Some things are Priceless as this Interview with Hank Paulson and excerpts from his book

By Krishna Guha in WashingtonPublished: January 31 2010 19:59 | Last updated: January 31 2010 19:59

Hank Paulson feared there would be a run on the dollar during the early phase of the financial crisis when global concerns were focused on the US, the former Treasury secretary has told the Financial Times.“It was a real concern,” Mr Paulson said in an interview ahead of the release on Monday of his memoir On the Brink. A dollar collapse “would have been catastrophic,” he said. “Everything that could go bad did not go bad. We never had the big dislocation of the dollar.
”http://www.ft.com/cms/s/0/772748d6-0e94-11df-bd79-00144feabdc0.html 

We owe it all to Hank and his henchmen. I read this article and I still have no idea what exactly he saved us from. He did save his bankster buddies that made bad loans with the Taxpayer's money.QB

Goldman Sachs Tops JPMorgan as World’s Best Broker

I thought the bottom of the article was the most interesting so I pasted it below the first paragraph. For the whole article go to the link below: QB
http://www.bloomberg.com/apps/news?pid=20601109&sid=aNykT4DvHd9A

By Jeff Kearns, Whitney Kisling and Nina Mehta

Jan. 29 (Bloomberg) -- The near darkness behind the bulletproof doors of a windowless Secaucus, New Jersey, warehouse is humming with tens of thousands of computers as U.S. exchanges open on a December Friday.

Brokerages and trading firms, battling for the fastest access to capital markets, lease space at this Equinix Inc. center and others to place their machines as close as possible to stock exchange computers. The practice, known as co-location, is one way firms are vying to win fractions of a second -- the difference between getting a trade and missing it.

Costs Per Trade

Goldman customers lost an average 0.275 percent, or 27.52 basis points, when they bought or sold through the bank, according to Ancerno’s world ranking. (A basis point is 0.01 percentage point.) For instance, a customer who placed an order to buy 50,000 shares at $10 each would get the shares for an average price of slightly less than $10.03. Bank of America’s customers lost 32.67 basis points, while Morgan Stanley’s lost 33.61.

The biggest brokers -- with their math whizzes, algorithms and flexibility to commit their firms’ money -- had the advantage as the Standard & Poor’s 500 Index posted the biggest percentage decline since 1937 in 2008 and volatilitysoared. Trading volume climbed 12 percent from the third quarter of 2008 to the fourth and then 3.8 percent in the next quarter. On average, 10.4 billion shares a day changed hands on U.S. exchanges during the 12 months ended on June 30, 2009.

Widest Swings

U.S. stocks had their most-violent swings in almost eight decades in 2008, pushing the Chicago Board Options Exchange Volatility Index, or VIX, to a record 80.86 in November of that year. The index, which measures the cost of using options as insurance against S&P 500 declines, is a gauge of investor uncertainty. It averaged 20.28 over its two-decade history and 38.91 in the first half of 2009.

Increased volatility makes it costlier for brokers to buy and sell the large blocks of stock that account for the biggest share of institutional orders.

In North America, costs roughly tripled for the top five brokers, causing customers to pay, on average, 25.42 to 34.10 basis points. Institutional investors around the world paid $28.2 billion in trading commissions in 2009, compared with $30.7 billion in 2008 and $26 billion in 2007, according to Greenwich Associates in Stamford, Connecticut.

With so much money at stake, the technology arms race that spawned millions of dollars’ worth of buzzing computers in Secaucus shows no sign of letting up.

“Equities is a technology business now,” Tabb Group’s McPartland says.

What the humans need to do is to make sure their firms have the best equipment, trading know-how and programmers.

World’s Best Brokers

Broker                           Loss,* in basis points
Goldman Sachs                            -27.5
Bank of America Merrill Lynch            -32.7
Morgan Stanley                           -33.6
Barclays Capital                         -34.2
JPMorgan Chase                           -34.2
Investment Technology Group              -35.6
UBS                                      -36.3
Deutsche Bank                            -38.8
Citigroup                                -39.7
Credit Suisse                            -41.3

     * For brokerage clients in the four quarters ended on June
30, 2009, based on the difference between the executed stock
price and the price when the order was placed. Source: Ancerno

To contact the reporters on this story: Jeff Kearns in New York atjkearns3@bloomberg.net; Whitney Kisling in New York atwkisling@bloomberg.net; Nina Mehta in New York atnmehta24@bloomberg.net.

Deficit of Trust

1/25/10 Jim Rogers on Bloomberg: Bernanke is Part of the Problem, Not the Solution!

1/25/10 Ron Paul on CNBC's Squawk Box: Debate on Bernanke, the Fed, and Stimulus

Mother of All Linkfests on the Outlook for the Period Ahead

For the past month, Charles Kirk, a full-time investor and publisher of The Kirk Report (a favorite of mine since my first book, The New Laws of the Stock Market Jungle, was published nearly six years ago) has been collecting posts regarding "what others think are themes that we're likely to see play out in the year ahead." While Charles admits that most of these will probably miss the mark ("they always do," he adds), I agee with him that you may find it of interest to see what others think we should be watching out for in 2010. Here is a sampling of what you might call the Mother of All Linkfests on the Outlook for the Period Ahead: ·         100 things to watch in 2010 (Open) ·         An ultimate guide to 2010 investment predictions & outlooks (PragCap) ·         The top trades of 2010 (TradingReport) ·         Financial bloggers make their 2010 projections (FasterTimes) ·         10 questions for 2010 (GoldmanSachs) ·         Five themes for 2010 (KevinDepew) ·         Ten investment themes for 2010 (MarketFolly) ·         Seven themes that will lead to maximum profits in 2010 (MoneyMorning) ·         Top market timers give their 2010 outlooks (Barrons) ·         Top three investment themes to watch in 2010 (TradingReport) ·         Ten themes for 2010 (ToddHarrison) ·         10 investment themes for 2010 (USAToday) ·         Byron Wien's top 10 surprise for 2010 (Big Picture) ·         James Altucher's 10 predictions for 2010 (WSJ) ·         John Mauldin's 2010 outlook (PragCap) ·         Leuthold sees volatility in 2010 (GuruInvestor) ·         Jim Cramer's themes for 2010 (TheStreet) ·         Doug Kass' predictions for 2010 (MarketFolly) ·         Richard Bernstein's 10 predictions for 2010 (BusinessInsider) ·         Ray Barro's offers themes for 2010 (GreenFaucet) ·         Final 2010 strategist predictions (Bespoke) ·         Billionaire predictions for 2010 (Forbes) ·         5 reasons to buy bullish or bearish on the market (Globe&Mail) ·         Finance executives' top 10 risk hot spots for 2010 (CFO) ·         10 themes for 2010 (Roubini) ·         Areas of interest for 2010 (VC) ·         Stock market outlook for 2010 (TradersNarrative) ·         15 professors give their take on what to expect in 2010 (Minyanville) ·         Three economic forces that will determine market direction (SeekingAlpha) ·         5 economic predictions to bank on (CharlieGasparino) ·         4 pros on what's ahead in the next decade (CNN) ·         Strong U.S. dollar and stocks the new tandem for 2010? (CSTS) ·         What's ahead in 2010? (BloggingStocks) ·         What Obama's second year could mean for stocks (Jutia) ·         What's ahead for the economy and politics in 2010 (RobertReich) ·         Why the Fed will be sidelined in 2010 (SafeHaven) ·         The end of 2009's ultra-low interest rates is coming (MarketWatch) ·         Fed tightening? Give us a break! (MerkFunds) ·         According to Geithner, there will be no second wave crisis (CNBC) ·         We will need much more stimulus in 2010 (BusinessInsider) ·         By the time all the data confirming an economic recovery comes in, most of the easy profits have been made (Morningstar) ·         NIA's top 10 predictions for 2010 (MyValleyNews) ·         Why deflation remains the greater risk (PragCap) ·         In 2010, demand for U.S. fixed income has to increase elevenfold or else (ZeroHedge) ·         Which sector will step up and lead bulls in 2010? (MoneyMorning) Click here to read the rest.

Commodities Set for Biggest Drop in 13 Months on Demand Outlook

By Claudia Carpenter

Jan. 29 (Bloomberg) -- Commodities headed for the biggest monthly drop in 13 months on concern that demand may wane as governments seek to control economic growth.

The Standard & Poor’s GSCI Index of 24 raw materials is down 6.8 percent this month, the most since December 2008, led by slides of 17 percent for both zinc and lead. Copper has lost 8.5 percent this month, also the most in 13 months, and crude oil is down 7.6 percent, the first decline since July. Sugar, feeder cattle and platinum climbed.

Commodities last year rose the most in four decades, led by a doubling in copper, sugar and lead prices, as government spending programs spurred speculation that raw-materials demand would increase after the biggest slump in the global economy since World War II. Investors poured a record $92 billion into commodities last year, Barclays Capital estimates.

“The optimism that led into 2010 has dried up very quickly,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. “Economies have been running off stimulus packages, not off genuine demand.”

The Federal Reserve this week said it is taking steps to prepare investors for an end to stimulus. U.S. economic growth expanded 5.7 percent in the fourth quarter, the most in six years, according to a Commerce Department report today. China started to restrict bank lending this month.

Copper for delivery in three months dropped $148, or 2.2 percent, to $6,750 a metric ton at 5:28 p.m. on the London Metal Exchange. Prices have declined 13 percent from this year’s high three weeks ago. Inventories of copper in warehouses are at the highest since January 2004. China is the world’s largest buyer of copper used in pipes and wires and its purchases last year helped to support prices.

‘High Copper’

“China’s got very high copper stockpiles right now,” Charles Kernot, a mining analyst at Evolution Securities Ltd., said today by phone. “One would have to question how much more buying one can expect from them.”

Crude oil for March delivery was at $73.36 a barrel on the New York Mercantile Exchange, down 13 percent from this year’s high of $84.45.

Commodities also have declined as the dollar strengthened, curbing investment demand for raw materials as an alternative asset. The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, has added 2 percent this month after gaining 3 percent in December.

“The strength in the dollar is pushing back a lot of the metals, including copper,” said Tom Hartmann, an analyst at Altavest Worldwide Trading LLC in Mission Viejo, California. “You would think that a stronger economy would improve demand for commodities, but right now it’s helping the dollar.”

Gold for immediate delivery fell 0.9 percent to $1,077.55 an ounce, down 1.8 percent this month. Investment in the SPDR Gold Trust, the biggest exchange-traded fund backed by the metal, had dropped 1.9 percent this month as of Jan. 28, according to figures on the company’s Web site.

‘Liquidating Gold’

“Speculators are still liquidating gold, with no physical buying in sight,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said today in a report. “Bullion is still trading on the back of swinging currency markets.”

Platinum, which is not in the GSCI index, has advanced 2.6 percent this month after an ETF fund was introduced in the U.S.

Raw-sugar futures in New York have gained 12 percent this month as buyers including India, the world’s biggest consumer, compete for limited supplies. Feeder cattle, calves that are not ready for slaughter, have climbed 3 percent this month.

Grain and soybean prices have declined this month after the U.S. Department of Agriculture raised its estimate of supplies. Corn futures have dropped 13 percent in January, wheat is down 12 percent and soybeans have slumped 12 percent.

To contact the reporter on this story: Claudia Carpenter in London atccarpenter2@bloomberg.net
If that wasn't enough bad news read this. QB
Asia Stocks Slump, Euro Drops on Greek Deficit, U.S. Jobless

By James Poole and Satoshi Kawano

Jan. 29 (Bloomberg) -- Asia stocksdeclined, with the regional benchmark posting its biggest weekly loss since March, the euro fell and corporate default risk increased on concern about Greece’s swelling deficit, U.S. unemployment and tightening measures by central banks in America, China and India.

The MSCI Asia Pacific Index slumped 1.7 percent to 117.05 at 5:10 p.m. in Tokyo, set for a 4.5 percent drop for the week. Futures for the Standard & Poor’s 500 slipped 0.5 percent and the Dow Jones Stoxx 600 rose 0.7 percent to 246.36 at 8:10 a.m. in London. The euro fell to a six-month low versus the dollar.

Investors are growing skittish about Greece’s finances. Credit-default swaps tied to the nation’s debt traded at about the same level as Dubai when the emirate received a $10 billion bailout in December. The Federal Reserve is removing stimulus programs and emerging market equity funds posted the first net outflows in 12 weeks as China curbed lending. The Reserve Bank of India today increased the proportion of deposits lenders must set aside as reserves to 5.75 percent from 5 percent.
The whole story is here:

http://www.bloomberg.com/apps/news?pid=20601080&sid=aT5QZ2c6BpEk

And this:
Spain Joblessness Climbs to 18.8%, Highest Since 1998 
By Emma Ross-Thomas

Jan. 29 (Bloomberg) -- Spain’s unemployment rate, the highest in the euro region, rose to 18.8 percent in the fourth quarter and the government said it may increase further, hindering recovery from the worst recession in six decades.

The jobless rate rose from 17.9 percent in the previous quarter to the highest since 1998, even as the active population fell with immigrants leaving the labor market, the Madrid-based National Statistics Institute said today in an e-mailed statement. Economists had expected the rate to climb to 18.5 percent, according to a Bloomberg News survey.

Reeling from the collapse of a debt-fueled construction boom as well as the global crisis, Spain’s unemployment rate has more than doubled in two years and joblessness among young people has surged beyond 40 percent. The greatest job losses in the euro region are eroding support for the Socialist government of Prime Minister Jose Luis Rodriguez Zapatero, re-elected in 2008 on pledges of full employment, even after his stimulus programs put more than 400,000 people back to work.

“This is going to make the recovery more difficult,” said Estefania Ponte, an economist at Fortis Bank in Madrid. “The most important factor for private consumption is the labor market, and if there’s no improvement in the labor market, it’s very difficult for consumption to recover.” Do ya think? QB

http://www.bloomberg.com/apps/news?pid=20601068&sid=aUSn5jAZj0aI

Elizabeth Warren on the Daily Show

Live Trade Recording of S&P 500 Trade During Fed Announcement

Davos 2010: George Soros warns gold is now the 'ultimate bubble'

Gold is now "the ultimate bubble", billionaire investor George Soros has declared, sparking fears that prices for the precious metal may soon suffer a tumble.

http://www.telegraph.co.uk/finance/financetopics/davos/7085504/Davos-2010-George-Soros-warns-gold-is-now-the-ultimate-bubble.html

Mr Soros, arguably the most famous hedge fund manager in history, warned that with interest rates low around the world, policymakers were risking generating new bubbles which could cause crashes in the future. In comments delivered on the fringe of the World Economic Forum, Mr Soros said: "When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment. The ultimate asset bubble is gold."

Gold prices last month reached a record level of just over $1,225 per ounce, having risen around 40pc last year. Investors are piling into the metal amid fears both of potential inflation and fading faith about the stability of previously-assumed safe assets such as government debt. However, the chairman of Barrick Gold, the world's biggest producer, Peter Munk, said he expected the metal's upward march to continue.

Mr Soros added that by proposing imminent "exit strategies" from the unprecedented support handed out to troubled banks and consumers, governments around the world could be in danger of triggering a double-dip in the global economy. In comments which will reinforce Labour's plan to fight the next election on promises not to start raising taxes or cutting spending too soon, he said that it was still too early to slash budget deficits.

He said: "I think that since the adjustment process to the recession is incomplete, there is a need for additional stimulus. Some countries, like the US and European countries, have plenty of room to increase their deficits. The political resistance to doing so increases the chances of a double dip in the economy in 2011 and after that."

The Conservatives have pledged to start cutting public spending almost immediately after this year's election, but their promise was weakened earlier this week by an International Monetary Fund report warning that it may still be too early to begin this process. Mr Soros also came out in favour of Barack Obama's plan to split up large US banks, but said that proposals to tax the banking system could also endanger the recovery.

WHAT DO YOU DO WITH STOCKS THAT GAP HIGHER ON OPENING: A lesson/ refresher for day traders

Don’t make emotional decisions, instead have a plan. The video from Alphatrends.net  below discusses how to trade a stock which gaps higher on opening, it was recorded Monday January 25, 2010.

Here is how the stock ended up:

Let the Sovereign Defaults begin

All this should could start a cascade of events similar to dominos falling over. Or maybe not. It only seems fair the the PIGS go first.

Portugal
Italy
Greece
Spain.

Greece Leads Surge in Sovereign Default Swaps on Deficit Woes

By Abigail Moses


Jan. 27 (Bloomberg) -- Credit-default swaps on Greek sovereign debt surged to a record on concern the government won’t be able to plug the largest deficit in the European Union, a day after it priced 8 billion euros ($11 billion) of bonds.

Contracts on Greece soared 48 basis points to 373, according to CMA DataVision. Swaps on Spain rose 17 basis points to 127, Portugal climbed 18.5 to 149 and Italy was up 10 basis points at 114, CMA prices show.

The European Commission said today that Greece hasn’t done enough to rein in its deficit that reached 12.7 percent of gross domestic product in 2009. Greece denied a Financial Times report it’s wooing China to buy as much as 25 billion euros of bonds.

“Who’s going to lend money to them next time and at what price?” said Gary Jenkins, head of credit strategy at Evolution Securities Ltd. “What’s happening is very negative and could lead to a vicious circle.”

The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments from Germany to Greece rose 9.25 basis points to a record 87.25, according to London-based CMA. That means it costs $87,250 a year to insure against losses on $10 million of debt for five years.

Greece’s new five-year bonds fell in the first day of trading. The spread on the notes, due August 2015, widened 35 basis points to 385 over the benchmark mid-swap rate, according to Markit Ltd. iBoxx prices on Bloomberg.

“Technically, the term is that it’s getting smacked,” said London-based Jenkins.

Greece sold almost 75 percent of the notes to international investors, including from the U.K. and France, the head of the nation’s debt agency said.

Debt Allocation

U.K. investors bought more than 29 percent of the 8 billion euros of notes sold via banks, according to Spyros Papanicolaou, director general of the Public Debt Management Agency in Athens. French investors purchased almost 8 percent and domestic buyers acquired more than 26 percent. The government said it received 25 billion euros of orders.

Greece, which had its credit rankings cut by Standard & Poor’s, Moody’s Investors Service and Fitch Ratings last month, needs to raise 53 billion euros this year. The government gave plans to the European Commission on Jan. 15. designed to reduce the shortfall to within the EU’s 3 percent limit.

The yield on the Greek 10-year bond rose 44 basis points to 6.68 percent as of 4:35 p.m. in Athens, with the difference in yield, or spread, against German bunds increasing by 46 basis points to 350 basis points, the widest since December 1998.

Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company or country fail to adhere to its debt agreements. An increase signals deterioration in perceptions of credit quality.

A basis point on a credit-default swap contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year.

Asian Stocks Fall as Commodities Drop, Toyota Halts Some Sales

By Shani Raja

Jan. 27 (Bloomberg) -- Asian stocks fell, led by mining and consumer companies, after commodity prices dropped and Toyota Motor Corp. said it will halt U.S. sales of models involved in a recall. Utilities and health-care shares advanced.

BHP Billiton Ltd., the world’s biggest mining company, sank 1.7 percent in Sydney. United Co. Rusal Ltd. may be active when it becomes the first Russian company to trade its shares in Hong Kong today. Toyota fell 2.3 percent in Tokyo.

The MSCI Asia Pacific Index dropped 0.3 percent to 119.04 as of 10:15 a.m. in Tokyo. The index slumped 5.8 percent in the previous seven days as U.S. President Barack Obama proposed measures to limit risk taking at banks and concern grew that China will rein in growth.

Japan’s Nikkei 225 Stock Average lost 0.1 percent even after a government report showed the country’s exports climbed 12.1 percent in December. Australia’s S&P/ASX 200 Index fell 1.6 percent. New Zealand’s NZX 50 Indexdeclined 0.2 percent.

South Korea’s Kospi Index dropped 0.7 percent, reversing early gains, after Yonhap News reported North Korea fired artillery toward an area off its west coast that it warned ships to avoid yesterday.

Futures on the U.S. Standard & Poor’s 500 Index rose 0.3 percent. The gauge lost 0.4 percent yesterday as concern the Federal Reserve may signal more plans to unwind stimulus measures overshadowed higher-than-estimated earnings and consumer confidence.

Signs of a global economic recovery have driven a stock rally since March, lifting the average price of companies on the MSCI Asia Pacific Index to 1.6 times book value, near the highest level since September 2008.

Sluggish Recovery

The International Monetary Fund raised its global economic growth forecast yesterday to 3.9 percent in 2010 from its October projection of 3.1 percent. The IMF said the recovery in industrial nations is expected to be “sluggish,” burdened by rising public debt and high unemployment rates.

Investors shrugged off a downgrade of Japan’s sovereign credit rating yesterday by S&P, which cited a “slower pace of fiscal consolidation” than the company had expected.

BHP sank 1.7 percent to A$40.56 and Rio Tinto Group, the world’s third-largest mining company, slumped 4 percent to A$70.38. Copper futures for March delivery dropped 1.6 percent in New York yesterday, while crude oil for March delivery slid 0.7 percent.

Toyota dropped 2.3 percent to 3,780 yen.

To contact the reporter for this story: Shani Raja in Sydney atsraja4@bloomberg.net.

Equities: More Downside To Come?

Submitted by Nic Lenoir found on Zero Hedge

We started the year saying that without a catalyst equities would trade between 1014 and 1236 for the S&P future, knowing that we think there are a number of risks that could lead to much more aggressive downside scenarios. Our outlook has not changed. And we still feel that China is one of those catalysts that could create serious problems in the market.

While the recent sell-off and risk aversion has been triggered by Obama's remarks on banking regulation, we think in the end whatever proposal he may come up with will be watered down to nothing. Every government over the past 30 years has been populist, especially in response to adverse equity market price action, so we think in the end politicians will scare themselves into doing nothing. Maybe this is the first time this principle will not be respected in 30 years, but we don't think so. Then there was obviously Paul Volcker standing in the background. He is the worst nightmare of all those who have been riding the whole of liquidity provided by governments around the world. However, as much animosity there might be between Congress and the Fed as they fight to decide who gets the stick to police around, it will be a hard task to debunk Mr. Bernanke out of his role as chairman. And no congressman really wishes he had not done what he did as in the end they have the most to lose if the established order was to be destroyed. If anything there is a greater chance Mr. Geithner's head rolls I would argue.

Meanwhile far away from this domestic political drama, China is taking steps to take liquidity. That is a development that could have far greater consequences. Indeed China's CPI is more sensitive to commodity prices as the US's (especially since we have been convinced to forget about food and gasoline) and 2009's rally in commodities means inflation numbers in China are likely to come in strong. The PBoC has no political capital when it comes to letting CPI getting far out of its target band. Congratulations to those who had called for early tightening in H1 2010. The fact is that China may start exporting its inflation through currency appreciation or yuan based inflation, and will hike rates as Chinese real estate is in the very late stage of a massive bubble. Surely that can't be good. If Asia and China is the motor of the rebound, then surely asset prices can't welcome a hiking cycle on the back of a real estate bubble and an unprecedented lending spree. How much is China willing to commit sepuku is anyone's guess but consequences could seriously threaten our fragile economic equilibrium.

Looking at price action, the Shanghai composite index has closed below the highs of September which invalidates a bullish impulse scenario. The 200 dma provides temporary support but we think further downside is likely.

We contended at the start of the year that no matter what happened medium-term US equities had to correct before anything else could happen even in a bullish scenario. The 1075/1065 support zone for the S&P future is not so far away. What will necessarily capture the eyes of the bears is that on a log scale we failed on the 61.8% retracement line at the highs (see weekly chart), so a very bearish argument can be made that we are entering the next huge sell-off from a technical standpoint. This is all the more interesting that the Dax shows the same feature in terms of retracement, and we also have a perfect a-b-c structure since the lows of March 2009 with c = a, so market symmetry definitely reinforces the bearish case. Note also on the daily chart for the Dax that the medium term supporting 100-dma has been violated on this last sell-off. On the hourly we feel that the S&P future may have completed a wave 3 of lower order, but bullish divergence is relatively mild, and so the rebound could well top around 1,105/1,108 before another drop to 1,065 to complete this initial sequence.

We will further update as the short-term price action develop but technically we have some strong arguments for a bearish case of greater order building up.

We will further update as the short-term price action develop but technically we have some strong arguments for a bearish case of greater order building up.

Good luck trading
Nic