While doing some weekend research, I came across an interesting development. At first glance, I saw that the Consumer Staples Sector SPDR - XLP - was making new recovery highs (new 2010 highs). My first thought was that this was a very bearish development that could be underscoring risk-aversion in that money is flowing into ’safer’ stocks according to the Sector Rotation Model. My next thought was to compare that development with its sister sector, the Consumer Discretionary/Retail Sector - XLY - to see if we were seeing weakness there. To my surprise, I found that we were seeing new 2010 and recovery highs in the ‘risk seeking’ or offensive Retail Sector as well.
It is not often that one finds smoking gun reports which refute all claims, such as those by EuroStat and Angela Merkel, in which the offended parties plead ignorance of the fiscal inferno raging around them, kindled by lies, deceit, and blatant mutually-endorsed fraud, and instead, now facing themselves in the spotlight of public fury, put the blame solely on related party participants, such as, in a recent case, Greece and Goldman Sachs. Yet a 2001 report prepared by Gustavo Piga, in collaboration with the Council of Foreign Relations and the International Securities Market Association, not only fits that particular smoking gun description, but the report itself was damning enough of another country, a country which used precisely the same off-market swap arrangement to end up with an interest expense of LIBOR minus 16.77% (in essence the counteparty was paying Italy 16.77% of notional each year as a function of the swap mechanics), in that long ago year of 1995. The country - Italy (for confidentiality reasons referred to in the report as Country M ), was at the time panned as the Enron of the European Union due to precisely this kind of off-balance sheet arrangement by the Counsil of Foreign Relations.
TCW, which incidentally is facing some pretty serious problems of its own lately, chimes in on Greece. Komal Sri-Kumar , Chief Global Strategist, is painfully realistic in believing that Europe should be much more worried about keeping the strength of the eurozone intact, and if that means jettisoning Greece, and devastating the euro, so be it. In fact, for an export-heavy Germany, this is precisely, as Zero Hedge has long been claiming, the end goal
Those banana-hugging Germans strike back, and by doing so, throw the rotten apple of the imminent Greek collapse straight into America's back yard: in today's edition of Handelsblatt , German politicians have said that only the International Monetary Fund is the right institution to save Greece from going bankrupt. While the increasingly irrelevant Greek rumor-spreader has been very busy over the past few days, getting Greek newspaper Ta Nea to announce that now Caisse des Depots has entered the KfW bailout syndicate, in an interview with German TV station ARD, Merkel said that not only is this yet more gibberish but that there is no legal basis for any of the rumored actions
Portfolio has prepared a useful interactive map highlighting America's increasing split between the haves and the have nots based on city of residence. Case in point: the wealthiest city in the US according to Portfolio, Newport Beach, has more than a quarter of its residents making over $200,000.
With February over, and the equity market just slightly down MTD, the January weakness in equities has finally spilled over to High Yield, where we are flowing in a see of red. This was to be expected considering the two nearly $2 billion HY fund outflows experienced in February. Below is the complete heatmap for February HY bond price performance by subsector.
Rep. Paul Ryan slams Obama's healthcare reform in one of the most concise critiques of the proposed plan
The NOAA's National Weather Service has provided the following analysis to estimate the anticipated hit times from the time of impact of the Chilean earthquake (3:34 am local Chile time, 2:34 am Eastern). According to this estimate, California will feel any residual Tsunami waves within the next 2 hours, Hawaii has about 4 hours to prepare, while New Zealand - a little less
Notional IRS, CDS, and Printing Press Irrelevance , Submitted by JM
Sunday, February 28, 2010
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