Testify before Congress?
One of the first things you should be taught when you are given access to e-mail is that some things sound a lot funnier in an e-mail than they do when read aloud in a court of law. Some folks at Goldman Sachs are in the process of learning this lesson today. Goldman Sachs is fighting for its reputation as it testifies in front of Congress this week. The irony here kills me…someone is forced to testify before Congress (a political body that has a 22% approval rating) in an effort to save their reputation.
There are certainly some Goldman e-mails that sound bad in the naked light of day…but rather than make me question Goldman (I mean after all should it be a big surprise to me that one of the most profitable firms on Wall Street was caught making money?), it really makes me want to see some of the e-mails exchanged by Congress as they shoved a few trillion dollars worth of spending and commitments down our throats. I guess I’ll never see those though. The point here seems to be to take the spotlight off of Congress and put it on someone else. Enter the SEC (with their 3-2 vote along political lines) and the charges against Goldman.
This looks like it will be a circus…and a circus created to help Congress jam more legislation through. I don’t know if Goldman did or didn’t do anything wrong at this point. What I do know is that with the un-employment rate near 10% and the US on very shaky fiscal ground, Congress has far more important things to be dealing with than whether a highly sophisticated institutional sub-prime credit-default-swap insurance company was “tricked” into buying a CDO by a Street firm in 2007.
Bloomberg is reporting that the Senate has sifted through about 2 million Goldman documents. At this point I’d be willing to wager that more politicians have read Goldman Sachs internal e-mails than read the Health Care Bill.
Back to Reality
This morning’s economic data showed us that Home Prices across the US increased very slightly, but at a lower rate than the survey expected. Richmond Manufacturing was also released. This series tracks manufacturing trends in the Richmond Federal Reserve District. The survey expected a reading of 10, but we actually saw a 30. The Richmond number is the second Fed manufacturing number to beat the estimate this week. These indices are coming off a run of very negative numbers so while the upside surprises are a nice thing, they still have a long way to go before they get back to their old levels.
Treasury prices are up along the length of the curve this morning, pushing yields lower. The 10-year Treasury is up over half a point and is trading at a 3.72%...down from the 3.80% start. Stocks are slowly trending lower as the morning grinds on.
Treasuries appear to be rallying this morning on more credit news out of Europe. S&P cut their rating on Portugal by two notches (from A+ o A-) this morning. This European sovereign debt crisis is beginning to look like a game of Jenga. Remember that game? It’s the one where you stack up all of the rectangular blocks and everyone takes turns pulling one out. As more pieces are pulled the tower starts to lean, then shake, and ultimately it comes crashing down. It’s interesting to watch from this side of the Atlantic.
Here are a few excerpts from the S&P report on the downgrade:
The downgrade “reflects our view of the amplified fiscal risks Portugal faces”.
“We expect the Portuguese government could struggle to stabilize its relatively high debt ratio over the outlook horizon”
I only hope that the folks in Washington are paying attention so we don’t end up playing the game next.
If you have any questions or if there is anything I can be doing for you just let me know.
Steve Scaramastro, SVP
800-311-0707
******POST SCRIPT******
Just as I was about to hit “SEND” on this e-mail my corporate trader announced that S&P cut the sovereign credit rating of Greece to Junk. In the two minutes since that announcement the DOW has dropped an additional 80 points and the 10 year Treasury is up another 12 tics, pushing its yield down to 3.69%. This could be a very interesting day.
Posts
No comments:
Post a Comment