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Morning Notes For Juy 8th 2010 at Trader’s Narrative




Morning Notes For Juy 8th 2010


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The following is a guest post by a buy-side analyst working in a US asset management firm. The only stipulation from the author is that after you enjoy them, provide some feedback in the comments:

Initial Jobless Claims: Survey 460 Actual 454 Prior 472 Revised 475
initial jobless claims Jul 2010

  • Europe’s weakened economy is now the central threat to global recovery, as its countries struggle with heavy debt, banks face a reckoning over their lack of capital and growth is slowing, the International Monetary Fund said Wednesday in its first assessment of the world economy since a crisis over government borrowing in Greece. – Washington Post
  • The percentage of investors who are bullish on US equities decreased to 20.94% this week from 24.68% the previous week. – This is the most pessimistic reading since March 5, 2009.

Percentage of Bulls minus Percentage of Bears
AAII bulls minus bears Jul 2010

  • RGE Strategy Flash by Jennifer Kapila: Results from the latest, more comprehensive stress tests administered by the Committee of European Banking Supervisors (CEBS) are expected on July 23. According to the press, Spanish officials are eager to release the results to assuage market concerns about (in) solvency, but others, notably the German contingent, are less keen and UK law may prevent the release of data for their banks. European banks have had low rates for an extended period, and are more likely to see downward than upward earnings revisions and are perceived as having been slow to take realistic marks on books. Sovereign rating risks and uncertainty over the details of ongoing ECB liquidity support do not help. Additionally, the future of the euro and the EU has been questioned as never before. – RGE Monitor
  • Washington reaches out to business community – Geithner tells major US execs that White House is a fan of business…embarks on “charm offensive” – Fox Business
  • Geithner tells L Kudlow in CNBC interview that White House hopes to keep cap gains and dividend tax rates @ 20% - “We’re going to make sure that we keep at 20 percent the existing rates on dividends and capital gains,” Geithner said. “We think that’s good policy.”
  • An index of mortgage applications in the US rose last week to the highest level since October as more Americans took advantage of lower interest rates and refinanced. – Bloomberg

mortage refinance applications Jul 2010

  • The end may be near for the runaway gulf oil well, according to the most optimistic statement yet from a BP executive. The long-anticipated “bottom kill” of the well — a massive dose of mud and cement shot through a relief well now being drilled in order to stop the gushing of oil from the well that exploded nearly three months ago — could take place before the end of July. – Washington Post
  • LeBron James leaning towards the Heat according to ESPN; the announcement will come tonight in a 9pmET 1hr special on ESPN; the special will be shot at the Boys and Girls Club of Greenwich, CT (ESPN).

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3 Responses to “Morning Notes For Juy 8th 2010”  

  1. 1 BO

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    OOO…….James join the Miami Heat . New Big 3 was born……..

  2. 2 PJ

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    Ok,

    Here is my view on the economy. Our hotel was sold to a college. The hotel in receivership and the management company was interested at it for 11-12 milliion. The bank found a college to sell it at 16.8 million. Wells Fargo owned the note/mortgage.

    We were doing well for 2010 as business picked up. We were really scraping off the bottom. So in my micro view the economy picked up. However, once the hotel was sold we all lost our jobs. Now the other hotels will be viable because they will have better occupancy rates and they will be able to pay off their notes or mortgages.

    The college is non profit but is willing to pay 20 percent of the property in lieu of taxes. Some say that the taxes to the city will be less. I say that the taxes may be less, a little less. Others will simply go to another hotel and pay occupancy taxes. I leave that argument to smarter minds.

    Companies are not hiring. Laid off workers are watching every dime. The housing market is not coming back so you won’t get an oomph from that sector. I went to Home Depot and someone actually helped me. More staff than customers on a weekday.

    My feeling on this fiscal and monetary policy is that we should be fiscally conservative and socially responsible. Corporate taxes are not too high. Corporations don’t pay the highest rates, they can manipulate that. I’m against raising capital gains and dividend taxes as history has shown you don’t get more revenue that way.

    I am for extending Unemployment insurance at this juncture in the economy. You can’t be so cruel to the unemployed and give a tax break to a multimillion dollar corporation or individual.

    As for cuts we need to get a handle on the “third rail programs” all will have to sacrifice to get a handle on spending. We only have a small window to fix this or else interest rates will spike. Our GDP/Debt ratio is close to Greece’s.

    As far as the ultra low rates that banks are offering this is like a tax to those who depend on interest income. The public is in fact subsidizing the moral hazard mistakes that the banks have made with the mortgages.

    That is my view!

  3. 3 Tristan Grayson

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    What is Geithner really saying about the 20% dividend & capital gains tax rate? Quotes from the comments on http://www.cnbc.com/id/38138119/comid/3#comments_top :

    “Has anyone contacted the author of this article about the apparent conflict between Geithner’s comment about the tax rate staying at 20% when it is currently 15%?”

    “This article is not a transcript of Geithner’s interview. It is poorly written regarding what Geithner said or didn’t say. CNBC is guilty of poor journalistic writing. Regardless, Geithner has indicated in the past that he favored raising the capital gains rate from 15% to 20% in response to those who called for higher rates. It is somewhat positive to investors that he continues to support the same rate that he supported many months ago, and not a higher one. There is no news in this article except that Geithner’s position hasn’t changed. Kudlow’s people are very good at raising political sensitivities with vague news.”

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