Dick Bove: Citigroup Headed Toward $8.50 (Down 93% From 2007 Peak)

Here is Dick Bove of Rochdale Securities conversing with Harry Rady of RAM on Citigroup (on CNBC). Bove thinks Citi will trade at $8.50, 117% above today's close ($3.90). Citi's been making some moves recently, here are recent articles and a quarterly chart since '87.  In 2009 Citi hit the 1990 low, down 93% from the 2007 peak.

Niall Ferguson: Treasury Bond Vigilantes Coming, Default Or Inflation Choice For US

Harvard Professor Niall Ferguson was at the Aspen Ideas Festival and met up with Eric Shatzker of Bloomberg. He said the Treasury bond vigilantes are coming. Meaning US Treasury bonds will be under attack by short sellers, like Bear Stearns and Lehman Brothers.
"Sooner or later, maybe after Japan has felt the pain, the bond vigilantes will get to the United States. I don't think it will be this year, because the worse things get in the Eurozone, the more attractive US Treasuries look. But in the absence of any political will to address this problem and the latest numbers from the congressional budget office should scare everybody in this country. This is simply an inevitability."
"So we really have at this point a kind of choice before us. Is it going to be inflation or is it going to be default.  Right now what's really troubling is that there's no sign of inflation, which is the easy way out of a debt burden in the United States. On the contrary, we have monetary contraction at a really quite alarming rate and effectively zero inflation in terms of core CPI.  So the [option?] of inflating this debt away, which a lot of people think will be exercised, doesn't seem to be there right now. What you're left with is therefore default and I think it's a fair bet that the United States will default, at least on the unfunded liabilities of social security and Medicare at some point in the foreseeable future."

Tokyo Nikkei Index Around 9,000 Support, EWJ Similar (Chart)

Watching floor support and downtrend resistance levels on the Nikkei Index (Tokyo) and $EWJ (iShares MSCI Japan Index ETF). The Nikkei tested the 9,000 level three times since summer 2009. It is currently trading at $9,255.94, -0.88% tonight. Also take a look at the long term downtrend/descending triangle on EWJ since 2007. Something has to give at some point. Here are a few articles and charts.

James Altucher vs. Roubini and Prechter, S&P 1,500 or Dow 1,000? WTF!

Watch James Altucher and Professor Nouriel Roubini battle it out on CNBC. Altucher sees 1,500 on the S&P with S&P EPS hitting $80 in 2010. By the way, Barton Biggs just slashed his 2010 EPS estimate to $70-75 and liquidated US stocks aggressively, at least that's what he said. Backing out cash, Altucher said stocks are trading at 11x earnings, below the historical average of 15, so he wants the S&P to fill that gap. Doesn't 80 x 15 = 1,200? The S&P already hit that level in April. Nouriel disagrees with James, he thinks the market is overpricing Q2 growth. Roubini sees 1.5% GDP growth vs. the 3% consensus estimate in the second half of the year. More estimates: Doug Kass sees $90 on the S&P in 2011 with 2%+ growth in the second half and Robert Prechter of Elliott Wave thinks the Dow will hit $1,000 over 5-6 years. Yes $1,000. Who to believe, who to believe.... Video courtesy of CNBC.com.

Barton Biggs Sells Stocks, Expects $70-75 EPS, Double Dip and Afraid of Policy Errors (1930s Redux)

After being bullish throughout Q1 and Q2 (1, 2), Barton Biggs (Traxis Partners) on Bloomberg TV said he reduced his long exposure in US stocks aggressively. He was mainly in tech. Biggs is afraid of policy errors tanking the market and singled out 1937 as a template.

S&P Death Cross Imminent! Non-Event So Far (S&P Future, Index Chart)

Below are charts of the September S&P E-mini Future (ES_U) and S&P Equity Index. The death cross is underway, when the 50-day moving average crosses below the 200-day moving average. The S&P is trading below both moving averages so they act as resistance.

Some people think the death cross is backward looking or a BS event. It could already be priced in, but should be respected. It confirms the fact that shorter-term price action (50 days) is beating out longer-term price action (200 days), to the downside. Ultimately, the death cross could confirm a new bear market. But you know what I find interesting people?

Links: Illinois Budget Crisis, Commodities Relapse, Shipowners, Gold Chart and BP Foreign Interest

Supercharged global link-fest for July 5, 2010

Illinois facing 'outright disaster' amid budget crisis - MSNBC/NYT (h/t @future_shock)
Commodities `Relapse' May Last Through 1st Half of 2011, RBS's Moore Says - Bloomberg
Greek Shipowners Waiting for Lower Prices to Buy Vessels, RBS Banker Says - Bloomberg
Speaking of RBS: Bob Janjuah Leaves RBS - Zero Hedge

Federal Reserve Express?

I found this article interesting at Business Insider. Happy July 4th weekend!

If Lebron James Leaves Cleveland, City Could Lose $10s of Millions

That would not be good for Cleveland, but... go to the Bulls Lebron! Video source: Associated Press.

Nice to See CDS Quotes (Credit Default Swaps) On Bloomberg.com

Source: Wikimedia Commons
Humankind might have a decent chance of survival now. I found credit default swap quotes on Bloomberg.com, but they are still unsearchable on their site. I found sovereign CDS quotes and a few corporates via Google. Most are labeled as the symbol itself so it's hard to find them by name. Quotes are the 5-year credit default swap priced in spread (premium payment/year) which protect against a bond default, ranging from corporate bonds, state debt, Treasuries and foreign Government debt. I could not find CDS indices (NAIG/investment grade corporate bond CDS, NAHY/high yield CDS, ABX/asset backed securities CDS, CMBX/commercial mortgage backed securities CDS, MCDX/muni bond CDS and more). *For those indexes, Markit actually has quotes and charts available on their website. Basically you're watching credit quality trade on a daily basis (real-time credit ratings).

Any piece of debt with a pulse can be insured with a credit default swap. The contracts are originated and traded by banks (Goldman Sachs et al.), insurance companies (AIG) and hedge funds. It's actually a great way to hedge debt and capitalize on credit volatility, until the insurer can't pay up on the claim (AIG haha). With the sovereign debt crisis upon us, you can find most government bonds and CDS on Bloomberg.com. Most have historical charts going back 5-years.

June HSBC China PMI 50.4, -4.3% in June, -12% From January (Chart)

The HSBC China PMI (Purchasing Managers' Index) was down 4.3% to 50.4 in June (over May) and down 12% from January (peak).  It measures growth in Chinese manufacturing.  Here is a historical chart and articles.

Biggs Sold His Stocks, Inventory Cycle Over -Goldman, Prechter vs. Acampora, Krugman vs. Paulson, Pending Home Sales -30% (May) - Distressed Volatility Link Fest

Barton Biggs sells stocks aggressively on concern "soft patch to worsen" - Bloomberg
(*read post from 5/10: Nothing Fazes Barton Biggs, Next Move in US Market is Up 15-20% Led By Tech, Sees Lower Euro)
Krugman or Paulson: Who You Gonna Bet On? - BusinessWeek
Beijing's new home sales -44% in first half - Bloomberg
Pending home sales plunge record 30 percent - Reuters
Manufacturing slips in June, but key ISM report still shows sector growth - SmartTrend Video
Lunch with David Rosenberg July 2 - Zero Hedge
Gross, Rosenberg Say Employment Growth an Illusion: Tom Keene - Bloomberg
Goldman Sachs: "The Second Half Slowdown Has Begun" (inventory cycle over)- Zero Hedge (7/3)
A Market Forecast That Says ‘Take Cover’ [Prechter vs. Acampora] - New York Times (7/2)
Bill Gross: Bonds are priced for depression (CNBC Video)- Pragmatic Capitalism
Credit Suisse still bullish, sees 1,270 on S&P - Pragmatic Capitalism
RBS: On "cliff edge", sees 2% on 10-year yield - Pragmatic Capitalism
Bill Fleckenstein: Market could easily trade at 10x earnings, can't trust P/E multiples - Zero Hedge

US Dollar Index, Euro, UUP/FXE Ratio -8.3% in June ($XEU, $USD)

Hopefully Jim Rogers scooped up some Euros in early June when he said he was "thinking about" getting long the Euro on CNBC. The US Dollar and Euro broke their respective near term trends and today the USD broke below its 50DMA ($XEU pierced it to the upside). The UUP/FXE ratio is down 8.3% from early June. These moves could run for a bit, $UUP and $FXE could test their trend lines from December 2009, then we'll see. Also UUP's RSI (strength index) is below 50 and the MACD pierced the zero line.  It will be interesting to see how SPY and GLD react here. Charts are courtesy of StockCharts.com.

Goldman FCIC Hearing: Watch Gary Cohn Explain What Happened

The Financial Crisis Inquiry Commission had two hearings regarding Goldman Sachs and AIG's use of over the counter securities and derivatives (credit default swaps) that led up to the financial crisis. Click the links for the CSPAN video (update 8/4/2013, the links might be broken now, but I embedded the Gary Cohn vid again).

Doug Kass Calling For Classic Market Bottom On Twitter

Here is Doug Kass (@DougKass) of Seabreeze Partners calling for a classic bottom on Twitter today. I'm not sure what his exact time frame is. For recent posts with Doug Kass media appearances click the label. Snapshot of Twitter:

ETFs Trading Below 200DMA: SPY, DIA, QQQQ, IYT, IWM - Not IYR! (Charts)

This is an update from my post on June 24. On that day, $IYR, $QQQQ, $DIA, $IYT, $IWM, $FXI and $XLK closed above or at their 200DMAs while $SPY, $XLF, $XLV, $XHB, $ITB, $SSEC did not. Six days later, IYR is the only ETF in the sample trading above the 200 day moving average! Who would've thought. I bet it tests it though. The red line is the 200DMA in the charts (courtesy of stockcharts.com).

Roubini: 1.5% US Growth + Global Slowdown = Market Vulnerable (CNBC)

Nouriel Roubini (Roubini Global Economics) was on Kudlow's show on 6/28. He expects slower economic growth (1.5%) in the second half of the year, not a double dip recession but will feel like one. Regarding the stock market, Roubini believes the economic slow down in the US and abroad [Eurozone double dip likely, Japan falling off cliff, evidence of slowdown in China] will be negative for earnings and the stock market. "Half of US profits come from abroad". So WHEN will the slowdown be priced in.