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Guest Post: Sentiment Surveys Or Margin Debt Who Is Smarter?

The one and only data point that has given the bears pause is the extremely bearish sentiment readings. As an example the AAII survey recorded its highest bullish view on December 21, 2010 at 63.3% bullish to 16.4% bearish whereas on June 15, 2011 those readings were 29.0% bullish to 42.8% bearish. Bulls have argued this contrarian indicator says to buy stocks while bears have scratched their heads questioning why sentiment is so bearish with the VIX below 20 and equities only 7% off their multi year highs. Makes no real sense or does it?



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RIMMberrrrrrrrrrrr (Resumes Trading At $29.75)

  • RESEARCH IN MOTION SEES 2Q REVENUE $4.2B-$4.8B, EST $5.47B
  • RESEARCH IN MOTION 1Q REVENUE $4.91B, EST. $5.15B    
  • RESEARCH IN MOTION SEES 2Q ADJ. EPS 75C-$1.05, EST $1.40
  • RIM SEES YEAR OPER EPS $5.25-$6.00, HAD SEEN $7.50; EST. $6.24
  • RIM SEES 2Q GROSS MARGIN 39% VS EST. 41.5%
  • RIM CUTS YEAR FORECAST, SETS BUYBACK, JOB CUT PLAN


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HY ETF Flash Crash Prevented In Last Minute By 3 PM Market Ramp

While the furious tape painting attempt into quad witching continues courtesy of a surging EURUSD, which we anticipate will sell off shortly once again, as tomorrow brings absolutely nothing actionable out of Greece, a better indication of what is happening in the market are the High Yield ETF JNK/HYG which both were just been punched out. It is unclear if this ETF was the plaything of some HFT algo (we will follow up with Nanex shortly), but it appears that these ETFs would have been a direct casualty had the sell off continued after 3pm, at which point the bidside of the Level 2 order book essentially disappeared, and the only thing that prevented an epic collapse was central bank purchasing of the EURUSD which lifted the entire market. Yet what is nonetheless quite bad for holders is that the JNK/HYG has now taking out not only 2011 lows, but lows unseen since September 2010. The ETFs tend to be a good proxy of the actual cash HY market as can be seen in the second chart below. Which is why we send our condolences to all HY fixed income hedge funds which are about to be dealing with some very substantial margin calls. The crash may have been delayed but has not been prevented.



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And For That Flashy Crashy Smell, Here Are Surging Vol And Implied Correlation

You can look at the Dow which is hilariously green on the day despite the now doubly confirmed contraction of the US economy. Or you can look at the VIX which is now surging in what can be classified as an offerless market, and up well over 10% at last check. NYSE Circuit breakers now off.



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Krieger On Peak Government

While I spend a lot of time highlighting TPTB’s plan to form a world government, currency and central bank that doesn’t mean I think they will succeed. In fact, just as Wall Street played their hand too aggressively after being bailed out and are now going to go down for the count this round, The Powers That Be have also played their hand way too aggressively and not only will their dream of planetary control through a global fiat money system run by them completely fail, but their policies will fail so spectacularly and publicly that it will lead to what I call ”peak government.” Governments right at the moment are as big as they will ever be in our lifetimes. This is in my opinion a great thing for humanity and freedom but the transition to more localized rule of law will be tricky. We must be rational and help the sheep out as their world crumbles around them. They will be scared and looking for mommy. Governments won’t be in a position to help so we will need to do the heavy lifting.



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Weiner Announcing Resignation

Update: Well that was quick - Weiner lasted just 4 minutes. Speech over.

Watch it live. Elsewhere, InTrade about to commence cash settlement on Weiner resignation contracts.



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The Second Dot Com Bubble Has Now Burst

It is hard to believe that the first dot com bubble, so vivid to most semi-veteran traders, occurred over a decade ago. What is even harder to believe is that courtesy of the record liquidity bubble created by the Central Planning mafia, 2011 has already seen not only the second dot com bubble, but as the table below demonstrates, its bursting. Of all the dot com 2.0 IPO to hit the market in the past 3 months, the average return is now down 20%, but that has not prevented an underwriting syndicate comprised of the TBTFs to make billions in underwriting fees. Luckily, the fervor that previously had gripped some of the more volatile precious metals, and since spilled over into new public issues, has popped. Incremental cash will now be nearly impossible to get. To all companies that managed to take advantage of momo traders who have a memory of 15 minutes or less, congratulations. To everyone else: get in line for QE3. Wink, wink Groupon.



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Guest Post: The Countdown To Sovereign Debt Write-offs Has Started

Don’t be fooled by the IMF’s announcement that Greece will get a new round of money. This bailout is merely to give a couple of months for the parties to seriously negotiate what haircuts and debt extensions investors need to take in Greece, and Ireland and Portugal. Virtually all the comments made by the parties involved fit in with the view that we are now in a phase where people are negotiating how much they will write off and what else they will do. Almost none of the comments indicate that anyone is really trying to put together a plan that is going kick the can down the road for a long time. I am fading this rally as only the most optimistic investor can believe that this problem doesn’t lead to real default/restructuring with haircuts in the next couple of months.



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Art Cashin Compares This Week's Action To The Days Before Black Friday

Yesterday's ominous selloff (today's very temporary EURUSD, and 100% cross-asset correlation, bounce notwithstanding: after all the data just got even worse courtesy of the Philly Fed, meaning much more pain for the S&P before QE 3 comes) got you a little jittery, with Flash Crashy overtones? You are not alone. Market veteran Art Cashin recounts that yesterday's market action was not so much reminiscent of 2010, or even the 2008 uber-volatile market, but really 1987.



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Guest Post: Nuclear Twilight In Europe

It is becoming evident to many that the March nuclear catastrophe at Japan’s six reactor Daichi Fukushima complex has dealt a huge, possibly fatal, blow to the nuclear industry’s hopes of a revival. A year ago even global warming enthusiasts reluctantly embraced nuclear power as a carbon-free energy generating system, and the industry was ramping up for glory days as a result. The triple whammy against nuclear power beginning with the 1979 partial meltdown at Three Mile Island, followed by 1986’s Chernobyl disaster and now Fukushima, effectively present a “three strikes and you’re out” call against civilian nuclear energy power generation for the foreseeable future.



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Federal Reserve Plant To Be Next Greek Finance Minister

Update: according to sources, L-Pap has taken the smart way out and has decided to reject the offer to replace G-Pap #2.

According to Greek TV, and this is not confirmed by the Greek government yet, Lucas Papademos ("L-Pap", or "The Plant") will replace "Goldman employee of the year" Giorgios Papaconstantinou, (or G-Pap the Second as he is known on Zero Hedge) who is now the sacrificial lamb of the complete failure that is the PASOK government in Greece. A quick glance at L-Pap's resume explains why the European banking cartel is delighted with this nomination: "He followed an academic career at Columbia University, as well as
serving as Senior Economist at the Federal Reserve Bank of Boston in
1980
. He joined the Bank of Greece in 1985 as Chief Economist, rising to
Deputy Governor in 1993 and Governor in 1994. He was Vice President of the European Central Bank from 2002 to 2010." Take a wild guess whether The Plant will be on the side of his "constituency" or of the Criminal Banking syndicate in the upcoming plunder of Greece. And yes, this is quite bullish for the Ensolventzone Central Bank (and its currency) which was about to be saddled with tens of billions of defaulted debt pledged in its nether regions as cash collateral.



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Recent Risk Spread Dispersion Closes As Algos Bid ES Higher

The ES-Risk spread, so closely followed by so many recently, has now closed. Following the major divergence yesterday when the ES plunged but was not nearly followed as closely by the broader risk basket aggregates. Well, following today's relief rally in the S&P, the spread has now closed as always seems to happen eventually. What happens next is anyone's guess as ES appears fairly priced from a 3 day regression perspective (although very rich on an intraday basis).



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G-Pap Says Not Only Is He Not Resigning, But Government Reshuffle Has Been Postponed

Per Reuters, the "Greek Prime Minister George Papandreou said on Thursday he would stick to the course of reforms and would continue to seek wider consensus among Greece's political parties. "I seek and will continue seeking wider consensus," he told Parliament in an address. "Our response to the challenges we face is stability and to stay on our course of reforms." Apparently, the man who is now without any credibility, also announced during a live televizied appearance that the Cabinet shuffle, announced yesterday to placate the masses has been postponed according to Sky News. Curiously he also said,to a standing ovation, that he would reshuffle his cabinet before putting it to a vote of confidence by the parliament. In other words, everything has been kicked down the street and there is even less confidence about what is about to happen than before. This is increasingly starting to smell like a (hopefully non-violent) government overthrow in the making, especially now that G-Pap officially has less than the 151 votes needed to pass any PASOK proposal following recent party defections.



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Goldman: "Sorry, You Can't Blame The Philly Fed Collapse On Japan"

The firm, whose only job now as in 2010, is to pave the way for QE "Oliver Twist" 3, pulls one of the crutches used by the depression apologists, and makes the secular decline case that much stronger. To wit: "Weakness in the Philly Fed cannot be obviously explained by
supply-chain disruptions or other special factors, as we argued in
yesterday's US Daily. For example, the latest Beige Book comments on
Philadelphia Fed district manufacturing activity said "declines in
orders broadened from producers of apparel and rubber products to
include producers of electronic equipment and instruments.
Failure to
pass a multiyear transportation infrastructure reauthorization bill and
the ongoing real estate slump were cited by five different manufacturing
sectors as hampering the recovery" (these comments refer to May rather
than June). Slowing in "electronic equipment and instruments" could be
related to supply-chain problems, but otherwise the weakness looks
related to other factors." As to whether this means that the next stimulus is another payroll tax cut as Obama is hoping the republicans will allow, or more 2 Year rate caps, is unclear. What is certain is that the Keynesian monster must be fed.



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IMF Says Ready To Continue Support For Greece

  • IMF SAYS `WE STAND READY TO CONTINUE OUR SUPPORT FOR GREECE'
  • IMF SEES `POSITIVE OUTCOME' ON GREECE AT NEXT EUROGROUP MEETING
  • IMF SAYS SUPPORT SUBJECT TO ADOPTION OF AGREED GREEK MEASURES

And the EUR surges



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