Diary of a Financier

Bookshelf Update: Top Newsstuffs (January 2-15)

In Bookshelf on Sun 15 Jan 2012 at 13:42

There’s a bull market in news… I’m not talking NWS; I mean page hits, clicks.  Investors & traders are confused, and they’re turning to the news to try and find answers.  I spent some late nights in the office this week–some time spent looking for truth somewhere on the web.  The truth is out there, but it’s indecipherable among the noise.  That’s why markets trade so tightly with technicals right now (typical crisis markets): the future of fundamentals could swing valuations ±20% depending on sentiment’s treatment of Europe.

Without further ado, the cream of this week’s news…

The Decline Of Peak Spenders: A Terrifying Demographic Headwind | Doug Short & Harry Dent
 
Greece: Disagreement Everywhere, Rift in the Troika | Wolf Richter
IMF Managing Director Christine Lagarde had warned German Chancellor Angela Merkel and French President Nicolas Sarkozy that the fiscal and economic situation in Greece had deteriorated. Hence, the “voluntary” haircut on Greek bonds held by private sector investors should be increased to more than 50% to maintain the goal of bringing Greece’s debt load down to 120% of GDP. And the second €130 billion bailout package, agreed upon on October 26, should be enlarged by “tens of billions of euros.” The German reaction was immediate. “There has to be a line somewhere,” said Michael Fuchs, deputy leader of Merkel’s party, the CDU. “This cannot be a bottomless barrel… I don’t think that Greece, in its current condition, can be saved,” he said.
 
Debt talks falter, Greeks warn of disaster | Reuters
“The stumbling block in the negotiations was the low coupon offered on the new bonds… EU & IMF insistence on a coupon lower than 4 percent on the new bonds… It could mean an accounting loss of more than 70 percent for banks on their books, far more than the actual 50 percent cut in the original deal.”
 
Total Collapse In Rail Traffic To Start The Year | Business Insider
First week of 2012 reported -9.3% w/w drop on rail traffic.
 
Oil Is Unlikely To Fall Below $70 | Robert Sinn
Most OPEC producers need $80-$90 oil to break-even (i.e. balance state budgets).
 
Hedge funds play hardball over Greek restructuring | ekathimerini
 
Bernanke Doubling Down on Housing Bet Asks Government to Help: Mortgages | Bloomberg
 
The Venn of Ron Paul and Other Mysteries of Libertarianism Explained | Mother Jones
 
The Merrill Lynch Cramdown | The Big Picture
Merrill no longer paying brokers commissions/fees on relationships under $250k, “$1.76B in payouts the bank just decided to keep for itself, screwing their own employees.”
 
Several Major Housing Policy Changes Coming Soon | Calculated Risk
1. By March 2012, updates to Desktop Underwriter® will allow lenders to modify/refinance mortgages without representations & warranties, per HARP. (This throws all caution to the wind.)
2. In January/February, expect mortgage settlements to bring principal reductions to GSE & non-GSE borrowers.
3. Fannie & Freddie expanding an REO to rental program.
 
M.I.T. Game-Changer: Free Online Education For All | Forbes
 
Eric Cantor | 60 Minutes
 
The One Solution To The Euro Crisis That No One Is Talking About | Bruce Krasting
After a last ditch ECB/IMF effort in January-February, expects Euro engineered devaluation by 20% a la Plaza Accord, because ‘nobody in the world has a big enough bazooka left.’
 
Future Stock Returns Wilk Be Crappy (But Better Than Bonds) | Henry Blodget
Using John Hussman’s chart of tightly correlated forecast/actual 10-year returns, expectation is for 5% returns this decade.
 
Here’s Who Gets Hurt If Hungary Goes Bust | Business Insider
 
Maturing EU bank debt to hit a wall in 2012 | Pragmatic Capitalism
 
I’ll Hold Yours If You Hold Mine: The Italian Ponzi Comes Home | Peter Tchir
Mediobanca is the largest shareholder of UniCredit. Unicredit is the largest holder of Mediobanca. “Remember when CDO’s all bought each other’s BBB and BB tranches, because no one else would?”
 
Equity Valuations And The Jobless Recovery | ZeroHedge
Cheap Price-to-Earnings & Price-to-Book valuations are sensical, because “In contrast to prior recovery cycles, current cycle profits have been driven significantly by very low labor compensation… it’s hard to pay a very high multiple for this kind of profits boom.”
 
The Can Kicking Is Ending: Key Upcoming Dates For Europe’s Patient Zero | ZeroHedge
“In March Greece faces a redemption cliff: if by then the €130 billion promised to it by the Troika as per the July 21 second bailout, is not delivered, it is game over.”
 
Energy Giants Undeterred by Quakes Seek Shale Stakes in ‘Runway to Growth’ | Bloomberg
More reports of earthquakes linked to oil drilling & shale gas fracking.
 
On The World’s Reserve Currency: What’s Past Is Epilogue | ZeroHedge
World reserve currencies from 1400 to 2011: Portugal, Spain, Netherlands, France, Britain, US.
 
Two Lectures On The History Of Austrian Economics | Zero Hedge
 

–Romeo

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