Another reason to audit the fed
Comments »Experts: Central Bank Action Temporary, May Fuel inflation
The New Meredith Whitney, Eagan Jones, Downgrades France
FLASH: Louise Cooper States Overnight Lending Reached 300 Billion Euros Last Night From the ECB
As told by the commentator that this spells a significant liquidity crunch. She states banks and traders have to buy this rally, but it may only last a few days as equity markets do not understand the trouble felt within the bond markets.
Louise Cooper from BGC
Will try to pull the interview later for your viewing pleasure…
Comments »El-Erian Comments on Today’s Central Bank Action
“Mohamed El-Erian, chief executive and co-chief investment officer at PIMCO, submits this guest post to FT Alphaville in reaction to this morning’s coordinated announcement.
Risk markets love liquidity injections, real and perceived. As such, they will welcome today’s announcement by six major central banks to reduce the price of emergency financing and broadening its scope. They will also like the possibility that this dramatic coordinated move provides a stronger context for further actions at the level of individual institutions.
In justifying the move, the central banks point to the need to counter pressure on “the supply of credit to households and businesses and so help foster economic activity.” This is an objective that will sell well to the public and politicians. But it is not one that will be effectively met by the announced measures. Indeed, the importance of the announcement is elsewhere, involving two related issues.
First, these monetary institutions feel that, again, they have to move because other entities have continued to be too slow and too ineffective; and second, they feel that they cannot, and should not ignore an actual or anticipated need to relieve acute pressures within the banking system.
These two reasons were made even more pressing by last week’s dislocations in the functioning of European financial markets – most notably, the inversion of the Italian yield curve, pressure on government bond markets in core Europe, the growing fragility of the banking system, a drop in market liquidity, and growing hesitation by market participants to warehouse any risk.
The immediate impact on markets unambiguously favors risk assets across the world. The longer-term effect depends on the scale and scope of the follow through from others. This is particularly important as we count down to yet another European Summit on December 9.
The hope is that central banks are acting because, looking forward, they feel confident that other policymakers will finally catch up with a big and spreading debt crisis that has serious implications for growth, jobs and inequality. The fear is that they are acting because they feel that they must again pre-empt yet another set of potential disappointments.”
Comments »Jim Cramer: Banks Work for a Day and Then They Don’t (video)
Jim Cramer says buy gold, oil, and copper. Defcon 2 avoided, but central bank action will only work for a day.
Comments »Crescenzi: Central Bank Action is Back Door Easing
“The coordinated actions by the Federal Reserve![[cnbc explains]](http://ibankcoin.com/news/wp-content/imagescaler/b095857bc35684a1ecf9bbc7c44ce936.gif){kind=small}
and other central banks is aimed at the funding strains faced by European banks in what was becoming a modern day run on the banks. The run has differed from the run that George Bailey watched as he drove up to the Bailey Building and Loan in It’s a Wonderful Life, but it has been a run nonetheless. The world in fact has been playing a game of hot potato with European bank debt as well as European sovereign debt, and the only player with oven mitts to hold the hot potato is the world’s central banks.
Illustrating the run on European banks is the sharp reduction in exposures by U.S. institutional prime money funds to European banks. For years the prime money funds invested about 50% of their investable money in European banks. This lasted until June. Since then, data from Fitch indicate the tally has fallen to 35%.
Further evidence of strain has been in the inter-bank market, in particularLIBOR . Whereas in June the 3-month LIBOR hovered close to the 0.25% rate the Fed pays on excess bank reserves, it was today at 0.53%, indicating banks were having increased difficulty obtaining dollar funding. Moreover, forward rates on LIBOR were priced for 3-month LIBOR to eventually reach about 85 basis points and the trend was accelerating.”
The Fed Gave You Some Time to Take Your Money Off the Table
Q&A on Central Bank Coordination
“Frontier Markets” For Your Consideration by Citi
Upgrades and Downgrades This Morning
Upgrades
SNDK – SanDisk named a long Research Tactical Idea at Morgan Stanley
SMFG – Sumitomo Mitsui initiated with a Buy at Jefferies
CLF – Cliffs Natural Resources initiated with Outperforms at Macquarie
CHSP – Chesapeake Lodging Trust initiated with a Buy at Janney Montgomery Scott
SLG – SL Green Rlty upgraded to Outperform from Market Perform at JMP Securities
FCX – Freeport McMoRan initiated with Outperforms at Macquarie
CAG – ConAgra initiated with a Buy at Janney Montgomery Scott
AGU – Agrium upgraded to Action List Buy from Buy at TD Securities
ORN – Orion Marine upgraded to Buy from Hold at BB&T
APC – Anadarko Petro upgraded to Overweight from Equal Weight at Barclays
EDU – New Oriental Education & Technology initiated with an Outperform at Credit Suisse
OMG – OM Group upgraded to Buy from Hold at Keybanc
LEAP – Leap Wireless upgraded to Outperform from Sector Perform at RBC Capital
SMSC – SMSC downgraded to Hold from Buy at Capstone
MDR – McDermott initiated with a Buy at Stifel Nicolaus
TEN – Tenneco initiated with a Top Pick at RBC Capital
GDP – Goodrich Petroleum initiated with a Mkt Outperform at Rodman & Renshaw
NXY – Nexen upgraded to Overweight from Equal Weight at Barclays
VRTU – Virtusa initiated with a Buy at Janney Montgomery Scott
BWA – Borg Warner initiated with Outperforms at RBC Capital
CVE – Cenovus Energy upgraded to Overweight from Equal Weight at Barclays
JCI- Johnson Controls initiated with Outperforms at RBC Capital
FIG – Fortress Investment initiated with a Market Perform at JMP Securities
Downgrades
RIG – Transocean downgraded to Hold at Argus
NFLX – Netflix downgraded to Underperform from Neutral at Wedbush
GLW – Corning downgraded to Underperform from Outperform at Credit Agricole
MTU – Mitsubishi Financial initiated with an Underperform at Jefferies
X – U.S. Steel initiated with Underperforms at Macquarie
FTI – FMC Tech downgraded to Underweight from Neutral at HSBC
SWN – Southwestern Energy downgraded to Equal Weight from Overweight at Barclays
AKS – initiated with Underperforms at Macquarie
BIO – Bio-Rad Labs downgraded to Outperform from Buy at Credit Agricole
AMSF – Amerisafe downgraded to Neutral from Buy at Suntrust
Comments »Gapping Up and Down This Morning
Data now skewed dur to central bank coordination….
Gapping up
the whole world
Gapping down
shorts
Comments »In Play and On the Wires
Gold Mining Companies Have Evaluations Not Seen in Years
Hedge Fund Adviser Leon Cooperman Tells Obama What He Thinks of Him and His Policies
The letter arrived just as Obama hit the all time worst president poll ratings…
“Omega Advisors Founder Leon Cooperman sent a scathing letter to President Obama yesterday, [via @andrewrsorkin] and its contents are just short of being outright brutal.
In the three page letter, Cooperman outlines his grievances with Obama’s administration, calling his policy decisions “profligate and largely ineffectual” and calling Obama out for using a political rhetoric that promotes the ideas of class warfare.
Cooperman came from very humble roots (his dad was a plumber in the South Bronx) but is now worth around $1.8 billion after rising through the ranks at Goldman Sachs in the 1980s and 1990s and starting Omega Advisors, a hedge fund sponsor.
The letter has clear and eloquent prose, but that only adds a sharper edge to the biting statements made by Cooperman. We picked out the best parts…
Cooperman’s biggest gripe with Obama is his policitizing of class division, which he feels exacerbates the problems facing Amercia.
I can justifiably hold you accountable for is your and your minions’ role in setting the tenor of the rancorous debate now roiling us that smacks of what so many have characterized as “class warfare”. Whether this reflects your principled belief that the eternal divide between the haves and have-nots is at the root of all the evils that afflict our society or just a cynical, populist appeal to his base by a president struggling in the polls is of little importance. What does matter is that the divisive, polarizing tone of your rhetoric is cleaving a widening gulf, at this point as much visceral as philosophical, between the downtrodden and those best positioned to help them.”
Comments »Bill Gross thinks 5% returns will be high very soon
Comments »Most investors for the next several years will be lucky to get a 5 percent return in their portfolios thanks to the growth-constricting debt problems in the U.S. and Europe, Pimco’s Bill Gross said.
Europe’s “dysfunctional family” of disparate nations will make a long-term debt solution elusive and cause the crisis to spread to other countries, said Gross, who as co-CEO at Pimco helps run the world’s largest bond fund.
In his monthly commentary, Gross paints a grim picture of Europe’s future and advises investors to avoid the region and focus on other parts of the world such as Brazil and Asia.
“Investors should recognize that Euroland’s problems are global and secular in nature, reflecting worldwide delevering and growth dynamics that began in 2008,” he wrote. “It will be years before Euroland, the United States, Japan and developed nations in total can constructively escape from their straightjacket of high debt and low growth.”
Until then, he said, investors should get used to low rates, slow growth and weak returns from their portfolios.
