Guest Post: Why Ford CEO's "U.S. Car Market In A V-Shaped Recovery" Thesis is Wrong

by Zero Hedge - September 29th, 2009 11:07 pm

Submitted by The Firecracked Report, a new up and coming financial blog

Why Ford CEO’s “U.S. Car Market in a V-shaped Recovery” Thesis is WRONG

Attachment	Size
US Car Sales Collapse In September (2).pdf	179.16 KB

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Guest Post: FDIC Making Sure Continuing Claims Slack Is At A Maximum

by Zero Hedge - September 29th, 2009 10:55 pm

Courtesy of Tyler Durden

Submitted by Keyser Soze

Sheila can you please explain the following email I received from the FDIC last night if “we are all good”? Ben feel free to jump in…

Tim can you again PLEASE explain to the American people why you pulled the backstop of MMF in light of the weekly escalation of employment requests at the FDIC? I am completely confused. I have tracked this for over 18 months and it keeps accelerating, one of the largest lists I have seen since the crisis began. (I encourage folks to get on the mailing list as it appears to be a great windsock)

Tim, unless you are actually functionally retarded the only other rational explanation is that you are doing it on purpose considering most other large company backstops and guarantee programs have been pumped up – not wound down. (Except those which back the American people that is) …. I hope it is the former but I think we all know the truth.

Don’t worry America it is all under control….

Sent: Tuesday, September 29, 2009 1:07 AM

            Job: 2009-KC-B0156
   Job Position: 0950 PARALEGAL SERIES
Job Description: PARALEGAL SPECIALIST CG-950-9/11 (TERM Appointment)
      Job grade: CG-09/11
      Open Date: 09/28/2009
     Close Date: 10/09/2009
   Salary Range: $47250.00-$96439.00
       1 vacancy at Kansas City, MO

Follow this link to the job listed above:
https://jobs1.quickhire.com/scripts/fdic.exe/rundirect?Org=1&Job=3213

———————————————————————-

            Job: 2009-KCD-B0157
   Job Position: 0950 PARALEGAL SERIES
Job Description: PARALEGAL SPECIALIST CG-950-9/11 (TERM Appointment)
      Job grade: CG-09/11
      Open Date: 09/28/2009
     Close Date: 10/09/2009
   Salary Range: $47250.00-$96439.00
       1 vacancy at Kansas City, MO

This position is also listed with USAJobs website ( http://www.usajobs.opm.gov ), as Control Number 1691179
———————————————————————-

            Job: 2009-HQD-B1236
   Job Position: 1160 FINANCIAL ANALYSIS SERIES Job Description: LOAN REVIEW SPECIALIST, CG-1160-11 (TERM NTE 2 YRS)
      Job grade: CG-11
      Open Date: 07/01/2009
     Close Date: 10/02/2009
   Salary Range: $59387.00-$94023.00
       FEW vacancies at Albany, GA
       FEW vacancies at Atlanta, GA
       FEW vacancies at Charlotte, NC
       FEW vacancies at Columbia, SC
       FEW vacancies at Gainesville, FL
       FEW vacancies at Montgomery, AL
       FEW vacancies at Pensacola, FL
       FEW vacancies at Raleigh, NC
       FEW vacancies at Richmond, VA
       FEW vacancies at Charleston metro [Scott Depot], WV
       FEW vacancies at Hoover, AL
       FEW vacancies at…

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NO WONDER INSIDERS AREN’T BUYING THEIR OWN SHARES….

by Insider Scoop - September 29th, 2009 10:22 pm

NO WONDER INSIDERS AREN’T BUYING THEIR OWN SHARES….

Courtesy of The Pragmatic Capitalist

As we have reported repeatedly over the last few months, insiders have voted a resounding “no confidence” in the future share price of their own corporations via the use of their own dollars. Insider trading trends have remained extraordinarily lopsided despite signs that the economy is stabilizing. The latest report showed 6 sellers for every insider buyer. Well, today’s business roundtable survey results shed a bit of light on their current outlook for the economy, spending and hiring – and perhaps explains why insiders aren’t buyers of their own shares.

The survey results showed that 49% of all CEO’s expect their sales to be flat or down in the coming 6 months. 51% expect an increase. 79% of all CEO’s surveyed expect their capital spending to be flat or down in the coming 6 months. 87% of all CEO’s expect to do no hiring in the coming 6 months:

It will be nearly impossible for a robust recovery to develop without a capex recovery and hiring. With the market currently pricing in 20% EPS growth for 2010 and 4% GDP it might be more than safe to say that investors have grown overly optimistic about the strength of the recovery.

Source: Business Roundtable

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Bill Gross Bets On Deflation

by ilene - September 29th, 2009 10:21 pm

Bill Gross Bets On Deflation

Courtesy of Mish

PIMCO’s Bill Gross has a switch of heart. He has gone from hating treasuries to liking them. Please consider Pimco’s Gross Buys Treasuries Amid Deflation Concern.

Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said he’s been buying longer maturity Treasuries in recent weeks as protection against deflation.

“There has been significant flattening on the long end of the curve,” Gross said in an interview from Newport Beach, California, with Bloomberg Radio. “This reflects the re- emergence of deflationary fears. The U.S. is at the center of de-levering as opposed to accelerating growth.”

Gross had said during the midst of the credit crunch that Treasuries offered little value as investors seeking a refuge from turmoil in global financial markets drove yields to record lows in December. He boosted the $177.5 billion Total Return Fund’s investment in government-related bonds to 44 percent of assets, the most since August 2004, from 25 percent in July, according data released earlier this month on Pimco’s Web site. The fund cut mortgage debt to 38 percent from 47 percent.

Yield Curve Flattening

click on chart for sharper image

I am very familiar with the yield curve flattening. The above chart is one I run constantly, in real time, on my computer. The curve represents weekly closes. The flattening from the actual peak is even greater. The intraday high in the 10-Year Treasury Note is just over 4%.

What’s The CPI?

Properly adjusted for housing, I have the real CPI as of July at -6.2%. That number is arrived at by substituting the Case-Shiller CPI for Owners Equivalent Rent (OER) in the CPI. Please see What’s the Real CPI? for details.

Inquiring minds might also be interested in Real Treasury Yields Highest In History. If real treasury yields are high, it should be no wonder that Bill Gross in interested in them.

Rents Falling Everywhere

Given that the official measure of CPI is based on rents not housing prices, please consider the following collection of links courtesy of Lanser on Real Estate: Really? Rents fall almost everywhere.

Manhattan:Apartment Rents Drop as Employers Cut Jobs
Houston: Renters are snagging deals in a slowing local market
Tuscon: On your mark, get set,

…

Tags: apartment rents, Bill Gross, CPI, deflation

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Dave’s Daily

by Chart School - September 29th, 2009 10:11 pm

MARKET COMMENT

Courtesy of Dave Fry at ETF Digest, September 29, 2009

STILL TIME TO DRESS THE WINDOWS

Tomorrow is the quarter end and there’s some serious bonus money on the line. A little selling at these levels is no big deal today but tomorrow bulls will take a “bend but don’t break” defensive posture. Today, rising home prices were more than offset by declining Consumer Sentiment data.

Volume was heavier than yesterday with selling but still light as investors let the quarter run out. Clearly in their focus will be employment data on Friday. In the meantime breadth was flat to negative.

Read all of Dave’s Daily here. >>

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Cash for Clunkers Will Go Wrong, But Not For the Right Reasons

by ilene - September 29th, 2009 9:57 pm

Cash for Clunkers Will Go Wrong, But Not For the Right Reasons

cash for clunkers Courtesy of Jesse’s Café Américain

If I were to design a stimulus plan, Cash for Clunkers might be among them.

The target of the plan was to incent the public to trade in gas guzzling ‘clunkers’ for more fuel efficient, safer cars. It provided a spark of buying at a time of serious economic recession.

This is a classic case of promoting an economic and societal ‘good’ while providing a stimulus to spur economic activity. This is precisely the type of program that Big Business and its demimonde of commentators like when they are the primary beneficiary. Let’s say, in a program of tax incentives to promote useful capital expenditure spending. And what many of the private individuals who complain about the program like when it benefits them personally, such as the deduction of mortgage interest.

So why is this likely to fail, at least in part?

That is because the Obama Economic Team, under the leadership of Larry Summers, is grasping at stimulus and aids programs like bank capital asset subsidies that as part of a total package might be useful, but as remedies applied to a sick system do not promote a cure, but merely serve to mask the symptoms.

Stimulus and aid programs do not work when they are merely poured into a system that is broken, or worse, broken and corrupt.

And it cannot be reformed by actors who have been and continue to be willing beneficiaries of its flaws, such as the transference of wealth from the many to the few. Congress and the Administration have to take themselves away from the trough and start acting for the greater good of the people whom they represent, rather than the special interests who give them campaign contributions and fat, overpaid jobs when they leave office.

What we are experiencing is a collapsing Ponzi Scheme, as Janet Tavakoli describes so clearly and yet so well in Wall Street’s Fraud and Solutions for Systemic Peril.

This is why we say that the banks must be restrained, and the financial system must be reformed, and the economy brought back into balance, before there can be any sustained recovery.

Tags: bankers, cash for clunkers, government, Janet Tavakoli, regulatory capture

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CIT Bankruptcy V2.0 Next; Upcoming Debt-For-Equity Conversion Renders Equity Worthlesser Even As Cramer Pumps Stock

by Zero Hedge - September 29th, 2009 8:51 pm

Courtesy of Tyler Durden

How many times can one of the world’s worst-managed and toxic-laden companies be on the verge of bankruptcy? As long as Obama is president, one could answer “in perpetuity” although CIT may finally be on its last breath. The WSJ is out with this stunner:

The fate of CIT Group Inc. was hanging in the balance Tuesday as the large commercial lender readied a plan that would likely hand control of the company to its bondholders.

CIT is preparing a sweeping exchange offer that would eliminate 30% to 40% of its more than $30 billion in outstanding debt, said a person familiar with the matter.

For the uninitiated, a debt-for-equity means the old equity is worth zip. Nada. That won’t, however, stop it from trading up to $1,000 before the HFT algos decide they need to move and suck the liquidity rebates out of some other bankrupt deranged monster of a company.

The plan would offer bondholders new debt secured by CIT assets, as well as nearly all of the equity in a restructured company. The new debt would mature later than current debt, the impending maturity of which has posed a problem for CIT.

If not enough bondholders agreed to the plan, the company could seek to execute the restructuring in bankruptcy court, the person said. The result could potentially be one of the largest Chapter 11 bankruptcy-court filings in U.S. history.

So there you have it: keeping the zombified living dead walking for a few extra months only leads to the same final outcome. Yet the costs to the taxpayers keep climbing.

One issue is the $2.3 billion taxpayer investment made in CIT through TARP. While the U.S. would recover a small amount in any such exchange plan, it is likely that much of the sum would be wiped out, said people familiar with the matter.

Presumably this will shut up all those idiots who have claimed what a success for taxpayers the Fed/Treasury’s bailout of everything with a balance sheet has been.

So poor Obama is now in the same place he was in July, when a Hail Mary rescue financing from Pimco, Oaktree and Silverpoint gave the company a…

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CNBC September Total Viewership Down 37% YoY

by Zero Hedge - September 29th, 2009 8:14 pm

Courtesy of Tyler Durden

According to Nielsen, CNBC’s annual decline in total September viewership was a massive 37%: the worst YoY performance in 2009. The decline in the demo audience also hit a high of 27%. The dilemma for Jeff Immelt is the following: do CNBC pundits keep pumping GE (which everyone ignores, as CNBC’s credibility is practically nonexistent), or, at the expense of marking a few hundred billion assets at GECC to fair market value, incite another major market crisis. Perhaps, just perhaps, if the later were to occur, CNBC would have some chance of salvaging its prior year numbers. Although with CNBC now spending hours a day advertising GE engines, it seems like external advertisers couldn’t care less: after all, GE is subsidizing its own station by selling them ad space. Business schools have a word for that: vertical integration. Sane people have another word: biased reporting.

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BILL GROSS: DEFLATION EPITOMIZED IN THE HOUSING MARKET

by ilene - September 29th, 2009 8:07 pm

BILL GROSS: DEFLATION EPITOMIZED IN THE HOUSING MARKET

Courtesy of The Pragmatic Capitalist

Bill Gross, the world’s largest bond manager, sat down with Tom Keene and Ken Prewitt on Bloomberg Surveillance this morning. Gross continues to expect subdued inflation and a weak recovery.

Tags: Bill Gross, bonds, inflation, Recovery

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PETER THIEL: THE RECOVERY IS ENTIRELY FAKE

by ilene - September 29th, 2009 8:03 pm

PETER THIEL: THE RECOVERY IS ENTIRELY FAKE

Courtesy of The Pragmatic Capitalist

High profile hedge fund manager Peter Thiel is speaking out after reports emerged that his firm was floundering as the markets ripped higher. Thiel, a master of understanding secular trends believes the rally is built on quicksand – a stance he’s not alone in taking. Thiel told the WSJ yesterday that the rally was not real:

“The recovery is not real,” he says. “Deep structural problems haven’t been solved and it’s unclear how we will create jobs and get the economy growing again — that’s long been my thesis and it still is.”

Of course, this sounds all too familiar to regular readers. Thiel is dead right about the long-term problems that the U.S. is confronted with. Unfortunately for Mr. Thiel’s investors he has had a difficult time trading around these themes. Thiel’s fund Clarium was up 50% as of the middle of last year, but finished the year with slight losses. Even his deep pessimism couldn’t protect him from the collapse in Q3 as his commodity heavy fund got pummeled. The fund is now sitting on a 40% peak to trough (?) draw-down – a massive and potentially life threatening draw-down for such a large and respected fund.

But Mr. Thiel has unwavering faith in his positions which include a re-emergence of the fear trade:

“The government has helped stabilize the banking system, but I’m not sure we have a path toward sustainable growth,” partly because consumers are dealing with debt and other issues, even as an energy crisis looms, he says. “It always feels unpatriotic to be negative. But too few people are focused on the real problems.”

As we often hear, the market can remain irrational longer than you can remain solvent. Investors would be crazy to bet against Thiel in the long-run, but that doesn’t mean there isn’t more near-term pain for the ultra negative investors….

Source: WSJ

Tags: Banking System, consumers, Economic Growth, fake recovery, government, PETER THIEL

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