Saturday, August 27, 2011
Watch live coverage of Hurricane Irene courtesy of WCBS-TV New York on Ustream (after the jump).
Hurricane Irene Makes Landfall in North Carolina (NASA Goddard Space Flight Center on Flickr)
"Chairman Ben S. Bernanke
At the Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole, Wyoming
August 26, 2011
The Near- and Longer-Term Prospects for the U.S. Economy
Good morning. As always, thanks are due to the Federal Reserve Bank of Kansas City for organizing this conference. This year's topic, long-term economic growth, is indeed pertinent--as has so often been the case at this symposium in past years. In particular, the financial crisis and the subsequent slow recovery have caused some to question whether the United States, notwithstanding its long-term record of vigorous economic growth, might not now be facing a prolonged period of stagnation, regardless of its public policy choices. Might not the very slow pace of economic expansion of the past few years, not only in the United States but also in a number of other advanced economies, morph into something far more long-lasting?
I can certainly appreciate these concerns and am fully aware of the challenges that we face in restoring economic and financial conditions conducive to healthy growth, some of which I will comment on today. With respect to longer-run prospects, however, my own view is more optimistic. As I will discuss, although important problems certainly exist, the growth fundamentals of the United States do not appear to have been permanently altered by the shocks of the past four years. It may take some time, but we can reasonably expect to see a return to growth rates and employment levels consistent with those underlying fundamentals. In the interim, however, the challenges for U.S. economic policymakers are twofold: first, to help our economy further recover from the crisis and the ensuing recession, and second, to do so in a way that will allow the economy to realize its longer-term growth potential. Economic policies should be evaluated in light of both of those objectives.
Friday, August 26, 2011
EUR/USD is testing the upper-bound of the descending channel. It is currently fighting the first near-term trend line.
|EUR/USD 5-Month Chart (freestockcharts.com)|
|EUR/USD Longer Term (freestockcharts.com)|
- Dollar Falls Before Bernanke Speech, U.S. Economic Growth Data (BusinessWeek)
- Europe stocks fall but short sell ban boosts banks (Reuters)
- Finland Committed to Greek Demands as Talks Over Collateral Model Continue (Bloomberg)
- Pace of Euro-Zone Lending Slows (WSJ)
- KBC Market Research: Currency markets spooked by 'wild' rumours - (FX Street)
- Greek CDS rises, Finnish collateral threat persists (Reuters)
- Tomorrow's "Other" Event - A Sub-1% GDP Report (Zero Hedge)
- Bernanke: will he or won’t he? (Financial Times)
- Bernanke Scholar Advises Bernanke Fed Chief (Bloomberg)
- German Bunds steady as markets focus on Bernanke (Reuters)
- Spain growth slows, recession fears loom (Reuters)
|Source: U.S. Navy (Algae/Camelina fuel)|
Investor Interest in U.S. Biofuel Production Set to Soar
On 16 August President Obama announced that the U.S. Departments of Agriculture, Energy and Navy will invest up to $510 million by 2014 in partnership with the private sector to produce advanced "drop-in" aviation and maritime biofuels for military and commercial use. This builds on a directive Obama issued five months ago as part of his "Blueprint for A Secure Energy Future," his administration's policy for reducing U.S. dependence on foreign oil imports, which now cost more than $300 billion.
The plan envisages the three federal departments to invest a total of up to $510 million, which will require substantial cost sharing from private industry, with projected matching funds of least one to one.
President Obama declared, "Biofuels are an important part of reducing America's dependence on foreign oil and creating jobs here at home. But supporting biofuels cannot be the role of government alone. That's why we're partnering with the private sector to speed development of next-generation biofuels that will help us continue to take steps towards energy independence and strengthen communities across our country."
Thursday, August 25, 2011
|Royal Bank of Scotland 5Y CDS (bloomberg.com)|
Royal Bank of Scotland 5Y CDS
Lloyds TSB Bank PLC Bank 5Y CDS
BNP Paribas SA 5Y CDS
UBS AG 5Y CDS
UniCredit SpA 5Y CDS
Societe Generale SA 5Y CDS
Banco Santander SA 5Y CDS
Credit Agricole 5Y CDS
ING Groep NV 5Y CDS
Banco Popolare SC 5Y CDS
Commerzbank AG 5Y CDS
Bank of Ireland 5Y CDS
Deutsche Bank 5Y CDS
Two and a half years later, after taxpayers bailed out all of these banks, their credit default swap spreads are at record "wides" again! Read these articles at The Telegraph and PragCap: "Cost of insuring RBS debt reaches historic high" (Telegraph 8/24, Bloomberg chart), Market crash 'could hit within weeks', warn bankers" (Telegraph, 8/24), "CDS Market To Euro Banks – This Is Worse Than 2008" (Prag Cap, 8/22 with Danske Bank chart of Barclays, Credit Agricole, Societe Generale, Unicredit, Banco Santander, BNP Paribas CDS). With Royal Bank of Scotland's CDS making new highs, why the hell was its stock (RBS:NYSE) up 7.37% yesterday? Here are charts of RBS's stock and 5Y CDS. Its stock looks like Bank of America, no?
|Royal Bank of Scotland Stock (stockcharts.com)|
"Investors are worried that during times of quickly deteriorating asset prices, high volatility, and rising risks to the economic recovery, banks could be left with too little capital and a potential lack of support since governments are constrained by high indebtedness," UniCredit credit strategist Christian Weber said."
Wednesday, August 24, 2011
|Courtesy of tsevis on Flickr (for Fortune)|
"Letter from Steve Jobs
To the Apple Board of Directors and the Apple Community:
I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple’s CEO, I would be the first to let you know. Unfortunately, that day has come.
I hereby resign as CEO of Apple. I would like to serve, if the Board sees fit, as Chairman of the Board, director and Apple employee.
As far as my successor goes, I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple.
I believe Apple’s brightest and most innovative days are ahead of it. And I look forward to watching and contributing to its success in a new role.
I have made some of the best friends of my life at Apple, and I thank you all for the many years of being able to work alongside you.
Apple's press release naming Tim Cook as CEO and Jobs' 2005 commencement speech.
|Libyan Oil Fields, Pipelines, Refineries (Wikipedia)|
Libya's Post Gadhaffi Future - Who gets the Oil?
Muammar Gadhaffi's 42 year-old regime is in its death rattle - maybe today, maybe tomorrow, his administration that has ruled Libya with a quixotic and brutal hand is about to pass, in Trotsky's piquant phrase, "into the dustbin of history," prompting the question "what next?"
The glittering prize is Libya's 1.6 million barrels per day output of high quality crude, which accounted for about 2 percent of global oil output drawn from Africa's largest oil reserves, whose exports have been stymied since the NATO-led campaign began six months ago. Projecting into the future, analysts believe that has reserves to sustain its previous level of production for 80 years.
Who will eventually control this asset, with oil prices currently at roughly $84 a barrel, generating an income of more than $12.6 million per day?
Or, will China add Libyan future production to its string of acquisitions, as it is already China's eleventh largest source of imports?
I'm watching GLD again after its two month parabolic move and 20 day spike in SPY terms. Gold (XAU/USD) hit 1,910 on Monday and then fell to 1,820 yesterday. From July 1 to August 22, gold moved parabolically from 1,500 to 1,900 (+26%). Is it exhausted yet using DeMark indicators? I bet gold sees volatile swings soon. Let's see 7% days. I put trend lines and channels on GLD, GLD/SPY, $USD and UUP charts using multiple time frames below. GLD is trading at uptrend resistance levels on two trend lines, one from 2006 and the other from 2009. If GLD moves vertically here through resistance, it will be in a whole new world. The overall trend is up until GLD breaks major uptrend lines. Gold has been in a bull market for 11 years. Get ready for crazy moves in gold, the U.S. Dollar and equities on Friday when Bernanke gives his Jackson Hole speech. The US Dollar ETF is testing an important downtrend and floor support level. A catalyst will determine its fate very soon. Charts are courtesy of StockCharts.com.
Tuesday, August 23, 2011
"Mr. Blodget is making “exaggerated and unwarranted claims,” which is what the SEC stated publicly when he was permanently banned from the securities industry in 2003.
The sovereign exposure is off by a factor of 10.
The commercial real estate figures are off by a factor of four.
The mortgage analysis was provided by a hedge fund that has acknowledged it will benefit if our stock price declines.
The blogger’s recommendations on goodwill accounting would be prohibited by generally acceptable accounting practices.
Traditional bank valuation relies upon tangible book value per share, which excludes by definition 100 percent of goodwill and other intangibles. As of June 30, our tangible book value per share was $12.65."
These posts supposedly moved BAC today. Did they move BAC's credit default swaps as well? (lol)
|BAC 5Y CDS (source: Bloomberg)|
The end of QE2, global economic slowdown, recent equity crashes, euro zone sovereign debt and banking crises, falling ABX and CMBX prices / rising premiums (credit default swap indexes insuring pools of subprime residential and commercial mortgage securitizations from 2005-2008) and the recent sunspot cycle correction are probably all responsible for the volatility recently (why sunspots). I want to show you charts of XLF, BAC, BAC CDS, C, WFC and the Financial Clog Index. See the CMBX Index and more at Zero hedge (links below). S&P, Dow and Nasdaq futures are up big tonight, while gold and the dollar are down. The next big moves will probably be Gold (going parabolic), EUR/USD (triangle squeeze coming) and DXY (testing floor support, downtrend). Those charts deserve a separate post. Traders are placing bets on whether the Fed continues to support the stock market and economy (Bloomberg).
XLF (Financials Select SPDR) broke through a 2-year channel. It looks ugly... Will the Fed backstop channel support?
Sunday, August 21, 2011
McAlvany Weekly Commentary on July 6 and had interesting views on the market. Listen to the full 53 minute interview here or read the full transcript ("Felix Zulauf: Marching Full Speed into Calamity"). Zulauf thinks the S&P bottoms at book value, or about 500, during the secular bear market, and believes gold is the best hedge against an "inflationary depression" as central banks keep printing money to prop up the system. He also discusses the euro zone sovereign debt crisis and the possible end-game. During a Barron's roundtable discussion on 8/13/2011 (see below), Zulauf gave his short term views on the market (hat tip PragCap). I also put up a chart of the S&P 500 price/book ratio.
Quotes from the McAlvany interview:
Quotes from the McAlvany interview:
"But even during the 1970s and early 1980s, the last major secular lows in the stock market, we were trading slightly below book value at maybe 90% of book value or something like that. I did expect the stock market to decline into a secular low to around a book value of slightly below that. Book value is roughly 500 or a little bit over 500, depending on how you define it.
According to Al Jazeera English, Tripoli is now in the hands of the opposition, but there are still pro-Gaddafi "sleeper cells". Muammar Gaddafi, and his sons Saif and Mohammed, have been detained by rebel forces (Update: Saif escaped! See below). Gaddafi's 40 year regime could be over. Watch the the events unfold live in Tripoli's Green Square, Benghazi's Freedom Square and Misrata on Al Jazeera English. I embedded video clips below. Also monitor the Twitter conversation on Gaddafi.