| Kidder Reports Archive, Tuesday, February 16 |
|
|
Latest Posts, News & Opinions
Crude is $77.05 vs $74.13 Gold is $1,118 DJIA is up +134 Tuesday at 15:00 Euro: 1.3756 vs 1.3600 Dollar-Yen: 90.124 vs 89.962 Euro-Yen: 123.98 vs 122.35 Canadian dollar: 1.0445 vs 1.0488 Aussie dollar: 90.11 vs 88.90 Today's Recap Archives Nikkei closed up +20 on Tuesday after falling -78 Monday (vs expected up +13) Australia RBA: Further rate hikes likely but perhaps not at every meeting ZEW expections index slipped to 45.1 from 47.2, stronger than expected; 5th decline EU: Greece has 30 days to show 2010 deficit to GDP ratio to be cut by 4% to 8.7% Capital One net charge-offs increase: 10.41% vs 10.14%; delinquencies 5.80% vs 5.78% NY Fed Empire State index rose to 24.9 from 15.9; but details weaker than headline Net foreign purchases of long-term securities slow: +$63.3 bln vs $126.4 billion China reduced its holdings by $34.2 billion Foreign holdings of Treasury securities fell by $53 billion in Dec, a record drop Home builders' index rises to 17 from 15 17:00 ABC Consumer Index 07:00 MBA mortgage prch. index 07:45 Weekly chain store surveys 08:30 CPI revisions 08:30 Housing starts (MS sees 540,000 unit annual rate) 08:30 Import prices 09:15 Industrial production (MS ooks for a 1.1% gain) 09:15 Capacity Utilization (MS see a new 14-month high) 14:00 US budget 14:00 FOMC minutes likely boost dollar due to details on hawkish dissent by Hoenig
Analysis Abnormal BCA Big Pic CalcRisk CW Econoday EconPic MFGR Mish MS
A European Slowdown Would Only Nick the US - MS updates 1.2 million jobless workers will become ineligible for federal unemployment benefits in March unless Congress extends the unemployment safety net programs from the American Recovery and Reinvestment Act (ARRA). By June, this number will swell to nearly 5 million unemployed workers nationally who will be left without any jobless benefits. -Calculated Risk If Greece were to default, the Landesbanks, which have already lost tens of billions, would be on the hook for even more. Clearly, the German government is aware of this situation and this is certainly a major part of their political calculus. Another fault line lies in the connection between Greece and the Balkans, where Greek banks are very active. -CW
Barchart Morning Call at 7:46 EurobondLive
Global stocks are mostly higher. The dollar and Treasuries are weaker and most commodities are higher with gold at a 1-1/2 week high and copper at a 2-week high. European stocks extended their gains after the Feb German ZEW economic sentiment survey fell less than expected at -2.1 to 45.1. Greek bonds and stocks soured on speculation that European finance ministers meeting today in Brussels may force the country to find more ways to pare its budget deficit.
Bond Market Briefing Bloomberg Bloomberg Tsys SMRA Reuters Wrightson GEZ0 Spread Dec10
Columnists Asia Times Beat Bloomberg Crane Econ View David Goldman KR List Pritchard RealClear
The British government must pay a higher interest rate to borrow money for ten years than either the Italian or the Spanish governments, despite the extraordinary ructions going on within the eurozone. \\ Of course, bond yields do not tell the whole story. Credit Default Swaps (CDS) measuring bankruptcy risk are much lower for the UK than for Greece or Spain. Bond yields capture the risk of devaluation and inflation, where CDS measure pure default risk (or do in theory — though they are also speculative tools). -Pritchard
Commentary Aleph Baseline Floyd Hutchinson Krasting Mauldin Naked Noland Roseman
After Greece, a new world - The Greek default crisis has made it clear that national economies are no more risk-free than Lehman Brothers or Merrill Lynch. That is good news for Asian countries such as South Korea, Indonesia and China that have used the past decade to good effect in working out sound policies. India is another matter. - Martin Hutchinson It is not just the writedown of Greek debt; it is the mark-to-market of other sovereign debt. That would bankrupt the bulk of the European banking system, which is why it is unlikely to be allowed to happen. Just as the Fed (under Volker!) allowed US banks to mark up Latin American debt that had defaulted to its original loan value (and only slowly did they write it down; it took many years), I think the same thing will happen in Europe. -Naked Beijing’s office vacancy rate of 22.4 percent in the third quarter of last year was the ninth-highest of 103 markets tracked by CB Richard Ellis Group Inc., a real estate broker. Those figures don’t include many buildings about to open, such as the city’s tallest, the 6.6-billion yuan ($966 million) 74- story China World Tower 3. -Link at Naked Goldman Goes Rogue – Special European Audit To Follow -Goldman will probably be blacklisted from working with eurozone governments for the foreseeable future; as was the case with Salomon Brothers 20 years ago, Goldman may be on its way to be banned from some government securities markets altogether. -Baseline
Commodities List Bloom Energy Kitco Drum Reuters CLH Gold J Soy K Wheat K NGH HGH CRB
Abandoning the previous economic paradigm of growth is paramount because, unlike previous energy transitions in history, the next energy transition will most likely involve a reduction in the energy available to society. But reducing energy consumption should not be viewed negatively. There is evidence that raising the incomes of all does not increase the happiness of all -Drum
Currencies Bloomberg BBH Laidi AL Twitter Michalowski Oracle Reuters Spot
Goldman's O’Neill says China is about to let currency strengthen as much as 5% -Bloomberg Butler of Everbank Issues Warning - I think I'm going to have to change horses in the middle of the stream, here... But, I'm torn between these two thoughts: 1. the euro is going to experience major problems and lose a large chunk of value... Or 2. the euro will take its hits, and come back even stronger, just like it has 3 times before. -Butler of Everbank If you're stuck with unwanted EUR now is not the time to sell. The currency is now heavily oversold on a short-term basis and will shortly record a big rebound following five straight weeks of severe losses. From a 2009 high in late November the single European currency has sunk more than 9% heading into this morning's New York trading session. From its all-time high back in the summer of 2008 the EUR has now shed a cumulative 15%. -Roseman in Commentary The premise that the U.S. dollar is a “safe haven” amid a European sovereign debt crisis is a joke. The only currency that is outside of the credit system and that remains no one else’s liability is gold. -Roseman in Commentary
Current Events Atlantic Buchanan Common Counter Daily Caller Huff Global Salon Slate Time
Latvia: Albert Einstein stated that “insanity [is] doing the same thing over and over again and expecting different results.” Latvia has employed the same self-destructive anti-government, anti-labor, anti-industrial, anti-agricultural “pro-Western” Washington Consensus for almost 20 years, and the results have become worse and worse. The task at hand now is to liberate the economy Latvia from its neoliberal road to neo-serfdom. One would think that the path selected would be the one charted by the classical 19th-century economists that guided the prosperity we see in the West and now also in East Asia. But this will require a change of economic philosophy – and that will require a change of government. -Global Research The Atlantic, “How a New Jobless Era Will Transform America.” New Cold War? Russia to Supply S-300 Anti-aircraft Missile Defense System to Iran - Russia repeatedly stated that S-300 systems are purely defensive. - Global Research
Foreign Policy Afghan Anti-War Asia Times Cole Debka FP Brief Stratfor Walt Wired
Taliban's number two, nabbed in ISI, CIA raid. -Cole
Grumpy Guys Cluster FA GW G's Mess Jesse Kadrosky Michaelson Ticker Taibbi Zero
Is Titlos PLC (Special Purpose Vehicle) The Downgrade Catalyst Trigger Which Will Destroy Greece? - Should Greece then be forced, at Titlos' option, to unwind the swap agreement, and be forced to cash out to the tune of €5.4 billion (net of the 107.54 issuance price), look for all hell to break loose. -Zero Gradually we are getting confirmation that Chinese "posturing" about offloading US debt is all too real. The most recent TIC data confirmed the Treasury's greatest nightmare: China is now dumping US bonds. In December China sold $34.2 billion of debt ($38.8 billion in Bills sold offset by $4.6 billion in Bonds purchased), lowering its total holdings $755.4 billion, the lowest since February 2009, and for the first time in many years relinquishing the top US debt holder spot to Japan, which bought $11.5 billion (mostly in Bonds, selling $1.4 billion Bills) bringing its total to $768.8 billion. Also, very oddly, the surge in UK holding continues, providing yet another clue as to the identity if the "direct bidder" - as we first assumed, these are merely UK centers transacting primarily on behalf of China as well as hedge funds, which are accumulating US debt under the radar. UK holdings increased from $230.7 billion to $302.5 billion in December: a stunning $70 billion increase in a two month span. Yet, with the identity of the UK-based buyers a secret, it really could be anyone... Anyone with very deep pockets. -Zero
History A&L History News History Today Howe New Geo News 1930 Trilateral
America feels like it’s unraveling. - Though we live in an era of relative peace and comfort, we have settled into a mood of pessimism about the long-term future, fearful that our superpower nation is somehow rotting from within. -Excerpt from Howe's Fourth Turning
Political AlterNet AmBlog Beast Drudge 538 Hines Politico P-Daily P-Wire Raw TAC Truth
Joe the Plumber, aka Samuel P. Wurzelbacher, is backing a number of candidates, but one politician he won't be stumping for is the man who made him famous: Sen. John McCain. "I don't owe him shit," Wurzelbacher said in an interview with PA Public Radio -Beast
Bond Market Briefing Bloomberg Bloomberg Tsys SMRA Reuters Wrightson GEZ0 Spread Dec10
Tuesday Closes: The 2Y/10Y is 285.8, -0.8bp 10Y yield is 3.661%, -3.2bp 10yr Tips is 1.405%, -3.1bp 2Y yield is 0.802%, -2.4bp Tips CPI inflation gauge is 2.255%, -0.2bp * The 2010 high is 2.475% on Jan 8; the 2009 high is 2.447% on Dec 28 * The decade average is about 2.700%; all-time low is 0.010% on Nov 20 * Gauge was 1.414% on Dec 31, 2009 and 0.135% on Dec 31, 2008 * The 2008 high was 2.613%; gauge was 1.94% just before Lehman bankruptcy The Eurodollar EDZ0 closed at 0.965% Friday, putting the yield of Dec Euribor at +32.5bp over the comparable US rate. The spread is narrower than its 18-day average of 43.4bp, a bullish pattern for the dollar vs the euro.
Currencies Bloomberg BBH Laidi AL Twitter Michalowski Oracle Reuters Spot
Tuesday at 15:00 Euro: 1.3756 vs 1.3600 Dollar-Yen: 90.124 vs 89.962 Euro-Yen: 123.98 vs 122.35 Canadian dollar: 1.0445 vs 1.0488 Aussie dollar: 90.11 vs 88.90
Calendar Econoday SMRA Wrightson Barchart Any Date
Wednesday 07:00 MBA mortgage prch. index 07:45 Weekly chain store surveys 08:30 CPI revisions 08:30 Housing starts (MS sees 540,000 unit annual rate) 08:30 Import prices 09:15 Industrial production (MS ooks for a 1.1% gain) 09:15 Capacity Utilization (MS see a new 14-month high) 14:00 US budget Thursday 08:30 PPI (MS sees +0.8% overall in January but only 0.1% ex food and energy) 08:30 Jobless claims 10:00 Leading indicators (should rise 0.3% for 10th gain in a row) 10:00 Philly Fed mfg survey 11:00 30-yr TIPS announcement 11:00 Treasury note announcement Friday 08:30 CPI (MS see a rise 0.3% overall and 0.1% ex food and energy) Monday, 2/22 08:30 Chicago Fed NAI 10:30 Dallas Fed manufacturing survey 13:00 30-yr TIPS auction Tuesday 07:45 Weekly chain store sales survey 09:00 Case-Shiller index 10:00 Consumer confidence 10:00 Richmond Fed 13:00 2Y auction 14:00 Fed discount rate minutes 17:00 ABC Consumer Comfort Index
Baltic Dry Index - - - Bloomberg - - - Google
The Baltic Dry Index fell -5 to 2,566 Monday. Feb 12. The BDI is down from 3,005 at year end and it has fallen more than -40% over the last 12 weeks. The 2009 range was 772 to 4,661 on Nov 19. The 2008 high was 11,793. The 20 year average is near 2,300.
2Y Yield Spread: Germany Over US - - - Tsys Yields
Monday at 10:08; The spread of Germany 2Y over US 2Y is +24 vs +26 Friday German Dec 2Y is 0.97% US Jan 2Y yld is 0.83% On Dec 7, Mar euro contract was 1.4815 and 2Y spread was +54; euro is 1.3650 today MS: The Fed to begin exiting from zero rates during the second half GS: No 2010 Fed hike & probably no hike in 2011
Nikkei Forecast- - - Nikkei - - - NKH0 - - - DJH0 - - - NKH vs DJH
The Nikkei is expected to open up +13 Monday in Tokyo. The NK/DJ spread is -12 points. Accordingly, NKH is trading cheap relative to DJH at -191 below the 21-day average of +179.
Archives and All Links - - - Archives
Keep In Mind
Aleph's Dirty Dozen: 1) China’s mercantilism — loans and currency 2) US Deficits, European Deficits 3) The Eurozone is a mess — Greece, Portugal, Spain, etc. 4) Many entities affiliated the US Government, e.g., FDIC, GSEs, FHA are broke 5) The US Government feels it has to “do something” 6) Residential real estate is still in the tank 7) Commercial real estate — there is too much debt and too little equity 8) State economies are weak 9) The US, UK, and Japan are force feeding liquidity into their economies 10) Yield greed. A bid for risky debt 11) Political deadlock is common, unable to deliver real pain to the populace 12) Europe and Japan face shrinking populations - a big, but hidden pressure Either currencies or debt markets will blowup in the next financial dislocation -- Dollar, gold and the VIX are likely to produce the biggest gains -- Aussie and Brazil overvalued on 12/31 at 89.74 and 1.75228; 90.45 and 1.80225 1/21 -- Inflation is emerging as key economic problem for India and China as growth surges -- China and Hong Kong have ‘dangerous’ bubbles in the real estate market -- Global economy could slow dramatically if China tightens lending due to inflation Public finances of the major Western countries are becoming unmanageable -- Who is going to buy the multiple trillions the G-7 countries want to issue? -- After Fed exits QE, who is going to buy $1 trillion in the US? That is 7% of GDP -- Bond market pressures on the PIIGS: Portugal, Italy, Ireland, Greece and Spain -- Portuguese and Greece economies face a ‘slow death’ as they pay off huge debts -- Credit-rating agencies are on collision courses with Spain, Portugal and Greece -- Danger of sovereign defaults by Dubai, Greece, Ukraine and the UK -- Spain's sovereign risk has increased due to exposure to Venezuela devaluation -- Social security systems are likely to be raided and social unrest is probable -- State, local and regional governments face a major funding crisis by summer -- Severe gaps will be closed via budget cuts or tax increases - especially on corps -- Large pension plans in U.S. have $2 trillion shortfall -- AIG, Fannie Mae, Freddie Mac and GMAC are long-term wards of the state Fifteen bank failures in 2010 vs nine in Jan 2009 and a total of 140 failures in 2009 -- 599 banks on so-called problem list -- Banks face huge rollovers of their corporate debts in next few years -- S&P has warned that nearly all of the world's big banks lack sufficient capital -- JP Morgan reported deep losses on its mortgage and credit card businesses in Q4 -- Banks have not taken write-downs on $150-170 billion of Alt-A expected to default Consumer spending remains persistly weak, jobs are scare and gasoline is expensive -- Consumer credit down record $17.49 billion in latest read; 10th consecutive fall -- Local, state, and federal tax increases of $500 billion are in the pipeline -- Unemployment likely to be 10% or higher (except for a few months of census hiring) -- Persons not in the labor force increased by about 840,000 between Nov and Dec -- To get a 5% unemployment rate within 7 years, US needs 300,000 new jobs a month -- Gasoline at highest level since Oct ‘08 at $2.70; record is $4.11 in summer of '08 -- Every $0.10 move higher takes an extra $14 bln annualized out of consumer pockets Residential investment up for two quarters, but slowed to 5.7% in Q4 from 18.9% in Q3 -- There is a huge overhang of vacant units with more foreclosures in the pipeline -- Leading indicators are NAHB index, housing starts and new home sales -- Higher mortgage rates likely as Fed stops buying GSE MBS; program ends on Mar 31 -- $47 billion collateral to recast from IO to a fully amortizing payment this year -- $130 billion due to recast over next two years; second wave of defaults likely -- At least 23% of all homeowners with mortgages are underwater -- Moody's put $572.7 billion in Alt-A mortgages on watch for possible downgrade -- Alt-A mortgages were granted without borrower showing proof of income or assets Commercial real estate foreclosures will have “catastrophic effects” * Fitch warns of huge CRE losses for life insurance carriers on mortgages * $1.4 trl in commercial loans are due in next 5 years; much will not be renewed Continued policy reflation should see trade weighted index fall to fresh lows (BCA) -- Yen may become the funding currency to short to fund the carry trade -- Dollar in bear market until Fed signals confidence in growth and hints of exit! -- Capital controls to curb hot money flows if dollar weakens again -- But watch trade deficit -- if it continues to narrow, the dollar may do better Core inflation is nearly impossible (statistically, anyway) -- Owners' equivalent rent unchanged in January -- Owners' equivalent rent is 24% of core CPI and its largest single component -- Rental vacancies remain near 10% and landlords have virtually no pricing power -- Capacity utilization is 72.0%, still low and a curb on both inflation and wages Stocks represent valuable enterprises which are inflation and dollar hedges -- Inventories and staff are very lean; operating leverage gives earnings much upside -- Dollar devaluation is huge positive for firms with int'l revenues; and visa versa -- Emerging economies with reserves, high productivity growth, low debt are valuable -- Most analysts seem cock-sure the bottom in the stock is in
BONDS Briefing USH TYH 5-min 10-min 10Y 2Y/30Y TU/US Bund/TY
STOCKS Briefing DJIA NKH0 NK/DJH S&P Nikkei Yahoo DJ Mini USD/FX SpotFX USD Euro Yen Aussie Loonie BL Cur Laidi Twitter BL Cur BBH Barchart OIL GOLD Oil CLH Gold J Soy H Wheat H CRB Metals BL Commodities NGH Energy Bond Market Briefing Bloomberg Bloomberg Tsys SMRA Reuters Wrightson GEZ0 Spread Dec10 Commodities List Bloom Energy Kitco Drum Reuters CLH Gold J Soy K Wheat K NGH HGH CRB Currencies Bloomberg BBH Laidi AL Twitter Michalowski Oracle Reuters Spot Stock Market Briefing Futia BW Pragmatic Nikkei Schaeffer St Smart 24/7 Wall St Yahoo ANALYSIS BCA Big Pic Beat CalcRisk CW Econoday EconPic MFGR Mish MS Oracle COLUMNISTS Asia TImes Bloomberg Crane Econ View David Goldman Pritchard RealClear COMMENTARY Aleph Baseline Hutchinson Mauldin Naked Noland Roseman GRUMPY GUYS Bail Cluster FA GW G's Mess Jesse Kedrosky Michaelson Ticker Martenson Ninja Zero
|