NIA believes the precious metals markets are currently being artificially suppressed by paper gold and silver that doesn't physically exist...The physical silver market is now more tight than ever before. In the first quarter of 2010, the U.S. mint sold 9,023,500 American Silver Eagles, the most since the coin debuted in 1986 and up from 8,299,000 sold in the fourth quarter of 2009. All U.S. silver mines combined are currently producing only 40 million ounces of silver annually. This means the U.S. needs to use almost all of its silver production just to keep up with the demand for American Silver Eagle coins. - National Inflation Association
Ratigan Discusses Wikileaks Video, Observes Implications On US Rules Of Engagement And Foreign Response To US ActionsSubmitted by Tyler Durden on 04/05/2010 - 19:19
Dylan Ratigan is joined by Julian Assange, co-founder of Wikileaks, Lt. Colonel Anthony Shaffer, from the Center for Advance Defense Studies, Glen Greenwald, from Salon.com and Brett McGurk from the CFR, in discussing today's must watch video. Assange states that the purpose of releasing these videos is to show how "modern aerial warfare is being done" and "to show the debasement and moral corruption of soldiers as a result of war." As pertains to the video, Julian states the obvious: if indeed the military believed him to be an insurgent, the wounded man should be interrogated and asked about what he was doing. The army's desire is merely "to kill as many people as possible, to get as high a score as possible, and then brag about it to the rest of the troops." McGurk is laconic "this is a tragic, tragic video." Shaffer does a detailed analysis on the Rules of Engagement (Minimum Force and Capture and Interrogate being primary), especially when the engaging party on the US behalf is something that appears straight out of Call of Duty, and can be controlled by the same 19 year old joystick-happy day traders that gun the market day in and day out. Lastly Greenwald discusses the responsibility of the media to cover these kinds of events. As Glen notes, "Wikileaks is absolutely heroic, because this kind of footage is seen all the time in the Muslim world, about what we are doing over there, and what the effect of our missions are, but it is seen very rarely over here... This is far from uncommon...What do you think the people who this video and the family members who are surviving, are going to think about the U.S. over the next 2 or 3 decades."
Time to update our "Mutual Fund Monday" analysis: since December 7, there have been 17 Monday, during which there has been just one down day. Statistically, this is even nuttier than Goldman's Q2/Q3 2009 profitable trading days. At 94%, we are two standard deviations away from statistically probable distributions. Furthermore, since the beginning of September, when the Mutual Fund Money phenomenon became especially pronounced (read our initial observations here), there have been 27 out of 31 profitable Mondays. There is no spoon. And this is considered perfectly reasonable market performance? It is time for Nassim Taleb to denounce the statistical wackyness that equity markets have become.
Earlier Rick Bookstabber wrote a good piece on why with everyone focusing on ignoring the commercial real estate disaster, the muni market is the next thing to appear out of left field and stun everyone with just how bad things really are domestically (they are pretty horrendous in CRE too, and getting worse, but just because everyone is "aware" of this, somehow this is supposed to make things better). Rick's piece could not have come at a better time: LA's controller Wendy Greuel just announced that she expects LA's general fund to be "out of money" by May 10, and that LA will likely deplete all reserve funds by the end of Q2. Hold on a second: wasn't state Treasurer Lockyer saying just a week ago how Greece is so much worse than California? Isn't it ironic that according to the Controller of LA's biggest city, Cali may end up in a liquidity crisis sooner even than Greece. At least Los Angeles has undisputed access to the IMF - the only question is what shape the California austerity package will end up taking.
Greek Deputy Prime Minister Calls Germans Racist; Believes Germans See Greeks As Bunch Of Lazy Drinkers And DancersSubmitted by Tyler Durden on 04/05/2010 - 17:26
Just because attacking the nation that is critical to making sure your bailout package is instituted is always a good idea (together with the US and the IMF of course), the Greek Prime Minister hasaccused Germans of being "prejudiced and racist" in their treatment of Greeks. Apparently demanding fiscal prudence (or lamenting the lack thereof) is now equivalent to stereotyping based on the color of one's skin or something. Spanish newspaper El Pais reports that Theodoros Pangalos, who previously demanded reparations from the Germans for WW2 acts, in an interview with the Portuguese Journal of Business, claims German citizens still see Greeks as lazy, and that Germans are resorting to "racially motivated" reasons to avoid providing a bigger helping hand to Greeks. El Pais quotes Pangalos as saying: "Greeks have problems. But why? Because they did not work hard. And why did they not work hard? Because they have a lovely climate, music and wine, and are not as serious as the Germans."
More insight from a just released interview with Pimco's Paul McCulley. Nothing that McCulley has not said before but sheds some additional light on PIMCO's specific portfolio exposure currently. Of course, as Goldman has taught us all too well, anyone talking their book who is as big (and smart) as Pimco, could just as easily hld the other side of the trade, and just be looking for willing lemmings, of the variety that stood 24 hours in line for a big and blendable iPod.
Freddie Fixed Mortgage Rate Rises For Third Week In A Row, At 2010 High: End Of QE Starting To Be FeltSubmitted by Tyler Durden on 04/05/2010 - 16:03
The Freddie 30 Year FRM just posted its 3rd weekly increase, jumping from 4.99% to 5.08%, which is just 1 basis point below the 2010 high recorded in the first week of the year. The end of QE may not have dented stocks much, but it is sure starting to be felt in the mortgage arena. It is only a matter of time before rising mortgage rates halt additional home refinancing activity, and force homeowners to take more drastic measures, such as those prescribed by the national and enforced doctrine of Moral Hazard. It is only a matter of time before the shorts in the MBS market find their bearings again and instead of covering existing positions, press new ones.
It seems traders are just waiting for the day when 10 blocks of ES move the market by 10%, and represent all the daily volume. Because at this rate we will get there in less than a year, just in time for the Dow to hit 36,000. At 0.751MM ESM0 volume is 40% below the trendline average by this point in the day. In a week we would be at half; in a year - 99%? The Prime Dealers and Liberty 33 is more than happy with this: it simply means much less capital has to be allocated to push the market in any one direction as moves in the broader market now have absolutely no breadth.
...It appears the answer is yes.
Today's move in the 10 Year is not being matched by German Bunds. The result: a spike in 10 year UST-Bund spreads to over 90 bps, a level unmatched since mid-2006. Yet one wonders just why the percevied flight to German safety persists, when as disclosed previously, German banks have over half a trillion in exposure in Southern European countries. Should the domino effect of Greece finally materialize, it is difficult to make the case that marginal deterioration within the German banking system can be isolated without major fallout to the very core of the economy.
Greece has been largely forgotten by the media over the past 2 weeks. This is somewhat perplexing in light of what is happening over in Europe: 1) Greek 10 Year spreads are back to crisis levels, hitting 6.53% today, 50 bps higher than the sub 6% reached in early March when speculation that the EU would fix everything; 2) German disagreements with other eurozone countries on the shape of the Greek bailout are getting more acute by the day, and this is nearly a month after the European "bailout" has been announced. Even as the S&P dropped in February on Greek fears in early February to the YTD lows on February 5, coupled with a spike in GGB 10 Years to 7%+, since then the S&P has been rising at a 60 degree angle, even as the yield on the Greek bond is now chasing to catch up with S&P rate of increase. There are no news that can shake the conviction of the S&P that Dow 36,000 is next.
For all who doubt the Obama administration will raise tax rates into the stratosphere in the very near future, here is a chart created by dshort.com which compares the total level of debt to GDP with Federal tax brackets over the past century. The correlation between the two is unmistakable. Unless the administration promptly finds a way to reduce the massive amount of debt that it continues to issue (in March alone the US Treasury issued a massive $333 billion in net debt), tax rates will have no option but to spike to levels not seen since the 50's. And that means a tax bracket for the highest earners of about 90%... You didn't think socialism comes cheaply now did you?
The just completed 3 Month and 6 Month Bill auctions were the weakest ones conducted so far in 2010. Out of 14 auctions conducted so far across both maturities this year, the 3 Month closed at the highest rate seen since December, at 0.175%, coupled with the lowest Bid To Cover over the same period, coming in at 3 month low of 3.6.The same is true for the 6 Month: the closing high rate of 0.265% was the highest in 2010, combined with the weakest Bid To Cover YTD, at 3.63. Direct bidders once again came in to save the day.
The 10 Year is on the verge of breaking the 4% resistance, last seen in June 2009. This follows today's auction of 3 Months (0.175%) and 6 Months (0.265%). At last check we were a few thousandths away from the important psychological level, even as oil is surging.