Some Observations On SPY VWAP And Block Manipulation As FSA Launches Probe On Front-Running Of Block Trades

Across the pond, the FSA has just announced that it is launching a probe to focus on the front-running of block trades. Without doubt this is dictated by the recent bust including Moore's
block execution trader, who likely was involved in just this (note:
this is purely speculation absent further data). Images of Flash Trading, HFT, algos gone wild, and all sorts of other computerized frontrunning come to mind. When are the useless excuses for human detritus over at the SEC going to do a comparable probe? Oh wait, they are watching kiddy and tranny porn as we speak, and counting their Wall Street salaries once they leave their cushy taxpayer subsidized offices. Sorry, go back to demanding an increase in your budget you worthless examples of reverse evolution. In the meantime, we present some obvious block manipulation data in the SPY which if we had anything remotely resembling a market regulator would be immediately probed. Maybe the FSA can LBO the SEC? Surely Goldman can provide financing.

Euro Plunging As Trichet Says Greek Bailout Blows And Is "Evidently Very, Very Bad"

Dollar surging, euro plunging as Trichet says Greek bailout involving IMF is a very bad idea. Next up: Merkel-Trichet at ten paces. So much for a unified Europe backing Greece. And now with China also a net importer, a surging dollar will do miracles for US manufacturing.

$32 Billion 7 Year Auction Closes At 3.374%, Very Weak Auction With Huge Tail

$32 Billion 7 Year closes at 3.374%, allotted at high 83.04%, previous at 3.078%!

Bid To Cover at 2.61, Previous at 2.98, average overpast year 2.67

Indirect Take Down 41.87; Direct Take Down 8.11%

Indirect Hit Rate 82%

When Issued was trading at 3.338%, a massive tail

10 Year about to break 3.90%

30 Year On Verge Of Breakdown As Yield Hits Highest Since June 2009

The 30 Year is yielding 4.76, the highest yield since June 2009, after spiking by 16 bps in the last two days.4.77% is a resistance level, which may be broken as soon as today's 7 Year auction is completed in 15 minutes.

Analyzing Corporate Margins As S&P500 Free Cash Flows Hits Record

In the recent multiple expansion run up, one of the largely ignored factors has been the dramatic rise in corporate margins, be they Gross Profit, EBITDA, Net Income or unlevered Free Cash Flow. Of course, all this has been a function of massive cuts in corporate overhead as most companies have laid off the bulk of their workers, resulting in a seemingly stronger bottom line. In the meantime, assorted stimulus programs by the government have prevented revenues from crashing, thus boosting EPS, on both a historical and a projected basis. We demonstrate the dramatic surge in margins by scouring through the S&P 500 companies over the past 3 years, and question just how sustainable this margin pick up is. As more and more analysts predict that future margin expansion is sure to drive the market higher, we can't help but wonder 1) with stimulus benefits expiring and excess liquidity approaching an inflection point (especially in China) who will keep the top line strong, 2) as companies are forced, as a result, to hire more workers in order to drive sales, how will operating margins maintain their stellar performance, and 3) how will a decline in margins be justified from a multiple expansion standpoint. Lastly, we parse through the thoughts of William Hester of Hussman funds, who has some very critical observations on this very relevant topic.

The Fed's Sole Dissenter And Voice Of Reason Speaks: "I May Be Alone, But That Doesn't Mean I'm Not Right"

When historians sort through the rubble of the Fed (and capitalism in general), Thomas Hoenig's dissent to Ben Bernanke's lunacy will stand as the only strand of rationality that could have prevented the collapse. Too bad he is, as he himself points out, all alone. Some critical, and mostly ignored by the Fed, comments by Kansas City's Fed Thomas Hoenig, from an interview the Kansas City Fed President gave to Fox Business News yesterday.