Tuesday, May 31, 2011

Intel Enters Tablet Market; New Amazing Asus AX21

Intel has reveklaed its plans to enter the Tablet market and makie all those who boight iPads wished they had waited. The company announced details of the “ultrabook” at the Computex, saying the new device would combine the power of laptops with the features of tablets.
Intel also touted more than 10 new tablets based on its technology. Intel is banking on users not being totally happy wth Tablet format.

MarketWatch: “There are millions of users who are still quite keyboard centric and are not ready to walk away from the use of a laptop in their lives,” analyst Tim Bajarin of Creative Strategies Inc. said.

“However, they are also reluctant to carry another device like a tablet with them, which only adds to the amount of devices they have in their digital lifestyles,”  “I think that these convertibles, if they are really thin and light, will strike a chord with this type of user and could be the type of device they choose to use instead buying two different devices.”

The Asus AX21 is the first UltraBook:

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Retails Sales Plunge in Europe; Italy The Worst

The latest Markit’s PMI (Purchasing Managers' Index) survey shows that retail sales in the Eurozone fell for the first time in three months in May. In addition, sales were only marginally higher than one year earlier, with retailers cutting staff levels and also reducing purchasing.

Italy was particularly bad, but France and Germany also showed slower growth.

"The Eurozone Retail PMI is a single-figure indicator of changes in the value of sales at retailers. The PMI is adjusted for seasonal factors, and any figure greater than 50.0 signals growth compared with one month earlier. The PMI slipped from 52.2 in April to 48.8 in May. That was the lowest figure since October 2010, and also below the long-run survey average (since January 2004) of 49.1. The latest PMI figure was consistent with a broadly flat trend in official retail sales (on a three-month on three-month basis) as produced by the EU’s statistics office Eurostat".

Please take a look at Italy:

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Monday, May 30, 2011

Canada's GDP Soars +3.9%

In Q1 2011 Canada’s economic growth accelerated to the fastest pace in a year. GDP grew by  3.9% according to Statistics Canada.
In spite of this growth, Mark Carney , Bank of Canada's Governorm will probably keep rates at 1% as the bank predicts growth will slow to a 2% pace this quarter. Exports are currently threatened by a strong dollar, although the US dolalr has recovered a little in recent days,  and auto production is taking a hit  after Japan’s earthquake and tsunami.

Bloomberg reports: "On a monthly basis, gross domestic product rose 0.3 percent in March, faster than the 0.2 percent economists forecast based on the median of 24 responses in a Bloomberg survey. The increase was led by a 1.8 percent gain in manufacturing.

Canada’s first-quarter growth rate compares with 1.8 percent in the U.S., the country’s largest trading partner. Faster Canadian growth also came as the country’s currency traded above parity with the U.S. dollar for most of the three-month period. Canada’s dollar rallied to 94.46 cents April 29, the strongest since November 2007".

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Troubles in Greece Get Worse; Greek Default Will Create Mayhem

Somebody once said that one people lend you money, they are stuck lending you even more money, in the hope that they pay back. This seems to be what is going on in Greece indeed and Europena banks desperate try to gve Greece more money. Trouble is, the Greeks want none of it.

While the EU desperate wants to save the greek loan and the bailout and are demanding further cuts in budget deficits (thus, tax hikes), opposition Conservative leader Antonis Samaras called for a flat 15%corporate tax, rejecting government plans for hiking taxes.
Samaras: "You want to raise taxes and reach consensus with us, who have set reducing taxes as a priority? Don't even think about it,"

"Lower tax rates are the key to starting the engine of the Greek economy," "If you raise taxes, there will be no room for consensus or for renegotiation."

The European Central Bank says a Greek default  would create mayhem in the banking system.

Lenders want all leading parties to support the austerity which they have set as a condition for loans.

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Friday, May 27, 2011

Japan's Ratings Outlook Now Cut To Negative

Fitch Ratings has jst announced it has revised its debt outlook for Japan from stable to negative, due to high government debt.

Japan's debt is at more than twice the value of GDP.

The agency also said that reconstruction costs from the earthquake and tsunami have raised pressure on the public purse, while the nuclear crisis has added uncertainty.

"Japan's sovereign credit worthiness is under negative pressure from rising government indebtedness,"

"A stronger fiscal consolidation strategy is necessary to buffer the sustainability of the public finances against the adverse structural trend of population ageing."

Fitch said that Japan holds the world's second-biggest foreign currency reserves of over $1 trillion, and that most debt is held domestically, "which reduces the risk of self-fulfilling panic among debt holders". However, the debt was projected to rise from 2007 to 2012 at a rate that was behind only Ireland and Iceland.

We know what happened to both countries and their banking crises.

Japan's household savings rate had been on a downtrend since the early 1990s, a trend it associated with population ageing.

Fitch says the Japanese Earthquake would add two percent of GDP to government expenditure for reconstruction this year and next.

"there is considerable downside risk for the public finances from the still-unknown cost of cleaning up the Fukushima nuclear plant, while delays in restoring power supplies could lead Fitch to revise down its 2011 growth forecast from 0.5 percent."

"There is a further risk that prolonged delays in restoring infrastructure could lead more Japanese corporates to consider relocating their activities abroad, leading to a greater permanent loss of output from the disaster, although it remains too early to gauge this effect."

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Greece Insolvency: I.M.F. Rules Prevent It From Further Loan To Greece

More troubles in Europe this morning. Luxembourg's Prime Minister and Eurogroup president Jean-Claude Juncker said yesterday that the I.M.F. rules prevent it from providing further loans to gGreece because the country cannot guarantee its solvency for the next 12 months.
Mr Juncker said Greece's privatisation plan needs to be more ambitious.

A 12B euro payment is due to be made to Greece on 29 June, of which 3.3B euros should come from the IMF.

This is fifth tranche of the 110B euro loan package from the EU and IMF.

Juncker added that the IMF was assuming that if it decided not to make the payment the EU would step in and make it instead, but countries such as Germany, Finland and the Netherlands may oppose that.

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Thursday, May 26, 2011

GDP Growth Stalls in The U.S., Unemployment Claims Rise Well Above Minimum For Sustainable Growth

The BEA has just released GDP numbers for Q1 of 2011. The numbers are not good. In adidtion, unemployment claims rose well above what is considered a minimum for sustainable growth (see at the bottom )

BEA: "Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.8 percent in the first quarter of 2011, (that is, from the fourth quarter to the first quarter), according to the "second" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 3.1 percent.

The GDP estimates released today are based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was also 1.8 percent (see "Revisions" on page 3).

The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, and nonresidential fixed investment that were partly offset by negative contributions from federal government spending and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased".


"The deceleration in real GDP in the first quarter primarily reflected a sharp upturn in imports, a  deceleration in PCE, a larger decrease in federal government spending, and a deceleration in  nonresidential fixed investment that were partly offset by a sharp upturn in private inventory investment."

And an interesting note on financial corporations:

"Domestic profits of financial corporations decreased $70.6 billion in the first quarter, in contrast  to an increase of $57.7 billion in the fourth. Domestic profits of nonfinancial corporations increased  $45.8 billion in the first quarter, in contrast to a decrease of $10.1 billion in the fourth. "


The Labor Department has just announced that claims rose by 10,000 to a seasonally adjusted 424,000.
"Applications are above the 375,000 level that is consistent with sustainable job growth. Applications peaked at 659,000 during the recession." (Yahoo/AP)

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Fed Loaned $80B in Unrevealed "Secret" Loans At 0.01% Interest Rates

The Federal Reserve loaned $30 billion to each of Credit Suisse, Goldman Sachs., the Royal Bank of Scotland from the emergency lending program. The details "weren’t revealed to shareholders, members of Congress or the public", according to a Bloomberg report today

The ST OMO $80 billion initiative, "single-tranche open- market operations", made 28-day loans in  2008.
These 20 banks paid interest rates as low as 0.01%, when the Fed’s main lending facility charged 0.5%.

Continues Bloomberg: “This was a pure subsidy,” quoting Robert A. Eisenbeis, former head of research at the Federal Reserve Bank of Atlanta,“The Fed hasn’t been forthcoming with disclosures overall. Why should this be any different?”

"The Federal Reserve Bank of New York, which oversaw ST OMO, posted aggregate data about the program on its website after each auction, said Jeffrey V. Smith, a New York Fed spokesman. By increasing the availability of short-term financing when private lenders were under pressure, “this program helped alleviate strains in financial markets and support the flow of credit to U.S. households and businesses,” he said."

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Wednesday, May 25, 2011

OECD: Fed Should Raise Rates - Or Risk Bubbles and High Inflation

The OECD has just released its semi-annual forecast. It says that the U.S. Federal Reserve should be hiking interest rates soon, "in coming months". It also sees U.S. economic growth of 2.6 percent in 2011, much lower than the Fed's estimates.

The Fed had growth estimates between 3.1% and 3.3% as recently of April 27. That is a big difference.
The OECD is indeed recommending the Fed begin slowly withdrawing some of its extraordinary aid to the economy.

"A modest reduction in monetary stimulus should get under way in the second half of this year,", adding that the Fed should raise its benchmark federal funds rate to 1% from 0-0.25%.

The OECD says that low rates raise the risk of future bubbles or inflationary shocks.

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Tuesday, May 24, 2011

New Search Engine IPOs, Price Skyrockets: Dot Bomb Deja Vu

A new search engine has IPOed today: Yandex, ticker, YNDX. Do not confuse with Spandex, although its prices are very elastic.  It began trading today after its initial public offering was priced Monday night at $25 a share. Currently there is a bid ask of  $50 and $85, or some other lofty values which are surely to move higher today in all this IPO silliness.

We have seen this movie before.

The company raised $1.3B, selling 52.2 million Class A shares. Its original expected price range was $20 to $22. No doubt, LinkedIn mania helped it.

Says the WSJ: "Yandex, the largest Russian Internet company by revenue, is also its most popular search engine, generating 65% of all search traffic in a country that isn't dominated by Google Inc. he company also operates in Ukraine, Kazakhstan and Belarus.

Consumer Internet companies both public and private have been drawing buzz in the U.S., especially in the wake of LinkedIn Inc.'s initial public offering last week, during which its shares doubled on the first day, the second-highest IPO performance of the year. That stock closed down 5% for the day Monday

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U.K. Debt Downgraded

China's Dagong Global Credit Rating Company has downgraded the UK's local and foreign currency sovereign credit rating to A+ from AA-, and slaped it with a "negative" outlook for "its solvency".

The reasons: "the deteriorating debt repayment capability of the UK and the difficulty in improving its sovereign credit level in a moderately long term in the future," as well as the uncertainties due to the Bank of England's future monetary policy coupled with the impact of debt of  European countries and its effects on the British financial system - that are "likely to further worsen the government's fiscal status".

The agency also says that the expected anemic growth of 1.3% of British economy "directly curbs the improvement of the national economic status."

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Friday, May 20, 2011

QQQQ and Russell 2000 Straddles For Any Outcome: Up or Down

With the markets near a tipping point point, here are straddles for the Nasdaq QQQ and Russel 2000 IWM.

Computed with StraddlesCalc Tool

Note: You may receive technical analysis and alerts of these stocks, sent automatically to you, by entering the symbols in the Technical Trend Analysis Tool, (powered by INO). Please do your own due diligence. This is not advice. Options are very dangerous and may cause 100% loss.

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Thursday, May 19, 2011

China Cuts Holding Of U.S Debt Further, For The Fifth Month In A Row

China, the biggest buyer of US Treasury debt,  reduced its holdings of US Treasury bonds for a fifth month in a row in March, dropping the amount of those assets to $1.145T.

The figures were released by the US Treasury Department on Monday.

The cut reduces the amount of its holdings by $9.2 billion, about 1% of the total it owns, but this after a month after it had unloaded $600M worth of the bonds.

In exchange, in the same period, China bought $2.9B of long-term Japanese treasury bonds, the biggest purchase of debt China has made within a single month in more than six years.

"The central bank is continuing its strategy of diversifying the $3 trillion it holds in foreign exchange reserves," said Lin Songli, an economist at Guosen Securities Co Ltd.

He said China's decision to diversify its assets is reasonable. To protect itself from financial troubles, the country should invest in a variety of foreign currencies to reduce the risks inherent in holding such a large an amount of foreign exchange reserves.

"But diversification will be difficult because there are few alternatives (to US Treasury debt)," said Lin, predicting China will not continue to cut its holdings of US debt in the coming months.

The Wall Street Journal cited David Ader, an analyst at CRT Capital, as saying that it seems as if the US Treasury debt the country is selling is scheduled to mature soon. He added that China is taking on more exposure to debt with longer maturity dates issued by Fannie Mae, Freddie Mac and other government-sponsored enterprises, and is only slightly cutting its holdings of longer-dated Treasuries.

"Concerns have arisen that the United States may default on its debt, especially since US President Barack Obama said a failure to raise the nation's $14.3 trillion debt limit by early August might disrupt the world financial system and plunge the US into another recession".

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ECB Issues Threat Over Greece: Do Not Restructure or Else; Instead, Take In More Debt Please!

The ECB has said that it would refuse to accept Greek bonds as collateral in the event of a restructuring of Greek debt.
Instead, Euro zone governments were considering a new plan to prevent a Greek default. According to this plan,  private investors would be asked to keep their exposure to its debt, and Greece would actualy receive a new package of EU/IMF aid! I.e, more debt for Greece.
The threat was made by Juergen Stark, ECB Executive Board member. Any soft or hard restructuring that might trigger a "credit event" -- or the payout of default insurance contracts -- was off the table.

So Greece, take in more debt.

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LKND, LinkedIn IPO Madness: Buy Buy Buy, Sell, Sell Sell!

LinkedIn IPO'ed today at $45. The stock was traded over $120 today, valuing the company at over $8B. Madness.

Total madness.

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Japan "Enters recession": What Are They Drinking?

The media reports today that Japan has entered into a recession. Amazing. As if any of this was any surprise.

Its GDP shrank 3.7%, 'more than estimated in the first quarter". The country has a shrinking population and suffered a devastating earthquake, and that is more than estimated?

Bloomberg: "Gross domestic product contracted an annualized 3.7 percent in the three months through March, following a revised 3 percent drop in the previous quarter, the Cabinet Office said today in Tokyo. The median forecast of 23 economists surveyed by Bloomberg News was for a 1.9 percent drop.

The March disaster hit an economy already weighed down by years of deflation and subdued consumer spending, and slashed profits at companies including Toyota Motor Corp. as factories were shut. The economy, now the smallest size since 1991 unadjusted for price changes, may shrink further this quarter before rebounding later in 2011 as reconstruction kicks in".

Disclaimer: I am short Japan through EWJ puts.

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Wednesday, May 18, 2011

Euro Soap Opera or Greek Tragedies: Now ECB Rejects Greek Restructuring

It's quite the soap opera in Europe. The right hand does not know what the left does apparently. The news today is that European Central Bank officials rejected the Greek debt restructuring, "clashing with political leaders over a solution to the sovereign financial crisis". Bloomberg.

ECB Executive Board member Juergen Stark: “A Greek debt restructuring is not the appropriate way forward -- it would create a catastrophe” because it would damage the banking system", Board member Lorenzo Bini Smaghi: “a solution for reducing debt but not paying for it will not work.”

"European Union finance ministers for the first time this week floated the idea of extending Greece’s debt-repayment schedule as the nation struggles to meet the terms of last year’s 110 billion-euro ($156 billion) rescue. EU officials say that Greece won’t be able to return to markets and sell 27 billion euros of bonds next year as scheduled under the bailout, leaving them searching for alternatives to avoid a default".

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Brazil WC 2014: Maracana Estimated Cost Doubles

This is a 'guess what' and 'told you so'. The cost of fixing the Maracana stadium for WC 2014 in Brazil has snow doubled, adding to the already chaotic organization of that cup.

The new cost  is forecasted iat R $ 956,787,720.00 (about USD $600M). In January 2010, the reform would was estimated to cost R$ 600 million. The value then jumped to $ 705 million, before reaching the current figure of almost $ 1 billion with the construction of a new roof.

And geuss what, as time goes on, further costs will appear, not only in this statdium, but everywhere else. And the bigger the delays, the bigger the costs will be. Somebody must be happy with the delays.

In a presentation held on Tuesday the technical and ministers of the TCU and the Comptroller General (CGU), Rio de Janeiro state government officials scrutinized the executive design of the stadium, which now goes to technical analysis.

"We will examine the project with very critical eye and point of view. At first glance, I think it is within what the law allows, " said Minister Valmir Campelo, Rapporteur of the World 2014 project at TCU. A team from the court must evaluate the project's Maracana within a period of 45 days. According to Campbell, the agency has been as flexible as possible, not to create obstacles.

"We want for Brazil not only to be champion in the field, but also on transparency, morality and the zeal of the public good, ". Ah huh.

MaracanĂ£ is the most expensive piece of the 12 stadiums that serve as the venue for the World Cup games - $ 400 million funding will come from Banco Nacional de Desenvolvimento Economico e Social (BNDES) and R $ 556.8 million from the government of Rio de Janeiro. The deputy governor and secretary of works in Rio, Luiz Fernando Bigfoot, attended the presentation and said the renovation will not exceed the ceiling announced.

Shall we see?

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IMF Warns Greece, As If Country Were Not in Big Enough Recession Already; Restructuring of Debt Finally Acknowledged

Europe finally wakes up and aknowledges that Greece may need restructuring. Remember how Greece, Ireland and Portugal all stated that they would not need a bailout?

The headless IMF warned Greece that it must "redouble reform efforts to avoid derailing its fiscal program". As if the country were not in a big recession already.

Reuters says it was the "sternest IMF warning since a 110 billion euro EU/IMF bailout a year ago pulled the troubled euro zone member back from the brink of bankruptcy was delivered as European officials raised the possibility of a Greek debt restructuring".

The IMF says that their view is that the government program is not working,"
"The program will not remain on track without a determined reinvigoration of structural reforms in the coming months. Unless we see this invigoration, I think the program will run off track,".

"Europe's top financial officials broke a taboo on Tuesday and acknowledged for the first time that Greece may have to restructure its debts."

The Euro trades as FXE, most popular Euro ETF.

Whenever the Euro rises to much, we see these upsetting news coming out of Europe. Trouble is, it's a ping pong game between the U.S and Europe, who all want their currencies to weaken.

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Tuesday, May 17, 2011

U.K Inflation Soars to 4.5%; Investors Now Need to Earn 7.5% to Beat Inflation

Inflation has risen once again in the U.K., this time by a relatively huge 0.5%, now stands at 4.5%.

The government's target is 2%.

The big numbers are causing  the pound to rally, as it creates expectations of rising interest rates.

The Telegraph has an interesting figure: Based on this inflation, basic-rate taxpayers now need a savings account paying 5.63% in order to beat inflation, while higher-rate taxpayers have to earn an interest rate of 7.5% to beat it.

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Monday, May 16, 2011

U.S Suspends Investments "To Keep From Defaulting", As Another $110B Bailout Hits Europe

While the U.S is struggling to avoid defaulting by hitting the debt ceiling, the European Union finance ministers approved a new bailout, this time for Portugal, in the amount of  78 billion euros or $USD 110.8B, the third european country todo so.

In the U.S. the Treasury Department will suspend investments in federal retirement and disability funds as of Monday, "the latest steps meant to keep the U.S. government from defaulting". (Bloomberg)

Meanwhile, the Greek situation is similarly fragile, with "European finance ministers will tackle Greece’s financing needs at meetings in Brussels today".

The Europena bailout will be paid by the European Financial Stability Facility, the European Financial Stabilization Mechanism, and the headless International Monetary Fund, provided nobody else ends up in jail.
"Portugal follows Greece and Ireland in requesting a bailout from the EU and International Monetary Fund. Politicians are struggling to convince investors that 256 billion euros in aid to the three countries will be enough to stamp out Europe’s debt crisis and prevent the euro region’s first restructuring".

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IMF Head Follows Wikileaks' Assange and Goes to Jail for Supposed Sex Offenses

Dominique Strauss-Kahn follows a ling list of leaders and prominent figures tried or jailed for, or accused of sex crimes.

Wikileaks's Assange was also jailed for supposed sex crimes.

What a world.

I was reading the wonderful book "Physics of the Impossible", by Mikio Kaku, last night, a chapter that deals with parallel universes. An angel comes from the 4th dimension into ours.... can't take what he sees and kills himself.

If course a lot of people are happy with the arrest. Conspiracy theories are running wild now.
Bloomberg: The news... "eliminating President Nicolas Sarkozy’s biggest rival".

"Strauss-Kahn, 62, was charged yesterday with attempted rape and a criminal sex act on a New York hotel maid. He's pleading not guilty. The legal proceedings may force him to stay in the U.S. for several months, while the deadline to participate in the Socialist Party primaries is June 28. The International Monetary Fund’s chief, who led in all the election opinion polls in the past six months, may be scrapped off the candidates list".

“Whatever the investigation shows, Strauss-Kahn cannot make it back to the race and maybe not to French politics all together,” Gerard Grunberg, a professor at the Political Sciences Institute in Paris, said in a telephone interview. “The game is reset; Hollande may take the lead at the Socialist primaries, Sarkozy will try to win over Strauss-Kahn supporters at the center and National Front leader Marine Le Pen is banking on the failure of France’s elite.”

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Thursday, May 12, 2011

Chambers: Cisco Has Losts it Ways; The Pizza Wasn't Too Good

The chart is stunning

John Chambers, Cisco CEO, admitted last month that the company had lost its ways. After posting results yesterday, he cautioned that the fiscal year starting August "would also not live up to the company's previous growth expectations".

In addition, the ex-high tech darling company is preparing... layoffs around the world, with the goal of reducing annual expenses by $1B.

The stock is off about 5% in pre-market.
Whil we wodner when he wuill retire, he mantains the PR rethoric: "Cisco is a very strong company in a healthy market with a few problematic areas."

The company has cut it big management structure, offered early retirement to employees, killed the Flip camcorder ,and laid off 550 workers.

On Layoffs:  "Each time we've done this in the past, we've done it crisply and emerged out of it stronger. ... We want to do it surgically instead of with a blunt instrument,".

"We were all here for the last couple of weeks, 9:30 at night, although the pizza wasn't too good."

Please note that we track tech companies live here.

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Wednesday, May 11, 2011

I.M.F.'s Strauss-Kahn: Without A Solution We Are All Going To Hell: Desperation in Europe

Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF),was tense, restless and wandered aimlessly through a luxury Zurich hotel corridors yesterday concerned with quite a few issues on his mind: how to save Greece, Europe and the euro. "If there isn't a solution, we're all going to hell," he said in a telephone conversation.

While Europe and the financial markets held their breath waiting for a solution to the Greek crisis, the IMF bosses were searching for a formula that would meet the financing needs of Greece.
Brazilian newspaper O Estado de Sao Paulo was one of the few newspapers that followed scenes of the search for a solution, which also involves the European Union (EU). Inside one of the luxury hotels in Zurich, some of the greatest economists of the world met to discuss the international financial scene in a conference room.

The tone of the debate showed the desperation of the authorities. "No use waiting a few weeks. The situation will not improve," said a senior IMF adviser to Strauss-Kahn. The IMF, usually very strict about its statements, yesterday broke a psychological barrier and seemed not to care about discussing the situation in Greece, even though the press was in the same room.

The IMF's assessment of the summit is that Greece can not be abandoned. But economists know that they must submit a "soft" project so as not to cause more controversy in countries like Germany and Finland, where governments do not want to spend more public money to save poor countries in Europe. "We have to fix this problem soon," said the counselor. "This damn thing can explode. It would be a failure of the EU," warned another.

All of them used dozens of times the word "rescheduling" to refer to the "restructuring" of the Greek debt and thus would not hurt the sensibilities of taxpayers from the rest of Europe, who do not want to give more money.

Even when the agreement was discussed. "It has to be done on a weekend, so early on a Sunday so that the Germans have time to convince the opposition during the afternoon and that the agreement is ready for Monday," suggested an aide to Strauss-Kahn .

At one point, Strauss-Kahn used the cell phone of one of his advisors and made a call, again, about Greece. Walking around as he spoke, the IMF director was emphatic. "We need a three-year plan, with or without elections. I am sorry to say this,". The governments of Portugal and Ireland have already fallen, precisely because of the austerity packages that had to adopt.

That same afternoon, Strauss-Kahn and the Minister of Finance of France, Christine Lagarde, met for over an hour to discuss what to do with Greece, leaving the event to which were invited. Leaving the meeting, Lagarde was emphatic about the commitment of Europe with Greece. "We're bailing them for a year and we will continue."

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Bad News From China: Inflation Still Too High, But Economy Slowing, More Tightening Coming

Inflation in China stubbornly continues above 5%, actually hitting 5.3% in April, above expectations. The economy, however, is not doing well, a very bad combination.
Bloomberg reports: "Consumer prices rose 5.3 percent from a year earlier and banks extended 740 billion yuan ($114 billion) of local-currency loans, according to reports from the statistics bureau and central bank. Weaker industrial-output growth, also reported today, may diminish price pressures in coming months.

Today’s data showed that inflation has exceeded Premier Wen Jiabao’s 4 percent target each month this year. The figures may buttress the case made by U.S. Treasury Secretary Timothy F. Geithner in annual bilateral talks in Washington this week that China needs a stronger yuan to contain prices and spur domestic demand".

We track all Chinese ETFs live here.

"Today’s report showed a 25.4 percent increase in fixed- asset investment in the first four months of the year. That figure, combined with a report yesterday showing record export shipments in April, indicates the world’s second-biggest economy has made limited progress in shifting to a growth model more driven by domestic demand.

“The data looks bad,” said Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong. “The economy is slowing more sharply than expected but inflation is not.”

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Tuesday, May 10, 2011

Now Let Them Pound Oil: CME Raises Margins by 25%

Oil takes a beating. The CME Group has just raised U.S. crude oil futures margins by 25%, effective as of the close of May 10.
Surprise sharp margin increases caused silver to crash down to earth over the last 2 weeks.
CME announced on its website that it had hiked margins for crude oil futures on the New York Mercantile Exchange by $1,250 per contract.

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Monday, May 9, 2011

Home Values Suffer Largest Decline Since 2008, Dropping For 57 Consecutive Months, No Bottom

Home values suffered the largest decline in Q1 since 2008, making it appear that there is yet no bottom in sight. This is crucial for the recovery.

Home values dropped 3% in Q1, and 1.1% in March from February. There is still a very significant number of foreclosed homes on the market. This, according to Zillow.com, who also say that prices have dropped for 57 consecutive months, according to Zillow.

Zillow is not the only index showing very bad numbers. The Case-Shiller index published by Standard & Poor's shows that prices climbed from April 2009 until last summer, but then resumed falling when tax credits expired and are about to reach new lows.
Very bad news for the recovery.

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Empty Threats; EU To Lower Rates for Ireland and Provide New Bailout to Greece

We knew that the abilouts provided to Greece and Ireland (and now Portugal) would cause deep recessions, and they would simply not be repaid. Today, Reuters reports that the European Union is looking to lower interest rates on the loans to Greece and Ireland, and, in addition, is working on a second bailout for Athens "in a chaotic effort to prevent a disorderly debt restructuring".

EU Economic and Monetary Affairs Commissioner Olli Rehn said that "The Commission is clearly in favor of a rate cut,"  "The Commission is against debt restructuring.".  The executive European Commission also said that it hoped to see a decision within weeks on reducing the rate charged to Ireland to make Dublin's debt "more sustainable".

However, it's not all rosy, well, nothing is about these bailouts, but these initiatives have been blocked by Germany and France, which want Ireland to drop its veto on harmonizing the corporate tax base in Europe, i.e, raise corporate taxes in Ireland. This would be to the obvious benefit of Germany.

What a mess. But since large parts of the debt are from German banks, it is really not clear whether these are empty threats.

"However, German Finance Ministry spokesman Martin Kotthaus told a news conference: "There is no discussion at the moment about extending the payment schedule or lowering the interest rates for Greece.

The calls for lower interest rates came after a select group of top euro zone policymakers held not-so-secret talks in Luxembourg on Friday evening on how to stem the currency bloc's deepening sovereign debt crisis".

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Friday, May 6, 2011

Investing in Brazil? 40% of Brazilian Families in Debt Can't Pay It; but 52% Have NO debt

In a survey released on Thursday by the Applied Economic Research (IPEA), the "Expectations Index of Families shows that 51.5% of Brazilian households surveyed in April said they had no debt. That is great news.

However, among those who admit to being delinquent, 38.6% said they would not be able to pay the overdue bills, a number regarded as "worrying" by IPEA.

The indicator on the prospect of default of households fell 1.9 percent last month compared to March (40.5%) but increased 6.4 percentage points compared to January (32.2%).

The research shows that the IPEA in the North, 54.2% of households reported not having how to pay their debts. Next is the Northeast (37.6%), Southeast and South (both 36.3%) and Midwest (22.7%). The average household debt of those in arrears rose from R $ 4,194.97 in March to R $ 5,247.78 in April.

According to the president of the IPEA, Marcio Pochmann, the growth of the average debt in households can be explained partly by the greater number of families who could not pay their bills in previous months, which makes the value of the debt grow.

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Thursday, May 5, 2011

Mindboggling Collapse in Silver and ETFs: AGQ Down 23%

All these sudden margin requirement raises did it, what a collapse for silver and the ETFs.

SLV, -11.89%:

AGQ, -22%:

Mom & pop investors and all the bubble chasers were take to the cleaners, as usual.

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Euro Mess: Portugal To Get 116B: Requires Big Sacrifices, Recession; Train, Airport Construction Cuts

The European Union will provide 52 billion euros for the financial aid package to Portugal, while the International Monetary Fund will provide 26 billion euros. In a statement, IMF Managing Director Dominique Strauss-Kahn said the program - which totals 78 billion euros - is ambitious and will require sacrifices from the Portuguese government.

The program will focus on three areas: "restoring the country's competitiveness, ensure a balanced budget trend and stabilize the Portuguese financial sector".

"In the context of a genuine national effort, this program will lead to a stronger and more dynamic economy able to generate growth, jobs and opportunities, "
Srauss-Kahn said in a statement it is important to "safeguard the social safety nets". According to the authority, there is no reduction of public salaries and pensions for people with lower income and assisting the most vulnerable will be guaranteed.

However, the program will lead the economy to a recession of 2% or more in 2011 and 2012. The forecast is contained in the draft agreement and contradicts prime minister Jose Socrates, who had said the plan was more lenient than those signed by Greece and Ireland.

Many Casualties.

Among the measures are the reduction of unemployment insurance benefits, the temporary freezing of the minimum wages, tax reform to reduce the number of charges paid by private initiative and the suspension of participation of the State in Public Partnershipa, as the construction of the new Lisbon airport and the high-speed train between Lisbon and Porto. The civil service will continue to be reduced at a rate of 1% per annum, while the decrease in regional administrations may reach 2%. Meanwhile, the budget of Health will lose 550 million. TAP airline should also be privatized by the end of 2011.

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Brazilian Banks Show JPM, Citi and GS Who Really Rules The Markets

Mega IPOs are becoming more common place in Brazil, and guess which major bank is doing them? Not JPM, GS or Citi. It's the big strong and very well capitalied Brazilian banks: Itau

Gerdau did $3.5 billion share sale last month, handled by 3 Brazilian banks.

Magazine Luiza's initial public offering in April that raised $586.7 million, handled by Itau.
Jean-Marc Etlin, vice president for investment banking at Itau BBA, says that  “Brazilian companies and entrepreneurs are learning that they don’t need a foreign bank to help them with their financing needs. Local banks have got what it takes to do even the most sophisticated deal.”

Says Bloomberg: "The strength of Brazilian lenders in investment banking is unusual for emerging markets, said Christopher Harland, head of Latin America for Morgan Stanley, which has 300 people in Sao Paulo, Brazil’s financial hub.

“You don’t find many markets where you have those kinds of strong, well-capitalized, entrenched competitors,” said Harland, who is based in New York.
Brazilian issuers sold a staggering USD $180 billion in stocks and fixed-income instruments in 2010, including the world's biggest IPO ever, Petrobras (USD $70 billion), where Itau acted as joint global coordinator.

Brazil had 143 mergers and acquisitions totaling $84.8 billion in 2010.

Itau trades in New York with symbol ITUB. Bradesco trades as BBD. We track them all live here.

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Wednesday, May 4, 2011

+197K: Silly Unemployment Figures - and Even Sillier Headlines

I have written before: I am just waiting for an ETF that tracks unemployment. Here come the latest silly figures, these ones from ADP:

'labor market is strengthening" read the headlines (Bloomberg)

"Employment increased by 179,000 in April from a revised 207,000 the prior month, according to figures from ADP Employer Services".

However, that is below expectations: "The median estimate in the Bloomberg News survey called for a 198,000 advance this month".

"The gain in employment projected by ADP may be insufficient to help the economy accelerate after a surge in food and fuel costs caused growth to slow to a 1.8 percent annual rate in the first three months of the year. Businesses added 200,000 jobs in April and the jobless rate held 8.8 percent, economists project a Labor Department report to show in two days".

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Monday, May 2, 2011

Now Both Gold And Silver Crashing Down To Earth: Possible Margin Calls Coming Tomorrow

This mornig silver had been hit by a truck but gold was soaring. Now both are crashig tdown to earty from their lofty (parabolic?) levels.

Margin calls might be coming tomorrow for people heavily invested in precious metals.

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Silver Crashes, But Gold Hits New Record High!

The mistery surrounding the mini crash on the price of silver yesterday and overnight continues. Gold, however, has just made a new all time high: The move in silver seems like an anomaly.

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