Tuesday, June 30, 2009

Herd Mentality On Steroids

It seems I wasn´t far off..... Everybody is once more chasing the same strategy.......No wonder when computer trading ( must see clip Themis Trading: "Principal Program Trading Is A Way To Get The Market Go In Your Direction" )& models are the dominant force on the exchanges these days.....This leaves unfortunately little room for "common sense"..... I doubt that this will end as hilarious ( see "Depression-Era Bear Market Rallies" ) as in the following clip .....

Da lag ich dann wohl nicht nicht ganz verkehrt .... Sieht ganz so aus als wenn einmal mehr alle ein und dieselbe Strategie verfolgen..... Liegt sicher auch daran das heutzutage computergestützter Handel ( passend hierzu Themis Trading: "Principal Program Trading Is A Way To Get The Market Go In Your Direction" ) bzw. Strategien die Märkte dominieren..... Da kommt der "gesunde Menscheverstand" leider oft zu kurz......Bezweifle aber stark das dieser Anfall von "Herdentrieb" für die Akteure ähnlich ausgelassen ( siehe "Depression-Era Bear Market Rallies" ) wie im folgenden Clip enden wird ....

FT Alphaville
June 29 (Bloomberg) — Investors are moving in lockstep like never before, driving up stocks, commodities and emerging markets and risking a replay of last year, when they all plunged the most since World War II.

The Standard & Poor’s 500 Index, whose increase in the past three months was the steepest in seven decades, is rallying in tandem with benchmark measures for raw materials, developing- country equities and hedge funds. The so-called correlation coefficient that measures how closely markets rise and fall together has reached the highest levels ever, according to data compiled by Bloomberg . .

The correlation coefficient for the S&P 500 and the Reuters/Jeffries CRB index of commodities has been at 0.74 for the last 60 days.

A value of 1 means perfectly correlated, but to give you the historical significance of a reading of 0.74 — it’s the highest correlation in at least five decades, according to Bloomberg

The S&P is also increasingly (werrdly) moving in tandem with the price of crude oil, with the correlation value above 0.7 in June. The correlation between the S&P and the MSCI Emerging markets index is also apparently the tightest since Russia defaulted on its debt in 1998

The rather dramatic increase in correlation should be a bit of a worry for investors, since it makes diversification rather difficult.
> Here another stunning chart.....

> Hier ein weiterer Chart der zeigt das momentan eine Art "Ausnahmezustand" herrscht.......

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Monday, June 29, 2009

UK CRE Now Off 45 Percent From The Peak.......

Could be worse if you are a foreign investor..... The British Pound is 20 percent off against all other major currencies over the past 12-18 months.....

Wenn man jetzt noch bedenkt das das britische Pfund gegenüber allen relevanten Währungen auf Jahressicht über 20% verloren hat sieht die Lage für ausländische Investoren noch düsterer aus...... Der Sektor der gewerblichen Immobilien dürfte schon sehr bald die Schlagzeilen mit spektakulären Pleiten dominieren..... Mich wundert das die in Deutschland dominierenden offenen Immobilienfonds ( etliche mit signifikanten UK Exposure siehe Chart Geographische Verteilung der Objekte In Offenen Immobilienfonds via FAZ/Scope ) trotz einer regelrechten Implosion im gesamten Sektor ( plus der teilweise drastische Währungseffekt in UK & Osteuropa ) querbeet über alle Regionen es noch immer schaffen keine Verluste auszuweisen...... Denke das spätestens wenn die Mieterneuerungen anstehen die ein oder andere Überraschung "droht".....

“Losses on UK commercial real estate could equal subprime” FT Alphaville BNP Paribas analysts are worried about the health of the UK’s commercial real estate sector. In a note released on Friday, they warned that a “combination of rising vacancy rates, falling rentals and extraordinarily difficult financing conditions will almost certainly drive UK CRE losses higher.”

Analysts Vivek Tawadey and Olivia Frieser contend that CRE is the “next leg of the credit story” in both the US and the UK, which they believe could see a major CMBS default.

From the note (any emphasis FT Alphaville’s):

Bonds backing CRE assets of a UK property investor (Simon Halabi) are likely to default on £1.15bn of debt. In this particular case, the values of the nine “prime” London office buildings (included the offices of JPM, the UK headquarters of Aviva, the Naval and Military Club amongst others) that were securitised have fallen from £1.8bn in November 2006 to £929mn as of 8 June, a reduction of almost 50%.

According to IFD, UK commercial properties values have been declining fast with peak to current declines of around 45%, with major declines noted in all major segments - retail, offices and industrials

At the same time the amount of available floor space for occupation increased at the fastest pace since 1999 in all regions with the exception of London (Chart 2) and thevalues of inducements rose at its fastest pace since the survey’s history in 1999. Collectively this implies that an upward correction in prices in the foreseeable future is unlikely.

BNP Paribas chart of available floor space in the UK

> I would love to see a similar stat for Dubai ( see The Upcoming Skyscraper Tsunami..... )

> Ich würde liebend gerne eine ähnliche Statistik für den Markt in Dubai sehen ( siehe The Upcoming Skyscraper Tsunami..... )

Tawadey and Frieser also point to the refinancing risk ahead:

Around £43bn (or 19%) of all CRE loans comes due for repayment in 2009. A further 14% matures per year annually in 2010 and 2011 (Chart 3) or in excess of £100bn over the next 3 years, implying very significant refinancing risk inevitably leading to higher defaults.

BNP Paribas chart of the refi risk in UK CRE

The fact that only 10% of CRE loans are securitised in Europe (US: 30%), also underscores that more of these loans are held on bank books, leading to potential write-downs down the line.

S&P On US CMBS / CRE FT Alphaville

The agency wants CMBS credit enhancement levels sufficient for AAA-rated tranches to be able to withstand some pretty severe declines (40 to 50 per cent) in the value of commercial property.

> So it looks like 50 percent off is the new normal...... And watching the next graph ( HT Zero Hedge ! ) i´m not sure if this will be enough..... Needless to say that the Fed just a few weeks ago has proposed a CRE TALF program to buy tons of this crap ( No Kidding..... S&P Is Acting Responsible & Threatens To Blow Up Fed´s CRE Bailout Stunt Via TALF ). It will be fun to watch how they will go along with the collateral criteria..... They already have loosened it once ( see ( see Fed Bends Over Backward For CMSA, Will Feed Inflation Capacitor With More Toxic Garbage via Zero Hedge ). .....

> Sieht ganz so aus als wenn eine coole Halbierung vom Top in den ehemals heißgelaufenen Märkten eher die Regel als die Ausnahme ist....... Bin mir sicher das Banken in Ihrer bekanntermaßen vorausschauenden Weitsicht hierfür ausreichend "Vorsorge" getroffen haben..... Wenn man sich jetzt die nächste Grafik ( Dank an Zero Hedge ) ansieht dürfte klar werden was sich für ein Debakel zusammenbraut....... Möchte nur noch mal zur Belustigung darauf hinweisen das die Fed vor wenigen Wochen extra ein TALF Programm gestartet hat um für wahrscheinlich bis zu 100 Mrd $ den Giftmüll zu kaufen ( siehe No Kidding..... S&P Is Acting Responsible & Threatens To Blow Up Fed´s CRE Bailout Stunt Via TALF ) ...... Bin gespannt wie weit die Fed noch sinken kann....Bisher hat Sie bereits einmal die Bedingungen für die Sicherheiten gelockert ( siehe ( see Fed Bends Over Backward For CMSA, Will Feed Inflation Capacitor With More Toxic Garbage via Zero Hedge ).......


European Top 20 From JPM’s CRE Risk List

( Note: Data from end of 2008! )

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Dubai Update.....The Upcoming Skyscraper Tsunami.....

Flashback / Rückblende Feb 2009

In February, Dubai announced a $10 billion bond offering. It was fully subscribed by the central bank of the United Arab Emirates, making it essentially a federal bailout. The Dubai government has used the money to help government-related entities pay off debt.
Dubai is calling the deal between of Emaar with a 100 percent state controlled company a merger.....Good joke...They won´t laugh in Abu Dhabi / UAE for sure.....I´m not sure how long Abu Dhabi ( see also No Kidding.... Dubai May Need Help To Repay Debt...., Dubai's bail-out, Dubai Gets $10 Billion Bailout to Ease Debt , Big spending Dubai may have to be bailed out by Abu Dhabi ) will be "glad" to bail Dubai out..... I assume the next time $ 10 Billion won´t be enough.......

Dubai nennt den Deal zwischen Emaar ( bauen u.a. den modernen Turm zu Babel.... ) und einer anderen Firma die zu 100% im Staatsbesitz zwar eine Fusion. Guter Witz.....In Abu Dhabi / UAE wird man darüber aber wohl kaum lachen ...... Schön zu sehen das der Größenwahn, der nirgends so ausgeprägt gewesen ist wie in Dubai, früher oder später zum scheitern verurteilt ist. Bin gespannt wie lange Abu Dhabi / UAE ( siehe No Kidding.... Dubai May Need Help To Repay Debt.... , Dubai's bail-out, Dubai Gets $10 Billion Bailout to Ease Debt , Big spending Dubai may have to be bailed out by Abu Dhabi ) noch willens ist Dubai mehr oder weniger vor dem Kollaps zu bewahren.... In jedem Fall werden 10 Mrd $ beim nächsten Mal wohl nicht reichen....... UPDATE: ein aktueller Lagebricht von Guido Mingels / Die Zeit Goodbye, Dubai Tip Top!

Dubai Index Drops Most Since November on Emaar’s Merger Plans
June 28 (Bloomberg) -- Emaar Properties PJSC pushed Dubai’s index to its biggest decline in more than seven months on concern shares of the Middle East’s biggest property developer may be suspended or diluted pending a potential merger.

Dubai-based Emaar dropped 10 percent, the maximum daily limit allowed, after the company said it’s in talks to merge with state-controlled Dubai Properties LLC, Sama Dubai LLC and Tatweer LLC, all units of Dubai Holding LLC.
The new entity will have 13.4 billion dirhams ($3.65 billion) in debt obligations, representing 7 percent of total assets, Emaar said today.

“Investors are worried a merger may mean a long share halt as is the case with Amlak and Tamweel,” said Mohamed Dwaikat, a broker at Al Fajer Securities in Abu Dhabi. “There is also concern about a possible dilution of the shares.” Amlak Finance PJSC and Tamweel PJSC, the United Arab Emirates biggest mortgage firms, haven’t traded since November pending a planned merger.

The Dubai Financial Market General Index lost 6.1 percent, the biggest fall since November, to 1,745.07, trimming the gain for this quarter to 11 percent. Abu Dhabi’s ADX General Index retreated 2 percent, paring this year’s advance to 7.7 percent.

Emaar, which is building the world’s tallest tower and makes up about 20 percent of Dubai’s index,fell to 2.89 dirhams.
Al Mal Capital PSC suspended its recommendation on the company, saying the planned merger could be “potentially dilutive” for Emaar shareholders.

Dubai Holding is a 100 percent state-controlled entity, while the government of Dubai owns about a 31 percent stake in Emaar, Bloomberg data show.

> At least Dubai´s sovereign debt rating is better than Iceland´s............

> Dubai schafft es immerhin Island in Scahen Kreditwürdigkeit zu schlagen.......

Sov debt riskiest

> Judging the following project ( see Dubai plans 'moving' skyscraper BBC) i think the term megalomaniac isn´t far-fetched....... I´m pretty sure there is ZERO chance that this "vision" will be build. The following clip is from mid 2008 and clearly a sign how far this bubble has been pumped up....

> Bei Betrachtung der nächsten "Vision" ( siehe Dubai plans 'moving' skyscraper BBC ) ist der Begriff "Größenwahn" sicher nicht zu hoch gegriffen....... Gehe jede Wette ein das dieses Objekt niemals gebaut werden wird. Der nachfolgende Clip ist von Mitte 2008 und zeigt eindrucksvoll welche Aussmaße die Blase zwischenzeitlich angenommen hat.

> Thank god there isn´t a lot of new space coming online .......;-) Now combine the upcoming glut with the sky high price level ( HT Paul Kedrosky )...... DOH! As far as i can see i think not an insignificant amount of the regions SWF will be needed to prop up the banking sector......

> Gottseidank kommt in nächster Zeit ja kaum neues "Material" auf den Markt......;-) Die beste "Medizin" um das bereits jetzt astronomisch hohe Preisniveau ( Dank an Paul Kedrosky ) zu halten..... Denke das ein nicht unwesentlicher Teil der Sovereign Wealth Funds in der Region demnächst benötigt werden um das heimische Bankensystem zu stützen.......

Future Dubai skyscrapers Wikipedia
Under construction Burj Dubai · Pentominium · Burj Al Alam · DAMAC Heights · Princess Tower · Marina 101 · 23 Marina · Emirates Park Towers Hotel & Spa · Elite Residence · Lam Tara Towers · D1 · The Marina Torch · Infinity Tower · Al Yaquob Tower · The Index · HHHR Tower · Ocean Heights · Ahmed Abdul Rahim Al Attar Tower · Central Park Towers · I&M Tower · Dubai Pearl · Sulafa Tower · G-Tower · Mag 218 Tower · Acico Twin Towers · Marina Pinnacle · Khalid Al Attar Tower 2 · Vision Tower · Ubora Commercial Tower · Conrad Dubai · Metro Tower · Al Tayer Tower · Churchill Towers · Sama Tower · The Buildings by Daman · Rolex Tower · Anantara Towers · Tiara United Towers · Al Bateen Tower · Trident Grand Residence · Latifa Tower · Executive Towers · Grosvenor House The Residence · Concorde Tower · Platinum Tower · Dubai Jewel Tower · Jumeirah Bay · Sidra Tower · Dubai Tower · Tiffany Towers · Silver Star · The Bay Gate · Dubai Islamic Bank Tower · Jumeirah Al Khor Residence · Pier 8 · Iris Bay · Liberty House · Goldcrest Executive · Dubai Gate 1 · The Prism · AG Tower · AU Tower · Lake Point Tower · Swiss Tower · Goldcrest Views 2 · The Residences · Silverene · Dubai Arch Tower · Laguna Tower · Verde Residences and Offices

Approved Dubai Towers Dubai · Lighthouse Tower · Al Sharq Tower · The Skyscraper · Al Hekma Tower · Providence Tower · The Palm Trump International Hotel & Tower · Abjar Tower · Nili Tower · ARY Digital Tower · Boraq Tower · The Sheffield Tower · Fortune Araames · Duja Tower · El Matador Tower · Arabian Crowne · Mag 220 Tower · The Dome · Jumeirah Business Center 1 · The Prime Tower · The Forum

Proposed Dubai City Tower · Nakheel Tower · Anara Tower · 1 Park Avenue · Meraas Tower · Marina Sky Towers · Marina 106 · Dynamic Tower · P-17 · The Wave Tower · Signature Towers · His Highness Sheikh Hasher Tower · Beachfront Tower Hotel · Beach Towers · Time Residences · Al Ghaith Tower

> I doubt that even one proposed or approved object will be realized.... Wouldn´t surprise me if we see will something similar what happened in Bangkok ......

> Von den genehmigten bzw. angedachten Projekten wird sicher kaum eines je verwirklicht werden..... Denke es grenzt bereits an ein Wunder wenn die bereits im Bau befindlichen Objekte fertiggesetllt werden.....Könnte leicht passieren das sich ähnliches wie in Bangkok wiederholt......

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Sunday, June 28, 2009

Chart Of The Day "Depression-Era Bear Market Rallies"

You can read my take on the current rally here.....

Meine Einschätzung zur aktuellen Marktlage kann man hier nachlesen.....

via Chart Of The Day
Many investors continue to look to the early 1930s for some insight into the current economic/stock market environment. While there are significant differences (global economy, credit default swaps, TARP, FDIC, etc.) between the current environment and that what occurred in the early 1930s, there are also many similarities (bank failures, bankruptcies, severe market declines, etc.). For some perspective on the current stock market rally that began on March 9th, today's chart illustrates duration (calendar days) and magnitude (percent gain) of all significant Dow rallies that occurred during the 1929-1932 bear market (solid blue dots).

For example, the bear market rally that began in November 1929 lasted 155 calendar days and resulted in a gain of 48%. As today's chart illustrates, the current Dow rally (hollow blue dot labeled you are here) is above average in both duration and magnitude relative to the average 1929-1932 bear market rally (hollow red dot).

Compared to the current rally, only one 1929-1932 bear market rally was greater in both magnitude and duration and that was the first 1929-1932 bear market rally that began in November 1929.
> Make sure you also read A Tale of Two Depressions & Mega-Bear Quartet for another excellent comparison......

> Für einen weiteren erstklassigen Vergleich der aktuellen Lage mit der um 1930 herum bitte unbedingt A Tale of Two Depressions & Mega-Bear Quartet die Aufmerksamkeit schenken.

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Thursday, June 25, 2009

"China Inc." Deal Premiums.......

Another way to recyle the greenback.... The race to hard assets is speeding up.....Unfortunately China´s deal ethics are more than often non existent & inhuman ( see Oil for China, Guns for Darfur / China and Sudan Fact Sheet ) UPDATE: Says China should buy gold, natural resources, U.S. land

Auch ein Weg wie man die ungeliebten und im Überfluß vorhandenen US $ Bestände wiederverwerten kann..... Die Flucht in Hard Assets wird weltweit sicher noch zunehmen.... Wenig überraschend ist China auf dem Weg zum Ziel im Zweifel jedes Mittel recht ( siehe Oil for China, Guns for Darfur / China and Sudan Fact Sheet ).....UPDATE: Says China should buy gold, natural resources, U.S. land

[Sinopec photo and charts]

Is China Inc. Overpaying in Its Merger Deals? WSJ Deal Journal
Deal makers know that to succeed you have to make your assets speak louder than your liabilities. China Inc. is learning that lesson.

Just look at Sinopec’s bid to acquire Swiss oil company Addax, which has a big presence in Africa. The price that China Petrochemical Corp., the Chinese state-owned oil company known as Sinopec, is offering is much higher than usual for the sector, analysts say.

Sinopec’s offer is equivalent to $34 a barrel of proved reserves and $14 a barrel of proved and probable reserves. The African transaction average in 2007, when the average crude price is similar to current prices, was $14.40 a barrel for proved reserves and $9.90 for proved and probable reserves, respectively. On a proved basis, the 2007 average suggests $3.1 billion total value for the deal. Therefore, $7.2 billion implies a 135% premium.

The deal also shows China’s willingness to take risks, as Sinopec would gain a presence in oil-rich but politically sensitive Iraqi Kurdistan as well as offshore West Africa, one of the hottest sectors of the oil world but one that includes Nigeria, where local militants continually harass drillers.

Already this year, Chinese companies have notched 10 deals in the oil & gas space. The total number of oil & gas deals in all of last year was 14


This Sinopec deal, if completed, would be the largest overseas takeover in China’s M&A history in natural resources The deal also would boost the value of Chinese oil & gas mergers and acquisition to $12 billion, up 80% from the same period last year.

> Add this number to the mix ( via WSJ )

> Um das Bild abzurunden sollte man die nachfolgende Summe ebenfalls miteinbeziehen.....
Over the past half-year, China has proffered more than $45 billion in loans to Russia, Brazil, Venezuela and Kazakhstan in exchange for long-term crude supplies.
> Very unlikely that this trend will reverse course......

> Wenn man jetzt noch die Reaktion der kommenden "Elite" mit berücksichtigt halte ich es für extrem unwahrscheinlich das sich dieser Trend demnächst ändert...... :-)

Dennis Gartman
As we reported here, Geithner’s attempts to reassure Beijing authorities that the US government was still upholding a strong US dollar policy were met with loud laughter by an audience of students at Peking university.

Got GOLD....?

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Wednesday, June 24, 2009

ECB: Record 442 billion Euros “Stimulus by Stealth”

HT to Alea for the excellent headline. After reading the latest ECB "Instability" Report....... & the almost irresistable conditions ( despite news like this ECB Tightens Rules On Liquidity Facilities & Adjustment of risk control measures for newly issued asset-backed securities and for uncovered bank bonds ) it is no surprise to see such a huge number. .......A no brainer...... I can imagine Trichet is already praying that this will work.....I have some serious doubts......Liquidity is & was not the issue..... Core problems ( impaired bank balance sheets, not enough creditworthy borrowers ) are still unsolved and are getting worse on a daily basis..... Update : Spanish banks to get €90 billion bailout

Dank an Alea für die sehr treffende Überschrift. Nachdem ich den letzten ECB "Instability" Report....... gelesen habe und wenn man die unwiderstehlichen Konditionen ( trotz leicht verschärfter Bedingungen / siehe ECB Tightens Rules On Liquidity Facilities & Adjustment of risk control measures for newly issued asset-backed securities and for uncovered bank bonds ) berücksichtigt dürfte die Höhe nicht wirklich überraschen. Eine echte Lizenz zum Gelddrucken.....Kann mir bildlich vorstellen wie Trichet & Co beten, das dieser Kraftakt endlich dazu führt, das die Kreditmärkte wieder wie gewünscht funktionieren ( Update Banken tragen Milliarden zurück zur EZB ).... Ich denke das auch dieser Versuch maximal etwas Linderung in Form von geringeren Spreads verschaffen wird..... Dummerweise ist mangelnde Liquidität nicht das Problem. Solange die Problematik der bilanztechnisch insolventen Banken nicht gelöst wird und man anerkennt das es im Angesicht einer lang anhaltenden Rezession einfach zu wenig kreditwürdige Unternehmen gibt, dürfte sich die Lage weiter verschlechtern. Wenn man so will handeln die Banken aus Ihrer Sicht ironischerweise momentan das erste Mal nach Jahren der "Trunkenheit" richtig. Tragisch aus deutscher Sicht ist vor allem das unser Bankensystem trotz fehlender eigener Blase dank der desaströsen Exzesse besonders der Landesbanken ( folgerichtig kommen die Sparkassen als Anteilseigner dank massivster Wertberichtigungen auf Ihre LB Anteile in ernste Schieflagen, was das besonders für den Mittelstand bedeutet kann man leicht erahnen..... ) eher einen bzw. den Spitzenplatz der Problemliste belegt..... Updadte: EZB pumpt Rekordbetrag in den Markt FTD & Spanish banks to get €90 billion bailout

ECB pumps €442bn into banking system FT
The European Central Bank on Wednesday pumped hundreds of billions of euros in one-year loans into the eurozone’s weakened banking system, making record amounts of emergency finance available in a bid to unlock credit markets and revive the region’s economies.

In a dramatic step dubbed “stimulus by stealth” in financial markets, the ECB lent €442.2bn for 12 months to more than 1,100 banks at its current benchmark interest rate of 1 per cent.

The high demand for the funds, in what was the ECB’s first ever auction for one-year loans, reflected a growing realisation by the banks that emergency funding may not be available again on such favour-able terms.

The central bank’s action could boost the eurozone’s recovery prospects by lowering market interest rates and creating more scope for banks to lend to the private sector.

The ECB action, which attracted 1,121 bidders – more than usual in ECB operations – had an immediate impact in driving down overnight and longer-term market interest rates, though the full effects are still to feed through.

Don Smith, economist at inter-dealer broker Icap, said: “The massive scale and undoubted success of this tender almost entirely reflects the cheapness of the funds on offer.”

The previous largest amount injected in a single ECB operation was €348.6bn in December 2007.

The economic impact will depend on whether demand for liquidity in future ECB market operations is reduced as a result of Wednesday’s action, as well as whether banks step up lending.

“They must pass it along,” Lorenzo Bini Smaghi, an ECB executive board member, said in Rome.

> "...must pass it along" This kind of rhetoric will only be working in China ( see Number Of The Day "Credit Explosion In China" & todays must see Borrowed in China from FT Alphaville ). Probably ( after FT Alphavilles update DEFINITELY ) the NPL from the not so distant future...... Smaghi probably one of the ECB members pressing for "quantitive easing" ( despite intense discussions among the ECB members so far almost non existent ).......

> "...must pass it along" Wird wohl ein Wunschgedanke bleiben..... In China sieht das momentan ganz anders aus ( siehe Number Of The Day "Credit Explosion In China" sowie die aktuellen Daten für Juni Borrowed in China WAHNSINN!). Da wird solchen Wünschen wenn Sie von der richtigen Stelle geäußert werden "bedingungslos" Folge geleistet. Die Chancen das es sich um die faulen Kredite von morgen handelt sind nicht zu unterschätzen ( nach dem Update von FT Alphaville eine "leichte" Untertreibung )...... Unschwer zu erkennen das Smaghi eher dem Camp innerhalb der EZB angehört die PRO "Quantitive Easing" ( bisher trotz intensiver Diskussionen praktisch kaum vorhanden ) sind......


By promising a full allocation of all bids on Wednesday, the ECB has effectively passed responsibility for any easing of policy to the banks themselves, giving license to any institution that thinks it can lend the money profitably into the real economy.
AJ via Alea
“If I were a bank I would be gathering up all the furniture to use as collateral to take part.” said Erik Nielsen, European economist at Goldman Sachs.

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Thursday, June 18, 2009

Contrary Indicator.... The Retail Investor Is Back.....

Looks like the "herd mentality" ( with the help from usual vicarious agents / see Abby Joseph Cohen 2009 vs Abby Joseph Cohen 2001.....Which Call Is Worse? & The Wall Street Clown Show via Michael Panzner UPDATE: CNBC´s Dennis Kneale: "The Great Recession Is Over") has once again sucked the small investor into this very dangerous market.... Just in time after a 40 percent ( S&P from 666 to over 900, DAX from 3600 to north of 5.000, Nikkei from 7.000 to over 10K, etc..... ) runup & insiders dumping shares ( see Insiders Exit Shares at the Fastest Pace in Two Years including a very interesting chart ) .... The clip is excellent !

Es sieht einmal mehr danach als wenn der "Herdentrieb" ( auch dank der wunderbaren "Expertenunterstützung" / siehe Abby Joseph Cohen 2009 vs Abby Joseph Cohen 2001.....Which Call Is Worse? & The Wall Street Clown Show via Michael Panzner UPDATE: CNBC´s Dennis Kneale: "The Great Recession Is Over" PURE COMEDY!) einmal mehr ganze Arbeit geleistet hat und den Privatanleger im großen Stil zurück in den "verminten" Markt gelockt hat...... Nach Anstiegen von ca. 40% ( S&P von 666 auf über 900, Dax von 3600 auf fast 5200, Nikkei von 7000 auf über 10K, usw. ) und massivsten Insiderverkäufen ( siehe Insiders Exit Shares at the Fastest Pace in Two Years beinhaltet u.a. einen sehr sehenswerten Chart ) gerade noch rechtzeitig..... Klasse Clip!

Hat tip to Zero Hedge

Neesdless to say that i think Biderman is spot on & that herding is a global "phenomenon" ( see A year in perspective, Shanghai edition via FT Alphaville )......

Überflüssig zu erwähnen das ich hundertprozentig mit Biderman übereinstimme und das der Börsenwahn weltweit erneut um sich gegriffen hat ( siehe A year in perspective, Shanghai edition via FT Alphaville ) ...... UPDATE: Hier ein weiterer erstklassiger Kontraindikator.... Der ZEW Index ( Das ZEW befragt jeden Monat Analysten und institutionelle Anleger zu ihren Erwartungen an die konjunkturelle Entwicklung ) sieht charttechnisch so aus ( sicher kein Zufall das der fast identisch mit dem DAXverlauf ist..... ). Textlich geht das dann ähnlich dem Artikel im MM ( siehe ZEW-Index signalisiert Ende der Talfahrt ) über den Ticker.....

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Wednesday, June 17, 2009

Protectionism On The Rise....."China Edition"

First the US and now China ( the country with the biggest surplusses ) ...... Just what the doctor ordered...... Now combine this with the following chart ( for more more "depressing" charts see A Tale of Two Depressions & World Trade Shrinks ) and we all can only hope that this kind of "cancer" isn´t spreading.... But i have some serious doubts.....

Nachdem die USA ja bereits trotz einmal mehr großer Worte von Obama die "Buy American" Klausel in Ihrem Konjunkturpaket haben festschreiben lassen kommt jetzt der nächste Tiefschlag...... Wenn die Weltkonjunktur eines nicht gebrauchen kann dann ist es eine Ausuferung des Protektionismus. Der Welthandel ist eh im freien Fall ( siehe klasse Chart via WSJ World Trade Shrinks )..... Das jetzt ausgerechnet China ( das Land mit den größten Handelsüberschüssen ) genau in diese Richtung marschiert ist mehr als bedenklich und läßt einem bei dem nachfolgenden Chart ( mehr depressive Charts via A Tale of Two Depressions ) noch pessimistischer in die Zukunft blicken.......

‘Buy China’ policy set to raise tensions FT

China has introduced an explicit “Buy Chinese” policy as part of its economic stimulus programme in a move that will amplify tensions with trade partners and increase the likelihood of protectionism around the world.
In an edict released jointly by nine government departments, Beijing said government procurement must use only Chinese products or services unless they were not available within the country or could not be bought on reasonable commercial or legal terms.

The government also said it was launching an investigation in response to complaints from domestic industry associations which accuse local governments of favouring foreign suppliers in procurement related to the country’s Rmb4,000bn ($585bn, €421bn, £356bn) economic stimulus package.
Just a few months ago Beijing was raging against a proposed “Buy American” clause included in the US economic rescue package.

“Some countries raised clauses to prioritise the purchase of products of their own countries in their economic stimulus packages,” Yao Jian, a Chinese commerce ministry spokesman, told reporters in February. “We express deep concern about these [measures] ... under the current financial crisis, measures issued by all countries should not cause negative impacts, and especially they should not send out wrong messages.”

Most economists agree China’s economy is starting to recover as a result of its aggressive stimulus package but the country is still struggling with unemployment and fears widespread layoffs could lead to serious social unrest.

The edict was issued jointly by the legislative office of the State Council,China’s cabinet, the national development and reform commission (the country’s powerful state planning agency) and the ministries of industry and information, supervision, housing, transport, railways, water resources and commerce.
The new edict bans local governments and departments from discriminating against domestic suppliers in their procurement. Foreign companies operating in China argue that the opposite is in fact true and that they have been largely cut out of procurement related to the government’s stimulus package.

> More evidence via Michael Pettis that the potential for trade conflicts are rising......

> Hier ein anderes Beispiel das verdeutlich das sich Risiko von Handelskonflikten sich merklich erhöht hat.....

Trade tensions are not improving. Last week I had dinner with a very senior China manager at a large German company and he told me expected anti-dumping suits to surge in the first quarter of next year. As if to beat him to the punch yesterday’s Financial Times came up with this story (“China accused of predatory pricing practices”)
“We are puzzled by this discussion, especially since most European companies operating in China are locally incorporated and have not benefited directly from the government’s stimulus package,” said Joerg Wuttke, president of the European Union Chamber of Commerce in China.

“Requiring government procurement to favour Chinese goods and services certainly won’t help to address China’s trade surplus of €170bn.”
UPDATE: Ambrose Evans-Pritchard

China risks trade suicide Beijing is playing with fire by issuing a `Buy China' edict for its stimulus package.

Beijing risks making the same catastrophic error as the US Congress when it passed the US Smoot-Hawley Tariff Act in 1930. America was then the rising surplus power, like China today. It was the chief beneficiary of an open global system.

By imposing tariffs, Washington triggered massive retaliation. While nobody escaped the Great Depression that ensued, the effects were unequal. The US suffered a far steeper decline in output than the rest of the world. Britain muddled through relatively well in a trade bloc behind Imperial Preference.

China’s action is extremely disturbing. It confirms what we have long feared, that the Chinese government is sufficiently worried about rising unemployment to adopt suicidal measures. Nor does this episode instill confidence in the `China recovery story’.

China kennt die Kraft der Illusion FTD
Das Land will nur noch chinesisch kaufen, frisiert volkswirtschaftliche Statistiken und hängt weiter vom Ausland ab. Ganz schön merikanisch geworden

Die bisher größte Verwunderung löste Peking mit dem für das vierte und das erste Quartal gemeldeten BIP-Wachstum aus - 6,8 und 6,1 Prozent im Jahresvergleich sollen es gewesen sein. Das erstaunt, wo doch die Stromproduktion seit dem vierten Quartal zwischen einem und zehn Prozent im Vergleich zum Vorjahr rückläufig war. In China entfallen 80 Prozent des Stromverbrauchs auf die Industrie.

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Monday, June 15, 2009

ECB "Instability" Report.......

Not much stability to be found in the ECB Financial Stability Review ( Warning : Over 200 Pages ) ......

Ich konnte wenig Stabilität im 226 Seiten langen EZB Stabilitätsüberblick finden.....


Banks in the 16-nation eurozone face $283bn of further losses this year and next as the recession forces them to write off bad loans, the European Central Bank warned yesterday
> Wishful thinking.....

> Denke das die EZB wie im Regelfall der Musik mal wieder gnadenlos hinterger läuft.... Die Summe würde jeder wohl nur allzu gern für bare Münze nehmen.... Na ja , die EZB erwartet ja auch bereits für 2010 wieder Wachstum.....

The warning, which helped push down the euro against the dollar, came just hours before Moody's, the credit rating agency, downgraded 30 Spanish banks and cajas (unlisted regional savings institutions / see Moody’s bank downgrades, pain in Spain edition & Spanish Banks CDS Ouch!!! via Alea), citing the worsening quality of their loans ( see Chart Of The Day - " 90 Day Delinquency Rates In Spanish RMBS" ) and the struggling Spanish economy.

FT Alphaville

MADRID, June 16 (Reuters) - The number of houses sold in Spain fell by 47.6 percent in April compared to a year earlier, marking the largest percentage fall in 16-straight months of decline, the National Statistics Institute said on Tuesday.
The fates of the eurozone economy and its banks have become increasingly interlinked, the ECB said yesterday in its latest financial stability review report, with bank losses increasingly being caused by bad loans, rather than losses on securities.

Risks to the stability of the financial sector remained high, it said, while "uncertainty prevails" over the banking system's ability to absorb further shocks.

> The exposure to Eastern Europe isn´t "helpful"

> Die extrem starke Stellung in Osteuropa wird die nächsten Jahre ebenfalls wenig hilfreich sein.

Banks' exposure to eastern Europe The Economist

Lucas Papademos, ECB vice-president, said that "a negative interplay" between the financial sector and the economy had become clearer since the start of this year. He stopped short of calling for more transparent stress testing. The ECB, which acts as the monetary authority for the countries that share the euro, is not a bank supervisor.

In spite of the scale of the bank losses forecast by the ECB, its prediction was less gloomy than the International Monetary Fund, which in April put expected writedowns this year and next at $750bn, although taking account of loss provisions and write-offs up until May this year would reduce that to about $540bn.
> I´ll go with the IMF...... Especially in the face of news like this Record Job Losses in Europe via Financial Ninja.... I think it is a safe bet that record job losses will be popping up a a regular basis for years to come....

> Ich bin da eher der Meinung des IMF...... Besonders da wir diese Meldung ( Record Job Losses in Europe via Financial Ninjy ) die nächsten Jahre wohl noch öfter zu hören bekommen werden......

The gap between the ECB and IMF forecasts is due to different assumptions, for instance on the performance of loans.

The ECB also expressed confidence that the eurozone's largest banks could endure any further economic deterioration, saying "most . . appear to be sufficiently well capitalised to withstand severe but plausible downside scenarios".
> Needless to say that i beg to differ...... Taxpayer to the rescue....... This is especially true for the German Landesbanken ( seeGermany's Subprime Crisis: Interview With Achim Dubel & A darkened outlook for Germany’s banks ) The "funny" part is that they were once created to support local economies and are owned by regional governments and savings banks aka the taxpayer.......

> Brauche wohl nicht zu erwähnen das ich diese Meinung nicht teile..... Denke das der Steuerzahler schon bald wieder im großen Stil erneut die Zeche zu zahlen hat ( Bad Banks..... ) Da machen solche Geschichten ( Abstruse Investments der Landesbanken ) gleich doppelt so viel Spaß ....... Passender als Extra 3 ( siehe "Werbespot" der HSH Nordbank ) kann man das Debakel aus deutscher Sicht kaum zusammenfassen ( AusnahmeGermany's Subprime Crisis: Interview With Achim Dubel ) ..... :-)

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Friday, June 12, 2009

Herd Mentality / Herdentrieb

What this has to do with Wall Street......? More than you think.....

Was das alles mit den Märkten zu tun hat....? Mehr als man denkt......

Hat tip Paul Kedrosky

Have a nice weekend... Looks like concerts from Santigold are fun to attend.... Just in case here is the list with their tour dates..... I´m not sure i can resist to watch them in Hamburg.... But i´ll have to check out if this guy is also on board... :-)

Allen ein schöne Wochenende....Sieht ganz so aus als wenn Konzerte von Santigold Spaß machen können..... Bin mir nicht sicher ob ich der Versuchung widerstehen kann die in Hamburg zu sehen..... Natürlich nur wenn der Typ erneut den Einpeitscher macht...... :-)

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Wednesday, June 10, 2009

The Only Company That Has Managed To Get An Upgrade From Junk To Investmentgrade Is........

Congratulations to Jeff Bezos....... The overall trend that the bondholders ( vs shareholders ) are the new masters will continue for quite a long time & news like this will pop up on a daily basis and "DILUTION" will finally have an effect on stock prices..... Questions from Wall Street Finest about the debt profile, maturities & the balance sheet quality in general were unheard of until 2008..... Up to early 2008 they still have asked how big the next buyback will be ( of course financed with newly issued debt , see "I Want My Buyback Back....")...........

Glückwunsch an Jeff Bezos....... Insgesamt bleibt festzuhalten das der Trend das die Anleihe und Kreditgeber den Kurs der Unternehmen bestimmen ( im Gegensatz wie in den letzten Jahren die Aktionäre ) noch auf Jahre hinaus intakt bleiben wird. Nachrichten wie diese werden zum Alltag gehören und irgendwann wird auch die "Verwässerung" einen Einfluß auf die momentan doch recht losgelösten Aktienkurse haben.......Und ich glaube kaum das Trends wie dieser ( siehe Europäer stürzen sich auf Ramschanleihen & Hochzinsanleihen: Zahlungsausfälle in Europa halten sich in Grenzen ) von Dauer sein werden...... Fragen in Unternehmenspräsentationen von Analystenseite zur Bilanzqualität ( Verschuldung, Fälligkeiten usw. ) habe ich persönlich bis zum Mitte 2008 nicht vernommen..... Bis dahin wurde stattdessen in schöner Regelmäßigkiet nach der Höhe des nächsten schuldenfinanzierten Aktienrückkaufes gefragt ( siehe "I Want My Buyback Back...." & Druckreifer Vergütungsirrsinn ) ........

Amazon.com: An Angel Among Us Deal Journal WSJ
Forty companies have been jettisoned from the ranks of investment-grade credits this year. Just four junk-rated companies have been promoted to investment grade.
The credit changes, tracked by Moody’s Investors Service, show just how much the economy has faltered. It also shows that even healthier high-yield credits will require a much more vigorous economic environment to achieve investment-grade status.

Indeed, three of the upgrades didn’t reflect better economic times, only that the companies had been acquired in mergers. That leaves just one company to receive an upgrade on its business fundamentals. That company is Amazon.com.
“Other than Amazon, what’s missing are upgrades stemming from enhanced fundamentals such as an improved outlook for sales and a widening of profit margins,” said John Lonski, manager director of Moody’s Credit Market Economics. “In an environment like this, acquisition is still the main driver for upgrades.”

Alltel Communications, First Allmerica Financials Life Insurance and Barr Laboratories were acquired by Verizon Communications’ Verizon Wireless arm, Commonwealth Annuity & Life and Teva Pharmaceuticals, respectively. As a result, their bond ratings were upgraded to investment-grade level.

In the most recent quarter, no companies have been upgraded. Moody’s records show the previous record low was two upgrades–in the second quarter of 2008.

Amazon’s second-quarter financial statements reflected “the company’s very strong balance sheet, healthy operating performance, and good liquidity,” according to Moody’s.

As the dollar value of acquired U.S. companies plunged 53% in 2008 and fell 35% for this year through May, Lonski predicted that the potential for more “rising star” upgrades through M&A will keep diminishing.

> Unfortunately i think "good" ( if you want to call the ratio 1:44 good.... ) news like this will be the exception.... Will be interesting to see if at least one media outlet will spin this as a sign that the green shoots are still here....... :-)

> Bin mir ziemlich sicher das solch "gute" ( wenn man das Verhältnis 1 zu 44 gut nennen möchte ) Nachrichten auch weiter die absolute Ausnahme bleiben werden....... Trotzdem nicht ganz auszuschließen das sich zumindest ein Medienvertreter findet der dies als Beleg für den absurden "Green Shoots" Wahn verwendet....... :-)

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Friday, June 05, 2009

Yann Arthus-Bertrand - HOME

Time for a break from the usual stuff ......If you don´t know who Yann Arthus-Bertrand is you just have to watch the following photo galleries ( see Gallery Boston Globe & Gallery Stern ) .... After watching the galleries i think it is a safe bet that you will gobble up his first film .....

Höchste Zeit den Blick mal wieder auf das Wesentliche zu konzentrieren..... Solltet Ihr Yann Arthus-Bertrand bisher nicht gekannt haben empfehlen ich mal einen Blick in die nachfolgenden Fotoserien zu werfen ( siehe Poto Gallery Boston Globe & Photo Gallery Stern )..... Danach bin ich mir sicher das kaum einer auf seinen ersten Film verzichten möchte....

Here the trailer

Hier erstmal der Trailer

Here the link to the entire film

Hier nun der Link zum kompletten Film

HOME - The Movie

Have a nice weekend.....

Allen ein schönes Wochenende.....


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Wednesday, June 03, 2009

Investors Are More Enthusiastic About The Industry's Future Than Bank Executives Are.....

With insider buying at ZERO this is quite an understatement..... But it is definitely good news for the taxpayer....... Let´s hope that not too many pension funds got involved in the latest offerings.....This is especially true when you see some other ( now former ) "strategic" investors are slashing their holdings ( see here & here )......

Wenn man bedenkt das kein einziger Bankinsider seit dem Stresstest eine einzige Aktie gekauft hat dürfte die Überschrift gelinde gesagt ne kleine Untertreibung sein..... Immerhin sind das gigantische Nachrichten für den arg gebeutelten Steuerzahler..... Bleibt nur zu hoffen das nicht allzu viele Pensionskassen an den letzten Aktienemissionen teilgenommen haben.... Das gilt umso mehr wenn man bedenkt das ehemalige Ankerinvestoren Ihre Bankenbeteiligungen im großem Stil auf den Markt schmeissen ( siehe hier & hier )......


Banks are having an easy time dialing for dollars.

J.P. Morgan Chase & Co., Morgan Stanley, American Express Co. and regional bank KeyCorp said Tuesday they sold a combined $8.7 billion in common stock. That pushed the total value of shares sold by the 19 financial firms that were stress-tested by the government to at least $65 billion since the results were announced May 7.

At the 15 stress-tested banks that have raised capital by selling stock to the public, no senior executives have recently reported buying shares themselves

I have to repeat what i have said in early May...

Let´s hope that the banks that have passed the test are able to attract as much "smart money" as fast ( window of opportunity probably short lived ) as possible...The taxpayer needs a break.....

Kann nur meinen Kommentar vo Anfang Mai wiederholen.....

Bleibt zu hoffen das zumindest die Banken die den Test bestanden haben in der Lage sind genügend "Smart Money" schnell genug ( befürchte das die Bedingungen nicht dauerhaft so gut sein werden ) einszusammeln.... Der Steuerzahler kann dringend etwas Hilfe gebrauchen .......

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Report No Evil....... "Geithner´s Trip To China Edition"

Probably not the way to stop the crashing circulations ( & to rebuilt the lost reputation from the disastrous Iraq coverage )...... I hope the Gartman term " The American media is, and continues to be, “in the bag” for the Obama Administration." is a bit overstated. But after reding reports like Geithner gets passing grade for China trip via Marketwatch i can understand his "concerns".....

Normalerweise wäre die Tatsache das Geithner als er vor chinesischen Studenten über die Werthaltigkeit der chinesischen US$ Anlagen referierte und dabei lauthals ausgelacht worden ist eine dicke fette Schlagzeile ( zumindest in den eingängigen Wirtschaftsnachrichten ) wert..... Komisch nur das dieser "Knaller" de facto kaum erwähnt worden ist. Schlimmer noch... Der Besuch wurde allenthalben als Erfolg gewertet ( siehe stellvertretend Geithner gets passing grade for China trip via Marketwatch ). Sicher nicht der beste Weg um die seit der Irakberichterstattung eh schon stark beschädigte Reputation zu erhöhen bzw. die crashenden Verkäufe zu stabilisieren..... Die ganze Entwicklung ist mehr als bedenklich......

Dennis Gartman
via FT Alphaville

Which brings us to Dennis Gartman’s observations regarding US Treasury Secretary Timothy Geithner’s trip to Beijing this week. As we reported here, Geithner’s attempts to reassure Beijing authorities that the US government was still upholding a strong US dollar policy were met with loud laughter by an audience of students at Peking university.

This fact, apparently, went mostly unreported among the US press according to Gartman. As he surmises:

The utter and harsh reality of the US present fiscal circumstance is that the world is laughing at the Obama Administration’s handling of it. Mr. Geithner is the global vicar of the US fiscal policy, and never, ever in our lifetime have we seen or heard of a US Treasury Secretary being laughed at… until now. It is one thing to be derided; it is entirely another to be laughed at, and the US is now being laughed at.
And regarding the US coverage of the event, he writes:

What is even sadder, however, is that the American press missed the importance of this incident completely. As noted, other than the initial one sentence comment that was cursory in nature by The NY Times, nowhere else was this laughter noted by the domestic press.

The American media is, and continues to be, “in the bag” for the Obama Administration. The American media reported only that the Treasury Secretary made his case; explained the Administration’s position; informed China of the safety of its investments in US Treasury securities and moved on to his next meetings with China’s President and Prime Minister.

As far as the US media was concerned, Mr. Geithner’s speech was a rousing success when instead it was a laughable and utter failure.

The American media hid the importance of what happened there in Beijing from the American people, and we believe the media did so cognisant of what it was not reporting… a sin of omission rather than of commission, but a sin nonetheless.

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