Archive - Jan 11, 2010

Tyler Durden's picture

Goldman Provides An Answer To Albert Edwards' Household Employment Survey Concerns





Even accounting for demographic shifts in the labor force, the recent decline in the labor force participation rate is at the extreme end of prior recessions. We therefore suspect that the participation rate will stabilize over the coming year, implying that outright job growth of more than 100,000 per month will soon be needed to keep the unemployment rate from rising further.

 

Tyler Durden's picture

Chinese Monetary Schizophrenia Now Acute





While people may complain about the daily contradictory statements from the Federal Reserve about rates, easing, assets, QE, repos, etc., the truth is we have it easy. For a glance at what the dark side of a gonzo stimulus run amok, coupled with a sociopathic central bank, look no further than China. Earlier today, we got the following bit of data from Caing.com, "It seems that China's commercial banks have slowed the lending pace due to warnings from the People's Bank of China (PBOC) and banking regulator. However, new statistics showed that the pace actually accelerated during the first week of 2010. New lending by banks reached 600 billion yuan, with the five biggest banks accounting for 280 billion yuan, according data obtained by Caixin Media." And while the PBOC giveth with one hand, it taketh with the other. "China’s central bank guided its benchmark one-year bill yield higher for the first time in 20 weeks to curb lending, causing banking stocks to decline. The People’s Bank of China sold one-year bills at a yield of 1.8434 percent in open-market operations, according to traders at Industrial & Commercial Bank of China Ltd. and BOC International Holdings Ltd. The yield rose eight basis points, or 0.08 percentage point, said the traders, who asked not to be identified."

 

Tyler Durden's picture

Guest Post: What Happens When The Wells Run Dry





One nagging question that the industrial world has been asking itself since the discovery of the first oil well is what happens when the wells begin to run dry. The answer is relatively simple to imagine. We had a dry run, so to speak, when Dubai’s economy tanked a few years ago. And although the causes of Dubai’s ills and ails were financial and not oil related, the drama which unfolded gave us a watered-down version of what might transpire if and when the oil wells stop producing.

 

Tyler Durden's picture

Guest Post: The Case Against Geithner





"As we sit here today, Wall Street continues to exploit a policy of government-sponsored giveaways and secrecy to pay themselves billions. Record-setting bonuses due to banks like Goldman Sachs as early next week. Yet instead of acting as our cop, Secretary Tim Geithner has become central to what may be a cover-up of the greatest theft in U.S. history. Here is the evidence." - Dylan Ratigan

 

Reggie Middleton's picture

Is My Warning of the Risks of a Stagflationary Environment Coming to Fore?





A year ago I stated that if I had to pick a scenario, the most likely would be stagflation wherein high input costs would co-exist with a deflationary drop in asset values, creating a "worst of both worlds" style environment. Well, Alcoa has given us some anecdotal evidence of the likelihood of such an occurrence approaching.

 

Tyler Durden's picture

The Ultimate Shell Game: The Federal Reserve Funds 91% Of 2009 U.S. Deficit





In the current hodge podge of abstract finance, it is easy to get lost in the numbers and lose sight of the forest for the trees. Which is why we provide the ultimate simplification: In calendar (not fiscal) 2009, the US grew its budget deficit by $1.47 trillion. In the same time, the Federal Reserve grew its securities holdings from $500 billion to $1.85 trillion, a $1.34 trillion increase. Keeping it simple: 91% of the budget deficit increase in 2009, under the authority of President Obama, was funded by the... United States.

 

Tyler Durden's picture

The Minsky Moment Approaches





"When investors are forced to sell even their less-speculative positions to make good on their loans, markets spiral lower and create a severe demand for cash. At that point, the Minsky moment has arrived." The Minsky moment is, once again, knocking on the door.

 

Tyler Durden's picture

SEC Folds Like A Lawn Chair, Will Not Seek Charges Against BofA Individuals





More theater, more injustice, more kickbacks. We demand Mary Schapiro's immediate resignation for gross dereliction of assigned duty.

  • SEC Won't Bring Charges Against BofA Execs In Merrill Deal
  • Such Charges 'Are Not Appropriate'-SEC
  • Decision Covers 'Individual Officers,' Directors And Attorneys For BofA
  • SEC Proceeding With Revised Lawsuit Against BofA
  • U.S. Judge Has Pushed SEC For More About BofA Execs' Role

 

 

 

George Washington's picture

"We've Never Seen this Before – Such a Huge Rally, and the Little Guy Is Out"





Mom and Pop investors aren't buying stocks ...

 

RobotTrader's picture

Looking For Volatility





On a quiet day like today, everyone is screaming and complaining about a collapsing VIX and lack of volatility. However, look beneath the surface and you will find many battles being waged between Goldman Sachs and their biggest clients who have outsized positions in specific stocks. With insane volatility.

 

Tyler Durden's picture

SEC Seeks To File New Charges Against BofA On Merrill Deal, Full SEC Letter Attached





Dear Judge Rakoff

In accordance with the Court's instruction, we respectfully submit this letter on behalf of Plaintiff Securities and Exchange Commission to seek leave, to file a Second Amended Complain. The SAC adds a count under Section 14(a) of the SEC Act of 1934, and Rule 14a-9 thereunder based on the failure of Bank of America Corporation to update the merger proxy statement, before the December 5, 2008 shareholder vote, concerning extraordinary losses that were sustained by Merrill Lynch & Co. prior to the vote

 

Tyler Durden's picture

VIX-VXV Spread At 3 Year Lows





The massive squeeze in VIX has pushed the volatility index to level unseen since 2007. As the chart below indicates, a drop of a few more points will push the VIX to a level indicative not of the Great Recession but of Greenspan's Great Moderation, a time where vol was so law, it effectively killed th swaption market in CDS (green box). This is troubling as it indicates market complacency about risk is dangerously high. Yet even more troubling in terms of market positioning, is the VIX (1 month) - VXV (3 month) spread. That particular relationship has now revisited lows last seen in 2006. It appears that in addition to assuming "all clear" for the bond and inflation market, yet not so much clear down the line, the same line of thought is migrating to equities. Could near-term volatility be underrepresenting the true amount of risk on a normalized basis?

 

Tyler Durden's picture

The Fed Prepares For A Surge In New Primary Dealer Applications





These days Primary Dealers are the new black. Being a Primary Dealer is defacto insurance that one is Too Big To Fail, even if that is hardly the case. Having unfettered access to the discount window, to the Primary Dealer Credit Facility, to various repo facilities, and all other mechanisms that Liberty 33 has come up with to make goosing the market a formality, is a guaranteed way to achieve record profits and a wet dream for many a bank CEOs. In many ways this is comparable to the rush by everything with a heartbeat to purchase a home using New Century loans back in 2005, with the Fed of course in the role of the now bankrupt subprime lender.

Today, the Fed issued new guidelines for capital requirements for the line of banks that are willing and able to join the ranks of their infinitely bigger market monopolist brethren such as Goldman Sachs, on the receiving end of the taxpayer bailout trough. And because the Fed is certainly taking this risk "seriously" it has made becoming a PD ever so much more difficult: now instead having $50 million in net capital, PD wannabes will need to show $150 million of capital to the Fed kleptocrats. Prudence defined.

 

Tyler Durden's picture

What Happens If Bernanke Is Not Reconfirmed By January 31?





With Bernanke's reconfirmation getting dangerously close to not being reality by the January 31 deadline, courtesy of a few non-Wall Street captured politicians in the Senate who are doing all they can to delay the process, a key question asked today is what will happen to the Fed Chairmanship position on February 1. The WSJ Blog provides some perspective on why this could be a destabilizing event to the tranquility that has gripped all trading desks, where conviction that the guy who is allegedly gobbling up futures without respite, may soon became scarce.

 
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