Archive for November, 2011

Intervention Rally: Good, Bad or Ugly?

At times, I have described Good News as Bad — meaning that is could encourage the Fed withdrawing its accommodation, raising rates, pressuring margins, earnings and equity prices.

Today’s coordinated central bank intervention is the opposite: A Euro-zone bank on the verge of collapse prompted this extraordinary action.

So this a case where the news is so Bad it becomes Good for stocks: The financial system is so (choose 1 or more) vulnerable / compromised / inter-related / fragile that it required the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank to coordinate a joint liquidity event. So Bad News (near collapse) becomes Good News (equity rally).

The volume was so-so, except for the end of month/quarter buy on close surge; Monday’s volume was light as well. So this runs to 1250, maybe even 1300. Does it have legs? Will the surge suck the traders in (or trade the suckers in?)

Of course, these actions reflect the underlying weakness, and adds to the eventual bill to be paid (interest and penalties continue to accrue).

But tonight, we drink !

Category: Bailouts, Federal Reserve, Markets, Trading

10 Mid-Week PM Rally Reads

My afternoon train reading on this day when stocks had their biggest rally since March 2009: • Central Bank Intervention Round Up: …..-Welcome to the Great Global Easing (Fortune) …..-Pain Killer, Not Cure (WSJ) …..-Bank Intervention Raises Questions (Forbes) • On Wall Street, Some Insiders Express Quiet Outrage (Dealbook) • For S.E.C., Court Ruling on…Read More

Category: Financial Press

Coordinated Central Bank Action on Currency Swaps

The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing coordinated actions to enhance their capacity to provide liquidity support to the global financial system. The purpose of these actions is to ease strains in financial markets and…Read More

Category: Federal Reserve, Think Tank

Ritholtz Slams Paulson, Lauds Judge for Denying SEC-Citi Deal

Source:
Crony Capitalism Report: Ritholtz Slams Paulson, Lauds Judge for Denying SEC-Citi Deal
Aaron Task
Daily Ticker, 11/30/11
http://finance.yahoo.com/blogs/daily-ticker/crony-capitalism-report-ritholtz-slams-paulson-lauds-judge-193542241.html

Category: Bailouts, Video

When Will Housing Hit Bottom?

Source:
Home Prices Fall to 2003 Levels; When Will Housing Hit Bottom?
Morgan Korn
Daily Ticker, 11/30/11

Category: Bailouts, Real Estate, Video

IPO: Go, No-Go?

Interesting chart via the WSJ about IPOS — which often capture the public’s attention, despite their being less than reliable investment: A dollar invested in Amazon.com’s 1997 IPO would today be worth about $140. A dollar invested in Webvan would be worthless. Here’s a look at some of the high-fliers and flame-outs of the Internet…Read More

Category: Investing, IPOs

Case-Shiller Bubbliciousness

“It’s a little known fact,” as Cliff Clavin would tell us, “that the first city to have its housing bubble burst was Boston.”  How appropriate, eh? Since no one lives in either Composite10 or Composite20, below is a portion of a spreadsheet I maintain chronicling the popping of the bubble (this is on a NSA…Read More

Category: Cycles, Data Analysis, Economy, Real Estate

China to maintain tight monetary policy into 2012 – oh yeah?

Kiron Sarkar is an investor and advisor in London. Formerly in the M&A dept of N M Rothschild in London, he was head of M&A of Rothschild (Hong Kong) and worked on their international privatisation team. He worked as privatisation adviser to the UK Governments Know How Fund. Most recently, he was European Head of Media, Tech and Telecoms at CIBC World markets. Kiron has acted as a lead adviser in respect of over US$150bn of deals and has worked globally in both developed and emerging markets.

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More grim news (with sharply lower equity markets) from China. My friend, Ari Merenstein (whose analysis is amongst the best I’ve seen) summarises it impeccably – the Chinese may have left it too late to embark on monetary easing – by the way, I would bet that monetary easing is inevitable, even though a Central Bank adviser suggested that tight monetary policy will continue next year. However, my friends at Brown Brothers Harriman suggest that Mr Xia Bin’s (the PBoC adviser) comments seem to have been misinterpreted. Just when the Euro Zone seems to be coming to a sort of conclusion (I’m still uber cautious – it’s the Euro Zone/ECB/EU after all), China pops up. Bad news for the A$ and the miners – my way of playing a short China strategy + global markets generally.

Exports to Europe, from China, are collapsing, shipping sources report- no great surprise and don’t expect a recovery any time soon. The Shanghi markets closed down 3.3% today;

The FT reports that Indian companies are facing difficulties, indeed a number of companies are defaulting on their forex loans – apparently they have mismatched forex borrowings with Rupee assets. Classic economics 101 is DON’T DO THAT – must not have been translated into Hindi.

India’s GDP growth slipped to 6.9% (on an annualised basis) for the Q to September – the first time GDP has been below 7.0% since June 2009.

I regret to say, I cant see the upside – unfortunately more downside – don’t forget, when my Indian friends get worried (as they are right now), watch out. Cant see the RBI maintaining its tight monetary policy, though inflation (currently, the fastest in the BRIC’s) is nowhere under control. Indian Rupee – not quite as bad as the (likely, soon to be introduced) Drachma, but……;

Mr Noyer a French member of the ECB – soon to have a colleague appointed to the ECB board, reports that the economic situation in Europe has worsened significantly over the last year. Sacre Bleu – quelle surprise – I think not. However, the much more important issue is that Mr Noyer, his colleague and a host of other ECB voting members are going to vote for – you guessed it – ECB bond buying/QE and, in due course, assuming much tighter and verifiable fiscal controls within the Euro Zone (including penalties for non compliance), will be supportive of EURO BONDS;

Read More

Category: Think Tank

Pending home sales jump 10.4%; Chicago PMI at best since Apr

Oct Pending Home Sales, a measure of contract signings of existing homes, rose by 10.4%, much better than expectations of a gain of 2%. The gains were led by a 24.1% rise in the Midwest and 17.7% jump in the Northeast. Contract signings also rose 8.6% in the South but fell .3% in the West….Read More

Category: MacroNotes

Apple vs Samsung

Via: Online MBA Guide Hat tip Mac Daily News

Category: Digital Media, Technology, Think Tank