Archive - Dec 2010

And some B-grade blog elsewhere only managed to subordinate Ben Shalom Bernanke to Anil Bangar: this is a travesty - obviously the two are pari passu.

Christmas came early to Bolivia this year...

CNBC last week quoted an HSBC analyst's note pointing out that California California currently consumes more crude oil than China. It is hard for me to fathom California even belongs in the same sentence with China on any economic measures, and decided to do some research.

This evening's must read report comes from Hugh Hendry, arguably the most creative and free-thinking money manager in the world, of The Eclectica Fund.

Technically it a joke to call what we are seeing day in and day out, at least in equities, a market, but for old time's sake, here is a recap of what happened today in stocks, rates, corporates, FX, and a focus on the two key events from late in the day: the bombs from Bernanke and Merkel.

For those wondering why the market leaked higher in the last hour, it is because someone got an advance copy of the transcript (or advance notice) that in this Sunday's latest attempt at faux transparency on 60 Minutes, the bearded mutant-cum-supreme genocidal overlord says that more QE is coming. From Reuters: "The euro rose to a session peak against the dollar in late afternoon New York trade on Friday after a report on the CBS website that Federal Reserve Chairman Ben Bernanke did not rule out buying more than $600 billion of bonds in further quantitative easing." It also explains why the euro is back to 1.34, and is right in line with our expectations that the EURUSD is only weak so long as the market realizes that much, much more QE is coming. How much? See the chart below for our ongoing expectation of what the Fed's balance sheet will look like soon. And yes, the $7 dollar jump in gold late in the day may be multiplied 10-20x on Monday after the world realizes that the US economy is as fucked as always.

Yet another datapoint that has been completely ignored by a market that not only does not discount future events, but is blind to current ones as well, is that, as the Guardian reported late in the day, Merkel threatened to abandon the euro during the EU summit in late October. Per the Guardian: "The German chancellor, Angela Merkel, has warned for the first time that her country could abandon the euro if she fails in her contested campaign to establish a new regime for the single currency." The paper goes on to further say that, "Merkel's central aim, which she achieved, was to win agreement on re-opening the Lisbon treaty so a permanent system of bailout funding and investor losses could be established to deal with debt crises that have laid Greece and Ireland low and are threatening Portugal and Spain. The Germans also called for bailed-out countries to lose voting rights in EU councils." And while this certainly means that Ireland will soon be left without a voice in any European discussions, much as we have expected, and under the thumb of one very corpulent and pathologically mendacious Olli Rehn, it also means the the Emerald Isle got the shortest end of the stick as it appears that future bailout will likely involve senior haircuts. But not so much in the Irish case, which may have been the last ditch effort by the multi-trillion impaired asset banking hydra in which as we showed first long ago, one's impaired assets, are another's leveraged extra-impaired liabilities.

For those seeking a perfect explanation of what is happening in United Banana States of America right now, then look no further: the just released September Supplemental Nutrition Assistance program data is out and we are happy to report that the number of poor Americans has never been higher - SNAP recipients just hit a fresh all time high of 42.9 million. Naturally, the market celebrates the record number of poor Americans by closing at 2010 highs. No long-winded, somnolent essays, no rants, just observations. These two facts explain everything that is happening in this unrecognizable banana republic. Now that is a five year banana plan you can believe in.

Today's actual NFP result, which was at 111,000 jobs below the economist estimate of 150,000, was the worst miss in over two and a half years... And the market is about to close at fresh 2010 highs. Will the last algo left churning with itself please turn off the lights. As to what this ridiculous price action means shortly, we present the following quotes from the BIS which explains absolutely everything: "If the market is dominated by mechanistic traders, who react to microscopic directional changes in 9 prices rather than to market fundamentals, market prices may deviate further and further from the fundamentals once a demand-supply gap emerges. The Flash Crash is a perfect example of this, where the end result was just the contrary to the supposed stabilization."

Update from the AP: Spain orders its air traffic controllers to resume work or military will take over control of airspace.

If you are reading this from an airplane, we can only hope your final destination is not Spain. Sky News has just broken that virtually all Spanish air traffic is shut down after 90% of air traffic controllers have decided not to work due to "illness" but mostly in protest of austerity. Those with a memory that stretches beyond the last Dancing with the Stars episode will recall that this is what happened in Greece just days before the people died in riots and Waddell and Reed experimented with the whole sell concept.

With housing - just like with unemployment and every other portion of the economy - failure to prosecute the fraud is killing us ...

[We] are back at 2007 highs. I find this truly amazing as it seems to me things aren’t quite as good in America as we THOUGHT they were in 2007, before we found out that Financial earnings were a scam and before our homes lost 1/3 of their value and when our neighbors used to all have jobs

Now that his relentless skepticism, following today's abysmal data release (orchestrated or not), has been fully validated, much to the chagrin of top ticking flippers such as Goldman and other sundry blog sites, Rosenberg comes out with a must read essay on the state of the economy now versus later, entitled very appropriately "Hope-Based Rally Now, Shock Therapy Later." This is certainly one Rosie's better pieces out there and a must read for those who refuse to be led by the propaganda machine into believing lies and manipulation: "This has become such a hope-based market that the Dow jumped over 100 points earlier this week on a Reuters news story in Brussels, which reported that the U.S.A. would back an even greater financial commitment to Europe! Quick — get Sarah Palin on the line." Incidentally, if there is any confusion where Zero Hedge stands, we suggest rereading our post from last night which made it all too clear that we still refuse to drink the hopium (and self-aggrandizement) that seems to have gotten straight to the head of such a broad (literally and metaphorically) cross-section of the financial punditry.

Am I misreading this or has Trichet pulled out the bazooka?

You're a mean one, Bernie the Grinch--
You really know how to "filch" and steal,