Saturday, March 20, 2010

New Blogger Template Design Is Here, Demo Video #newbloggertemplate

Thanks Blogger, my HTML skills weren't up to par.  I think it's time for a sick 3-column layout with page tabs on Distressed Volatility.  To look all professional. Here is what they launched, quoted from the Blogger in Draft blog.  Check out the demo video below.
  • 15 new, highly-customizable templates from our design team, split into four families: Simple, Picture Window, Awesome Inc, and Watermark
  • One-, two-, and three-column layouts for each template, with complete control over the size and arrangement of the columns
  • Hundreds of background images and patterns from iStockphoto, the leading microstock image marketplace

Icahn Sues Raynor For $100 Million On Federal Mogul 13D Filing (IEP)

It looks like there's beef in 13D filing land. After going through my WCI post from 2008, which included various filings from Icahn against management, I decided to check out what was going on at Icahn Enterprises (IEP). It appears there is a feud between Icahn Enterprises and Geoffrey Raynor's hedge funds. On a Federal Mogul 13D filing in January, Raynor filed a complaint about Icahn's recent $2 Billion bond offering (regarding the nature of his Federal Mogul holding in connection w/ the offering).  Icahn is now suing Raynor for $100 million in damages for interfering with the offering. Wow..

First here is part of the decent sized debt offering made by IEP:
"Senior Notes Offering

On January 15, 2010, Icahn Enterprises L.P. (“Icahn Enterprises”) and Icahn Enterprises Finance Corp. (“Icahn Enterprises Finance” and, together with Icahn Enterprises, the “Issuers”), closed their previously announced sale of $850,000,000 aggregate principal amount of 7¾% Senior Notes due 2016 (the “2016 Notes”) and $1,150,000,000 aggregate principal amount of 8% Senior Notes due 2018 (the “2018 Notes” and, together with the 2016 Notes, the “Notes”) pursuant to the purchase agreement, dated January 12, 2010 (the “Purchase Agreement”), by and among the Issuers, Icahn Enterprises Holdings L.P., as guarantor (the “Guarantor”), and Jefferies & Company, Inc., as initial purchaser (the “Initial Purchaser”)." [source: sec.gov]

Here is part of the 13D made by Raynor's Nineteen Eighty-Nine LLC.
"It has come to the attention of the Reporting Persons that Icahn Enterprises, L.P. may be materially misrepresenting the nature of its ownership of certain assets in connection with its recently announced $2 billion Senior Note sale.

Friday, March 19, 2010

A Bullish and Bearish Case On The Market (3/19/2010)

Alright, alright...  Where are we headed people?  I've absorbed many different opinions from the tele, news stories and blogs.  $SPY made new highs, oil couldn't break resistance...yet, $GLD is making lower highs (watch that new symmetrical triangle though) and the USDX could breakout again above $81. We'll see what happens on Monday post-healthcare vote.  The best thing to do is watch the chart imo.  If the S&P breaks below 1,150 again it will be a failed breakout and potential double top, or a prep for a boring sideways channel.  I will chart out a bunch of sh*t later.   I'll leave you with a bullish and bearish case on the market.  Read this post at Beanieville Inc: Bears calling for major top, again and below is a video of Robert Prechter (Elliott Wave International) on CNBC warning about the next wave down coming. Good luck.

7 More Banks Fail On Friday (March 19, 2010)

This quote on quote readjustment period is surreal.  Will every community bank go under in this Country?  For the full list of failed banks go to FDIC.gov (h/t @polizeros).

Bank Name

City

State

CERT #

Closing Date

State Bank of Aurora Aurora MN 8221 March 19, 2010
First Lowndes Bank Fort Deposit AL 24957 March 19, 2010
Bank of Hiawassee Hiawassee GA 10054 March 19, 2010
Appalachian Community Bank Ellijay GA 33989 March 19, 2010
Advanta Bank Corp. Draper UT 33535 March 19, 2010
Century Security Bank Duluth GA 58104 March 19, 2010
American National Bank Parma OH 18806 March 19, 2010

Meredith Whitney: Housing Will Double Dip, Bank Mortgage Model Broken (CNBC)

Meredith Whitney (Meredith Whitney Advisory Group) was on CNBC talking about the housing and mortgage-backed securities market.  Below I quoted text from CNBC.com.  I didn't hear it on the video unless I missed it.  On the video she said watch what happens at the end of March when the Fed stops supporting the mortgage market (1/3 of Fed's balance sheet tied to mortgages).  From the recent Fed statement.
"To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve has been purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt; those purchases are nearing completion, and the remaining transactions will be executed by the end of this month" [full statement]

She called the correction that started in 2010 [12/9/09 post].  She also said the bank model is broken.  They can't make money on mortgages anymore with the securitization market closed.  
"The asset classes of MBS and Treasurys are priced for a material correction in my opinion," she said. "The only buyers of agency MBS are the Fed and banks so you see how precarious that market is." [Meredith Whitney via CNBC]

I also looked at the NAHB Builder Confidence Index chart a few days ago and saw a possible double dip coming (possible double bottom or retracement in the chart).  There are other data points to use for confirmation like home sales, inventories, Case/Shiller housing price index etc.  I think housing is important and will lead the US markets and economy going forward.  Unless corporations subsidize the mortgage market with all the Benjamins on their balance sheet.  Video below courtesy of CNBC.com.

Thursday, March 18, 2010

Is Google.cn going dark in China soon? Will Sohu take over? (GOOG, SOHU)

Wtf?!  It's still up though as you can see.  This is kind of a big deal.  It's still speculation but they did say at FT.com there was a 99.9% chance they were shutting it down.   在过去的乐趣?It all originated from that gmail hack from China in early January, see post.  Closing down google.cn would disrupt a bunch of advertisers and close off a lot content, and not be cool at all!


"Shares of Baidu, Google's chief rival in China, rose sharply on Monday following reports that Google is almost certain to close its search operations in China, while Google's shares declined." - InformationWeek.com
"Google-China Row Thickens over Complaint Letter: Most Alleged Signatories Say They Didn't Sign the Complaint Letter About Possible Google Pullout..." - ABCNews
"Though Google is denying anything about its processes have changed, MSNBC.com reported Tuesday that searches on subjects that had been blocked as objectionable are yielding results. For example" - ITBusinessEdge
"Who wins when Google leaves China? Microsoft and Baidu might not like the answer" (Sohu and Tencent) - Fortune.com
"A group of Google's advertising partners in China has sent a letter to the Web giant, saying it has waited in "profound pain" for word on the company's plans" -CNET
"Google's China ad partners wait in 'incomparable pain'"- BusinessWeek.com
"Google Partners Call For Clarity on China Plans" - Reuters
"Google China Exit Could Boost Tencent, Not Just Baidu" - Barrons Tech Trader Daily

I'm watching GOOG and SOHU charts, I will update if anything should happen. Here is a 1-month performance comparison of SOHU and GOOG from Stockcharts.com.


Read a Harvard Thesis on the CDO Market Meltdown

Finally a non-BS, unbiased report I can read about the subprime mortgage-backed CDO meltdown by a Harvard undergraduate last year.  The report is 115 pages long and packed with charts.  I found it at Deal Journal.
"Deal Journal has yet to read “The Big Short,” Michael Lewis’s yarn on the financial crisis that hit stores today. We did, however, read his acknowledgments, where Lewis praises “A.K. Barnett-Hart, a Harvard undergraduate who had just  written a thesis about the market for subprime mortgage-backed CDOs that remains more interesting than any single piece of Wall Street research on the subject.”" [LINK]

Greece, Discount Rate Could Bring EUR/USD 1.349 Retest, Couldn't Take Out 50DMA [Chart]

Articles today on the Euro.
Greece Concerns Hit Euro - WSJ: "NEW YORK—Speculation that Greece will seek aid from the International Monetary Fund pressured the euro Thursday morning in New York." [link].

Greece Requests EU Support Package - WSJ "BRUSSELS—Greek Prime Minister George Papandreou on Thursday requested that European Union leaders at their summit next week agree to a package of standby loans to...." [link]

*Or Fed discount rate hike speculation [BusinessInsider]

The Euro/USD is down 0.89% right now. I've been watching the 50DMA on both EUR/USD and USDX (US Dollar Index).  EUR/USD couldn't take out the 50DMA so a 1.349 retest could be in the cards.  It's also riding a downtrend from December, 2009 and the ultimate trend decision is imminent at the vertex angle.  Stay tuned.

EUR/USD (Euro/US Dollar) - freestockcharts.com

Wednesday, March 17, 2010

Why Did Gold Breakout and Not Silver, GLD, SLV and GLD:SLV Ratio

Anyone know why gold's nephew silver didn't make new highs when gold did a few months ago?  It's interesting that the GLD/SLV ratio (3rd chart) shot up 63% (5.5-9) through August-October 2009.  Is silver late to the party or is gold moving ahead of itself.  It does seem like GLD is the anti-fiat money play of choice. What's weird is the correlation spread from 2006.  In the 4th chart look how GLD and SLV rallied in lockstep until the 2008 crisis, which widened the price correlation during the reflation move.  Technically though, if SLV gets near $19-$20 resistance it could be an interesting breakout play.  That's if the deflation whale or Fed doesn't break up the precious metals party.  $16 looks like the next support level on $SLV/Silver May future.  SLV is trading at $17.  I also took a snapshot of Hecla Mining, a small cap silver mine in Idaho (see 2009 action) and it broke above the 50dma recently and is nearing $7 resistance.  If the secular precious metals play is still intact, watch silver. Thoughts?  For more information on the silver move read: Got Gold Report – COMEX Commercials Halt Silver Advance at news.silverSeek.com. Also, check out medieval silver coins at this museum.


Obama Discusses Health Care Bill on Fox News w/ Bret Baier (3/17/2010)

Obama was on Fox News discussing the health care reform bill and foreign policy with Bret Baier. Below are part 1 and 2. Hat tip to Drudge Report. If interested here's a link to the bipartisan health care reform round-table. If the videos below don't show up for some reason here is part 1 and part 2.

Roubini and Paul Britton of Capstone Warn About Volatility Ahead (CNBC Video)

Nouriel Roubini and Paul Britton of Capstone Holdings warned about potential volatility ahead on CNBC. Mid-term elections, liquidity withdrawals and downside earnings surprises could awake the volatility monster. The VIX (volatility index) is currently at the January lows (17.69).  What do we see first, 12 or 38? Action in the VIX option pit could get interesting going forward.

3-Year Volatility Index (VIX) Courtesy of Stockcharts.com

Fed Keeps Rate at Zero Percent, SPY Rides Above January Highs [GLD, SPY, TLT, UUP] 3/16/2010

There were interesting correlations today after the Fed left rates at 0% - 0.25% and said purchases of $1.25 Trillion in agency mortgage-backed securities and $175 Billion in agency debt neared completion. The Fed still sees subdued inflation. I provided a comparison chart of TLT, SPY, GLD and UUP reacting to the statement and broke each out separately ($DXY instead of UUP) with simple technical analysis.   I like watching the reflation crew to judge overall strength of the market and inflation expectations.  SPY broke above the January highs, GLD is flirting with near term ceilings, 20+ Treasuries are making moves around critical support above the downtrend and DXY is testing 50DMA support. See charts for more info and setups.  The rest of the week will make or break the charts.  Overnight futures are up except the Dollar. Watch out for volatility, as always.

 SPY (SPDRs S&P 500 ETF)

TLT, GLD, SPY, UUP, USO Comparison Post Fed Statement

GLD (SPDR Gold Trust)

DXY0 (US Dollar Index)

TLT (iShares 20+ Treasury Bond Fund)

Tuesday, March 16, 2010

Secondary Market Platforms Could Revolutionize Investment Industry; Banks and Insurance Companies Are Still Considered Accredited Investors!

Part of the title above is based on what Michael Lewis said in an interview with Bloomberg, "big firms that used to essentially be the smart money at the poker table had become the dumb money". Look what first defines an accredited investor at the SEC, a bank and insurance company. Lehman Brothers had no idea how to value their assets and AIG had no idea what they were insuring!

"The federal securities laws define the term accredited investor in Rule 501 of Regulation D as:

1. a bank, insurance company, registered investment company, business development company, or small business investment company;

2. an employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million;" (SEC.gov)

Will NAHB Builder Confidence Double Bottom? March HMI at 15, Couldn't Break Above 1991 Low (XHB, ITB)

Is it just me or did the HMI (builder confidence), Present, 6-Month and Traffic data fail to break above 1991 resistance/2008 high in September 2009 and now possibly building a base for a double bottom in confidence.  Since late 2007, 10-20 has been the range so 20 needs to be taken out for a confident builder recovery, imo.  Data comes from NAHB.com.



For a short term comparison between HMI and XHB/ITB movement, the builders index peaked in September, 2009 at 19 and is now at 15. During that same period XHB (homebuilder etf) and ITB (home construction etf) sold off and regained all their losses.  Which is priced in, the housing etf, builder index, or not enough information?

ITB and XHB

Here was the release from NAHB.com
"Foreclosures Weigh on Builder Confidence in March

March 15, 2010 - Builder confidence in the market for newly built, single-family homes fell back two points to 15 in March as poor weather conditions and distressed property sales posed increasing challenges to both builders and buyers, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today.

Economic Impact If Chicago River, O'brien Locks Close, Asian Carp Invasion!

Asian Carp volatility continued. There is currently a Silver Asian Carp terrorism alert for the Great Lakes. They are those crazy jumping fish that are in the Mississippi River that disrupt the food chain and knock people out on boats. If they invade the Great Lakes they'd affect the $7 Billion recreational and commercial fishing industry. The US Army Corps of Engineers are deciding whether they should close the Chicago River and O'brien Lock on a part-time basis to control the migration, but that would disrupt $1.5 Billion worth of Chicago freight and jobs. Interesting debates are going on between Illinois, Michigan and those affected. John Taylor of Wayne State University studied the economic impact of closing the locks and compared lock freight traffic to rail and truck. Here is what he presented to the US Supreme Court.  It was part of Michigan Attorney General's case to the Supreme Court to close the locks.
  • Barge traffic in Chicago has been declining for many years.
  • More than seven million tons of freight shipped through the locks in Chicago are low-value bulk commodities like sand, stone and scrap metal.
  • Seven million tons of this low-value cargo is the equivalent of only two loaded freight trains per day in a region that has an average load of approximately 500 freight trains per day.
  • Extra transportation and handling costs associated with lock closure are less than $70 million per year or less than thirteen-one thousandths of one percent of Chicago's annual GDP.  [Source:  Wayne.edu]

So do you buy or sell CDS on the Asian Carp invasion?  I found news clips from December 2009 when one Asian Carp was found in the Chicago Sanitary and Ship Canal.  Also provided is John Taylor's speech and recent news.

Monday, March 15, 2010

Mish, Marc Faber Believe Japan Is Undervalued, But Preparing For Doom

On Tech Ticker recently, Marc Faber (Gloom Boom Doom Report) and Mish (Global Economic Analysis) both thought Japan was undervalued. If you look at the 20 year Nikkei chart it's been in a deflationary spiral since 1989. Japan might be an interesting play as the Nikkei 225 is down about 73% from the 1990 peak (39,000 to 10,700). Hopefully the US doesn't follow that route. Yahoo Finance chart link. Broke US municipalities should buy up robot receptionists and substitute teachers out of Tokyo [video link] and the Bloom Box energy revolution would hire the lost jobs.

Nikkei 225 20 Year Chart -73% (Courtesy of Yahoo Finance)

Mish thinks there's a 50% chance the S&P could hit a new low below 666. Marc Faber disagrees, he thinks a harsh correction would bring on more money printing by the Fed to provide a backstop.

China Premier Wen Warns Of Double Dip Recession Risk (NPC Videos)

DV China: 仿旧波动

China Premier Wen Jiabao at the National People's Congress press conference warned of double dip recession risk and stood firm on the RMBs (yuan) value. Wen said high unemployment rates in major economies, sovereign debt crises, risks in the financial sector, public finance, prices of bulk commodities, unstable currency exchange rates and inflation threats could bring setbacks to the global recovery or a double dip recession (used translation from CNN video below). I embedded a translated CNN video where he talks about the Chinese economy and gave a link to the full translated CCTV press conference.

Chinese Premier Jiabao Wen at NPC Press Conference


Sunday, March 14, 2010

Video: Michael Burry of Scion Capital Speaks With 60 Minutes On CDS Bet

Michael Burry on 60 Minutes
Michael Burry speaks! In the 60 Minutes episode tonight (Inside The Collapse, featuring author Michael Lewis) they featured Michael Burry who was first in on the credit default swap bet against deteriorating pools of sub-prime mortgages. The same trade hedge fund manager John Paulson put on thereafter and made billions.  Michael Lewis (author of Liars Poker) is coming out with a book called "The Big Short" featuring Burry's CDS move.  For more information read the Vanity Fair article. Lewis also talks about the roles of Goldman, AIG, S&P, Moody's, delusional incentive structures, moral hazard and incompetence, which combined, dropped a financial bomb on Wall Street and ultimately the Fed's balance sheet.

Lewis: "This is where it gets a little creepy. The people who were most instrumental in building the subprime mortgage machine also happened to be the ones who had the most detailed understanding now of the securities in the ruble and they're being paid all over again to sort through the mess because they are the experts. That is an age old trick on Wall Street just generally speaking, people who create disasters make a lot of money cleaning up the disaster because they're the ones who know about the disaster". This is like the eighties junk bond/S&L crisis cubed. Videos embedded below are courtesy of CBS 60 Minutes.

Citi Relaxes While Lehman Repo-105 and Wamu Settlement Hits, WAMPQ Lost 91% At The Lows But Closed Down 36%

Last week felt like a mini aftershock from the 2008 banking crisis. First the Lehman bankruptcy examiner's report came out exposing shady balance sheet maneuvers and then a Washington Mutual/JP Morgan settlement hit which cut Wamu's pink sheet ($WAMPQ) value by 91% at the lows but closed down 36.26% (h/t the99th). Citigroup (especially the recent call buyers!) is just sitting back enjoying itself. Here is more information on the JPM/Wamu settlement and the WAMPQ chart.

Junk Bond, Savings and Loan Scandal Looks Familiar [CBS Video 1990]

Was the 2008 banking crisis the Drexel Burnham Lambert/Savings and Loan mispricing of risk bust handed over to the taxpayer x 1000? Check out this CBS News clip from 1990.

Saturday, March 13, 2010

Larry McDonald on Lehman Examiner's Report, Greatest Hide The Salami Move In The History of Wall Street (Repo-105, Counterparties, Videos)

Larry McDonald (a former bond trader at Lehman who helped make the firm $2 Billion in 2007) was on Bloomberg talking about the Lehman Chapter 11 Examiner's Report and called Lehman the "greatest hide the salami move in the history of Wall Street". According to the report Lehman hid assets through the use of off balance sheet Repo-105 transactions which painted a misleading picture of their financial condition. Lehman had 7 counterparties involved in the Repo-105 deals who could have "squeezed" Lehman given their exposed weakness (read Zero Hedge post: Lehman's Repo 105 Counterparties Barclays, Mizuho, UBS, Deutsche Bank, And KBC May Have Attempted To "Squeeze" The Bank).  Sounds like Repo-105 in this case was desperation + auditing (via Ernst & Young) gone amok. The video is from BloombergTV on Youtube.

Friday, March 12, 2010

Citigroup Call Options Triple With Pandit's Bullish Estimates At 2010 Citi Financial Conference, $C

This week saw big call option activity in Citigroup ($C) at the $4 strike. A few days ago CEO Vikram Pandit testified before the TARP Oversight Committee and said commercial real estate was not an issue on their books and they wouldn't come back for aid [Full video here].  After Citigroup paid back TARP funds, US taxpayers still own 27% of the common stock at $3.25.  Today Vikram Pandit made a presentation at the Citi 2010 Financial Services Conference.  From the full PDF file here are a few bullish estimates or goals he made [Source: Citigroup].
  • Citicorps "Global Revenue Pool" could grow 21.8% to $3.9 Trillion with emerging markets representing 55% revenue growth [Page 12].
  • Goal to increase managed assets 5% annually (compound annual growth rate) from $1.38 Trillion in 2009.
  • Goal to see 1.25%-1.50% Return on Assets from 1.15% in 2009. 

Full Examiner Report of Lehman Brothers Bankruptcy, Repo-105

Here are links to the "Report of the Examiner in the Chapter 11 proceedings of Lehman Brothers Holdings Inc." by Anton R. Valukas of the Jenner & Block law firm.  It looks like Lehman hid some assets look at Volume 3 - "Repo 105".  Zero Hedge blog has a detailed post on it and check out this Bloomberg story (JPMorgan, Citigroup Helped Cause Lehman Collapse, Report Says).  For Volume 6-9 Appendices visit http://lehmanreport.jenner.com/.

Volume 1 - Introduction, Executive Summary & Procedural Background; Risk
Volume 2 - Valuation; Survival
Volume 3 -  Repo 105
Volume 4 - Secured Lenders; Government
Volume 5 - Avoidance Actions; Barclays Transaction

Here's a look back at Lehman's last moments before bankruptcy during the weirdest time in financial history.

Lehman Disaster Sending Index Futures Lower, BAC Buys MER (September 14, 2008)
Lehman Brothers In Play, South Korean Bank Buy Out? (Option Analysis) (August 24, 2008)
Freddie Mac, Lehman hit in the Fannie Mae, Dow! (July 11, 2008)

Thursday, March 11, 2010

Hedge Fund Managers Are On Your Side (Hugh Hendry), CDS Thoughts

Hugh Hendry, hedge fund manager at Eclectica Management, wrote an interesting piece in the Daily Telegraph (h/t Trading Trophies).
"You don't know me; we've never met. But I fear you are being encouraged to dislike me. Let me explain: I'm a speculator. I manage a hedge fund. Apparently I profit from your misery. Accordingly, our political leaders are keen to see the back of me.

Only yesterday, Germany and France were calling for the "fastest possible" adoption of new rules to put an end to financial speculation. But before you write me off I ask that you listen to my side of the story." [read full article at Daily Telegraph]

How long will this debate go on for?  I agree with him that speculators are not to blame for anything.  In my opinion, if there was more price transparency when dealing with credit default swaps and/or other over-the-counter hedging vehicles on public company debt (now sovereign/munis), nobody would have an excuse to blame anybody for anything.  I remember Soros made a speech that CDS should be outlawed because bond investors had a bigger incentive to bankrupt a company than reorganize ["It's like buying life insurance on someone else's life and owning a license to kill him"-Soros].  Soros, John Paulson and Burry of Scion Capital made a lot of money buying CDS on subprime mortgage portfolios.  CDS gave signals of the coming mortgage slowdown -> meltdown in 2006.  When things start to turn for the worse, price signals in the private financial insurance market matter to not only the hedge fund manager hedging or speculating on a $2B default, but as we've seen, everybody who lives on planet Earth who has a job or owns a business/investment.  If CDS started trading on the secondary market would the market become too efficient?

Hugh Hendry also spoke recently at the 2010 Russian Forum with Marc Faber, Nassim Taleb etc (link).

US Graduation Rate Ranked 18, School Budgets Squeezed (NBC Videos)

NBC's Nightly News talked about the public finance and education crisis in the US.  "Four decades ago America had the best high school graduation rate in the world but by 2006 it had slipped to 18th out of 24 industrialized countries" (Brian Williams).  What the hell happened?  This is happening when school funding is scarce and schools are closing down.  Kansas City might shut down half their schools (700 jobs would be cut) and Illinois could cut school spending by 17% if they can't raise taxes.  Regarding those students who do graduate, James Altucher says don't send your kids to college, it's a scam (lol).  Watch the videos.

Updates: OPEC Oil Forecasts, El-Erian on Sovereign Debt, China Inflation Higher, Argentine Soy Producer US IPO, Foreclosures Down 2% From January, Miami-Dade Hospital System Needs $67M Advance From County

Distressed Volatility Global News of News Wire for 3/10/2010  
OPEC Raises Forecast for Oil Demand on Lower NGL Estimate (BusinessWeek)
OPEC, EIA lift demand views, but U.S. data still seen bearish (MarketWatch)
"Opec Warns Members to Reign in Production as Next Meeting Looms" (EnergyIntelligence)
Front running China Mobile's 20% acquisition of Shanghai Pudong? (BusinessInsider)
Foreclosures saw 2% decline from January -RealtyTrac (ZeroHedge)
Pimco’s El-Erian Says Public Finance Shock May Deepen (Bloomberg)
Opinion: How to handle sovereign debt explosion -El-Erian (FinancialTimes) h/t @Zerohedge
Senate passes $149 billion for jobless aid, tax breaks (Reuters)
Big Miami-Dade hospital system nears insolvency, needs $67M advance from County (AP)
China inflation at 16-month high, consumer prices up 2.7% on year (Reuters)
China Tightens Land Purchase Rules, Bans Villas (Bloomberg)
Hedge Fund-Backed Argentine Soy Producer Tejar Weighs U.S. IPO (BusinessWeek) h/t @SoybeanWatch
Citi, AIG, leap with other bailed-out firms (Reuters)
Wholesale inventories drop 0.2 pct in January while sales advance for 10th month (AP)
REGIONAL AND STATE EMPLOYMENT AND UNEMPLOYMENT — JANUARY 2010 (BLS.gov) h/t @GregorMacdonald

Wednesday, March 10, 2010

iPad Release Date April 3, Apple Leads QQQQ Above January Highs, SPY Yet To Clear Resistance, iPad Commercial ($AAPL, $SPY, $QQQQ, $TLT, $GLD, $USO Charts)

Apple ($AAPL) led the Nasdaq ($QQQQ) above resistance today.  $SPY (S&P ETF) tested resistance but sold off.  Will high beta tech lead the S&P like last year?  People are trying to game the iPad launch on April 3 [Apple iPad Sales May Approach 7 Million in 2010, Says Report, Eweek].  I also charted out USO, GLD and TLT below.  I just bought a Macbook and now I kind of want an iPad.

Tuesday, March 9, 2010

Crude Oil at Resistance, OVX Higher High, Dollar/Oil Narrowing in Lockstep, Oil Futures In Contango ($WTIC, $OVX, $USD, USO) Will There Be Blood?

Crude oil looks ripe here for a catalyst.  It's been trading in a sideways channel since September of 2009 (7 months).  The Oil Volatility index ($OVX) is making a higher high which is interesting because crude is testing upside resistance again.  OVX measures volatility on the Oil Fund ETF ($USO) so the relationship is similar, USO and OVX are converging (higher high in USO volatility vs. lower high in USO itself).  So why is oil implied volatility not testing the lows, like the VIX, as the underlying (Oil or USO ETF) tests upside resistance?

If a positive oil catalyst presents itself (cut in inventories, Asia/China demand, Middle East battles, inflation, dollar dump?) and Skynet Terminator trading bots rush oil over resistance it could head to $90-$100 (9/09-3/09 ceiling resistance respectively).  Oil is at $81.72.  Oil has also been moving in lockstep with the US Dollar recently which is hard to figure out.  The Euro is probably forcing the marriage at the moment but something has to give.  On the other side of the trade, as with the S&P, if there's a double dip recession, China tightens too hard or a deflationary safe haven bid knocks out risk/commodities, demand for oil could see a double dip and price would sense it with a $70 breakdown.  A stagflation scenario would be interesting.  Looking out on the oil futures curve I see that it's in contango.  A year out oil is trading at a 4.5% premium, just think a year ago January crude oil was trading at a 30% premium to February 2010!

$WTIC (Light Crude Oil - Continuous Contract) 

Monday, March 8, 2010

Reads: US States, Greece, Portugal Austerity, Vineyard Defaults, CMBS Delinquencies 6.29%, Chicago Unfunded Retirement Deficit

Depressing and somewhat interesting news from today and last night.  Mostly state and sovereign related since that's where the volatility is.  Get ready for my 13D war post..

Mutual funds saw quickest decrease in cash since 1991 (BusinessWeek, also see Prechter's explanation)
Papandreou warns of crisis "domino effect", driving up borrowing costs, reign in speculators (Reuters Video)
Portugal follows Greece with austerity measures, European Monetary Fund coming? (Reuters)
Chicago unfunded retirement deficit up 4.4 fold in 10 years -Civic Federation (ChicagoTribune)
Also read..  Illinois has $5.1 Billion unpaid bills (Comptroller)
States’ Payrolls Lag as U.S. Austerity Sets In: Chart of Day (Bloomberg)
Another Record In CMBS Delinquencies, 6.29% -Fitch (ZeroHedge)
AIG sells Alico to MetLife for $15.5B in ongoing bid to payback government (AP)
China cautions against expecting fast yuan rise (Reuters)
Can California Declare Bankruptcy? (Slate)
Vineyard Defaults Surge as Bargain Wines Hurt Napa (Bloomberg)
US taxpayers on the hook for $5 Trillion Fannie Mae, Freddie Mac debt (Tech Ticker Video)



Barney Frank Asks Top Four Banks To Write Down Second-Lien Mortgages.. (ZeroHedge)
Worlds biggest hedge fund is JPMorgan (High Bridge Capital), Pensions & Investments Says (Bloomberg)
FDIC prodding pension funds to invest in failed banks: report (Reuters)
Oil traders end petrol supplies to Iran as US pressure pays off (FT.com)
March 3:  Energy Supply and the Individual States (Gregor.us)
Can we roll out the Bloom Box already....  We need an energy revolution right now.

Is S&P 500 Ready To Hit Abby Cohen's 1250-1300 Target, 50 Month Moving Average? 10-40 Year Monthly Charts, $SPY $SPX, $VIX

The S&P 500 definitely pierced through the downtrend line which is bullish structurally if it can hold.  In the 10 Year S&P chart below, every time the S&P broke above or below the trend line it switched directions.  That's why I think this particular downtrend is so important.  It's currently in process of confirmation and needs to take out the highs from January (top of channel) to attempt a decent long to possibly the 50 month moving average or 1230.  Every time the S&P closed above or below the 50 month moving average the trend was confirmed for a few years. What's interesting is on the 40 year S&P chart (exhibit 2) the last time the index traded well below the 50 month moving average was in 1973 (before 2001 and 2008).  The MACD needs to close above zero which is currently at -32.4 on the monthly.

A few weeks ago Goldman strategist Abby Cohen said S&P fair value was between 1250-1300 [video] so that's another possible target.   If I attempted to pull the trigger to ride an upside breakout I'd buy some cheap puts for downside protection just in case there's a catalyst that fakes the break (which Marc Faber thinks could happen). The Volatility Index (VIX) is testing lows again, however if history repeats itself volatility (option or insurance premium bids) could rush into S&P index options and bring down the S&P or SPY, which would make your puts more valuable.  The same would hold true if I wanted to get short and hedge with calls if the S&P broke back below the ultimate downtrend and channel support.  It's all risk management.  Learn more about buying index puts to hedge at the Chicago Board of Options Exchange (CBOE.com).  It appears that crude oil, the S&P and gold are all testing major resistance levels (except gold which is minor resistance below the December 2009 peak).  I'll update tomorrow.  All eyes are on any sign of a double dip recession, the market will lead the data.  Watch out for catalizadores.

S&P 500 - 10 Year Chart [FreeStockCharts.com]

Sunday, March 7, 2010

Vikram Pandit to TARP Panel: Won't Need More Aid, CRE Not An Issue (Taxpayer Still Owns 27% $C Common Stock)

Since the American Taxpayer now owns 27% of Citigroup common stock according to CEO Vikram Pandit, if you haven't seen it yet Vikram testified before the TARP Oversight Committee.  He said commercial real estate was not an issue for Citigroup and there will be no need for additional aid.  If you short Citi you are short yourself folks.  How is the yield curve looking, nice and steep?  Video below is courtesy of Cspan.org.

Reads: Regulators vs. Forex Leverage, SAC Golf Outing, Detroit Strategic Defaults, Cali Job Losses, Panasonic and Best Buy 3D TV Discounts

Link pimping for 3/7/2010, my twitter stream is on fire.

Metro Detroit:  Owners walk from homes, values erode - DetroitFreePress
California job losses grow - ContraCostaTimes (h/t @GregorMacdonald)
Regulators about to limit forex leverage?  - Business Insider
BlackRock's Doll says China not a bubble - Bloomberg (h/t @Asiablues)
SAC had golf outing at Bear Lakes Country Club - Bloomberg
Zero Hedge gets email from Greek Embassy to attend US briefing - Zerohedge
In 3D TV push, Panasonic and Best Buy give 50% discount - WSJ (h/t @bored2tears)
Buy Russian stocks on ‘symbiotic’ ties with China (HSBC) - Bloomberg
China "nullifying" guarantees on local Governments - Bloomberg (h/t @bored2tears)
3.1M Cablevision/ABC feud could leave 3.1 Million without Oscar broadcast - AP
RBS branch sale may be hit by funding gap: report - Reuters
Goldman conviction buy/sell list - Zerohedge
China’s Bank Chief Says Currency Is Unlikely to Rise - NYT
Zhou Xiaochuan:  Days of "special yuan" policy numbered (Dollar peg) - Telegraph

Saturday, March 6, 2010

Investors Not Settling For Beta Monkeys In China!

Beta Monkeys lol.  Someone needs to grab that url. "In finance, the beta (β) of a stock or portfolio is a number describing the relation of its returns with that of the financial market as a whole" (Wikipedia). Beta (relationship against S&P, Shanghai Composite etc.) is what managers should beat or you'd be better off owning a China Index ETF with lower fees and less risk (which still requires research). For example, iShares FTSE/Xinhua China 25 Index (FXI), SPDR S&P China (GXC) and iShares MSCI Hong Kong Index (EWH). Btw, the S&P, Dow and Nasdaq are at or near January resistance....
"There is a lot of interest in China, but investors are looking for top quality stock pickers in that market, and won't settle for the 'beta monkeys'," said Pyrke of Triple A Partners. (Link: Risk. Not for us, say some investors - 3/5/2010, Reuters)

Friday, March 5, 2010

Updates: Net Euro Shorts/Yen Longs, US Unemployment 9.7%, Payrolls Fall Less Than Expected, Greek Workers Tried To Storm Parliament, Footsie 18 Month High, S&P Cuts $3.39B Leveraged-Buyout Loans

Greek Protests Mount as Parliament Passes Budget Cuts: Video




Payrolls in U.S. Fell 36,000 (less than expected); Unemployment at 9.7% (Bloomberg)
Footsie jumps to 18-month high (FT.com)
S&P: Junk-Rated Issuers Tally Steady On Defaults, Downgrades (WSJ)
GM to reinstate 600 dealerships slated to be cut (AP)
Banks shuttered in Fla., Ill., Md., Utah (AP)
Western sanctions draft targets Iran's banks abroad (Reuters)
S&P Cuts Ratings On Another $3.39B Of Leveraged-Buyout Loans (CLOs) (WSJ)
Banks defend use of sovereign CDS trade to hedge risk (FT.com)
Net Euro Speculative Short Positions Decline Marginally From Record, Yen Longs Surge (ZeroHedge.com)
Google Targets Microsoft With DocVerse Deal (WSJ)
Obama Budget Plan Underestimates Deficits, CBO Says (Update1) (Bloomberg)
Wen May Struggle With 3% Inflation Goal After China Credit Boom (Bloomberg)
Greeks ban hedge funds in bond sale (FT.com)
Striking Greek workers shut down transport and tried to storm parliament (Bloomberg)
Yields on Tax-Exempt Bond Sales Reach Lowest in Three Months (Bloomberg)
Greece Won’t Sell Islands to Cover Debts (NYT)
UPDATE 1-Beijing says working with Google to resolve dispute (Reuters)
Robert Prechter Says Equities to Drop, Invest in Cash: Video (Bloomberg Video, 3/4)
Pandit Says Citi Playing Critical Role in U.S. Recovery (Bloomberg Video, 3/4)

S&P 500 Re-Testing Downtrend Resistance From 2007 Peak ($SPY, $TLT, $SPX)

The market (S&P 500, $SPY) is re-testing the ultimate downtrend from 2007 again after correcting 9% (see put activity) from that level in January.  All eyes are on the jobs numbers tomorrow to provide a catalyst for direction.  Also look at the 20 month moving average.  Since 2000, if the S&P broke above/below the 20DMA it determined the next multi-year bull/bear market.  BUT, from 2000-2007 $SPY was riding an uptrend from 1989 which was broken in 2008.

In the end, $SPY (S&P 500 ETF) needs to break through the downtrend from 2007 and above the January 2010 highs to build supportive infrastructure to reach the castle and defeat the King aka the 2000-2007 double top which looks like 1,500.  That's 378 points away and we just added 500 from the March 2009 lows so it could take months or years.  That will be a memorable moment and will probably set the stage for the next 20 year bull market but hopefully it won't be the result of hyperinflation and/or artificial in nature (a breakout but not priced in gold).  If the market fails at this downtrend, the correction from January could proceed and the February lows would be in play (see free MarketClub video: Line Drawn In The Sand For Equity Markets).

S&P 500 40 Year Chart (Courtesy of FreeStockCharts.com)

Thursday, March 4, 2010

Edward Lampert 2010 Sears Holdings Annual Letter, 13F RBS Partners (Fiscal Year 2009)

Is it time to start charting out valuation ratio trends, comparables and financial statement trend Elliot Waves? Find the Sears Holdings annual letter and Q4/fiscal year 2009 results at http://www.searsholdings.com/invest/ and see RBS Partners (holding company for Sears Holdings) Form 13F for holdings ended 12/31/2009. Next Warren Buffett?

Sears logs best quarter in 3 years, Chairman Lampert answers critics of his strategy (ChicagoBusiness)
"Chairman's Letter

February 23, 2010

To Our Shareholders:

Today we announced our financial results for our 2009 fiscal year. I am pleased to report that we delivered both stability and progress, resulting in roughly $1.8 billion of Adjusted EBITDA, an improvement of more than $200 million over 2008. While this may be surprising to some, it isn’t to me. The dedication of our associates and leadership team led by Bruce Johnson and the diversity of the Sears Holdings business portfolio—Sears Full Line stores, Kmart stores, our Home Services business, Sears Auto Centers, Outlet Stores, Hometown Stores, the Kenmore, Craftsman, DieHard and Lands’ End brands, our majority interest in Sears Canada, and our online business properties including sears.com—have allowed us to successfully manage through the economic and financial crisis of the past two years.

Today, the United States stands with an unemployment rate close to 10%, a housing market that appears to be stabilizing at depressed levels, and uncertainty over government policy and geopolitical events. Despite this, Sears Holdings continues to make progress against our strategic initiatives and our long-term financial goals. I recognize that our financial results, while substantially improved from 2008, remain well below where we would like them to be. At the same time, we have seen significant improvements in our focus on customers and the transformation of our culture.

I would like to do several things in this letter. First, review 2009 at Sears Holdings. Second, look ahead to 2010 and beyond. Third, discuss some policy issues generally including job creation, and finally, address some consequences of ecommerce tax practices.

2009 in Review

In 2009, we kept expenses under control and stayed focused on our vision and strategic, operational, and financial goals. We were both prudent and opportunistic in spending money and in allocating capital at a time when many others had to make major adjustments.

Early in the year we amended and extended our revolving credit facility through June 2012. In one of the most difficult financing markets in recent memory, we found significant support from numerous financial partners led by Bank of America, Wells Fargo and General Electric, and we executed one of the largest revolving credit facilities in the past couple of years. Our substantial asset base and our strong cash flow management were important factors in this successful deal. When people take a close and objective look at our company, our strengths are not difficult to see.

Wednesday, March 3, 2010

Gold Rallying In US Dollars, Update on Gold/S&P, Gold/USD, USD/SPX, USDX

It's been an interesting week.  If the US Dollar Index (Chart 2) breaks support and tests the uptrend (79.5), 50DMA (78.84) or floor support (78.5), Gold priced in US Dollars (Chart 1) could test $1,150 aka the January highs.  In the first chart you can see it pierced through a downtrend resistance level and is riding the 50 and 100 day moving average.  Gold in US Dollars is currently trading at 1,134.  1,150 is an important resistance level and will prove if the mini inverse head and shoulders bottom has legs.  If that level is broken with momentum it could possibly be a decent hedged long to test the ultimate highs and beyond (like I said earlier 2/21).

Regarding Gold v. S&P (Chart 3), they've been dancing since the beginning of the year trading between .99-1.02.  When gold broke out at the end of 2009 (Oct-Dec) the Gold/SPX ratio went from .95-1.10.  Por último, look at the USD/SPX ratio (Chart 4).  With the recent rally in the S&P and a stagnant Dollar, the USD/SPX ratio is now testing the 50 day moving average and December support level.  If Marc Faber is right that the Euro gets squeezed to 1.40, that will support the USDX correction trade.

A bunch of decisions need to be made in the overall market. I'm waiting for a big catalyst even if technical.  Btw:  Greece braces for deeper spending cuts, as EU tightlipped on rescue plan (AP) ("We are today in a state of war in front of negative scenarios for our country," Prime Minister George Papandreou said."). 

Tuesday, March 2, 2010

Marc Faber: Euro Oversold, If S&P Above 1150 Could See 20% Correction

Marc Faber was on Bloomberg in Hong Kong giving detailed thoughts on the market. He writes the Gloom Boom Doom Report.  I quoted the segment for those with Youtube blocked. He gives his thoughts on the market, Euro and US Dollar.
Market: "I'm not so sure that we'll make new highs but if we make a new high above 1,150, I don't think it will be that far above the 1,150 level, maybe 1,200, and that thereafter we have a bigger kind of correction on the downside.  I think if we make a new high then I wouldn't rule out a correction of at least around 20% and don't forget many shares in America and globally have already corrected 20%, so for them to make a new high isn't going to be all that easy in the first place. So what we could see is a new high in the S&P and the Dow Jones that is not confirmed by the new high list. In other words you will make a new high with fewer stocks making a new high than in January."

Updates: GM Recalling 1.3 Million Vehicles, Dave Bing Downsizing Detroit, Unemployment Benefits Extension Blocked In Senate, Gold Counterfeiting Using Tungsten, Betting On The Blind Side (Scion Capital)

Frank speaks with Mayor Dave Bing about downsizing Detroit to save it (Audio WJR/760 Detroit)
Bing blames union for looming city worker layoffs (DetroitFreePress)
Betting on the Blind Side (Vanity Fair) about Scion Capital's Michael Burry (h/t Morgan_03)
GM recalling 1.3 million vehicles over steering problems (Reuters) h/t ZeroHedge
US senator single-handedly freezes unemployment payment (BBC)
2,000 transportation workers idled over impasse (AP)
Gold counterfeiting using tungsten? (Zero Hedge)
Japan's unemployment rate falls in January (AP)
Australia Raises Key Interest Rate to 4% on Recovery (Bloomberg)
Google acquires Picnik: Perfect fit for Chrome OS (ZDNet) (photo editor)
Google buys Photo-editing Site Picnik (TechTree)
Gross Says Sovereign Debt to Resemble Corporate Returns (Bloomberg Video)
Finnish Recovery at Risk as Strikes Threaten Exports, Traffic (Bloomberg)
ABC Threatens to Go Dark in New York in Spat With Cablevision on Sunday (TheWrap via SkyGrid)
Swiss PMI hits two-year high, price pressures emerge (Reuters)

Monday, March 1, 2010

Double Bottom In Mutual Fund Cash Ratio? Prechter Thinks Optimism Signals Top and Bond Market Biggest Bubble In The History Of The World (Video)

Robert Prechter of Elliot Wave International (see below) is back trying to kill everybody's buzz, lol.  He was featured on Tech Ticker on 2/24/2010.  He's still bearish and probably one of the biggest contrarians on the market right now.  He mentioned that mutual funds have a 3.6% cash/assets level which he considers "an incredibly dangerous level indicating extreme optimism among mutual funds and their clients" and "low cash levels tend to coincide with tops".  So will the mutual fund cash ratio double bottom here at 3.6% (3.4% in 2007) or will the cash ratio squeeze to 3.2% before a volatile event forces re-balancing.  That's yet to be seen, but he always makes interesting points.  In the interview he provided a chart comparing the mutual fund cash-to-assets percentage to the market.  It's interesting that he also thinks the "bond market is the biggest bubble in the history of the world".  So he said stay in cash inside safe institutions or in Treasury Bills (shortest duration).  I'm going to chart out $SPX and SPY on long and short term time frames next.  The long term trend is the most interesting and at an inflection point..

Greece, UK Debt Crisis Through Eyes of Currencies (EUR/USD, GBP/USD)

Watch the sovereign debt crisis in Europe through the eyes of currencies (March 1, 2010).  In this case the Euro (EUR) and Pound (GBP).  EUR/USD (Euro in Dollars) is still trading in a downtrend channel and 1.3457 is ultimate support which, if broken, opens the door to lower levels (1.30 or perhaps parity). Read the post I did on Sunday for more info on Euro/Gold, Euro/USD, the Euro hedge fund meeting (Soros, SAC etc.) and an interview with German banks via Deutsche Welle.

EUR/USD (Euro/US Dollar) - FreeStockCharts.com

Now a look at the British Pound.  On February 8 I did a blog post on GBP/USD when it was at 1.55 and said make sure it stays above October 2009 support (1.57) or it will test the 1.40s.  It hit a low of 1.478 this morning, -1.5% on the day and -4.6% in 3 weeks.  There was buying/covering off that level this morning.

Sunday, February 28, 2010

Updates: Greece Bailout?, Faber at Japan CLSA Forum, VW Profit Falls, February Payroll Preview, Brazil Stocks, Real, US Unemployment Benefits and China Labor Shortage

News from Twitter stream and journey around the interwebs on 2/28/2010.

Greece Bailout Plan Takes Shape [WSJ]
h/t @alea_
Defying Global Slump, China Has Labor Shortage [New York Times] h/t @asiablues
Markets poised to punish Spain [FinancialTimes]
Payrolls Probably Declined in February: U.S. Economy Preview [Bloomberg] h/t @gregormacdonald
Brazil stocks end Feb up 1.7 pct, real firms 4 pct [Reuters]
1.2 Million to Lose Unemployment Benefits Today [Calculated Risk]
Ze Germans: "Only The IMF Can Help Greece" [ZeroHedge]
TCW On Greece: "Let It Burn" (Komal Sri Kumar) [ZeroHedge]
CLSA Greed & Fear [theback9]
Fannie Taps Treasury for $15.3 Billion More After a 10th Loss  [Bloomberg] h/t @in_economy
Lloyds in £42bn bill from toxic HBOS [FinancialTimes, 2/26]
VW Profit Falls 80% as Buyers Favor Less Costly Cars [Bloomberg, 2/26]
January home sales fall 7.2%, median price unchanged  [USA Today] h/t @asiablues
U.S. Stocks to Fall, Faber Says; Wood Doubts Recovery [Bloomberg 2/22, CLSA Japan Forum]
Marc Faber, One Dr. Doom has brighter view of Japan [MarketWatch 2/22, CLSA Japan Forum]

Bernanke Semiannual Monetary Policy Report to Congress (2/24/2010)

Careful Behzad! Read this: Is Ben Bernanke The Second Coming Of Rudolf von Havenstein, The Central Banker Responsible For Germany's Hyperinflationary Collapse (And Ostensibly WWII)?

Chairman Ben S. Bernanke
Semiannual Monetary Policy Report to the Congress
Before the Committee on Financial Services, U.S. House of Representatives, Washington, D.C.
February 24, 2010

Chairman Bernanke presented identical remarks before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, on February 25, 2010

Chairman Frank, Ranking Member Bachus, and other members of the Committee, I am pleased to present the Federal Reserve's semiannual Monetary Policy Report to the Congress. I will begin today with some comments on the outlook for the economy and for monetary policy, then touch briefly on several other important issues.

The Economic Outlook
Although the recession officially began more than two years ago, U.S. economic activity contracted particularly sharply following the intensification of the global financial crisis in the fall of 2008. Concerted efforts by the Federal Reserve, the Treasury Department, and other U.S. authorities to stabilize the financial system, together with highly stimulative monetary and fiscal policies, helped arrest the decline and are supporting a nascent economic recovery. Indeed, the U.S. economy expanded at about a 4 percent annual rate during the second half of last year. A significant portion of that growth, however, can be attributed to the progress firms made in working down unwanted inventories of unsold goods, which left them more willing to increase production. As the impetus provided by the inventory cycle is temporary, and as the fiscal support for economic growth likely will diminish later this year, a sustained recovery will depend on continued growth in private-sector final demand for goods and services.

Hedge Funds Bearish On Euro, German Banks Speak (XEU/USD, XEU/XJY, XEU/GOLD)

This was an interesting report out of Deutsche-Welle on 2/24/2010 on how banks view the Euro's future. Deutsche Bank didn't comment but economists at Deka Bank and Commerzbank did.  People on the street said they were used to the currency and didn't see a need to switch. Today (Saturday, 2/27/2010) all eyes are on Greek debt.  Germany, France, Dutch to buy Greek bonds: MEP (Reuters).
"ATHENS (Reuters) - Germany, France and the Netherlands plan to buy Greek bonds to help Athens cope with a severe debt crisis, a German member of the European Parliament said on Saturday." [full article]

Greece must take more measures or face sanctions: report (Reuters)
Flip Floppage (2/28): Greece may take more debt steps (Reuters)

Saturday, February 27, 2010

Live Hawaii Tsunami Coverage Ustream Video (CBS KGMB)

Wow live video coverage of the Hawaii tsunami warning courtesy of CBS KGMB on Ustream. One day we will live stream an asteroid about to hit us, after an ad. Dvol hopes everyone in Hawaii and on the West Coast will be alright.

Tsunami Warning for Hawaii and Alaska (NOAA), Chile/Japan Earthquakes

Taking a break from market waves at the moment for a more important issue. There is apparently more action in the ocean. A tsunami warning for Hawaii and Alaska (via NOAA twitter) is in effect from the 8.8 mag earthquake that hit Chile (LA Times).  A 6.9 earthquake also hit Southern Japan (xinhuanet).  The US earthquake weapon is hard at work.  Is the Earth about to explode?  Here is a graphic from NOAA (from the tweet) showing Tsunami travel times and the most recent message from the NOAA.  It looks like tsunami warnings are all around the world.  Prepare for Tsu-wave volatility...

Thursday, February 25, 2010

Obama Bipartisan Health Reform Panel, Business Roundtable (Videos)

For the DV archives. Videos from the Bipartisan Meeting on Health Reform: Part 1, 2, 3, 4 and the Business Roundtable.

S&P Under 50DMA, TLT and 30-Year Yield At Make Or Break Point (SPX, SPY, TLT, TYX)

While the S&P camps out below the 50 day moving average and potentially forms a right shoulder (we'll see), the 20+ Treasury bond ETF ($TLT) and 30-Year Treasury Yield ($TYX) are both at inflection points. TLT is just above the 50DMA and close to testing downtrend resistance.  If inflationistas get spooked on the long end and sell because Bernanke is too soft on the short end, TLT could retest the June 2009 lows of $86.

On the other hand RSI is building as is momentum so if there's some type of flight to safety and/or deflation consensus, it could break the downtrend and test the 200DMA at 92.20.  Below I also provided the 30 Year Treasury Yield chart ($TYX).  You can see the obvious make or break level at ceiling resistance and at the triangle point.  $TYX is just above the 50 day moving average so in my opinion if it breaks below that it could test the 200DMA (230 basis points lower around 44 or 4.4%).  Since the October 2009 low $TYX always found support at the 200DMA. 

If the S&P decides to roll over and test the 200 day moving average ($1,037), in the past Treasuries caught a bid so perhaps yields (inverse of price) would follow suit.  I'm not sure if that's the definite dynamic today given jitters on the long end.  Is the long bond now considered "risk" on the "flight to safety" trade even though it's technically "risk free"?  Is "temporary flight" risk officially priced in? I'll just watch the charts, follow the dough...  Charts below are $SPX, TLT and $TYX.

Municipal Crisis Is Spreading, Updates on Distressed Munis | February, 2010

ALERT FROM DVpf (Distressed Volatility Public Finance)

I've been writing about the public finance crisis since 2008. The craziest story so far has been out of Jefferson County, Alabama.  Bankers at JP Morgan bilked Jefferson County, AL ("county paid banks $120 million in fees, six times the prevailing rate") into buying $2.7 billion interest rate swaps that turned out to be viral when the recession hit, debt was downgraded, auction-rates skyrocketed and swaps violated covenants which put them on the brink of bankruptcy (read the Bloomberg story:  JPMorgan Swap Deals Spur Probe as Default Stalks Alabama County).

Municipalities feed on their tax base, so when their underlying economy is booming they can lever up against tax revenues and throw cash at projects/developments to improve the area and create jobs. It's great until the economy crashes, tax revenues slow and they're left servicing debt and unprofitable operations, in GASB terms. So just like a company they have to cut projects, lay off workers and try to kill or lower debt payments. During the past few years I've been watching this unfold all across the Country.

Distressed Detroit.. (Analysis of Detroit Economy in 2008) (7/12/2008)
Jefferson County, AL - Possibility of Biggest Municipal Bankruptcy In History (8/13/2008)
The Municipal Meltdown. Current Health of U.S Municipalities (Videos / Links) (10/19/2008)
Oakland, California Denies Bankruptcy Rumors, General Fund Drying Up (6/9/2009)
California Issues IOUs, California GO Bond Bets (7/1/2009)
Jefferson County Volatility, Interest Rate Swaps to National Guard (8/5/2009)
Moody's Downgrades Detroit $781M GO Debt Further Into Junk (8/30/2009) 
Illinois Insolvency, Chicago Commercial Real Estate Outlook, Warehouse Vacancies Hit 12.1% (1/22/2010)
Chicago CTA Volatility, $95M Budget Hole, Service Cuts, 1100 Laid Off (Video) (2/6/2010)

So munis are distressed and it's just getting worse..

Wednesday, February 24, 2010

Read: UBS Pound Foreast 1.48, Soros on China, Rosenberg on FHA, GGP/Brookfield, SEC Curbs Short Selling, Fed Keeping Rates Low, Zero Hedge vs. RBS, $SPY Quant Algo, Aiko Toyoda Statement Video

Articles for 2/24/2010, read up... 

SEC Curbs Short Selling, Disappointing Goldman Sachs (Bloomberg, Video)
Bernanke pledge of low rates lifts Wall Street (Reuters)
UBS Cuts Three-Month Pound-Dollar Forecast to $1.48 From $1.59 (BusinessWeek)
Surface Tension: George Soros on China (Caing.com, 财新网)
Real Market Control for Bubbly Real Estate (Caing.com, 财新网)
David Rosenberg: Get Ready For FHA To Go Completely Bust, Housing Market To Take Hit (BusinessInsider)
Greek strike halts transport, people back reform (Reuters)
Record Direct Bidder Share And Near Record Direct Take Down Masks Indirect Shrinkage (Zero Hedge)
General Growth shuns Simon, picks Canadian buyer (Indystar)
New class action lawsuit targets Yelp (CNET)
Is the SPY getting a "Jump" at key levels from a quant algo?  (HedgeAccording.ly) interesting
Latvia Sells 2-Year T-Bills for First Time Since 2007 (Bloomberg)
Junk Bonds May Post Double-Digit Returns in 2010: Pimco (Reuters/CNBC) wow
Bear Market Armageddon: Why Prechter Might Be Right This Time (TechTicker Video)
Greenspan: U.S. recovery "extremely unbalanced" (Reuters)
The 2014 HY Maturity Cliff: Bank of America's Take (ZeroHedge)

Auto News..
FBI raids Toyota suppliers in Michigan (DetroitFreePress)
GM to Wind Down Hummer After Sale to Tengzhong Fails (Bloomberg)
Toyota dealers rally in defense of brand (CNN)
After Toyota Recall, Best Deals Ever for Hybrids (HybridCars)

"Toyota President Aiko Toyoda gives his opening statement before the House Commerce Oversight Committee hearing 2/24/10" (CSPAN).

PIIGS, Goldman and Shanghai Index All Below Their 200 Day Moving Average

I first heard about this from John Murphy at StockCharts.com (S&P 500 May Retreat Below 200-Day Average: Technical Analysis (BusinessWeek), that the PIIGS (Portugal, Ireland, Italy, Greece and Spain), Shanghai Composite Index ($SSEC) and Goldman Sachs ($GS) are all trading below their 200 day moving average. China is tightening and the "PIIGS" are dealing with a sovereign debt crisis (with Goldman as financial engineer 1, 2). The February report by Bill Gross mentioned that public debt escalation (debt-to-GDP >90%) could slow economic growth by 1% and put pressure on asset/investment returns (Ring of Fire: February report at Pimco.com).

So with major indexes currently trading below their 200dma, could they drag the S&P, Dow, Nasdaq, TSE, Sensex, FTSE, Nikkei, Hang Seng and even Bovspa (Brazil) down to test that level?  Most indexes are just under the 50 day as of today's close so if they can't get above that level I'd say there's a possibility.  Here are charts courtesy of StockCharts.com.  The 200dma is the red line.