Daily Highlights: 4.26.10
Submitted by Tyler Durden on 04/26/2010 - 08:19- Asian stocks, commodities rally on economic recovery, Greece.
- Bond traders declare inflation dead with yields below 2008 crisis levels.
- China is considering introducing new or higher taxes on real estate.
- Consumer spending in US probably stepped up, carrying expansion in 2010.
- Dollar rises versus Yen amid signs of global recovery before Fed meeting.
- Finance Ministers urge IMF, EU to speed aid to Greece at Washington Talks.
- Germany is laying the legal ground for its contribution to the financial aid package for Greece.
- Comments: 2
- Reads: 1,474
Bob Janjuah: "We Are Trapped In Some Sort Of Horrendous Keynesian/Monetarists' Nightmare...."
Submitted by Tyler Durden on 04/26/2010 - 08:12"We are trapped in some horrendous Keynesian/monetarist nightmare, where policymakers, aided/abetted/advised by their buddies in the media, in the lobbyist cabal and in financial system, have YET AGAIN decided to go down the route which merely delays the problem/pushes it down the road, but which virtually guarantees that when the NEXT bubble collapses (I assume it will be the Global Government Debt/Bond Bubble and/or the Global Fiat Money/Paper Money/FX Bubble), there is NO pleasant way back. When this next bubble collapses, those of us living/working in these problem economies will realise, too late of course, that WE are the new emerging markets. And no, I don't mean the next China, instead my reference is to Argentina back in the late 90s/early 00s!. So if (as it seems to me) - even though we are agreed on the weak sustainable grwth outlook for the UK US Japan & Europe - that I WAS wrong and that Kevin is right on Austerity and the Reflation Trade, that policymakers will simply keep on behaving recklessly by loading on more debt and blowing more and bigger bubbles until the point of market and/or taxpayer revulsion, then this has some very clear 'asset allocation', and other implications" Bob Janjuah
- Comments: 141
- Reads: 18,869
RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 26/04/10
Submitted by Tyler Durden on 04/26/2010 - 08:03RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 26/04/10
- Reads: 555
Portugal CDS At Record As Bond Markets Refuse To Undergo GE-Sponsored Lobotomy
Submitted by Tyler Durden on 04/26/2010 - 07:59
No comment
- Comments: 18
- Reads: 4,311
Greek HDAT Withdraws Official Bond Price Disclosure, Greek Spreads At New Record, Greek Stock Market Down 2.5%
Submitted by Tyler Durden on 04/26/2010 - 07:48The Greek bond holiday is here. Greece's bond pricing administration HDAT has withdrawn bond prices as spreads have hit 650 bps. Greece acknowledges it is game over as 10 Years are at 10%, and 3 Years at 13%. Stock liquidation are rampant as Greeks are on the verge of panic: the ASE is down 3% and investors are now widely expecting a 10% correction to below 1,700 on the ASE. And Portugal is now officially part of the party Portuguese - CDS just hit 310 bps.In the meantime Germany is starting to feel the burn - German FinMin Schaeuble has stated he is determined to defend the stability of the euro by asking that Greek talks with IMF conclude by weekend. He also said that he anticipates that Euro zone and IMF want to free up Greek aid simultaneously and does not favour idea of granting Greece moratorium on debt. Alas, the time for speeches is over. Making matters worse, Germany’s SPD says will not back accelerated parliamentary process to approve Greek aid, rendering all rhetoric useless. Lastly, Angela Merkel will make a statementon Greece at 13:00 GMT. We can't wait to hear the powerlessness in her voice.
- Comments: 20
- Reads: 3,643
CDOs For Dummies (Yes, Congress, We Are Looking At You)
Submitted by Tyler Durden on 04/25/2010 - 22:06Every now and then, congressmen (and their staffers) have a knack of taking a terrific opportunity to investigate the alleged criminality at the apex of Wall Street (such as Tuesday's hearing with Darth Blankfein), and blow it by 1) pursuing personal agendas that have nothing to do with the matter at hand and 2) having no understanding of the matter at hand. And when the matter at hand is something as complex as CDOs (just ask Lloyd or Ben Bernanke - both will tell you that only Goldman understood these products well enough to trade them, and that only the Fed is smart enough to regulate them),televised embarrassment is sure to follow. Which is why we have prepared some bedside reading for all those who intend on grilling Lloyd on Tuesday.
- Comments: 20
- Reads: 9,310
Goldman's Essay On Why The US Debt Load Is "Not Too Concerning"
Submitted by Tyler Durden on 04/25/2010 - 21:03Goldman has been on a roll this week. After losing all credibility (or whatever they had) with the markets, the objective media and Main Street, but not their clients, who were the ones losing the most for interacting with the squid, yet refuse to take their business elsewhere for fear of being locked out from the market monopolist with the greatest amount of inventory (yes, economies of scale when compounded with not so subtle forced liquidations of key competitors end up in monopolistic outcomes), now their economic team is taking a gamble with its own reputation (this is the team that won the best big bank economic team aware for 2009). In a note distributed to clients, entitled "What's the Right Measure of US Government Debt?" Andrew Tilton and Alec Phillips try to present the case that contrary to what you may have heard, the $12.8 trillion of US debt is not really worth losing sleep over. In fact the next time Goldman needs a bailout and the resultant $2-20 trillion of new debt are added to the make the 2s30s at about 100%, that should not be a source of concern either.
- Comments: 81
- Reads: 6,656
A Detailed Look At Goldman's Mortgage Trading Strategy In Late 2006 And 2007; The Goldman "Directive"
Submitted by Tyler Durden on 04/25/2010 - 19:04One of the key topics over the next week will be just what was Goldman's exposure to the mortgage industry in 2006 and 2007, and was the firm actively short mortgage exposure or was it merely, as it claims, just a market maker without any active positions on its prop desk. Courtesy of Carl Levin's recently declassified Goldman emails and presentations we get an extensive glimpse into Goldman's net exposure, its DV01, its counterparties, as well as how the firm was planning on interfering with the market when it needed liquidity to offload legacy positions. We also get a rare glimpse into the contributions from Tourre's mentor, Jonathan Egol. Let's dig in.
- Comments: 76
- Reads: 10,502
South Korean Defense Minister Confirms Torpedo Sunk Cheonan; Next Step: Escalation
Submitted by Tyler Durden on 04/25/2010 - 17:07As Zero Hedge first reported, rumors within the South Korean community that North Korea would receive the full blame for the tragic sinking of the South Korean ship Cheonan have turned out to be true. Today, the WSJ confirms: "South Korea's top military official said Sunday that a torpedo likely
exploded under the Cheonan, the South Korean patrol boat that sank a
month ago near the maritime border with North Korea, edging Seoul even
closer to declaring it was attacked by forces from the North." So with the obvious finally confirmed by everyone, the only question now is "what's next?" According to the WSJ, "South
Korea faces several constraints in penalizing Pyongyang, starting with
the prospect that a military response could escalate into a war that no
one here wants. And the timing of a response may be shaped by an
approaching election and the amount of time and effort it takes to
rally international support for economic penalties." Alas, the animosity between the two countries runs so deep that mitigating the populist response may just be a task a tad too impossible for either administration to accomplish.
- Comments: 105
- Reads: 5,900
Guest Post: On The Brink Of An Asset Explosion, II
Submitted by Tyler Durden on 04/25/2010 - 11:46Let me start off by saying the market should be correcting. Sentiment has reached ridiculous bullish extremes, the kind of extremes that led to the January /February correction. That correction separated the second leg of the bull from the third. But let’s face it, sentiment has been in this condition for several weeks now and the best we could muster was a minor correction of 30 points on the news the SEC was filing charges against Goldman Sachs for fraud.
We’ve had three opportunities to “sell the news” with the April jobs report and recently with INTC and AAPL earnings. None of them have panned out. The market could use the Greek excuse as a downside catalyst, the same as it did in January. And now Greek short term bonds are tanking as the EU waffles about writing that check in front of the German elections in May. All in all it boils down to the market has had every chance to correct and it has failed to do so. Last month I speculated that we were On the Brink of an Asset Explosion. Well, we may not be on the brink anymore. We may very well be moving into the heart of the explosion right now.
- Comments: 147
- Reads: 15,300
The Upcoming Week In Greece And Europe
Submitted by Tyler Durden on 04/25/2010 - 11:23"Greece will remain in the spotlight. Reportedly, PM Papandreou is planning to appoint a central coordinator for the government’s interactions with the IMF and the European counterparties. According to the FT, highly respected outgoing ECB vice-president Papademos has turned down the offer of the post, which – if confirmed - makes me wonder whether Papademos sees what I see, namely an overwhelming probability that we are indeed heading towards a debt restructuring, and being in the middle of this mess is just not the way he wants to end his fine career. IMF negotiations continue and will presumably pick up pace once Papaconstantinou returns to Athens, but on my schedule they really need to get done around May 6 so that disbursement can take place before May 19. In the European capitals, draft legislation for the loans is likely to be presented in several parliaments this coming week, including in Germany, but no decisions at least for another week or so. The whole thing is moving terribly close to the wire, so one must hope (and assume) that bridging arrangements are being put in place in case something slips." - Erik Nielsen, Goldman Sachs
- Comments: 23
- Reads: 4,321
Was Fabrice Tourre Cheating On His Girlfriend? Are CDOs Really Nothing More Than "Intellectual Masturbation"?
Submitted by Tyler Durden on 04/25/2010 - 00:00Zero Hedge is currently going through the 100 or so pages of just released Goldman emails that disclose in excruciating detail the events from late 2006 to late 2007 occurring in Goldman's mortgage trading business. We will have a lot more to say on this tomorrow, suffice to say that we were pleasantly surprised that C-BASS, which we uncovered recently may be implicated in the Goldman SEC fraud scandal, is again involved. We also feel bad for Harvard and MS Prop, and a little better for Hayman Capital. Stay tuned. In the meantime, we will take a brief detour into the financial yellow pages, as we focus on the curious case of Fabrice Tourre, who once again plays a prominent role in today's email discovery. The first thing that caught our attention is the original "Fab Fab" email, finally reproduced in its entirety. One tangent that may be relevant to gleaning some more insight into the character of the "fabulous" 27 year-old mortgage god, is that at the time he penned his email to girlfriend (#1), then Goldman co-worker, Marine Serres, he was likely also with girlfriend (#2) Fatiha Bouktouche, a Columbia University post Doc, to whom he may have been disclosing proprietary Goldman holdings and trades. Who knows to whom, when or how Fatiha may have leaked insider trades whispered to her by Fabrice, and who knows what CDO trades Marine was pitching to the retarded (and soon to be bankrupt) European banks gobbling up everything Goldman would sell them, structured and originated by her boyfriend.
- Comments: 193
- Reads: 10,630
Jeremy Grantham: This Is Nothing But The Greenspan Legacy's Latest Bubble, America Is Now "Thorougly Expensive"
Submitted by Tyler Durden on 04/24/2010 - 14:59
Yesterday we first posted Jeremy Grantham's latest letter which incidentally is a must read for everyone who still is stupid enough to think this market reflects anything remotely related to fundamentals, when instead all it is pricing in is the money printing Kommendant's daily predisposition to continuing his dollar decimation via ZIRP and shadow QE. Just like all those who are buying Apple at these stratospheric prices are in essence selling life insurance on Steve Jobs (sorry, someone had to say it), all those buying into the market here are betting the Fed is apolitical when it comes to monetary policy decisions: a proposition so naive and ludicrous, it is not surprising that only the momos continue to buy into the rally, which is driven purely by Primary Dealers recycling money they lend to the treasury which in turn is repoed back by the Fed, so that the banks can buy 100x P/E risky stocks with the same money used to keep the treasury curve diagonal. This is nothing but Fed-sponsored monetary pornography at its NC-17 best. Of course, those who grasp it are few and far between, while the rest of the population is ignorant in its hopes that S&P 1,500 is just over the horizon, without a resultant crash back to 0 on the other side of the bubble. So for all those who are still confused (this means you Kommendant Bernanke) here is a 6 minute clip in which Grantham tells it just the way it is: there is nothing more to this rally that free money and banks' last ditch attempt to lock in another year of record bonuses before it all goes to shit. And the implication - play with the big boys at your own peril. "Bubbles are when you should cash in your "career risk units" and do something brave to protect the investors. There is nothing more dangerous and damaging to the economy than a
great asset bubble that breaks, and this is something that the Fed
never seems to get. Under Greenspan's incredible leadership he managed to give us the
tech bubble, and by keeping interest rates at negative levels for three
years drove up the housing bubble, and finally the risk bubble. And
Bernanke has happily picked up the mantle, and seems totally
unconcerned about creating yet another bubble. He has interest rates so
low banks can't possible not make a fortune. Savers are being
penalized, anyone who wants to buy cash faces a painful experience, and
so we are all tempted into speculating, which is apparently what he
wants and we've just had one of the great speculative rallies in
history, second only to 1932-33."
- Comments: 201
- Reads: 21,561
From The Rumor Bag: The Dangerous Politics Behind The Greek IMF Bailout And Why A Government Collapse May Be Imminent
Submitted by Tyler Durden on 04/24/2010 - 14:26Has G-Pap chosen the US and the IMF, over a no-strings attached, no austerity package, provided by Russia and China? "The person alleging this information was supposedly involved in the actual meetings in which these decisions were made. If this turns out to be true, and makes headlines, expect serious social unrest and possibly the Greek government to fall in short order."
- Comments: 122
- Reads: 15,006
Net Speculative E-Mini Contracts Hit Greatest Short Exposure Since Lehman Failure
Submitted by Tyler Durden on 04/24/2010 - 14:07
A few weeks ago we indicated that the S&P Large contracts surged in the week ended March 23by the biggest amount since the March 2009 lows (which incidentally was followed up by the latest phase of the most ridiculous market melt up since 1932), observing the capitulation phase of the melt up. So it is interesting to point out that non-commercial speculative positions in the just as relevant E-Mini contracts hit the greatest short exposure since the collapse of Lehman, declining to -51,180 in the week ended April 20th. The last time we were negative by such an amount was in November 2008, when the market was plunging daily, however then the bias was positive with E-Minis surging all the way to the March inflection point at which point they collapsed once the market started its seemingly endless creep higher. Have we reached another inflection point, with the E-Mini specs, at least, betting there is a market correction upcoming?
- Comments: 39
- Reads: 8,338
