Succinct summation of week’s events:

Positives:

1) Cheers to Mark Zuckerberg and Facebook for building an incredible business and whose reward today is hugely deserved and exciting to watch.

2) April Housing Starts back above 700k for 4th month in the past 6 at 717k, above est of 685k and March revised up by 45k to 699k.

3) After rising from 19 to 28 thru the winter months and falling to 24 in April, the May NAHB home builder survey rises to 29, the best in 5 yrs.

4) Refi apps up by 13% with new low in mortgage rates.

5) NY mfr’g in May rises to 17.1 from 6.6 in April but still down from 20.2 in March and 6 month outlook falls to 29.3 from 43.1.

6) Old news but Q1 GDP in Germany surprises to upside and region sees flat Q1 growth instead of expected contraction. That will certainly change in Q2.

7) China cuts RRR again, market though yawns.

8) UK jobless claims unexpectedly falls.

Negatives:

1) Europe again the main concern as Greek stocks fall another 10% and new PSI bonds sell to lows as bank run fears spread and we have to wait another month for new elections. Spanish IBEX down 6% as Bankia falls 15%. MIB lower by 7% and both Spanish and Italian bond yields jump and Spanish CDS goes to new high.

2) Philly mfr’g falls to -5.8 from +8.5 and well below expectations of +10 as weakness is broad based and the outlook falls sharply.

3) Initial Jobless Claims 5k more than expected at 370k and prior week revised up by 3k.

4) April Retail Sales reflect give back as they rise just .2% m/o/m ex gasoline.

5) CPI moderates to 2.3% from 2.7% y/o/y but tell that to people whose wages are flat. Core rate up 2.3% y/o/y matching most since Sept ’08.

6) Shanghai index closes week at 1 month low. FDI falls for 6th straight month and home prices fall in more Chinese cities than the previous month.

Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

14 Responses to “Succinct Summation Of Week’s Events (05/18/2012)”

  1. AHodge says:

    Jamie and JPM was big to me? what my BSD friend sent

    BIG GUY The JPM trade is a bilateral OTC swap with multiple hedge funds, including a JPM fund. It’s off-balance sheet, so no collateral call – no transparency…..for now.

    ME (after earlier obvious questions) OK silent one. Must ask one Q. Why deal with their own fund? Are the two marks of that deal the same? Per our view they often not?

    BIG GUY Marks are different as JPM fund operates to profit from the trade and independent from the CIO

    Got that last part????!! Morgan doing the same ridiculous self dealing at different prices
    within the SAME company
    that Goldman publically attacked and called for reform of.
    till the rest of wall st beat them up so badly they stopped talking accounting reform
    jamie is a scumbag of the Merrill lynch class and has totally prostituted the good Morgan risk culture.
    i actually am shocked.

  2. AHodge says:

    for those of you,
    who like me a week ago
    held some residual fondness for jamie
    along with the above
    here from bloomberg is enough evidence for me that jamie let the prostitution of the old JPM riskmetrics solid VAR corporate oversight

    1 When he joined the bank in 2006, his new commander, Chief Executive Officer Jamie Dimon, was transforming the once- conservative (CIO) unit from a risk manager to a profit center.
    “We want to ramp up the ability to generate profit for the firm,” Olson, 43, recalled being told by two executives. “This is Jamie’s new vision for the company.”

    2 Simon Johnson “What’s particularly ironic here is that Jamie presents himself, and is believed by others to be, the king of risk management.”

    3 “Her (Drew’s) position over the years has always been around hedging, but hedging for profit as opposed to hedging just to counter losses,” said Dina Dublon, a former JPMorgan chief financial officer who worked with Drew for 22 years before leaving in 2004 and now teaches at Harvard Business School. “She’s always been in a for-profit operation, even when she was managing a smaller domain.”

    4 Dimon nurtured the office’s shift from its role mitigating lending risks, such as interest-rate and currency movements, to becoming a profit center, former executives said. Drew, who declined to be interviewed, hired Achilles Macris, 50, in 2006 to oversee trading in London. Macris, with Dimon and Drew’s blessings, led an expansion into corporate and mortgage-debt investments with a mandate to generate profits, three former employees said.
    When the 2008 financial crisis highlighted the bank’s need to hedge its exposure to corporate loans and bonds it held on its books, Drew’s office expanded into credit derivatives and other risky instruments, according to a former senior officer. Those trades were tightly controlled and monitored at first, the former executive said.
    Macris’s mandate drove the bank into riskier products and a less disciplined approach to investing, according to two former CIO executives. The shift provoked an exodus in 2008 of traders who specialized in more-liquid markets where risk was easier to measure, such as interest-rate products and foreign exchange, these people said. Macris didn’t respond to an e-mail or a call.
    While Drew liked generating profit, she did so in a controlled way, placing strict limits on how much an investment could lose or gain, former colleagues and employees said. Traders were required to exit positions if losses exceeded $20 million, according to one former CIO manager in London. Those limits were scrapped under Macris.
    The London team amassed a portfolio of as much as $200 billion, booking a profit of $5 billion in 2010 alone — more than a quarter of JPMorgan’s net income that year, one senior executive said.UNQUOTE

    I have heard this doubletalk BS about the hedging center being a profit center
    as long as i was in the business of selling to these types,
    they are speculators
    and they blow up more than speculators usually do
    as i described earlier
    because they often “buy their own bullshit” as we used to say in the dealing room
    and dont have a clear P/L and daily marks

  3. mathman says:

    http://thinkprogress.org/climate/2012/05/18/486776/asthma-baby-asthma-house-energy-committee-eliminates-protection-from-smog/

    “Last year, the House Republican majority cast 191 votes to weaken safeguards for our air, land, water, and climate. Their efforts to shred these protections continued yesterday when the House Energy and Commerce Committee passed two bills that would block protections from air pollution while allowing more oil drilling — all under the guise of “lowering gas prices.”

    Both bills passed the committee on mostly party line votes.

    The first bill was the Gasoline Regulations Act of 2012, H.R. 4771, sponsored by Energy and Power Subcommittee Chair Ed Whitfield (R-KY). This bill would eliminate the bipartisan mandate under the Clean Air Act that the Environmental Protection Agency set health standards for ozone (or smog) pollution based only on the best medicine and science. Instead, for the first time ever under this bill, the cost of pollution reduction would determine how much health protection to require. In other words, air pollution that triggers asthma attacks and respiratory diseases would only be reduced if the polluters could afford it.

    In addition, the bill would require endless study of other possible pollution reduction requirements, using “paralysis by analysis” to block additional health protections. H.R. 4771 would slash these safeguards even though “more than 40 percent of people in the U.S. still live in areas where air pollution threatens their health,” according to the American Lung Association.

    The committee also passed the Strategic Energy Production Act, H.R. 4480, authored by Rep. Cory Gardener (R-CO). This bill would force increased drilling on public lands any time reserve oil is released from the Strategic Petroleum Reserve (SPR). The SPR was designed to supply oil in case of a supply disruption, though President George H. W. Bush and the 104th Congress under Speaker Newt Gingrich (R-GA) sold reserve oil in anticipation of a disruption that did not occur, and to reduce the federal budget deficit, respectively.”

    A little further down in the article is a chart of the “donations” each congressperson got from Big Oil.
    Democracy in action.

  4. louis says:

    I had the exact opposite reaction to the facebook rally. My intial reaction was amusement followed by the thought of sadness for our nation.

  5. G3 says:

    Barry,

    Did not recall seeing you unloaded all your long positions (though you said you trimmed down quite a bit). Are you still long or neutral now?

    Thanks.

  6. 4whatitsworth says:

    1) Cheers to Mark Zuckerberg and Facebook for building an incredible business and whose reward today is hugely deserved and exciting to watch.

    Really? The guy stole the idea screwed his best friend then created one of the great time wasting machines of all time that makes you change your email address.

    B-T-W when is the stock market correction going to end? Dow is off 900 pts.

  7. Singmaster says:

    Not certain that #1 is really a positive:
    Underwriters bought Facebook’s stock to keep it from falling below the IPO price, people with knowledge of the matter said today.
    http://www.bloomberg.com/news/2012-05-17/facebook-raises-16-billion-in-biggest-technology-ipo-on-record.html

    With quote from our own dear leader:
    “This is what happens when you price something around 100 times earnings,” said Barry Ritholtz, chief executive officer at FusionIQ in New York. “If this closes poorly, there is nobody to blame but the company and the underwriters themselves.”

  8. sharpie says:

    Mark Zuckerburg “hugely deserved” becoming a multi-billionaire? Really? Why? How much would a person “hugely deserve” if he found the cure for cancer, or otherwise did something that dramatically improved the world we live in? Are we all happier because of Facebook? I don’t think so. Maye becoming a multi-millionaire would be enough. After all, he didn’t think of the idea himself and, truth be told, Facebook ain’t so great.

  9. Singmaster says:

    Ditto Sharpie.
    Not certain that #1 is really a positive:
    Underwriters bought Facebook’s stock to keep it from falling below the IPO price, people with knowledge of the matter said today.
    http://www.bloomberg.com/news/2012-05-17/facebook-raises-16-billion-in-biggest-technology-ipo-on-record.html

    With quote from our own dear leader:
    “This is what happens when you price something around 100 times earnings,” said Barry Ritholtz, chief executive officer at FusionIQ in New York. “If this closes poorly, there is nobody to blame but the company and the underwriters themselves.”

  10. techy says:

    4whatitsworth & sharpie : you guys are taking it too seriously, the goal of capitalist system is to amass as much capital as possible, playing within the defined rules (cheating is allowed, ethics and morals are for losers :)

    Sorry I did not make these rules :), neither do I like them, but Zucky is the winner today, almost bigger than google founders. because he can make 400 million people spend 2 hours everyday and give him all their information.

  11. lebowski007 says:

    barry, you your compassion oscillator is peaking this week w summation notes.

  12. obsvr-1 says:

    Negatives: + HP to trim 25 – 30K jobs … ouch!

  13. [...] from the EU, add more chatter about the U.S. “fiscal cliff,” and not a whole lot of good news. That set up is likely enough negativity to encourage a counter trend [...]

  14. More upgrading of 2012. Adding in this week’s forward-looking data, TRI gauges Q2 GDP to have an upper bound of 3.4%. Eleven days prior to the Election, BEA will announce Q3 GDP of not more than 3.0%. Four days prior, BLS will announce a 7.7% Unemployment Rate.

    FOMC will announce first rate increase in Aug/2013 upon UR finally retreating below 7.0% … forget about the “late 2014″ charade. 5-yr mortgage rates should be up 2% by mid-2015.

    TRI charts: http://trendlines.ca/free/economics/RecessionIndicatorUSA/USA-TRI.htm