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CIA Agent Charged With Leaking Classified Information To Journalists Including Photos From Guantanamo

The US Justice government reminds us that it still does exist. One wonders with the passage of the NDAA just what comparable lawsuits will look like when applied to regular US citizens charged with such crimes as talking to journalists and leaking photos from Guantanamo. Now we can all wait with bated breath as the DOJ i) finds where the MF Global money went, and ii) who is actually accountable. Or maybe not. From the DOJ: " A former CIA officer, John Kiriakou, was charged today with repeatedly disclosing classified information to journalists, including the name of a covert CIA officer and information revealing the role of another CIA employee in classified activities, Justice Department officials announced."



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Charting The US (Un)Recovery

How does the current recovery compare to those of the past? The following charts from the Council on Foreign Relations puts the current (un)recovery in context and despite some apparently bright news recently, the pictures underline the economy's weakness since the NBER's recovery began in June 2009.



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EURUSD Sliding On Anti-Rumor From Europe - Headlines "No More Money To Greece From Eurozone, IMF"

This is not the rumor that the central planning doctor ordered. This time from Dow Jones:

  • No Intention By Euro Zone, IMF To Give More Money To Greece, Say Dow Jones Sources -DJ
  • Major Greece creditors made clear EUR130 bn bailout loan "won't be increased by a single euro" - DJ

It remains to be clear if Greece will even get the €130 billion loan still, but that is a different story. EURUSD, and stocks, not happy.



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The ESM/EFSF Bluff

Both EFSF and ESM rely primarily on guarantees which we know Most European politician think is as valuable as toilet paper, so why not provide more?  The ESM does have some paid in capital, but the plan is for minimal paid in capital and maximum usage of guarantees. It is a distraction from their failure to leverage EFSF or to get new (non European bank) funding from the IMF.  It's not a solution, barely even feasible. In the end there are only a couple of guarantors that matter and the rest is circular.



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The Machines Are Back On As Randolph And Mortimer Stage Epic Comeback - OJ Trading At All Time High

As of today, Orange Juice has just hit an all time high price of $223.25 (this time on talk of an import ban in Brazil but who really cares), and has returned a jaw-dropping 32.4% YTD, or 7,032% annualized. This is the biggest 4 day surge since October 2006, and for all intents and purposes, essentially the biggest ever. Needless to say, Randolph and Mortimer Capital LLC is back up and running, and has been forced to limit investor inflows due to unprecedented interest in this asset class, which, yes, you can eat (a little freeze drying may be required in advance). At this rate, bottle service of Dom P at 1Oak will cost less than a small container of Tropicana.



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Over Two Thirds Of All Hedge Funds Are Under Their High Water Mark

For an update on the sad state of the hedge fund industry, we go to the FT which confirms what we had been reporting every week in 2011 courtesy of the periodic HSBC hedge fund industry report, namely that less than one third of all hedge funds in 2011 paid material bonuses to their employees (or if they did, they better have done it without the knowledge of their LPs), because "more than two-thirds of hedge funds are below their high water mark., the point at which they are able to charge investors performance fees." And since performance fees, or the 20 in the "2 and 20 part", is where the discretionary component of analyst, trader and PM compensation comes from, it is safe to say that the bulk of hedgies did not have a good year in 2011. And, in fact, for many the anger goes far back: "It can be a long way back. Credit Suisse calculates that 13 per cent of hedge funds have not earned any incentive fees since at least 2007. Most of these are small funds with assets of less than $100m, which struggle to retain staff without the income available from performance fees." One such fund was of course Citadel which after its abysmal performance in 2008 only managed to climb above its high water mark in the past week for the first time since 2007. And while this is not really news, what is far more curious is that according to Credit Suisse hedge funds have resumed levering once again.



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Why Are Greek Credit Event Swaps Still In The Mid 60s?

As we wait for more IIF announcements about the Greek Private Sector Involvement (PSI), Greek CDS remains bid above 60 points up front.  For a contract that is about to be "worthless", this seems to have a lot of value. Why would Greek CDS still be so well bid? Whether it is stubbornness, stupidity, or more simply a reality check on the IIF's negotiating power (just how many bonds do they speak for?) and the future unsustainability of Greek debt anyway, it seems that an impressive immediate exchange of all Greek debt with at least a 50% notional reduction, 30 year maturity, and low coupon is pretty well priced in (away from actual Greek bonds that is). Anything less is likely to disappoint the market as the realization that nothing is fixed sinks in, and that this may not even take near term "hard default" off the table (this PSI is a default no matter how it is spun even if it isn't a Credit Event).



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Chart Of The Day: By 2109 Everything Will Be "Sustainable"

Long-time readers of Zero Hedge know that the application of Birinyi's ruler to any trend (traditionally the market, but anything works - after all extrapolating the future courtesy of a few data points is the new killing it) has long been a "favorite" topic of ours. So is media spin in the form of certain "hit" keywords, such as "transitory", "better than expected", and of course "sustainable." Which is why were are delighted when we can combine both concepts into one post, or in this case, chart, which today comes courtesy of xkcd.com, which plot the incidence of the word "sustainable" in English text, and comes up with some amusing predictions, such as that by the year 2109, at current trends, every sentence in the English language will consist solely of the world "sustainable" used over and over.



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Americans Are Deleveraging, But Not Because They Want To

As comparisons between US and European debt to GDP levels and the finger-pointing of who is deleveraging more continues, McKinsey notes (in their quarterly Debt and Deleveraging article) that there may be a light at the end of the tunnel for the US as private-sector deleveraging has been rapid since 2008. However, reading on a little, we find that the light at the end of the tunnel may well be the front of the oncoming train of financial distress as some two-thirds of the 4% ($584bn) in US household debt deleveraging is from defaults on home-loans (and other consumer debt). Of course, with homebuilder stock prices surging (notably rather dramatically relative to lumber or ABS/CMBS), consensus has once again agreed that the bottom in housing is in. McKinsey's initial forecast that the pent-up foreclosures and implicit deleveraging will bring us back to trend by 2013 seems like a pipe-dream and we tend to agree with their more conservative perspective that reversion in household debt will not be to trend but to pre-credit-bubble levels, implying a 22% further reduction (or a couple more trillion dollars of defaults).



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January 23 Trading Omens From Art Cashin

So far today's market action appears to be reasonably tame, with no economic data on the horizon, no real update out of Europe, rumors largely ignored at this point, and all signs indicating a quiet trading session for the rest of the day. But will it be? The only market veteran whose opinion actually matters, Art Cashin, says not so fast, especially if one looks at historical precedent, with a focus on 1987 (which incidentally is the last year in which the S&P moved up as much as it has YTD, only to culminate with Black Friday). Could it be that the quietest day ends up surprising everyone?



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One Day Ahead Of State Of The Union Address, American Dissatisfaction With Economic, Political Issues At Record

As Obama takes the stage for tomorrow's State of the Union address, in which, among other things, he probably will not announce that the US debt limit is effectively $16.4 trillion, or 107% of GDP and rising, he faces a very unhappy audience: one which according to Gallup has seen its dissatisfaction with economic and political issues hit record levels. Among the Gallup observations: "As President Barack Obama prepares his annual address to Congress, Americans are broadly dissatisfied with the state of the nation in several specific issue areas, with satisfaction down sharply in some cases since January 2008. However, three issues -- the nation's economy, the size and power of the federal government, and the moral and ethical climate in the country -- fit both of these unwelcome criteria." And with the only response the administration has in the past three years consisting of either printing more money which sends all assets, especially energy, higher in price, or fiscal stimulus of which 90% and more is lost due to inefficiencies and corruption, we don't see satisfaction rising any time soon.



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Lightning Hits Again: Latest Anti-Stolper EURUSD Fade Closed Out With 317 Pips Profit In Two Weeks

Just as certain as death and taxes, fading Goldman's FX "Strategist" has once again made everyone rich. Back on January 6 when the 0.000-batting FX guru said "With considerable downside risk in the short term, within our regular 3-month forecasting horizon, the key questions are about the speed and magnitude of the initial sell-off. If we had to publish forecasts on a 1- and 2-month horizon, we could see EUR/$ reach 1.20. In other words, we expect the EUR/$ sell-off to continue for now as risk premia have to rise initially." To which our response, naturally was: "In yet other words, if there is a clearer signal to go tactically long the EURUSD we do not know what it may be. We would set the initial target at 1.30 on the pair." Needless to say, following Stolper's recommendation, the EUR barely dipped further, and as of this morning has soared above 1.3000, helped not least of all by the record EUR IMM shorts we have been highlighting for weeks. With this, we now close our latest fade-Stolper trade at a profit of 317 pips. This is the 8th out of 8 closed and profitable "anti-Stolper" trades posted on Zero Hedge.



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Daily US Opening News And Market Re-Cap: January 23

Macro news from Europe has refuted claims made last week that the ESM fund would be doubled to EUR 1tln, with a German spokesman commenting that the country is not of mind that ESM resources should be increased to that level. Discussions concerning the management of the EFSF and the ESM from German members of parliament have spurred talks that the funds could be run in parallel and even together in an emergency scenario. The ECB’s Weidmann has commented on his confidence in the Eurozone and the German economy, stating that current stagnation is temporary and that we should see a recovery in the Eurozone during 2012. Financial stocks have shown volatility this morning following comments from French and German Finance Ministers that banking regulations may be relaxed under the Basel III agreement, however this was later denied by the German Finance Minister.



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