Futures are flat to slightly (+5bps) higher this morning on a relatively light news day. Emerging markets are higher on global economic recovery sentiment, and the euro is up against the USD on news of a bank bailout in
(see more on that below). Additionally, Ireland successfully placed EU5 billion of 7yr notes yesterday, and their first day of trading today will be closely watched. According to Bloomberg: Greece
In corporate news, the WSJ is reporting that AAPL is developing a CDMA phone for summer launch that is compatible with VZ’s network. AAPL, QCOM, VZ, and S are trading higher pre-market on that news, while RIMM and T are trading lower. Additionally, instrument company Danaher (DHR) raised Q1 guidance. Note that earnings season (already?) is set to kick off April 12th with Alcoa. CaseShiller Home Price data is due at 9am, and Consumer Confidence is due at 10am. Recall that in addition to facing month- and quarter-end this week, investors must consider that the Fed’s quantitative easing is due to end March 31st as well. According to Bloomberg News, all will be well, as private investors will take over what the Fed has started: “The Federal Reserve’s completion this week of its program to buy $1.25 trillion in mortgage bonds probably won’t mean significantly higher
home loan rates as investors return to the market, replacing the Fed.” Whether that is actually true or not remains to be seen… U.S.
, the government effectively bailed out troubled banks today, agreeing to back stop toxic real estate loans. Note that AIB down is 10% this morning on that news. The guys at Hedgeye posted some thoughts on this topic this morning: Ireland
This Irish stock market story gets more interesting by the minute. In the last 48 hours, this country that the short sellers called a PIG in February has started to go down again. For the week-to-date, Irish stocks are flashing what we call a regional negative divergence (underperforming other countries in both the European region), and its doing so on very bad long term news.
The isn't "new" news, per se, but everything has a price. Timing, when the long term TAIL of a "Bad Bank" plan (taking over toxic loans from dysfunctional lenders) like
has imposed on their citizenry can obviously wreak some havoc on your stock portfolio. If you don't invest alongside government-leaked inside information, your best path forward in Ireland is to wake-up every morning and understand when they are going to double down again on government debt. Ireland
“Dublin Down” is maybe a cute way of saying what happened yesterday in the Irish banking stocks, but there is nothing cute about this, ladies.
based Allied Irish bank was down -17% yesterday on fears that the unknown is known again. After receiving over 7 Billion Euros in government support, Allied Irish could need as much as another 7.7 Billion Euros ($10.4B dollars) and the Irish government to take as much as a 70% stake in the company... Dublin
If you want to wrap all of these massive price moves in Ireland's stock market around your head and consider what could happen to US stocks from here (if indeed the Irish continue to be a lead indicator for global leverage disease coming back into focus), you might want to get yourself a pint.
Regular readers of this note know that I am a big fan of the 2008 book Are We
? by fellow Rome grad Cullen Murphy. As such, you can imagine my delight at reading this morning’s Bloomberg editorial on that very topic by a guy named Mark Fisher. The full text is in the quote section below and I would encourage you to read it, but here’s a tease: Amherst
Unless the government creates a massive jobs program, cuts spending and taxes, and gains control of the national budget and the balance of payments crises, we should fear for our future. Unless our fellow Americans relearn the value of hard work, no government plan stands a chance. Once the world realizes that the
U.S. is the new , the traditional tenets governing asset correlations will no longer hold, and we can expect a breakdown in traditional stock-bond portfolio theories. Since paper assets are ultimately shoved down to zero, expect hard assets to benefit -- especially gold, energy and grains -- along with commodity-related equities. The name of the game going forward -- let’s say the next five years -- will be buying ahead of whatever China and other developing nations are trying to accumulate and diversifying away from the U.S. Rome
It actually sounds pretty similar to what I posted in this space from Gloom, Boom & Doom’s Marc Faber yesterday… Regardless, as much as I like reading this stuff and welcome the comparisons to Ancient Rome, it’s worth noting that I have not made a cent on any such related trading strategies to date. (Unless you count gold, but that’s a permanent P.A. fixture) As always, the lesson remains: the market can be wrong for a lot longer than most individuals – and funds, even – can stay solvent…
BofAMLCO ups HL. JPHQ ups WLK. BofAMLCO cuts DWA. BCAP cuts GENZ. JPHQ cuts BWY. OPCO cuts TNDM. Roth cuts GNVC. OXM beats by 5c. Geithner makes positive comments about AIG. WEDC to be acquired by Microsemi for $7/share. LDK misses by 9c and guides in-line. DAI denies rumors it may sell Maybach brand. WSJ reports that TM will license Prius technology to Mazda.
S&P 500 PreMarket 8:30am (last/% change prior close/volume):
DANAHER CORP 80.90 +4.56% 900
DYNEGY INC-A 1.32 +3.94% 5000
QUALCOMM INC 42.88 +2.68% 71592
VERIZON COMMUNIC 31.18 +2.4 % 571465
WHOLE FOODS MKT 37.00 +2.35% 4510
AMERICAN INTERNA 35.17 +2.09% 43969
APPLE INC 237.11 +2.03% 280180
WEATHERFORD INTL 15.90 +1.6 % 5550
AT&T INC 26.10 -1.55% 435080
Today’s Trivia: What is the tallest statue in the world?
Yesterday's Answer: Sandy Springs, GA - UPS; Vinings, GA – Home Depot; Purchase, NY - PepsiCo; Issaquah, WA - Costco.
Best Quotes: “
U.S. Decline, Sloth Look a Lot Like End of : Mark Fisher 2010-03-30 01:00:00.2 GMT Rome
March 30 (Bloomberg) -- Historians cite the late second century as the turning point of the
Roman Empire, when the once- proud, feared society began its descent into infamy. As the ruling class was undermined by civil wars and attacks by outsiders, the Romans’ respect for law and social institutions began to erode. In the end, a combination of political and economic mistakes led to the empire’s downfall. The U.S. today is a mirror image of the Roman Empire as it tipped into chaos. Whether we blame our bloated government, a greedy elite or a lethargic population, the similarities between the two foreshadow a gruesome future. The Roman economy grew fat from the plunder of conquered territories and the added productivity offered by new lands. The waning of expansionism didn’t bode well for the empire. While the ascended quite differently, it also used its position as a superpower to fuel economic expansion. Because the country had the strongest military and economy in the post-World War II era, the U.S. dollar became the de facto global reserve currency, ensuring endless competitive advantages -- which have vanished in the last decade. Americans have become less productive while relying more on social safety-net programs such as Medicare, Medicaid and Social Security -- and now expanded health-care insurance. Worse, like the ancient Romans, a sense of entitlement has replaced the drive and motivation we once championed. With easy access to abundant government handouts, it’s no wonder so many jobless people have stopped looking for work. U.S.
Bread and Circuses… In the fifth century, the Roman political elite began searching for ways to distract its population from the hopelessness at hand. Bread and circuses postponed the ultimate fall. The tactic stopped working when people realized their bread tasted stale and sensed the true scope of the impending disaster. The
U.S. government’s version of bread offerings proliferated throughout the fiscal crisis, in which collapse was averted only by a massive financial bailout and an endless supply of paper money, along with the rest of the seemingly endless sustenance being shoved down ’s throat. Meanwhile, the administration hasn’t yet tackled the most pressing issue: job creation. Given the current state of the labor market, American workers can’t possibly provide enough tax revenue to support the government’s swelling debt. Even more unsettling is the government’s inability to fix the financial crisis. After a stream of stimulus programs and bailouts, the Federal Reserve continues to print enormous quantities of dollars and buy the nation’s debt. America
Fear Mounts… Unless the government creates a massive jobs program, cuts spending and taxes, and gains control of the national budget and the balance of payments crises, we should fear for our future. Unless our fellow Americans relearn the value of hard work, no government plan stands a chance. Once the world realizes that the
U.S. is the new , the traditional tenets governing asset correlations will no longer hold, and we can expect a breakdown in traditional stock-bond portfolio theories. Since paper assets are ultimately shoved down to zero, expect hard assets to benefit -- especially gold, energy and grains -- along with commodity-related equities. The name of the game going forward -- let’s say the next five years -- will be buying ahead of whatever Rome China and other developing nations are trying to accumulate and diversifying away from the U.S.
Factor… Consider the trading relationship between the China U.S. and . When the China U.S. funnels its unfinished products to , the Asian nation is able to send back manufactured goods -- thanks to its abundant supply of cheap labor -- in return for dollars. While the American people are busy tinkering with their newly manufactured playthings, the Chinese continue to use their new wealth to buy energy and commodity assets. Thus, China and the other developing countries that are amassing dollars, euros and pounds basically play a game of global hot potato, trying to pass the potato -- worthless paper currencies -- to others in exchange for energy, water and valuable food assets. As China continues to thrust its dollars at all things commodity-related, it’s hard not to laugh when hearing President Barack Obama speak about trying to identify “environmentally sound” opportunities in energy. China
Meltdown Ahead… It’s only a matter of time before the mechanism that has allowed the government to sustain its trade deficit for longer than it should have -- similar to the Asian dollar peg of the 1990s -- causes a simultaneous decline in the
currency, asset prices and the economy. Once people begin to realize that their paper currencies, stocks and bonds are all garbage, we can expect a meltdown. Although it may be too early to predict an impending collapse in paper assets and an immediate need to acquire hard assets, it’s clear that we’ve reached a turning point. The ship has begun to sink. As I await a global re-set of asset values and prices, I will continue to monitor the swelling federal and state tax revenue levels, the rising animosity between Main Street and Wall Street and the progress made by commodity-hungry nations as they continue to eat our lunch. While I continue to hope for the best, it’s far wiser to prepare for the worst.” U.S.
(Mark Fisher, author “The Logical Trader,” is the founder of MBF Asset Management LLC. The opinions expressed are his own.)