Jeff Gundlach Compares The US To The Roman Empire
“Jeff Gundlach just hosted a webcast with clients. The title of his presentation: “The Decline and Fall of the Roman Empire.“
Not surprisingly, Gundlach drew parallels between the U.S. and Ancient Rome. Like the U.S., he noted that Rome had an insufficient tax system and a huge military budget.
Like Rome, the U.S. faces “persistence of a destitute underclass,” as reflected by the excruciatingly slow job recovery.
Gundlach’s talk also included commentary on the year-to-date performance of markets as well as his outlook for the rest of the year.
As usual, Gundlach’s presentation has all of the most important financial and economic charts you need to understand the world.”
Comments »Goldman Sachs and Morgan Stanley Warn of Trouble Over the Volcker Rule
“Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS), the two Wall Street banks most reliant on trading, warned U.S. regulators that a proposed ban on proprietary trading could make the financial system more risky and curtail services for clients.
The New York-based banks, along with competitors Bank of America Corp., Citigroup Inc. (C)and JPMorgan Chase & Co., are pushing to limit the reach of the Volcker rule, a ban on proprietary trading included in the 2010 Dodd-Frank Act. A draft of the rule, which takes effect in July, was released by U.S. regulators in October.
“Without substantial revisions, the proposed rule will define permitted market making-related, underwriting and hedging activities so narrowly that it will significantly limit our ability to help our clients,” John F.W. Rogers, Goldman Sach’s chief of staff, said in a comment letter.
“Although one of the key aims of Dodd-Frank was to promote greater stability in financial markets, we are concerned that the proposed rule could inadvertently increase systemic risk,” he added. If the rule makes hedging more expensive, “banking entities’ clients and customers will be forced to hold more risk on their own books.”
Comments »There Has Never Been a Better Time to Be an Individual Investor
abnormalreturns February 14th, 2012
This is not a novel theme for us. Indeed one thing we note in our forthcoming book, Abnormal Returns: Winning Strategies from the Frontlines of the Investment Blogosphere, is that investing has never been “cheaper or easier.” Some of this has to do with the rise exchange traded funds. In other respects it has to do with the blossoming of the options markets. In large part, it has to do with technology. In short, never before have investors had access to data, analysis, opinion and social tools that are commonplace today. Let’s take these points one by one.
Read the rest here.
Comments »No BS: Gasoline Above $3.50 This Early in the Years Signals More Pain for Motorists
Doug Kass Gets Shorty on the Qs
The Financial Stress Index is On the Rise Again (Chart Porn)
FLASH: CARL “GIVE ME 3 SEATS ON YOUR FUCKING BOARD” ICAHN TELLS CVI TO SELL THE FUCKING COMPANY ALREADY
13-d
CVR Energy: Icahn spoke with mgmt and told them CVI would be better served if it commenced a process to put itself up for sale – amended 13D filing (26.96)
On February 13, 2012, Carl C. Icahn and other representatives spoke with Jack Lipinski, the Chairman, Chief Executive Officer, and President of CVI, and discussed the initiatives announced on February 13th. Icahn stated that they believed that shareholders would be better served if CVI commenced a process to put itself up for sale, rather than pursue the limited initiatives announced by the co. Icahn believes that CVI’s stock price does not reflect current high crack spreads. CVI is a small company with only two refineries. As a result, shareholders face an unfavorable risk reward ratio since they bear not only the risk of a decline in crack spreads, but also the risk of production interruptions which would reduce the upside from high crack spreads. Icahn expressed their belief that there are three or four possible acquirers that could benefit greatly from the synergies that could be realized from a combination with CVI and that are better positioned to hedge currently high crack spreads. Mr. Lipinski stated that he would take the Icahn’s suggestions under advisement and discuss them with his board of directors and advisors.
U.S. Equity Preview: YGE, UCTI, SGEN, MAS, LPS, HMA, & CCC
Calgon Carbon Corp. (CCC) : The Pittsburgh-based water- purification company said fourth-quarter earnings will be hurt by expenses on equipment failures.
Health Management Associates Inc. (HMA) : The operator of acute-care hospitals reported fourth-quarter earnings of 26 cents a share, excluding some items, beating the average analyst estimate of 21 cents.
Lender Processing Services Inc. (LPS) : The provider of mortgage-processing services to lenders forecast first-quarter earnings of no more than 55 cents a share, excluding some items, missing the average analyst estimate of 61 cents.
Masco Corp. (MAS) : The home improvement and building products maker reported a fourth-quarter loss from continuing operations of 9 cents a share, wider than the average analyst estimate of a loss of 2 cents.
Seattle Genetics Inc. (SGEN) : The developer of cancer drugs reported a fourth-quarter loss of 24 cents a share, beating the average analyst estimate of a loss of 29 cents.
Ultra Clean Holdings Inc. (UCTT) : The supplier of equipment to semiconductor makers said first-quarter earnings will be at least 15 cents a share, beating the average analyst estimate of 9 cents.
Yingli Green Energy Holding Co. (YGE) : The Chinese maker of solar-power modules agreed to buy $100 million of solar materials from DuPont Co. (DD)
Comments »Gapping Up and Down This Morning
Gapping Up
KORS +11%, UCTT+15.4%, NSIT +11.8%, HIMX +8.9%, RAX +6.8%, YGE +5.9%, HMA +5.4%, LLNW +3.8%, TTM +3.3%, CRL +2.7%, GPRO +1.9%, FIS +1.7%,
MMC +2%, GNRC +7.8% , MGIC +4.6%, WPI +3.1%, RGC +0.8%, PRGN +9.0%, DRYS +3.3%, FRO +2.6%, SBLK +2.5%, YOKU +5.9%, RENN +2.2%, BIDU +1.1%,
MYL +1.2%, GPS +1.8%, HFC +0.4%, KFT +0.7% ,
Gapping Down
SGEN -6.6%, ALNY -4.8%, LPS -2.8%, RJF -2.6%, BAC -0.8%,
Comments »In Play and On the Wires
Why Economist May Be Wrong When They Say There Will Be No QE3
BREAKING: GREG SOLOMON RETURNS!
[youtube:http://www.youtube.com/watch?v=9chNh_baJe0&feature=g-all-u&context=G290057fFAAAAAAAAQAA 603 500]
This is in response to this ridiculous video
[youtube:http://www.youtube.com/watch?v=kl1ujzRidmU 603 500] Comments »Jim Cramer’s Mad Money Monologue, 2/13/12
[youtube:http://www.youtube.com/watch?v=buHdybFhoo4&feature=g-all-u&context=G2b3801bFAAAAAAAAEAA 603 500]
Comments »Watch Jeremy Siegel Explain How We May Get to DOW 15-17k in the Next two Years
STUDY: Businesses Who Employ Undocumented Workers Do Better
An American Budget for the Rich and Powerful
By Jeffrey Sachs
President Barack Obama’s budget for 2013 will set off a vitriolic battle. Republicans will rail against the Democrats’ “class warfare” and Democrats will rail against the Republicans’ “coddling of the rich”. Yet it is mostly for show. The rich will win in their fund balances while probably losing at November’s presidential polls, and the poor and working class will probably re-elect Obama but suffer a continuing decline in relative and perhaps absolute incomes.
Read the rest here.
Comments »Malinvestment: Are central bankers seeding the next crisis?
Comments »FRANKFURT — Few would begrudge Mario Draghi his boast last week that he and the European Central Bank had prevented a disastrous credit crisis by showering banks with cheap loans in December.
But beneath the gratitude toward Mr. Draghi, the president of the central bank, lurks a fear that the easy money could simply be creating the conditions for another banking crisis several years from now.
Because of the central bank’s cheap financing, some economists warn, sick banks now face less pressure to confront their problems — to clean out bad loans and other impaired assets, or even wind down operations if there is no hope of a turnaround. The European Central Bank, they say, could inadvertently spawn a cohort of “zombie banks,” burdened by nonperforming loans and assets that remain on the books, like the ones that helped make the 1990s a lost decade for Japan.
“It’s a huge bet,” said Charles Wyplosz, a professor of economics at the Graduate Institute in Geneva. “If the crisis ends up well, the E.C.B. will have pulled off a miracle. If things go wrong, then commercial banks will be in a much worse situation than they were before.”
Professor Wyplosz said the central bank might be making the banking system more fragile by encouraging institutions to load up on risky assets, especially government bonds from troubled euro zone countries like Spain or Italy. Banks can use those assets as collateral for more loans from the central bank.
In December, the European Central Bank invited banks to borrow money at the benchmark interest rate of 1 percent for three years, compared with a previous maximum maturity of one year. Banks could borrow as much as they wanted provided they posted collateral. They jumped at the opportunity: 523 banks borrowed 489 billion euros, or $647 billion.
The central bank will offer another round of three-year loans at the end of this month, and last Thursday it loosened its collateral rules to encourage smaller banks to join in. According to some predictions, banks may draw on the cheap credit even more enthusiastically than they did in December.
Last Thursday, Mr. Draghi urged banks to take the money, and even ridiculed top bankers who have bragged they did not need the central bank’s charity. “I would describe some of the statements made as ‘statements of virility,’ ” Mr. Draghi said at a news conference in Frankfurt. “The three-year facilities are there to be used.”
The cascade of cash has lifted sentiment in the euro zone, and may even help the region avoid a serious economic downturn. But it is not yet clear how banks are using the money, and whether they will spend it wisely. Some banks — no one knows how many — are bound to use it to cover up past mismanagement and books full of bad assets.
“It’s like taking medicine, it sometimes has side effects,” said João Soares, a partner at Bain & Company, the management consulting firm, who specializes in financial services. “One side effect that is not good,” he said of the central bank’s lending, “is that it removes pressure to clean up balance sheets.”
