Archive - Oct 26, 2010

The 10:15 POMO start moment when the Fed begins to indirectly buy Amazon and Netflix is as stealthy as a fart in an elevator. Nobody even pretends to hide the manipulation. Enjoy the free for all.

Amusingly, following up on earlier reports that the Clearing House Association (aka the banking oligarchy) will petition the SCOTUS to hide their oh so very secret insolvency which by now everyone knows about, the Fed has decided to amusingly distance itself from the kleptocratic crowd and will not seek court review. In other words, the public's anger when the SCOTUS sides with the bankers will fall squarely upon Lloyd Blankfein et al, and not Ben Bernanke, even though it is the Fed who is the defendant in the Pittman lawsuit. This is just plain ridiculous. And the reason provided by the banks: why more mutual assured destruction of course: "disclosure of the information threatens to harm the borrowing banks by allowing the public to observe their borrowing patterns during the recent financial crisis and draw inferences--whether justified or not--about their current financial conditions." Here is an inference about their current financial conditions: they are all insolvent. Does that matter? No. Because the only holders of bank stocks now are other banks. It is called a ponzi for a reason after all.

And Richmond Fed beats too, coming at +5, on expectations of 1... QE2 not looking so hot all of a sudden.

If this is not some nasty and quite early April Fool's joke, this is very, very bad news for JPMorgan:

• BN CFTC CHILTON MAKES STATEMENT ON SILVER MARKET
• BN * SILVER PRICES SUBJECT TO "FRAUDULENT" INFLUENCES, CHILTON SAY
• BN *"REPEATED ATTEMPTS" MADE TO INFLUENCE SILVER MARKET, CHILTON
• BN *SILVER MANIPULATION SHOULD BE PROSECUTED, CHILTON SAYS

Now... where are all of those tin foil hats...

As we expected months ago, the fate of the US constitution, and the tyranny of the Federal Reserve and the banking oligarchy as a whole, will be decided by the captured Supreme Court, after Dow Jones reports that the Clearinghouse Association has asked the US Supreme Court to hear the Fed disclosure ("Pittman") case. The SCOTUS decision, given the recent Obama appointment, is a moot point. What happens after the judicial branch is also exposed to have been fully bought by the banks, after the executive and the legislative, is up to 99% of the US population.

Is there any wonder why Buffett loves him so much? With 77% of his holdings at Castle Point invested in financials, there is no surprise why Todd Combs, who has yet to get to the part about diversification in Finance 101, and is the consummate believer in the US ponzi, is the heir apparent to the man who is all about taxpayer funded bailouts of financial investments.

"A disappointing report" as the report itself says. The very much outdated August Case Shiller Index comes at 148.59 compared to 148.91 previously, a sequential deterioration. The growth is just 1.7% Year over Year, compared to 3.18% in July, and a miss of expectations of 2.1%. This is the smallest Y/Y improvement since February. Look for this index to collapse in October when it is reported in December, once the full impact of fraudclosure is digested. In the meantime, the downward inflection point in CS is now very much obvious.

• Fed's `Pit Bull' Takes on Bank of America in BuyBack Battle (Bloomberg) - "Kathy Patrick can be as frightening as a pit bull on steroids."
• High US Unemployment, Chinese Growth May Spur Trade War (WSJ)
• Japan's Igarashi Says Yen Sales Most Effective When 'Surprise' (BusinessWeek)
• Debt Sales Highlight Abnormal Conditions (FT)
• Asia's economic history foretells Chinese slowdown (Reuters), compare to Is China's Growth Rate Destined To Be Cut In Half? (Zero Hedge)
• End Bailouts—No Ifs, Ands, or Buts (BusinessWeek)
• Malcolm Gladwell: Who really rescued General Motors? (New Yorker)
• Meet the leading contender to manage Berkshire's billions (Fortune)
• Greece Likely to Default Within Three Years, El-Erian Says (WSJ)

After all, if the Fed DOES announce such a program, then we are undoubtedly heading into outright trade wars, tariffs, and even MORE currency intervention.True, Bernanke has ultimately got his sights set on destroying the US Dollar. But with global tensions growing, he’s got to walk a fine line between saving Wall Street and pissing off the US’s biggest creditor (and the only country that still owns more US debt than the Fed).

Today, is the first of three last POMOs to be conducted before the November 3 D-Day, on which we will learn how many tens of billions more will be added to the daily POMO monetization. As announced previously, Brian Sach will buy back bonds maturing 2/15/2021 – 8/15/2040, of which many that likely were auctioned off as recently as a week or so ago (we will compare the 2040 Cusips with those from the 10/14 30 Year auction to see just how prompt the Fed is at remonetizing immediately auctioned off bonds once the permitted issues are announced). In the meantime, here is the list of most probably monetization candidates.

• Copper climbs to 27-month high on Dollar concern; Zinc at nine-month peak.
• Home sales picked up in Sept, but long-term picture for housing is growing grimmer.
• Sweden’s Riksbank hikes key interest rate for a third time since July on stronger economy.
• UK growth probably weakened last quarter as BOE keeps 'fingers crossed'.
• US Treasury draws negative yield for first time during 5-year TIPS auction.
• Aaron's posts Q3 EPS of $0.32 (cons $0.30); revs rose 8.9% to $452.2M.
• Amgen's Q3 net income fell 11% on higher operating costs, lower sales of key drugs.

Remember all those lies about how the Greek economy was going to grow and stuff? Here is the truth: the latest Bank of Greece report shows Greek GDP to shrink about 4% this year and unemployment to exceed 12%. And it is enough to blow Greek spreads out by 25 bps and growing. Below are the summary points from the report which is the first step to uncovering the true devastation sweeping the country. Elsewhere, Kathimerini reported that delays in the collection of taxes in Greece may cause a EUR 900mln shortfall in 2010 causing further widening in spreads.

Home prices, consumer confidence, the Richmond Fed index, and one more Fed speech….

That is how Transparency International defines corruption...

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 26/10/10