• Bruno de Landevoisin
    09/21/2014 - 14:52
    Dear Janet; If I may be so forward, as a concerned citizen of the Constitutional Republic of the United States, it is with great consternation that I feel compelled to write you this distressing...

Tyler Durden's picture

Guest Post: Q2 Economic Contraction Highly Probable

Recently I have been discussing the possibility that the US economy is in fact in a period of contraction. I want to revisit that call as I don't loosely throw out such a statement without backing it up with real data. Q1 2011 GDP was 1.77%, a 43% reduction in Q4 2010 GDP of 3.11%. Although Q1 GDP could be revised higher over the next two revisions it did highlight three sources of contraction. Initial data for April has further supported potential economic contraction with four regional Fed manufacturing surveys showing a sharp reduction in growth, near outright contraction in ISM Services, a very sharp increase in weekly unemployment claims and a deteriorating trade deficit.



Tyler Durden's picture

A Look At Key Global Events In The Upcoming Week

Last week’s flow of cyclical data was broadly encouraging. However, cyclical currencies traded weak against the USD. In addition, the Greece situation stood at the forefront of market attention. This week will offer us more on that front with the Ecofin/Eurogroup meetings on Monday. Other than that, we have important cyclical data this week with the Philly Fed on Thursday standing out as the key forward-looking indicator. It will also be interesting to watch trends in initial claims, which has been volatile recently. Finally, Fed Chairman Dudley’s speech will be interesting to follow, together with FOMC minutes.



Tyler Durden's picture

Goldman On The EUR Long/USD Short Rout

A week ago, when we looked at the CFTC's Commitment of Trader data (for speculative exposure), we noticed that EUR long spec positions surged to multi-year highs. We said: "As a result of this surge in exposure, we have seen a one way trade as the specs exit the trade en masse." Sure enough, a week later, the EURUSD (and other EUR crosses) continues to tumble and appears poised to take out the 1.40 level. Today, Goldman's FX team led by Thomas Stolper who appears will not disappoint once again and will be closed out on his EURUSD trade at a loss, looks at the COT data and extrapolates the same rout in EUR longs we predicted, as well as a large $ short position. Of course, this is what we said on Friday, with the caveat that the marginal move has already been completed "and from this point on it will be just the retails, the momos and the robots" if the EUR is to continue dropping.



Tyler Durden's picture

Strauss-Kahn Does Not Have Diplomatic Immunity

To all those who thought, himself probably included, that DSK would get away scott free from his most recent rape incident (as opposed to the metaphorical rape that the IMF has exercised over the decades over insolvent creditor nations), the Telegraph has one word: wrong. "Dominique Strauss-Kahn was told he does not have diplomatic immunity from prosecution against charges including alleged rape, said Paul Browne, an NYPD spokesman."



Tyler Durden's picture

NIA Releases The "College Conspiracy" Video, Or Why The College Bubble Is Next To Pop

NIA's long anticipated "College Conspiracy", or "why the college bubble is next to burst" video by the NIA is finally out.



Tyler Durden's picture

Guest Post: The Global Economy Burns, While its Leaders Fiddle

All around the world, the bodies and countries with the most power keep screwing people (some like IMF head, Dominique Strauss-Kahn, literally) and entire nations, while supporting their banking systems. Last week, S&P announced it would downgrade Portugal if it didn’t play ball with the IMF and EU over its 4-year 78E billion-bailout program in return for hacking public programs. Echoing our own Congressional goons spewing spending cuts in the face of inadequate revenues and for-bank-manufactured mega-debt, the S&P noted, “Two-thirds of the projected savings in [Portugal’s] 2012 budget will likely come from spending cuts.” On a roll, the IMF also declared Italy needs ‘structural reform’, meaning labor market reform, less public ownership and more private investment to “unlock its growth potential.” (aka invite more speculative capital at its earliest convenience.) Meanwhile, thousands of people are again striking in Greece, as the IMF and EU discuss more austerity measures, following the bank bailout that provoked public outrage a year ago, and a rating downgrade by S&P. The EU remains more concerned with investors regaining confidence in Greece than economic stability of its citizens. Then, there’s Ireland, for whom its last bailout didn’t dent its 14.5% unemployment rate, or fill in the gaping holes its banks dug. In short, the global ‘remedy’ for depressed economies and debt-bloated banking sectors remains to do – more of the same - and pretend this will beget a different outcome. Yet, there is no way this strategy will result in more stable economies. What we can expect instead is further widespread deterioration.



Tyler Durden's picture

Emergency IMF Meeting To Begin As Strauss-Kahn Retains High Profile Attorney

As was previously reported by the WSJ, "The IMF is considering holding a board meeting at 5 p.m. Sunday to discuss how to proceed, but isn't expected to come to a decision. Rather the board and staff members are in the midst of conference calls and informal discussions to try to figure out what steps to take next. It's unlikely that Mr. Strauss-Kahn can represent the institution during meetings while dealing with arrest and legal issues, at least over the next week, said officials. An IMF spokesman declined comment." We expect lots of headlines over the next several hours as an unstoppable European default meets an unmovable chaos. In the meantime, we have learned that DSK has retained legal counsel in the form of one Benjamin Brafman, a New York criminal defense attorney. From Wikipedia: "Brafman's profile rose following his winning the acquittal of Sean "P. Diddy" Combs, who was acquitted from his 1999 illegal weapons and bribery charges. The criminal charges stemmed from a nightclub brawl, while accompanied by then-girlfriend Jennifer Lopez  and Combs' usual entourage, and witnessed by over 100 other people. Despite the numerous prosecution witnesses to Combs' culpability, and Combs' fame, Brafman's legal skills produced a unanimous 'not guilty' verdict. Brafman also represented Jay-Z  when the rapper was accused of assaulting record producer Lance "Un" Rivera at New York's Kit Kat club in December 1999. Jay-Z pleaded guilty as part of a deal, and was given three years of probation. In 2002, Jay-Z referenced Brafman in his featured appearance on Cam'ron's "Welcome to New York City". On November 30, 2008, Brafman was hired to represent NFL star Plaxico Burress who on August 3, 2009 was indicted on two counts of criminal possession of a weapon and one count of reckless endangerment. Burress pleaded guilty to a weapons charge and was sentenced to two years in prison. Brafman represented radio personality Star, who was arrested by hate-crime unit detectives on charges of endangering the welfare of a child, aggravated harassment, criminal possession of a weapon and failure to report a change of address on his gun permit after being tricked into going to a New York police station to surrender his 9 mm handgun. The DJ was later released on $2,000 cash bail."



Tyler Durden's picture

Nakba Violence Escalates As Many Dead On Isreal Borders With Syria, Lebanon And Gaza

Not all headlines today are about the sexual indignities of the IMF head. While the world is eagerly awaiting yet another photo that may or may not be released, in the form of the Dominique Strauss-Kahn mugshot, a surge in violence along Israel's three borders with Syria, Lebanon and Gaza, has left at last 10 dead and dozens wounded as Palestinians marked what they term Nakba, or "the catastrophe" of Israel's founding in 1948. Reuters reports that "Israeli troops shot at protesters in three separate locations to prevent crowds from crossing Israeli frontier lines in the deadliest such confrontation in years. Israeli and Syrian media reports said Israeli gunfire killed four people after dozens of Palestinian refugees infiltrated the Israeli-occupied Golan Heights from Syria, along a disputed border that has been quiet for decades." A subsequent update from Reuters states that "more than 100 people had been wounded in the shooting incident in the border village of Maroun al-Ras." Prime Minister Netanyahu issued a stern warning: "We hope the calm and quiet will quickly return, but let nobody be mistaken, we are determined to defend our borders and sovereignty." Alas, it appears that this latest bout of regional violence will only escalate and that quite rapidly: "In Tel Aviv, Israel's commercial hub, a truck driven by an Arab Israeli slammed into vehicles and pedestrians, killing one man and injuring 17 people." The only remaining wild card at this point is Iran: should Tehran join in, then all bets will be off. Also, CL traders can't hardly wait the arrival of another record vol day as soon as electronic trading opens later in the day.



Tyler Durden's picture

Greek Bailout Money Is In Jeopardy As The IMF's Departing John Lipsky, Former JPM Chief Economist, Is In Temporary Command

It turns out that the meeting that DSK was rushing to (in just a bit of a rush, without his cell phone), was a critical one for the future of Greece. Per the AP: "The arrest of IMF chief Dominique Strauss-Kahn means a key participant
will be missing at a European meeting considering whether to give Greece
billions more in financial help
." Does this mean that all Greek bailout talk is put on hold? As a result the headless (no pun intended) IMF is forced to promote its second in command, John Lipsky, previously chief economist of JP Morgan, to the rank of acting managing director, even as "separately, spokeswoman Caroline Atkinson said the fund remains fully functioning and operational despite the arrest of the fund's chief executive." What is funny is that it was just yesterday that Lipsky announced he was stepping down in August. What happens to the world's pseudo-bailout organization come September, when its top two officers are gone, is anyone's guess.



Tyler Durden's picture

A Shocked France Reacts To The Strauss-Kahn News

A plethora of shocked, shocked, responses, that Strauss-Kahn tried to get away (and off) with it again... Of course, the focus now is on the presidential race which just like that of the US, following the Mike Huckabee announcement, is once again wide open.



Tyler Durden's picture

Update: DSK Now In Police Custody; IMF Head Dragged Off A Plane, Arrested Following Hotel Maid Allegations Of Forced Head

If there was any threat that the IMF would launch an SDR alternative to the USD, it is all over now. According to the NYPost, IMF head Dominique Strauss-Khan (no Bob Pisani, it is not a she) was just arrested on board the first class cabin (thank you taxpayers) of a New York-Paris flight as it was about to take off. And here is where the story gets surreal: "Around noon today, a maid at the hotel knocked on the door of Strauss-Khan’s room. After letting the maid in, Strauss-Khan allegedly threw the maid on the room’s bed and forced her to perform oral sex on him, said police sources. Strauss-Khan let the maid leave — and soon afterward, headed off to Kennedy Airport for his flight to Paris." Of course this will not be the first sexual misconduct for the head of the world's global pseudo bail out organization: as a reminder back in 2008 the IMF hired a law firm to investigate whether its chief had an improper relationship with a female employee, Piroska Nagy. Back then he got off. This time he won't (even though he did... in a way), and it appears that the IMF is about to lose its head, meaning the fate of literally unlimited bailout funding is now up in the air. Also, it appears that being head of major bureaucracy does not automatically mean getting head on an ad hoc, and involuntary basis. Lastly, we are stunned it was not Herman Von Rompuy or G-Pap on the receiving end.

Update: Strauss Khan to be taken to Police Service Area 5 at 221 East 123rd Street



Tyler Durden's picture

Tim Geithner Responds To Druckenmiller With More Fearmongering And "Assured Destruction"

Not even 24 hours after Stanley Druckenmiller said to ignore all threats by the kleptocratic kartel [sic] of a world collapse should the debt ceiling not be hiked, as if on cue the tax-troubled treasury secretary has released another letter, this time to Michael Bennet, D-Colo, in which he rehashes all the usual threats that Hank Paulson pulled out of his sleeve when he presented his 3 page term sheet demanding congress give him unlimited powers to do anything Goldman, er, he saw fit to preserve the banker status quo. Nothing new in the letter, just more of the same: “A default would inflict catastrophic far-reaching damage on our nation’s economy, significantly reducing growth and increasing unemployment...Even a short-term default could cause irrevocable damage to the economy. A default on Treasury debt could lead to concerns about the solvency of the investment and financial institutions that hold Treasury securities in their portfolios, which could cause a run on money market mutual funds and the broader financial system. A default would call into question the status of Treasury securities as a cornerstone of the financial system, potentially squandering this unique role and the economic benefits that come with it." It is sad that the Treasury has succumbed to another bout of fearmongering because as Zero Hedge has been claiming since late 2009, and as Gross and Druckenmiller have recently reaffirmed, the only threat to the "confidence" of the US is if (or more correctly "when") the legislative bodies of the US succumb to this latest round of completely flawed, irresponsible and wrong mutual assured destruction rhetoric, and once again hike the debt target, this time to a total that is about 115% of US GDP.



Tyler Durden's picture

The Complete Overview Of The Setting Economy Of The Land Of The Setting Sun

Increasingly we have come to believe that the real marginal economy over the next several quarters will be neither that of the contracting US, nor that of the rapidly tightening, yet still very much inflationary China, but the (arguably) third largest one: that of Japan. Over the past month we have suggested that in addition to already latent deflationary tendencies, the recent post-earthquake collapse will require a dramatic, and very political intervention in BOJ monetary policies (here and here), in order to avoid a global contraction. Yet as David Koo proposed yesterday, the (infra)structural changes will demand an overhaul so profound that the contraction will be not only severe but likely very extended due to spillover effects into energy commodity demand, thus creating a non-virtuous feedback loop. So for those who are still new to the Japan story, below we present an extended presentation compiled by The Tail Chaser blog which compiles the relevant bits and pieces on the Japanese economy to scare even the most optimistic fan of the land of the setting sun (which certainly is not Dylan Grice who recently suggested that a very possible outcome is a Weimar repeat as the BOJ takes the von Havenstein route to excess debt resolution).



Tyler Durden's picture

Druckenmiller Calls Out The Treasury Ponzi Scheme: "It's Not A Free Market, It's Not A Clean Market", Identifies The Real Bond...

We hadn't heard much from legendary investor Stanley Druckenmiller since last August when he decided to shut down his Duquesne Capital hedge fund. Until today. In a must read interview, the man who took on the Bank of England in 1992 and won, says that he join the camp of Bill Gross et al, making it all too clear that all the recent fearmongering about the lack of a debt ceiling hike by the likes of Tim Geithner, Ben Bernanke and, of course, all of Wall Street, is misplaced, and that the real threat to the country is the continuation of the current profligate pathway of endless spending. From the WSJ: "Mr. Druckenmiller had already recognized that the government had
embarked on a long-term march to financial ruin. So he publicly opposed
the hysterical warnings from financial eminences, similar to those we
hear today. He recalls that then-Secretary of the Treasury Robert Rubin
warned that if the political stand-off forced the government to delay a
debt payment, the Treasury bond market would be impaired for 20 years. "Excuse me? Russia had a real
default and two or three years later they had all-time low interest
rates,
" says Mr. Druckenmiller. In the future, he says, "People aren't
going to wonder whether 20 years ago we delayed an interest payment for
six days. They're going to wonder whether we got our house in order." Which begs the question: if interest rates are so low today, is the market not appreciating the current path of "financial ruin"? And here is where Druckenmiller joins the Grosses and the Granthams of the world. Asked if the future is not so bad judging by today's low bond rates he says, "Complete nonsense. It's not a free market. It's not a clean market." The Federal Reserve is doing much of the buying of Treasury bonds lately through its "quantitative easing" (QE) program, he points out. "The market isn't saying anything about the future. It's saying there's a phony buyer of $19 billion of Treasurys a week." Of course, there is another name for this type of arrangement and so far only Bill Gross has used it: Ponzi Scheme.



Tyler Durden's picture

Weekly Chartology And The Amazing Levitating Corporate Profit Margins

The core topic of this week's chartology (in addition to all the charts that Goldman sees it fit to print), is the amazing never shrinking corporate margin, which continues to hit new all time highs, despite a "tepid economy" and surging input costs. As Goldman's David Kostin points out, it primarily has to do with the ability of companies to gradually pass on costs to consumer, indicating once again that the primary variable in this economy has nothing to do with the jobs picture, or even wage inflation (a key variable that many have said is necessary for inflation to return), but with the ongoing green light by the administration and big banks to allow a substantial number of Americans to live mortgage free (as disclosed previously up to 900 days in the states of New York and New Jersey, a number which actually is 7 years if one considers the backlog in the judicial system, as we will shortly demonstrate), thus removing the primary use of funds for the American household, and allowing a substantial demand price inelasticity for key consumption products such as gasoline, and iPads. As long as the deadbeat rent component in the economy is in the high double digit billions, it will translate in quarter after quarter of surprise margin beats, and latent price increases which for lack of a better word translate into inflation.



Do NOT follow this link or you will be banned from the site!