Like a rabid bulldog that refuses to let go, Goldman's Ed McKelvey has bitten on the fact that the US economy continues to deteriorate, despite the occasional data point which the feedback loopers latch on to, only to find out the data was either manipulated or "estimated", and provides a "roadmap" for how the ongoing depression will manifest itself over the next two quarters. As his economic team has been more correct than all others, investors will be paying far more attention to his estimates, than those of a now ridiculous David Greenlaw of Morgan Stanley, who after downgrading the economy three weeks ago, upgraded Q3 GDP from 2.1% to 2.4%. High Frequency Forecast adjustments anyone? According to McKevley the ongoing weakness in the economy will manifest itself along these five key verticals: consumer spending, housing start weakness, industrial activity, ongoing labor market deterioration, and deflation. Of course, this should be sufficient to get bizarro stocks higher by a few percent today. Then again, nobody gives a rat's ass what stocks do anymore.
- Norway Buys Greek Debt as Sovereign Wealth Fund Sees No Default (Bloomberg), and in two years those responsible for the decision will be sued for criminal negligence; In other news ECB funding to Greek banks stays within €0.3 billion of all time high at €95.9 billion. Perhaps Norway meant buying ECB bonds?
- Funniest self-serving statement of the year: Greece Says Bonds Now an 'Opportunity' as Budget Deficit Falls (Bloomberg)... as opposed to yesterday when they were a catastrophic investment. Also not mentioned was the austerity is really working as Greek industrial production plunges far below expectations
- And guess what - more QE coming to a broke Europe near you: BOE Mulls ‘Second Wave’ of Bond Buying as Rebound Ebbs (Bloomberg)
- Base metals overnight flash crash in China (Reuters)
- OECD Says Slowdown `More Pronounced' Than Anticipated (Bloomberg)
- European Crisis Flares Up in Ireland (WSJ)
- A recent uptick in insider buying is normally considered a positive for the stock market, but it may be misleading for investors (Reuters)
- Japan Plans to Seek Discussions With China on Bond Purchases (Bloomberg)
Cherry picking the best money management techniques that have evolved over the last 30 years, and discarding the dross. Sophisticated hedge fund management for the little guy.Benchmarking performance to an arbitrary index, such as the S&P 500, has been consigned to the dustbin of history. Buy and hold is dead. Security in the wake of the Madoff affair. No more black boxes, homemade account statements, or a “need to know” basis. Scouring the world for only the cream of investment opportunities. An exclusive interview with Lee O’Dwyer of 5T Wealth Management on Hedge Fund Radio. (CU), (DBA), (CORN), (PHO), (GLD), (SLV), (FXC), (FXA), (IDX), (TUR), (ECH), (EPOL), (TBT), (YCS).
Meredith Whitney Sees A 10% Drop In Wall Street Headcount And "Dramatic" Declines In Payouts In 18 MonthsSubmitted by Tyler Durden on 09/07/2010 18:09 -0400
And you were wondering why the SEC and certain politicians with extensive connections to the financial services lobby are starting to stir now that it is common knowledge that every single hedge fund and trading desk's woes are a function of HFT run amok (which is exaggerated BS of course, but from Wall Street's darling, HFT has now become the one thing everyone loves to hate, and blame their own underperformance on). And as we suspected, there is a far more structural issue underlying the recent faux-move to restore confidence in markets, namely imminent pain for Wall Street headcounts... and bottom lines. According to Meredith Whitney, who had been relatively quite in recent weeks, Wall Street faces the departure of about 80,000 staffers, or 10% of all, within 18 months, not to mention a major drop in Wall Street compensation. The reason is the same as the one we pointed out earlier: slowing revenue growth, primarily due to the complete collapse in trading volumes, as computers have used their binary elbows to push everyone else out of the markets, and with Wall Street's primary revenue model now being exclusively reliant on trading, this is equivalent to a partial extinction event as many trading firms will have to close. This also means that the New York City economy is facing another major solvency crisis as tax receipts are sure to plummet.
Michael Burry Is Long Farmable Land, And Agrees With Paulson On Gold (But Not The Other "Recovery" Themes)Submitted by Tyler Durden on 09/07/2010 11:32 -0400
Michael Burry, who needs no introduction, was on Bloomberg TV earlier discussing his latest investment allocation, which no longer focuses on shorting real estate via the cheapest possible instrument, and instead is going long cash assets in the form of farmable land (oddly enough, not multi apartment commercial real estate), small tech, and, yes, gold. “I believe that agriculture land -- productive
agricultural land with water on site -- will be very valuable in
the future. I’ve put a good amount of money into that.” Burry, just like Zero Hedge, laments the surge in cross-asset correlations, which makes all hedging strategies virtually impossible, and is a primary reason for why so many rational investors have decided to depart from the market: "I’m interested in finding investments that aren’t just
simply going to float up and down with the market. The incredible correlation that we’re experiencing -- we’ve
been experiencing for a number of years -- is problematic." Lastly, Burry agrees with the Paulson-Greenspan view on gold, but not any of the other Paulson "Recovery" themes we presented in extreme detail over the weekend: "Paulson's big in gold, and that's something that is interesting to me given how I see the world playing out, but other than gold I haven't really bought into any of the other theses." (And no, you still can't eat it, dammit).
In some fields of research, dishonesty and misconceptions can cost lives. In economics, dishonesty and misconceptions can cost MILLIONS of lives. Mainstream financial analysts (and the MSM in general) have lost all sense of responsibility for what they do, and thus, continue to put our society at risk and continue to lose vaster portions of their audience year after year. The problem is that the vacuum left behind by this mass exodus from the MSM has not yet been correctly filled with principled alternative news providers. We are growing everyday, but the information void is still ever present, and the memory hole continues to be exploited by global bankers. Some people don’t know where to turn, and have instead given up on looking for the truth altogether. My only option has been to continue drilling away at the root points of disinformation, along with many other uncompromised researchers, and hope that consistency and perseverance win the day by accumulation and attrition. With that strategy in mind, we will now examine the instabilities behind our current recession/depression. We will then follow by deconstructing the most prominent economic misconceptions surrounding them (often perpetuated by the MSM), along with those misconceptions you will probably hear in the near future… - Giordano Bruno
Exclusive: The Paulson Portfolio Post-Mortem (In Which We Learn That The Maestro Himself Is Advising J.P. On Future Gold Prices)Submitted by Tyler Durden on 09/05/2010 23:44 -0400
We present an exclusive summary of all the Paulson & Co. portfolio facts, figures, strategy, ins and outs, and Paulson's discussions with former Fed Chairman Alan Greenspan on the "the relationship between the monetary base, the money supply, inflation and gold prices." Must read for everyone.
A Labor Day rant.
Your one stop shop for the week's summary of bullish and bearish events and news.
BN 10:03 *GOLDMAN SACHS SAID TO PLAN TO CLOSE PROPRIETARY TRADING UNIT
BN 10:03 *GOLDMAN PRINCIPAL STRATEGIES TRADERS IN NY MAY JOIN OTHER FIRM
BN 10:03 *GOLDMAN PRINCIPAL STRATEGIES HEAD SZE MAY START A HEDGE FUND
So as long as you do one flow trade a year, you are considered a flow trader? Brilliant.
In providing commentary to the FASB's attempt to solicit public response on its recent foray into bringing some transparency into "loans held to maturity" by Wall Street banks, Goldman Sachs does a terrific job of exposing the very prevalent, and very conflicted phenomenon better known as "lending to play" in Wall Street firms' attempt to get an allocation on the IPO underwriter syndicate of public company candidates, in exchange for providing debt to the same firm on very disadvantageous terms to both the underwriters' shareholders, and to secondary purchasers of such debt. In addition to providing broad mispricing incentive to an entire capital structure product, this practice also completely destroys the credibility of the ratings of the newly public company by the Underwriter syndicate due to tremendous conflicts of interest.
Goldman Sachs recaps expectations for today's key event - payroll day… also the ISM nonmanufacturing index and a couple of Fed speeches.
Today's key economic events include weekly claims, productivity revisions, retail chain store reports, pending home sales, factory orders, and the Fed’s weekly report on its own balance sheet, plus testimony from Chairman Bernanke and some other FOMC speakers.
The Great Global Macro Experiment, BoomBust Cycles, and the Refusal to See the Truth: Bubble Economics in the Mainstream MediaSubmitted by Reggie Middleton on 09/01/2010 11:19 -0400
Those who feel that CRE is a good buy now due to cap rate spreads over treasury yields are ignoring a) that treasuries are most likely in a bubble and b) this thesis if applied last year when spreads were even higher would have lost you a lot of money. Just because something costs less than it did when it was very expensive doesn't mean it is cheap. Being less broke then extremely broke still means that your broke, doesn't it???
A Look At Futures Action: A Weak Seasonally Adjusted Chinese And European PMI, First Negative 2010 ADP, And MoreSubmitted by Tyler Durden on 09/01/2010 08:29 -0400
A weak seasonally adjusted PMI number out of China did nothing, as expected, for Chinese stocks, but was enough to push US futures up an entire point overnight, as any data now is enough to send the computers into a feeding frenzy. Additionally the trend of declining European data continues, with an even starker contrast between core and the periphery: EU PMI came in at 55.1 compared to 56.7 previously and the lowest since February 2010, yet what is interesting is that German PMI came on top of expectations (and again the lowest since february at 58.2), while Italy missed by a mile at 52.8 on expectations of some growth from the previous print of 54.5. As for Greece - forget about it: its PMI was 43, compared to 45.3 in July, on steep falls in output and new orders, as austerity continues to extract its pound of flesh. Yet it is all about the AUDJPY, which at least up until the completely worthless and irrelevant ADP report came in at -10,000 on expectations of +17,000 (and, gee, the previous was again revised lower from 42k to 37k, hopefully this is not an indicator of what to expect this Friday, as this was the first decrease in private payrolls since January 2010) was up by about 150 pips. So why is the AUDJPY flying? In addition to some better than expected Aussie GDP data, which is nothing but a second derivative on the Chinese economy, one should actually ask the forward looking question: what is really going on in China? And here is Goldman explaining why the Chinese PMI number, despite what Doug Kass would like to tweet, actually confirms an ongoing slow down in mainland China.