The wheels fall off the global "recovery," the emerging market equity bubbles, oil, China's equities and its property bubble, and most if not all commodities. Gold and silver swoon as per late 2008 as raising cash become paramount. Oil retraces to the $40/barrel level, and then drops further as exporters ramp up their exports to generate desperately needed cash. Interest rates rise sharply, risk assets tank, borrowing dries up, housing prices "slip" to new lows (the stick-slip phenomenon), and the hated/loathed U.S. dollar confounds almost everyone by breaking out of technical resistance levels. Civil disorder spreads along with recession and lower energy prices, which devastate oil exporters' primary source of government revenues. With better grain harvests stemming from improved weather, declining meat consumption in 2012 due to recession and the implosion of the market for corn ethanol, grain prices plummet, wiping out all the speculators who reckoned 2010 had set the trend for the decade. All of this starts slowly in Q3 2011 but gathers momentum in 2012.
There is little that can be said about the December TIC data, as all the same (troubling) trends continue. In summary, net foreign purchases of long-term U.S. securities were $76.8 billion.
Of this, net purchases by private foreign investors were $66.3 billion,
and net purchases by foreign official institutions were $10.5 billion. The bulk of purchases was Treasurys at $54.6 billion, and $10.2 billion in corporte stocks (a fourth straight monthly decline), with token purchases of both Mortgages and Corporate bonds. Net foreign acquisition of long-term securities, taking into account adjustments, is estimated to have been $41.8 billion. Yet the most notable data continues to be the interplay between the formerly largest holder of debt (soon to be third), and that locus for bond laundering- the UK. Total Chinese holdings declined by $4 billion, as a result of $9.4 billion in Short-Term debt declines, offset by Long-Term purchases. China continues to dump agency securities like there is no tomorrow, and December is the 6th month in a row in which China has seen its agency holdings decline, but that should come as no surprise to anyone: after all they made it somewhat clear they are on the verge of liquidating the bulk of their GSE holdings recently. On the other hand, the "UK", which is either the Fed's "direct bidder" bond bonzi scheme, Chinese indirect purchases, or recycled petrodollars, just can't get enough of US debt: in December UK holdings increased by $30 billion. It has gotten so bad, that at $541 billion the "UK" is now just $350 billion away from China's total holdings ($892 billion). And Japan is now just $8 billion behind China in total US debt holdings! Of course none of this matters: The Fed will soon be more than double the next two holders (China and Japan) combined, with all the interest collected on the Fed's debt to be promptly converted to Treasury "revenues."
Fed boss Ben Bernanke is the most dangerous human on earth, far more dangerous than Hosni Mubarak, Egypt’s 30-year dictator, ever was. Bernanke rules a monetary dictatorship that will trigger the coming third meltdown of the 21st century. But this reign of economic terror will end. Just as Mubarak was blind to the economic needs of the masses and democratic reforms, Bernanke is blind to the easy-money legacy that’s set the stage for revolution, turning the rich into super rich while the middle class stagnates and peanuts trickle down to the poor. Warning, Egypt also had a huge wealth gap before its revolution. Bernanke is the final egomaniac in America’s bubbling 30-year wealth gap, where the top 1% went from owning 9% of America’s wealth to owning 23% during this dictatorship.
Per Declassified Testimony, Bernanke Blames Blogosphere For Itemizing Disastrous Consequences Of His Actions, Says Goldman Is A UtilitySubmitted by Tyler Durden on 02/15/2011 - 10:14
Following loud complaints by Zero Hedge over the weekend about the retention of Bernanke's FCIC testimony from the public's eye, yesterday the commission caved and agreed to release Bernanke's November 17, 2009 89-page closed session confidential transcript, in which, among other things, Bernanke complains about the... blogosphere. Arguably, among the most amusing comments are the circumstances which bring Bernanke to lament the surge of alternative media. On page 68, the Chairsatan, in responding to a question of why nobody could predict the disastrous consequences of Vissarionovich Jr's actions, we see another face of Bernanke - that of the man who deflects his gross incompetence which almost destroyed civilization as we know it... to those who worry too much: "I think there were people -- there were people saying -- including people at the Fed but others as well -- saying, in the year before the crisis, that risk was being underpriced, that spreads were very narrow, that markets seemed ebullient, that liquidity was, in some sense, excessive. There were -- you know, the way I would put it is, I think there were people -- not necessarily the same people -- identifying various parts of the problems. You know, there were people who were concerned about derivatives, there were people that were concerned about subprime mortgages, there were people concerned about the overall credit environment, there were people who were concerned about off-balance-sheet vehicles. But I think notwithstanding the claims of one or two people out there who are now sort of living on the fact that they, quote, anticipated in the crisis, I would still say that the interaction of these things, the “perfect storm” aspect was so complicated and large, that I was certainly not aware, for what it’s worth -- and it could be just my deficiency -- but I was not aware of anybody who had any kind of comprehensive warning. There are people identified -- and the trouble is -- and particularly in this blogosphere we live in now -- at any given moment, there are people identifying 19 different problems, crises." So there you have it: the next time the entire financial system collapses, which should be within a few years at most, and unless Mars bails the Earth out, this will be the last collapse, it will be the blogosphere's fault again, for identifying too many problems again, and for supposedly 'shouting wolf' when it has been right all along.
Empire Manufacturing Beats Expectations As Prices Paid Surge To Two And A Half Year High, Advance Retail Sales Of 0.3%, Below Expectations Of 0.5%Submitted by Tyler Durden on 02/15/2011 - 09:32
The only actual number that matters, is the Empire Index' Prices Paid index, which climbed to a two and a half year high of 45.8, as prices received barely moved. Even the Empire Index itself acknowledges the collapse in margins: "The prices paid index climbed to a two and-a-half-year high in
February, but the measure for prices received was little changed,
suggesting some pressure on profit margins." New orders and employees both dropped to 11.8 and 3.6, from 12.4 and 8.4 respectively. And, lo and behold, inventories climbed to the highest since April: the hollow growth must continue!
Yet the biggest disappointment came from the advance retail sales which not only missed on every metric, but saw all the January data was revised lower:
And some bad news for the world's worst car maker (recently bankrupt), which has bet its entire "growth" platform as per the recent IPO on the one market that is so far unfamiliar with said carmaker's "quality" reputation. In January, the Shanghai-based China Passenger Car Association reported that sales of passenger cars fell 10.3 percent in January from the month before to 965,238. Per Manufacturing.net: "Chinese bought 13.7 million passenger vehicles last year, up by a third
from 2009. But that robust growth is forecast to cool this year due to
the expiration of tax incentives for some vehicle purchases and a
renewed effort by cities to bring traffic under control."Is the recent collectivist action to cool off purchasing actually going to have an adverse impact not only on GM's margins but its sales as well? Why yes. But the market will be stunned when this is publicly announced shortly.
Silver and particularly gold rose sharply on the release of the higher than expected UK inflation data. It showed that UK inflation quickened to 26 month highs at 4.0%. Currency debasement and higher food and energy prices are leading to an inflation surge in both developed and emerging markets. The Chinese inflation data appears to be even more misleading and manipulated than that in western economies. Many governments are attempting to manage consumers perceptions regarding the significant increase in the cost of living as fiat currencies are debased. Silver is now less than 2% from its 30 year nominal high of $31.25/oz seen at the start of the year and looks set to challenge and surpass this level in the coming days due to continued robust physical demand (both investment and industrial) and the fact that the futures market is seeing some big money go long again after the recent correction. Silver remains in backwardation with spot trading at $30.68/oz while the July 11 contract trades at $30.55/oz and the December 14 at $30.40/oz.
Markets mostly positive this morning, breaking its recent pattern. Today will show several retail industry-related releases, including advance retail sales and import price index. Surveys reflect expectations of bullish data. We also note a recent creep in LIBOR-OIS to 16bp (+4bp YTD). Emerging market stocks rallied yesterday after the release of China’s positive export figures and the announcement of Egypt’s intent to form a democracy. Inflation continues to rise in China, as its CPI increased 4.9% YoY missing expectations of 5.4% and PPI increased 6.6% YoY v 6.2%E. The CPI increase included a change in the basket of goods that reduced the weight of food which has recently risen in price dramatically. The BOJ left its target rate unchanged at 0.1%, in line with consensus estimates. Japan also saw a 3.3% MoM gain in industrial production over last month’s +3.3%.
Lot’s going on today—retail sales, Empire index, import/export prices, TICS, housing market index, business inventories, two rounds of budget testimony, and the usual weakly consumer confidence…At 11am a $5 – $7 billion POMO in 02/28/2015 – 08/15/2016 closes. Look for CUSIP 912828PS3 to be monetize like hotcakes.
Inasmuch as one can trust any data coming from centrally-planned governments, following last night below consensus CPI reading, China continues to telegraph that monetary growth is once again under control (at least for the time being): in January commercial banks extended CNY 1.04 trillion in Loans, up from CNY 480.7 billion in December, which however was well below the consensus of CNY 1.2 trillion. Outstanding CNY loans grew by 18.5% yoy in January, down from 19.9% yoy in December (market consensus: 18.7% yoy). Additionally, the just as "credible" Chinese M2 printed at 17.2% growth yoy, down from 19.7% in December (19.% consensus). The M/M seasonally adjusted annual growth fell to 1.5%, down from 14.5% in December.
It's not quite snow. But it's close. Reuters reports that traffic in the Suez Canal has been disrupted since 8am GMT after a ship ran aground due to "engine failure in bad weather." There is no indication of foul play yet.
RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 15/02/11
Paulson Sells 10% Of BofA Stake, Increases Equity AUM From $23 To $30 Billion, Adds Numerous New PositionsSubmitted by Tyler Durden on 02/14/2011 - 23:07
The much anticipated Paulson & Co. 13F is out and there are quite a few changes. First, the total equity AUM has increased from $23 billion to $30 billion. Paulson is now bigger than many mutual funds: "nimble" unwinding should the market ever sell off again sure will be an amusing sight. After all, his top 10 positions, which amount to $16 billion, represented 55% of his entire equity AUM (of 102 names). While there are not many dispositions, most notable is the decline of Paulson's third biggest holding - Bank of America - by 10% from 137.8 million shares to 123.9 million. Also, as Zero Hedge speculated, Paulson reduced his holdings in Citi modestly, from 424 million shares to 413.5 million (it appears he was selling to Tepper). Otherwise the top two holdings, the GLD for the dollar denomination shares, and Anglogold, are still in first and second place. In terms of notable increases, Paulson added 7.9 million shares to his Anadarko stake (conceived in Q3), bringing the total to 21.3 million, making it his 5th largest position. Rounding out the top 10 are Hartford (a small decline), Suntrust (a 5 million share increase), Comcast (flat), Capital One (3 million shares added) and MGM (flat). Buffett fans will be delighted to learn that Paulson added 5 million shares to his Wells position, making it his 11th largest holding at $635 million. Those curious what other additions are in Paulson's portfolio can do so by looking at the green highlighted rows in the table below (also, the rightmost column shows increases in green and declines in red). As for complete dispositions, here is the list: Hewitt Associates, NBTY, Mariner Energy, Mirant, Burger King, General Growth Properties (Ackman will not be pleased), Airgas, Family Dollar, Starwood, Zymogenetics, Potash, Mead Johnson, Boyd Gaming, and Starwood Property Trust.
China CPI Comes At 4.9%, Below Consensus Of 5.4%, In Line With Zero Hedge "Pervasive Data Manipulation" ExpectationsSubmitted by Tyler Durden on 02/14/2011 - 22:09
The consensus expectation for Chinese CPI was 5.4%. Zero Hedge's expectation based on just announced manipulated CPI data was 4.9%. Guess who was correct... In the meantime, Chinese food prices are not increasing by 5% every ten days, or over 400% annualized. Or at least, they are not doing so on rice (most likely fake) paper.
You know what would have been really cool? If Obama had just said - you know what - the budget can't be balanced, deal with it. And you know why? Because over the past two years, the economy, that was trashed by the banking sector, still sucks. And, during the entirety of the Bush administration, while prepping the economy to suck, debt to pay for wars and tax cuts kept growing. And, when the banking system was facing the abyss, we opened our checkbooks, we stimulated the hell out of it, but we did it mostly through issuing Treasury debt and the magical Fed printing machines - so it doesn't show up in the budget that we're all debating, except for a couple hundred billion to Fannie and Freddie and what remains of the stellar TARP project. And you know what? I admit that was a stupid thing to do. It was stupid when it started under Bush, and it was stupid when it continued under me and the economic team I appointed to keep it going. The bailout binge increased our public debt by 50% under my reckless economic advisors, Treasury Secretary, the Federal Reserve. And, hell if other countries decide to dump Treasuries in bulk, and their interest rates rise, and Bernanke can't QE them down fast enough, our budget deficit will gap like the Grand Canyon.