Daily Highlights: 3.16.10

• Asia stocks rise on speculation Bank of Japan will ease policy.
• Builders in Feb probably broke ground on the fewest U.S. homes since October.
• China plans to keep its foreign trade policies, including the yuan exchange rate, stable.
• China, Japan reduce holdings of US Treasury debt as global demand wanes.
• China plans to keep its foreign trade policies, including the yuan exchange rate, stable.
• Continental Airlines Inc. will start charging for food for economy-class

China Retaliates: Ministry Of Commerce Says US Should Not Seek To Boost Exports By Forcing Others To Appreciate Their Currencies

Well that didn't take long. China just escalated the verbal quarrel with D.C. by retaliating right back. The Chinese Ministry of Commerce stated earlier that the "US should not seek to boost its exports by forcing other countries to appreciate their currencies." The spokesman for the Chinese Ministry of Commerce Yao Jian also told reporters that the US shouldn't be seeking to "develop its own economy" by forcing other countries to strengthen their currencies. We are holding out breath to see what China's reaction is when Geithner forwards them the petition signed by 130 very much erudite congressmen demanding that Beijing float the CNY immediately (or else America will be more than happy tolive with a 7% 30 year mortgage).

Guest Post: The CDOs That Destroyed AIG: The Big Short Doesn't Quite Reveal What They Knew And When They Knew It

It's been eighteen months since AIG collapsed, and Congress has yet to seriously focus on the most important questions: What did they know and when did they know it? "What" refers to the fatal flaws in the collateralized debt obligations, or CDOs, that AIG insured. "They" are the bankers that structured and sold the CDOs, plus the AIG executives who took on the credit risk, plus the rating agencies that handed out AAA ratings. "When" harkens back to 2005 and 2006, when those toxic CDOs were first issued.

Senator Kaufman Makes A Stand Against The Criminality Exposed By The Lehman Examiner Report, Questions The Core Principles Of US Democracy

Only a few days have passed since its release, and already the Mainstream Media has forgotten all about the Lehman Examiner Report, with barely an occasional mention. As the CJR points out, this unquestionably massive story of corruption and vice, is being covered up by powered interests controlling all the major news outlets, because just like in the Galleon case, the stench goes not only to the top, (in this case the New York Fed and the SEC), but very likely to various corporations that have vested interests in the conglomerates controlling America's key media organizations. One person, however, who refuses to let it go, is Senator Ted Kaufman, whose determined support for an overhaul of market structure we have followed over the past year. The Senator now moves on to yet another pressing issue: the disclosures of unprecedented impropriety conducted by virtually every person of responsibility within the Lehman organization, as well as associated firms like Ernst & Young, and regulators who were asleep at the wheel during the moment of greatest stress for the American financial system. Kaufman calls for a "a thorough investigation, both civil and criminal, to identify every last person who had knowledge that Lehman was misleading the public about its troubled balance sheet – and that means everyone from the Lehman executives, to its board of directors, to its accounting firm, Ernst & Young. Moreover, if the foreign bank counterparties who purchased the now infamous "Repo 105s" were complicit in the scheme, they should be held accountable as well." Zero Hedge sides with Senator Kaufman in this new endeavor (we have yet to see even one other member of Congress or the Senate stand up and voice their opposition to Lehman's criminal conduct). As Kaufman wisely points out: "I’m concerned that the revelations about Lehman Brothers are just the tip of the iceberg. We have no reason to believe that the conduct detailed last week is somehow isolated or unique. Indeed, this sort of behavior is hardly novel." We look forward to obtaining even more raw data on improprieties conducted by other financial firms, and we hold our breath until we can finally get a glimpse at the heart of that most corrupt and secretive organization of all - the US Federal Reserve.

130 Congressmen Join Paul Krugman's Campaign To Rid The World Of Chinese CNY Manipulation Once And For All, Consequences Be Damned

By now everyone has undoubtedly been reading reams of primary and secondary opinions based on Krugman's discussion that it is time to play hardball with China on the FX "manipulation" issue. Retaliatory implications aside (and we are confident China will be full of these) it was ironic that one commentator on CNBC today pointed out that since the CNY is pegged to the USD, shouldn't America be looking at itself first when it comes to currency manipulation, before blaming others. In essence, China is merely taking advantage of the exploding US balance sheet, and adding on top of it its own fiat printing largesse, yet offset by its positive trading surplus. Certainly, Bernanke should have thought of that before it set off on the greatest experiment of failed Keynesianism ever. But now that China has served its purpose and was the economic rebound leader for the past year, it may no longer be as needed. No matter the logic though. The people have spoken and they want CNY blood (or the inverse as the case may be -what is that: lymph?). And not just the people. We have just received a copy of a letter signed by 130 Congressmen, and sent to Tim Geithner and Gary Locke, urging the Treasury to immediately address the "growing problems associated with China's continued currency manipulation" and in essence serving as a springboard to the latent protectionism brewing between China and the US, but never really escalating into all out trade war.

Major Push To Again Close Above 1,150 Leads To Total Break With EURJPY Correlation

The traditional correlation between the S&P and its key leading indicator the EUR-JPY pair just went out of the window, as the market just hit the nitrous with the 3:30pm buying programs.As always, must. close. above. 1,150... or else it is a quadruple top, whatever the hell that is.