Morning Report. Volcker: “There’s a lot of liquor out there now.” 03/05/13

Vital Statistics: 

  Last Change Percent
S&P Futures  1531.2 5.5 0.36%
Eurostoxx Index 2659.6 39.8 1.52%
Oil (WTI) 90.65 0.5 0.59%
LIBOR 0.281 -0.002 -0.71%
US Dollar Index (DXY) 82.08 -0.115 -0.14%
10 Year Govt Bond Yield 1.89% 0.02%  
RPX Composite Real Estate Index 195 0.2  

Stocks are higher this morning on no real news. China re-affirmed its growth target of 7.5% GDP. European ministers opened the way for looser budget policies after the Italian election results. In spite of that, Euro sovereigns are generally stronger this morning. Generally, the market has a “risk on” feel to it, and bonds / MBS are lower.

Acting FHFA Chairman Ed Demarco laid out the plan for dealing with the GSEs. Fannie and Fred would be merged, slowly dissolved and a new entity would take their place. The new entity would be owned and funded by Fan and Fred, but would have its own CEO and Chairman and be in a physically separate location. Left undecided is exactly what role the government will have in the mortgage market. The government seems to be leaning in the direction of focusing on low income / VA products, and acting as a re-insurer.  That said, it is up to Congress to figure out what the the exact role will be. The securitization arm could be nationalized, turned into a utility, or privatized.

The GSEs owe the government something like $120B and it is estimated that it would take another $200 – $250 billion to capitalize them enough so that they could stand on their own.  The government is in a pickle on this one. On one hand, if the government nationalizes Fan and Fred, all of their debt becomes sovereign debt, with the attendant effects on our debt / gdp ratios. On the other hand, there is no way to raise $350B in the private markets. And the chances of getting a $350B appropriation for the GSEs in this Congress is probably too much to ask as well.  Given that the government backs 90% of all new mortgages it is probably safe to say they won’t make any major changes until private financing takes some of the load. 

Ex Fed Chairman Paul Volcker is warning that removing the central bank stimulus will be difficult and the temptation will be to stay too long.  “You can make a mistake and go too quick, but the much more frequent mistake is you go too slow, because its never popular to take the so-called punch bowl away or to weaken the liquor.” Of course after the equity bubble burst, the Fed kept the punch bowl out so long that the real estate market went on a 5 year bender and then wrapped the car around a tree. Almost on cue, Janet Yellen, as the good co-dependent / enabling wife, is out there saying that the “potential costs of asset purchases definitely need to be monitored over time and she did not see any that would cause me to advocate a curtailment.” Meanwhile, the stock market is approaching all-time highs, the VIX is at 14, and S&P 500 earnings have been dropping every quarter since Q212…

Bites and Pieces: Eat Your Sprouts

Brussels sprouts have a well-deserved reputation amongst children for being one of the nastier things they’re forced to choke down. They manage to combine insipid flavor with a mealy texture. You can imagine my surprise when my wife came back from a trip gushing over these amazing Brussels sprouts she’d had. She went to a place in Kansas City called PizzaBella. They roast Brussels sprouts with pancetta, cranberries, almonds, and vinaigrette. Looks a lot more appetizing than cream of Brussels sprouts, no?

Creamed Brussels Sprouts

Creamed Brussels Sprouts

PizzaBella Brussels SProuts

Sprouts from Pizza Bella

Brussels sprouts have been a fixture in our household ever since. You can find plenty of recipes out there for roasted Brussels sprouts. Here’s an example from the good folks at Epicurious (originally published in Gourmet magazine).

Roasted Brussels Sprouts

Ingredients

1 pound of Brussels sprouts, halved

2 oz. of diced pancetta

1 garlic clove, minced

½ tablespoon olive oil

salt and pepper to taste

Method

Combine everything and spread in a single layer in a baking pan. Roast in 450 degree oven, stirring after about ten minutes, until sprouts are browned on the edges and tender. Add a bit of water to the pan when done to get the brown bits . Serve warm.

Not bad. One could add the cranberries and almonds and get reasonably close to that served up by PizzaBella. I find a bit of sweetness works well in this sort of dish, so some pomegranate juice adds a nice touch. Still, one isn’t going to approach what you get from a good pizza oven at home. I wanted proper caramelization and wasn’t going to get that from the oven alone.

Enter my cast iron pan. If I want a good steak, I sear it on both sides and put it in the oven until it’s medium rare. [If I want a great steak, I’ll put it in a low temperature oven until medium rare and then sear it.] So, I sear the cut sides of the Brussels sprouts, toss in the other goodies, and then finish in the oven. It’s a pain to halve and place the Brussels sprouts, but the center gets pretty mealy by the time whole sprouts are cooked.

Caramelized Brussels Sprouts with Almonds, Cranberries, and Pomegranate

Ingredients

1 pound of Brussels sprouts, halved

¼ cup of olive oil

¼ cup of slivered almonds

¼ cup of sweetened, dried cranberries (Craisins)

½ cup of pomegranate juice

salt and pepper to taste

Method

Heat the oven to 400 degrees. Put a case iron skillet over med-high heat and add olive oil. When the olive oil is shimmering (not smoking), add the Brussels sprouts, cut side down. Cook until they develop a good brown crust, several minutes. Add the cranberries and almonds (if using) and use a metal spatula to get the Brussels sprouts off the pan and mix briefly. Pour in the pomegranate juice and put into the oven until the sprouts are just cooked through. Serve with a bit of grated Parmesan cheese.

Some variation on this has been my go to dish until recently, when I started playing with unusual ingredients for different cuisines. I tried my braised squid concept, using an Indian recipe for chicken with tomatoes, yogurt, ginger, garlic and the usual spices. We had a big bag of Brussels sprouts in the kitchen and I decided to try cooking them with an Indian flare. And so here we have it.

Curried Brussels Sprouts

Ingredients

½ pound of Brussels sprouts, halved

¼ cup of ghee (I used two tablespoons each of clarified butter and canola oil)

½ cup chopped onions

1 teaspoon minced ginger

1 teaspoon minced garlic

¼ teaspoon red chili powder

½ teaspoon ground coriander

½ teaspoon ground cumin

½ teaspoon ginger powder

1 teaspoon ground cinnamon

Method

Heat the oven to 400 degrees. Put a cast iron skillet over med high heat. Add the ghee until shimmering. Add the onions and cook until browned. Add the ginger, garlic and spices and cook until the fat begins to separate. You might need to add a bit of water, a technique known as bhunao.

Place the Brussels sprouts, cut side down, and cook for several minutes. Scrape the Brussels sprouts from the bottom of the pan with a metal spatula and toss slightly. Put the pan in the oven and cook until the sprouts are tender, about ten minutes. I’ll post a separate B&P update for the curried squid with coconut/saffron rice.

Since starting this post, I tried a third variation. The first two are good, but go into the category of anything tastes good if you add enough butter. I wanted to make sprouts that might be a bit healthier. Well, that and I was out of butter. But I did have cheese! I also had some leftover sliced and spiced apples from an apple pie that I’d made. As a slice of cheddar cheese is a classic topping for apple pie, I had my inspiration.

 Brussels Sprouts with Apples and Cheese

Sprouts no cheese Sprouts and Cheese
Ingredients

½ pound of Brussels sprouts, halved

2 tablespoons of vegetable oil (I used canola)

1 Granny Smith apple

1 tablespoon sugar

½ teaspoon cinnamon

¼ teaspoon ginger

¼ teaspoon allspice

Optional: ½ cup of grated cheddar cheese

Method

Peel and slice the apple, then toss with sugar and spices. Set aside.

Heat the oven to 400 degrees. Put a case iron skillet over med-high heat and add vegetable oil. When the oil is shimmering, add the Brussels sprouts, cut side down. Cook until they develop a good brown crust, several minutes. Add the sliced apples and use a metal spatula to toss everything together. Put into the oven for ten minutes.

Optional: After five minutes, sprinkle shredded cheese over the sprouts and apples and return pan to oven for another five minutes.

Note: use whatever combination of spices you prefer for apple pie. I actually used some leftover sliced apples from an apple pie. I had tossed the apples with lime juice to prevent them from darkening until I assembled the pie. You can also toss in some minced ginger and garlic if you like.

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