Posts filed under “Think Tank”


While commodity prices have sold off the past 2 days due to concerns
with the impact that swine flu will have on global growth, the implied
inflation rate in the 10 yr TIPS today has risen to the highest level
since early Oct at 1.51%. The dynamics impacting the bond market remain
the concerns with huge amounts of supply that would most impact the
longer end of the curve as the shorter end is more influenced by fed
policy (2 yr and 5 yr auctions were good), a slowing rate of economic
deterioration based on recent data, bigger picture inflation concerns
due to the Fed’s monetization of govt debt and lastly a possible game of
chicken between the Fed and the bond market as the 10 yr yield is at the
same level it was the exact day before the FOMC announced their plan to
buy Treasuries. Does Bernanke admit to himself that fighting the market
is probably a bad idea or does he think rates would be higher without
him and double down as a result.


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cannot be guaranteed. An options disclosure document may be obtained
from Mr. Jay Stenberg, Miller Tabak + Co., LLC., 331 Madison Avenue, New
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Category: MacroNotes

The Next Great Bubble?

Vitaliy N. Katsenelson, CFA, is director of research at Investment Management Associates in Denver, Colo., and he teaches a graduate investment class at the University of Colorado at Denver. He is the author of “Active Value Investing: Making Money in Range-Bound Markets” (Wiley 2007).


One more bubble, please.

After the bubbles in technology, housing, and commodities, we saw the mother of all bubbles: the one in global liquidity. The world economy seemed to require bubbles for its continued functioning.

I get the distinct feeling that investors’ prayers are now being answered: There’s a new bubble now – or an old one is being re-inflated, depending on your perspective even as I type this. I’d like to call it the Troubled China Revival Program (TCRP).

Why start reserving bubble-naming rights? Well, I recently received an email from a friend that had the following subject line: “China … Record Loan Addition, Record Money Supply, Record Auto Sales, Record Imports of Copper, Iron Ore, and Coal, Strong Property Sales.”

I checked every figure (the hyperlinks above are mine), and every single one checked out. I couldn’t quite believe what I was reading. I had thought China was in a spiraling-down recession. But even the decline in electricity consumption — a true gauge of economic growth — decelerated from 3.7% in January and February to a mere 0.7% in March. (Take a look at the FXI for more.)

So is China really the first nation to rebound? Is this the first sign of a rebounding global economy?

I’m sorry to say that the answer to both questions is no.

Read More

Category: Think Tank

consumer confidence

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…Read More

Category: MacroNotes

S&P/CaseShiller home price index

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…Read More

Category: MacroNotes

4/28 Morning Note

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:





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.

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Category: Think Tank

1st poli sci, now pre-med

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…Read More

Category: MacroNotes

The Real Swine Flu

Good Evening: The major U.S. stock market averages declined on light volume today, and an outbreak of a new strain of swine flu was deemed the primary culprit. Upon closer inspection, however, it seems as if the sloppy — even hoggish — bank lending practices of the previous up cycle are as much to blame…Read More

Category: BP Cafe, Markets, Think Tank

This AM I was on CNBC discussing the banks with Paul Miller of FBR.  Paul is a first rate analysts, IMHO. I suggested that the big banks should not be allowed to repay TARP equity to long as the government is guaranteeing their debt. That is, if a bank wants to repay TARP capital, they must…Read More

Category: BP Cafe, Think Tank

Swine Flu Comments

As if the global economy, let alone the world itself, needed another thing to worry about, swine flu comes along. Having lived through the experience of SARS 6 years ago, the Hang Seng and Shanghai stock markets were hard hit. Economically sensitive commodities such as crude and copper are also weak. The Mexican peso is…Read More

Category: BP Cafe, MacroNotes, Markets, Think Tank

The King Report

> Today – SPMs are down 14.60 in Sunday night trading because Obama’s chief economic adviser, Larry Summers, asserted while appearing on Fox News Sunday, that the economic freefall is over but, “I expect the economy will continue to decline… [with] sharp declines in employment for quite some time this year.” (Reuters) • “The anticipation…Read More

Category: Bailouts, BP Cafe, Financial Press, Markets, Think Tank