Diary of a Financier

Top Newsstuffs (September 3-9)

In Bookshelf on Sun 9 Sep 2012 at 19:31

Get your spectacles…

Technical features of Outright Monetary Transactions (2012.09.06) | European Central Bank (ECB)
OMT features include: unlimited purchasing power for 1-3y sovereign bonds; strict conditionality; pari-passu; sterilization; SMP will be terminated & its assets held-to-maturity.

China Announces New $126B Stimulus Package | Bloomberg
Chinese policymakers announce new infrastructure spending on road, railway, waterway & sewage construction/upgrades. Will add 5pp to annual growth rate of infrastructure-spending (from 15% to 20%).

American v. Chinese Net Petroleum Imports | Goldman Sachs
China’s oil imports have surged higher unabated since 1990s, but the US’s topped out under 14M barrels/day in 2007. They’re about to converge for the first time ~8M b/d.

Rail Traffic Weekly: Steady Growth As 2011 Japanese Earthquake Effect Wanes | Association of American Railroads (AAR)
Carloads -2.4% and Intermodal +3.7 (cumulative ytd volume); -3.4 and +6.5 respectively (vs. this week last year). 10 of 20 carload groups posted gains: Petroleum products +44.1%, Farm products +22 & Lumber/wood +20.7; Metallic ores -17.2% & Waste -16.6.

Cyprus’ Crisis: Russia Approves €5B in Bailout Loans | Wolf Richter (testosteronepit)
The situation has worsened, as Cyprian banks now need ~€12B in aid and the government another €4B (totaling 94% of GDP). Russia has approved €5B in loans, likely because Cyprus is a Russian tax-haven.

Why are Goldman Sachs & Morgan Stanley Still Bank Holding Companies? | Bloomberg
After Lehman, GS & MS signed bank charters to access Fed’s discount window & FDIC deposit coverage. 4 years later, they’re still Investment Banks, and taxpayers are still subsidizing their funding.

The Earnings Recession: 3Q12 Consensus Expects 2nd Straight Quarter of EPS & Revenue Contraction | UBS
Consensus expects -4.6% EPS growth in 3Q12, falling from $25.65 to $25.07 (SPX ex-financials). 2Q EPS +6.9% y/y, but actually -1.5% ex-Financials, which lowered 2011’s base with writedowns.

An Austrian Take: The History of Business Cycled in the US (1854-2012) | Jim Reid (Deutsche Bank)
Study concludes that Fed has done little to smooth-out business cycles. Further, its role in prolonging the 3 super-cycles between 1987-2007 predicated the Great Recession & present liquidity trap.

Economic Bellweather FedEx Cuts Its Quarterly Forecast | Business Insider
For fiscal quarter ended August 31, FDX now expects EPS $1.37-1.43 per diluted share, down from $1.45-1.60 prior (vs. $1.46 last year). [As earnings guidance swings lower, consensus seems to be overshooting the downside again.]

A “Paris Club” Ending: The European “Creosote” Bank’s Endgame Will Be a Massive Debt Renegotiation | Michael Cembalest (JP Morgan)
“Europe is conducting one of the most unorthodox experiments of the last 100 years (a competitiveness adjustment mostly through wage and price declines instead of currency devaluation), and they are making it up as they go.” The ECB’s only exit from bond-buying will be a Paris Club debt restructuring & forgiveness.

Video: Social Media is Bullshit, by B.J. Mendelson | CNBC
Social media co’s are competing for your time, which is finite. As the industry & its users grow, more noise & clutter decreases the utility for outreach, advertising, marketing, small business, etc.

Presentation: “Accommodation at the Zero Lower Bound” (Jackson Hole, 2012.08.31) | Michael Woodford (Columbia University)
Economist suggest that QE balance sheet expansion is not the most effective means of policy exertion in a ZIRP regime, and even empirically it appears to have little effect on the real economy (per the lack of growth in the monetary base/M1/M2, among other data).
Empirically, the Fed’s verbal commitments to target outcomes is most effective in coaxing a desired market effect. He suggests the Fed pledge ZIRP until the output gap is closed (actual Nominal GDP catches potential).

Global Purchasing Managers Index (August 2012): Same Story As US Continues Expansion | Business Insider
International PMIs have steadily declined since May, now China has officially entered contraction. The US is still expanding though, accelerating a bit from last month.

Million Dollar Traders (Full Series) | BBC
Dutch hedge fund manager Lex van Dam picked 8 novice traders and seeded them with $1mm. His lieutenant, Anton Kreil, a former London trader, oversaw the operation from its headquarters in The City.




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