Central banks are in combat mode. On the front lines: Europe, Denmark, Canada, Switzerland, Peru and India.» Read More
Countering some of the rosy rhetoric on Wall Street this holiday season, Guggenheim Partners CIO Scott Minerd came loaded for bear.
In an interview this morning on "Squawk Box" he questions the German Finance Minister's "street" cred, the stability of European banking and, says Spain could become the "Lehman of Europe".
"I think that there is a possibility that the subprime crisis was just the opening act to the main act and that the main act here in the ultimate financial crisis that we are living in is the European crisis", says Minerd.
CNBC's Steve Liesman labeled Minerd's doomsday scenario as the ECE or, European Cataclysmic Event.
But even in chaos or, especially in chaos, there are opportunities to make money.
Minerd's advice: Short the euro, short certain sovereign CDSs and get long gold.
Watch the full interview here.
Is it really so bad if an elite cabal of bankers meets once a month in midtown Manhattan to conspire about the rules governing derivatives trading?
Over the weekend, Louise Story of the New York Times breathlessly told the tale of a regular meeting of the risk committee of the derivatives clearing house set up by the InterContinental Exchange, usually known as ICE.
The main issue with this committee, it seems, is that outside financial firms complain that it is a cabal of insiders set up to keep out competition.
Moody's has just increased its estimate for loan losses by Spanish banks by a sizeable 63 percent.
The new loss estimate is now €176 billion—nearly one quarter of a trillion U.S. dollars. What may be worse is this: Moody's states that the banks have only recognized half of those projected losses. Moody's also criticizes the current levels of capital cushions, stating that those reserves must be increased in order for Spanish banks to sustain the coming losses.
The report cites adverse economic conditions and deteriorating asset quality. Moreover, Spanish banks may face difficulty recapitalizing.
As I sat watching a video of Vladimir Putin warble "Blueberry Hill" this weekend, I couldn't help but think, what would Ronald Reagan say?
Totally mesmerizing and a little shocking, the leader of the former "evil empire" was putting it all on the line to raise money for a children's charity. The star-studded audience gave it up for the Vlad, clapping and singing along—Goldie Hawn and Kurt Russell, Sharon Stone rockin' out hard, Kevin Costner blowing bubbles with his gum, and a stout Gerard Depardieu. Who knew Hollywood elite would travel to St. Pete for a fundraiser?
Like I tell my kids, whatever you do or say on camera or online is public domain—I dare you to turn away.
Tax Deal Looks Likely to Pass Senate Today; Potential for Changes in House Unclear. (Wall Street Journal) "Democrats are predicting that a much-debated tax agreement will clear a crucial hurdle comfortably in the Senate on Monday, with a margin that they hope will add momentum to the deal in the House. But even with President Barack Obama, former President Bill Clinton and a growing number of Senate Democrats backing the deal, House Democrats remained eager to test whether they could push Republicans to raise the proposed tax rate on estates. It wasn't clear how far House Democrats would push such a fight. If a bill isn't passed by the end of the year, tax rates are scheduled to go up, although the White House could block an immediate increase in withholding levels, pending passage of a tax bill by a new Congress next year."
10-Year Yield Rises (CNBC via Reuters) "U.S. Treasurys tumbled in Asia on Monday, driving up their 10-year yields to a new six-month high as Japanese investors kept dumping Treasurys on the specter of higher growth and higher deficits in the United States. The short end of the market is increasingly under pressure as the yield on two-year notes also rose to a near six-month high and federal fund rate futures prices started to price in the chance of a possible rate hike by the Federal Reserve in 2012. That is a sea change from just over a week ago, when comments by Fed chief Ben Bernanke prompted debate among traders over whether the central bank will adopt another round of easing after its current $600 billion debt purchase program expires next June."
Why Investors Are Demanding Greater Treasury Yield \(Bloomberg\) "Treasury notes fell before tomorrow’s Federal Reserve meeting, pushing 10-year yields to a six-month high, on speculation reports this week will add to signs the recovery is sustainable. The extra yield investors demand to hold 10-year notes over 2-year debt was the highest since April as economists raised growth estimates after President Barack Obama’s agreement to extend tax cuts. Ten-year notes, which declined last week by the most since August 2009, also fell as stocks gained. "
CNBC Reports More Insider Trading Charges to Come (CNBC) "Wall Street is bracing for another round of indictments as early as next week in a massive insider trading probe, people familiar with the matter told CNBC. The move by Federal prosecutors may include a number of arrests, according to these people. The indictments right at the height of the holiday season may prove a tactical advantage for prosecutors, sources in the legal community say." Hardball.
Yesterday Third Point founder Dan Loeb sent a mocking letter to a group of hedge fund managers who have supported Barack Obama, comparing them to battered wives.
“I am sure, if we are really nice and stay quiet, everything will be alright and the President will become more centrist and that all his tough talk is just words; I mean he really loves us and when he beats us, he doesn’t mean it; he just gets a little angry,” Loeb wrote.
Loeb is famous for his poisonous pen. He once wrote to Irik Sevin, the chief of Star Gas Partners, calling him “one of the most dangerous and incompetent executives in America.”
“Do what you do best: retreat to your waterfront mansion in the Hamptons where you can play tennis and hobnob with your fellow socialites,” Loeb said .
Nigel Hart managed the Tamarack Fund for UBS's Private Wealth Management—until recently.
Earlier this afternoon, Courtney Comstock of Business Insider published a letter related to the departure on BI's website. The letter is said to be from Nigel Hart—and is addressed to the head of UBS's Wealth Management hedge fund unit, Ned Sienko.
It appears the Treasury Secretary going under the knife today.
The AP is reporting that Geithner was admitted to George Washington University hospital early Friday morning because of pain caused by a kidney stone.
A Treasury spokesman said he would undergo surgery Friday afternoon. » Read More at CNBC.com
What do investors fear most about Spain?
The cancer at the core of the Spanish economy may be the structure of its banking system, according to a recent report issued by UBS.
The report comes to our attention via Tracy Alloway at the FT blog Alphaville .
Alphaville reports the context: Spanish sovereign debt-to-GDP ratios don't look appreciably worse than the rest of the pack in the eurozone. And the overall trend line for Spain doesn't seem much worse either.
So where does the problem lie?
Some investors believe that declining oil prices are a good thing—for now—with $30 a barrel as the break point.
Owen Li, who blew up his own hedge fund and lost millions isn't an anomaly, warns ex-hedge-fund trader Turney Duff.
Central banks are in combat mode. On the front lines: Europe, Denmark, Canada, Switzerland, Peru and India.