Archive - Oct 2010

Today's latest chapter in what is now known as the new 3M: the Massive Mortgage Mess, is that Fidelity National has told lenders to halt foreclosures, and to stop sales of bank owned properties. The reason, and this should be no surprise to anyone, is "possible document flaws." Fidelity is merely the next of, well, all. And while the WaPo reports that the John Walsh, acting director of the OCC has reached out to seven lenders including Chase, Bank of America, Wells Fargo, Citi, PNC Bank, U.S. Bank and HSBC, to review their foreclosure processes in light of the Ally and JPM Chase situations, the news of the day comes from the NYT that Old Republic National Title has stopped insuring title to Ally-foreclosed properties "until further notice." And once the insurers lost faith in the product they are supposed to have 100% confidence in it is game over: virtually no foreclosure transactions will take place going forward. We hope RealtyTrac will provide an update on what they may be seeing in foreclosure trends in the past two weeks : we are confident these have plunged off a cliff across the land.

Demand from emerging markets is absolutely exploding. A major super cycle of buying from Asia is creating a long term structural shortage for the black stuff. A US dependence of 50% of its power generation from coal isn’t changing any time soon. If the Republicans win the November elections, a regulatory back off will deliver a sudden boost to profitability. (BTU), (MEE), (JOYG), (KOL).

The collapse of America continues, and Meredith Whitney may be proven right that the municipal bankruptcies are about to make a full frontal appearance. Harrisburg has just requested a last minute rescue financing from the state Pennsylvania, as the alternative would be insolvency. From BusinessWeek.

The fundamental premise behind the entire SEC report is that the accelerated sale of an "outsized" ES block (of 75,000 contracts) caused an avalanche that wiped out $1 trillion in market cap in five minutes. Which very well may have been the case... if the block was indeed big. Below we present the average volume of the front month (on the run) ES traded on a daily basis since the beginning of the year: it average to around 2 million contracts a day. In fact, in the days preceding the flash crash (during which incidentally saw a surge in ES trading to almost 6 million contracts), daily volume was around 3 million contracts. Let's do the math: 75,000 of 3,000,000 is 2.5%! The SEC expects the naive sheeple to believe that a block that was VWAPed (and not slammed on the bid) and accounted for around 2.5% of recent daily volume caused the flash crash??? And that the HFts, who were supposed to provide all this massive liquidity in ES and everywhere else, but decided to shut down, and take away all liquidity, were merely an innocent bystander who gut hurt by W&R's recklessness? Good luck with that. Next week - 22 consecutive outflows from equity mutual funds. Oh, and if the statement in the report: "At the same time, HFTs traded nearly 140,000 E-Mini contracts or over 33% of the total trading volume" is indicative of the competency of the porn addict or porn addicts who wrote this report, we are all doomed.

Housingwire: "In the memo, Chase says it believes the factual information given in the affidavits are accurate and not affected by whether or not the signer knew the details."

In the memo, Chase says it believes the factual information given in the affidavits are accurate and not affected by whether or not the signer knew the details.

4closureFraud here...

Factual information eh??

Explain this then…

Why were Two Original “WET INK” Notes Discovered in Same Foreclosure Case?

It looks like two different attorneys from the Florida Default Law Group did not realize that the other attorney filed a “copy” before they did.

Not only were there two notes filed as certified originals in the case, they were slightly different...

As GMAC would say, just a “technical” issue…

China has created a monster for itself that has already begun to turn on its master, and will one day devour it.

One of the theories proposed by Zero Hedge and Nanex is that some of those who may have clogged the market with "quote stuffing" did so in order to benefit from arbing the immediately effectuated latencies in the NBBO and proprietary quote streams. We were immediately ridiculed by "experts" who claim such an arb is impossible. Luckily, the SEC confirms that not only is it possible, but here is how it very well may have happened, utilizing, what else, dark pools. But, as the SEC says, it didn't happen, because for it to be profitable only a select few must have been utilizing this strategy, when as the SEC so thoughtfully assumes, everyone was in on this criminal trade, thus removing all arbitrage opportunities. So all is well, because if there is one criminal in the market they all are. Brilliant.

Moral of the story: NO ONE MUST BE ALLOWED TO SELL MORE THAN ONE SHARE OF STOCK AT A TIME EVER!!! YOU WILL OVERLOAD THE MARKET, FLOOD THE NYSE'S LRP, CAUSE A LIQUIDITY CRISIS, DESTROY THE MARKET AND END CIVILIZATION AS WE KNOW IT

In the great pursuit of yield one of the key observations in fixed income land has been the ever increasing duration of bonds, as more and more companies are able to offload debt with ever longer maturities, the recent reissuance of 100 year bonds by Norfolk Southern being just one example of why many are expecting (jokingly, for now) the return of perpetual bonds to be issued by the US government, i.e., never to be repaid. Yet the full picture is not so simple.

A total global growth rate of 2.47% is simply not enough to sustain $3.70 copper and $80 oil… Speculators, fortunately for the commodity pushers, cannot do complex math like that – they just hear the words “China” and “growth” and they begin to foam at the mouth and throw all their dollars at shiny bits of metal and black sticky goo.

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 01/10/10

There are literally hundreds of thousands of trades that had to be DKed this morning at the open of LQD after who knows how many HFT algos went haywire and traded the ETF down from its closing price of $112 down to $102. Of course, all these broken HFT algo induced trades are being cancelled, as the idiots at the SEC look for a way to blame all this on Waddell and Reed once again. Next up: Barack Obama prepares to blame Waddell and Reed for the second Great Depression. Someone please forward the chart below of all the DKed trades in LQD and ask her to point out just which was Waddell and Reed's trade that set off the avalanche. In the meantime, we look for the next Waddell and Reed induced flash crash. Luckily, the porn-fetish morons have demonstrated once again they have a "very deep understanding" of if not the markets, then at least how to use taxpayer-funded credit cards to pay for web porn, and that it will always be Waddell and Reed who is blamed for every single daily, then hourly, then minutely flash crash from now to infinity.

Nothing to see here, move along ...

Alexandre Pestov, whose insightful work of deconstructing the Canadian housing bubble has been presented on Zero Hedge on several previous occasions (link), has released his Fall update. In his words: "This paper is written as to address the paraphrasing of “housing market in Canada is not identical to that of the US" as “no housing bubble in Canada”. Instead of dissecting the US housing market crash for answers, this report examines our current housing bubble in Canada against the backdrop of the 1985-1989 housing bubble in Canada. In fact, our specific Canadian situation will most likely be the force behind housing market’s unwinding." As always, this is required reading for our Canadian readers as well as everyone else who trades the CAD, and has an interest in the Canadian economy.

Yesterday Jim Grant gave an interview to Bloomberg's Pimm Fox, which was as usual informative and entertaining, and thus must see. Yet the section which is most relevant for our post-capitalist society (one is unsure what defines it best: communism? socialism? fasism? farcism? idiocy?) is Grant's discussion of H. Parker Willis, one of the founders of the Federal Reserve in 1913, who in a book written two decades later laments the very existence of the Fed. As Grant says: "Willis was present at the creation of the Fed, he was one of the draftsmen of the Federal Reserve Act of 1913. Willis was also the first secretary of the Federal Reserve Board - he knows this institution. He wrote a book in 1936, which was a lamentation about the low estate of Central Banking in America, the Fed had lost its way in 1936. It had opened its doors in 1914 and by 1936 it had eaten the forbidden fruit, it was in the business of guiding the economy, of managing the economy, of manipulating this aggregate and that, and Willis said: "For Pete's sake. You can't know that - the GDP data are not reliable enough for you to do what you think you are doing." It's a wonderful tract against the tendency of the Fed to do what it has so lethally done to this economy in my opinion, which is to steer us, in the interest of raising the GDP it presses interest rates to zero, pouring out immense volumes of econometric studies in support of this dubious enterprise. Hey Fed: just attend to the dollar, that's it, no inflation, just do one thing! You've heard of mission creep, these guys are the mission creeps par excellence."