Goldman's Chief European strategist is starting to sound less and less confident that all shall be well. The same can not be said for his ebullient (and still employed) colleague Jim O'Neill, whose answer to everything is "BRIC." Anyway, here are Erik Nielsen's latest (and increasingly more skeptical) summary views on the Greek bailout. By the way, the IMF shotgun approach to "helping" any and every member country is to peg its currency to something and establishing a currency board. The IMF simply does not know how to do anything else. So how the hell can the IMF operate in the context of a monetary union?
Chris Dodd Asks Department Of Justice To Probe Lehman's Repo 105 And Other Firms' Shady Accounting PracticesSubmitted by Tyler Durden on 03/19/2010 - 16:34
"We must work tirelessly to reduce the incidence of financial fraud in order to restore trust and confidence in the financial markets. A task force investigation and taking appropriate Federal actions in these matters will contribute to these goals."
Sincerely Christopher J. Dodd Chairman
The most recent CFTC committment of traders report indicates that as of March 16 net speculative euro short positions got clobbered in the past week, and declined by nearly 40%, from the all time record bearish -74,551 to -46,341. Comparably for the Yen, In the yen, of per March 16, speculative accounts had a net long of +15,197 contracts, another 40% decline from of the prior weeks's +26,288. On March 16, the euro closed $1.3769 compared to Friday's closing levels of $1.3534. In the meantime it was discovered that Europe won't be bailing out Greece after all, so all you speculators who closed out your shorts in anticipation of a squeeze: better luck next time.
Federated's David Tice Is Not A Fan Of Bernanke-Manufactured, Free Money Driven, Bear Market Bounces, Sees "Huge" Potential For DeclineSubmitted by Tyler Durden on 03/19/2010 - 14:34
Federated Investors' David Tice has a thing or two to say about the rally - "We've been the beneficiary of a massive credit bubble that we've not yet worked off the excesses... This secular bear market will not bottom until we get back until we get back below book value." In a portion of the interview not caught by the Bloomberg clip below, Tice says that the decline potential for the market is "huge." Don't tell that to the algos whose one and only program for the past month and a half is Buy.The.Dips.
Second Circuit Tells Fed If It Wants To Maintain Its Secrecy It Better Get Congress To Change America's LawsSubmitted by Tyler Durden on 03/19/2010 - 13:31
Key selection from the Second Circuit's Fed FOIA appeal:
The requirement of disclosure under FOIA and its proper limits are matters of congressional policy. The statute as written by Congress sets forth no basis for the exemption the Board asks us to read into it. If the Board believes such an exemption would better serve the national interest, it should ask Congress to amend the statute.
In other words: if the Fed wants to maintain its strict secrecy, it better get Congress to change the laws immediately. Of course, if that happens it will become very clear who controls not just the fiscal and monetary destiny of America, its executive control (via the recently institued bilateral decision making of who apoints who - the President of the United States <-> The President of the FRBNY, and vice versa ), but also the legislative. As for the judicial, we will know definitively when the Supreme Court overturns this decision. In other words, the Federal Reserve is about to become the President, the Congress and the Supreme Court (not to mention Wall Street) all rolled into one.
In Prior Week Money Markets Recorded Biggest Outflow Since Collapse Of Lehman At $60 Billion, Or 2.2% Of AssetsSubmitted by Tyler Durden on 03/19/2010 - 12:19
Well, the administration finally succeeded in getting everyone to join it in going all in on the Ponzi. In the prior week, money market funds record a humongous $60 billion outflow, or a whopping 2.2% of all assets. This follows a $30 billion outflow in the prior week, and is the single biggest outflow since the fall of Lehman ($144 Billion, when money markets needed a Federal guarantee to be saved). Joe Sixpack has thrown the dice and its has fallen on pyramid scheme. The chase for yield (who cares about return of capital, return on capital rules), continues in the high yield arena as well: after 2 $1 billion outflows a month ago, it is now smooth sailing. Lipper estimated that for the week ended March 17, HY funds saw an inflow of $597 million, a small decline from the $795 million in the week prior and and $314 in the week before. As for High Grade - fughettabboutit - last week was a record 54th consecutive week of inflows into HG (nevermind that foreigners sold the greatest amount of corporate bonds on record in January), at $1.3 billion. And the biggest loser - why equities as usual, which "explains" why credit is at two week lows even as stocks push all time records. For logic there is Math 101. For everything else there is the Federal Reserve Bank of New York.
From Bloomberg: "The Federal Reserve must disclose documents identifying financial firms that might have collapsed without the largest ever U.S. government bailout, a federal appeals court said." Next step for the Fed weasels - petitioning the U.S. Supreme Court in an attempt to completely trample America's constitution. In the meantime, Mark Pittman smiles from above as Satan reevaluates the amend and extend provisions of his affirmative covenants with the Fed.
Full report attached (it's after 10am).
If one were to think that the market is determined exclusively by the predominantly retarded action in equities over the past months or so, it would appear we have now fully entered the insanity dot com days, where each day could easily be the rally's last, yet with shorts terrified of being steamrolled by the fine upstanding market manipulators at Liberty 33, the possibility of the Dow hitting 36,000 is distincitly realistic (only to be followed by Dow 0, and a Marsian bail out). What is notable, however, is that credit, which is and always has been the rational market, has not only bought this most recent melt up, but over the past week has in fact retrenched. Not only is credit weaker compared to its January tights, but is also at its widest over the past two weeks, just as equities were set to go parabolic on no volume and on giddy algos, already seeing themselves buying their third summer house in Binaryhampton.
Congress Demands Explanation From Bernanke On Why Goldman And Ex-Fed Board Member Stephen Friedman Illegally Bought Shares Of Goldman In December 2008Submitted by Tyler Durden on 03/19/2010 - 10:11
Congress is pretending to be investigating yet more criminality out of Goldman and out of the New York Fed, and specifically the nexus where the two streams intersect (aside from private room meetings at assorted Financial District restaurants) - Goldman's very own/the Fed's very ex-own, Stephen Friedman. We can't wait to see how quick before this investigation quietly disappears. Pay particular attention to rhetorical question #13: " 13. Has the Federal Reserve investigated whether Goldman Sachs or Mr. Friedman benefitted financially from Mr. Friedman serving as Chairman of the Board of the New York Fed?" Duh.
This paper explores the subject of a possible housing bubble in Canada. It examines a diverse array of factors that may have contributed to the rise in house prices in Canada. The paper evaluates each factor individually and determines the health of the Canadian housing market using common valuation techniques. Results suggest that economic fundamentals in Canada provide little explanation for the Canadian house price dynamics. Market fundamentals have become insignificant in affecting house prices, and the price-momentum conditions characteristic of a bubble now exist. The extreme decoupling of the market prices from the underlying fundamentals suggests an upcoming correction in housing prices in Canada.
It had been a little quiet without Alan Grayson these past few months. Too quiet. The Florida Democrat is now back with a bang after sending a letter to the representatives of the AIG Credit Facility Trust demanding that all AIG emails over the past decade be made public, as well as all company models and internal accounting documents. Yet it is the flourish of the narrative, which reminds one of Dan Loeb in his iconoclastic prime that is the centerpiece of the most recent, and every other letter. Where else can you find pearls like: "It is beyond outrageous that this company, which taxpayers capitalized after Wall Street used it as a slush fund, hides nearly all relevant facts from its owners, the public." We are most enthused by Grayson (and others) finally picking up on a key theme - if you want something analyzed independently and objectively, just open it up to the broader public, and screw all corrupt internal commissions. Crowdsourcing is the only way to get anything done these days. Also, the crowd wonders, is it too late to replace the top two posts in the current administration with Grayson-Kaufman (in alphabetical order)?
- The start of the great unwind? JGB yield curve steepens asbig buyers faith dented (Reuters)
- Markets spooked as Greek rescue plan crumbles (Telegraph)
- Nobel winning economist extraordinaire responds: Steve Roach goes batty (NYT)... it's going to be a slow news OpEx
- Latvia government collapses amid economic crisis (Telegraph)
- China tries to cool yuan dispute with US (Reuters)
- Stop losses see Sterling heavy in European Trade (Market News)
- Lehman's auditor goes blind from all the cooking (Bloomberg)
- Asia stocks rise as US reports boost confidence in recovery; Yen weakens.
- Banks borrowed less from the Fed?s emergency lending program over the past week.
- Euro set for biggest weekly drop in six on concern Europe split by Greece.
- Nikkei hits sixth straight weekly gain, up 0.7% on week.
- US Treasury to sell $118B in notes.
- Papandreou races against time to cut borrowing costs as EU splits on aid.
- Supply of foreclosed homes on the rise again, putting pressure on home prices.
At a time when our political and financial landscapes are littered with villains and those unwilling to take them on, it's refreshing to find someone in the halls of power that we can unabashedly celebrate.
Enter Sen. Ted Kaufman of Delaware. Kaufman, Joe Biden's longtime chief of staff who was appointed to serve out his old boss's term, was originally thought to be a Senate placeholder.
But, far from biding his time, Kaufman has emerged as one of the Senate's fiercest critics of Wall Street and a champion of the need to push for a serious rebooting of our financial system.