Diary of a Financier

Top Newsstuffs (June 4-10)

In Bookshelf on Sun 10 Jun 2012 at 06:56

Just gutted after the Celtics season ended last night. Thank you Truth, KG, Ray Ray. There will never again be a basketball trio as pure as you. Nothing more to say…


German TARGET2 Total Hits €700b in May (+€54.4b m/m) | ZeroHedge

21 Charts That Prove the US Stimulus Worked | Mike Normal (John Thomas Financial)
Cites the 2/2009 American Recovery & Reinvestment Act (ARRA) as the launchpad for economic and market recovery. [There’s no question the stimulus “worked”; the problem is that the economy still can’t stand on its own.]

Junk Bond Conundrum | The Wall Street Journal
High Yield spreads at ytd wides (731bps) since Treasury yields plunging: “a clear signal of investor nervousness, it also indicates junk bonds are looking cheap.” [Ditto for Munis & Investment Grade.]

27 States Project Budget Surplus by Year-End 2012 | Morgan Stanley Smith Barney

Unemployment by Educational Background | James Bianco
Still only ~4% Unemployment rate among college-educated professionals (BA degree or higher).

From Negative 5Y5Y Inflation to $2200 Gold? | ZeroHedge
For the first time in history, 5Y5Y forwards (Treasury 10yr spot vs. 5yr swap, which together express inflation expectation for the period 5-10 years from now) expect deflation. Plummets of this magnitude have prompted Fed action twice since 2008. If Gold were to recouple, target $2200.

Presentation: Germany Is Riskier Than You Think | Carmel Asset Management
When German banks divested of PIIGS debt, the Bundesbank was accumulating it. Says the cost of Euro breakup (€1.31t) far greater than bailouts (€579b), taking its Debt/GDP to 103% or 131%.
[Camel does assume the preexisting ESM ends the crisis with no future bailouts or peripheral states declare bankruptcy, but PIIGS may repay liabilities in devalued currency.]

Outlook for Oil Refiners “Reasonable” | Fitch
Cite reasonable free cash flow henceforth that’ll be unencumbered by mandatory CapEx (regulatory/environmental improvements). Also says crude spreads “likely to persist, but should weaken as more logistical solutions (pipeline/trucking/rail) come online to move shut-in crude to end markets.”

Outlook & State of the Global Consumer | Citi Global Consumer Conference

Survey: How economists assess the european economic crisis | VoxEU & AIECE
Average probability of Grexit 16.7% (mean) with most citing high costs of breakup, preferring Fiscal Union as solution. Average 35% odds of Portuguese haircuts. 0.6% GDP growth expected 2013.

David Versus Goliath/The SNB Against Everybody, Full SNB Balance Sheet, P&L Analysis | Lighthouse Investment Management
CHF245b in FX reserves sustaining major losses; 40b in Gold. Foreign central banks (ECB) frustrated with SNB intervention & could bust the peg: 10% revaluation in EURCHF means ~CHF30b in losses.

Bond Vigilantes, It’s Italy’s Turn | Bridgewater
Conventional wisdom is that Italian banks still have dry powder from LTRO, but their LTRO cash is actually -€48b (vs. €114b total LTRO funding).

Europe’s Bailout Timeline: €2 Trillion in Costs & Counting | Brandywine Global Management

Iraq’s Oil Production Surging | New York Times

20% jump in exports to 2.5mm barrels/day dampening oil & gas markets and will offset effects of Iran sanctions starting in July.


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