Meanwhile, in his always entertaining monthly missive, Pimco's Bill Gross makes the case that asset appreciation in U.S. and other G-7 economies has been artificially elevated for years. Gross says the risks of betting on a V-shaped recovery far outweigh the rewards. "Out, out, brief candle." [View news story]
You don't say, Bill? Thanks for letting us know. Meanwhile, enjoy the bond bubble while it lasts. The only keeping it aloft is ZIRP. Any upward tick in the fed funds rate will ruin the Total Return Fund.
Sources say United Technologies (UTX +0.1%) has emerged as the frontrunner for GE's (GE +0.3%) fire alarm and surveillance systems unit, which it put on the block earlier this year. A deal would bolster United's strategy of locking in revenue streams by offering multi-year service contracts for equipment and systems in commercial buildings. GE is thought to want about $2B for the unit. [View news story]
Getting property owners to sign multi-year contracts might have been wise in a healthier climate, but doesn't the slow-motion CRE crash put that strategy at risk? If I owned a mini-mall I'd be more concerned about making my mortgage payment than my fire alarm payment (as long as I had insurance).
The message to Wall Street is that some or all of the pay givebacks depend on the amount of campaign contributions to the right people. Hey, it's just business. Besides, the current pay restrictions are for those companies that have the least chance of getting healthy anyway, so Uncle Sam is just being prudent in extracting as much blood as he can from a dying patient.
There will be a second stimulus in some form, depending on the bond market's reaction. Asian creditor nations may choke on another big bond bolus, so D.C. is floating alternative ideas.
Just talking up the prospects of one may be enough to give the mini-bull market some legs for a couple more months.
SEC's Mary Schapiro says along with its probe into dark pool liquidity, the agency is looking into exchanges' co-location practices - where volume traders are allowed to place their computers closer to the exchange's data center. The SEC will seek public comments on the issue. [View news story]
The perp walk for Galleon's founder was a shot across the bow to hedge funds that have not ponied up sufficient campaign contributions. Look for some Wall Streeters to dig deeper to avoid prosecution.
Calling ETFC a speculative play is absolutely correct. Have you noticed their long term debt load? Net income (which has been negative for two years) would have to suddenly turn positive, rise by several multiples, and stay there for a decade to pay off that debt. Shareholder equity has declined for three years straight. ETFC is a penny stock for very good reasons.
Wells Fargo Is Doing Worse than It Seems [View article]
Good analysis, Reggie. Having something original to say sometimes feels like you're talking to a wall, and many people don't listen until they collide with that wall themselves. They'll come around when they see you standing there unscathed.
So is WFC reporting earnings out of "capitalized interest" the way WaMu was before it cratered? It sure seems that way if their quality asset base is shrinking.
Four Shippers Emerging from the Mire [View article]
Has anyone seriously looked at the debt load that DRYS and other shippers carry? The economics of transocean shipping are pretty bad right now and not many firms have the pricing power needed to lift their revenue. Shippers are doing poorly for more reasons than just the Baltic Dry Index's decline.
David Einhorn on That Barbarous Relic, Gold [View article]
Mr. Einhorn's novel insight links gold's desirability to irrational policy and not to macro conditions. That is an effective answer to gold skeptics like Mish Shedlock who dismiss gold because it didn't live up to its inflation-fighting reputation in the 1970s.
Wall Street Breakfast: Must-Know News [View article]
Helicopter Ben isn't hiking rates anywhere near 2% until the U.S.'s entitlement liabilities are inflated away or foreign central banks quit buying Treasuries, whichever comes first.
Positive earnings results from MCD wouldn't be a surprise given their downmarket positioning. Positives from AAPL and WHR would be very positive indeed.
Drug companies to benefit? You don't say? Check their campaign contributions to evaluate the ROI on what they spent to get that outcome.
So when does the next shoe drop? Other hedge fund managers are supposedly under investigation. The ones who get the perp walk treatment probably didn't make enough campaign contributions.
Chinese central bankers aren't Bernanke fans either. But Iowa farmers getting rich enough for exotic cars? That's a stretch if rising oil prices keep costs high for energy-intensive American agribusiness. BTW, Jim Rogers isn't any better than average on timing market swings. His value lies in spotting the long-term shift in civilization's center to Asia.
How Galleon Got (and Lost) Its Edge [View article]
Hedge fund managers get sloppy when they get greedy. The desire to earn 30x on capital when 15x used to be sufficient pushes people to do things they normally wouldn't do in the absence of perverse incentives.
The poor prospects for the U.S. economy are already driving PhD students from China and India to return to their home countries after they complete their studies here. The educated U.S. elite may follow suit and decamp for more economically hospitable climes. The loss of a professional class of scientists, engineers, and managers will do irreparable harm to American competitiveness.
As its key programs get canceled or cut back, Boeing (BA) - led by new defense chief Dennis Muilenburg - is looking to enter the potential $20B American power-grid market. The company wants to use tech from its combat and missile-defense programs to smarten up the grid, but would compete for stimulus dollars with GE, IBM and Cisco Systems (CSCO). [View news story]
Routing combat orders is kind of like routing energy flows, but energy flows are continuous (like a sine wave) whereas mission order packets are discreet and discontinuous. Boeing's expertise in government relations is actually more relevant than its tech given the amount of regulation in energy. IMO they should consider an acquisition.
Meanwhile, in his always entertaining monthly missive, Pimco's Bill Gross makes the case that asset appreciation in U.S. and other G-7 economies has been artificially elevated for years. Gross says the risks of betting on a V-shaped recovery far outweigh the rewards. "Out, out, brief candle." [View news story]
Sources say United Technologies (UTX +0.1%) has emerged as the frontrunner for GE's (GE +0.3%) fire alarm and surveillance systems unit, which it put on the block earlier this year. A deal would bolster United's strategy of locking in revenue streams by offering multi-year service contracts for equipment and systems in commercial buildings. GE is thought to want about $2B for the unit. [View news story]
Critics who thought government paymaster Kenneth Feinberg was too draconian in his terms for compensation at seven bailed-out companies should brace themselves: He's turning his attention to 2010 pay and those demands could sting much worse. [View news story]
Without another round of stimulus, NY Times says, the best we can hope for is the weakest recovery in modern history. Mark Thoma agrees, but thinks the chances are slim given the political climate. [View news story]
Just talking up the prospects of one may be enough to give the mini-bull market some legs for a couple more months.
SEC's Mary Schapiro says along with its probe into dark pool liquidity, the agency is looking into exchanges' co-location practices - where volume traders are allowed to place their computers closer to the exchange's data center. The SEC will seek public comments on the issue. [View news story]
E*Trade: A Solid, Deep Value Stock [View article]
Wells Fargo Is Doing Worse than It Seems [View article]
So is WFC reporting earnings out of "capitalized interest" the way WaMu was before it cratered? It sure seems that way if their quality asset base is shrinking.
Four Shippers Emerging from the Mire [View article]
David Einhorn on That Barbarous Relic, Gold [View article]
Wall Street Breakfast: Must-Know News [View article]
Positive earnings results from MCD wouldn't be a surprise given their downmarket positioning. Positives from AAPL and WHR would be very positive indeed.
Drug companies to benefit? You don't say? Check their campaign contributions to evaluate the ROI on what they spent to get that outcome.
Shut down CIT already.
Accused insider trader Raj Rajaratnam is back at work this morning after posting $100M bail. [View news story]
Jim Rogers on the Next 10 Years [View article]
How Galleon Got (and Lost) Its Edge [View article]
The Greatest Depression Is Coming [View article]
As its key programs get canceled or cut back, Boeing (BA) - led by new defense chief Dennis Muilenburg - is looking to enter the potential $20B American power-grid market. The company wants to use tech from its combat and missile-defense programs to smarten up the grid, but would compete for stimulus dollars with GE, IBM and Cisco Systems (CSCO). [View news story]