- Ralph Nader: Obama’s GM plan looks like a raw deal (WSJ)
- GM bondholders near deadline to accept equity plan (Reuters and NYT)
- Niall Ferguson: how economists can misunderstand the crisis (FT)
- The inefficient capital markets hypothesis (Credit Slips)
- My therapeutic rant on the current economic madness (EconoSpeak)
- Emir of Qatar still studying stake in Porsche (Reuters)
- Zoellick warns stimulus “sugar high” won’t stem unemployment (Bloomberg)
- Putting a price on leaving the TARP (Dealbook)
Courtesy of Arthur Hill
The Euro ETF (FXE) has been red hot with a move from around 125 in early March to 141 in late May. Interestingly, the rise in the Euro coincides with a rise in stock over this same period. FXE is fast approaching a resistance zone around 142.5-145. This zone stems from broken support and the December 2008 high.
The NABE sees the end of the recession on the horizon, but is concerned that the recovery will be slow at best:
“While the overall tone remains soft, there are emerging signs that the economy is stabilizing,” according to NABE’s latest survey and its president, Chris Varvares, who is also president of Macroeconomic Advisers. “The survey found that business economists look for the recession to end soon, but that the economic recovery is likely to be considerably more moderate than those typically experienced following steep declines. Moreover, despite encouraging signs seen in the last several weeks, the NABE panel downgraded the economic outlook for the next several quarters, compared with the previous survey,” he added. According to the survey, the key downside risks remain continued large job losses, no improvement in credit conditions, and further sharp declines in home values. These same forces are causing consumers to remain cautious, a feature that NABE panelists think is here to stay. Following a sharp 6.1% (annual rate) contraction in the first quarter of this year and another 1.8% drop in the second quarter, NABE forecasters expect real GDP to rise at a subpar 1.2% rate in the second half. This would result in a hefty 1.2% decline in 2009 (on a fourth-quarter over fourth-quarter basis), on the heels of a 0.8% decline in 2008. The unemployment rate is forecast to rise to 9.8% by year-end; and inflation is expected to moderate, as economic slack builds and as oil prices are forecast to remain relatively depressed. “The good news is that the NABE panel expects economic growth to turn positive in the second half of this year, with the pace of job losses narrowing sharply over the remainder of this year and employment turning up in early 2010,” Mr. Varvares said.
by Tyler Durden of Zero Hedge
Trim Tabs reporting that in the first half of May (May 1-15), short interest on the Russell 3,000 stocks dropped to 13.32 billion shares ($253 billion / 2.78% of market cap) from 13.62 billion shares ($260 billion / 2.88% of market cap) on April 30.
There was net short covering in eight of the ten major sectors with Financials and Information Technology receiving the largest short interest outflows of $2.9 billion and $2.0 billion, respectively. The only sectors with net short selling were Energy and Industrials, in which traders opened new short positions valued at $500 million and $169 million, respectively.
Gettelfinger discussing the 2.5% warrants that the UAW has received in GM and snickering – “$75 Billion Dollars in equity for the company!? We did not put a lot of emphasis on the 2.5% warrants, let me put it that way.” As he shakes his head on whether he expects GM to ever get that kind of equity valuation.
Bondholders waiting for their warrants to be worth anything may want to find a flux capacitor and go to the year 10,000.
Which leads to the more pertinent question: obviously the (worthless) warrants were not the reason for the ad hoc committee to switch sides here… Did S-Rat have some highly persuasive conversations with Houlihan Lokey and the committee members? Inquiring minds dying to know.
Very Low Quality
The green shoot police will have a field day beating the drum over how the 30 Year mortgage has massively tightened to the 10 Year…. by a whopping 0.04 bps.
Dan Frommer of Silicon Alley Insider
Palm’s rivalry with Apple just got a little stickier, as the smartphone maker takes a bold step.
Palm (PALM) has figured out a way for the forthcoming Pre smartphone — launching June 6 for $199 after rebate at Sprint Nextel — to sync with Apple’s (AAPL) iTunes software.
“Simply connect Pre to your PC or Mac via the USB cable, select ‘media sync’ on the phone, and iTunes will launch on your computer desktop. You can then choose which DRM-free media files to transfer,” the company says today in a press release.
FREE Trend Analysis for PALM Here
This won’t make the folks at Apple happy. It’s probably not illegal, but given the bad blood between the companies, we assume Apple will block the Pre with the next update to iTunes, which could come this summer when the new iPhone OS is released. (After all, syncing to your iTunes library is a selling point for the iPhone — and one of the reasons other devices haven’t been as successful.) We’ve asked Apple for comment and will update if we hear back.
Meanwhile, Palm has also built Twitter into the Pre’s “universal search” function. This means when you search for something on the phone, it’ll also check recent conversations on Twitter. That will probably be useful, as Twitter is a good place to find news and short reviews.
Joe Weisenthal of Clusterstock
Earlier this week we mentioned an internet-borne conspiracy theory that the Chrysler dealership closings had a partisan tilt. Basically, some blogs believed that dealers who donated to Republicans were heavily represented on the list of closed dealers.
We were pretty skeptical, and we got some comments and emails wondering why we even bothered writing up that “wingnut” conspiracy story.
Well, whatever, the story isn’t going away. And it’s even reached the halls of Congress.
Mark Tapscott at the Washington Examiner picks it up
Evidence appears to be mounting that the Obama administration has systematically targeted for closing Chrysler dealers who contributed to Repubicans. What started earlier this week as mainly a rumbling on the Right side of the Blogosphere has gathered some steam today with revelations that among the dealers being shut down are a GOP congressman and closing of competitors to a dealership chain partly owned by former Clinton White House chief of staff Mack McLarty.
The basic issue raised here is this: How do we account for the fact millions of dollars were contributed to GOP candidates by Chrysler who are being closed by the government, but only one has been found so far that is being closed that contributed to the Obama campaign in 2008?
The story has angered Florida Rep. Vern Buchanan learned from a House colleague that his hometown dealership is on the closed list, so expect to hear some noise in Washington.
As for the Mack McLarty dealership, it is an interesting situation. The basic story is that McLarty is a co-owner of a big dealership chain RLJ-McClarty. The J is Robert Johnson, the founder of Black Entertainment Television (BET) and a big donor to the Democratic party.
The blog Director Blue (warning: it’s a right-wing blog, so don’t have a heart attack once you get there) notes how odd it is that this multi-dealership chain didn’t have a single closure and that in its various markets, it was always a competitor that got shut down. Put another way, RLJ-McClarty Chrysler dealerships in states like Arkansas, Missourri and Alabama just got a lot less competition.
Conversely, stats-god Nate Silver throws cold water on the whole thing, noting that car dealer deanerships go 88% to Republican candidates. He says this isn’t a conspiracy, it’s just bad math. But as Megan McArdle notes, it’s still odd that they’ve only found one Obama donor on the closed list (12% Democratic donation rate is small, but it’s not nil). And the fact that the one really Democratic chain went unscathed also raises eyebrows.
The best way for this to end would be for the government to provide even a smidgen of insight into how it selected dealerships for closure. So far, it really hasn’t offered a thing.
