The Big Picture

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• How to Bury the Lede
• Edging a Touch Longer . . .
• Paul Allen Slams Bill Gates in Memoir
• State of Japan’s Power Grid
• Global land cover change from 8000 BP to -50 BP
• Yep, it was us, the Fed did it
• Corporate Logos Reflect Company Principles
• Josh Rosner’s Congressional Testimony: Too Big to Fail
• Private job adds good in March
• Is QE3 Already Here?

How to Bury the Lede Posted: 30 Mar 2011 05:30 PM PDT The following narrative and news item comes my way via a professional journalist (cue the oxymoron jokes) friend.  Emphasis mine: Now, when you're in the sports information business, you generally highlight the exploits of your own team, not your opponents. With very, very, very rare exceptions. I'd say the eighth Division I perfect game in the last half-century might be one of those rare exceptions. But nope, I'd be wrong. Because here is the George Washington write-up of the game: The George Washington baseball team held No. 1 Virginia to just two runs on Tuesday evening at Davenport Field but were unable to compliment the strong pitching performance at the plate, falling 2-0. GW (7-18) pitchers Tommy Gately, Kenny O'Brien and Craig Lejeune combined to hold Virginia (25-2) to just two runs on six hits. The top-ranked Cavaliers entered the game batting .297 as a team and averaging over seven runs per contest. Hmmm. Ok. Tell me more. Gately got the start for GW and pitched three innings, allowing just three hits and two earned runs with one strikeout. He worked his way out of a bases-loaded jam in the bottom of the third by inducing two pop outs. Both Virginia runs were scored in the bottom of the fourth inning after Gately exited the game. Ryan Levine led off the frame with a single and Kenny Swab followed with a walk to put two on with no outs. Gotcha. How about the Cavaliers? Did they do anything interesting? Virginia would score their first run after Reed Gragnini reached on a fielders choice. Another run would score via a balk but O'Brien escaped the inning without any further damage and allowed just two hits over the next three innings. Oh. Ok. And, uh, nothing else noteworthy? Wait, what's this is the seventh paragraph? The two runs were all the Cavaliers would need as starting pitcher Will Roberts was perfect on the mound, striking out 10 batters en route to the eighth nine-inning perfect game in NCAA Division I (since 1957) history and the first since 2002.

Edging a Touch Longer . . . Posted: 30 Mar 2011 01:02 PM PDT The market fork will be resolved sooner rather than later. We added some more long exposure today: The S&P500 Dividends ETF (SDY), Citigroup (C), and Heckman Corp (HEK). Our main model is now 51% cash, 49% long.

Paul Allen Slams Bill Gates in Memoir Posted: 30 Mar 2011 12:18 PM PDT According to a new memoir by Microsoft co-founder Paul Allen, Bill Gates schemed to take shares in Microsoft following his partner’s treatment for cancer. WSJ’s Kevin Delaney and Julia Angwin discuss the roles the two men have played over the years and whether divergent paths at the top of the tech world are unavoidable. 3/30/2011 12:24:14 PM ~~~ digits: Allen’s Book: Revelations or Revisionist? Microsoft co-founder Paul Allen writes in his new memoir that Bill Gates schemed to undermine his role in the early days of the company. But people familiar with the matter say some of the statements in the book are false. Plus: how important are wingmen in tech twosomes? 3/30/2011 1:53:55 PM

State of Japan’s Power Grid Posted: 30 Mar 2011 12:16 PM PDT Nice graphic from the Washington Post: >

Global land cover change from 8000 BP to -50 BP Posted: 30 Mar 2011 12:00 PM PDT Hat tip Paul Kedrosky

Yep, it was us, the Fed did it Posted: 30 Mar 2011 11:16 AM PDT Retiring Fed member Hoenig, famous for his dissent vote all of last year on expanding Fed policy and actually calling for raising rates, is laying out again his call for the dangers of current policy in a speech. What is also of interest is his accusation that the Fed is largely to blame for the credit bubble (clear as day to me and many of my readers). “In the spring of ’03 there was worldwide concern that the US economy was falling into a ‘Japanese-like’ malaise; the recovery was stalling, deflation was likely to occur and unemployment was too high.” This was despite economic growth of 3.2% annualized and global growth of 3.6%. The fed funds rate was 1 1/4% at the time. “Although most knew that such a low rate would support an expanding economy, in June ’03 it was lowered further to 1% and was left at that rate for nearly a year, as insurance. Following this action, the US and the world began an extended credit expansion and housing boom…The long term consequences of that policy are now well known.” While others are to blame too, “monetary policy cannot escape its role as a primary contributing factor.” “The fact is that extended periods of accommodative policies are almost inevitably followed by some combination of ballooning asset prices and increasing inflation.”

Corporate Logos Reflect Company Principles Posted: 30 Mar 2011 09:00 AM PDT John Sherffius, who did the cover (and the awesome cartoons) for Bailout Nation, takes his own satirical swipe at GE: > via John Sherfius

Josh Rosner’s Congressional Testimony: Too Big to Fail Posted: 30 Mar 2011 08:07 AM PDT Rosner Testimony March 30 2011

Private job adds good in March Posted: 30 Mar 2011 08:00 AM PDT ADP said the private sector added 201k jobs in March, the 3rd month in the past 4 above 200k. It was though slightly below expectations of 208k and Feb was revised down by 9k. Gains were again led by small and medium sized businesses in both goods producing and service providing sectors. Manufacturing specifically added 37k jobs and the financial sector grew by 4k jobs. Construction suffered another lost 5k jobs and the decline from the top is now 2.126mm. Bottom line, while slightly below estimates, the pace of job gains is good and certainly encouraging to see but we still have years to go to get back what was lost in the recession if this current pace persists. Friday’s Gov’t Payroll report is expected to show a gain of 190k, 210k of which is in the private sector, with an unemployment rate of 8.9%.

Is QE3 Already Here? Posted: 30 Mar 2011 07:49 AM PDT We continue to watch the low volume levitation run as we head towards a denouement of the end of quarter window dressing, Friday’s NFP and the end of QE2 on June 30th. Earnings are good, analyst consensus for 2012 is very strong (too strong?). The hope is that the market might be able to “grow” into a reasonable valuation. The sell off post Japan was shallow, and the snapback rally has moved up smartly. But as we mentioned yesterday, the volume has been abysmal, and the February highs were not taken out — yet — and they are a stone’s throw away. Will Friday’s NFP report be a sell the good news situation? The gathering economic strength makes it more likely than not that the liquidity gusher will be turned off at the end of QE2. What might that do to traders thoughts? And what of the wild card: QE3. Here’s where things get tricky: It might not matter, because QE3 may already be here. Keep in mind, Quantitative Easing is a term that was invented in Japan in the 1990s. While many believe that QE3 is dead in the US, from a global perspective, the Bank of Japan’s massive liquidity stimulus and intervention into the bond market is the equivalent of a US QE3. Relative to the size of their economy, the BoJ spewed the equivalent of their own QE2 — in just 3 days. How does that liquidity affect how you trade?

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