Everyone's favorite Iceland expert, Fred "Napoelon Dynamite" Mishkin was on Bloomberg TV today. He said a bunch of stuff. None of it mattered, for the simple reason that as has been now confirmed beyond a reasonable doubt, Mishkin will say anything that he is paid $___ to say. In other words, only those who enjoy experiencing subdural hematomas from absorbing macrosievert emissions of hypocrisy, should subject themselves to the following clip. Incidentally, speaking of emissions levels, after observing the warm glow emanating from the former New York Fed member's epithelial covering, we open it up to debate: just what is the halflife of the "healthy and perfectly digestible" macrosievert emission from the "Dynamite's" skin?
Well, we know at least one bank has some sizable, non-grandfatherable commodity block positions. Per Reuters:
- BARCLAYS SAYS CFTC SHOULD DEFER DECISIONS ABOUT NATURE AND EXTENT OF POTENTIAL LIMITS UNTIL AFTER IT COLLECTS NEW DATA ABOUT OTC MARKETS
Why Barclays thinks CFTC does not have data on OTC markets is beyond us. So while we await the CFTC to issue its decision on position limits, any minute now, we wonder just how many other banks (wink wink Blythe) will follow up with comparable objections demanding an "indefinite" delay to what may soon unleash true price discovery, particularly in the PM market. And incidentally, whatever happened to the Fed's mandated disclosure of the confidential bank rescue information. At what point will Ben Bernanke be held in contempt to court for not following the decision of the Superior Court?
Reuters' Goran Tomasevic has compiled what is without doubt the definitive photo collection of Libyan (and middle east in general) civil war photographs. While the outcome of the Libyan conflict is far from clear, it is certainly well documented. The full gallery can be seen at Reuters (link). Here are some of the most representative photos:
Well, the idiot regulators, market monopolists, frontrunning algorithms, and, of course, Hewlett Packardian central planners have finally succeeded in driving everyone else out of the shark pool. Calling today's volume abysmal would be an insult to abysses everywhere. The OED is now in need of a word to explain the kind of market volume that appears to be part of the new Vissarionoviched normal. As we closed T+3 prior to Q1 settlement, stocks meanders without direction then saw nearly 1 billion in market on close sell orders. And what is far worse for the momo lemming brigade is that despite the negligible volume is the market, which traditionally manages to levitate courtesy of rebate collecting HFT stock churners, the wealth effect denying sell off could not be prevented. Is the Fed losing its market manipulating touch?
The scientists at the Central Institute for Meteorology and Geodynamics (ZAMG) have released their most recent near-term forecast of Iodine-131 dispersion. The combination of local weather forecasting and emission prediction results in the following animated dispersion map. ZAMG's google-translated narrative: "Today there was a weak disturbance with light showers in northern areas of the impacted area, but no precipitation from Fukushima to Tokyo. Winds are from the northwest, rotating somewhat during the day on Southwest. The next morning a few weak showers are possible, but it will be mostly dry. Wind mostly from southern directions. The day after tomorrow a weather disutrbance is approaching that brings in the impact of precipitation. The wind will turns to westerly. The dispersion calculations show that today a potential radiation cloud of the southeast Pacific is transported to the so away from Japan. Tomorrow by rotation of the wind on the Pacific Southwest further transport to be expected. Tomorrow, inland areas may also temporarily be affected." Look for readings in Ibaraki prefecture, and in Tokyo, to jump should this happen.
It used to be primarily schools and banks. Oddly enough, bomb threats have now moved on to the world's most "beloved" company. Apple Insider reports: "A bomb threat at Apple's distribution center in Elk Grove, Calif., has forced an evacuation of three buildings while emergency personnel assess the potential threat. People with knowledge of Monday's ongoing incident informed AppleInsider that the eastern three buildings A, B and C have been evacuated at the Apple Sacramento Campus. The site is used for receiving, warehousing and logistics, and is comprised of three warehouses totaling 450,000 square feet." Unclear if there were any more suicides at FoxConn to accompany this curious development.
Update: first market post news: 300-350; 100 bps tighter.
Per Yomiuri, TEPCO may be up for nationalization, precisely as we had predicted, due to the insurmountable amount of accrued liabilities from the Fukushima disaster which would bury a standalone company. And just as we rode the CDS on the way up from 90 to 460, so now is the time to assume there will be no credit risk whatsoever, now that TEPCO is the first ever non-bank Japanese TBTF. Time to bail as central planning is about to branch out.
Atlanta Fed's Lockhart is out with another prepared speech (and this week we will get over ten of these; keep in mind this is all talk - when it comest to voting, Hoenig was the only man who actually could not be accused of hypocricy). Lockhart weighs economic headwinds and tailwinds and comes to a net positive outlook for the rest of 2011 and 2012. Headwinds holding back economic recovery include continued declines in home prices, higher food and energy prices, crises abroad, and fiscal adjustments. Favorable forces—tailwinds—that are pushing the economy forward include improved household finances, moderate employment and income growth, and corporate profitability and ample liquidity. Per Dennis, the financial system continues to heal, supporting growth, although lenders remain conservative and some businesses and consumers still have only limited access to credit. Lockhart foresees continuation of moderate growth, gradually declining unemployment, and the settling of price movements around an inflation rate that is consistent with the Federal Reserve's price stability objective. While short-term measures of inflation have accelerated in the last few months, in Lockhart's view this trajectory will not continue. Lockhart believes that growth in overall consumer prices—at around 2 percent per year through a period of three or four years—is consistent with the Federal Reserve's price stability mandate. He continues to see this objective as attainable. Lockhart remains satisfied with the current stance of monetary policy but is prepared to support a change of policy if evidence accumulates that the low and stable inflation objective is at risk. In other words, Lockhart likely saw subprime as contained back in 2006. In other words, Lockhart most certainly saw subprime as contained back in 2006. The kicker from Lockhart's speech: "contrary to popular opinion, Fed officials actually do eat and fill up their gas tanks." That's admirable: is it with banker money though?
It is no secret that everyone who manages money looks at each and every iteration of the European (or US) stress tests as nothing but a glorified farce, attempting to restore systemic credibility, yet which ulitmately always end up hurting it. That the first European stress test identified exactly zero of the banks that failed within months in Ireland is also no secret. However, with Europe once again out of options, here comes stress test round two. For those who care about this grand farcade (sic), here is a simple visual summary. We fully intend to recreate this post some time in March 2012, describing what Stress Test round 3 will look like.
In a repeat of the "tightening" days from last spring when the Fed was posturing with one after another reverse repo to demonstrate just how prepared it is to take out money from the system (and look how that ended up), the FRBNY has once again started to conduct Reverse Repo tests, today removing $830 million in liquidity from the market, by reverse repoing $320 million in Treasurys at a 0.1%, $260 million in Agency notes at 0.13%, and $250 milion in Mortgage Backed debt at 0.16%. The term of the operation was 7 days. Considering this is about 10% of the amount POMOed earlier, to say this operation has any impact at all is aggressive. The only question is whether the reverse repo TOMO will be the same easing harbinger that it was last year.
To understand the structural flaw which dooms the European Union, we need to start with the Union's fundamental financial characteristics. The European Union established a single currency and trading zone for the classical Capitalist benefits this offered: a reduction in the cost of conducting business between the member nations and a freer flow of capital and labor across borders. But there were flaws in the structure that are now painfully apparent. The Union consolidated power over the shared currency (euro) and trade but not over the member states’ current-account (trade) deficits and budget deficits. While lip-service was paid to fiscal rectitude via caps on deficit spending, in the real world there were no meaningful controls on the creation of private or state credit or on sovereign borrowing and spending. Thus the expansion of the united economy via the classical Capitalist advantages of freely flowing capital and labor were piggy-backed on the expansion of credit and financialization enabled by the Neoliberal Capitalist structure of the union. The alliance of the Central State and its intrinsic desire to centrally manage the economy to benefit its fiefdoms and Elites and classical free-market Capitalism has always been uneasy. On the surface, the E.U. squared the circle, enabling stability, plentiful credit creation and easier access to new markets for all. But beneath this beneficent surface lurked impossible-to-resist opportunities for exploitation and arbitrage.
Today's first of three auctions, which will total $99 billion and likely put the Treasury on the verge of breaching its debt ceiling, was an issuance of $35 billion in 2 Year paper. Coming at a high yield of 0.789% (largely expected per the When Issued), this was the highest issuance yield since April 2010, just before the market tumbled and the ground was set for QE2. The bid to cover came at 3.16, higher than last month's 3.03, but still the second lowest since September 2010. Direct bidders, after taking a break in the last auction, double their take down from 6.81% to 13.31%, relieving the Primary Dealers from some of their purchasing obligations, accounting for just 53.72% or well over half of the entire auction, which will soon be flipped right back to the Fed (keep CUSIP QL7 in mind: we are confident more than half of the PD's $18.6 billion take down will be monetized by the Fed within 3 weeks). Lastly, Indirects accounted for a modest 32.97% of the take down.
China Detects Radiation Over Southeast Coastal Areas As Asahi Reports Of Holes In Reactor Pressure Vessels 1, 2 And 3Submitted by Tyler Durden on 03/28/2011 - 12:22
Radiation damage control now shifts over to the granddaddy of all free media China, where Xinhua has just reported a "tiny amount of radioactive material in the air over the nation's southeastern coastal areas" has been detected. But not to worry: just like in Japan and everywhere else in the world, this radiation is of the special "Ann Coulter" variety which actually boosts one's natural healthy glow and facilitates a prompt chromosome doubling courtesy of supposedly uber-benign mutation, and after all: more is better, so surely 92 chromosomes is much better than just 46 diploid pairs: "Xinhua quoted China's Nuclear Emergency Coordination Commission as saying that the radioactive level detected does not affect human health and no preventive measures are necessary." And courtesy of EX-SKF, we now learn that TEPCO is once again doing all it can to massage disclosure and delay the release of potentially unpalatable data, after the Asahi Shinbun only recently announced that the Pressure vessels in reactors 1, 2 and 3 may have holes confirming everybody's worst fears of full blown release of radioactive particles in the environment.
According to Bloomberg, the New York Attorney General has petitioned the NRC to force Indian Point to meet fire rules (which probably means they were not meeting them before, and also confirms the NRC is another farce of a regulator). If this gains traction, and it will, watch for Indian Point to be offline shortly. So once Indian Point is shut down, will New York by on a 3 hours on 1 hour off rolling black out or 2 on 2 off? We should find out soon.
Plutonium Found In Fukushima, TEPCO Executive Says "Radioactive Substance Shouldn’t Have Any Impact On Human Health"Submitted by Tyler Durden on 03/28/2011 - 10:59
Shit just got real. The spin? It is not harmful to human health. Oh really? We can't wait for Kan to eat some plutonium on national TV to confirm this. In the meantime we await the retraction from TEPCO claiming they made a mistake and they really meant platinum not plutonium. Lastly, it appears that this is merely yet another attempt at hiding real time data: "TEPCO vice-president Sakae Muto told journalists at the company's latest briefing that test results showing the plutonium came from samples taken a week ago."