Dirt Bag on Wall Street - who knew?!

From "The Epicurean Dealmaker", linked at left, a great piece on Goldman: The Dirt Bag Chronicles.

"Seriously, now, can we all just agree to put a stake once and for all in this Goldman Sachs reputation-thingy? I have repeatedly shaken my head in wonder over the years at Goldman Sachs' apparently preternatural ability to maintain an absolutely spotless public image while simultaneously soiling itself in full view of everyone in the most miserable and abject manner possible." [more]

Not much for me to add, but to point out that while the halo still shines somewhat brightly against its peers, (peer, I mean... and, to fill some chart space, Citi,) GS is still off some 60% from the start of 2007. Crappy performance, but much much better than Morgan Stanley (and the S&P500) off some 60% with Citi giving up 95% (okay, okay, 94%.)


(So when is it Joisey Governor Jon Corzine's turn? He was, at one point in time, the boss of Paulson, Rubin and Thain. And Jim Cramer. And possibly Erin Burnett...)

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It's OK to be late! Early really IS the new wrong!!

Gosh, those Merrill ("BAS-ML") analysts are being productive, these days. Wonder why?

Nigel SuperQuant Tupper has an interesting piece out... you know how everybody's saying "Early is the New Wrong" (along with "Down 10% is the new Up")?

Well, Nigel now proves that it's OK to be late... Globally, it's better to be late than early. If you invest 4 mos too early, you lose 22%, while those who invest 4 mos late miss only 8% on avg (since 1988).

(For Asia ex-Japan, he writes: "the bounce in performance after a trough (+27%) is about as dramatic as the fall in performance before the trough (-23%), on average. Invest $100, lose 23% ($77), gain 27% ($97.79), and you’re slightly worse off than having waited.")


Well, that'll be a relief for the long only managers out there. (As for the remaining "fast money" guys desperately trying to justify 2/20... )

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Now, the shape of that global chart looks a bit familiar, doesn't it? HSCEI (China H-share index, traded in HK) with an 8 day moving average) below. So we have maybe a month to decide if that end-October trough really was the trough. Looks startlingly like Nigel's above, but about twice the fall to the trough, and, so far, twice (roughly) the rise since then...:
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"Don’t be fooled..."

All seems well in the world, as I return from the CNY break... yes, we're heading into the Year of the Ox, which is basically the same as the Year of the Bull, right? They look the same, more or less, and the character's the same, so we should be set for a cracker, I guess.

Except that apparently, an ox is a castrated bull. Crudely snipped, then all set to toil 24/7 its entire sad, sexless life, and, when too old or weak and no longer of any use to its owners, slaughtered and consumed by those for whom he'd been working. (Sound/feel familiar?)

But all's well in the overnight markets, at least - we have the S&P500 up the last 3 days we've been away, with mega-buck M&A, a storming 52% of companies that've reported coming in ahead of expectations (BTE!), Leading Indicators bottoming and existing home sales on the up-and-up!

Except...

From my new BFF, David Rosenberg of Merrill in his must-read Morning Market Memo:

Don’t be fooled by the home sales data
The resale data for December came in better than expected to be sure at 4.74 million units, a 6.5% bounce from the 4.45 million print in November. But distressed properties accounted for 45% of all sales, according to the National
Association of Realtors, so this is not exactly ‘organic’ activity as much as
investors looking for a deal on foreclosed units – look for these to be put back on
the market at the first hint of revival (or will be converted to rentals). So the sales
activity did indeed help drag the inventory backlog to 9.3 months’ from 11.2
months’ in November, but then again, we know that this data is also undercounted
by as much as 15% as property holdings at the banks are not counted in this data
(i.e. the unsold inventory is still close to 11 months’ supply). Moreover, median
home prices deflated 2.7% in November – the sixth month in a row of decline
during which they have sunk at a record 33.5% annual rate (median home values
are no higher today than they were in December 2002). The YoY trend is -15% so
as you can see, the trend is becoming even more negative.

Don’t be fooled by the leading indicator either
Another case where the devil was in the details. Yes, yes, the LEI managed to
rise 0.3% in December after two months of hefty declines. First, half of the 10
components were negative and three were flat. The real money supply soared
(of course as the CPI deflated) and added 0.99% to the headline, and the steeper
yield curve added 0.22%. So basically, a deflating CPI and a rise in bond yields
is supposedly good for the economic outlook (come again?). So outside of the
curve and real M2, the LEI would have declined 0.9% in December. Very
lopsided. Moreover, we see that the coincident-to-lagging index, which has this
habit of leading the leader, actually dipped for the second month in a row to 91.9
from 92 in November and 92.3 in October.

Hmmm...


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Meanwhile, more (and more) layoffs.
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0.96

"Researchers at Cambridge university have found a strong statistical link between the profitability of male traders at a London bank and the ratio of index to ring fingers on their right hand." - FT

I think they are referring to the length, not number of fingers, though knowing many London based traders myself, maybe...

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Happy New Year, by the way. (My short position in SAY really helped!)

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