Sunday, March 2, 2008

Bottoms Up

Always on the lookout for pints of reality, similar in deliciousness to the pints of Red Bull/Vodka I consumed on a rare boys night out, Paul Kedrosky of TheStreet.com gathered a week's worth of global gobbledeegoo to digest. I have regurged some of the most pertinent passages here (links below). Ironically, without even having knowledge of my blog, my drinking partner/PA also mentioned the ridiculous prices of Mach 3 razors! He's outdone me, buying used cartridges on Ebay and paring his shaves down to once a week, impressive!


Bloomberg reported that credit default swaps tied to MBIA's bonds rose 106 basis points to 705 points, according to London-based CMA Datavision. "That meant it cost about $705,000 to buy a contract protecting $10 million of bonds from default for five years. The figure also implies that MBIA has a 45 percent probability of defaulting during the next five years. By contrast, credit protection for AAA rated General Electric Co. on bonds of equivalent maturities were only 137 points." This again points to a raging conspiracy among banks/bonds/rating agencies. How could one AAA product cost 5x more than another. What's the point?



What a great concept, the misery index, comprised of the sum of the unemployment rate and inflation. The index currently stands at 9.2 percent. That's the highest reading since October 2005 and up from 5.8 percent in December 2006 (Bloomberg).



Another hedge fund goes kablooey! Peloton is being cashed in by its lenders and withdrawls from the fund have been stopped. "City sources fear the Peloton firesale will prompt banks to ask other funds to put up more cash to support their positions, forcing more to close. " $2 billion in equity, poof!



Finally, a NYT article says our current measures for inflation/recession are outdated and don't factor in real-time accessible data. "For the first time since the fourth quarter of 2003, TrimTabs estimates, consumers will have less money to spend this quarter on a year-over-year basis. The firm expects this figure to fall 0.6 percent from the same period in 2007." Things are actually worse as this service expects Feb. job losses to be 77K, a bit more than the 30K expected gain by the Fed. Let's see who's right......

http://www.nytimes.com/2008/03/02/business/02gret.html?_r=1&ref=business&oref=slogin
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_sesit&sid=aW0NPzWnjAQ0
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3465233.ece

2 comments:

Tiger Coach said...

AX...I enjoy reading your blog and the amount of time and research you put in to it. I particularly like your story on the science teacher with his radio. I can remember teachers Mr. Garrison shaking his head that same day about the market crash...that's o.k. he still owned half of the ponies at Thistledown!

BD

Tiger Coach said...

P.S. I met a financial manager at states this weekend...A former Solonite by the name of Wahl...good guy. I would like to get a hold of him to see if he would post for you or for me. He manages well over 600 million a year!

check out www.usmegatrends@blogspot.com when you get a chance!