Archive - Jul 18, 2009

Since I'm moving and have to pack up all my seized collateral audio equipment, Radio Zero will be on hiatus for a time. Figuring you might want to send it off in style, we'll host it again tonight, around 11:45 eastern (woops) for a special midnight(ish) run. As usual, URL to follow on http://www.zerohedge.com 15 before and I tend to be late.

Listen here: http://cdo.zerohedge.com:8000/listen.pls

Maybe the attention is on the wrong building...

Zero Hedge posts a weekly update of the Federal Reserve's bloated balance sheet as we believe it is critical to visualize the spiraling debt burden at our "central bank" especially since any day now the Fed will begin purchasing treasury securities outright in defiance of Geithner's lies to the contrary (China can't sell its planned Bills: at 0.925 Bid-To-Cover does anyone honestly think they will instead prefer to buy dollar denominated toiler paper and not roll out their own QE version momentarily?). As Cornelius pointed out earlier the dollar can't find a floor these days: rerisking is rampant the argument goes and that kills the greenback. However, the circular logic also holds: create dollar pain (by whatever means possible) and thus stimulate the market, Larry Summer's all time wet dream (would anyone like to wager that when hedge fund positional disclosure become mandatory DE Shaw will fight until the bitter end). And in this simplistic trilateral world (have fun gaming the yuan), the strength of any one of the trio in the dollar-yen-euro triangle results in implicit weakness of the other two. And vice versa. Yet aside from major broker-dealers who are axed in a given equity direction and thus have all the incentive to impact underlying currencies, is it possible that specific governments may manipulate currency strength via central bank positioning? Why yes.

We've updated our disclaimer, our privacy policy and our (non)policy on conflicts / full disclosure. You should take a look. Also, if you like knowing whenever we make changes, you can subscribe to those listings.

The recent fall in the dollar and yen are yet another indicator of investors moving to risk assets. What does this mean for further dollar/yen weakness?

Liquidity, as frequent readers know, is a fascinating topic to Zero Hedge. Liquidity black holes, as one would imagine, is doulby so. However, when a firm like State Street, which is at the heart of the multi-trillion dollar stock lending endoskeleton of the market discusses both of these concepts, one must pay attention. The below report is a State Street presentation from 2003 discussing what happens in those episodes when liquidity disappears and how that impairs all other axes of proper market function.

Missed this the first time around, but it explains pretty well what modern banking means for the retail investor and why it is oh so critical to save, save, save.

No downward inflection points on the horizon in this set of primary data (here and here). Then again, we did not yet run it through the CNBC filter.

No direct correlation between the two, but a couple of good videos to start off your morning: Denninger on Kudlow - ever wondered what a bear in a Pamplona stampede looks like, here is your chance - this proves again why the Brady Bunch talking head box format is the most useless medium to convey any sort of informative message (but works miracles for those Mercedes commercial CPMs). And also a much more informative piece on Dark Pools.