Monday, April 6, 2009

Overallotment: April 6

  • Must Read: IMF to warn toxic debts will reach $4 trillion, higher than Roubini's prediction (Times Online)
  • GM accelerating bankruptcy preparations (Bloomberg)
  • CBO update: US deficit nearly $1 trillion in first half of FY 2009 (Reuters)
  • Doug Kass joins Cramer on staking his reputation for S&P at 1,050 (The Street)
  • Treasury to open up PPIP to small hedge funds, banks can still buy toxic garbage creating mother of all conflits of interest (FT)
  • Who killed the U.S. public pension systems (The Barricade)
  • ...As the remaining public pension funds want in on the toxic fun (Reuters)
  • Some more on the ongoing CDS unwinding at AIG (Business Week)
  • Australia steals PPIP idea.... to build a broadband internet network (Bloomberg)
Market summary from Robert Savage:
Quiet day to begin what should be a quiet week in front of the holiday weekend. US equities were unable to sustain overnight gains, led lower by financials and cyclicals. Though after five straight up days, few are surprised or even disheartened. So the USD was bid and carry sold off, and those trading were merely booking profits or reducing risk. More worrisome for the longer-term – especially for those who have placed their faith so completely in QE – US fixed income continues to sell off. 10 year yields now 2.93% and closing in quickly on the 3.00% seen before the Fed pulled out its bazooka. Perhaps the market is slowly coming to realize what economics majors learn in their first semester: prices are set at the margin. The Fed can suppress yields only as long as it remains in the market; the Fed can only suppress yields if it commits to unlimited Treasury purchases. $300bn is a lot, but it’s not unlimited. Operation Twist failed in the 60s, are we foolish to think it might succeed today? But questions like this will not inspire more than idle chatter this week, as few can yet muster the bravery to fade this rally.
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S said...

Kass and cramer enough said. How is that no wage growth and all the job giveback since 2001 and kass is still using an S&P peak number from the debt induced haze. EPS on the 500 was in the $40-50 range in '98-99 range . For comparitive purposes it fdropped down to $20 or so in 2001. As a refresher estimates for this year were in the $100-$115 range. Kass analysis is so lacking and sophmoric it is embarrasing. I'll leave aside his tobins Q garbage.

Anonymous said...

Doug Kass 2009 = Jessie Livermore 1931.

Made a lot of money on the initial down leg.Five years later -bankrupt

I think Doug Kass called the bottom for housing in December
2008. I also think he said the markets would be down 10% in 2008. His call on LEH was correct.

However guys like Rosenberg,have been calling it more right than wrong, for what seems like an eternity. Guys like Doug Kass just don't seem to understand that we are short about $6T-$10T. AAd the ramifications of being offside to the tune of trillons of dollars ain't going to be pretty.

It was 25 years before the highs of 1929 were revisted.

Joe Rawlings said...

From the Times Online article:
Nouriel Roubini, chairman of RGE Monitor, expects bad debts from US-originated assets to reach $3.6 billion by the middle of next year.

$3.6B doesn't sound very bearish :p

Anonymous said...


Excellent video of William Black.
I really hope he can dig his teeth into this like he did during the S&L crisis.

video, right click-->Open in New Window

Anonymous said...

Rosenberg sounds bullish in his report today.