Follow the motions: with Greece imploding once again, and bonds back to 7%+. let's try everything all over again and hope it works this time: IMF is *yawn* sending another team to Greece, Dominque Strauss-Kahn reports, even as Greek PM G-Pap has sent a letter to top officials in Europe and the IMF, requesting talks to discuss the details of a contingency financial support plan for his country. Um, we did that charade last weekend: it worked for 24 hours, just long enough for you to issue $2.1 billion in Bills, which auction by the way bankingnews.gr recently reported was a scam, with half the bids being fake! Well, congrats, but it ain't gonna work any more, as the market has called your half-pregnancy bluff. But that does not stop Greece, and its ex-Goldmanite head of public debt management, from demonstrating just how clueless it is when accessing the capital markets. At least Greece is acknowledging that at this point formal aid request is merely a matter of a few days. We are now convinced that Greece is in fact doing all it can to be allowed to default, yet Germany and Europe are forcing a two tier sovereign debt capital structure, with new guaranteed money becoming the Secured tranche in the Greek balance sheet. Of course this means that any demand for the "Unsecured" portion will disappear as soon as the bailout mechanism is finally activated.
The Treasury has just released the latest TIC data: we will provide a full analysis later, but here are the key observations. Total foreign holdings at the end of February increased by $44.4 billion, however this was not thanks to China. Mainland China sold $11.5 billion in total Treasuries. However, the components of this number were primarily due to ongoing sale/roll off of Bills, which holdings decreased from $58 billion to $42 billion. At the same time Long-Term Chinese UST holdings increased marginally from $831 to $836 billion. Of the top three, Japan barely added to its total UST holdings, which increased from $765 to $769 billion. Just like China, Japan allowed more Bills to be sold/roll off, while adding Long-Term debt, $8.1 billion to be precise.Yet the biggest surprise continues to be the UK, which is certainly the nexus of whatever shell game operation the Federal Reserve has in play in order to stimulate artificial demand for US Treasuries. Note that UK Treasury holdings have literally exploded from $106 billion in October, to more than double, or $231.7 billion in February. This is by and far not just hedge fund additions, and is certainly not merely any offshore operations that China may have in order to acquire USTs under the radar, as that would be a very naive way of avoiding the spotlight.
Cesar Chavez Day And Easter (For Second Week) At Fault For Latest Initial Jobless Claims DisappointmentSubmitted by Tyler Durden on 04/15/2010 - 07:56
Jobless claims missed consensus for the second week in a row, coming it at 484,000, 44k worse than expected, 24k worse than the week before, and the worst since February 20. Of course, the B(L)S has to provide a narrative for why the economy is not performing as expected by the propagandorium: and this week's explanation is hilarious. A Labor Department economist said Thursday that this latest rise can also be pegged to lag effects from the spring holidays including Easter and Cesar Chavez Day, which is celebrated in worker-heavy California. This is now the second week that Easter has gotten blamed for deteriorating economic data. Easter was also blamed for the delay in Greek bonds a few weeks ago (those particular investors now wish they had just slept in through the day they were getting their allocated share). As for initital claims, the four-week moving average, which aims to smooth volatility in the data to help paint a better picture of the underlying trend, also rose for the week ended April 10. The Labor Department said the four-week moving average went up by 7,500 to 457,750 from the previous week's unrevised average of 450,250. Continuing claims also increased by 73,000 to 4,639,000 from the preceding week's revised level of 4,566,000. And while Extended Benefits declined by 99,716, Emergency claims increased by 261,817 to 5.855 million.
- Bond-fund fraud suits leaves auditor speechless: PwC joins the E&Y in the incompetent lineup (Bloomberg)
- Goldman director in probe: prosecutors examine trades by Galleon in bank's shares as investigation widens (WSJ)
- The rumors were spot on: Chinese economy grows 11.9%, highlighting threat of overheating (Bloomberg, Reuters)
- New Basel restrictions blasted by banks who thing 100x leverage is perfectly acceptable, anything less and the "client" will suffer (Bloomberg)
- More bad news out of PIIG land: Greece may cancel bond issue - "Athens now hopes to raise "up to $1 billion to $4 billion," compared with $5 billion $10 billion previously." (WSJ)
- We need a Blankfein amendment (DealBook)
- Behavioral economics—the governing theory of Obama’s nanny state (The Weekly Standard)
RANsquawk 15th April Morning Briefing - Stocks, Bonds, FX
RealtyTrac reports the next catalyst that will surely take the Dow to 12,000 by 9:31 am tomorrow. "Foreclosure filings were reported on 367,056 properties in March, an increase of nearly 19 percent from the previous month, an increase of nearly 8 percent from March 2009 and the highest monthly total since RealtyTrac began issuing its report in January 2005." And people were wondering where consumers get all their money from. Of course, those foreclosed upon have likely figured out ways to continue squatting in their house so they dont have to pay mortgage and rent. Nothing beats living for free in America, especially in a 2,000 sq. foot average home. We can't wait to hear Jamie Dimon's rebuttal on how this data massively misrepresents the optimism that JP Morgan is seeing everywhere, and how the JP Morgan unicorn ranchis about to issue a royal smackdown on those speculative traitors over at RealtyTrac who, unlike JPM, dare to speak the truth.
The Fib retracement from the highs to the lows in the cycle is now nearly 61.8 (at 1,228). The retracement from the highs to the lows in the first wave of the Great Depression peaked just below 61.8. Does history repeat itself, or come in tidy little Fibonacci packages? Are today's math Ph.D.'s even aware of retracements, or do they just know how to buy, buy, buy on ever declining volume?1,228 is the magical number on the S&P. We'll find out soon enough.
Guest Post: The Aftermath Of The Kyrgyz Revolution - The Lesser Players (Part Two Of A Three Part Series)Submitted by Tyler Durden on 04/14/2010 - 21:19
The recent unrest in Kyrgyzstan has largely been portrayed as an epic clash between U.S. and Russian interests.
That said, interest in events in Bishkek extend far beyond Kyrgyzstan throughout the regional and one should expect the following voices to add their concerns as the situation evolves. While largely overlooked by media coverage, their influence could be a significant factor in both interim and long-term solutions that emerge to Kyrgyzstan’s recent upheavals.
Perspectives From The West Bank: "Israel Is Definitely Planning A Strike On Iran, Which I'm Told May Happen This Summer"Submitted by Tyler Durden on 04/14/2010 - 18:39
I can assure you of two things. Israel is definitely planning a strike on Iran, which I’m told may happen this Summer. The country has been having large simulated chemical attack drills, and even my small town has had its own drills (which I’m sure were ordered from above). Number 2 is that I am also hearing that Israel will not attack w/o the OK of the US. Israel needs to fly over Iraq to reach Iran, and it can’t do this w/o US attack codes. I’m not sure what the solution is, but, as someone once said – “a Jew who does not believe in miracles is not a realist.” - Chashmonaim, Israel (West Bank)
Dylan Ratigan and the Story Pirates have dumbed down the biggest generational theft in US history to the level where a Sesame Street fan can get it... Or is that a master ES trader with laser precision liquidity withdrawal reflexes? Anyway, it is somewhat sad to witness the transition of America from at least a passably respectable nation to one in which it is made plainly obvious to children, that to succeed in life one must cheat, lie and steal with the best of the the bankers.
The Great Lehman Derivative Robbery: From A Tipster; Lehman May Have Grounds To Sue Goldman And Barclays For Fraudulent TransfersSubmitted by Tyler Durden on 04/14/2010 - 17:27
Earlier today we posted the unredacted version of the 5th volume of the Lehman Examiner report, which unhid all the specifics of the unwind related to Lehman's options and futures positions. There was a reason why Goldman et al felt sufficiently motivated to make the data hidden in the first place. The reason: the banks participating in the liquidation made a killing on the unwind. Yet another involuntary gift from the Lehman creditor estate to the big banks who had the inside scoop on Lehman's books all along, and certainly in the days just before the bankruptcy was announced. The market continues to be one for the banks, and one for "everyone else." And "everyone else" still can not borrow at the Discount Window. Although we are confident that that may change soon. At least in the meantime, Anton Valukas scores one for honesty and transparency, and "concludes that an argument can be made that the transfers at issue were fraudulent." Which means Goldman can likely be sued for ripping off Lehman.
Spreads were broadly tighter today with HY outperforming IG as equities got a boost from retail sales, Bernanke's low-and-long comments, and Beige book headlines. JPM's earnings (along with CSX's beat and INTC's smash) also helped as financials outperformed in equity and credit. The psychological break of several critical levels in equity and credit indices seems relevant for the moment (despite the survivorship bias inherent in these long-run indices reducing the real worth) but there was no arguing with the breadth today as tighteners outpaced wideners by over 8-to-1.
Zero Hedge is happy to announce we are starting a daily Oil market summary, generously provided by FMX Connect. We will vary the content as appropriate with an eye toward actionable information for active traders and managers. FMX Connect is a Commodity Information Portal that provides traders with data and analysis of various markets. They also host and publish research for boutique firms like Cameron Hanover, whose principals have 30 years experience in markets.
Paedophilia is a great scandal. The fact that it involves Catholic priests is an even greater scandal. Especially for a devout Catholic, this pain is like few others. It is good thing that it is coming to light. It would be worse if we allowed such a cancer to slowly consume souls and let it pollute and destroy the structure of relations of the Church from within. No one could find a better pretext to attack the Catholic Church than this. We saw this recently in the wanton attacks against the Pope that culminated in the obviously ones-sidedness of an article by Laurie Goodstein published in the New York Times. Paradoxically, the Pope, who recently called for zero tolerance in cases of paedophilia, was targeted more than ever and more than others. Various Vatican media outlets have already described who did what, refuting charges against the Pope. But even the Wall Street Journal in an editorial challenged the defamation of the Pope by the New York Times article.
Notwithstanding the lies, there are some disturbing coincidences. Why so many accusations (some going back 40 years) appeared all at once in various countries around the world? This is a peculiar coincidence, but there are others, far more complex, that lead to a somewhat more disquieting picture.
Dallas Fed Has Requested A Rise In Discount Rate To 100 Bps, Fisher Joins Hoenig Asking For Drop Of "Extended/Exceptional" LanguageSubmitted by Tyler Durden on 04/14/2010 - 16:26
It appears the Fed meeting on the Discount Rate that was held last week behind closed doors is about to yield results. In a Q&A with reporters following a luncheon sponsored by the Levy Economics Institute, Dallas Fed's Richard Fisher said that "his Bank's board of directors recently requested an increase
in the primary credit rate. The request was made out of a
desire "to normalize" the spread. "We would like to get it back to 100"
basis points."According to Market News, Fisher "also told reporters he opposes the Federal Open Market
Committee's continual assertions that it expects the federal funds rate
to stay 'exceptionally low ... for an extended period.'"Furthermore, when discussing the steepness of the curve, Fisher hit the nail on the head: the curve is record steep due to a "limping" economic recovery (at record underemployment and an inventory restocking based GDP boost, we wait with baited breath to see just where this recovery is), but mostly due to record treasury supply. And because auctions have not busted yet, banks, whose PDs bid for these very auctions, especially on the short end, help to create a record steep curve, thus allowing them to borrow at zero costs and lend (assuming there is anyone out there who actually wants to borrow) at whatever rates they choose, thus guaranteeing themselves record profits for so long as the US continues to issue an average of $10 billion in debt a day! If you see this as a perverted Catch 22, you are not alone. The only one getting raped in all of this, has always been, and continues to be, the US middle class. At some point, the debasement to the dollar which all this printing results in, will catch up with consumers, but by then all the wealth in NPV terms will have long been transferred to the banks, their shareholders, and their managements.