• Tim Knight from...
    09/01/2014 - 12:24
    Although I never thought it was possible, it makes me angry to write this book review. I'm not angry because I don't like the book. On the contrary, this is the best economics book I've ever...

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Weiner Is Leaking On Live TV As Congressman Admits Tearfully He Got Caught

Watch the pathetic confession from the congressman live here. Nonetheless, a very "regretful" Wiener refuses to step down.



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Handelsblatt Reports Second Greek Bailout Package To Be Delayed

It seems that Europe once again shot its last bullet a few days too early (to use a more polite phrasing than the alternative) with the announcement from last week that the Greek bailout was a done deal. As we speculated, various complications will soon emerge for anyone who cares to read the fine print in the bond indentures which preclude the imposition of Collective Action Clauses, thereby making an enforcement of a "voluntary" maturity extension problematic if anything. Below we present an article that appeared in Handelsblatt in the last hour, which indicates that opposition to the rescue has emerged not only from Slovakia, but from the UK as well. The English is about as garbled as possible thanks to Google translate, but oddly enough far more understandable than the periodic soundbites of outright lies from the pathological troica of Rehn-Junker-Trichet.



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ES Substantially Underperforms Broader Risk As Scramble Into Defensives Returns 4% in 3 Weeks For "QE Unwind" Basket

Comparing ES to the broader RISK basket discussed extensively previously, it appears that following several days of decoupling of the S&P contract to broader risk, today we saw the opposite, when around 1 pm the two series diverged and never looked back. The selling pressure was certainly focused on stocks, led by financials and energy stocks. The shift to defensives is becoming palpable: following our pair trade advice to retrench into consumer staples and utilities while shorting discretionary and industrials (better known as the QE Unwind trade) would have returned almost 4% since inception on May 16.



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S&P Technicals Update: Next Support At 1241

Now that both the early April swing support of 1283.75, which also happens to be the 150 DMA, have been taken out, the next support in the market is the 200 DMA, which is also the post-Fukushima March lows. A breach of that level would mean the market goes negative for the year. As a reminder: the next 30 minutes are NYSE circuit breaker coffee break time.



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Juncker Says Euro Overvalued, As G-Pap Willing To Consider Referendum On Bailout Measures

It appears Jean-Claude Jun(c)ker has been sniffing hallucinogenic Spanish cucumbers again:

  • JUNCKER SAYS EURO OVERVALUED VS OTHER MAJOR CURRENCIES
  • JUNCKER SAYS EURO AREA SHOULD HAVE EXCHANGE-RATE POLICY

The tautological question of whether he is lying we leave to the logicians. What is apparent is that Europe is finally getting pissed they are dead last in the FX race to the bottom. Cue Tim Geithner's strong dollar policy.

And in far more important news, Greece's G-Pap says that he is willing to consider a referendum on the Greek bailout measures. If so, it's goodbye EUR: a referendum has a snowball's chance in a Comcast business channel in passing.



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Google Trends: "QE3"

Presented without commentary (well, we'll say one thing: for QE3 to work, it would have to be a surprise... so much for that).



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With A 3 Week Delay, Deutsche Bank Discovers That Q2 GDP Will Collapse Following Plunge In Car Production

Nearly three weeks ago, on May 17, Zero Hedge, when analyzing the complete collapse in car and thus Industrial production made the following observations: "The immediate impact: the drop in the industrial production already
seen, but the bulk of it due to delayed aftereffects will likely impact
the May number, as the follow through from the Japanese supply chain
halt starts ringing a loud alarm bell across Wall Street. Of course,
this is another thing that all those calling for a 4% H2 GDP could have
absolutely not foreseen (and in fact it was originally supposed to be
positive for the economy, eh Deutsche Bank?). Expect to see drastic
downward cuts to May Industrial Production and next, to Q2 GDP.
" Fast forward to today, when, in an example of poetic irony, none other than Deutsche Bank's grossly overpaid economists also known as Shaman witchdoctors in less than polite circles, have just come out with a note titled: "Quantifying the impact of autos on Q2 real GDP" in which they, gasp, discover that "a near 30% decline in motor vehicle production is consistent with roughly a two full percentage point drag on Q2 real GDP. In our forecast, we are assuming a decline of around 1.5% because we think that we might see a small bounce in June production that will push the quarterly decline in motor vehicle production to something closer to -20%." Well, better late and always cluelessly wrong, than never... and still cluelessly wrong.



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Tim Geithner's Remarks To The International Monetary Conference On Systemic Risk

Amid the usual meandering propaganda, Tim Geithner finally catches up to Zero Hedge from February 2010: "The three largest U.S. banks account for 32 percent of total banking assets in the United States, in comparison to 46 percent for the three largest in Japan, 58 percent in Canada, 63 percent in the UK, 65 percent in France, 70 percent in Germany, 71 percent in Italy, and 76 percent in Switzerland. And total banking assets are 461 percent of GDP in the UK, 178 percent in Germany, and 820 percent in Switzerland." Supposedly this is intended to indicate just how much less concentrated the US banking system is compared to other nations: "Some argue that the U.S. financial system is too concentrated, which could promote systemic risks.  But the U.S. banking system today is less concentrated than that of any other major economy.  And
total banking assets in the United States today are only about the size
of U.S. GDP – much lower than in other developed economies." So just because the entire system is broken beyond repair, it makes sense to tout that the US is broken just a little bit less than everyone else? Also, where is the mention of the fact that the bulk of these balance sheets are chock full of toxic US securitized detritus and that without the US selling its worthless crap around the world, we would not be in the predicament we are in now. In the meantime, here is what Zero Hedge presented in February of last year...



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Ron Paul On Holding The President Accountable On Libya

Last week, more than 70 days after President Obama sent our military to attack Libya without a congressional declaration of war, the House of Representatives finally voted on two resolutions attempting to rein in the president. This debate was long overdue, as polls show Americans increasingly are frustrated by congressional inaction. According to a CNN poll last week, 55 percent of the American people believe that Congress, not the president, should have the final authority to decide whether the U.S. should continue its military mission in Libya. Yet for more than 70 days Congress has ignored its constitutional obligations and allowed the president to usurp its authority....I believe these resolutions and amendments indicate that the tide is turning in the right direction. I am confident we will see Congress move toward ending our unconstitutional wars. The American people are demanding no less. The president's attack on Libya was unconstitutional and thus unlawful. This policy must be reversed.



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John Taylor Says He Is Now Long The USD As Of A Week Ago

John Taylor is again making the media rounds, following last week's CNBC appearance in which his punchline is that next year was going to be "truly miserable", today he was on Bloomberg continuing his thesis of how doom and gloom will be with the US for a long, long time, and that courtesy of no QE3, risk is about to go bidless (he differs with the Zero Hedge outlook only on whether there will be QE 3 or not). His response to what an environment of no fiscal or monetary stimulus (in case it was not clear): it is bullish for the JPY, bullish for the USD, bearish for commodities and bearish for stocks. More importantly, in terms of timing, Taylor says that after being short the dollar, he went long a "week and a half ago" and expects a big upside USD catalyst in the next "3 or 4 days." which he follows up with the cryptic: "Our analysis of the markets has shown that they are very, very dangerous." Another trade that JT has on is a long JPY, short EUR - the reason for the EUR bearishness is that Taylor is very "confused" by the second European bailout. As for his long USd conviction, it is based on his belief that the market appears to believe that QE 3 is coming, and that once it is made clear that there will be no further monetary easing (good luck with that), the dollar will surge, following a slowdown in the economy, and a shortage of dollars.



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Latest Insider Tally: 8 Buys, 111 Sells; Ratio Of Insider Selling To Buying: 69.3x

The good news: this week's insider sales to buys were half of last week's 147x. The bad news: this week's insider selling to buying came at 69.3x. As a reminder, a baseline bearish indication occurs whenever the insider selling surpasses 30x. That it has surpassed that threshold for virtually every week in the past two years seems to continue to be lost on investors. There were 8 insider purchases of S&P 500 stocks for $3.4 million, the bulk of which was in Marshall & Ilsley stock for $1.7 million, while the sales were focused on Heinz, Iron Mountain, Agilent, Broadcom and NetApp, where insiders dumped a total of $86 million.



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Guest Post: Productive Vs. Unproductive: Manufacturing Vs. Financialization

There is so much ideological, quasi-religious fanaticism around "free trade" (there is no such thing as "free trade," there are only various permutations of managed trade) and "industrial policy" (every nation has one, explicit or implicit) that it is difficult to make any sense of the many intertwined issues. Ideological purity is not a substitute for knowledge, any more than a superficial admiration of machines equals actually knowing how to assemble, maintain and repair them. As a background context, we might start by noting that Marx outlined how finance capital comes to dominate industrial capital, as industry comes to depend on the credit extended by the banks/finance capital. The key takeaway: if you don't control the banks, then they will end up dominating industrial capital. In the U.S., we have the worst of both worlds: a dominant financial Elite and various cartels (military-industrial, sickcare, agribusiness, etc.) that have captured what little of the Central State that isn't already beholden to financial capital.



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Is Fukushima's Earless "Nuclear Rabbit" A Harbinger Of The Mutations About To Hit Japan?

This is not good. From the RT clip: "A nuclear rabbit has sparked online panic in Japan. Amateur footage shows an earless mutant rabbit, and the person who made the video claims it was shot just outside the exclusion zone near Japan's crippled Fukushima plant. The clip has given rise to fears the radiation threat in the area is far worse than previously thought. The funny bunny has caused an online frenzy, with predictions that babies in Japan may soon be born with mutations."



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Dealers Flip 50% Of Entire Just Completed "Very Strong" 3 Year Auction Back To Fed's Brian Sack

Last month, the 3 Year bond auction conducted on May 10 was memorable for 3 reasons: it was the auction that breached the US debt ceiling, it priced at 1.000%, and came at the third highest Bid To Cover in history, despite a decline in Indirect participation. Basically the auction was a massive success primarily due to the Primary Dealer participation, which took down 51.9% of the entire issue, or $16.6 billion of $32 billion. We predicted, accurately, that "Naturally, none of this due to actual demand, but merely due to Primary
Dealer expectations of a prompt and profitable flip back to Brian Sack... Look for Cusip QM5 to be briskly monetized as soon as the next 3 Year
POMO is announced, when the next POMO schedule is revealed tomorrow at 2
pm
." Well the schedule came and went, and following today's just completed $6.4 billion POMO, we see just why all recent bond auctions continue to price at such phenomenal internals: at today's POMO the On The Run QM5 accounted for 3.189 billion of the entire $6.397 billion, or exactly 50%. This follows the May 24 POMO at which QM5 represented $5.14 billion of the total $6.4 billion. In other words, less than a month later, PDs have flipped out of $8.3 billion, or exactly 50% of the entire Dealer allocation at the auction. Basically, had the Dealers not had the backstopped certainty that the Fed would gladly gobble up whatever 3 Years they had for sale, and if heaven forbid, they would be forced to keep $8.3 billion in capital yielding just 1.000% on their books, the auction internals would have been vastly different. But such is life when monetization continues... for another 3 weeks until the POMO barrage ends on June 30. For all those praising the strength of each and every auction, perhaps it would be prudent to wait until July 1 and see just how much interest Dealers have when they don't have the Fed in their back pocket buying up half of the entire auction takedown...



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Muddy Waters' Carson Block Discusses Sino-Forest, Says Will Keep Short In "Ponzi" Until Stock Hits Zero

More color from Muddy Waters' Carson Block on why he believes the now infamous Sino-Forest is a ponzi scheme: "It's a Ponzi scheme in that the company perpetually issues securities in order to fund itself. Even by its own fraudulent numbers, the company does not generate any free cash and has not done so in sixteen years. Were the company be unable to issue additional securities to fund itself, it would collapse. That to me is the definition or epitomizes the definition of a Ponzi. "In this situation, the company appears to be investing for the 23rd century. It's sixteen straight years burning cash, no guidance as to what the rationale is to acquire so many trees so far ahead of customer orders. This is taking a capex fraud--we have found several of these in China--it's taking it to the next level where you're not constrained by the walls of a factory and no one is able to really see the movement of physical goods. It could grow to be infinite provided that the capital markets continue to fund it."



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