drop is treason and punishable by A. Joseph Cohen rereading Leonard Cohen, in roughly the same octave? If we take out what Bob Pisani would call the psychologically important barrier of 1200, watch for the S&P and gold (last seen at 1155) to play a nasty game of convergence. With the largest SPY put open interest at $117, we may just see a 30 point drop in the index if the "boys" don't intervene post haste. After all it is well known ponzis are only allowed to go up.
Of course they knew ...
- Fannie and Freddie: the biggest income (Post)
- Paulson's $32 billion funds prompt too-big-to-succeed concerns (Bloomberg)
- China jails Rio Tinto staff to 7-14 years (Reuters)
- Dubai World said to offer shortfall guarantee in debt proposal (Bloomberg)
- Suicide bombers kill at least 37 in Moscow metro (Moscow Times, Reuters)
- China knows the time for laying low has ended (FT)
- Stocks soar but many analysts ask why (NYT)