Archive - Dec 1, 2010
JP Morgan On JC Trichet's Third Attempt At Pulling Off Paulson's Bazooka: Advance Thoughts On More ECB Bond PurchasesSubmitted by Tyler Durden on 12/01/2010 23:47 -0500
Today the market surged after it was announced that JC Trichet has finally thrown in the towel and will launch some version of "buy the everything" program made so popular by his bald transatlantic late-afternoon genocide buddy over the last two years. Subsequently the market surged more on a rumor that America would send a mega dose of viagra to make Trichet's "bazooka" even bigger by boosting America's, er, IMF contributions to what will soon be a multi-trillion bail out. Lastly the market surged some more when that last rumor was proven to be false. Which is why tomorrow at 7:45 am Eastern (with conference to follow 45 minutes later) the hapless Pinata formerly known as Jean-Claude Trichet, whose every action is now predicated by the markets, better have something good to announce or else the market will go up so more... just as it will if there is no news. So for all those who wish to know why buying stocks is a guaranteed way to make money now that nothing at all matters, here are JP Morgan's advance thoughts previewing the ECB action, as well as Greg Fuzesi's observations on additional bond purchases.
Just because a cartoon can explain QE and POMO better than the mainstream media and blogosphere combined, here is all you needed to know about making money. In short: "Buy the fucking dip."
They actually want to go backwards.
The musings of Simon "Sovereign Man" Black, whose prior post about leaving America as the only intelligent way to lead a noble fight against crony capitalism and a corrupt regime, provoked a very spirited conversation, received well over 20k reads, indicating this is a very sensitive topic to many potential expats currently on the fence about abandoning this once great country. Today, exclusively on Zero Hedge, we present Black's follow up thoughts on the topic of expatriation as the noble way of winning the fight with the "mob-installed government beast", by avoiding the fight entirely. For all those who are considering pulling the cord on abandoning an increasingly oppressive regime where the concept of liberty is now whispered about with the hushed tones of increasing nostalgia, here are some suggestions on what one's next steps may be. If nothing else, this should certainly engender another possibly combustible discussion on the benefits of passive versus active patriotism.
The FX recommendations of Goldman's Thomas Stolper have, over the course of this year, been the butt of every joke on Zero Hedge, and we actively recommended readers do precisely the opposite of whatever Goldman advised clients. End result: Zero Hedge readers: 100%; Goldman clients: -100%. We were delighted to read that in his yesterday letter, Stolper admitted that his clients would have done better off siding with our cynical view of events than paying Goldman tens of millions in soft dollars (oops, did we just say soft dollars). To wit: "The performance of our FX top trades this year has been unsatisfactory." Nuf said.
Why China's Leading Indicators Are A Big Flashing Warning Light To Albert Edwards; A Triple Dip Headfake In The US?Submitted by Tyler Durden on 12/01/2010 21:24 -0500
As usual, Soc Gen's Albert Edwards does not pull any punches: "Once again, investors see China plays as the only investment game in town. Dylan and I remain convinced we are witnessing a bubble of epic proportions which will burst – catching investors as unawares as the bursting of the Asian bubbles of the mid-1990s." Already we have seen traces of Edwards proving correct after the Chinese market has swooned dangerously in the past week. Should the world realize that, as Edwards claims, even near-unlimited liquidity is insufficient to keep the system going, then the China-initiated avalanche will be severe. Not only that, but in the recent fake economic renaissance (sorry, unwind QE1, QE Lite and QE2 and then we'll talk how real this recovery is) Edwards sees nothing less than the shades of the dreaded 1990s economic Triple Dip...
Two words describe the market action today: risk on. A few more words: indiscriminate buying of equities coupled with indiscriminate selling of fixed income. For all this and much more, see inside.
Nigel Farage: Europe Is Becoming An Orwelian Police State, Ruled By Unelectable Madmen, Which May Soon Be Overrun With ViolenceSubmitted by Tyler Durden on 12/01/2010 19:43 -0500
Nigel Farage made waves recently when he told the Europarliament the truth about the sad fate of the euro experiment. Obviously, it was not taken too lightly by the career politicians who, just like our own, have made it their life mission to lead a failed economic experiment to its sad end, no matter the social cost and public suffering. Today, Farage made a repeat appearance on King World News continuing with his warning that the one most likely outcome of Europe continuing on its autopilot course will be one the culminates with "violence and extremism." To wit: “Nobody dares to admit that they got this whole thing wrong...Once people realize that who they vote for in general elections has become no more than a charade, then if they want to change things, all they are left with is civil disobedience and violence, and we’re beginning to see this already. In Greece we are seeing small terrorist style attacks that are taking place on EU buildings that are taking place against EU officials...So what happens if you rob people of their rights is they will turn to violence and they will turn to extremism, and that is why I believe these people to be so dangerous."
I would like to feel sorry for Ben Bernanke because of his bumbling and confusion about what to do about the economy, but I can't. Every time he turns around he does the wrong thing. Can you say "cognitive dissonance?"
Those fabulous Bernanke Bears have a great discussion about the merits of BAC, listening to WikiLeaks and investing in NFLX.
Today was the perfect opportunity for GS to come with a revised much more bullish forecast for the economy. The nature of the arguments advanced seemed a bit suspect: basically foreign demand and public demand will more than make up the lack of private demand. That is excellent news but it may somehow miss out on the fact most governments in Europe are going to keep cutting drastically public spending, there are certainly new members in Congress trying make the country lean that way as well, and the brilliant Albert Edwards' chart on Chinese leading indicators is not exactly positive. Unfortunately now growth forecasts are becoming as volatile as the markets: it's the tail wagging the dog. The Fed must be proud in succeeding in having the S&P dictating the economy instead of following it. - Nic Lenoir
Personally I do not think the fundamentals have changed one bit. Certainly the private sector has surprised in November to the upside as people trampled their way to Black Friday bargains, but from there to extrapolate +3.7% growth in 2012 is more than an exageration. Probably more a good opportunity to short squeeze those who sold equities realizing Greece was only the tip of the European iceberg, with the help of $8Bn more in cash provided by the Fed.
In a sad twist of fate for Comcast, its recent business channel acquisition, which numerous independent reports have alleged has become nothing but a prattling brown-nosing drone for the administration, spewing forth an endless barrage of mindnumbing propaganda, is seeing an ever increasing plunge in its viewership (which arguably validates said independent reports) which in November dropped to 47 in the demo, a 36% slide from a year earlier. Nowhere is this more obvious than in what's left of the audience of the original CNBC icon: Maria Bartiromo. The once jet-setting, and now merely setting money honey, whose Closing Bell slot starts at 4PM, has stooped to having the dubious reputation of being in possession of the weakest 25-54 demo among all of CNBC's November viewership, at just 41K per Nielsen's, a massive 51% drop from November 2009, and a 11% drop from October, it seems CNBC's ever sparser viewers have decided that even icons have a useful shelf life. But that's ok: we are confident that once the next round of CNBC "business rationalizations" takes place shortly once the NBC Universal transaction formally closes, the $ Honey will be able to fall back on the proceeds from her latest bestseller: "The Weekend That Changed Wall Street: An Eyewitness Account", which since publication on September 7, has blitzed almost to top of the charts and currently languishes in the much coveted spot #10,655 of bestsellers.
No matter the amount of propaganda, the amount of manipulation, and Fed intervention, retail refuses to come back to the market. America's love affair with stocks is over, has bypassed the marriage stage and gone straight to the bitter divorce. Per ICI, the week ended November 24 saw $2.6 billion in outflows from domestic equity funds, and a total of over $91 billion year to date.
One may be forgiven to believe that via its FX liquidity swap lines the Fed only bailed out foreign Central Banks, which in turn took the money and funded their own banks. It turns out that is only half the story: we now know the Fed also acted in a secondary bail out capacity, providing over $350 billion in short term funding exclusively to 35 foreign banks, of which the biggest beneficiaries were UBS, Dexia and BNP. Since the funding provided was in the form of ultra-short maturity commercial paper it was essentially equivalent to cash funding. In other words, between October 27, 2008 and August 6, 2009, the Fed spent $350 billion in taxpayer funds to save 35 foreign banks. And here people are wondering if the Fed will ever allow stocks to drop: it is now more than obvious that with all banks leveraging the equity exposure to the point where a market decline would likely start a Lehman-type domino, there is no way that the Brian Sack-led team of traders will allow stocks to drop ever... Until such time nature reasserts itself, the market collapses without GETCO or the PPT being able to catch it, and the Fed is finally wiped out in one way or another.
Hidden deep in today's disappointing GM November sales release is a number that all GM longs may want to quickly forget, or else pay serious attention to. But first, earlier today, GM reported slightly disappointing sales numbers: the newly IPOed company sold 168,739 cars in November, a 11.4% increase to November 2009, which came in below expectations of a 13% rise. That's mostly noise. What isn't, however, is the linear rise in GM's auto inventory safely stashed away at dealers, i.e., unsold. The chart below demonstrates what some may argue is nothing less than a blatant case of channel stuffing. Is it really surprising that GM will resort to such pathetic schemes to boost its top line numbers? Of course not: the government's GDP report demonstrates that this is occurring everywhere in the US economy, courtesy of near record inventory accumulation which two years after the start of the depression refuses to let up, providing a hollow boost to economic numbers as the much anticipated pick up in end demand (sorry Goldman) courtesy of record deleveraging ( Jan, let's discuss the hundreds of billions of leverage lost in the shadow banking system on December 7 shall we?) continues to accelerate.