As we pointed out yesterday, while the US navy is seriously starting to amass in the Persian Gulf region, it has left the Mediterranean and more importantly, the Libyan coastline unguarded. With concerns that Gaddafi will follow through with what we speculated on Monday was a Saddam-like "after me the flood" act and burn his oil facilities, this may not be the most prudent thing. Luckily, here comes Germany. According to Spiegel, Germany has sent three warships to Libya which may possibly get involved in a "military engagement."
Initial Claims, which were obviously revised higher from 410K to 413K, dropped well below expectations, printing at 391K, on expectations of 405K. With claims continuing to hug the 400K line, this means that unfortunately the economy is not creating nearly enough jobs: as a reminder per the CBO, the US needs to create over 100K jobs a month just to stay in line with population growth. Continuing claims dropped from an (upward) revised 3935K to 3790K, as more and more people hit the 6 month continuing benefits cliff. They also are hitting the end of their 99 week extension period: those on extended benefits dropped by -111,087. That said, with California claims data partially estimated, and all of Massachusetts, Hawaii and Oklahoma data based entirely on the wind, this data has the credibility of an NAR report. And while the employment picture was better than expected, the capital goods data was a total disaster: January US Capital Goods orders non-defense ex. aircraft plunged by -6.9% M/M on expectation of just a -1.0% drop (Prev. 1.4% Rev. 4.3%). And just excluding Transportation, durable goods collapsed by 3.6% on expectations of a 0.5% increase. Time for those downward GDP revisions.
Full initial claims report.
Saudi Arabia, Suddenly Desperate For More Bribe Cash, Says Will Boost Shipments (As If It Has A Choice)Submitted by Tyler Durden on 02/24/2011 - 09:21
That latest entrant to the "whorism" political class, Saudi Arabia, is getting desperate. After yesterday's attempt to prostitute itself out to its people by literally handing out $37 billion in a glaring demonstration that it has never heard the "money can't buy you love" saying, now the FT is reporting that "Saudi Arabia is in “active talks” with European oil companies to meet the production shortfall left by Libya, the clearest indication to date that the leader of the Opec oil cartel is about to boost supplies to stop further rises in the oil price, which surged to near $120 a barrel on Thursday." The FT's commentary is partially correct: "You can only expect the price to go up. It is fear of the unknown. The risks are all to the upside,” one senior oil trader said. "Saudi Arabia needs to respond." It does, but not to fill the gap. Following the latest attempt at recreating Helicopter Ben's monetary policy, Saudi Arabia suddenly finds itself clutching at cash straws.As UBS' Andrew Lees points out: "Saudi's USD37bn bonus to the population equates to USD10.45bbl on its 2009 production of 9.7m bpd. Saudi already needed USD74bbl to balance its budget in 2008. In December last year the talk was that its budget deficit would be 40bn riyals having been 86.5bn riyals the previous year as it spent heavily on salary increases for soldiers. With this increased spending it seems Saudi will need about USD85 - USD95bbl to balance its budget, or it will need to ramp up production by about 10% (more capital spending) without prices falling." Oops. Do you see what happens Larry when a country hands out money it doesn't have? We hope for Saudi's sake that it has some POMO desk interns running things there as effectively as in the US. But until we get some confirmation, we continue to back the truck up with Saudi CDS, a process which started when these were first quoted in the double digits.
Markets sluggish this morning. Kansas City Fed president Thomas Hoenig, an outspoken critic of the Fed, warned yesterday that the central bank’s easy money policy may lead to another financial crisis through increased speculation. The comments came on the same day as the release of President Obama’s optimistic economic report to Congress, which plans on a doubling exports by 2014. Treasury Secretary Timothy Geithner also complimented the current recovery in a separate statement. Mortgage applications rose 13.2% last week after slipping 9.5% the week prior, the lowest since November 2008. Existing home sales grew in January by 2.7% MoM v -1.1%E. The unexpected increase occurred with the lowest median price in almost nine years as the number of foreclosures and short sales reached a twelve month high. Similarly, consensus estimates expect new home sales to decline 7.3% MoM. Look for that release later this morning as an additional metric for the slow recovery in housing.
- Gadhafi Flails as Libya Splinters (WSJ)
- As reported on Zero Hedge two days ago... Libya placed billions of dollars at U.S. banks (Reuters)
- Bullard Is ‘Bellwether’ as Fed Weighs Duration of Asset Buying (BusinessWeek)
- Is Stevie Cohen the Feds' Moby Dick? (Reuters)
- Those delusionary brits...Miles Says BOE Outlook Warrants ‘Very Gradual’ Rate Increase (BusinessWeek)
- Bonuses on Wall Street Declined 8% in 2010, N.Y.'s DiNapoli Says (Bloomberg) The average Wall Street employee took home a cash bonus of $128,530 in 2010
- Fleeing Egyptians Tell of Qaddafi's `Bloodbath' Across Libya (Bloomberg)
- Senator Wyden's Son Starts Hedge Fund After D.E. Shaw Internship (Bloomberg)
- Indian Rally Raises Pressure on Singh (FT)
There are many different kinds of revolution; some more effective than others. Telling the difference between a successful revolution and a failed revolution can be tricky. Often, on the surface, they look exactly the same. The secret is to set aside what we would “like” to see, and be brutally honest about what was actually accomplished in the course of the dissenting action. Has power been fully rescinded by the offending government or regime to the people, or, to yet another corrupt bureaucracy with a slightly different face? Have the puppet strings of corporate globalists been severed from your country, or do they remain strong as ever? Has ANY corrupt official actually been punished for the crimes that led to the insurgency in the first place, or, did they fly off scot-free to their million dollar villas in Ecuador, drinking mojitos in wicker recliners and watching the disaster they created unfold on CNN? Who ultimately benefited from the event?
Brent Touches $120 Overnight After Chinese Oil Facilities In Libya Attacked, Bombay Stock Market PlungesSubmitted by Tyler Durden on 02/24/2011 - 08:20
Global stagflation has moved from knocking gently on the door to pounding with a battering ram. Brent touched just south of $120 overnight, the highest level since the summer of 2008, just before the global economy imploded, after reports circulated that the oil facilities of CNPC, the largest Chinese oil producer, were attacked in Libya. "News of the attack will heighten concerns among oil industry executives that the turmoil in Libya may lead to widespread sabotage of oil facilities and that it would take many months or even years to return the country to full production capacity even if a semblance of peace returns. In a speech earlier this week, Seif al-Islam Gaddafi, the son of Colonel Muammer Gaddafi, warned that in the event of a civil war, Libya’s oil wealth would be “burned”. In a terse announcement, CNPC said it was in the process of evacuating its 391 Chinese employees from the country and had already repatriated 24 of them. Contacted by phone, CNPC confirmed the attack but did not provide details, saying that it was still waiting for the latest news out of Libya." Unfortunately, as we first suggested three days ago, it is now only a matter of time before the Libyan madman decides to set his oilfields on fire in recreation of Saddam's parting gift to Kuwait, as retaliation against the world. In the meantime, US GDP has just lost another $300 billion in 12 hours, wiping out the gains all the gains in the last quarter.
RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 2/22/11
Five People Killed As Protests Shift To North Korea: Government Mobilizes In Preparation For Violent DemonstrationsSubmitted by Tyler Durden on 02/24/2011 - 00:58
Freedom fighter Bernie Bernanke's has just carved another notch in his liberation bed post. With everyone expecting Saudi Arabia to fall next, or even South Korea, following days of consistently unreported bank runs, it is North Korea which takes tonight's gray swan award. From The Chosunilbo: "Hundreds of people clashed with security forces in the North Korean town of Sinuiju on the border with China on Friday, a source in the Stalinist country said Wednesday. The military was deployed to quell the demonstration, leaving some protesters wounded. The source said police officers cracking down on traders in a market in
Sinuiju after the public holidays marking leader Kim Jong-il's birthday
beat one of them unconscious. The victim's family protested and many
other traders went along to support them. When it looked as though other people might join the traders, security
agents and military troops moved in. Rumor has it that four or five
people were killed in the resulting clashes, but no details of civilian
casualties are known." So how much are those North Korea CDS again? And how much longer does China think it can suppress its own 1.3 billion-strong tsunami?
And so the scramble to buy people's love and undying affection moves beyond the Casual Encounters section on Craigslist. After Helicopter Ben and Teleprompter Barack came up with the brilliant plan to give $2,000 to every underwater homeowner, Saudi Arabia blows everyone out of the water with the biggest social whoring attempt to date. "King Abdullah of Saudi Arabia announced financial support measures, worth an estimated SR135bn ($36bn), in a bid to avert the kind of popular unrest that has toppled leaders across the region and is now closing in on Libya’s Muammer Gaddafi. The measures include a 15 per cent salary rise for public employees to offset inflation, reprieves for imprisoned debtors, and financial aid for students and the unemployed." Unfortunately for Saudi, Bahrain tried this and failed. Also, once you start down this path, there is no turning back, as people demand more and more. Just how many printing presses does Saudi Arabia have? At least we now know that the political system that follows capitalism after its violent end is always and everywhere whorism, in those brief moments before total anarchy takes over and the inevitable systemic reset button is finally pushed.
“Conman” is a term for Confidence Man – in his usual role, the con man does something to gain someone’s trust or confidence and then when the person is least expecting it, the con man steals some form of wealth from the unsuspecting victim. The greatest long cons to come out of Hollywood naturally include the 1973 Oscar winning “The Sting” featuring a young Robert Redford and Paul Newman, as well as the 1988 hit “Dirty Rotten Scoundrels” supported by Steve Martin & Michael Caine. Unfortunately for the World, today we are also experiencing another long con and it’s in the bond market. This is a very dangerous con and the victims have no idea it is occurring.
Socialism Gone Apeshit: Obama Wants To Use Proceeds From $20 Billion Fraudclosure Settlement To Reduce Underwater MortgagesSubmitted by Tyler Durden on 02/23/2011 - 21:51
Ever wonder why the banks have been stowing away cash as if in anticipation of a torrential rainy day? Well, it just started pouring. According to the WSJ: "The Obama administration is trying to push through a settlement over mortgage-servicing breakdowns that could force America's largest banks to pay for reductions in loan principal worth billions of dollars…Terms of the administration's proposal include a commitment from mortgage servicers to reduce the loan balances of troubled borrowers who owe more than their homes are worth, people familiar with the matter said. The cost of those writedowns won't be borne by investors who purchased mortgage-backed securities, these people said…some state attorneys general and federal agencies are pushing for banks to pay more than $20 billion in civil fines or to fund a comparable amount of loan modifications for distressed borrowers…Regulators are looking at up to 14 servicers that could be a party to the settlement…Banks would also have to reduce second-lien mortgages when first mortgages are modified…Under the administration's proposed settlement, banks would have to bear the cost of all writedowns rather than passing them on to other investors. The settlement proposal focuses on pushing servicers who mishandled foreclosure procedures to eat losses, by writing down loans that they service on behalf of clients. Those clients include mortgage-finance giants Fannie Mae and Freddie Mac, as well as investors in loans that were securitized by Wall Street firms.” In other words, we have just reached the pinnacle of banana republic socialist insanity. In one fell swoop the teleprompter will not only grant reprieve to the banks for decades of fraudulent mortgage activity, but undercapitalize themselves and have them at risk for another liquidity run, which would of course mean another record multi-trillion taxpayer bailout. And the worst case: the 10 million or whatever underwater mortgages will get an average reduction of $2000 each. This is unfuckingbelieveable!
US Naval Update: Enterprise Is Second Aircraft Carrier To Reinforce Persian Gulf, Kearsarge In Pursuit Of IraniansSubmitted by Tyler Durden on 02/23/2011 - 20:54
In this week's naval update, the focus is naturally once again on the Middle East. After the focus last week was on the Red Sea, where Kearsarge and Enterprise had attempted to block off the Iranian warships, now that the Iranian ships have passed into the Mediterranean, LHD 3 Kearsarge is hot on their heels, and will likely pass the Suez any minute. At the same time the Enterprise has joined the recently redeployed CVN 70 Carl Vinson, both of which are now reinforcing the Persian Gulf and specifically the Straits of Hormuz. It appears that the US is now firmly focusing on the Iranian theater of operations. Lastly, LHD 4 Boxer has just left SanDiego "for a scheduled seven month deployment to the US 7th and 5th fleet." Good luck getting to Bahrain in time.
While Leonardo’s creation is often considered the initial introduction of a robot in human form, many believe the honor should go instead to Al-Jazari, the engineering genius of the Islamic world during the Middle Ages. The Kurdish Al-Jazari designed, and apparently built in 1206, a boat that floated on a lake to entertain guests at royal drinking parties. Within the boat were four musical automata – two drummers, a harpist, and a flutist. They appear to have been somewhat programmable, although they lacked the sophisticated articulations of da Vinci’s design.
Ahead of what is shaping up to be a brutal March for Europe, here is a refresh of all the key European data. Keep this handy as there will be much selling (and, respectively, much buying by the ECB) over the next month. From Nomura: "We refresh the Cheatsheet in the lead-up to a period of key events for euro sovereigns. On 25 February Ireland is set to hold elections, which could ultimately be positive for the sovereign in settling some of the political turmoil that is gripping the country in the post-bailout world. The upcoming ECOFIN (14/15 March) and EU Council (24/25 March) meetings are crucial for the future of the crisis resolution mechanism based on the proposed timeline of the EU treaty change."