Insomniac Hedge Fund Guy

Italy’s debt must be restructured It is increasingly clear that Italy’s public debt is unsustainable and needs an orderly restructuring to avert a disorderly default. The eurozone’s wish to exclude private sector involvement from the design of the new European Stability Mechanism is pig-headed – and lacks all credibility. With public debt at 120 per cent of gross domestic product, real interest rates close to five per cent and zero growth, Italy would need a primary surplus of five per cent of gross domestic product – not the current near-zero – merely to stabilise its debt. Soon real rates will be higher … Read more

Complete List Of European Sovereign Events Through The End Of 2011Submitted by Tyler Durden on 11/28/2011 22:17 -0500Belgium Bond Deutsche Bank European Central Bank Finland fixed France Greece Gross Domestic Product Ireland Italy Portugal recovery UnemploymentWe wont focus too much on the reasons why Deutsche Bank just cut its forecast for European 2012 GDP from +0.4% to -0.5%: needless to say it is yet another ploy to force the ECBs hand to print, and not even DB is ashamed to admit it: “The good news is that the worse the economic outlook becomes, the more likely it is the ECB … Read more

Goldman: “As The Endgame Approaches, The Rally In AAA-Euro Area Sovereign Bonds No Longer Seems Sustainable” Submitted by Tyler Durden on 11/27/2011 19:06 -0500 Bank Failures Baseline Scenario Bond European Central Bank France Germany Goldman Sachs goldman sachs Italy Lehman Meltdown National Debt Option Skew Raiffeisen Recession Risk Management Sovereign Debt Sovereigns Swiss Franc Goldman Sachs has for the time being been very quiet in joining all of its colleagues from around the street in screaming for an immediate intervention by the ECB or else. The reasons are glaringly obvious: with a Goldman alum in charge of the ECB, and … Read more

Playing Defense Amid Debt Drama Investors Turning To Israel, Lehman In Hunt for Refuge From Market Woes ArticleBy MATT WIRZ The hunt for the perfect trade has some investors straying far from the herd. They are scouring the nooks and crannies of the investing world, making bets on Israeli bonds, the fate of Iceland’s banking system and the likelihood of payouts from the bankruptcy of Lehman Brothers Holdings. Their quest is to find investments where the value isn’t beholden to the broader market swings fueled by debt woes in Europe and political battles in the U.S. Historically, investors relied on … Read more

Markets are rallying sharply from deeply oversold conditions overnight. No legitimate news organization is picking up this story although we did blog a few days ago that would be a conceivable solution.  Unfortunately the IMF doesn’t have this kind of money, the U.S. House of Representatives would need to approve additional U.S. commitments and Germany will unlikely allow the ECB to print the money it needs to add to the IMF.  We remain unconvinced and are maintaining for now our short euro trade.  Bear markets have vicious short covering rallies.  At any rate it seems a better hedge than shorting … Read more

Utah Law Makes Coins Worth Their Weight in Gold (or Silver) Djamila Grossman for The New York Times Rounds of silver being produced at the Old Glory Mint in Utah. By WILLIAM YARDLEY Published: May 29, 2011 via Utah Law Encourages Gold and Silver Coin Use – NYTimes.com. Anyone know a good place to pick up your gold?

Euro ‘doomed to be a weak currency’ by DAVID HUGHES, Daily Mail Comments (0) Add to My Stories The euro is doomed to be a weak currency indefinitely, according to a crushing assessment by Europe’s most authoritative economists. The single currency will not prosper without sweeping economic reforms across the EU, the Organisation for Economic Cooperation and Development says today. The bombshell verdict punctures the euro-euphoria that greeted the launch of notes and coins in the new currency in 12 EU member states on January 1. Politicians across the Eurozone hailed the launch as a massive success that has given … Read more

      Black Friday 2011: Waffle Maker Riot Caught On Tape.   Wow, I thought the riots in Greece were scary.  This is a full blown riot in a Walmart where apparently there are $2 waffle makers available.  Based on the looks of  these obese people on this video, I never want to eat a waffle again. There may have been record sales on Friday but I doubt if the market will care enough about them to matter.  My guess is that any consumer names rallying on the news will be short seller candidates soon after.  The euro debt … Read more

  By STACY MEICHTRY and JONATHAN CHENG ROME—Uncertainty in financial markets deepened as Italy’s borrowing costs soared to euro-era highs and Prime Minister Mario Monti said European leaders understood an Italian collapse would mean “the end of the euro.” Europe’s troubles weighed on markets world-wide: Stocks in the U.S. had their worst Thanksgiving week since 1942, the year the U.S. officially set the holiday at its current date. The Dow Jones Industrial Average has shed 7.6% the past two weeks. The common currency showed its own signs of strain, ending the week down 2.1%, its lowest level in almost two … Read more

Insiders, C-level officers,directors, and 10% owners of companies, in short the people that know the business the best, has picked up noticeably as the markets have come down.  But it’s not anywhere near the level of August sell off activity.

I think we were premature closing out our euro short.  There really isn’t viable outcome of the European common currency anymore.  It’s possible that the IMF will bail out Europe and that is probably the right thing to do but there will have to be considerably more pain.  There is no way Germany is going to bail out its neighbors so it will be left up to the U.S, China,and Japan offering the Germans a face-saving way to pitch in through the IMF. So we are reinstituting our short position. We started Friday and are adding to it with EUO and … Read more

PUT OPTIONS ON JGB is Kyle Bass’s favorite trade.   UPDATE: IMF Warns Japan Debt Could “Quickly Become Unsustainable” — IMF warns that Japan’s debt could “quickly become unsustainable” if JGB yields rise — Says market concerns could trigger sudden spike in risk premiums — Yield spike could trigger Japanese withdrawal of liquidity from global capital markets (Adds more details from report, background throughout.) By Takashi Nakamichi Of DOW JONES NEWSWIRES TOKYO (Dow Jones)–The International Monetary Fund warned in a new report that market concerns over fiscal sustainability could trigger a “sudden spike” in Japanese government bond yields that could … Read more

The closest parallel to what’s unraveling now is the 1998 Asian currency crisis, culminating in Russian default and the collapse of Long Term Capital.  This is probably a multiple of 3-10 x worse than this as it could end with the collapse of the euro currency, several sovereign defaults.  It’s really hard to play anything here from the long side.  We have spent the last several days lightening up on perfectly healthy companies with high dividend yields and increasing our short exposure. You would think that gold would act as a buffer against the massive amount of money printing ahead … Read more

As usual, most of our posts are with a theme on how to profit from them or to stimulate the investment mind.  One of Gary Shlling’s ideas from The Age of Deveraging is to short emerging equities.  This could be a further catalyst.  It’s not easy to short emerging markets and the ETFs that attempt to do it explicitly say they don’t even attempt to correlate for more than a day.  That’s discouraging but the ProShares Short MSCI Emerging Markets ETF has returned 28.78% through 2011 third quarter versus -22.46% for its underlying index which isn’t too terrible considering that’s … Read more

.By BINYAMIN APPELBAUM and ANNIE LOWREY The latest Congressional failure to agree on a plan for balancing the government’s books could yield a surprising result: a sharp reduction in annual federal deficits, larger than anything contemplated by the special panel that reached its fruitless finale on Monday. But the absence of an agreement also threatens to significantly slow growth in an already ailing economy by raising taxes on almost everyone while reducing government spending on almost everything. via For Deficit Panel, Failure Cuts Two Ways – NYTimes.com.

The real issue is the total collapse of the global financial system based on a run of all the banks in Europe that leads to a gumming up of the global financial engine and a complete and utter demolition of the machine.  Throw thermo-nuclear war on top of that and you have  the perfect portfolio positioning for readers of Zero Hedge.  I have to say, I’m not a fan of horror movies, but horror blogs have certainly piqued my interest.  My vote for scariest blog of the year is ZERO HEDGE.  I guess that’s the point of the name, there … Read more

For this of you who don’t know who Kyle Bass is.  He is the new John Paulson.  Where Paulson screwed up this year thinking that our financial system would recover and bought heavily into the banking sector, Kyle Bass has adamantly maintained we are all going to hell in a hand basket sooner than later.     Kyle Bass Destroys The Ponzi-Prone Debt Sustainability Arguments Of The Status Quo…And Why Germany Cant Save The WorldSubmitted by Tyler Durden on 11/20/2011 16:08 -0500Germany Japan Kyle BassAnother noteworthy Kyle Bass moment as he discusses debt sustainability among major global sovereign nations. Simply … Read more

Reeling In the Yields By KAREN HUBE | MORE ARTICLES BY AUTHOR Despite rock-bottom interest rates, you can still earn investment income of 7%-plus per year. How to keep money flowing during retirement. Not so long ago, you could build a reliable portfolio of income-producing investments with just a few simple steps: Buy some Treasuries, some corporate bonds and some munis, and then watch the money roll in. That kind of investing is a long-lost luxury. Yields on core bond holdings have been slim for three years in a row. And while 10-year Treasury yields, at 2%, are higher than they were … Read more

At least that’s Merrill Lynch’s recently published outlook.  I happen to agree with it.  There are a few names here we own, our largest positions, and some insider buying as well.  Merrill Lynch writes Combines growth, yield and quality, three of our key theme-dividend growth potential in addition to high dividend yield. Under-owned by fund mangers Health Care is the preferred defensive sector (We have a full weighting nearly 8% in MRK but have sold some call per our tweet) Only sector with no expected deceleration in earning growth in 2012 Risks: commodity inflation, strong profits recovery.   Our favorite … Read more

The Dow Jones Credit Suisse Hedge Fund Indexes Performance data for Oct 2011 has been updated. Please visit our site at http://www.hedgeindex.com for further details.    Dow Jones Credit Suisse Core Index Performance Index / Sub Strategies Value** Oct 11 YTD 1 Year Annl* Std Dev* Sharpe* Dow Jones Credit Suisse Core Hedge Fund Index 93.87 1.85% -6.13% -4.28% 6.65% 6.80% 0.70     Convertible Arbitrage 93.35 -0.52% -6.65% -6.05% 3.32% 11.54% 0.13     Emerging Markets 98.85 1.73% -1.15% 1.06% 9.90% 10.87% 0.74     Event Driven 88.99 2.66% -11.01% -8.62% 4.84% 8.37% 0.36     Fixed Income Arbitrage 100.01 0.18% 0.01% -1.89% 7.78% 8.78% … Read more

I’m not sure what to make of this headline so judge it for yourself.   I wrote about insider buying picking up dramatically in August/September.  I said the two other signs I’d look for were stock buybacks and takeovers.  Stock buybacks apparently have picked up but I’m suspicious since companies can easily announce a buyback but not actually do it.  If you really want to buy back your stock, just tender for it and get it done! U.S. companies are buying back the most stock in four years, taking advantage of record-high cash levels and low interest rates to purchase … Read more

I thought this article was revealing.  As they say, as goes California, so goes the nation. There are a lot of actionable ideas here, from shorting restaurants to credit card companies.   Californians Cut Spending Published: Monday, 14 Nov 2011 | 10:20 PM ET Text Size By: Jane Wells   Californians have been cutting spending, according to a new report, in stark contrast to the state government, which continues to spend more than it takes in. The latest figures show state revenues last month were $811 million below projections. Nearly a billion dollars in just one month. Fiscal year to … Read more

Investors Dread-Letter Day: 11/23Mystery Surrounding Budget Supercommittee Keeps Markets in Limbo as Deadline Nears By BRENDAN CONWAYAssociated PressThe co-heads of the so-called deficit-reduction supercommittee, Rep. Jeb Hensarling R., Texas and Sen. Patty Murray D., Wash., have investors on edge as the panels progress on a deal by Thanksgiving remains shrouded in mystery.Call it Wall Streets other geopolitical driver, one played out not in Athens or Rome, but close to home in Washington. WSJs Janet Hook reports on yet another week ending without a deal from the congressional deficit supercommittee. Plus, what is likelihood that the deficit negotiations will come down … Read more

In Paris, Keeping a Watchful Eye on Rome’s Finances By NELSON D. SCHWARTZ and LIZ ALDERMAN Published: November 13, 2011   While Italy has replaced Greece as the focus of anxiety amid Europe’s worsening debt crisis, investors are increasingly concerned about the outlook for France, whose banks are among the world’s biggest and are closely linked with their counterparts in the United States. via France Keeps a Watchful Eye on Italy’s Troubled Finances – NYTimes.com.

Schedule for Week of Nov 13th by CalculatedRisk on 11/12/2011 01:15:00 PM Earlier: • Summary for Week Ending Nov 11th Two key housing reports will be released this week: November homebuilder confidence on Wednesday, and October housing starts on Thursday. For manufacturing, the November NY Fed (Empire state) survey will be released on Tuesday, the November Philly Fed survey on Thursday, and the September Industrial Production and Capacity Utilization report on Wednesday. via Calculated Risk: Schedule for Week of Nov 13th.

Jefferson County, Alabama, Votes to Declare Biggest Municipal Bankruptcy – Bloomberg Jefferson now must show a federal judge that it can’t pay its bills and then draw up a plan for meeting obligations, which the court may reduce. Unlike corporate cases, creditors can’t try to seize or sell off county assets, and the court can’t appoint a trustee to run the county.Municipalities have more leverage with creditors under Chapter 9 of the U.S. Bankruptcy Code than corporations have when reorganizing debt in Chapter 11 protection, said Marc Levinson, a lawyer who represented Vallejo, California, when that city went bankrupt. A … Read more