While we still await Jan Hatzius to lower his full year outlook any second now, to keep in line with Bernanke's drastic growth outlook reduction from yesterday's press conference, here is Goldman's Sven Stehn sharing his interpretation of the Fed's "color" from yesterday. The conclusion: "Taken together, Bernanke’s remarks were consistent with our forecast for no rate hikes for a long time to come." And we would go further: just as in 2010, which 2011 has so far been an identical replica of, the second there is a 15% drop in the Russell 2000 (which hit a new all time high yesterday) following the end of the liquidity pump, "economic conditions" will deteriorate, necessitating another loosening episode. And it will come - sooner or later.
At the current rate of collapse, in a few more days the dollar will take out all time lows. Currently holding at 73, after hitting 72.8 overnight, the DXY appears set to test the last support from when the dollar carry trade was all the rage again back in 2008. Of course, for that to happen crude will have to be north of $130, which not even the most incompetent CNBC pundits will be able to spin as positive for corporations (let along the US consumer). It will also mean that any opex inspired corrections in precious metals will not be a frequently recurring phenomenon. But at least Bernanke's plan of inflation our way out of insolvency through a complete currency devaluation is working: after all for all who listened to the Bernanke conference, the only way to rescue the flailing dollar, is first to kill it...
And so the cannibalism at the very top begins. According to a statement just released by Barry Wm. Levine, attorney of David Sokol (who was slated to be the next head of Berkshire... until Berkshire decided to sue him that is), none other than the Octogenarian (soon possibly the Outcast) of Omaha was in fact lying, and arguably committing 10(b)-5 fraud by not disclosing the full details of his and Sokol's involvement in the situation in the Lubrizol proxy. To wit: "Mr. Buffett was told twice, not once, about Mr. Sokol’s ownership of
Lubrizol stock before Mr. Buffett engaged in any discussions with
Lubrizol." And we personally can't wait for Munger to be the next fall guy: we are confident that Charlie will suck it in, like every other good citizen who benefited from the infinite taxpayer largesse. Grab the popcorn - it's dirty laundry "on the record" time.
After 10 A.M. the August 1600 Call buyer came back to the market. Between 10-11:00 am that option was bid and bought, but offers were not lifted as they has been previously. The buyer was patient today. Volatility stabilized and drifted higher. June Calls were still being sold and nothing else was aggressively traded. From there the market moved higher and skew changed dramatically to the calls. The August 1600 Call buyer stepped up his purchasing accordingly. At this point the option term structure became efficient and everything caught a bid on the call side...At about 4:00 the August 1800 Call caught a bid. Several hundred were sold by market makers and spread against the surrounding months...The difference between this month and other months that catch bids is that this is not from retail buying. There is an institutional player who wants to own options. We don’t know that he is going to sell them yet or at any point but regardless, yesterday’s near pin of 1500 was a gift from heaven for this buyer, as he got to accumulate at a discount.
One day to correct 10%, and one day to retrace 76.4%. The HFT robots appear to have really taken over. We can't wait to see what high frequency conversion of registered to eligible silver looks like. We expect a full loss retracement overnight.
How The Comex Lost 20% Of Its "Registered" Silver In One Week, Or Where There's Smoke Of A Run, There's Probably A RunSubmitted by Tyler Durden on 04/27/2011 - 18:38
A week ago we noted something peculiar: in one day, COMEX
depository Scotia Mocatta (one of five in the world) saw a 25% transfer of silver from "registered" (or deliverable physical) to "eligible" (or "undefined" - a distinction discussed previously, and also below). We said: "Canada's largest bullion depository (and one of five total) reclassified
a whopping 5.2 million ounces of silver from Registered to Eligible
status. In order to get a sense of how big this amount is, which amounts
to just under $238 million at today's fixing price, it represents just
over 25% of the total silver stored at Scotia Mocatta, and about 5% of
the total silver held across all depositories." The reason then given was: "due to a reporting reclassification, 5,287,142 t oz was moved from Registered to Eligible." To our (lack of) surprise, a quick glance at today's silver holdings at the Comex confirms that the trend of reclassification is continuing unabated, and total "physical" silver across the entire Comex universe has now plunged by almost 20%, or from 41 million ounces to 33 million ounces, in the span of one week! And while last week it was Scotia Mocatta, today it is HSBC and the Delaware Depository, and the reason given: "Adjustments include reporting classifications of t oz that were moved from Registered to Eligible. Please see Special Executive Report reference 5736 for additional information. http://www.cmegroup.com/tools-information/advisorySearch.html#." And a further drill down reveals the following link. Many have speculated that there could well be a run on physical silver. But for those looking for a smoking gun, this is probably as close as you will get to one, short of JPM actually declaring "force majeure."
If you are confused why at one point every word the Chairman said was the equivalent of one pip lower for the DXY and 10 cents higher for gold, wonder no more. Here is Citi's Steven Englander asking, and explaining why the USD just hit a new cyclical low.
"Mr. Chairman, first, thanks for doing this. This is a tremendous development." Steve Liesman
There's your whopper of a YTD stock. Just don't try to buy anything with the proceeds from those booked (cause they are booked right?) gains.
All you need to know...
The below Bloomberg TV interview with Paul O'Neill pretty much jumps the shark in Mutual Assured Destruction. Whenever someone says "people who are threatening not to pass the debt ceiling are our version of Al-Qaeda terrorists. Really. They're really putting our whole society at risk" it is obvious that the issue is beyond rational and has crept up into the demented extreme of demagogy. This one statement may have just doomed the whole debt hiking debate as nobody will cede to being perceived as not only a terrorist but, what is far worse, a weak terrorist by the general population.
On the face of it, American households were not that affected by the bursting of the housing bubble. If we look at the Fed Flow of Funds report, the Balance Sheet of Households and Nonprofit Organizations, we find that net worth only declined by about 11% ($7.3 trillion) from 2007 to 2010: a $2.9 trillion decline in financial assets and a $4.9 trillion decline in tangible assets, i.e. real estate and consumer durable goods...Before the housing bubble, households owed about $5 trillion in mortgages. The housing bubble came along, introducing the fantasy of home-as-ATM-cash-withdrawal-machine, and mortgages ballooned to over $10 trillion. Back at the top of the bubble, the middle class had $6 trillion more assets on the books. Considering the Mortgaged Middle Class now owns about $6 trillion in net assets, then the bursting of the housing bubble caused their net worth to drop by 50%.