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The yield on 10-year Italian government bonds rose above 7%, the level at which other European countries — including Greece, Portugal and Ireland — have sought international bailouts. The bond yields — which represent the level of risk of lending Italy money — surged as high as 7.48%, marking its highest since the euro was launched in 1999. Ireland’s actually rose above 8%, while Portugal’s breached 9%. And yields for Greek bonds touched the 10% mark. Obviously the U.S. has a similar problem as the PIIGS.  The best way to understand this problem and the fix for this problem is to look … Read more

Jefferson County, Alabama to file for largest municipal bankruptcy This is probably more of a one off municipal bankruptcy but its sure to grab some headlines if Italy gives it a chance.   James O’Toole @CNNMoney November 9, 2011: 7:25 PM ET Downtown Birmingham, in Jefferson County, Alabama. NEW YORK (CNNMoney) — Alabama’s Jefferson County is set to file for the largest municipal bankruptcy in U.S. history after commissioners failed to approve a settlement on the county’s billions in debts. Plagued by budget woes, Jefferson County had narrowly avoided filing for bankruptcy in September after reaching a deal with creditors … Read more

This Is The Moment Rick Perry’s Presidential Chances Flash Crashed Submitted by Tyler Durden on 11/09/2011 21:51 -0500 CDS Intrade 1 minute 40 seconds into this clip is where Rick Perry’s presidential chances flash crash. Literally. As the attached InTrade chart shows, the Perry presidential contract imploded from a prevailing level of about 9 by 60% to 3 in the span of milliseconds, and has since dead cat bounced to about a 50% decline. Who would have thought that the vacuum tubes have now taken over presidential odds as well? As for Perry’s presidential chances, this being America, where the … Read more

by  STEVEN ERLANGER Published: November 9, 2011— Since the start of the euro crisis two years ago, the big fear has been contagion, that market unease about the high debt and slow growth in Europe’s southern rim would infect the core. On Wednesday, contagion arrived with brute force. via Euro Fears Spread to Italy In a Widening Debt Crisis – NYTimes.com.

We slipped a bit in the month of September but still maintain a respectable place amongst the best performing long-short equity fund managers in the world.

Barclays Says Italy Is Finished: “Mathematically Beyond Point Of No Return” Submitted by Tyler Durden on 11/08/2011 20:13 -0500 Barclays European Central Bank Eurozone Italy Rate of Change Euphoria may have returned briefly courtesy of yet another promise for a resignation that will likely not be effectuated for weeks or months, if at all, and already someone has done the math on what the events in the past several days reveal for Italy. That someone is Barcalys, the math is not pretty, and the conclusion is that “Italy is now mathematically beyond point of no return.” Summary from Barclays Capital … Read more

For Markets in Europe, the Focus of Fear Moves to ItalyBy GRAHAM BOWLEYPublished: November 6, 2011 European efforts to solve a growing sovereign debt crisis have failed to quell market unease on the Continent, and the skepticism over Greece points to continued volatility this week.Multimedia Interactive FeatureTracking Europes Debt Crisis Interactive FeatureEuropean Debt Crisis Timeline GraphicMarket Gauges FlashingRelatedGreek Leaders Reach Deal to Form a New Government November 7, 2011Normal Life on Pause, and a Sense of Simmering Rage November 7, 2011Among fresh warning signs, Italy’s cost of borrowing has jumped to the highest rate since the country adopted the euro. … Read more

The rationale for this ETF portfolio is as follows: It delivers a 4.7% average yield and has returned 4.88% YTD just on the market appreciation alone. ETF Portfolio Delivers Income With Diversification Beta Yield YTD MkT % Vanguard Utilities (VPU) 0.5 3.76% 9.51% Deutsche Bank AG ELEMENTS Dogs (DOD) 1.09 4.62% 0.27% iShares iBoxx $ Investment Grad(LQD) 1.94 4.60% 6.82% JP Morgan Alerian ETN (AMJ) 0.7 5.30% 0.15% PowerShares Emerging Mkts Sovereign Debt (PCY) 2.51 5.69% 2.30% iShares Barclays TIPS Bond (TIP) 1.42 4.24% 10.23% Average 0.79 4.70% 4.88% Vanguard Utilities (VPU). Low management cost diversified basket of utilities. Utilities … Read more

Itron, Inc. provides products and services for the energy and water markets worldwide. It produces standard electricity, natural gas, and water meters for residential, commercial, industrial, and transmission and distribution customers. The company also offers advanced and smart electronic, gas, and water meters, as well as communication modules.     This is a checklist I use to quickly come to a conclusion on a stock.  I score a stock, each line getting a 1, 0, or -1.  A stock  that scored 1 on each line would be a perfect 10.  Buy it!Some of these items are quite subjective.  For example … Read more

Gary Shilling’s excellent book, The Age of Deleveragingpublished in May of 2010 predicted a future that has only become all too obvious to the world in the last few months.  Conveniently for the reader’s sake Shilling divides his book in two parts: the first part which is 90% or more of the book is devoted to laying out his thesis of slow growth and deflation and the last chapter details his investment ideas on how one can benefit from this state of affairs.  Unfortunately he doesn’t provide many specific capital investment ideas other than his love of the long bond … Read more

Italy gives EU a post-party hangover By FT reporters Italy’s borrowing costs have climbed to euro-era highs just a day after European leaders agreed on a new plan to reverse the region’s spiralling debt crisis, a worrying sign they have failed to regain the confidence of key financial markets. via Italy gives EU a post-party hangover – FT.com.

CHART OF THE DAY: Serious Question: Does The Euro Even Care About What Happens In Europe? Joe Weisenthal and Eric Platt | Oct. 26, 2011, 3:53 PM | 301 | 4   The more we look at US markets the less it looks like Europe is proving to be a big force in one way or another. As we pointed out this weekend, what’s clearly moving the US market is expectations around GDP growth. As the data has improved, US stocks have improved in a pretty straightforward manner. But it’s funny, because you always hear about how the US market … Read more

OP-ED COLUMNISTThe Hole in Europe’s BucketBy PAUL KRUGMANPublished: October 23, 2011RECOMMENDTWITTERLINKEDINCOMMENTS 377SIGN IN TO E-MAILPRINTREPRINTSSHARE If it weren’t so tragic, the current European crisis would be funny, in a gallows-humor sort of way. For as one rescue plan after another falls flat, Europe’s Very Serious People — who are, if such a thing is possible, even more pompous and self-regarding than their American counterparts — just keep looking more and more ridiculous.Fred R. Conrad/The New York TimesPaul KrugmanGo to Columnist Page »Blog: The Conscience of a LiberalRelatedTimes Topic: European Sovereign Debt CrisisReaders’ CommentsReaders shared their thoughts on this article.Read All … Read more

Foreigners’ Sweetener: Buy House, Get a Visa Article   By NICK TIMIRAOS The reeling housing market has come to this: To shore it up, two Senators are preparing to introduce a bipartisan bill Thursday that would give residence visas to foreigners who spend at least $500,000 to buy houses in the U.S. The provision is part of a larger package of immigration measures, co-authored by Sens. Charles Schumer (D., N.Y.) and Mike Lee (R., Utah), designed to spur more foreign investment in the U.S. via Bill Would Give U.S. Visas to Foreign Home Buyers – WSJ.com.

Banks, whose shares as measured by the 46-member Bloomberg Europe Banks and Financial Services Index have fallen 30 percent this year, oppose the plan partly because it would dilute the value of existing shares. In addition, Deutsche Bank AG (DBK)’s Chief Executive Officer Josef Ackermann and Banco Santander SA Chairman Emilio Botin say capital injections won’t address the real problem, which is sovereign debt. “Since private investors will certainly not be providing the funds for such a recapitalization, governments would ultimately have to raise such funds themselves, thus only exacerbating their debt situation,” Ackermann, who’s also chairman of the Washington-based … Read more

Europe: Clock is ticking, Officials try to ratchet back expectations by CalculatedRisk on 10/16/2011 04:52:00 PM From the WSJ: Europe Faces More Hurdles on Aid Plan European leaders have primed investors to expect a sweeping euro-zone rescue plan to be unveiled within a week. But several hurdles remain, among them the details of a new Greek bailout, and clearing them could take weeks, not days. The result could be a plan broad in ambition but short on specifics. … The plan will have three pillars: a call for higher capital levels for banks, a beefing up of the euro zone’s … Read more

When you read this article, you wonder if not every municipality and state in the country will have to go bankrupt or reorg in some manner to deal with this problem.  I don’t think I’d own anything but pre-refunded munis or for that matter, the perceived most risky of  muni bonds, revenue bonds might actually be the better since you don’t have all of these health care and pension guarantees with many of them.  A good article on How to Short the Muni Bond Market   States’ Fiscal Health   |  Contact: Margie Newman, 202.552.2230 April 25, 2011 — The gap between the promises states … Read more

How they plan on raising your property taxes   Why States Need to Restructure Pension Obligations Published: Tuesday, 12 Jul 2011 | 9:45 AM ET Text Size By: Jonathan S. Henes Partner, Kirkland & Ellis LLP Twitter   The major issue facing states and municipalities is the unsustainability of their defined benefit public pension plans. States and local governments made promises to public employees that upon retirement they would receive defined payments for the rest of their lives. Jonathan Henes Kirkland & Ellis LLP Unfortunately, this was a promise that could never be kept over the long term and today, … Read more

Actually this is a summary of the introduction from Michael Lewis’s new book, Boomerang, which we are giving away this month.  Definitely read it.   Hayman Capital’s Kyle Bass says “Buy Guns and Gold” OCTOBER 4, 2011 Kyle Bass, “one of 15 people” who put on the CDS subprime trade, has been interviewed a couple times of late. Bass has bought 20 million nickels for $1million. He said the metal inside each coin is worth 6.8 cents Ken Rogoff, who wrote the book on sovereign debt defaults, was shocked at the numbers Kyle Bass shared. Thus his new investment thesis: … Read more

By Jilian Mincer NEW YORK | Thu Oct 13, 2011 11:39am EDT (Reuters) – Deteriorating conditions in the pension system are jeopardizing the lump sum payouts workers count on, and pushing some workers to retire ahead of schedule. Stock market losses began dragging down pension assets a few years ago, but the current near-zero interest rates – intended to spur the American economy – have worsened the problem and created the largest gap in assets and liabilities since the end of World War II. “While low interest rates help people borrow money, they dramatically shoot up the pension obligations of … Read more

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By ALEX FRANGOS HONG KONG—Though the world’s economic and financial problems are largely concentrated elsewhere, markets in Asia have been hit hard in recent weeks, falling more than those in the U.S. and Europe. Driving the selloff are fears of global recession, worries about the fragility of the financial system and a cash crunch for some investors that led to forced selling. The fall in Asian markets means they have now priced in all but a major shock to the global economy, and to some analysts appear cheap. “The way markets are trading, people are anticipating some kind of falling … Read more

Linking Sovereign Risk to Corporate Credit Spreads in Europe Author: Rebecca Wilder  ·  September 24th, 2011  ·  Comments (3) Financial firms in Europe and the US are hitting crisis mode, as illustrated by relative borrowing costs, spreads, to comparable government bonds (see financial spreads chart to left and click to enlarge). World policy leaders anxiously await – and some promise to deliver – a solution to the euro area sovereign debt crisis at the IMF annual meetings. Tim Geithner urges policy makers in Europe to end the “threat of cascading default, bank runs and catastrophic risk”. We really are in … Read more