The Footnote On The Irish Bailout Plan
by Zero Hedge - November 29th, 2010 7:20 pm
Courtesy of Tyler Durden
We very much enjoy the view of Michael Cembalest (CIO, JPM Private Bank) when it comes to the sensitive topic of geopolitics, as it tends to provide that incremental perspective over and above what otherwise his and other banks would skirt around due to conflicts of interest (after all they are banks). Today, in his Eye on the Market report, Cembalest looks again at the Irish bailout. And while his summary of the 4 key dynamics (in his opinion) is certainly spot on, it is his footnote that caught our attention, as it carries in it the most pertinent information: namely, that since its bankruptcy and currency devaluation, Iceland’s economy and stock market have surged, unbound by the shackles of a zombie monetary system and exponentially growing debt. Ireland, to the contrary, can only hope for at best a gradual decline in its economic output instead of an outright collapse now that European Commission council is the country’s new politburo. It can also, at best, hope that its pension fund will have a few penny farthings left for the aging population once it is done rescuing Europe’s banks. It is precisely this option that a formerly democratic country refused to offer its citizens, and is the reason why its entire government should be tried for treason: instead of using empirical evidence that default and devaluation is the best outcome, Ireland crumbled to the interests of a few parasite plutocrats, which have just their own interests in mind, and never those of the host nation (which ends up being abused and discarded like a used condom off the side of the road).
The key issues on the Irish bailout per Cembalest:
1. Bailouts don’t change the level of debt that countries owe, it just shifts the creditors around. The latest steps remind me of the desperate attempts by US banks to lend more money on top of prior money during the late 1980s to Latin America, when Citibank chairman Walter Wriston’s “countries cannot default” thesis was left in ruins. For everyone that said last spring that “Greece 2009 is not Argentina 2001”, they’re right; Greece’s budget/trade deficits and debt/GDP were much worse.
2. GDP figures can be misleading indicators of risk. Greece, Ireland, Spain and Portugal (GISP) are small in GDP terms relative to Germany and France.
…
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by Chart School - November 29th, 2010 7:09 pm
Courtesy of David at All About Trends
Our call options we bought at 23.15 are now 47.00 for a gain of 103%! — watch the green trend channel resitance level.
Over the weekend, we said "Three days of consolidating at the highs. A few more days of consolidation then a bust higher is what we want to see if indeed it is going to go higher. Should that occur? Then we definitely will lock in our gains on the call option.
The flip side is if it pulls back in here. Then we’ll let the stock tell us what to do by the action it exhibits, much like we saw last week in the leaders vs. the indexes.
Regarding the $SPX, we wrote:
"HOWEVER more often than not, much like the wave 2 pullback in August we could still stage an ABC 3 legs down to complete the pattern for the completion of wave 4
If this wave 4 is not done and it traces out an ABC down pattern just like wave 2 in August then we we need to complete the c wave down as we have what looks to be waves A and B completed.
If wave four is NOT done then it’s just a little bit more minor turbulence work to do to the downside"
Below is the super short term 1 minute zoomed in chart of the SPX.
For now? Support looks to be holding, we’ll find out in the magic into the close hour.
We also said over the weekend:
"We’ll just stick to our knitting around here and pay attention to what our stocks are actually doing and what the follow the leaders type names are doing also."
So let’s do that below by looking at how our holdings are faring today.
SHORT SELL TRADES TO FOCUS ON THIS WEEK
NONE
Talk to us at the end of the year AFTER they’ve sucked in the retail investor (think greater fool theory) in a big way out of fear of missing it AFTER they already missed it.
To learn more, sign up for David’s free newsletter and receive the free report — “How To Outperform 90% Of Wall Street With Just $500 A Week.” David’s also offering PSW readers a Special deal, two months for just $10 a month. - Ilene
Research or Insider Trading? A Guide
by ilene - November 29th, 2010 6:54 pm
Joshua M Brown provides a hilarious roadmap to help you distinguish between legitimate research and preparation for insider trading, in "Research or Insider Trading? A Guide." And no, it’s not meant as a "how to". - Ilene
Courtesy of Joshua M Brown, The Reformed Broker
What constitutes legitimate research? When is the insider trading line crossed?
Many of the financial blogosphere’s luminaries, like Felix Salmon, John Carney and Roger Ehrenberg, are carrying on this debate right now.
And since I’m in the solutions business, I’ve created the below guide that may help a bit…
Just my 2 cents.
Some of my other guides:
Venture, Angel or Private Placement? (TRB)
Decoding Mutual Fund Brochures (TRB)
*SAC = SAC Capital Advisors
Market Recap: 11.29.2010
by Zero Hedge - November 29th, 2010 6:51 pm
Courtesy of Tyler Durden
A summary of the day’s key developments in equities, vol, FX, rates, credit, and commodities. The biggest highlights of the day by far was that despite two POMOs, stocks closed once again red on a POMO day.
- US equities recover nicely from early weakness as SPX bounces from well-flagged technical support in front of 1170. US financials held in well all session despite a poor performance from their European counterparts. Greece, Ireland, et al is still a European problem, it seems. SPX closes down 2 at 1188. The DOW closes down 40 at 11052. The NASDAQ closes down 9 at 2525.
- The VIX sold off into the close to end the day down -.66 at 21.56, though still managed to hold above 21 for the second consecutive day.
- FX markets vote ‘no’ to the Ireland package. The relief rally in EURUSD lasted all of 100 points before the pair reverses sharply lower, taking out its 200d (1.3130) in the process. Good leverage selling through that level. The pair stabilizes back above 1.3100 and vol pulls back modestly as stocks pare earlier losses, but this is hardly comforting to anyone still long EUROs and hardly discouraging for anyone short. The worry: extend and pretend is over in Europe. The corollary: liquidity fixes aren’t going to be enough. Elsewhere, most pairs take their cues from stocks so AUDUSD back above .9600 and USDCAD back below 1.0200. USDJPY trades in a very dull 30 point range in NY despite decent volatility in both fixed income and stocks.
- The rates market finished 0.5 to 6bps firmer in a bull flattening move as the back end outperformed. The rally was supported by equity weakness, continued worries over the European periphery situation, and the Fed buyback in the 2013-14 and 2021-2027 paper. We remain cautious constructive on duration as risk aversion and continued fed buybacks should provide support to the market. However, the shakiness from the last few weeks in global fixed income has kept conviction relatively low and positioning still feels generally long.
- In commodities, energy was bid despite dollar strength, with Nat Gas the only loser, down -4.25% on milder weather forecasts. Flow-wise, we saw leveraged selling of Nat Gas and buying of Jan crude. Metals were similarly bid as traders fled into safer assets. Silver continued to outperform gold, up +1.6%.
…
Chris Christie Stares Down Jimmy Fallon, Steals My Heart
by ilene - November 29th, 2010 6:25 pm
Courtesy of Joshua M Brown, The Reformed Broker
You guys know I’m a big fan of NJ’s Governor Chris Christie. He’s smart, analytical, tough and human. He was on Jimmy Fallon’s show last night cracking jokes about tunnels, his own redundant name and Sarah Palin. And he’s still doing that Presidential denial thing, but I think he can be talked out of it…
Read Also:
NJ’s Chris Christie – The Wrecking Ball Governor (TRB)
Governor Chrisite vs the Educrats (TRB)
Originally published by The Reformed Broker, Chris Christie Stares Down Jimmy Fallon, Steals My Heart
ETF Periscope: An Ostrich Walks Into a Bar and Says “Ouch”
by Sabrient - November 29th, 2010 6:14 pm
Courtesy of Daniel Sckolnik of ETF Periscope
“I have always been regretting that I was not as wise as the day I was born.” ~Henry David Thoreau
We’re not in Kansas any more. More like Madrid. Or perhaps even Pyongyang.
After several months of marching to a primarily up-trending beat based around some pretty good third quarter U.S. corporate earnings and generally decent national economic reports, the markets seem to be getting a lot more skittish.
It doesn’t take a lot of figuring to see why higher levels of uncertainty are permeating the markets. All it takes is a quick read of the news to recognize that unnerving events are unfolding in the wider world. On Tuesday, the benchmark S&P 500 index fell 1.4%, its largest drop of the week, on the scary news that fighting occurred between the two Koreas. Asian currencies also reverberated with losses as a result of the mounting tensions. The S&P 500 ended the week down almost 1%, which put it about 3% below the two-year high that it hit on Nov. 5.
Bickering countries with nuclear capabilities and deep grudges seem to have that effect on the markets, for some odd reason or another.
As if that wasn’t enough to spook investors, the growing media focus on the sovereign-debt crisis of the European Union’s weaker members is starting to gain mass. The word “contagion” is being bandied about with greater frequency than at any time since last year’s H1N1 concerns. The EU’s bourses posted their largest losses in over two months in response to the perception that Ireland, Portugal and Spain are situated on increasingly unsettled ground in terms of their abilities to repay their debts. This concern was highlighted in Ireland, where S&P lowered the Anglo Irish Bank’s ratings to junk level, as well as lowering the ratings of several other Irish banks. Moody’s Investors Service also placed Anglo Irish Bank “under review.”
The dollar, as would be expected in such times of international uncertainty, gained rather nicely, 2.4%, giving it a three-week winning streak. Measured against the basket of currencies consisting of the euro, the yen, the pound, the Canadian dollar, the Swiss franc and Swedish krona, it gained the most in over three months.
Other pieces of the economic puzzle offered contrasting levels of sentiment. General Motors (GM) offered up its highly awaited IPO, and managed to convince the public…
Wikileaks Next Target: “A Big US Bank”
by Zero Hedge - November 29th, 2010 5:54 pm
Courtesy of Tyler Durden
Honest distributor of leaked data or a clever PsyOps front, one can not deny that whatever it is, Wikileaks does share some unique information with the world (as to how it is interpreted is a different story). Yet for the most part, the bulk of the organization’s recent exposures have focused on the US military and away from the private sector, and thus away from that which is really important in today’s world: money (of a paper representation thereof). Which is we read with interest in the latest Julian Assange interview with Forbes’ Andy Greenberg that next on the docket of Wikileaks disclosure is not some facebooky look into the gossip world of international espionage or the foreign service, but something far more tangible and relevant: “A Big US Bank.”
From the interview:
These megaleaks, as you call them that, we haven’t seen any of those from the private sector.
No, not at the same scale for the military.
Will we?
Yes. We have one related to a bank coming up, that’s a megaleak. It’s not as big a scale as the Iraq material, but it’s either tens or hundreds of thousands of documents depending on how you define it.
Is it a U.S. bank?
Yes, it’s a U.S. bank.
One that still exists?
Yes, a big U.S. bank.The biggest U.S. bank?
No comment.
When will it happen?
Early next year. I won’t say more.
One needs to ask whether this is what we need: after all the US public already has enough public data to convict the executives of all the banks for numerous consecutive life sentences as is. It almost seems that nothing short of photographic evidence of some very (in)famous bank CEOs have underage sex while filming snuff movies, dressed in drag, killing puppies and recording their market manipulation conversations with Brian Sack will even rattle the Rip van Winkle formerly known as Eric Holder. But then again, we can hope…
As for Assange’s reason for coming to public with the bank exposition:
What do you want to be the result of this release?
[Pauses] I’m not sure.
It will give a true and representative insight into how banks behave at the executive level in a way that will stimulate investigations and
…
Guest Post: Musing Of A Bank Run
by Zero Hedge - November 29th, 2010 5:26 pm
Courtesy of Tyler Durden
Submitted by Joe Wäges
Musing of a Bank Run
If ever there were a sign of the times, one can clearly see the desperation of the establishment upon reading Andrew Clark’s “Eric Cantona’s bank protest isn’t very wise“. After reading the article and comments it becomes painfully clear that most people, the author included have no idea how the monetary system works.
How does Mr. Clark propose with that “There’s nothing evil about the concept of banks – they exist to look after our savings and to provide investment for businesses”, given that banks create money out of thin air based on deposits as a multiplier. One cannot say (with a straight face) they are looking after our savings as the very purchasing value of those savings is being diluted through legalized counterfeiting known as leverage and or the money multiplier. I do not think Mr. Cantona is arguing against the concept of banking, but rather organizing the end of the current predatory casino model paraded around as capitalism. Calling this model capitalism is an insult to capital, as it is after all savings. True capitalism cannot exist in a system where money is based on debt, not value; a printing press and not from savings. On the point that the concept of banking is not evil, one concedes that an idea cannot posses any characteristics of a living entity as it is an idea. That said debt based monetary systems utilizing a fiat currency, are historically used by oppressive régimes as the system itself is a giant wealth transfer and consolidation mechanism.
Ask yourselves how can it be that I, my friends and family, businesses and corporations, states, nations and indeed every entity created by man be in debt all at the same time? It is because of the banking and monetary system itself. The assets of the people are transferred to banks by creating ever more “reserves”. There is no hope for savings in a fiat currency as the nominal value can be maintained, but the actual purchasing value is devalued at an exponential rate. Most importantly in this type of system you can never be out of debt as the system is based on debt. Banks create principal and not interest, which is why there is a minimum payment on credit cards. This is the interest payment.…
Seagate LBO Dead: Here Are The Latecomer Fund Casualties
by Zero Hedge - November 29th, 2010 5:06 pm
Courtesy of Tyler Durden
One of the most long-suffering LBO names, Seagate Tech, has just decided to pull the plug on its going private aspirations. After on October 14 months of LBO rumors culminated with a press release from STX that the firm had received a “preliminary indication of interest regarding a going private transaction”, today, just over a month later, the foreplay ended, and management is now forced to appease its angry shareholders by announcing a $2 billion share buyback having been snubbed by its PE suitor. Of course, this is too little, too late, and the stock is getting gutted in the after hours session. At last check the stock was just above $13, or a 6% slide from closing. Which begs the question: which hedge funds jumped late on the LBO bandwagon hoping to receive some of that 20% upside love? Well, quite a few it appears. The list below shows all the funds who bought for the first time by September 30, and possibly later. After all the LBO was not announced until October 14, and in this broken market it would be stupid to assume that this information was not leaked in advance. The question remains: who bought when, and who sold when. And how many of those who still have not sold, and played this name for the LBO are now stuck with far less valuable stock certificates?
Here are those who may have been smart to sell in advance of today’s press release: all the funds below held zero or nominal amounts of STX shares in the June 30 quarter and ramped up heading into October (i.e., position is of September 30):
- Coatue: 4.2 million
- SG Gestion: 3.1 million
- Lazard Asset Management: 2.4 million
- SAC Capital (oops): 2.3 million
- Schroder Investment Management: 1.4 million
- Janus Capital (oops): 1.2 million
- CastleRock Management: 1.1 million
- Freestone Capital: 1.1 million
- Tahithromos: 1.0 million
- Suttonbrook Capital: 1.0 million
- Met Investors Advisory: 1.0 million
- J. Goldman & Co: 0.8 million
- First Eagle Investment: 0.7 million
And so forth. Altogether there are about 20 million shares bought on what was most likely an LBO catalyst expectation, and that possibility is now over. No buyback, absent a full MBO, will placate the bulk of these investors, some of which already have redemption issues due to recent subpoenas into their trading practices. Which…
Demand for FedEx Corp. Calls Jumps
by Option Review - November 29th, 2010 4:46 pm
Today’s tickers: FDX, XRT, FRX & HANS
FDX - FedEx Corp. – Shares of the delivery services firm increased as much as 3.4% in the first half of the trading session to secure an intraday high of $90.49 after it was upgraded to ‘outperform’ from ‘neutral’ with a target share price of $111.00 at Credit Suisse. The positive ratings change and subsequent rally in the price of the underlying shares spurred demand for near-term call options. Bullish players expecting FedEx to extend gains purchased at least 2,800 now in-the-money calls at the December $90 strike for an average premium of $2.13 a-pop. Call buyers are poised to profit should FedEx Corp.’s shares increase another 1.80% over today’s high of $90.49 to exceed the average breakeven price of $92.13 ahead of December expiration. More than 5,800 calls changed hands at the December $90 strike versus previously existing open interest of 4,243 lots at that strike. Options strategists also exchanged 1,400 calls at the higher December $95 strike by 1:15 pm in New York trading. The surge in demand for near-term call options on FDX lifted the stock’s overall reading of options implied volatility 5.9% to 29.91% this afternoon.
XRT - SPDR S&P Retail ETF – Put players flocked to the retail SPDR to initiate bearish positions on the fund right out of the gate this morning. Shares of the XRT, an exchange-traded fund designed to replicate the performance of the S&P Retail Select Industry Index, fell as much as 2.04% to touch down at an intraday low of $46.48. A sizeable ratio put spread drew our attention to the front month where one investor purchased 5,300 in-the-money puts at the December $47 strike for a premium of $1.45 each, and sold 10,600 puts at the lower December $45 strike at a premium…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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