Archive - Nov 23, 2010

Following last night's escalation in hostilities between the two Koreas in what was the worst peacetime incident in over 5 years, the AP has compiled a visual summary of not only the events that transpired, and the generations of conflict built up between the two countries that have led us to the current predicament, but most importantly, a comparison of the military strengths of the two countries. A most useful resource for all those who would like to know if the over/under on either country winning the next shelling incident is on the money.

Peep-and-grope ... coming to a venue near you?

Once a year, the International Energy Agency (IEA) releases its World Energy Outlook (WEO), and it's our tradition here at ChrisMartenson.com to review it. A lot of articles have already been written on the WEO 2010 report, and I don't wish to tread an already well-worn path, but the subject is just too important to leave relegate to a single week of attention. Because some people will only read the first two paragraphs, let me get a couple of conclusions out right up front. You need to pay close attention to Peak Oil, and you need to begin adjusting, because it has already happened. The first conclusion is mine; the second belongs to the IEA. Okay, it's not quite as simple as that; there are a few complexities involved that require us to dig a bit deeper and to be sure our terms and definitions are clear so that we are talking about the same things.

A summary of the day's key events in equities, vol, FX, rates, commodities, credit, insider trading, corruption, monetary manipulation, racketeering, prostitution, and a forecast of tomorrow's market travesty.

Natural gas has long been touted as a cleaner alternative because natural gas releases about half as much of the greenhouse gas carbon dioxide as coal does. However, a new research by Dr. Robert Howarth at Cornell University says otherwise.

Contagion in the Europe is a foregone conclusion and its risk cannot be truly priced in since no one really knows where it will kick off, how, and what direction it will take through which channels. All that is known for sure is that you have a collective of nations that have been purposely over-optimistic in forecasts, purposely misleading regarding their past and present liabilities and mired in debt and bad assets amid an inevitable hard landing - or worse.

Putting a cheery on top of one of the best days in capital markets history, FOX Business Network’s Charlie Gasparino is reporting that Citadel Investment Group, the giant hedge fund run by Ken Griffin, has received a subpoena from the Department of Justice. It is unclear if the Chicago's fund long-rumored 'dark pool' dealings with Brian Sack's Open Market Group will be exposed as a result. From Charlie: “They got a subpoena. It’s the same subpoena that sources tell FOX Business Network that Steve Cohen over at SAC Capital got. It’s a wide ranging subpoena and it dates back to 2008 asking for information on certain stocks. From what I understand, it’s not just healthcare stocks, which has been a primary focus. FOX Business Network has learned two other hedge funds have received subpoenas. We have put calls into Millennium Capital Management and Maverick Capital Management and we are waiting to hear back to them.”

It was just yesterday that Goldman thought all of its dealings with the SEC would be over and done with: after all it is not that often that the firm gets slapped with a fine to the tune of 3 trading days' profit to neither admit nor deny it was raping its dumb as bricks European and Asian clients (the same ones who are responsible for the end of the shadow banking system) who could not realize just how massive a scam synthetic CDOs were. We hope the firm enjoyed its time away from the public's attention, because as Gasparino reports, it is about to reenter it with a thud. Quote Chaz: "Goldman Sachs, we can definitively say, is involved in this investigation through its healthcare group and through some sort of associate and potential leak to Diamondback, the hedge fund of five billion dollars that was raided yesterday. Sources are telling the FOX Business Network as the Feds are looking at Diamondback’s healthcare group, that’s were at least one Goldman Sachs banker has been roped in." When all is said and done, our money is on Goldman Sachs being "Investment Bank 2" (see here).

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 23/11/10

From RTE "The EU and the IMF will offer the Government an €85bn facility, which can be used to recapitalise the banks and fund the public finances. The EU and the IMF will offer the Government an €85bn facility, which can be used to recapitalise the banks and fund the public finances. The package would see the level of capital in the Irish banks being increased from eight to 12% in a move to bolster confidence of depositors in the financial system." This could well be too little, too late. The bank run has already started. And just to confirm that the schism between the ECB and Germany is now likely insourmountable, Nowotny said that he is 'irritated' with Merkel's remarks on the serious situation for EUR. Why, of course Ewald- nobody wants to hear the sad truth that you will be unemployed within a year.

Could this day get any better? Throw in some Ron Paul in there and November could be the best month for capital markets in many years.

My Christmas wish to Santa: please let this be the last Christmas in America that is dominated by the propaganda that holiday retail sales have any more impact on the $14.7 trillion U.S. economy than a moldy, half-eaten fruitcake left over from 2007.

Goodnight Sweet Prince

If you think the World's Most Complicated Securitization Chart was complicated, get a load of this baby!

"Participants also differed in their assessments of the likely benefits and costs associated with a program of purchasing additional longer-term securities in an effort to provide additional monetary stimulus, though most saw the benefits as exceeding the  costs in current circumstances. Most participants judged that a program of purchasing additional longer-term securities would put downward pressure on longer-term interest rates and boost asset prices; some observed that it could also lead to a reduction in the foreign exchange value of the dollar. Most expected these changes in financial conditions to help promote a  somewhat stronger recovery in output and employment while also helping return inflation, over time, to levels consistent with the Committee’s mandate."