David Bianco

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Bank Of America Sees Material Deterioration In Budget Deficit Estimates, Worried About Fiscal Tightening Post Mid-Terms





A few days after the economists have had some time to digest the latest GDP numbers, the results are coming in, and they aren't pretty... And to Obama's chagrin they aren't going to get any better. The end of the stimulus "sugar high" is approaching, and most likely will culminate with the mid-term elections: the attached piece by BofA only solidifies this observation. Bank of America, after Goldman, is now the latest major bailed out bank to join the bandwagon decrying US fiscal insanity (oddly enough, few have much to say about the lunatics in charge of monetary matters). And that's just for the medium-term. Speaking of lunatics, for those curious about the long-term, who can summarize it better than the Oracle of Constitution Avenue himself: "Unfortunately, we cannot grow our way out of this problem. No credible forecast suggests that future rates of growth of the US economy will be sufficient to close these deficits without significant changes to our fiscal policies." - none other than B.S. Bernanke. Furthermore, this is the real problem, forget all about G-Pap reelection chances (none to negative): Greece is just a pleasant distraction compared to what would happen if the US can't roll $700 billion in short-term debt each month.

 


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Step Aside Roubini - FX Concepts' John Taylor Is The New Dr. Doom: "2011 Will Be Worse Than 2008"





"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

 


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US Consumers At Crossroads As Spread Between Visions Of Present And Future At Record Divergence





Yesterday's most recent data from the Conference Board's Confidence Index recapitulates very well the Economic Inquisition purgatory that living in America has become: pain and suffering now, coupled with the promise of salvation and financial bliss at some point in the future. Of course, on a long enough timeline we are all dead, so it is only fitting that the administration, whose slogan had something to do with tangible change, is gradually encroaching on the Catholic Church's turf in an all out war for the souls of America's taxpayers as tangible becomes increasingly ephemeral and, well, intangible (save for unemployment and the wads of electronic cash deposited in Goldman Sachs' employees bank accounts - both of those are all too real). While the CBCC number came in at about the expected reading of 52.9 (from 50.6 in November), all of the "improvement" in confidence came from rosy future expectations, which rose to a two year high of 75.6 (from 70.3 previously). As for the present: current conditions plunged to another record low of 18.8. Never before has the differential between present pain and future hope been so wide.

 


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Sorry, The Upper Class Will Not Pull The US Economy Out Of The Depression





Several months ago Zero Hedge did an exhaustive study of relative contributions to GDP by consumer class decile: the conclusion was that even though it accounts for a mere 10% of US population, the ultra rich are responsible for over 40% of consumption in the US (yes David Bianco, that ever critical 70% of GDP, get over it). Of course, they end up being taxed for the privilege of consuming so much, but that's irrelevant for this post. What is, however, is a recent GALLUP poll which proves that Rosenberg's theme of "new normal frugality" is now entrenched in the consumer's psyche, and not just among the lower- and middle-classed, but, most surprisingly, in the higher income brackets as well. In November the richest Americans reported a 14% drop in average daily discretionary spending to $117. This is a far cry, and 30% off, from the peak of $185/day report in April of 2008. It also represents a disappointing downward inflection from October 2009, when hopes prevailed that upper income spending would once again take off courtesy of 33 Liberty.

 


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Meredith Whitney Continues The CNBC Doomsayer Tour





Such a bearish appearance must be the result of the rose-colored glasses affirmative action thing at GE Capital: we have yet to see what the Comcast policy vis-a-vis unbiased content is. Nothing substantially new from Meredith - same focus areas of concern including toxic mortgages on the Fed's balance sheet, non cash flow generating "assets," and consumer, consumer, consumer (apparently she has not read the David Bianco piece either - after all the US consumer now accounts for 100% of Kindle revenues and 0% of US GDP, or so Merrill will soon want you to believe). Yet withComrade Sam making sure all is good for ever (the alternative, just like falling housing prices in your average S&P model from 2005, simply did not compute at the most recent 5 year plenary session), is there any reason to worry about anything? After all the debt auction carnival begins afresh again today at 1PM with $40 billion in 3 years. So long as those keep getting gobbled up without a glitch, all shall be well.

 


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Merrill Vs (Ex-)Merrill: Rosenberg Takes On David Bianco's Unending Bullish Misperception Misconceptions





The focus of Rosie's morning note has to do with debunking the latest misconception pushed by Barron's, which in all honesty is merely paraphrasing one of Rosie's own successors at Merrill Lynch - David Bianco, whose most recent fluff piece "Harvesting the Truth" (presented below) was an insult to thinking homo sapiens worldwide. The particular item that Rosie has beef with is the Bianco allegation that the consumer is not really 70% of US GDP. Here is Rosie's rebuttal.

 


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Observations On The Psychology Of A False Market Rebound





A recent note out of permabullish ward of the state BofAMLCFC (makes sense why they would be permabulls: after all nobody asks why CNBC is a non-stop propaganda mouthpiece for pro-market, pro-GE, pro-stimulus policies... everyone makes fun of it, everyone cracks up at Kudlow and company, but nobody questions it - it does, after all, make complete sense when one considers their agenda is to have all their ever diminishing viewers purchase however many shares of their soon to be former employer GE, even if it means said viewers financial ruin in a month or a year) shares some interesting perspectives on what would happen if a market that is priced for absolute perfection does not end up occurring (or, scarier, does). The note below out of Sadiq Currimbhoy, Merrill's Hong Kong strategist should be kept in mind any time readers enjoy the rosy propaganda from Merrill's David Bianco, which has the form, consistency and texture of two-ply Charmin'.

 


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BofA's Chief US Equity Strategist Unable To Hide Optimistic Delirium





The greatest piece of "research" humor today (and that is saying a lot as it is in direct competition with Wells Fargo's upgrade of Bank of America) comes from David Bianco, whose report "Six Reasons for Optimism" borders on the surreal.

 


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Albert Edwards On The Upcoming Economic "Abyss"





"One of the key lessons from Japan’s lost decade is that investors’ confidence that the authorities are in control of events will ultimately drain away. In a balance sheet recession, one should expect frequent downturns as the authorities balk at additional stimulus. Only then will zombie investors, sucked dry of confidence, squeeze the remaining puss from equity market valuations. Only then will the 20 year boil of equity market over-valuation be properly lanced." - SocGen's Albert Edwards who apparently is unaware that being a realist is unpatriotic

 


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Extrapolating Equity And Credit Via The VIX





Extrapolation exercises are fun, even if mostly futile and usually ending in tears. Nonetheless, as the VIX continues collapsing compliments of the dollar carry trade, we provide some observations from the latest bullish converts. It would appear the memo David Bianco received has made its way around the BofA vacuum tube network to the Merrill Lynch Credit Strategy team, headed by Jeffrey Rosenberg, which has thrown in the glove on cautiousness.

 


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Rosenberg Replacement Reaches For The Stratosphere, Sees 1,200 S&P On "Strong Earnings Growth"





David Bianco, CFA, has solidifed his status as the anti-Rosenberg with yet another pump piece issued by TARP recipient extraordinaire BofA/Merrill Lynch. The Chief US Equity Strategist and Rosie replacement sees an S&P earnings of approximately $70, or roughly a Div/0 compared to the most recent negative trailing EPS for S&P companies. How Bianco sees earnings growth on limited cost extraction and a persistently declining top line is just slightly beyond our meager calculating skills.

 


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Meet Richard Bernstein's Jolly And Much More Optimistic Replacement David Bianco





With normalized cover page headlines like these:

  • Robust S&P 500 EPS growth expected for 2010 and 2011
  • S&P 500 EPS recovery to outpace the US GDP recovery
  • Financials to contribute to EPS growth in 2010 and 2011
  • Normalized S&P 500 EPS is above our 2009E and 2010E EPS
  • Our normalized EPS supports a strategically bullish stance

is there any wonder how happy Bernstein and Rosenberg must have been to go to work every day?

 


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UBS in Serious Need of Editorializing





In what might be a blatant example of investment banking schizophrenia, or merely a good-ole "talking up the book", two of UBS key "strategists", Larry Hathaway and David Bianco, in the span of 1 business day, manage to come out with two essentially contradictory reports.

 


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UBS in Serious Need of Editorializing





In what might be a blatant example of investment banking schizophrenia, or merely a good-ole "talking up the book", two of UBS key "strategists", Larry Hathaway and David Bianco, in the span of 1 business day, manage to come out with two essentially contradictory reports.

 


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