Yesterday, the Fed disclosed that liquidity swaps have remained at 0 for the eleventh week in a row. This is not unexpected, as it is in line with the Fed's statement of eliminating emergency liquidity facilities (and the CB liquidity swap lines are among these). Of course, there is no way to truly verify whether or not the Fed is syphoning off US money to once again bail out foreign central banks as the Fed is shrouded in secrecy, and while we have to figure out just what exchange Bernie Sanders concluded with Chris Dodd, on the surface we are disappointed that the socialist is not sticking with his initial much stronger language for Fed transparency. Furthermore, we know all too well that the Fed would never lie to the US population, right - just look at the chart below, which discloses the Fed-determined values of Maiden Lane I-III. Somehow, the combined value of these three Bear/AIG rescue facilities have surged to one year highs in the last week. This is somewhat stunning as we reported a week ago that the Fed is about to be crammed down on its Red Roof portfolio holdings due to initiatied foreclosure proceedings. We have no figured out why REITs have been defying gravity for the past year - according to the Fed and the FASB, foreclosures are now a valuation enhancing process. How could we be so blind not to realize this.
CME Issues Press Release, Confirms No Fat Finger: Will CNBC Issue Retraction For Repeated Factless Rumor Dissemination?Submitted by Tyler Durden on 05/07/2010 - 12:48
CME Group has issued a statement following rumors that erroneous or irregular trades by Citigroup Global Markets Inc may have been the cause for a more than 900 point drop in the Dow Jones Industrial Average during mid-day trading on Thursday:
“While our policy is not to comment on individual participation in our markets, in light of volatile market conditions, CME Group confirmed that activity by Citigroup Global Markets Inc. in CME Group stock index futures markets does not appear to be irregular or unusual in light of market activity today.”
Even as the market is now surging on rumors of massive pan-European bail outs (someone explain to us how a tsunami of failed banks is equity positive... or for that matter how imminent monetization is EUR positive), Bloomberg is reporting that the liquidity crisis in Europe has struck smack in the middle: after the FinMin released a draft bill to forcibly write down real estate asset holdings by 10, investors in certain mutual funds have panicked and attempted massive redemptions, which in turn forced redemption halts by these funds which likely are woefully undercapitalized to begin with. This is just the beginning of the liquidity squeeze moving from the periphery to the core.
Euro (and the market) surging on rumors that the ECB is preparing to bail out 1,100 banks in Europe. And with that the bailout moves officially to Europe. From the dealer community:
CHATTER OF NEWS ECB LOAN FACILITY GOING AROUND
- Chatter of €600bn ECB loan facility to be announced over the weekend
- Terms mentioned are 1% for 1 year loans to cover 1,100 banks
- UNCONFIRMED - Euro is moving on this chatter
Imagine Lehman. Times 1,000. Now it gets fun.
The market is now irreparably broken - if you are trading your own money today, or in the near-future you will lose it, and you can thank the SEC, the NYSE, dark pools, Goldman and all the other "liquidity providers" and market makers. The damage control by the mainstream media has failed. The European bailout has failed. The Nonfarm number was a failure, despite Obama's attempt to spin it favorably. The entire bear market rally is finally being seen for the sham scam we have said it was from the very algo-manipulated beginning. So is it any surprise that the VIX is now double where it was a few days ago. All those who sold calls on the VIX are getting carried away in bodybags, the only question is whether the decimation there is worse than among the ranks of the carry traders. At this rate the market is likely going to close near the stop limit positions in the 1,050 range, which will push traders over the weekend to take weapons grade doses of Xanax. Alternatively, mutual and pension fund idiot money will simply sell.
Overnight 1,135 was a relatively obvious resistance on the bounce. We briefly traded through on the NFP release but it remains resistance hee. Technically my preference we remain to the downside as the wave pattern is not complete and there was no divergence on the lows in terms of momentum. 1,113 is the support to obsrve on the day, and on a break there is a risk of retesting the lows and the medium term support at 1,040 which will be key. All eyes on 1,135 and 1,113 for now.
Fake +290K Payrolls "Added", Real Number Is 36K After Census And Birth-Death, Unemployment Goes Back To 9.9%, Underemployment At 17.1%Submitted by Tyler Durden on 05/07/2010 - 08:40
290K of which census was 66k and Birth Death was 188k. Hurray -the economy added a real 36k in jobs in April. Still, we are curious how the Chairman will not be forced to discuss tightening after this B/D adjustment inspired number (188K in April B/D, 81K in March). And in the meantime, headlines will read Unemployment back to 9.9%, and Underemployment back to 17.1%. Record jittery market bounces than calms down again.
- Administration pledges support for Greece while market regulators launch trading investigation.
- Calif. AG sues former pension fund officials for fraud.
- E. coli outbreak sickens 19 people in 3 states.
- Euro zone summit to try to cover debt crisis.
- Geithner urges Congress to equip regulators.
- German lower approves a law to free up Germany's contribution to a multi-billion euro rescue package for Greece.
- Jobs expected to grow in April; Wall Street tremors over debt crisis could limit future gains.
Today’s action left us amazed, and we have been warning about this stuff since December 2008. Where do we even start? Yesterday afternoon and evening all the business programming focused on how the markets were in turmoil, and Greece this, and overdue correction that, and fat finger the other thing. They couldn’t even recognize the story, as even the business media doesn’t understand that the markets are a changed structure and beast. The story is not a key-punch error. The story is a failed market structure. The market failed today. - Themis Trading
Since Goldman is the only party that ultimately determines domestic financial and economic policy through its Washington D.C. subsidiaries and puppets, the attached presentation disclosing the squid's thoughts on regulatory reform is about as significant as they get. Remember - what the Squid wants, the Squid gets. To be sure, that Goldman is virtually pretty much negative on practically every proposed "reform" is no surprise. Goldman likes to maintain its monopoly just as it is, for as long as it can. Pay particular attention to where Goldman Sachs sees the biggest opportunity: the $437 trillion Interest Rate Swap market. If Goldman were to formalize its monopolistic tentacles over this particular product, then it is pretty game over.
Here are the detailed Indications Of Interest blasts in the SPY blasted by various market makers. Not surprisingly JPMorgan, UBS and Morgan Stanley were the three busiest bees selling and buying in what was certainly a record day for their ETF and correlation desks. As theaudiorecording posted earlier discloses, we know that MSCO at least was a size seller. We are curious who were the buyers, i.e., doing the bidding of Liberty 33.
Greek 10 Year Hits 952 Bps, +100 On The Day, 5 Years At 13.6%, German Professors Announce Imminent Greek Bail Out LawsuitSubmitted by Tyler Durden on 05/07/2010 - 06:14
At this point there is no need to refresh the Greek curve in graphic form: the country is finished in its current format. Bailout, no bailout, the market has spoken. Even as the German Bundestag (lower House of Parliament, the Bundesrat will vote later) approves a bailout, which unfortunately is too little too late at this point, Market News reports that several German professors "will file a lawsuit at the German Constitutional Court today against the German aid for Greece." This will put a procedural stumbling block in the rescue machine, as Greece is in desperate need to getting funding this weekend: some estimate that the entire country has far less than 1 billion available as "petty cash" not to mention it has to fund billions in maturities. The end game at this point is all to clear, even German FinMin Schaeuble said that "s a consequence of the current crisis, rules for an orderly insolvency of a Eurozone member state should be established, Schaeuble urged, reiterating previous comments." Yeah, those orderly procedures are oh so easy to implement. Just look at how easy it is for that political corpse Dodd and his worthless bill: As the Dude says it best: "That's a great plan, Walter. That's f#*$&' ingenious, if I understand it correctly. that's a swiss f#($*& watch." Alas, the troubles in Europe have devolved to the comedic content of a Coen brothers movie.
"Guys this is probably the craziest I have seen it down here ever." Here it is, memorialized for the generations and away from the now openly ridiculous disinformation propaganda of the mainstream media, just what a full market meltdown panic sounds like: straight from the epicenter, the S&P 500 pits. Luckily open ouctry still exists, if at least for shock value. Click here for a first hand account of the most shocking 15 minutes in recent market history. Fat finger my ass.
Japan takes a bold step toward moving away from second to last place in the currency devaluation game. Bloomberg reports:
The Bank of Japan said it will pump 2 trillion yen ($21.8 billion) into the financial system after the Greek debt crisis caused instability in financial markets in the U.S. and Europe.
The emergency measure represents the bank’s first same-day repurchase operations since December. The balance of current- account deposits held by financial institutions at the central bank will likely increase to 16.9 trillion yen, up 800 billion yen from yesterday, the central bank said.
Of course, right now Ben Bernanke an d the US dollar are dead last in the fiat bonfire. But not for long.
Luckily, the only real winner out of the Keynesian death rattle will be gold. Which is the LBMA is doing all it can to manipulate the price lower right this instant. All the better - entry points will be fewer and harder to come by as the time to the final Keynesian unwind draws nearer with each passing day.