Chasing Red Liquidity Herrings
Submitted by Tyler Durden on 01/24/2010 - 19:00In response to the earlier post on Treasury's supply/demand imbalance, a keen reader shares the following insight:"if there are ~16t usd assets in banking per the article and ~1% are in treasuries today that means 9% conversion of assets to treasuries remains....the banks are woefully undercapitalized. 9% of 16t is 1.44t so the banks can't meet the 10% requirement although some will get close....my concern is that the 1t usd sitting in the fed may already be in treasuries and that it is not truly cash - frn...." That would be very ungood.
- Comments: 36
- Reads: 6,540
Guest Post: Bernanke Nomination By The Numbers And What Saves Him
Submitted by Tyler Durden on 01/24/2010 - 15:38A milestone in Bernanke’s nomination was reached this morning …. the Sunday political talk shows. John McCain came out this morning against Bernanke. So here’s what we know. As of this morning (noon CT, January 24) … Bernanke needs 60 votes to end a filibuster of his nomination (known as cloture). After cloture, he then needs 51 to be reappointed. So, the bogey is 60 for cloture.
- Comments: 114
- Reads: 8,320
Rentec's RIEF Collapses In 2009, Even Firm Admits It May Be Medallion Fodder
Submitted by Tyler Durden on 01/24/2010 - 12:38Rentech's RIEF investors can't be too happy. After underperforming the S&P by about 30%, and seeing AUM in the once fabled quant fund evaporate, they now have to contend with disclosure that there is "no assurance that trading of the Medallion Funds may will not have a negative effect on the trading of RIEF." Luckily for a now-retired Jim Simons (speaking of, what non-extradition countries has the billionaire code-breaker taken to vacationing in these days?), those same RIEF investors sure do seem to have a lot of patience.
- Comments: 10
- Reads: 5,059
Reader Submission: Letter To Senator Schumer "A Vote For Ben B. Is A Vote Against You"
Submitted by Tyler Durden on 01/24/2010 - 11:58I have never voted Against the Democrats in my life, BUT I WILL THIS TIME just like the people of Mass. did last week.
Its your time to stick up for the people of New York State and this country we call home. I will be watching to see what you do for us.
The people of America are to the breaking point and if we snap how long do you think Citi, Bank of America, and Wells Fargo will last if everybody stops paying ther Morgages and Credit Cards.
- Comments: 115
- Reads: 6,306
The $700 Billion U.S. Funding Hole; Desperately Seeking A Very Indiscriminate Treasury Buyer
Submitted by Tyler Durden on 01/24/2010 - 03:15
Economics 101: when supply is greater than demand, prices fall; when supply is $700 billion greater than demand, prices plunge. An in-depth look at the supply-demand mismatch of the 2010 US Treasury market demonstrates that the truth is much worse than you may think, and why Bernanke's first act upon reconfirmation will likely be the announcement of the second part of Quantitative Easing.
- Comments: 198
- Reads: 30,123
Stewart Cremates Cramer (Again)
Submitted by Tyler Durden on 01/24/2010 - 00:06
Fast forward to 7 min 50. At this point what more can be said: Stewart is simply jealous because Cramer draws far more laughs every time the former Goldman Private Wealth Management expert (the kind of wealth where you become a millionaire, if you started of a trillionaire) shows up on TV.
- Comments: 59
- Reads: 12,331
Wall Street Journal On The Systemic Threat Posed By Quants
Submitted by Tyler Durden on 01/23/2010 - 17:13Nearly a year ago, Zero Hedge first brought broad public attention to the nebulous aspects of the dark and dirty underworld of the market, exposing the "second-tier" of privileged market participants, consisting of quant traders, high frequency trading, flash trading, sponsored access, co-location, latency arbitrage, Morgan Stanley's discussed-below PDT operation, and many other topics (check our Glossary for much more). In April, Zero Hedge wrote an open letter to the quant community, pleading for more transparency absent which the eventual result would be "larger, systematic problems at the largest, most sophisticated quant managers." Since April, the impact of market neutral quants has progressively declined, as factors, one after another, have failed, and market neutral indexes are probing multiyear lows (HSKAX). The question of who has stepped in to replace the whales' liquidity provisioning is still unanswered, although the explosion of small, inexperienced 3 man quant shops consisting of a math Ph.D. and two programmers, may be part of the answer. The integration of Goldman within the structure of the NYSE and other exchanges, may be another: at last check, Goldman is still a key component of the NYSE's SLP program, regarding which there is still barely any information, despite promises by NYSE representatives to the contrary (and with Goldman's prop operation potentially terminally crippled, the question of how extensively intertwined prop trading is with liquidity provisioning, will be a major topic going forward). Today, the WSJ's Scott Patterson takes advantage of the recent furor over quants and in extensive article promotes his new book "The Quants" in which "he suggests how this new breed of mathematicians and computer scientists took over much of the financial system—and the damage they inflicted in the 2007 meltdown." We are glad that, after nearly a year of writing about it, the topic of the market systemic threat presented by a small subcommunity of quantitative traders is finally emerging on the mainstream scene.
- Comments: 69
- Reads: 10,279
Guest Post: All About The Cloture Vote
Submitted by Tyler Durden on 01/23/2010 - 16:40It appears that the debate over the reappointment of Bernanke will likely come down to an impending U.S. Senate Cloture vote, barring a further uptick in political pressure on President Obama, who increduously seems to have missed the message of the vast majority of Americans who are opposed to Bernanke's renomination. I'm no Senate parliamentarian but it is important for us to understand some of the subtleties of this matter, some of which I'm sure I haven't thought about but am confident that the ensuing comments from Zero Hedge readers will fill in the blanks and lay out other options.
- Comments: 119
- Reads: 5,939
Global Tactical Asset Allocation - Commodities
Submitted by Tyler Durden on 01/23/2010 - 13:55We conclude the Damien Cleusix series on Tactical Asset Allocation by presenting Damien's thoughts on Commodities. "Global growth (China tightening could take the upper hand given investors obsession with the story…) will be the referee with regard to the timing as continued robust growth could mask some of those dynamics for some time but ultimately we will have a correction to be remembered...Observers have focused too much on what happened to financial markets to explain the rapid slowdown we witnessed in 2008-early 2009... our contention is that even without it, we
would probably have a "commodity price too high" induced mild recession..."
- Comments: 14
- Reads: 4,857
Zero Hedge Proposes John Taylor For The Position Of Chairman Of The Federal Reserve
Submitted by Tyler Durden on 01/23/2010 - 12:48A talking point that has gripped the media in light of the sudden weakness ahead of the Ben Bernanke reconfirmation process, is the question of who should succeed the Fed Chairman, should he fail to obtain the requisite number of votes to continue. Many have said "Ben is bad, but anyone that would come after him would likely be even worse." While this is true for any of the potential successors (Donald Kohn, ex-Morgan Stanley banker Kevin Warsh, community-banker Elizabeth Duke, Daniel Tarullo, or ex-Goldmanite Bill Dudley, and speaking of the New York Fed, where Jeff Immelt is a Class B director: did Jamie Dimon, whose membership expired on December 31, 2009, get the Goldman renewal vote?), this is not an exclusive case. Which is why Zero Hedge proposes the candidacy of Stanford economist, and "Taylor Rule" creator, John Taylor for the post of Chairman of the Federal Reserve.
- Comments: 75
- Reads: 6,209
First Google, Now Goldman360?
Submitted by Tyler Durden on 01/23/2010 - 01:57
Would the nearly two days of "scheduled maintenance" for Goldman 360 include installing some anti-Shanghai IE bugs perchance? Wouldn't it be ironic if the Chinese could sell just-purchased Treauries using a hacked, third party REDI account.
- Comments: 41
- Reads: 5,625
Bernanke Reconfirmation Odds Plunge From Near-Certainty To 78%
Submitted by Tyler Durden on 01/23/2010 - 01:35InTrade's latest market on Bernanke reconfirmation is 77.5x79, better bid, with some serious bid interest below 72. There is a size seller at 85. Yesterday, the market closed at 93, and was at 95 since the contract inception. The question is if Harry Reid's last minute endorsement will push the odds higher yet again. However, things are not so certain: Democrats have a busy agenda for next week - they have to make a vote on America's bankruptcy first (the whole $1.9 trillion debt ceiling extension), and then there is the whole state of the union address... And the real question - when will Proshares and BlackRock start selling a qunituple leveraged ETF that will decay 99% by the time it hits Cede & Co.
- Comments: 40
- Reads: 3,629
The Volcker Revolution - Providing Some Much Needed Answers
Submitted by Tyler Durden on 01/23/2010 - 01:11While many pundits will obsess over the markets' gyration in this past week, and make it into a major headline in the quest for eyeballs, the truth is that the S&P turning negative for the year was merely a sideshow (the next real market crash will be much more memorable). No - the real story was the advent of Paul Volcker to his rightful place on the, well, right of President Obama, coupled with the now imminent departure of Geithner and Summers, and the massive question mark that now hangs over Goldman Sachs. Who could have believed that the implications of one Senatorial election could be so profound, yet that is precisely the stuff black swans are made of. The new regime is here, and like it or not, it brings with it a new framework of variables. Yet shifting from the past and looking at the future, the question now becomes what should investors focus on? Just who is this Paul Volcker who will now be the President's seemingly primary economic advisor, and more importantly, what will his policies be like? Luckily, an extensive blueprint already exists, and Zero Hedge readers should be quite familiar with it by now.
- Comments: 96
- Reads: 10,581
Guest Post: Counterfeit Gold
Submitted by Tyler Durden on 01/23/2010 - 00:07Precious metals are going to be attractive to con artists, just like anything else of real value. No question about it. But there are some decent safeguards already built into the system. If you supplement them with your own knowledge and common sense, it shouldn’t be difficult to avoid becoming a victim. And for goodness sake, look after your own interests and don’t fret about what’s in Fort Knox. If it truly is full of tungsten, so much the better for your own holdings.
- Comments: 82
- Reads: 9,500
Tim Geithner's "Financial Crisis" Declassified Phone Log Released
Submitted by Tyler Durden on 01/22/2010 - 20:25Politico has obtained the phone log of conversations performed by then FRBNY President Tim Geithner during the period of the financial crisis, or specifically September 14, 2008 through the end of the year. Some of the people called include (many of them repeatedly) pretty much all the usual suspects... And who is mysterious ex-Goldmanite Dan Jester and why was he, together with another ex-Goldmanite, Hank Paulson, the first two people called the day Lehman filed?
- Comments: 134
- Reads: 11,584
