In a moment of clarity, Tiger's Julian Robertson educates the money-honey on just how bad things are. Robertson started by trumpeting how bad macro is everywhere, moved on to Europe being in a 'state of financial collapse', likes shorting weak European currencies (Hungarian Forint) and warns of the possibility of a rapid rise in interest rates in the US. He is positive on NOK, thinks Canada is a 'very well run country', is a buyer of US large cap tech (citing GOOG and AAPL specifically), and sees Visa/Mastercard growing at 20%+ per year for some time.
NYSE Short Interest Soars To Highest Since July 2009; Is An Epic Squeeze Forming In Bank Of America Shares?Submitted by Tyler Durden on 09/13/2011 - 15:55
While two weeks ago the notable feature in the NYSE short interest update was that it had grown by a whopping 1 billion shares, or the most in over two years, this week's highlighted feature is that in the second half of August evil "speculators" did not relent in their negative bias, and brought the total NYSE Group short interest to a two year high or 14.9 billion shares, a 484 million share increase from the prior week, and the highest since July 2009 when the market still was unaware that central planning was the name of the game, and being short actually meant taking on the Chief Printing Officer head on (and fewer still realized that being long gold was the only effective way to "fight the Fed"). And just like last week when we speculated that we can "expect some even more furious short covering sprees to send the S&P much higher on an intraday basis" courtesy of this massive short interest overhang (which will without doubt be used by stock custodians to create a rally if and when needed, just like back in March of 2009, by making recalling shorts in every name), the probability of a massive "face off" rally grows as more and more join the ranks of those believing that the US capital market still plays by the rules. Newsflash: it does not. And anyone trading stocks, on either the long or short side, is guaranteed to lose.
Since there is no point anymore in doing any analysis or wasting time thinking, here is the copy and paste of the relevant section from a just released piece in Bloomberg. "Greek Default, Euro Exit Inevitable, Std Chartered CEO Tells Sky. Default, euro exit won’t “necessarily” occur in next 1 or 2 mos., but “quite likely at some stage,” Standard Chartered CEO Gerard Lyons tells Sky News. Greece “not going to pull down Europe” or cause world recession." Actually, the last bit may be a rumor, at least if one remembers what happened to global banking after Lehman was taken down in a "controlled" Chapter 7. Anyway, Johnny 5: take it away.
While 30 minutes ago Brazil's Central Bank policy head Mendes spoke in Brasilia saying that the "Euro is less important in Brazil international reserves", and "Brazil seeks reserve currencies with solid fiscal positions", we are now supposed to believe a rumor cited by Reuters that BRICs are setting up for coordinated buying of European peripheral sovereign debt? It appears Rumor Fatigue has taken hold as the market rallied 6pts and then sold it all back within the same minute.
Full Retard Rumormill Goes For The Trifecta As Brazil Joins China And Russia In Bailing Out The European PonziSubmitted by Tyler Durden on 09/13/2011 - 14:09
Add this from Reuters to today's rumor trifecta to make the day RDA allowance of crazy pills complete:
- BRICS COUNTRIES IN "VERY PRELIMINARY" TALKS TO COORDINATE PURCHASES OF EURO ZONE SOVEREIGN DEBT - BRAZIL GOV'T SOURCE
And so in one day we have heard rumors of China, Russia and Brazil (in this case"citing a monetary official"... sure beats "unidentified Italian government sources" ahem FT) all bail out Europe, none of which will inevitably happen mind you because these countries aren't governed by idiots, although "idiots" is precisely who trades this market. See the attached chart for the kneejerk reaction to this latest headline.
Even though it has since provoked a firestorm of denials and refutations, the reality is that Dutch media RTLZ probably had some very good sources (certainly better than the FT's yesterday when China was supposed to LBO Italy for the 4th time in 2011) to release the following information, namely that according to the Finance Ministry, the bankruptcy of Greece is inevitable, and that the "question is no longer whether but how Greece goes bankrupt." Additionally, Reuters added that according to Jan Kees de Jager, "We are studying scenarios in secret together with the Dutch central bank (DNB) and also with other countries. We are looking at our own economy, our government finances, the financial sector and consequences for Europe," De Telegraaf added that the "other countries" also included Germany and Deutsche Bank. He said it was difficult to let a country go bankrupt in a controlled way. "Always, if something goes wrong there are effects on other countries, on central banks. So you will have to take into account side-effects. That is precisely the reason why we are looking at different scenarios behind closed doors." A ministry source later confirmed a report on Dutch broadcaster RTL that the scenarios being studied included default by Greece. Of course, in keeping with the European M.O. of spreading a rumor, gauging the market response, and if response is unpleasant, to immediately refute it, Dow Jones and everyone else has since reported that the Dutch were only kidding and were not calling for an orderly default for Greece. Sure. Just preparing for one. Huge semantic difference there...
Heeeeere's the teleprompter again. Because it was at least 24 hours since he was on TV again spewing gripping rhetoric and doing his hypnotrance: "you must pass this bill...you must pass this bill...you must pass this bill...you must pass this bill..." PS - shot for every time Obama says, "you must pass this bill" or a version thereof.
One of the parallel consequences of the market plunging (although nowhere near as far as it would had central bankers not be ubiquitously present to cushion every blow) in the past month on fears of another Great Financial Crisis, coupled with concerns of global insolvency, has been a surge in stock correlations (if not so much between stocks and other risk assets such as bonds and gold), to the highest point since the Lehman collapse. Putting a number to the "point" - 97.2%. Here is how BNY Convergex' Nicholas Colas summarizes the recent surge in cross sector correlations: "Disparate markets – stocks, bonds, currencies, and the like – have a lot in common lately. Whether they want to or not. Average correlations between the 10 major sectors of the S&P 500 have reached 97.2%, from 82.1% just three months ago. That’s the highest level of such common price action since the Financial Crisis. Gold and silver have continued to provide actual diversification, and Investment Grade bonds are also holding their own in this regard. They are at least moving on their own, rather than lockstep with the rest of the world. The difference between investing in Emerging Markets equities, Developed Markets equities, and High Yield bonds is now effectively zero. We think these high correlations will plague markets through the end of the year, since they are fundamentally caused by worries over European financial market solvency. Those aren’t going away any times soon." Well, they might, if someone actually believes the lies spewed by European bankocrats, who have now reached new lows in dealing with information, by sicing regulators against those who write OpEds. Very soon the dissemination of facts will also be made illegal, but until then, we will likely see correlations continue to trade, and soon hit 1.000 as everything trades in perfect lockstep with every other robot traded "thing."
The only notable thing about today's $21 billion 9-year 11-month reopening was the yield which at 2.00% was the lowest ever. Granted less than half was allocated at the high but obviously the interest was there, even with Direct Bidders tumbling from a record 31.7% take down in the last auction, to a perfectly average 11% today. In their place came Indirect Bidders, who saw their take down rise from 35.4% to 48.9%. And while the Bid To Cover dropped from 3.22 to 3.1, it was still just in line with the LTM average, and is not at all indicative of weakness as some speculated, especially with the WI trading at 1.99, just before the pricing, indicating the auction was in line with expectations, if maybe a tad on the weak side. Following tomorrow's final auction of the week, in which the Treasury sells 30 Year bonds, which may or may not be very well bid depending on Op Twist expectations (although if Gross' record duration extension is any indication, the copycats will be there in full force), total US debt will be knocking on $14.8 trillion's door once this week's auctions are settled.
The idiocy just hit record highs:
- BNP PARIBAS SAYS IT ASKED AMF TO INVESTIGATE WSJ OPINION PIECE - BLOOMBERG
What next: the AMF dispatches black choppers to round up all those trop-beaucoup criminal bloggers?
In what seems like the first honest words from a central banker in months (albeit an ex-central banker), Mario Blejer (who presided over the post-default Argentina in 2001) has some first-rate advice for G-Pap and his fellow Greeks. From an interview in Buenos Aires, Bloomberg notes the following notable quotes:“Greece should default, and default big, you can’t jump over a chasm in two steps.”
Tim Geithner, in his third third annual pilgrimage to Europe, the first two of which concluded with one after another more discredited stress tests (because in Mark-To-Unicorn America they worked sooooo well), has a slightly different message to the locals on how to run their failed monetary union. From Reuters: "Treasury Secretary Timothy Geithner is likely to urge euro zone finance ministers on Friday to speed up ratification of changes to their bailout fund and consider boosting its size, an EU source said on Tuesday. The official said Washington was worried that the euro zone was not acting fast enough to enhance the EFSF fund and that the stability of the global financial system was at stake. He is likely to tell the ministers that they should consider increasing the size of the EFSF to equip it better for the needs of potential bank recapitalization. "He will probably tell Germany to give up its resistance to an increase in the size of the EFSF," the source said. A well connected fund source told Reuters Geithner had been pushing for a solution for European banks along the lines of the TARP program in the United States, but had not made much headway." Translation: Germany has to immediately throw billions more of taxpayer money into the insolvent bank pit (just like America did), or else Tiny Tim will get angry. Well, if Germany's ruling class was against pledging over 100% of its GDP to bailout Greece and the other insolvents, it will surely be persuaded to commit political suicide after the last man standing from Obama's administration, who still inexplicably has not been fired for gross incompetence (and also prosecuted for tax evasion), has his say. And just as the short selling ban lasted all of one week before Europe's banks tumbled, even a favorable uptake of the idiot's proposals will at best lead to a 24 hour spike in prices followed by what will likely be the terminal tumble into the abyss of failed Keynesian-Bernankian experimentation.
This market seems completely broken. The S&P could be at 1,300 or 1,000 in a week, and neither move would be a complete surprise. One way or the other, moving 1% on a headline that really didn't seem to add any new information is scary. The S&P now seems to move in 5 pt increments. Certainly when credit markets get that illiquid they have at least one good move wider before providing some big relief rallies. The market for SOVX started exhibiting severe lack of liquidity back in June. Since liquidity broke down, it has generally traded wider, with some big sharp rallies. Almost all the other credit indices followed the same pattern as their liquidity broke down. I don't see any reason for equities not to follow. Some might argue that we are at levels where we are due for the relief rally. I'm betting that we aren't. The manic nature of the stock market seems to have increased lately and we are too far off the lows to be comfortable that relief rally is ready.