With populations soaring at the bottom end of the economic spectrum, the demand for new apartment buildings is going to be huge. Immigrants joining impoverished gen Xer’s and Millennials aren’t going to live in cardboard boxes under freeway overpasses. Institutions combing the landscape for low volatility cash flows and limited risk are starting to pour money in.
A 17% bonus increase in a recession year with a nationwide jobless rate of around 10%, coupled with a reduction in lending while receving TARP money - a sure fire recipe for becoming public enemy number 1.
Bloomberg reported that crude oil open interest was 1.41 million contracts, the highest since June 11, 2008. Some analysts think the high level of open interest raises concerns about whether the market is overvalued relative to fundamentals and whether the upward price trend can continue.
Whether you like it or not, Goldman is THE scapegoat for what is perceived as capitalism's failures. Goldman was not the cause of the boom or the bust, but Congress is looking for heads. The threat of criminal indictment hangs over Wall Street. Let the bloodletting begin.
As we discussed in our Q4-09 Broyhill Letter, it appears that the EU’s initial plan of action (see illustration below) was not exactly a robust plan after all. At the time, we suggested that Mr. Almunnia consult his history books, when he claimed that “There is no bailout problem. In the euro area, default does not exist.” Actually, European nations have defaulted on their debt a stunning 73 times since 1800, with Greece in default more than 50% of the time!
Remember, practically everybody poo-poohed my research and opinion in 2008 when I said Goldman was drastically overvalued. Those 600% to 1,000% gains on put options proved otherwise. Speaking of which, look at those July 150 puts… Can you smell what old school, fundamental analysis (you know counting profit and discounting for risk) is cookin’???