Frontrunning: July 22

• Gallup Poll: More disapprove than approve of Obama's healthcare policy (Gallup)
• PIMCO and Centerbridge charging 13% for the privilege of bleeding CIT dry, before handing off charred remains to GE Capital (Bloomberg)
• The GE - CIT Connection becomes obvious (Bloomberg)
• CIT troubles raise Fed supervision questions (Reuters)
• CNBC parent GE to exit TLGP taxpayer backstop program (AP)
• Goldman Sachs lack of love puts profits at risk (Bloomberg)

S&P Commits Professional Suicide With Ratings Round Trip, Underlying CRE Remains Toxic Garbage

Rare? Medium Rare? Medium? Well Done? S&P? Indeed, as the last peg in the gradation of burnt to a crisp, S&P smells completely done. As in there isn't even left a shadow of a doubt that all S&P does is pander to the solicitations of whatever few remaining clients it may have, or, as the case may be, the U.S. government. Any credibility S&P, which one would be excused for confusing with Sycophantic & Pathetic, may have tried to salvage over the past 6 months has been gutted and left to dry after this most recent fiasco, which is the final straw on theMcGraw-Hill subsidiary's expedited route to the NRSRO utterly discredited trash heap.

T2's Whitney Tilson On Toxic Trading

T2's Whitney Tilson on Themis Trading and Zero Hedge

The Day That Was - HFT's Superdominance

The three HFT horsemen are C, BAC and CIT.  These three stocks traded 860 million shares today which is 10% of all US Equity volume.  Think about that: 3 stocks in a universe of over 5000 U.S. stocks represented 10% of the volume.  How could this be?  Look at the intraday chart of all three of these stocks and you will see a something in common: an early morning move followed by a flatline with a very tight range (around .05).  Meanwhile, while these stocks were flatlining the market was heading higher.  The S&P 500 gained around 10 points in the afternoon (or 1%) but these 3 stocks did not move.  There was a constant bid to these stocks yet anytime they wanted to lift there seemed to be a constant offer just a few pennies higher.  This is what HFT looks like.  The HFT’s made a killing in these 3 names today – in addition to the .01-.02 spread, they collected about .005/share in liquidity rebates.  Not a bad day for a supercomputer.

Is The SLP The NYSE's Answer To Direct Edge's "Advance Look" Enhanced Liquidity Provider Program Or You Trade You Lose, You Trade...

There is a curious article in the latest edition of Traders Magazine. It is curious mostly because it was allowed to be published, as it definitively peels off the cover of what truly happens at the pantheon of stock exchanges, that dominated by a private club of select high frequency traders, who obtain better and faster pricing than everyone else, and where the group of "select few" is seemingly legally allowed and even encouraged to front-run the "every-one else" (you, dear reader, are most likely in the latter camp). If you ever wondered why HFT generates profits of over $20 billion a year, please read this article.

Grayson Grilling Bernanke On Half A Trillion In Foreign Liquidity Swaps And The Constitutional Basis For Such

Grayson asks Bernanke about the $550B (as of 12/31/08) in liquidity swaps with foreign central banks. Who got the money? How did the Fed lend this much money without the consent of Congress? Did these loans push up the value of the dollar?

• At minute 1:30, Bernanke can’t say which financial institutions got the money.
• At minute 3:19, Bernanke says that the 30% rise in the dollar which took place at the same time as the Federal Reserve lent out $500B to foreign central banks was just a coincidence.
• At minute 3:45, Bernanke and Grayson discuss the Constitutional basis for the Federal Reserve lending a half a trillion dollars to foreigners.

Canada Believes It Has A Tight Grip On Inflation

The Canadian rate decision is standing solid at 0.25 and the BoC expects to be able to control inflation going forward.