Berkshire Hathaway Hits the Bid on $8.25 Billion Muni Bet

“Berkshire Hathaway terminated a large wager on the municipal-bond market five years early, the Wall Street Journal quoted a person familiar with the transaction as saying.

CNBC

In a quarterly regulatory disclosure filed this month, the Warren Buffett-owned company terminated credit-default swaps insuring $8.25 billion of municipal debt.

The paper said the early termination is deepening questions among some investors about the risks of buying debt issued by cities, states and other public entities.”

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“Samsung Electronics said on Tuesday it will spend about $4 billion at its chip plant in Austin, Texas, to renovate an existing chip producing line and boost production of system chips, widely used in popular smartphones and tablets.

Jung Yeon-Je | AFP | Getty Images Samung flag flies in Seoul

The investment comes on top of 2.25 trillion won ($1.98 billion) in spending that Samsungannounced in June to build a new logic chip plant in South Korea, and the conversion of two memory chip lines into logic chip production earlier this year to meet growing demand from mobile gadget customers such asApple [AAPL  673.31    8.16  (+1.23%)   ].”

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The S&P 500 is likely to fall by 20-25 percent over the next three months according to Nomura strategist Bob Janjuah.

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In a research note published on Tuesday, the long-term bear who called the recent rally for U.S. stocks said he expects investors to be back in risk-off mode until the U.S. election is over.

“I now think the correct thing to do — as I also said in April and June — is to prepare for a serious risk-off phase between August and November…over the August to November period I am looking for the S&P 500 [.SPX  1421.68    3.55  (+0.25%)   ] to trade off down from around 1400…by 20 to 25 percent…to trade at or below the lows of 2011.”

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$BBY had poor earnings seeing their net income falling. The company has also suspended profit forecasts.

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Russell Wasendorf of Peregrine Financial was indicted last week on 31 counts of lying to regulators and robbing his firm’s clients of about $200 million.

Wasendorf, who plead “not guilty” to the charges, faces up to 155 years in jail.

Meanwhile, The New York Times reports NO charges are likely against Jon Corzine or other senior execs of MF Global — where $1.6 billion of customer funds remain missing nearly a year after the futures brokers filed for bankruptcy.

Which brings us back to a segment we call Taken to Task.

Look, I get that proving a crime is tough, but when the guy accused of stealing $200 Million goes to jail and the guy who can’t account for $1.6 Billion is likely to get off scott free, something is very wrong.

In case you didn’t know, Jon Corzine is a former CEO of Goldman Sachs, a former Senator and Governor of New Jersey and a former major fundraiser for President Obama. It’s really hard to be more “high-powered” and “connected” in American society.

To be sure, Wasendorf essentially confessed to how he stole customer funds in what was supposed to have been a suicide note while Corzine has denied any wrongdoing and MF Global’s bookkeeper, Edith O’Brien, has plead the fifth.

Still, I’d like to take the Obama Administration, the Department of Justice and the Commodities Futures Trading Commission to Task for not either finding the missing money at MF Global or turning up the heat on the head of the ill-fated firm.

I mean, is it really possible to be unable to account for $1.6 BILLION of customer fund without breaking rules that compel brokerage firms to keep customer funds segregated (and safe)?

The lesson here: If you’re going to blow up the firm, go BIG!

Read here:

Prichard of the Telegraph thinks ‘convertibility risk’ in sovereign debt purchases will be considered or called something else as opposed to a bailout. This is being suggested as a game changer.

This appears to be a ‘lipstick on the pig’ analogy….

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ABB, BDC, BSFT, CLX, GLW, CVH, EIX, GPS, GRPN, NNN, NFLIX, PVR, QTWW, STP, URBN, VE,

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Facebook Inc. (FB) director Peter Thiel sold most of his stake in the operator of the world’s largest social-networking website, bringing his proceeds to more than $1 billion, after restrictions on insider sales ended.
Thiel, one of Facebook’s earliest investors, sold about 20.1 million shares in the company on Aug. 16 and Aug. 17, raising $395.8 million, according to a filing yesterday with the U.S. Securities and Exchange Commission. Thiel, a venture capitalist and hedge-fund manager, had already generated $640.1 million in sales during the initial public offering.

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Apple tops Microsoft’s 1999 record to become most valuable company of all time, with a market cap of $621 billion.

-CNN Money

• “Recent Merrill Lynch Fund Managers Survey showed that 8 out of 10 fund managers expect ECB to engage into QE by the end of the year, while 5 out of 10 expect Fed to re-start QE. Also to note was that managers increased equity exposure to overweight, increased exposure to commodities from underweight to neutral and finally decreased exposure in both cash and bonds.

• Bulls well and truly dominate the media space (CNBC, Bloomberg). That is usually what happens when US equities rise for six straight weeks and EU equities rise for 11 straight weeks. NYSE 10 day TRIN breadth measure has now become extremely low and joins other indicators like the VIX in signalling maximum complacency.

• Treasury Inflation Protection securities (TIPs) have done amazingly well in recent years. We have seen a very strong correlation with the overall business cycle since early 2009. TIPs have tracked the improvement in equity prices, industrial production and weekly jobless claims perfectly. Fast forward to today and we see TIPs breaking down. What is the message for other risk assets?

• Global risk appetite is usually best represented by the Aussie Yen exchange rate cross. Australian central bank is seen as a super hawkish inflation fighter during economic upturns, while capital naturally finds its way into Japanese Yen during downturns as a safe haven – a perfect risk on / risk off barometer. Aussie Yen cross continues to send a warning signal for other risk assets. “

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“The global economic outlook is more uncertain now than at the start of the financial crisis in late 2008, chief executive of Caterpillar, Doug Oberhelman, said on Monday.

The CEO of the world’s largest maker of construction equipment also predicted that it could take another five years before Europe’s economy begins to see growth again.

“There’s never been a more unpredictable set of tea leaves than right now. Even in 2008 and 2009, U.S. housing was already dying and had been for two years. We saw that,” Oberhelman is quoted as saying in the Financial Times.

“I don’t think the situation is as grave as it was in 2008, but the uncertainty, the storm clouds are around things that none of us know about — like what will happen with the political situation in Europe,” he said.

Oberhelman is cited as saying that barring Europe, most big economies looked unlikely to contract, although he said it was not clear whether they would grow significantly.

Source

“The 14.4 percent total return generated by the Standard & Poor’s 500 Index so far this year is no flash in the pan, says Jim Paulsen, chief investment strategist at Wells Capital Management.

“The market, as a whole, is starting to suggest that this rally has more legs and sustainability than people might think,” Paulsen told Yahoo. “You’re seeing more and more underlying characteristics aligning with a real rally.”

And what are those characteristics? ”

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“(Reuters) – General Motors Co <GM.N> will recall 249,260 midsize sport utility vehicles to correct a potential fire hazard, a U.S. government safety agency said.

GM, in a filing with the National Highway Traffic Safety Administration, said the recall affected 2006-2007 Chevrolet Trailblazer and GMC Envoy SUVs, as well as certain 2006-2007 Buick Rainier, Saab 9-7X and Isuzu Ascender SUVs.

A possible electrical short could affect power windows and door locks, and in some cases could cause a fire, GM said in its August 17 letter to the NHTSA that was posted on the agency’s website.

The recall involves vehicles sold or currently registered mainly in the Northeast and Midwest states, including Connecticut, Delaware, Illinois, Indiana, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, West Virginia, Wisconsin and the District of Columbia.”

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“As you may recall, Groupon did a highly unusual stock deal about 10 months before its November 2011 IPO.

The company allowed its early investors to cash out big, selling $946 million-worth of stock to a host of new investors who were eager to get in on one of the fastest-growing companies in history.

This deal was a bonanza for early Groupon insiders and investors, including Chairman Eric Lefkovsky, who banked $318 million (to go with an earlier $67 million cash-out) and Andrew Mason, who took out a total of $31 million in that round and a prior round.

Importantly, the investors who bought this pre-IPO round weren’t idiots. Rather, they were a who’s who of smart money.

That pre-IPO cash-out was done at a split-adjusted share price of $7.90. ”

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“ATP Oil & Gas Corp. (NASDAQ: ATPG) is joining the bankruptcy crowd. The oil company in the Gulf of Mexico filed a voluntary Chapter 11 bankruptcy petition in order to undertake a comprehensive financial restructuring.”

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Gapping Up

CVH +20.2%, GOLD +2%, BCS +1.9%, FB +1.8%, PRU +1.6%, ARMH +1.4%,

TEF +1.4%, SAP +1.2%, NVS +0.9%,  AET +2.5%, CIS +5.9%, ROST +0.2% ,

SIRI +3.1%, FB +1.8% , PRU +1.6%,

Gapping Down 

ATPG -57.4%, ZAGG -5%, WM -3.3%, BBY -3.3%, ADES -2.9%,  STX -0.9%, TI -3.5%,

AZN -0.9%, ADES -2.9% , HD -0.9%, HLSS -1.6%,  ASX -8.5%,  BBY -4.3%

AGU, AZN, BEBE, BRCD, CHUY, PB, QSII, ROST, SCCO, STO, STEM, TI, VNTV,

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In Play ,

On the Wires 

“Many analysts, strategists, and economists forecast that the U.S. is entering a long-term period of outperformance against Europe as the eurozone deleverages and battles financial crisis.

However, Goldman Sachs equity strategists Christian Mueller-Glissmann and Peter Oppenheimer think it’s time to bet on a comeback in Europe. In their latest note to clients, they make an unusual trade recommendation – buy companies with exposure to the European economy and sell companies with exposure to the United States.

Here is their reasoning:”

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