Archive - Dec 2010

After an early morning reading on on-line advertising, we have claims, chain-store sales, pending home sales, and the Fed’s balance sheet. Away from the US, 7:45am Eastern sees the ECB rate decision, and at 8:30am is the important conference during which JCT is expected to announce more QE by the ECB. As Brian Yelvington from Knight securities observes, that this news can rise the EUR makes absolutely no sense: "The EUR has risen on this speculation, which seems to be a quandary as if the ECB does purchase, it is participating in QE which is a currency negative and if the ECB does not purchase as expected, it is a clear EMU and currency negative. Further, with over €1.5 trillion in principal and interest due in the next thirteen months alone, any solution would have to be quite sizable to stem the tides. The true solution will be systematic in nature and involve a central treasury-like facility. Till then, the rest is loud political noise."

Busy day in the markets today as Eurozone concerns took a breather and a backseat to a barrage of positive dataflow, starting with a big beat in Chinese November manufacturing PMI (55.2 vs 54.8 expected vs 54.7 prior) that helped boost markets. Significant support levels in the euro, which I pointed out in last night’s piece, and moving average ceiling in the US Dollar Index, set up a market ripe for a rally and the data catalysts followed through. A great beat in US November ADP employment (+93k vs +70k expected vs +82k prior) and a 56.6 print for US ISM PMI, higher than the 55.5 consensus estimates, helped send markets rallying further. Upward revisions by GS to its macro forecasts for both US & global growth added fuel to the fire.

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 02/12/10

Retail traders are notoriously wrong at picking market direction/tops and bottoms. Most retail traders very naturally seem to adopt a counter-trend stance and this offers very accurate signals for individuals looking to trade against this group. This daily report is designed to help traders focus their efforts on higher probability pairs.

Below the thunders of the macro deep;--

Far, far beneath the abysmal news,--

This ancient, clueless, PhD freak--

The Benron sleepeth

RealtyTrac has just reported that even though the volume of foreclosed homes plunged by 25% from Q2 to Q3 and 31% from Q2 of 2009, the discount on foreclosed homes has hit a five year high, as interest in even ultra bargain properties has collapsed following the expiration of the homebuyer tax credit, and confirming yesterday's bad Case Shiller (remember that one?) number. Per RealtyTrac: "foreclosure homes accounted for 25 percent of all U.S. residential sales in the third quarter of 2010 and that the average sales price of properties that sold while in some stage of foreclosure was more than 32 percent below the average sales price of properties not in the foreclosure process — up from a 26 percent discount in the previous quarter and a 29 percent discount in the third quarter of 2009." Yet despite the major price drop, buying interest has evaporated as nobody there is no longer any purchasing power left in the lower and middle sections of the housing market: "a total of 188,748 U.S. properties in some stage of foreclosure — default, scheduled for auction or bank-owned (REO) — sold to third parties in the third quarter, a decrease of 25 percent from the previous quarter and a decrease of nearly 31 percent from the third quarter of 2009. The average sales price of properties in some stage of foreclosure was $169,523, down 2.46 percent from the previous quarter and down 0.44 percent from the third quarter of 2009." And while the average price of non-foreclosed homes posted a slight uptick in Q3, the volume drop was even worse: "The average sales price of properties not in foreclosure was $249,721, up 6.42 percent from the previous quarter and up 4.36 percent from the third quarter of 2009. Sales volume of non-foreclosure properties decreased 29 percent from the previous quarter and nearly 31 percent from the third quarter of 2009."

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.

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 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?"