Bits & Pieces (Friday Night Open Mic)

Posted on January 27, 2012 by Kevin S. Willis

Here are 5 People Who Succeeded Long After They Should’ve Quit.

Robert Hooke was the Steve Jobs of the 17th Century.

It doesn’t look like things are going to improve much in North Korea. North Korea makes it a war crime to use a cell phone during 100 day mourning period.

Monopoly

Everything Lee Stranahan’s learned about business, he learned from playing Monopoly.

Not that any of you need any more reasons to avoid swinging drug-fueled orgies with strange couples, but now you have one: bear mace.

Survivors of the Costa Concordia are being offered money to shut up and sign a liability waver. At least, that’s my assumption. Given that Carnival Cruises, who owns Costa Cruises, has a lot of money, I’m betting not everybody takes them up on that offer. I’d at least assume that’s a first offer, and return with: “Well, I’m talking to my lawyer, and he says the whole thing was a lot more traumatic than that.”

Cruise Ships Should Not Lay On Their Side

The Costa Concordia After Captain Ignored Both Maps and Procedures to "Wave at people"

That’s it for tonight. Hope you have a great Friday Night! — KW

Filed under: Bits and Pieces | Tagged: , , , , , | 39 Comments »

Morning Report

Posted on January 27, 2012 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1308.3 -7 -0.53%
Eurostoxx Index 2435.3 -25.060 -1.02%
Oil (WTI) 99.35 -0.350 -0.35%
LIBOR 0.5511 -0.002 -0.36%
US Dollar Index (DXY) 79.356 -0.041 -0.05%
10 Year Govt Bond Yield 1.92% -0.01%

Markets are weaker on a lower-than expected GDP report.  4Q GDP came in at 2.8% vs street expectations of 3%.  Consumption and prices were lower than expected as well.  No major news out of Europe.  EURIBOR  / OIS continues to fall – it is now at 77.5 basis points.  Remember, 20 bps is more or less post-crisis “normalcy”  Pre-crisis normalcy was closer to 7 bps. Note the flat line before mid-2007 and then the spike in 2008.  People forget that the crisis began a year before Lehman.  Looking back, I remember the crisis began when the banks were stuck with a hung bridge on the Boots LBO.  Should have sold everything that day.

Chart:  EURIBOR / OIS

The WSJ has an editorial today on the Fed, which I believe nails it.  It notes the disconnect between obama’s view of the economy and the FOMC’s view.  But, the quote that says it all is this:

“One problem with all of this was pointed out yesterday by Kevin Warsh, who as a Fed governor sat on the FOMC until early last year. Speaking at Stanford, Mr. Warsh said that “exceptionally accommodative monetary policy” has its uses in a crisis or recession. But the Fed’s “recent policy activism—measures that go beyond a central bank’s capacity or traditional remit—threatens to forestall recovery and harms long-term growth.”

That’s a useful warning for markets to hear. Consider that Mr. Bernanke’s transparent goal is to drive down long-term interest rates to reduce mortgage rates to reflate the housing bubble. But intervening so directly to keep rates artificially low has made the bond market useless as a price signal or indicator of risk across the larger economy.”

As others (John / Banned) have noted, low interest rates are not “free.” They are the equivalent of sticking a penny in the fuse box.  They may make the immediate problem go away, but they mask the underlying issues, and set yourself up for a major fire later.

In earnings this am, Ford missed and DR Horton beat.  D.R. Horton is cautiously optimistic about Spring.

Filed under: Earnings Announcements, Economic data, Economy, Federal Reserve, Financial Crisis | 92 Comments »