Showing posts from November, 2011

Money For Nothing and Risk For Free?

Love days like today. Those hopeless shorties at Zero Hedge are fuming after world central banks decided to pump up the jam. I've been warning them, don't mess with banksters, not only do they get secret Fed loans, they borrow for free on the short end, lock in spread by buying bonds, and invest in risk assets like high beta stocks, EM stocks, commodities, commodity currencies and high yield bonds.

Lots of money managers underperforming their indexes. Both long-only managers and hedge funds. They need a mega beta boost, which is why I'm positioned for La Dolce Beta once more (click on each image to enlarge):

When people ask me what is the biggest tail risk I see, I tell them, "a meltup unlike anything you've ever seen before." Forget Europe, it's just a lot of noise and in the end, Germany will cave to demands of financial oligarchs and back a eurobond market.

There will be profit taking along the way -- there always is -- but if you focus on the right stoc…

Pump Up The Jam?

Twas the month before Christmas when the world's central banks decided to pump up the jam:
The world's major central banks made it easier Wednesday for banks to get dollars if they need them, a coordinated move to ease the strains on the global financial system. Stock markets rose sharply on the move. The European Central Bank, U.S. Federal Reserve, the Bank of England and the central banks of Canada, Japan and Switzerland are all taking part in the operation, which is designed to "enhance their capacity to provide liquidity support to the global financial system." The European Central Bank said in a statement the central banks were making it cheaper for banks to get U.S. dollar liquidity when they need it, starting next Monday. They are also taking steps to ensure banks can get ready money in any currency if market conditions warrant by establishing a temporary network of reciprocal swap lines. The ECB said the central banks have agreed to reduce the cost…

By George, How Bad Is It?

The Guardian reports, George Osborne confirms state pension age will rise to 67:
The government will raise the state pension age to 67 by April 2028 in a move it said would save the UK almost £60bn.The change, which was announced by the chancellor George Osborne in his autumn statement, and had been widely anticipated, will be phased in over two years from April 2026. It will affect 8.1 million people in their 40s who would otherwise have expected to retire at 66.Osborne said the move was in response to rising life expectancy and described it as "a measure to control spending [which] is not for today or for next year or even for the next decade".He added: "Our generation has been warned that the costs of providing decent state pensions are going to become more and more unaffordable unless we take further action."Let's not leave it to our children to take emergency action to rescue the public finances; let's think ahead and take responsible, sensible s…

Banksters Take It All?

A follow-up to my earlier comment on Hard Times Generation. Bloomberg reports on secret Fed loans which helped banks net $13B:
The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing. The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue. Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled o…

Hard Times Generation?

I've seen many episodes of 60 Minutes but nothing got to me as much as watching these homeless kids living out of car. Scott Pelley brings 60 Minutes cameras back to central Florida to document another form of family homelessness: kids and their parents forced to live in cars:
More than 16 million children are now living in poverty and, for many of them, a proper home is elusive. Some cash-strapped families stay with relatives; others move into motels or homeless shelters. But, as Scott Pelley reports, sometimes those options run out, leaving an even more desperate choice: living in their cars. 60 Minutes returns to Florida, home to one third of America's homeless families, to find out what life is like for the epidemic's youngest survivors.The following is a script of "Hard Times Generation" which aired on Nov. 27, 2011. Scott Pelley is correspondent, Bob Anderson and Nicole Young, producers.Never has unemployment been so high for so long. And as a r…

Europe's Real 'Contagion' Threat?

Edward Harrison of Credit Writedowns reports that the IMF to offer Italy a 600 billion euro bailout via ECB funding. Don't know if this latest rumor is true and don't really care. At this point, I'm convinced the bond market will break Merkel by pushing Germany to the precipice.

There is something else that caught my attention, however, and it has to do with something much more serious in terms of European "contagion." Jeremy Laurance of the Independent reports, Antibiotic-resistant infections spread through Europe (h/t Paul Kedrosky):
The world is being driven towards the "unthinkable scenario of untreatable infections", experts are warning, because of the growth of superbugs resistant to all antibiotics and the dwindling interest in developing new drugs to combat them.Reports are increasing across Europe of patients with infections that are nearly impossible to treat. The European Centre for Disease Control and Prevention (ECDC) said yesterday that…

Will the Meek Become the Masters?

Bloomberg reports that U.S. stocks fell, capping the worst Thanksgiving-week drop since 1932 in the Standard & Poor’s 500 Index, as S&P cut Belgium’s rating and a report said Greece is demanding private investors accept larger losses on their debt: Financial (S5FINL) stocks in the S&P 500 rose 0.4 percent as a group, trimming an earlier gain of 2 percent. Chevron Corp. and Hewlett-Packard (HPQ) Co. slid at least 1.5 percent to pace losses in the Dow Jones Industrial Average. Sears Holdings Corp. lost 1.3 percent while Wal-Mart Stores Inc. (WMT) rose 0.4 percent on Black Friday, traditionally the biggest U.S. shopping day of the year. The S&P 500 declined 0.3 percent to 1,158.67 at 1 p.m. New York time, falling for a seventh straight day, the longest streak since August. The Dow retreated 25.77 points, or 0.2 percent, to 11,231.78. The U.S. stock market was closed yesterday for a holiday and trading ended at 1 p.m. today. About 3 billion shares changed hands on U.S. ex…

Canada Facing EZ Contagion?

Blooomberg reports that Canadian Finance Minister Jim Flaherty says Europe’s debt crisis is creating “contagion” outside the region and policy makers must act while the situation can still be “stabilized”: “Again today, we are staring a crisis in the face,” Flaherty said in the text of a speech he’s giving today in Toronto. “The crisis remains far from resolved.” European leaders have spent two years struggling to prevent contagion from affecting the region’s largest economies such as France and Germany. Italy had to pay almost 7 percent to sell six-month bills at an auction today, and Germany failed to sell 35 percent of 10-year bonds on offer at a Nov. 23 sale. “Ongoing uncertainty stemming from the European sovereign and banking crisis is leading to broader contagion outside Europe and global credit markets,” Flaherty, 61, said today. “If European authorities move aggressively and with decisiveness to address the crisis and restore financial market stability and confidence, the sit…