The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

heh heh:

Meet the Cassandras, 14 economists, bloggers, politicians and businesspeople of all political stripes who have become the most strident critics of President Obama’s stewardship of the economy . . . [I guess this means I am a bi-partisan critic]

Hard answers are in short supply. But here’s a guide to the prophets of doom. We’ve identified them, attempted to ascertain the moment when they first turned against the White House, and summarized the basic points of their critique. We’ve included economists, members of the business community, bloggers and, just for fun, two of the most anti-Obama Republicans we could dig up.

Yes, I am one of the 14:

BARRY RITHOLTZ: Author of financial blog the Big Picture; regular commentator on CNBC, Bloomberg, Fox and PBS; CEO and director of Equity Research at Fusion IQ, an online quantitative research firm. Barry Ritholtz has ridden his blog’s huge popularity to a bookstore near you. Keep your eye out for “Bailout Nation.”

Earliest critique: Jan. 29, 2009

Stimulus: Too small.

Banking plan: Will not work. Nationalization in the form of “prepackaged Chapter 11 bankruptcy reorganization is the fastest way to fix the banking system.”

Most hurtful quote: In response to Geithner’s statement that “We have a financial system that is run by private shareholders, managed by private institutions, and we’d like to do our best to preserve that system,” Ritholtz exploded: “No! Defending these idiots was your old gig. In the new job, you no longer work for the cretins responsible for bringing down the global economy. Please stop rationalizing their behavior, and preserving the status quo!”

My big criticism of Obama is not his policies, but his appointments of Larry Summers and Tim Geithner. These two may end up being the Dick Cheney and Donald Rumsfeld of the Obama administration.

Nice company to be in, too. Here’s the rest of the 14:

Read the rest of this entry »

Reporter David Segal looks at the town that might have lost more money per square mile than any other in the country because of the downturn in the economy and the Ponzi scheming of Bernie Madoff.

The April Conference Board Consumer Confidence # was a much better than expected 39.2, almost 10 pts better than forecasted and up from a revised 26.9 in March. It’s the highest level since Nov ’08 and the
questionnaire was likely filled out a few weeks ago but definitely reflects the sense of a slowdown in the economic deterioration and rally in the capital markets.

BUT, most of the gain was in the Expectations component which rose 19.3 pts as hope reigns supreme. The Present Situation component rose less than 2 pts. Those that said jobs were Plentiful fell .2 pts to the lowest level since 1991 but those that said jobs were Hard To Get fell almost 1 pt from last months highest level since 1992. Those that think business will get better within 6 mo’s rose to the highest since Sept ’07. Those that plan to buy a home within 6 mo’s rose a hair while those that plan to buy a car within 6 mo’s rose
to the highest since Jan.

DISCLAIMER

Although the information contained herein has been obtained from sources
Miller Tabak + Co., LLC believes to be reliable, its accuracy and
completeness cannot be guaranteed. This report is for informational
purposes only and under no circumstances is it to be construed as an
offer to sell, or a solicitation to buy, any security. At various times
we may have positions in and effect transactions in securities referred
to herein. Any recommendation contained in this report may not be
appropriate for all investors. Trading options is not suitable for all
investors and involves risk of loss. Although the information contained
in the subject report (not including disclosures contained herein) has
been obtained from sources we believe to be reliable, the accuracy and
completeness of such information and the opinions expressed herein
cannot be guaranteed. An options disclosure document may be obtained
from Mr. Jay Stenberg, Miller Tabak + Co., LLC., 331 Madison Avenue, New
York, NY 10017. Additional information is available upon request.

Member NYSE, NASD, CBOE, PHLX, ISE, NFA.

Member SIPC.

Finally!

I have, over the years, exhorted Dow Jones to make the very best feature of the ILX service — the Dow Jones Market Talk feed — a blog.

They have done so, and now (huzzah!) its officially launched:

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I am drunk with power! I demand something, and a mere a decade later, it happens.  Take THAT, King of All Media.

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Previously:
Make DJMT a Blog! (December 12th, 2005)

http://www.ritholtz.com/blog/2005/12/make-djmt-a-blog/

Source:
Dow Jones Market Talk

http://markettalk.newswires-americas.com/

The Feb S&P/CaseShiller 20 city home price index fell 18.63% y/o/y, a touch better than expected but with a slight downward revision to Jan to a fall of 19%. The index is now down 30.7% from its record high in July
’06. Both on a m/o/m and y/o/y basis, all 20 cities saw declines. The y/o/y declines saw the same culprits leading the way, Phoenix, Las Vegas, San Francisco, and Miami. The smallest decline both m/o/m and
y/o/y was in Dallas.

The bank ‘stress test’ adverse scenario assumed a top to bottom fall of about 45% in the 10 city index which would imply another 20% fall from here in house prices. Unlike the FHFA report, CaseShiller does include jumbo’s, subprime and alt a backed mortgages but isn’t as geographically diverse in its coverage. With months supply still almost twice the long term average, economics 101 says that prices still have further to fall.

DISCLAIMER

Although the information contained herein has been obtained from sources Miller Tabak + Co., LLC believes to be reliable, its accuracy and completeness cannot be guaranteed. This report is for informational purposes only and under no circumstances is it to be construed as an offer to sell, or a solicitation to buy, any security. At various times
we may have positions in and effect transactions in securities referred to herein. Any recommendation contained in this report may not be appropriate for all investors. Trading options is not suitable for all investors and involves risk of loss. Although the information contained in the subject report (not including disclosures contained herein) has been obtained from sources we believe to be reliable, the accuracy and completeness of such information and the opinions expressed herein cannot be guaranteed. An options disclosure document may be obtained from Mr. Jay Stenberg, Miller Tabak + Co., LLC., 331 Madison Avenue, New York, NY 10017. Additional information is available upon request.

Member NYSE, NASD, CBOE, PHLX, ISE, NFA.

Member SIPC.

The good news: February 2009 was the first month since October 2007 where the 10- and 20-City Composites did not post a record annual decline:

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From the peak in mid 2006, the 10-City Composite is down 31.6% and the 20-City Composite is down 30.7%.

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Source:
The Pace of the Decline in Residential Real Estate Prices Slowed in February
S&P/Case-Shiller Home Prices Indices, 2009-04-28 09:00:00

http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_news/2,3,1,2,0,0,0,0,0,0,0,0,0,0,0,0.html

Dan Greenhaus is at the Equity Strategy Group at Miller Tabak + Co. where he covers markets and portfolio theory. He has contributed several chapters to Investing From the Top Down: A Macro Approach to Capital Markets (by Anthony Crescenzi).

This is his most recent commentary:

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Earnings

Tuesday: ACE, AVY, BEC, BMY, CCE, CPO, CVH, DB, DIN, BEN, HL, HERO, HMC, JEC, LVLT, MEE, MBHI, ODP, PCAR, PNRA, PFE, PSYS, RFMD, COL, RTI, JAVA, TLAB, IPG, MHP, SMG, UA, X, VFC, WAT

Commentary

The news this morning is absolutely unequivocally making my point about the banks. On the one hand, you have reports that the government is apparently going to have C and BAC raise billions more in capital in order to increase their capital base. We know the private market is not going to come forward with the necessary money, not all of it at least, and as a result the government is going to have to plug the holes with additional capital. With preferred to common conversions all but assured, I maintain my belief that Citi emerges from this situation as a fully functioning arm of the federal government. BAC is probably not far behind but this is only one side of the debate. On the other hand, you have NTRS announcing that they are planning on raising more than one billion dollars in order to help repay the TARP injection. NTRS follows other banks including GS and JPM in laying the groundwork for TARP repayment. The specifics of the sale do not matter for this discussion but rather we need only focus on the intention. GS, JPM and NTRS are healthy banks. We knew this and we know this. C and BAC are unhealthy banks. We knew this and we know this. Creditors know this. Depositors (I hope) know this. The returning of TARP funds by any of the aforementioned banks does not in any way draw attention to less healthy banks in terms of making people aware they are unhealthy. This is not October. This is April and the amount of information we have now compared to October is significantly larger. There are, of course, broader questions about the health of the overall banking sector and the economy at large. NPA are up, loan loss reserves are increasing and credit deterioration is an ongoing battle but the fact remains that if you are GS, why should you be subject to an intrusive and draconian Congress simply because of mismanagement at other institutions? The answer is you shouldn’t.

Read the rest of this entry »

After having to get an advanced degree over the past year in political science to better understand the US Govt’s desire to encroach to an extraordinary extent in private business (they’ll own 50% of GM if bondholders agree, BoA is on the chopping block to convert govt
preferred stock to common and will join Citi in this special club and other banks may be forced to raise money based on unknown scenarios as we learn in the papers today that no one can keep a secret ahead of May 4th), yesterday was the first day of medical school to help us learn about swine flu, its treatment and impact.

The FOMC begins their two day meeting and with every piece of their playbook already committed, the question remains of sitting put for now or ramping up asset purchases, especially in treasuries. They will also likely acknowledge the slowing rate of economic decline based on recent data. S&P/Case-Shiller price index and consumer confidence are out today.

“The FDIC is up to the task, and whether alone or in conjunction with other agencies, the FDIC is central to the solution. Given our many years of experience resolving banks and closing them, we’re well-suited to run a new resolution program.”

-Federal Deposit Insurance Corp. Chairman Sheila Bair

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This is a fascinating — and not wholly unexpected — development: A push for more FDIC authority:

“Federal Deposit Insurance Corp. Chairman Sheila Bair sought authority to close “systemically important” financial firms, marking her boldest attempt yet to expand the agency’s reach.

The FDIC should be able to take over and shut bank-holding companies and other large institutions instead of just failed commercial banks, Bair said today in a speech at the Economic Club of New York. Such power would shield taxpayers from losses when government protects companies deemed “too big to fail,” a concept that should be “tossed into the dustbin,” she said.”

Considering the FDIC is the most competent of the Federal Regulators over the past decade, we shouldn’t be surprised. The crisis has enhanced the agency’s reputation, certainly versus the SEC or the Federal Reserve.

Meanwhile, Citigroup and Bank of America each fell about7 % in pre-market trading on concern the companies may be forced by regulators to raise more capital.

Citigroup and Bank of America have already received $90 billion in bailout momnies, plus another $550 billion in federal guarantess on their toxic assets.

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Sources:
Bair Seeks to Expand Power, Ending ‘Too Big to Fail’
Alison Vekshin
Bloomberg, April 27 2009

http://www.bloomberg.com/apps/news?pid=20601087&sid=a2Hy2M0SSVqs&r

See also:
Fed Pushes Citi, BofA to Increase Capital
DAN FITZPATRICK, DAVID ENRICH and DAMIAN PALETTA
WSJ, APRIL 28, 2009

http://online.wsj.com/article/SB124088901025362487.html

The Espresso Book Machine can print any of 500,000 titles while you wait

Pretty wild stuff:

“It’s not elegant and it’s not sexy – it looks like a large photocopier – but the Espresso Book Machine is being billed as the biggest change for the literary world since Gutenberg invented the printing press more than 500 years ago and made the mass production of books possible. Launching today at Blackwell’s Charing Cross Road branch in London, the machine prints and binds books on demand in five minutes, while customers wait.

Signalling the end, says Blackwell, to the frustration of being told by a bookseller that a title is out of print, or not in stock, the Espresso offers access to almost half a million books, from a facsimile of Lewis Carroll’s original manuscript for Alice in Wonderland to Mrs Beeton’s Book of Needlework. Blackwell hopes to increase this to over a million titles by the end of the summer – the equivalent of 23.6 miles of shelf space, or over 50 bookshops rolled into one. The majority of these books are currently out-of-copyright works, but Blackwell is working with publishers throughout the UK to increase access to in-copyright writings, and says the response has been overwhelmingly positive.”

Here’s the video

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Cryptogon via NJ Hoffer

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Sources:
Revolutionary Espresso Book Machine launches in London
Alison Flood
Guardian, 24 April 2009

http://www.guardian.co.uk/books/2009/apr/24/espresso-book-machine-launches