Archive - Dec 17, 2010

The market was up yesterday as PIMCO is set to get their equity on, Fed Ex plans to deliver a fuckload...

Because why go B when DD will do (and double as a gas mask). Or is Mark merely wishing he was part of the Power Lunch crew? We doubt it: for some odd reason, and completely independent of wardrobe, that particular segment continues to have some of the lowest Nielsen ratings on the Comcastic station.

At this point it appears Bank of America can't wait for the alleged Assange secret fraud trove to finally be released and put the bank out of its misery: not a week passes without someone suing the bank for gross mortgage fraud. One would almost think that if we had a functioning legal system in which perpetrators of crime, instead of those protesting it, were arrested that BofA may actually be a sell on the f#&^@!g dip. The latest reason why the best job in the world these days is to be BofA's outside counsel, is that as Reuters just reported, Arizona has sued the bank as a result of the latter "consistently misleading consumers about its home loan modification process." Perhaps a greater crime is BofA's consistently misleading the SEC into settling every single case of multi-billion bonus dispersal at or about the time the banks receives a $15 billion taxpayer funded TARP bailout. And while this latest case will also be settled promptly and quietly, to not give some other plaintiffs the idea that such a thing as equitable compensation exists, in the meantime the actual damages sought by Arizona AG Terry Goddard is $25,000 per violation. Ball park estimate of 500,000 of those countrywide (not just Arizona) , and there goes the firm's Christmas Bonus.

One of the biggest misconceptions about inflation is that the US Dollar needs to collapse in order for inflation to occur. While a currency collapse often accompanies periods of heightened inflation, this is not necessarily true.

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 17/12/10

Every massive inventory accumulation.... has an equal and opposite effect on GDP. To all those who snickered at the earlier chart of the BDIY, we recommend you read the following brief blurb from Nordea, whose implications may put everything you have heard about a surge in GDP in Q4 and Q1 (primarily from the Goldman bull brigade) in a slightly different light.

Just headlines for now, but not good for BofA: Per Reuters, the SEC has sent out a new round of subpoenas to Wall St. banks, the agency is aking harder look at securitization process; finally, the SEC is looking at role of 'master servicer' that oversees collateral in pool of loans. And here Brian Moynihan was, hoping this thing would disappear like a silent but deadly fart in the wind.

Does anybody else notice the very close correlation between the Baltic Dry and the stock market/myths of economic recovery? Neither do we. Oddly enough, the BDIY did predict the late August S&P surge by about a month. And incidentally, we are back to early August levels all over again. Just as incidentally, the market was about 15% lower back then. Then again, our advice is to pay no attention to this index which tracks nothing relevant, and has no bearing on the world economy (and certainly not markets) whatsoever. And ignore the data on the Bberg chart: the value of the BDIY as of this morning is 1,999.

The cascade of restructurings are approaching exactly as I have forecast. Not 48 hours after I warned of Spain's impending problems, ratings agency have (rather tardily) moved to downgrade them.

Reggie Middleton vs Goldman Sachs' marketing department for investment banking, brokerage and trading (otherwise known as their sell side analysts), round 4. Who has been the most accurate in the past?

After killing the db server, and suffering through domain issues to boot -- we're back up and fully functional. If you have any login problems, let us know: everything should be working. Also, all email should be directed to @zerohedge.org now, NOT zerohedge.com.

Update: We just switched over from the backup server data, which restored all the missing December posts. Unfortunately, it ended up in a loss of all comments since last night. We are confident our readers' sense of expression will not be blunted by this minor glitch.

For all those (all 6 of them) scratching their heads on how to make money daytrading when the Delta One terrorist group is selling vol using Fed funds and taxpayer money by the bushel, and the VIX is about to hit 2010 lows again, here is where all the vol went: the EURUSD has moved from 1.3360 to 1.3160 in just a few hours. This is probably the 5th time in the last 10 days we have seen a 3+ sigma move. The law of connected vessels is working perfectly: no vol in stocks, means all the vol has shifted to those instruments that just happen to be between 250 and 5000 times leveraged. Expect the CME to soon hike margins on all EUR related derivatives. In other news, this will end well, and buy the fucking dip.

Now that all recent bond auctions have settled, and with no further bond
auctions scheduled until the rest of the year, we can look at the final
tally of US total debt: the number - $13,879,785,000,000. This represents a $1.568 trillion increase in total US debt held by the public for 2010, and $4.388 trillion since the collapse of Lehman. This
is in essence the cost to US taxpayers to keep the financial system
solvent, as the US has become the biggest marginal leveraging actor in
the world, with everyone else, notably US consumers, and Europe, doing
all they can to strip as much debt as they possible can. Of course,
since this money does not have to be repaid any time soon, or ever,
nobody seems to mind, especially not the politicians in Washington. As
we have said before, and pro forma for the Obama tax deal, we expect
total debt issuance in 2011 to accelerate once again, and to hit just
under $2 trillion, putting total US debt at the end of next year at
around $16 trillion. We also fully expect the Fed to monetize the bulk
of that issuance. We can't wait to hear the positive spin on this one.

The QQQQ options table below shows what frothy, irrational exuberance in its purest form, truly looks like. The top 10 options traded currently are all calls (and yes, most on the offer side).

The QQQQ options table below shows what frothy, irrational exuberance in its purest form, truly looks like. The top 10 options traded currently are all calls (and yes, most on the offer side).