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Frontrunning: June 1

  • Is bond trading dying? (Reuters) - of course it is; everyone is trading CDS
  • Russian president comments on wheat export ban lift (Kremlin)
  • Europe struggles towards new Greek rescue deal (Reuters)
  • A new Greek deal with troika imminent (Kathimerini)... since refuted... then confirmed... then refuted again... then confirmed again... etc
  • Rehn Sees Greek Solution in Bond Rollovers, Cuts (Bloomberg)
  • Kan Ouster Risk Rises as No-Confidence Vote May See DPJ Split (Bloomberg)
  • China May Assume Some Local Government Debt (Bloomberg)
  • SAC Faces Probe Of Biotech Trading (WSJ)
  • Australia GDP Falls Most Since 1991 (Bloomberg)
  • NATO extends Libya operations to September (Reuters)... 2020...
  • World’s Wealthy Rose by 12%: Boston Consulting (Bloomberg)

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Today's Economic Data Docket - Plunging ISM, Weak ADP, Collapsing Car Sales

The ISM, ADP, and vehicle sales for May: all expected to be horrible. In other rhetorical observations, what kind of stingy depressionary economy won't let a Fed chairman buy a virtuous economic cycle for $800 billion?

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Silver Eagles Sales Through May Best Since 1986, Turkish Silver Bullion Imports Surge

Bloomberg reports this morning that Turkey imported 25.7 tons of silver in May, up from 61 kilograms in April, the Istanbul Gold Exchange said in a report on its website. This is a huge increase in demand and suggests that Middle Eastern demand for silver, which has not been noteworthy to date, may soon become an important catalysts for higher silver prices. Silver demand is particularly strong in China and Asia and among a minority but increasingly vocal and influential band of silver advocates who believe that silver is a superior form of money and will help protect people from developing problems in the western and global financial and monetary system. Bloomberg reports this morning that U.S. silver eagle coin sales through May 2011 are the best since 1986 (see news below). 18.9 million ounces have been sold so far in 2011. While that may seem like a lot, to put that number in context, it is only worth some $661 million. Ireland, a small country, may need an extra €50 billion to be made available under the EU/IMF programme to allow it to remain out of the markets for a longer period. The average daily turnover on foreign exchange markets is in excess of US$4 trillion. The US has monthly budget deficits of over $200 billion.

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Global Economic Growth Stalls; UK Manufacturing PMI Tumbles To September 2009 Level, China PMI At 10 Month Low

Two more indicators of a stalling global economy came out of China and the UK overnight, where manufacturing Purchasing Managers Indices posted substantial drops. Growth in the Chinese manufacturing sector slowed to a 10-month low in May, with both production and new orders gains moderating during the month, according to the final HSBC Purchasing Managers Index released Wednesday. The final May reading stood at 51.6, up from the May flash reading
of 51.1 reading but down from 51.8 in both April and March. Total new orders rose for the tenth consecutive month but at a slower pace than in April, while new export orders contracted for the first time in three months, though the rate of contraction was only marginal. This caused the pace of output growth to slow to a ten-month low, HSBC said. However, the pace of new employment rose at the fastest rate in five months. The rise in input price growth eased to a nine-month low in May. Yet the modest Chinese slowdown was nothing compared to the now confirmed stagflation gripping the UK, where Manufacturing PMI fell from 54.4 to 52.1 in May, weaker than consensus expectations (54.1) and its lowest level since September 2009. As Goldman reports,  consumer-facing manufacturers registered the sharpest contraction in output on the month. Some of this is attributable to temporary effects; some may be indicative of more sustained pressure on household incomes. Nowhere was the impact of this more evident than on the GBPUSD pair which took a nearly 100 pip overnight tumble, and has weighed on European markets overnight. Other global PMI readings also confirmed that the world economic is approaching stall speed, which should certainly be favorable for global bizarro stocks.

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RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 01/06/11

A snapshot of the European Morning Briefing covering Stocks, Bonds, FX, etc.
Market Recaps to help improve your Trading and Global knowledge

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Ahead Of Tomorrow's ISM Plunge

May surveys had the largest ‘negative surprise’ since Bloomberg started tracking consensus estimates in 1998. In addition, several of the reports have shown some of the largest two and three month rates of decline on record. Whether this is indicative of a mid-cycle slowdown, or something more serious, a continuation of the recent deterioration could well set the table for QE3... Oh, and tomorrow's ISM will likely be a bloodbath, which in continuation of today's bizarro market (and world) will mean the S&P closes at least 2% higher.

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Big Trouble In Little Goldman's VPN Firewall (Or NYT's Editorial Department)?

This evening's latest NYT Story-Morgenson Joint Venture story about Goldman beats a well-beaten drum: the question, which has been discussed extensively on Zero Hedge and elsewhere before, of just how ridiculous and ludicrous is the notion, used by Goldman in both Congress and before the SEC, that Fabrice Tourre, then a midlevel 28 year old whose story has been told millions of times, worked completely and entirely alone when perpetrating the Abacus CDO "transgression" (for which Goldman neither admitted nor denied guilt). Obviously this is such BS that nobody but an entity as entitled (and for the implications of perceived infinite self-entitlement look no further than DSK or David Sokol) as Goldman (and hence the SEC which needs Goldman for future employment prospects) could possibly believe it. There is however, a link in the story that is so weak, that it raises extensive questions about either the credibility of the entire narrative, or the complete worthlessness of Goldman's IT security and VPN firewall, two possibilities that demand further inquiry.

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Guest Post: EU - A Flawed Foundation, But Brilliant Strategy?

The European banks are slowly but surely, through a tactic of Financial Arbitrage, moving more and more sovereign debt to the ECB and EU. Someone must pay for this debt and that will eventually be the entire European taxpayer base. That is the goal. In the initial stages of the Euro dream everyone was benefiting. Like an initial user of drugs the early stage is euphoric before the issues associated with the addiction surface. This stage fostered tremendous growth in debt - never ending Corniche housing villas in Spain and Portugal, embarrassing pensions and social benefits in Greece, tax advantages for off shoring corporations in Ireland or unjustifiable and hidden local government spending in Italy. It has been a captive market for the Asian Mercantile Strategy and a financial retail market boon for US financial instruments created from the never ending supply of freshly minted US fiat paper...Be aware that the mercantile financiers are so opposed to risk that operating as the secured bond holders of the banks they make the profit from the banks - not the shareholders. The financiers get first distribution of profits and are always kept whole. The public typically attacks the bank owners, not those who insidiously control and profit from its operations - the senior secured bond holders. It is the senior secured bond holders who must take the Greek 'haircut' but as part of the strategy they have their political mouthpieces vehemently opposing it...Forcing the Greeks to sell all that's left of the family jewels is now seen as a key part of the political solution. But who will want to buy them when there is every possibility of Greece leaving the euro? Capital is already fleeing Greece as fast as it can; what's the chance of attracting it for Greek assets? Someone is going to get real fire sale prices.

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Theatrical Vote To Raise Debt Ceiling By $2.4 Trillion Begins; Does Not Pass

Update: As expected, debt ceiling does not pass.  Final vote:

  • Nay (Republicans 236, Democrats 82), total: 318
  • Yea (Republicans 0, Democrats 97), total: 97
  • Not Voting (Republicans 3; Democrats 6); 9

As we reported first today, any minute now the Congress will pretend to vote on HR1954, a clean debt ceiling increase of $2.4 trillion to $16.7 trillion. This will not pass. Why Congress is doing this bullshit, and why the US debt ceiling is now nothing but a farce, is a question voters should ask themselves next time they vote for their representatives. Watch the tragicomedy live at C-Span below.

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Now That The Banker Bailout Plan Is Set, Here Are The Greek Islands About To Hit Ebay And Fund Another Record Wall Street Bonus Season

The description of the Greek bailout plan in the NYT has just one salient paragraph. Here it is: "With great reluctance, European governments have come to the conclusion that an additional €60 billion now, while politically unappealing, would be less costly than the unquantifiable public funds that would be needed if a restructuring of Greece’s debt produced a Lehman Brothers-like contagion that spread not just to Portugal and Ireland but possibly Spain and the financial system as a whole." Ah yes, with "great reluctance" European governments, bought and purchased by bankers, have decided to bail out their sources of capital. As for the conclusion, the only thing that matters is how long before European taxpayers realize that once again they are the mark in this latest pathetic attempt to ignore reality, which incidentally for those who are clueless, is the following: "“Greece’s G.D.P. is already declining and now the government will need to cut another €7 billion in spending,” said Jason Manolopoulos, who manages a hedge fund based in Athens and Geneva and is the author of “Greece’s ‘Odious’ Debt: The Looting of the Hellenic Republic by the Euro, the Political Elite and the Investment Community.” “That is only going to make the debt to G.D.P. figures worse,” he said. “There is no getting around it: Greece is insolvent.”" So while the bankester cartel is dead set on bleeding the last drop of hemoglobin from the petrifying Greek corpse, here, courtesy of the WSJ is what will soon be purchased by special purpose entities controlled by the same banks that are just now getting bailed out.

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Guest Post: The News Cycle: Full of Sound And Fury, Signifying Nothing

The Mainstream Media has completely failed to make sense of the global financial crisis. By "make sense" I mean a framework of interpretation that properly attributes responsibility to the causes and players and which explains the key dynamics in common language. A framework of interpretation doesn't disappear in the next news cycle: it is constantly reinforced by additional interpretation and illumination. The news cycle now lasts at best the length of a playoff series. Mr. bin Laden's news cycle didn't even last as long as an NBA playoff; the demise of the "most dangerous man in the world" was shoved into the ashbin of history within a few days, with little interpretation beyond fist-pumping and a few fusty pontifications by the usual suspects, i.e. the "experts" trotted out during "big events" to explain it all away. The full quote from Macbeth (Act V, Scene V): It is a tale told by an idiot, full of sound and fury, signifying nothing. Every "news event" is terribly important, until a few hours later it is unimportant. This is a form of madness, a madness which goes unrecognized in the crazed, turbulent flood of "news."

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Here Is Your Chance To Demand Answers From The Fed's General Counsel, Scott Alvarez

For all Zero Hedge readers who have long waited for their chance to ask Mr. Scott Alvarez of "Have The Federal Reserve Or Prime Brokers Ever Tried To Manipulate The Stock Market?" fame a question about life, the universe or why the CME decides to hike ES margins in an environment of rising realized vol, here it is. Tomorrow, at 2PM, Ron Paul will lead a hearing by the Financial Services Committee, which will luckily be carried by C-SPAN meaning one will be actually able to hear the dialog (alas, the House continues to believe that investing in microphones for their internal webcasts is a bad idea), titled: "Federal Reserve Lending Disclosure: FOIA, Dodd-Frank, and the Data Dump." The witnesses will be Mr. Thomas C. Baxter, Jr., General Counsel, Federal Reserve Bank of New York, and the one and only Scott G. Alvarez, General Counsel, Board of Governors of the Federal Reserve System. While the usual heeming and hawing will follow each and every question, what is unique about this session is that the FSC actually allows anyone to submit questions for the honorable lawyers. The link to submit questions is here: we urge Zero Hedge readers to take advantage of this opportunity and have Mr. Paul read their questions to the two general counsels, even if no legible answers will be (ever) forthcoming.

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And Scene: CME LOWERS ES, SP, YM Margins, Despite An INCREASE In Realized Vol

Speechless. Just.... speechless.

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click click click

C:\FRBNY\Sackster\Market Manipulation\CloseAtHOD.exe /routethrucitadel

Push Any Key to Execute?

[any key pushed]

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LNKD Now Below Break Price

Well, that took all of 8 days. To all who bought the shares from the bankers and primary allocators who wasted exactly 10 milliseconds to flip this flaming dog turd to the greatest momo fools out there with an E-trade account and $10k in discretionary cash (now well less), our condolences.

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