RANsquawk 26th March Morning Briefing - Stocks, Bonds, FX etc.
Earlier today the CFTC held a sham hearing in which, among other things, the organization discussed position limits in PM speculation, because, you know, it's the mom and pop speculators that destroy the precious metal market (not JP Morgan or the New York Fed mind you). The hearing could not have come at a more opportune time. GATA has just broken a major story, in which a London metals trader-slash-whistleblower exposes JP Morgan's silver price suppression/manipulation scheme. At this point none of this should be at all shocking, and the only thing that matters is when CFTC's ex-Goldmanite Gary Gensler will be fired for allowing hundreds of billions of dollars to be sucked out of the PM market on behalf of such major market manipulating entities as JP Morgan and the New York Federal Reserve, for whom it transacts. Don't worry - the answer to that rhetorical question is "never", as it is the administration's goal to make all the millionaires among the bulge bracket firms billionaires, via legalized theft from honest investors. Furthermore, if indeed the CFTC is complicit in these manipulative events, as GATA suggest, we hope our objective mainstream media readers enjoin GATA in seeking justice for this criminal breach of proper regulatory enforcement.
As indicated this morning, the market is getting pretty close to some key support levels in Fixed Income. We first highlight the 30Y future support we tested today at 114-26. If we bypass this level we have potential to sell off down to 111-24 which is the next key support, and would trigger a massive bond bear market if actually triggered. But we should expect a bounce here.
Well, we certainly lost a big one. Despite hopes I share that this November’s polls will help mitigate the damage, this giant leap towards socialized medicine is a big loss for the Republican Party, and for the American people. And I say “leap towards” socialized medicine as this bill is not nearly the Left’s end game. It’s not meant to work, it’s meant to destroy the private health insurance industry, an industry that realized this only too late.1 It’s meant to help bring on, through socialized medicine, further breaking of the budget, and further conditioning of the American people to dependency and an expectation that government will provide for all their needs, the full European style welfare state. While it is obvious we must fight this, it’s not as obvious how. This note offers a few thoughts on the matter. - former Goldmnaite Cliff Asness of AQR (Quant Hedge Fund)
ECU Group's Philip Manduca "We Are At A Tipping Point" And The Only Thing That May Save The Euro Is A Collapse Of The USSubmitted by Tyler Durden on 03/25/2010 - 15:31
For once, some actually good insight from a CNBC guest. Philip Manduca, Head of Investment of the ECU Group, discusses Greece and the very severe implications of what the final outcome will look like. "Trichet said the Greeks are crooks, and they've been lying about the numbers. There is a deeply embedded corruption within the Eurozone. Combined with the endemic European socialism and there is just no way you are going to get spending cuts and tax raises and maintain a GDP that makes any sense of the percentage aspect of debt to GDP. So the whole show is wrong. This is an intractable situation, this is going to continue on and on. The onle hope for the Eurozone, and the Euro as a currency, is that sameone takes the spotlight soon, and that may be the United States." Watch the rest as Philip's perspective is spot on... Not to mention that he sees gold as the only alternative to the fiat bonfire soon to engulf the western world.
As part of a package involving substantial International Monetary Fund financing and a majority of European financing, euro area member states are ready to contribute to coordinated bilateral loans.
This mechanism, complementing International Monetary Fund financing, has to be considered ultima ratio, meaning in particular that market financing is insufficient. Any disbursement on the bilateral loans would be decided by the euro area member states by unanimity subject to strong conditionality and based on an assessment by the European Commission and the European Central Bank. We expect euro member states to participate on the basis of their respective ECB capital key.
You didn't think China would fund America's insane spendorama for ever, did you. Here's Goldman on the second, and much more relevant, part of Obamacare and the stock market reflation trade: tax rates going through the roof.
Some Observations On SPY VWAP And Block Manipulation As FSA Launches Probe On Front-Running Of Block TradesSubmitted by Tyler Durden on 03/25/2010 - 14:03
Across the pond, the FSA has just announced that it is launching a probe to focus on the front-running of block trades. Without doubt this is dictated by the recent bust including Moore's
block execution trader, who likely was involved in just this (note:
this is purely speculation absent further data). Images of Flash Trading, HFT, algos gone wild, and all sorts of other computerized frontrunning come to mind. When are the useless excuses for human detritus over at the SEC going to do a comparable probe? Oh wait, they are watching kiddy and tranny porn as we speak, and counting their Wall Street salaries once they leave their cushy taxpayer subsidized offices. Sorry, go back to demanding an increase in your budget you worthless examples of reverse evolution. In the meantime, we present some obvious block manipulation data in the SPY which if we had anything remotely resembling a market regulator would be immediately probed. Maybe the FSA can LBO the SEC? Surely Goldman can provide financing.
Must watch roundtable with two of the most prominent thinkers of our generation, Daniel Kahnemann and Nassim Taleb. Topics discusses include the GSEs, which according to Taleb "is sitting on a barrel of dynamite" (and everyone agrees), cognitive biases, patterns (and their lack), and risk and denial perceptions. Via DLDConference.
Dollar surging, euro plunging as Trichet says Greek bailout involving IMF is a very bad idea. Next up: Merkel-Trichet at ten paces. So much for a unified Europe backing Greece. And now with China also a net importer, a surging dollar will do miracles for US manufacturing.
Albert Edwards Vindicated: Discusses China's Upcoming Trade Deficit, And Why CNY DEVALUATION Is Now Increasingly LikelySubmitted by Tyler Durden on 03/25/2010 - 12:46
"Many clients have congratulated us for flagging up this outturn back in November last year. We said back in November that ?China will be heading into a trade DEFICIT (!) throughout 2010. This is a mega-call and will have major financial market implications?. Unfortunately I have not pushed this call hard enough. Why not? Well, because as the implications are so very non-consensus, I knew noone would take it seriously. With the pre-announcement of March?s deficit, investors are now more willing to listen." - Albert Edwards, SocGen
$32 Billion 7 Year closes at 3.374%, allotted at high 83.04%, previous at 3.078%!
Bid To Cover at 2.61, Previous at 2.98, average overpast year 2.67
Indirect Take Down 41.87; Direct Take Down 8.11%
Indirect Hit Rate 82%
When Issued was trading at 3.338%, a massive tail
10 Year about to break 3.90%
They gave us the “Minsky Moment.” Its sequel was “Shaking Hands with the Government,” followed by “the New Normal.” As you may know, these are Pimco’s pithy phrases used to describe the investing world as they view it. The first two were notably accurate narratives of what was occurring and how investors should respond. The jury remains out on “The New Normal” since it is a longer term prognostication. Why are we focusing on the etymology employed at Pimco? Unbeknownst to us, in his March commentary, Bill Gross unveiled the latest catch phrase, “Unicredit Bond Market.” Gross explained that “If core sovereigns such as the U.S., Germany, U.K., and Japan ’absorb’ more and more credit risk, then the credit spreads and yields of these sovereigns should look more and more like the markets that they guarantee.” Anyone who has been paying attention in any financial market the past two days will recognize that this trend, which has been developing around the globe over the past several months, has come home to roost in the United States as the 10 year swap spread has inverted. - Mike O'Rourke, BTIG