Ben Bernanke Is Looking Into Goldman "Arrangements With Greece"

"Yes, Senator, I just want to say first of all we are looking into a number of questions relating to Goldman Sachs and other companies and their derivatives arrangements with Greece and this issue as well. As you know credit default swaps are properly used as hedging instruments. The SEC, of course, has been interested in this issue. Obviously using these instruments in a way that potentially destabilizes a company or a country is counterproductive. The SEC will be looking into that. We'll certainly be evaluating what we learn from the activities of the holding companies that we supervise here in the U.S." - Ben Bernanke

Daily Highlights: 2.25.10

• Asian stocks were mostly higher Thursday, lifted by Bernanke's reassurance that interest rates will stay low for some time.
• Euro plunges to lowest level in year against Yen on risks to Greece rating.
• German unemployment rate edges up to 8.7 percent in February.
• India forecasts 8.2% growth next year, giving room for exit from stimulus.
• Japan stocks fall for 3rd day on strong yen; Toyota down despite president's US testimony.
• New home sales plummet 11 percent in January, the 3rd monthly decline in a row.

Guest Post: The Helicopter Departs

The Fed move to raise the discount rate on Feb. 18 has initiated a discussion of the timing of the removal of accommodation. Unfortunately, framing the subject as being relevant to accommodation is a mistake. The implementation of a near zero interest rate policy is just another component of emergency measures used to cure a systemic bank run. The emergency measures need to be viewed completely separate from the setting of a policy rate for economic management purposes. The potential raising of the Fed target rate from near zero to near 1% should not be called a tightening of monetary policy. There exist many harmful side effects of an emergency rate policy.

Goldman Suspends Simon Property Group Rating

Update: Goldman is advising Brookstonefield. Explains it all.

Innocuous... Or something strategic, and Goldman-conflicting, coming down the pipeline? The excuse: "We have suspended our investment rating and price target on Simon Property Group (SPG) because there is not currently a sufficient basis for determining an investment rating or price target for this company. Our previous investment rating and price target are no longer in effect and should not be relied upon." Well that's an odd excuse.

Goldman And JPMorgan SPY Holdings Double Over Prior Quarter, And Other SPDR Observations

Over the past 6 months, much attention has been focused on broker/dealer trading in ETFs, and more specifically, on the SPDR S&P 500 ETF, better known as SPY, which in the absence of material cash volume in intrinsic names, has become the de facto primary way to express a bullish and, to a much smaller degree, bearish bias on stocks. Previous observations by Zero Hedge and elsewhere have demonstrated odd accumulation behavior by major broker-dealers which have been speculated to use precisely this ETF, in order to "push" the market in one direction or another. Having done some micro-level research previously, we decided to analyse SPY patterns from a macro stand point. After compiling SPY holder data for the just completed Q4 2009 quarter, we have observed some very curious trends in SPY accumulation. To wit: in Q4, the 5 major market players saw a dramatic increase in their SPY $ notional holdings: specifically JP Morgan (combining both Asset Management and Private Wealth) jumped by 222%, Goldman Sachs saw a 45% increase, Merrill Lynch SPY holdings increased by 207%, and those of Deutsche Bank: by 256%. During this time Morgan Stanley was relatively flat, while probably the biggest surprise was Credit Suisse, whose holdings dropped by 48%, or nearly 24 million SPY shares, to 26 million in Q4. Keep in mind Credit Suisse had a record 2009 holding of 109 million SPY shares on June 30, 2009: it appears Credit Suisse ETF desk has decided to aggressively offload as many SPY shares as it possible can beginning in Q3, 2009. Altogether, we observe a decidedlypositive correlation between B/D SPY holdings and the performance of the broader market.

Record US Debt Vs. Keynesianism: A Bloomberg Presentation

Bloomberg has released another terrific interactive presentation on the ongoing duel between Keynesian economics and record debt levels (both in the US and in most developed countries). While certainly nothing new to regulars, it does provide a glimpse into the final chapters of the debate between record deficit-fans and what is be ultimate natural trade off - upcoming sovereign defaults on a global scale.

Record Direct Bidder Share And Near Record Direct Take Down Masks Indirect Shrinkage

Don't look now but the Direct Bidders once again saved the just completed 5 year bond auction. Not only was the $13.1 billion direct bid a record by a large margin (the prior record bid was $8.5 billion), not only was 12.8% take down the second highest since June of 2009 (versus an average of 5.6% since June), but the Direct share was a record 11.4% of total total auction (average at 4.5%). This masks the ongoing deterioration in the Indirect bid, which at $22 billion was almost $7 billion lower than the $28.6 billion last month. This is the smallest Indirect bid for a 5 Year since mid 2009, while the 19.1% Indirect share was the lowest since last April, coupled with the lowest Indirect takedown (40.3%) since last July.