Live Video of President Obama's 2012 State of the Union Address

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I embedded the live Youtube video: "The online-only enhanced version of President Obama's third State of the Union Address features charts, stats and data that helped inform President Obama's policy decisions." You can now follow The White House on Google+.

IMF Lowers Global Growth Outlook, Europe is Epicenter (IMF Videos, 1/24/2012)

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The IMF (International Monetary Fund) lowered its global growth outlook from its September projections. Europe tipping into recession is the greatest risk ("epicenter") to world growth. Read more: World Economic Outlook Update: Global Recovery Stalls, Downside Risks Intensify -IMF). In the three videos I embedded below, the IMF talked about their global growth outlook, fiscal challenges advanced economies face, and financial sector risks. Issues raised by IMF analysts have been addressed by the United Nations, Ray Dalio on Charlie Rose, Robert Prechter, David Rosenberg, and Richard Koo, on this blog (views vary): Fiscal consolidation and private sector de-leveraging by households and banks threaten global growth. The question is how governments manage it. Do they spread out the deleveraging process, or clear the debt quickly. George Soros, who manages billions and trades the macro environment, told Newsweek that he expects either a deflationary environment, or, worst-case scenario, a collapse of the financial system.

2012/2013 growth projections (full chart at IMF)
"In an update to its World Economic Outlook (WEO), the IMF said that the euro area would fall into a mild recession in 2012 after the euro area crisis entered a “perilous new phase” toward the end of last year, affecting other parts of the world including the United States, emerging markets, and developing countries.

Overall, activity in the advanced economies is now projected to expand by just 1.2 percent in 2012—a downward revision of ¾ percentage points relative to the forecast last September—picking up to a still tepid 1.9 percent the next year. The global growth outlook for this year is 3.3 percent."

See a chart of the IMF's downside scenario (% deviation from WEO baseline) for World and Euro area GDP growth at Zero Hedge.

George Soros: Deflation is Best-Case Scenario, Collapse of Financial System is Worst-Case Scenario

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Famed macro trader/hedge fund manager, George Soros, was interviewed by Newsweek and issued a warning for the developed world.

Image Source: NorwayUN
"“I am not here to cheer you up. The situation is about as serious and difficult as I’ve experienced in my career,” Soros tells Newsweek. “We are facing an extremely difficult time, comparable in many ways to the 1930s, the Great Depression. We are facing now a general retrenchment in the developed world, which threatens to put us in a decade of more stagnation, or worse. The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system.”"

Read more at the
TheDailyBeast. What are Soros' thoughts on Central Banks printing money?

Jon Stewart on Newt Gingrich (Daily Show Clip)

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This was an interesting clip on the Daily Show (h/t Zero Hedge via Daily Crux).

Links: Greece Debt, Portugal, Japan, Treasuries, S&P 500, Natural Gas (1/24/2012)

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Eurozone finance ministers reject Greek debt offer - (Telegraph)

Euro zone ministers reject private bondholders' Greece offer - (Reuters)

EU Seeks Bondholder Concessions on Greece (Bloomberg)

Timely Greek lessons on the eurozone crisis (by George Provopoulos, Bank of Greece) - (Financial Times)

Fears Mount That Portugal Will Need a Second Bailout - (WSJ)

Bids for Portugal REN with 30-50 pct premiums-sources (Reuters)

Goldman Tells Clients To Short US 10 Year Treasurys (Zero Hedge)

10 Good And Bad Things About The Economy And Rosenberg On Whether This Isn't Still Just A Modern Day Depression (Zero Hedge)

Credit Suisse: 11 Reasons We'll See S&P 1,400 This Year (PragCap)

EU May Be Preparing for Greek Default, Bank of New York Mellon Strategist Simon Derrick Says (Bloomberg Video)

Hussman: Recession risk remains very high (HussmanFunds)

Watch The Republican Debate Live Here (NBC)

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Tonight's NBC Republican debate is in Tampa, Florida and moderated by Brian Williams. Ron Paul, Mitt Romney, Newt Gingrich and Rick Santorum are left. Watch it live below. Photo source: NBC.

Tom DeMark: S&P is Close to a Top, Bullish on DAX, Bearish on Bunds (Charts)

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Tom DeMark, creator of the DeMark Indicators (used to time market exhaustion), was on BloombergTV last Friday and made a call that the S&P 500 would top out between 1,338-1,342 this week (specifically on Tuesday). It closed on Friday at 1,315. Watch the interview after the jump for more details. The chart definitely looks like it's getting exhausted after this nice rally. On December 5, DeMark predicted that the S&P would hit 1330-1345 when it was trading at 1,258. He thought it would hit by Christmas, so he was a month off. The downtrend from the 2007 peak and 2011 high hits around 1,330 today.

He is also bullish on the German stock market (Frankfurt DAX) and bearish on German bunds (government bonds). I charted out the DAX and German Bund ETN (BUNL) below. Actually, BUNT (3x German Bund ETN) looks interesting as well. German bund yields are available at (10-year German bund yield). Interesting. So, are DeMark's indicators predicting that a "hard Greek default" will be averted? Or is his call for the short-term.

Greece can't make a €14 billion bond payment on March 20, so it is trying to cut a deal with private creditors to swap into new Greek debt at a loss so it can get bailout money from the European Union and IMF. Read the articles below for more information. There's a meeting today with finance ministers and an important EU summit on January 30. Wow, EUR/USD is up 0.83% at 1.30. Something is up, at least in the short-term.

GOOG is Back Below 2010, 2011 Highs After Q4 Earnings, Will Google Finance Socialize With Google+?

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Since gets paid by Google Adsense and is powered by Google services, I thought I'd listen to GOOG's Q4 2011 earnings call and look at its financial results. I embedded the call below via Youtube and put up a summary of Google's financial results from its press release. Google closed down 8.38% today at $586 after reporting weaker results. From WSJ:

"The weaker-than-expected results were hurt by Europe's economic woes as well as mobile and other new forms of online advertising selling for lower prices than Google's traditional ads. The issues come as Google continues its costly expansion beyond its core search-advertising business, which pits it against formidable competition in mobile, social networking..."

It would be cool if Google Finance built an online social bank with Google bankers and peer-to-peer lending, and Google+ had a social investing, trading and lending network. Or hook up with the financial Twittersphere and StockTwits. As of December 31, 2011, Google had $44.6 billion in cash and short-term marketable securities. Compete with the big banks, Google!

GOOG Technical Update

I see a false breakout above the 2010 and 2010 highs. It broke through the 50 day moving average today, but is still above the 200dma, 50 week moving average and 200wma. Also look at GOOG's trend from its IPO in 2004. It looks like a long-term ascending triangle formed using the highs in 2010-2012 (not perfect though with the 2007 high). If GOOG trades above $630 again that will probably provide confirmation that it wants to move higher, perhaps to $747 or the 2007 high. If it breaks through the long-term uptrend line, that would be bearish. The trendline hits around the 200 week moving average as well. Just looking at simple trends and support/resistance levels here.

GOOG 3-year Daily Chart

EURUSD Needs To Break Downtrend, Big Move Coming Either Way

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EUR/USD is trying very hard to break through that downtrend line in the death channel. It tried for the fourth time earlier this morning but couldn't manage. It is inside both channels again and needs to decide which path to take. If it can breakout of the death channel with confirmation, 1.3146 is the next resistance level and then between 1.34-1.38 through March. Billions of Italian and Greek bonds mature in the next two months. If EUR/USD continues to ski down this slope, 1.18 support is next and then 1.08-1.10. Interesting article at Zero Hedge: A Shocking €1 Trillion LTRO On Deck? CLSA Explains Why Massive Quanto-Easing By The ECB May Be Coming Next Month.

A lot going on: S&P Downgrades France, EFSF; Greece Defaults Shortly (EUR/USD, Bond Yield Reactions)

Morgan Stanley's Adam Parker: S&P Hits 1,167 in 2012, Multiple Contracts With Low Rates, Earnings Plateau

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S&P 500 through 2012
Adam Parker, chief equity strategist at Morgan Stanley, has a bearish outlook on the S&P 500 for 2012 with a year-end price target of 1,167. The S&P is currently trading at 1,289. The interesting part about his call is that he thinks the S&P's price/earnings multiple will contract "to 10x over time" because rates are low. He was on CNBC on January 3 and 9 discussing Morgan Stanley's report, see quotes below. To hedge himself, I noticed a CNBC slide that said he could be wrong if there is QE3, a meaningful cyclical upswing, or the U.S. government addresses the debt situation (wouldn't that sell off the market?). I found a quick summary of Parker's S&P call at Morgan Stanley's 
Global Strategy Roundup.

"US Equity Strategy: The 2012 Playbook
Adam S. Parker et al.

We establish a 2012 year-end price target of 1167 for the S&P 500, representing 7% downside from today's price and around 13% more conservative than the "muddle through" scenario implied by consensus. While 2011 was about multiple contraction, and further contraction is likely, we think 2012 and 2013 are likely to be more about earnings than the multiple. Our 2013 EPS estimate for the S&P 500 of $103.1 is 15% below the consensus bottom-up view of $121.1."

They also lowered their 2012 EPS estimate for the S&P 500 to $100 from $103. Parker discussed his market call with Jim Cramer and David Faber on CNBC on January 3.

S&P 500 Chart Looking Into 2012, Key Trendlines To Watch (SPY, $SPX)

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S&P Downgrades France, EFSF; Greece Defaults Shortly (EUR/USD, Bond Yield Reactions)

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10-year Portuguese Bond Yield (Bloomberg)
European sovereign credit ratings are in the news again. Standard & Poor's downgraded nine European nations on Friday, including AAA France, AAA Austria, Italy, Spain and Portugal. Yesterday, S&P also downgraded the EFSF, or European Financial Stability Facility, which is dependent on France's creditworthiness since they fund a large portion of the fund. Moody's then spoiled the downgrade party by keeping France at Aaa with a stable outlook. However, markets, except for Portugal (see chart), treated the catalysts like they were priced in.

10-year French OAT yield opened at 3.06%, hit a high of 3.12%, but then closed at 3.03% (price moves inversely with yield). And the 5-year French OAT yield spiked to 2.05% at the open and then closed at 1.86%. The 10-year French-German yield spread opened around 1.35 but then tightened to 1.26 at the close. On the other hand, Portugal's government bond yields spiked after S&P downgraded the country to junk. The 10-year Portuguese bond yield opened at 12.65% and rose all the way up to 14.40% to make a new high.

Euro Couldn't Breakout Again, Now Selling Off Hard (EURUSD 1.2670, -1.24%)

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Ugly day today for EUR/USD. It couldn't breakout again, which means it is still trading in a steep descending channel. Fears of France getting downgraded by S&P and JP Morgan's weak quarter are hitting stocks and the euro. On the chart, 1.258 is the next support level and then 1.18.


Lampert Buys Sears Stock From ESL, Open Market; CDSs Spike (SHLD)

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Source: Wikipedia
In two SEC Form 4 filings on 1/11/2011, it appears that
Edward Lampert, chairman and majority shareholder of Sears Holdings Corp. (through his hedge fund RBS Partners et al.), bought 4,461,329 shares of $SHLD from ESL Investors LLC, his own fund, at $29.2 per share on January 9 for $130 million. Was this a redemption? The filing also said that ESL Investors LLC distributed 573,184 shares to the managing member of Investors (aka RBS Partners) "in lieu of a cash payment for management fees." Lampert also bought 409,000 SHLD shares on the open market between $29.52-30.99 per share on 1/9/2012-1/11/2012.

Yesterday, Sears sold off on news that CIT decided to halt loans to Sears' suppliers. Fitch released a note on this yesterday, see it below. As a result of the CIT news (or something else), Sears Holdings Corp. and Sears Roebuck Acceptance Corp's 5Y credit default swaps spiked. I was wondering if Lampert was buying Sears CDS back in December to hedge his position without having to report it in a filing. Why doesn't he own any puts!? The CDS rate is the cost to insure $5 million of Sears bonds per year, which can be a naked position. I was able to get a snapshot of SRAC's CDS chart at CMA (see below), and Zero Hedge posted both charts on Twitter. Sears' cash bonds were active as well. Sears Holdings Corp's 6.625% fixed note maturing on 10/15/2018 (SHLD.JE) closed at 78.375 today, yielding 11.287%. It was interesting to see the stock up 3% today with the CDS spike.

EUR/USD Bears Predict 1.0-1.20, Rallying Towards Downtrend In Meantime

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I decided to securitize all of the bearish views I found on the euro (EUR/USD) recently in this post. Are there any die-hard EUR/USD bulls anywhere? It makes sense given that there's a risk of a "
euro quake" in the next few months as the EU, ECB, and everyone else, try to engineer a soft landing for the Eurozone sovereign debt and banking crisis. Since December of 2011, currency strategists, economists, traders, and a currency hedge fund manager, had targets on EUR/USD between 0.90 and 1.20. Right now at 4:34am EST, EUR/USD is trading at 1.27923 after hitting a low of 1.26663 early yesterday morning. A nice squeeze is taking place, and it is back trading in the intermediate descending channel that formed on Thursday (which was pierced on Fri). Look how short large speculators are in Euro FX futures (h/t GM). EUR/USD is trying to figure out which channel to trade in as large chunks of European sovereign debt mature in the next few months (1, 2). As noted in my previous post, if EUR/USD wants to test support in the "death channel", it would be around 1.14 in January and 1.08-1.10 in February.

Euro at inflection point in two channels (EUR/USD) 1/6/2012

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EUR/USD broke support and then sold off to test (and actually form) a new channel support level (yellow line). You can see on the daily chart that it just bounced off that level. It is positioning for the U.S. employment report. EUR/USD is testing resistance in the steep white descending channel ("death channel") and support in the yellow descending channel just formed. The weekly chart shows a clearer view of what's been happening. If the euro can catch a bid here, a key resistance level to watch is 1.2873, or the January 2011 low. If EUR/USD can successfully destroy that downtrend line, it could rally up to that red ceiling and possibly to the yellow channel resistance level at some point. If it continues to slide, 1.2587 and 1.1875 are the next floors to watch. I say death channel because if the euro wants to test channel support, it is around 1.14 in January and 1.08-1.10 in February (see the third chart).

Judgment Day Near For European Sovereign Debt, Euro

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Euros (source: aranjuez on flickr)
There's a huge chunk of European sovereign debt principal and interest due in the next few months (and year). has a table of the
debt payment schedule for Greece, Italy, Spain and Portugal. There could be a hard Greek default in Q1.

*WSJ: Greek PM Says Country Faces Risk Of Disorderly Default In March (WSJ)
*ECB's Knot: Euro May Collapse If Greece Pushed Out (Dow Jones Newswires)
*EU Crisis Road Map: Key Milestones Ahead (WSJ)
*Spain, Italy Debt Insurance Costs Rise On Euro-Zone Worries (Dow Jones Newswires)
*French Debt Costs Rise at Bond Sale as AAA Decision Looms (BusinessWeek)
*France Likely to Lose AAA Rating: UBS European Economist (CNBC Video)
*Zero Hedge: The Can Kicking Is Ending, Key Upcoming Dates For Europe's Patient Zero (Zero Hedge)
*Collapse of euro will hit EU, global financial system: Soros (BusinessLine)
*Greece: If we can’t finalise second bailout, we’ll have to leave the euro (
*Banking sector trembles as UniCredit shares plunge (Reuters)
*High ECB reserves are not evidence of bank "hoarding" (Alea)
*Japan buys 300 mln euros of EFSF bonds -MOF official (Reuters) - where's China?
*Germany is Biggest Obstacle to Emergency Fund: Knot (Bloomberg)
*Slowing Inflation May Give ECB Room to Maneuver on Interest Rates: Economy (Bloomberg)

New Low For The Euro, EUR/USD Hit 1.2837 (Chart)

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According to ZH, Unicredit was halted down -7.9%, Deutsche Bank was down 5%, and the 10-year Italian bond yield was above 7% again. And then I saw EUR/USD drop to 1.2837, a new low. Check out the chart.


Sears Holdings is Back at $31, Where's the Value? Price/Book at 0.44 (SHLD)

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Former Kmart HQ (Troy, MI) sold to BlackRock in 2005
To close off 2011 with a bang, Sears Holdings Corp. (SHLD), which owns Kmart and Sears, and majority owned by hedge fund manager and Sears Holdings chairman Edward Lampert (ESL Investments/RBS Partners), announced on 12/27/2011 that holiday sales were weak so they plan to close 100-120 marginally performing stores and record a non-cash charge of $1.6-$2.4 billion. They released a list of
79 stores closing and I found an interactive map as well.

I was watching SHLD's price action on 12/21/2011 and it looked terrible on the chart (made a new low, can ESL buy Sears CDS?). When the big news hit on 12/27, SHLD closed at $31.78 on Friday, down 27%. It is retesting the 2008/2009 lows and back at 2003/2004 levels, when Kmart (KMRT) emerged from bankruptcy in 2003. Kmart acquired Sears (S) in November 2004 for $11 billion (or eventually $12.3 billion in 2005) to form Sears Holdings Corp (SHLD). Out of bankruptcy, Kmart was a nice real estate play for Lampert since Kmart owned real estate recorded at low historic book values, and real estate was about to go parabolic.

BusinessWeek: The Next Warren Buffett? 11/22/2004:

"And he pushed for Kmart to sell 68 stores to Home Depot Inc. (HD ) and Sears to raise a total of $846.9 million. That's nearly as much as the $879 million value placed on all of Kmart's real estate -- 1,513 stores, 16 distribution centers, and the fixtures -- in bankruptcy proceedings."

While I'm at it, check out the chart of SHLD's price/book ratio going back to 2003 courtesy of ycharts. It is at 0.44 as of 12/30/2011. Since October 2004, SHLD's price/book ratio has been in a range between 0.38 (11/2008) and 2.31 (10/2006). What is 0.44 trying to say here? Is there still hidden real estate value or major equity erosion ahead.

Sears Holdings Corporation Price / Book Value Chart

After Sears was acquired, the combined company went from being a cash, tax credit, retail synergy, real estate backstop play to which magical retail company will Lampert acquire in May 2007. SHLD peaked out in April 2007, and the company decided to buy back shares.

EUR/USD Testing January 2011 Low (High 1.28s)

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EUR/USD courtesy of
EUR/USD Update: After
approaching the 1.28738 January 2011 support level on 12/18, EUR/USD just about hit that level tonight. EUR/USD broke 1.29 and hit a low of 1.28877 before bouncing to 1.29200. You can see that EUR/USD is still in a steep downtrend, as it has been since Oct (or really May). BUT, if the Euro can base out here and rip through that trend line, it could re-test the 10/4 low 1.31460, like it tried a few days ago before bear flagging around trend resistance and breaking down. It could then rally on up to that next downtrend line that hits around 1.36-1.38 in early 2012. It depends on the eurozone sovereign debt catalyst, or ECB/Fed actions if positive for the euro. If not, bye bye to 1.25-1.18. In another post I'm going to embed videos with analysts and a hedge fund manager that believe the Euro is going lower, or possibly to parity. Click the chart for a larger view.

Satyajit Das Explains How We Got Into This Financial Mess (INET Video)

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Satyajit Das (INET)
For those of you who still care about why the financial system collapsed in 2008, which required 
trillions of dollars by the Treasury and Fed to bail it out. Satyajit Das, an author and derivatives expert, who's been in the business for 34 years, was interviewed by Robert Johnson of INET (Institute for New Economic Thinking) on how we got into this financial mess, and the challenges the global financial system faces going forward.

Margin Call!
Das said it all started in the late 1980s when old-school bankers like himself were replaced by business school trained bankers and derivative traders that religiously relied on models and financial theory to manage risk (see video #1). He also mentioned that profit margins were so great back then that making mistakes (losses) didn't even matter.

In the end, Das said leveraged bets using other peoples money; complex derivatives; mis-priced clustered risk; churning structured products to maintain profitability; repackaging risk throughout the system (counterparty risk); and the incentive to churn for bonuses, ultimately destroyed the financial system in 2008 when risk management failed. Interesting interview (h/t naked capitalism).