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    Daily Digest 1/29 – Disney Insider Trading, Market Falls as Egypt Unrest Continues, Banks Bundled ‘Deficient’ Loans

    by DailyDigest

    Saturday, January 29, 2011, 4:00 PM

  • The Big Squeeze, Part 2: Abused Fundamentals and Fake Markets: How They Play Out
  • Thank GDP It’s Friday!
  • Welcome, ‘Peak Oil’
  • Disney Inside Trading Schemer Gets Prison
  • U.S. Stock Market Falls As Egypt Unrest Continues
  • Banks Accepted And Bundled ‘Deficient’ Loans
  • Secret to Bank’s Comeback: A Rich Uncle Named Sam

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The Big Squeeze, Part 2: Abused Fundamentals and Fake Markets: How They Play Out (charles)

Analyses that try to predict near term market moves based on Laffer curves, Elliot Waves, and historical cycles will almost definitely fail. We don’t have a “new era”, but we definitely have unprecedented coordinated global intervention dedicated almost solely to the fortunes of the top 1%. That is the new rule that will govern until there is a serious breakdown. Warren Buffet got this insight after the financial crash in 2008. He knew the government was going to step in to save and subsidize the big banks so he swooped up their stocks, garnering himself a hefty tax break in the process.

Thank GDP It’s Friday! (ilene)

 As I said on Mondaywhen looking ahead to whether we’d have our Alpha 2 drop pattern we had last year: “Surely the Fed can break this patten as we have as much as $9Bn worth of POMO today, $8Bn tomorrow, $6Bn on Thursday and $9Bn on Friday (see SWW for chart) for a whopping $32Bn of fresh money created by the Fed in just 5 days. As I said to Members this morning – that is like handing everyone in America $100 to spend – you would think that would boost the markets just a little, right?”  So you can see why I’m still a little cynical – we’ve seen this movie before and we know how it’s going to end, it’s just a question of when.

Welcome, ‘Peak Oil’ (woodman)

It is notable that in 2009, the IEA stressed the importance of oil for economic growth and concluded that 106 million barrels per day will be required by 2030; representing an increase of approximately 18 million barrels per day above current output.  Interestingly, in last year’s report, the IEA predicted that global production will peak at only 96 million barrels per day in 2035! So, within the course of a single year, the energy watchdog for the developed world lowered its production estimate by 10 million barrels per day! 

Disney Inside Trading Schemer Gets Prison

The plot was hatched last year while Sebbag’s girlfriend, Bonnie Hoxie, 34, was the secretary to Disney’s head of corporate communications in Los Angeles. Prosecutors say she fed nonpublic information such as the company’s quarterly earnings to Sebbag, who tried to sell the inside tips by sending anonymous letters to 33 hedge funds and other investment companies. Most of the firms that received the offers, including some in Manhattan, notified the FBI. Federal agents then posed as hedge fund traders and offered to buy the information from the couple.

U.S. Stock Market Falls As Egypt Unrest Continues

Scenes of demonstrators challenging the government of Egypt, a strategic ally of the United States in the volatile Middle East, helped send oil prices 4.3 percent higher. In a flight to safety, investors increased their purchases of U.S. Treasurys, pushing the yield on 10-year bonds down to 3.33 percent from 3.38 percent a day earlier. The price of bonds rises as the yield falls.

Banks Accepted And Bundled ‘Deficient’ Loans

The panel’s study found that Clayton rejected 28% of the loans in the sample as “deficient” for failing to meet originator underwriting standards, yet nine big banks accepted, on average, 11% of those loans anyway. In many cases, such loans failed to meet both originator underwriting standards and guidelines provided by the financial institution purchasing the loan, the panel said.

Secret to Bank’s Comeback: A Rich Uncle Named Sam

As the nation’s roughly 7,700 banks and savings institutions try to recover from about $493 billion in loan losses since the start of 2007, BankUnited is emerging as a case study of how government largess in the immediate wake of the crisis has allowed certain lucky institutions to thrive—while others, whose timing was less opportune, continue to struggle. As the economy stabilized, the FDIC’s incentives to lure buyers became less generous than those enjoyed by the new owners of BankUnited.

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