Archive - Oct 2010

Ben B is going to buy a Trill in bonds for a 1/2% boost in GDP. SSA just took that away from him.

• Marc Faber Says World Heading for "Major Inflection Point" (Bloomberg)
• French Strikes Disrupt Air and Rail Travel (NYT, BBC)
• Jobless America threatens to bring us all down with it (Telegraph)
• Will they be paid in gold? Fed's latest reflation attempt comes via Wall
  Street, which is expected to pay $144 billion in bonus this year (WSJ) - this number represents 8% of M1
• Two Faces: Demystifying the Mortgage Electronic Registration System's Land Title Theory, Christopher Lewis Peterson, University of Utah (SSRN, h/t Karl Denninger)
• States to Probe Mortgage Mess: Attorneys General Hope Lenders Will Re-Write Loans With Troubled Documents (WSJ)
• Citigroup Stops Using Foreclosure Law Firm Facing Florida Probe (Bloomberg)

Another quiet day with just small business sentiment and more from Fed speeches. However, bonds are now reopen, and the 10 year was trading at 2.35% last. This means the Fed has about 235 basis point to extract out of it before it starts buying stocks in the open market.

• Aluminum prices in China may gain more than 10% on output cuts.
• Asian stocks fall on lower commodity prices, Yen concerns; Toyota declines.
• China may worsen trade tensions with biggest quarterly surplus since 2008.
• China reportedly lifts reserve ratio for top banks.
• Greece raises $1.6 billion in oversubscribed 26-week treasury bill auction.
• Japan's Noda says ready to take 'bold' action after Yen hits 15-year high.
• Oil falls a second day after stronger Dollar reduces appeal of commodities.

My theory of currency relativity sufficiently exposes, as frauds and charlatans, Geithner and other Western bankers that have created, as a diversionary tactic to bury the truth, an artificially divisive East-West hostilities among the serfs that inhabit their kingdoms. Despite Mr. Geithner’s attempts to convince the world that the Chinese yuan is insufferably weak compared to the other world’s major currencies, the below charts expose that, well, a fiat currency is a fiat currency is a fiat currency is a fiat currency is a fiat currency.

The media is staring at the wrong target. Each major media outlet is copying what is popular or what the next outlet broke as a story versus where the true economic risks actually lie. Here's what's truly at stake – the United States is now at risk of losing its hegemony as the financial capital of the world!

European Morning Briefing - Stocks, Bonds, FX – 12/10/10

The big banks are saying that these are simply "procedural defects" which don't affect their ability to foreclose.

Are they right?

This daily report is designed to help traders find opportunities to trade against this group. The premise is very simple we are looking for 66% of retail traders to be trading either long or short a currency pair, we then look for opportunities to fade (trade against) this group. For example if 72.99% of traders are long the USD/CHF we look for opportunities to short that pair. The pairs that we feel offer the highest opportunity for success are described in the Shortand Long Zones.

"And in the last analysis, success is what matters--Adolf Hitler"...

I know I will be accused of engaging in dangerous hyperbole by making this comparison. Allow me to differ...

It was a quiet day on the Street as the bond markets and federal offices were closed to celebrate one of the greatest threesomes of all time, and no, Money McBags isn't talking about the Three Stooges, the Dahm triplets or that scene in Meggann and Hanna love Manuel, he's talking about the voyage of the Nina, Pinta*, and Santa Maria as today was Columbus day so hopefully you all coughed in to a blanket and handed it to your neighbor in order to celebrate.

In a profession where you are only as good as your last trade, the question arises of what to do now? I look at moves like these and my inner trader says “run, Forest, run!” Mean reversion has the nasty habit of taking profits away. Is QEII (the monetary kind) already priced in, but may not happen? What’s a poor trader to do? Better to lock in that performance, keep you powder dry, and live to fight another day.

The biggest piece of news this evening is, surprisingly, not the latest monsoon season suddenly to hit Manhattan, but comes from a few thousand miles to the East, out of Ireland to be specific, where we learn via the FT that the country "has opened the door to a renegotiation with senior bondholders of its two nationalised banks despite previously opposing any such move for fear of drawing the wrath of creditors around the world." This would be a huge change in strategy, and if effectuated, would mean that Ireland (for lack of an alternative) would be forced to do what the US was terrified of doing when Citi, Fannie and all the other still-bankrupt companies were on the brink. While the US never impaired the senior debt, for fear of enraging creditors (mostly China) who would have experienced their first capital loss on US-debt, it seems the dominoes are about to topple for Ireland as Irish eyes are about to stop smiling and take their bitter medicine, which our own Uncle Sam will avoid until well past the bitter end. Alternatively, this would also mean the end of the strong EUR regime once again, as the ping-ponging burden of proof of solvency shifts once again to Europe.

Of the 67 or so people who own homes in our group of “average Americans,” 16 (roughly 24%) of them are “underwater,” meaning they owe the bank more money on their mortgage than their homes are actually worth. Another five out of this 67 have lost their homes to foreclosure since the Depression began in 2007. Add to all of this the facts that Americans’ second most common source of wealth (stocks) haven’t returned anything in over a decade and that incomes today are 5% lower than they were in 1999 and you’ve got a pretty bleak picture for the US economy and Americans’ quality of life.

By now it should be common knowledge to everyone that in American society, the top wealthiest 1 percentile controls all the political power, holds half the wealth, and pays what is claimed to be the bulk of the taxes (despite mile wide tax loopholes and Swiss bank accounts). The rest of the population is merely filler, programmed to buy every latest self-cannibalizing iteration of the iPad/Pod while never again paying their mortgage and brainwashed to watch 2 hours of prime time TV commercials to keep it distracted from the fact that the last time America was a democracy was around the time the Wright brothers were arguing the pros and cons of frequent flier programs. So far so good. But what about the rest of the world? How is wealth stratified in a global perspective? Where do the "rich" live? What kind of wealth is controlled by various countries? Where are the Ultra High Net Worth people? For answers to all these questions, and much more, confirming that just like in America, the wealthiest 0.5% control over 35% of world wealth, Credit Suisse has compiled and released its latest "Global Wealth Report." The findings are summarized here.