Why The U.S. Blocked Sprint's 4G Deal With China's Huawei (60 Minutes)

Huawei in Shenzhen, China (Wikipedia)
This 60 Minutes segment is about why the U.S. government blocked China's Huawei, the largest telecommunications equipment maker in the world (economist), from doing a 4G deal with Sprint in the U.S. Watch the 60 Minutes video below (Huawei probed for security, espionage risk).

But, did you know that some small rural wireless carriers in the U.S. currently use Huawei's telecom equipment for their 4G services? In the 60 Minutes video, the president of United Wireless said he was approached by federal agents after he signed a deal with Huawei.

Zynga's Stock Crashes After Lowered Q3 Bookings Outlook ($ZNGA)

Here's an interesting bar chart of Zynga's quarterly bookings via Statista (and then ZNGA's stock chart since the IPO). After Zynga's lowered its outlook on Friday, $ZNGA made a new low on record volume. You have to wonder when capitulation sets in here. The stock respected the perfect downtrend line and crashed to $2.21, down from a high of $15.91 in March, before closing at $2.48. You can see on the chart that $2.67ish is now a new ceiling resistance level for the stock (w/ a tight sideways channel above), and there's a downtrend as well that traders and bots could fight again. There could be a pop in the stock at some point if it breaks those resistance levels, which could even try to fill that July gap. But you are still fighting data that is technically and fundamentally trending down.

Interesting out-of-the-money option activity occurred as well on Friday in November and December puts and calls: 2,289 November $2.0 puts traded with 101 contracts open (closed at 0.09, +0.04); 18,056 November $2.50 calls traded with 788 contracts open (closed at 0.27, -0.21); 6,189 December $2.50 calls traded with 2,118 open (closed at 0.32, -.20); and 8,300 December $2 puts traded with 3,512 open (closed at 0.12, +.04). As of Sep 14, 11.7% of the float was short via Yahoo Finance, but that was a while ago.

The Most Important Links For 10/7/2012

I'm in the middle of doing an important post. So in the meantime, here are a few interesting articles to read (h/t G+ and Twitter streams). By the way the Market Center is up and running with a real-time ETF and currency quote widget, and a live stream of Bloomberg TV.

Investors Jump Off the 'Junk' Pile (Wall Street Journal)
Could interest rates fall below zero? Don’t bet against it (Globe and Mail)
California gas prices hit all-time high as average soars to $4.61 a gallon (Fox News, AP)
Could the cross-border tomato feud cost you more? (Houston Chronicle)
Rare Fungal Meningitis Outbreak Rises; 7 Dead, 64 Sick (ABC News)
US Foodstamp Usage Rises To New Record High (Zero Hedge)
Turkey warns Syria future attacks 'will be silenced' (CNN)
Israeli air force shoots down drone aircraft (Reuters)

Energy New Front in Economic Warfare - Guest Post

Img: L.C.N√łttaasen on Flickr
Guest post by Daniel J. Graeber of Oilprice.com

Energy New Front in Economic Warfare

Opposition leaders in Canada suggested a string of cyber security threats to domestic companies might be the work of Chinese hackers. Twice last week, the Canadian government confirmed two separate companies -– both in the energy sector -- were the target of cyber-attacks. In the United States, meanwhile, the Obama administration said national security interests trumped energy concerns and blocked a Chinese company from constructing wind turbines near a Navy installation in Oregon. While the Chinese military isn't the overt threat like the Soviet Union was, Beijing's rise as an economic power has seemingly sparked a war of economies.

Live PBS Video of the 2012 Presidential Debates (October 3, 11, 16, 22)

Source: Flickr, Cane and Todd Benson
Watch live coverage of the 2012 Presidential Debates below courtesy of PBS NewsHour's Ustream (Mitt Romney vs. President Obama). The debate starts at 9pm ET. They are replaying Al Gore and George W. Bush's debates from the 2000 race right now.

More information on the debates via PBS.org.

"PBS NewsHour's special election broadcast coverage continues with live coverage and post-debate analysis of the 2012 Presidential Debates on Oct. 3, 11, 16 and 22, 2012 from 9:00 pm EDT - 11:00 pm EDT."

"Wednesday, October 3 - The first Presidential Debate will focus on domestic policy and will be moderated by Jim Lehrer, Executive Editor of the PBS NewsHour at the University of Denver, Denver, CO.

Thousands of Bombs Dumped in Gulf of Mexico Pose Huge Threat to Oil Rigs - Guest Post

Guest post by Joao Peixe of Oilprice.com

Thousands of Bombs Dumped in Gulf of Mexico Pose Huge Threat to Oil Rigs

After World War II the US government dumped millions of kilograms of unexploded bombs into the Gulf of Mexico. This is no secret; many governments dumped their unexploded ordnance into oceans and lakes from 1946 up until the 1970s when it was made illegal under international treaty.

Now that technology has advanced enough for oil companies to drill deep sea wells in the Gulf of Mexico, those forgotten payloads have become a real hazard.

Bearish Linkfest (10/3/2012)

Source: US Naval Research
Dylan Grice Writes His Most Negative Note Ever: 'I Am More Worried Than I Have Ever Been' (Business Insider)

The One Chart No Equity Portfolio Manager Wants To See (Zero Hedge)

ROSENBERG: There's Another Bubble Keeping Buyers Out Of The US Housing Market (Business Insider)

Gap between college tuition and consumer income is at record levels (Sober Look)

California Has A PMI Report And It Just Took A Horrifying Nose Dive (Testosterone Pit at Business Insider)

Big Oil Funding U.S. Politics - Guest Post

Source: Trevor MacInnis, Wikimedia
Guest post by Daniel J. Graeber of Oilprice.com

Big Oil Funding U.S. Politics

U.S. Rep. John Boehner, speaker of the House of Representatives, received nearly twice as much financial support from donors tied to the energy sector than did the next-closest recipient, a report from the National Wildlife Federation finds. The 20-page report highlights the role it says oil companies play in U.S. politics, stating energy companies are working behind the scenes on Capitol Hill to influence legislation in favour of oil, natural gas and coal policies. The NWF report finds that the current 112th U.S. Congress has voted one out of every five times against legislation drafted in favour of environmental issues.

AUD/USD's Reaction to RBA's 25 bps Rate Cut (10/2/2012)

I haven't covered the Australian Dollar in a while, mainly because it's been in a tight range since the beginning of 2011. But, AUD/USD might start to get interesting again as it trades closer to the apex point of a multi-year symmetrical triangle. After the Reserve Bank of Australia cut its cash rate by 25 basis points to 3.25%, AUD/USD fell 0.63% to 1.03. Read the RBA's statement here.

JPM (Bear Stearns) Gets Sued Again For MBS Fraud

The NY Attorney General just sued JPMorgan (Bear Stearns) for defrauding investors in Bear Stearns' mortgage securitizations in 2006-2007. Read the full complaint here via ThomsonReuters (h/t Business Insider).

It's always interesting to see how Bear Stearns University - School of Finance operated during the credit bubble. Were any credit professionals at the big banks looking at data on their Bloomberg Terminals during this time? Isn't that the reason why financial institutions (CIOs) pay thousands of dollars a month to analyze opaque loan data, mortgage-backed securities, and credit default swaps? Or were entry level, post-grad junior analysts the only ones looking at trends at this point. There should be more MBS charts on the St. Louis Fed's FRED database. The Federal Reserve regulates the financial system right? After the crisis, it is still hard to find quality data on the mortgage and MBS markets.

"30. Defendants were aware that many of their loan originators were selling defective loans but continued to buy and securitize those loans. For example, according to a June 2006 internal Bear Stearns email, almost 60% of AHM loans that were purchased through the conduit were 30 or more days delinquent. After learning this information, Defendants went on to issue over 30 subprime and Alt-A securitizations that included AHM loans. At least four of these securitizations contained 30% or more loans originated by or purchased from AHM, including SACO I Trust (“SACO”) 2006-8, Structured Asset Mortgage Investments II Trust (“SAMI”) 2007-AR4, SAMI 2007-AR6, and SAMI 2007-AR7. Other internal communications reflect Defendants’ awareness of the bad quality of loans that were being included in other securitizations. In connection with the Bear Stearns Second Lien Trust 2007-1 (“BSSLT 2007-1”) securitization, for example, one Bear Stearns executive asked whether the securitization was a “going out of business sale” and expressed a desire to “close this dog.” In another internal email, the SACO 2006-8 securitization was referred to as a “SACK OF SHIT” and a “shit breather.”

S&P Has Been Rising With Negative Earnings Pre-announcements Since QE2 (Two Years Straight)

Look at this amazing FactSet chart via Business Insider today. As you can see, usually the market goes down when there are negative earnings pre-announcements (see 2007 and 2008). But ever since QE2 was announced by the Fed in August 2010 (and then Operation Twist and QE3), it looks like the S&P 500 and negative earnings pre-announcements have been rising in tandem for two years straight (except for Q1 2012). Wow.