Russ Certo: “Fire In The Hole”
by Zero Hedge - September 30th, 2011 3:21 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
From Gleacher’s head of rates, Russ Certo
Fire In The Hole
Not rocket science but perusing my launchpad observing bleeding indicators which reveal more carnage (than usual) today which are the underbelly of seemingly contained or benign moves in headline equity indices. First notable observation is that commodities are getting whacked. Wheat down 7.22%, corn down 6.32%, sugar, copper down 3.5% and the list goes on… This likely represents CHINA slowdown. We talked about this in earlier notes and watch out for that Chinese PMI print tomorrow that you won’t get to trade til Monday.
Oil just broke below $80/barrel AGAIN. Guessing some stops running and could continue. Been down here before. It feels like it can break lower and I’m thinking of Copper down 25% ish in a month due to economic slowdown/increased chances of recession.
Kodak on the verge of filing, and lost 27% of its market cap. But good stuff getting hit like Tiffany. This concerns me as U.S. GDP is 70% consumption and high net worth would likely be 68% of that, decidedly not WalMart. Some times you hit bids that are fully valued and despite silver being up today the gold/silver/metals space has been liquidated for a variety of reasons recently and from a variety of players, but its all about liquidity. Like Tiffany? Retail stocks today and recently? Like selling Alt-A at par or moving your shorts up the capital structure or coupon stack years ago versus hitting a down CMBX or ABX synthetic index. Sell what you can, what is fully valued to extract alpha.
International banks/financials getting trashed as UBS/ING down 8+% and the rest of the lot following suit. Any number of Basil capital requirements, financial transaction surcharges, or collateral damage of operating businesses. Just a note on this topic as U.S. financials not faring well either but something is brewing in quarter end. It is clear that BWICs in subprime or ABS space are validating or exposing dysfunctionality in banking, balance sheets and markets. Even vanilla pass-thrus LAGGING by anywheres of 20 ticks today. Homebuilders are homely today, down as much as 6% selectively.
If the equity crowd only knew how difficult it is to trade financial instruments in secondary markets (or primary markets with IPOs non-existent and IG…
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DiggCoach Options Embossed With Bearish Paw Prints
by Option Review - September 30th, 2011 3:13 pm
Today’s tickers: COH, BIG & MOLX
COH - Coach, Inc. – Concern that growth may be slowing in China sparked selling pressure in shares of luxury goods retailers such as Coach, Inc. this week. Shares in the largest U.S. luxury leather goods seller fell 0.90% to $53.51 on Friday afternoon, adding to Thursday’s losses of roughly 6.0%. A three-legged options trade initiated on the stock this morning suggests one strategist expects shares to continue to decline in the next couple of months. The trader may be assuming an outright bearish or protective stance on Coach ahead of the company’s first-quarter earnings report on October 25.
The investor appears to have sold 1,100 calls at the Nov. $57.5 strike for a premium of $2.50 each, in order to offset the cost of buying the 1,100-lot bearish Nov. $43/$50 put spread purchased at a net premium of $2.20 per contract. The trader pockets a net credit of $0.30 per contract on the transaction, which he keeps in full as long as shares in Coach fail to rally above $57.50 at expiration. Additional profits are available to the investor should COH’s shares fall 6.6% from the current price of $53.51 to breach $50.00. Maximum potential profits of $7.30 per contract, including the net credit of $0.30, pad the investor’s hand-stitched fine Italian leather wallet if the stock drops 19.6% to settle beneath $43.00 a share at November expiration.
The bear put spread normally limits an investor’s maximum loss potential to the net premium paid, however, the addition of the short calls introduces additional risk to the position. If…
Occupy Wall Street: Rise Up and Burn This System to the Ground
by Insider Scoop - September 30th, 2011 3:10 pm
Courtesy of Benzinga.
Long before a tidal wave ever hits, it starts off as a ripple event, an ocean apart from its eventual impact. Over the vast expanses, it gains speed and power. It picks up, essentially, support from every molecule of water it rolls over, until finally — BOOM — it crashes, unexpectedly into the world.
The Occupy Wall Street movement is building in much the same way, and will have much the same impact on Wall Street, on Washington, and on the elites in America who control the wealth and believe they have an iron grip on the lives and fortunes of the citizens of America.
For decades, starting with Ronald Reagan’s election, the wealthy right wing in this country has used any means necessary to plunder wealth and financial security from Americans, poor or middle class, black or white.
They have broken union after union; they have spent vast fortunes of money — our money — bailing out the very banks who have conspired to rig the system against you. They have raped the environment because clean air isn’t profitable. They have polluted oceans and rivers because regulations “cost jobs”. They have moved millions of jobs overseas because, well, because they can. Congress lets them. The President lets them.
They throw people out of work and then call them bums for needing unemployment insurance. They cut off the insurance, refuse to hire anyone currently unemployed, and call them lazy. They cut health insurance and then complain that their workers are sick and miss work.
They cut wages and then act surprised when citizens ask government to supplement their minimal existence. They reap record profits (literally, record profits) and then cut wages, refuse to hire, and give themselves lavish bonuses. The average CEO now makes more in a year than you will in your entire lifetime.
They demand increased worker productivity and then keep every penny of those increases. They freeze wages, inflate prices, and laugh as Americans blame themselves for an economic predicament not of their choosing.
And now, they’re coming after your retirement fund and your old-age health insurance fund. They refer to Social Security as a welfare program and a Ponzi Scheme, when in fact, it is a retirement…
KoDaK’S LaST MoMeNT
by Zero Hedge - September 30th, 2011 3:04 pm
Courtesy of ZeroHedge. View original post here.
Submitted by williambanzai7.
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Is Kodak on the Brink of Bankruptcy?
by Insider Scoop - September 30th, 2011 2:59 pm
Courtesy of Benzinga.
With the Wall Street Journal reporting today that Eastman Kodak (NYSE: EK) has hired law firm Jones Day for restructuring advice, concerns are increasing from investors that a turnaround is unlikely.
As of 14.40 on Friday, EK was trading at $0.60, A loss of well over 50% from the $1.69 it was trading at yesterday.
According to the WSJ, “Kodak, whose operations burned $847 million in the first half of the year, had $957 million in cash on June 30. It aims to have $1.6 billion to $1.7 billion on hand at the end of the year, but that target presumes successful asset sales, patent income and improvements in the company’s businesses.”
“We’re a large company, and we employ a number of outside consultants. We don’t itemize who those consultants are or what they do for us,” Kodak spokesman Gerard Meuchner told WSJ. “As we sit here today, the company has no intention of filing for bankruptcy.”
Business Insider ranked EK at number 3 in its 15 Companies Most Likely To Declare Bankruptcy feature, and that predictions seems to be edging ominously closer.
Presenting Eastman Kodak’s Main ‘Value Investors’
by Zero Hedge - September 30th, 2011 2:59 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
As EK is halted on news that it is considering patent sales and potential bankruptcy (very much in line with the expectations CDS markets have had for a while), we present the professional falling-knife-catchers (sorry value investors) who owned the most at the end of Q2. Has anyone heard from Bill Miller today? Largest holder was LMM LLC (yes that Legg Mason). Or is Bill Miller preparing for a speech at some Value Investing Shindig?
With the short-dated bullet bond trading $44 – down 50% on the week – it seems the events have caught a lot of people by surprise…though CDS cracked on Monday and has shifted from 35/36% upfront to 64/65% upfront now – seems like equity-holders clung to ‘hope’ just a little too long.
Chart: Bloomberg
POMO…. It’s BAAAAAAAAACK
by Zero Hedge - September 30th, 2011 2:32 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
You didn’t think the Fed would let more than a few months pass without the much beloved and dearly missed near-daily POMOs now did you. The FRBNY’s Brian Sacksters just released the October schedule of $44 billion in long-dated purchases, and $44 billion in short-dated sales. Since the net effect to banks is one of derisking, the offsetting rerisk will be implemented in the form of more stock purchases. Hopefully their prop desks (which no longer exist, right, after all the whole Volcker Rule thing and the UBS fiasco…) will know how to trade Netflix this time around better than last time.
POMO buy dates and amounts:
And POMO sell dates and amounts.
Wall Street Protest: Time for Conservative Endorsements
by Zero Hedge - September 30th, 2011 2:24 pm
Courtesy of ZeroHedge. View original post here.
Submitted by George Washington.
Big Liberal Endorsements for Wall Street Protest
Given that numerous unions (and see this) and progressive luminaries like Cornell West, Michael Moore, Bernie Sanders and Russel Simmons are joining the Wall Street protest, this may be painted by some as a “left-wing movement”.
Conservatives Support Protests
Of course, United Airlines pilots are not a particularly liberal group, but they joined in.
Indeed, conservatives such as Dylan Ratigan, Karl Denninger, and supporters of Ron Paul have also joined in to the protests.
The Divide-And-Conquer Technique Is Failing
I’ve repeatedly warned that there is a scripted, psuedo-war between
Dems and Repubs, liberals and conservatives which is in reality a
false divide-and-conquer dog-and-pony show created by the powers
that be to keep the American people divided and distracted. See this, this, this, this, this, this, this, this, this and this. (In fact, the Founding Fathers warned us about the threat from a two party system.)
The Tea Party was quickly co-opted by the Republican Party:
Remember that one of the founders of the Tea Party – Karl Denninger – has slammed
the current Tea Party (which was quickly co-opted by the mainstream
GOP) for serving the rich and the Republican party instead of fighting
against the giant banks, and is calling for non-partisan, Gandhi-style nonviolent resistance to take on the banskters.
Don’t let the Wall Street protests get hijacked by the mainstream Democratic Party.
Time for Big Conservative Endorsements
This is not a liberal or a conservative cause … it is both.
It is time for some big conservative endorsements, to rally around the non-partisan issues important to all Americans.
The Tea Party should endorse the protests, but so should the Oath
Keepers, taxpayer rights groups, conservative Christians, limited
government groups, and all other conservative groups.
A sign from the Wall Street protest shows that the people on the ground get it:
Buffett Says European Bank(s) Have Asked Him For Money
by Zero Hedge - September 30th, 2011 2:05 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
While Buffett hemmed and hewed in his usual populist rhetoric, discussing how multi-billionaires can afford to be generous with other people’s tax rates, all of it completely unremarkable and highly hypocritical, the Octogenarian did release, whether by accident or on purpose, something quite critical, namely that European banks have approached him with requests for money. From Bloomberg: “They need capital in their banks, in many of their banks,” Buffett, Berkshire’s chairman and chief executive officer, told Bloomberg Television’s Betty Liu on “In the Loop” today. “We would not be a good prospect,” he said in an interview from the New York Stock Exchange. He’s received “very, very few” calls about putting capital into European banks. “Not quite none at all,” he said, declining to name any institutions.”And that, as they say, is a word out of place, because while one my pretend that borrowing $500MM from the ECBs Fed swap line is really just an (inverse) arb on Libor or some other useless excuse, a bank begging for Buffett to take a bath can not be explained away.
Furthermore, since something tells us La Troisieme Banque d’Avignon does not have Warren on speed dial. So yeah, now begins the great scramble to figure out just who it is that can not even rely on the Fed or ECB for funding, but has to rush all the way to the”Really Poor Man’s” central bank, located in downtown Omaha. And the inevitable risk flaring in Europe which will result once this latest data is processed will certainly lead to even more weakness for Bank of America. Which begs the question: why is Buffett trying to push his own investments lower with careless words: accelerate dementia or an attempt to double down on BAC shares at even lower prices?
As for bank [X], the Oracle had bad news:
Berkshire Hathaway Inc.’s Warren Buffett, who has sold most of his company’s holdings of European sovereign debt, said his firm isn’t interested in helping to bail out lenders on the continent.
Berkshire sold most of its European holdings about year and a half ago, the billionaire said today on CNBC. A German reinsurance unit still holds some bonds from that nation, and Berkshire is “fine” with the investment, he
…
‘Real’ Disposable Income Per Capita: Down 0.4% from Last Month
by Chart School - September 30th, 2011 1:35 pm
Courtesy of Doug Short.
Earlier today I posted my monthly update of the year-over-year change in the Personal Consumption Expenditures (PCE) price index since 2000. My focus was on PCE data as a measure of inflation.
Now let’s look at the PCE data to understand what the latest numbers are telling us about a key driver of the U.S. economy: "Real" Disposable Income Per Capita.
The first chart shows both the nominal per capita disposable income and the real (inflation-adjusted) equivalent since 2000.
The Bureau of Economic Analysis (BEA) use the average dollar value in 2005 for inflation adjustment. But the 2005 peg is arbitrary and unintuitive. For a more natural comparison, let’s compare the nominal and real growth in per capita disposable income since 2000. Do you recall what you we’re doing on New Year’s Eve at the turn of the millennium? Nominal disposable income is up 46.6% since then. But the real purchasing power of those dollars is up a mere 13.9%.
In fact, real disposable personal income is at a level first attained in October 2006 and remains about 1.2% below the level at the beginning the 2007-2009 recession. Real DPI has remained essentially flat for the past 12 months, down 0.5%.
The mainstream media focuses on nominal disposable income with little or no attention to population or inflation adjustment. Thus today’s business headlines speak of a 0.1 percent MoM decline in disposable income versus the 0.4% decrease when population and inflation are included. The “real” story in the latest PCE data is one of continued economic weakness.
Note: My source for the recent data is the BEA Table 1 in the full release available here. Earlier data is from FRED, the St. Louis Federal Reserve database: available here.
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