- Home price drops exceed Great Depression (Reuters)
- The Fed Oracle Speaks: Fed Officials Signal Intent to Back Bond Buys (Jon Hilsenrath)
- Sanders Says Bernanke Ducks Request for Details on Fed Loans (Bloomberg)
- Clarium Slumps 90% From Peak After Thiel Hedge Fund Has Third Losing Year (Bloomberg)
- EU Weighs Boosting Bailout Fund (WSJ)
- Lisbon Succeeds with Debt Auction (FT)
- Credit Suisse Plans Market for Long-Term Investors (BusinessWeek)
- UK Insurers Attacks Europe’s Bank ‘Bail-In’ Plans (FT)
- World's ATMs Pump Billions Into Wrong Places (Bloomberg)
- Rethinking the Public-Pension Punching Bag (BusinessWeek)
The general market tone is more positive this AM as winter weather impacts the Northeast. Yesterday's NFIB Small Business Optimism and other economic data did not paint a commensurately rosy picture alongside the recent ISM prints. Today's big releases will be the Fed's Beige Book, which should provide a more granular level of data points on expansion, and the US Monthly Budget Statement.
Ever since his transition from a critical, respected and objective economist to the third coming of A Joseph Cohen, Goldman's Jan Hatzius has become an increasingly irrelevant second fiddle-cum-broken record, and as such his observations have merited less and less attention. His latest spin piece on why the centrally planned US economy will grow within the parameters of "perfection pricing" is merely more confirmation of this sad transition. To wit: "2012 is still a long way off, and the uncertainty surrounding any forecast is large. But if we are right, the implications of this forecast are reasonably benign for the US Treasury market and very benign for the equity market. Indeed, our strategists expect only a moderate increase in 10-year Treasury note yields to 3¾% at the end of 2011 and 4¼% at the end of 2012, as well as an increase in the S&P 500 index to 1500 by the end of 2011." In other words: the debt-fueled Frankenstein of a Goldilocks monster, currently rampaging around on government-funded steroids, is really completely under control. It appears that all the gloves have come off in this last attempt to reflate the global ponzi, and sadly credibility once relevant, is now completely out of the window.
Legitimate humanitarians inspired by real compassion inevitably seek to help men become more responsible for themselves, not less. Compared to this mission, the Loughners of the world are only a distraction, a media game which does not need to be played. While it is important to safeguard against events like that which took place in Arizona, it is even more important to safeguard against the exploitation of these events by those who would do much greater harm. The wider view requires a respect for the enduring benefits of freedom, which eclipse our momentary lapses of human character. The Liberty Movement’s interest lay not just in the chaos of the present moment, but in the clarity of a possible future; one in which man’s individual sovereignty is valued, rather than feared.
The most expected yet anticlimactic bond auction for 2011 has come and gone: after getting the backstops of the ECB, China and most recently, Japan, Portugal managed to sell €1.25 billion in 4 and 10 year paper. And while the the yield on the 10 year was better than expected, and notably lower than the 7% where the point had been trading on the curve recently, the 4 year priced notably weaker compared to previous. Of course, none of this would have been possible had the ECB not been buying Portuguese bonds in the open market for two days this week, and continuing into Wednesday, into the biggest farce of a market currently operating in Europe.
RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 12/01/11
Any billionaire who continues borrowing slides from Zero Hedge, surely knows what he/she (although in this case most certainly he) is talking about (especially one that expects a double digit drop in equities in 2011). This goes double for any billionaire who actually has a James Bond fetish to impart to his investor presentation. Attached are 89 pages of shaken and stirred data, that you wouldn't really find at any other "institutional" asset manager.
This one was just too hilarious to pass by without presenting it. It was in fact hilarious enough that it could be presented a la carte without spoiling it by actually commenting...
When you're on the right side of a macro trend, supposedly random events inexplicably go right with improbably high probability. I can live with such blatant disregard of nice mathematical properties. What I cannot live with is the lack of understanding when the trade may end. There're many ways the gold trade may end, but valuation is not one of them (though valuation may cause temporary pull-backs once in awhile). As I said in the beginning, there's simply no rational basis for gold valuation in anything else. It is, quite simply, whatever value the market is willing to pay for.
Is The Criminal Case Against Goldman About To be Reopened, As Robert Khuzami's "Ethical" Reputation Lies In RuinsSubmitted by Tyler Durden on 01/11/2011 - 20:09
After a few days ago we described in detail the facts behind the ACA lawsuit against Goldman, we were left scratching our heads how it could be that the SEC could ever possibly scuttle this criminal case which was obviously a slam dunk through court, and which based on the disclosures presented by ACA, is a blatant violation case of 10(b)-5 securities fraud and underwriter representation. We asked: did the SEC hide a key piece of the case against Goldman to fast track a settlement process? We concluded that even the SEC's otherwise completely inexperienced legal team should have been able to get this case through the finished line without the need to settle. Two developments today may allow us to postpone the head scratching for at least a bit. According to the FT, the Senate permanent subcommittee on investigations is about to issue a report which "will press the SEC to reopen its investigation into the bank." And in a completely separate report, we learn from Bloomberg that the SEC's top enforcement official, Robert Khuzami, who settled the SEC case with Goldman, is now being probed for his role in Citi's abrupt settlement over the summer. According to Bloomberg disclosures in a letter that served to open the probe "Khuzami ordered his
staff to drop the claims after holding a “secret conversation,
without telling the staff, with a prominent defense lawyer who
is a good friend” of his and “who was counsel for the company,
not the individuals affected.” We hope readers are able to put two and two together, and ask: just why is Robert Khuzami, former General Counsel for Deutsche Bank, still pretending to represent investor interests, when he obviously has far more powerful (and rich) interests to answer to?
Zero Hedge is happy to announce a new collaboration with the precious metals experts at Gold Core. We look forward to posting periodic industry updates, notes, analysis and commentary in conjunction with GC on all matters of topical significance in the PM space. As an introduction, we would like to present GoldCore's review of 2010 and Outlook for 2011. A sample from the analysis: "Should the dollar and other debt laden currencies and government bonds fall sharply in value due to a panic and wholesale liquidation we could experience hyperinflation. In this scenario paper assets will be shunned and people will protect themselves by buying hard assets such as real estate, commodities and gold and silver bullion. In such a scenario, gold and silver surge would quickly reach their inflation adjusted 1980 high of $2,300/oz and $130/oz before overshooting to much higher levels as was seen in Weimar Germany and more recently in Zimbabwe."
In the eyes of this volatility trader the current paradigm of monetary and fiscal stimulus may best be understood as the greatest leveraged volatility short in economic history. The current stimulus is analogous to continuously rolling "naked" put options on the global economy, backed by margin provided by the US taxpayer, generating short-term growth at the expense of long-term systematic risk. The reinvestment of the premium into risk assets by the investor class ensures the Fed's naked put is never exercised. In theory the Federal Reserve is now the largest volatility trader in the world...You've most likely heard the old adage about the danger of picking up pennies in front of a steamroller. The great volatility short is no different in principal as our government collects trillions of pennies from the treads of a debt steamroller repatriating them to the driver in exchange for a promise to slow the machine. We must hope the operator is able to find a better job before he becomes dependent on those pennies for his survival. At 9.4% unemployment it will be challenging. In a recent letter to senior members of Congress Treasury Secretary warned there will be "catastrophic economic consequences" if the government's $14.29 trillion debt ceiling is not increased immediately. What should be apparent by now is that one day the greatest volatility short in history will face a margin call the US taxpayer will be unwilling or unable to meet. While the markets remain in a state of euphoria it may be the right time to opportunistically position yourself on other side of the Fed's volatility trade by going long tail risk.
After insiders closed off 2010 with just 19x more selling than buying, they have greeted 2011 with a ratio of selling to buying of 114x, a decent pick up in dumping. Specifically there were 4 purchases in the first week of 2011 in S&P 500 names, for a total of $2.5 million in notional. This was offset by $290 million in sales, in 86 transactions. The only notable purchase in the last week was in ATI, which has continued to see insider buying for the past month. The selling side is far more interesting, and here we can see ongoing dumping of Google, MCK, Qualcomm, Ford, HP, Carnival, CSX, and so forth. Luckily for the PDs and the Fed, the retail hot grenade lemmings are finally stepping in, because it was unclear how much longer the HFTs could keep the market from crashing again.