Archive - Oct 7, 2010

Actual Bloomberg headline just posted:

BN  *BRAZIL CENTRAL BANK TO BUY DOLLARS XX:XX-XX:XX P.M. LOCAL TIME

Yup, the filler pretty much says it all.

Bill H.R. 3808, the Interstate Recognition of Notarizations Act of 2010, which was discussed yesterday, and which according to both Reuters and the NYT may have a material impact on mitigating the impact of the High Freq Signing scandal, at least on the servicers, is now open for public comments at the white house.

Those wishing to tell the president how they feel, may do so at the following link:

http://www.whitehouse.gov/webform/comment-legislation?billname=H.R.%203808%20-%20Interstate%20Recognition%20of%20Notarizations%20Act%20of%202010

Now that Research in Motion has reached our valuation target and offered the opportunity for material gain for our subscribers, I have decided to released the full 45 page professional Forensic Valuation report to the public. It is quite extensive, and has been quite accurate to date…

Very much as expected courtesy of 100% correlations, and following the earlier drubbing in the EURUSD, gold is now falling after the central banks of America, Europe, and Asia have all issued press releases they are henceforth ceasing all currency debasements and will never monetize debt ever again. Seriously, though, following the parabolic move higher earlier, as the widely predicted and expected correction is taking place (see Rosenberg's note from yesterday), which has brought gold to the level last seen two long days ago, all the new price does is provide a cheaper entry point to a self-created gold standard. Thank you LBMA.

Daniel Gross, who while at Newsweek saw the end of the recession even as the depression was merely stretching its wings, and generally drank Kool Aid by the supertanker, only to see his media venue blow up (some recovery) and by forced to move to that other bastion of creative thought Yahoo!, gets pummeled in today's letter by David Rosenberg for his most recent lunatic ramblings which not at all surprisingly made it into Paul Krugman's New York Times. Frankly, it was about time someone explained to Mr. Gross that reality is actually quite visible, if only one puts down the mild hallucinogens for at least a minute.

Cold feet? Yes, but I am taking money off the table.

The sudden plunge in the EURUSD can only be attributed to Waddell and Reed rushing to sell a few nickels worth of the FX pair, as the JCT ECB press conference has ended, and contrary to what some are saying, had nothing notable in it. In fact it was the usual liefest, in which the Europe Fed big man had the gall of saying the US wants a strong dollar: who appoints these pathological liars? Here is Goldman's Erik Nielsen with a rounddown of the bulletin of bullshit.

When I wrote last week about the emerging problems in foreclosures, I opined that the problem could get much bigger and more complicated. Boy, has it ever. It was noted how quickly this had morphed from a potentially isolated processing problem at a single institution (GMAC) to an industry-wide disaster that may threaten the very concept of securitization. That would be a major problem since at the top of the bubble, it was estimated that nearly 80% of all credit came from securitization.That’s a hole that no fleet of Fed helicopters can fill. - Art Cashin

Oh the joys of austerity. In Greece things are finally warming up, even as the weather is cooling off, and vacation bills come due. Don't expect to see any live footage on CNBC, as Waddell & Reed may be forced to sell 10 ES contracts and wipe out the entire market, but back in Athens things are right about where we left them off on May 6: Greek civil servants have stopped work for 24 hours, "pushing ahead with protests against EU/IMF prescribed austerity measures despite a waning turnout." Reuters reports: "Tax offices, public schools and some public services shut down, while public hospitals worked with emergency staff. Flights to and from Greek airports were to be grounded for four hours up to 1600 GMT, when air traffic controllers joined the action." For the sake of keeping the ponzi alive, we hope at least Fed helicopters are allowed to make emergency landings in the general area of the Acropolis, or to at least paradrop buckets full of green colored linen to keep the peasantry content for a few more weeks.

This horrifying fact comes courtesy of Morgan Stanley analyst David Greenlaw. And it confirms what I’ve been saying since the end of 2009, that the US has entered a debt spiral: a time in which fewer and fewer investors are willing to lend to us for any long period of time… at the exact same time that we must roll over trillions in old debt and issue an additional $100-150 billion in NEW debt per month in order to finance our massive deficit.

Underrepresented jobless claims, which just like last week and now 23 out of 24 weeks prior, will be revised notably higher next week, came at 445K, on expectations of 455K, after last week was revised from 453K to 456K. Continuing claims, on the other hand, increased from 4,45K to 4,462K, while last week was revised, surprise, upward from 4,457K to 4,51K. At this point, however, good news is bad news, as any economic data that shows even the slightest positive inflection point weakens the QE2 argument. And if November 3 does not see Bernanke announce further easing, stocks will plunge. As for the tail end, those on extended claims and EUCs continue to seesaw, this time jumping by 255K in the week ended September 18, with extended claimants once again passing 1 million and those on EUCs over 4.1 million.

• Greenspan Op-Ed: Fear undermines America’s recovery (FT)
• Revision season begins: job losses in 2009 likely bigger than thought (Reuters)
• The Mutual Fund in the 'Flash Crash' (WSJ)
• Yen at fresh high amid intervention talk (FT)
• Japan Says It Won't Join Currency Devaluation Race (Bloomberg)
• Geithner Calls for Currency Cooperation Amid Rush to Weaken (Bloomberg)
• Jonathan Weil debunks another government lie: why AIG's numbers are much worse than presented (Bloomberg)
• Fed is banking on phony wealth effect (Reuters)
• Fed Officials Mull Inflation as a Fix (WSJ)
• NY Fed takes $180m hit on Hilton debt restructuring (FT)
• Greek Services Paralyzed as Public Workers Strike Over Austerity (Bloomberg)

It is getting scary out there. The LBMA has now lost all control over the gold market, even as the Fed now has the entire bond market in the palm of its hand. A little earlier spot gold passed a new record price of $1,364, which as the chart below shows, demonstrates a parabolic blow off or something in the precious metal, while in bond land the 2 Year has collapsed to 0.37%, an unprecedented low yield. There is a possibility gold will take out $1,400 within days. Not to be left alone, the 10 Year has also surged and is now touching 2.39%, bringing it to within 11 bps of the Bund, the tightest spread since December 2009. In other news, today will be another day in which both deflation and inflation win at the same time, leading to major confusion for everyone in the prediction game. And with gold already up 1% on the day, stocks will continue to be down in real terms.

• Bank of England may step away from stimulus exit as UK economy stumbles.
• China hardens opposition to calls for stronger Yuan, tells EU to back off.
• EU backs the introduction of an EU-wide tax on bank profits and pay packages.
• Euro nears $1.40 as dollar plunges on expected Fed move to boost economy.
• Geithner says Japan intervention not to blame for global currency tension.
• IMF lifts Euro-zone growth f'casts to 1.7% this year and expects 2011 growth at 1.5%.
• IMF raises India 2010 economic growth forecast to 9.7% on consumer demand.

The day starts with more data on the job market; we then see retailers’ reports, listen to a couple of Fed speeches, and wind up with consumer credit and the Fed’s balance sheet.