Archive - Mar 25, 2010

A US debt downgrade could trigger a stampede into the debt of healthier countries. Emerging market debt has a much rosier future of credit upgrades to look forward to than US bonds. A 6.44% yield on an appreciating asset. These days, many emerging markets have little or no debt. The sovereign debt crisis is sending bonds issues by financial responsible countries to decent premiums, while punishing the bad boys with huge discounts. Time to trade in Marilyn Monroe for Carmen Miranda? (PCY), (LQD).

Earlier today the CFTC held a sham hearing in which, among other things, the organization discussed position limits in PM speculation, because, you know, it's the mom and pop speculators that destroy the precious metal market (not JP Morgan or the New York Fed mind you). The hearing could not have come at a more opportune time. GATA has just broken a major story, in which a London metals trader-slash-whistleblower exposes JP Morgan's silver price suppression/manipulation scheme. At this point none of this should be at all shocking, and the only thing that matters is when CFTC's ex-Goldmanite Gary Gensler will be fired for allowing hundreds of billions of dollars to be sucked out of the PM market on behalf of such major market manipulating entities as JP Morgan and the New York Federal Reserve, for whom it transacts. Don't worry - the answer to that rhetorical question is "never", as it is the administration's goal to make all the millionaires among the bulge bracket firms billionaires, via legalized theft from honest investors. Furthermore, if indeed the CFTC is complicit in these manipulative events, as GATA suggest, we hope our objective mainstream media readers enjoin GATA in seeking justice for this criminal breach of proper regulatory enforcement.

The yuan-induced heated debates prompted two prominent economists--Paul Krugman and Jeffrey Frankel--to come up with two versions of swan songs for China. Ironically, the two, however diverging, could still lead to the same "next black swan" scenario warned by Albert Edwards at SocGen last November.

As Greeks celebrated a scaled-down parade for Independence Day, an IMF-EU accord was reached in Brussels, but many questions remain. China is watching nervously, increasingly worried about the large chunk of its $2.4 trillion (£1.6 trillion) of foreign reserves held in eurozone bonds. No wonder Trichet reversed course and came out in support of the deal...

The S&P 500, DJIA and NASDAQ Cash Indexes each registered bearish daily candlestick patterns on Thursday's close. Interestingly, the three primary US equity markets registered unique candlestick patterns in the form of a Shooting Star on the S&P 500, a Gravestone Doji on the DJIA and a Bearish Engulfing on the NASDAQ. Charts of the Dow, S&P 500, NASDAQ, VIX, BKX & SKF.

I get screwed, again.

As indicated this morning, the market is getting pretty close to some key support levels in Fixed Income. We first highlight the 30Y future support we tested today at 114-26. If we bypass this level we have potential to sell off down to 111-24 which is the next key support, and would trigger a massive bond bear market if actually triggered. But we should expect a bounce here.

Well, we certainly lost a big one. Despite hopes I share that this November’s polls will help mitigate the damage, this giant leap towards socialized medicine is a big loss for the Republican Party, and for the American people. And I say “leap towards” socialized medicine as this bill is not nearly the Left’s end game. It’s not meant to work, it’s meant to destroy the private health insurance industry, an industry that realized this only too late.1 It’s meant to help bring on, through socialized medicine, further breaking of the budget, and further conditioning of the American people to dependency and an expectation that government will provide for all their needs, the full European style welfare state. While it is obvious we must fight this, it’s not as obvious how. This note offers a few thoughts on the matter. - former Goldmnaite Cliff Asness of AQR (Quant Hedge Fund)

For once, some actually good insight from a CNBC guest. Philip Manduca, Head of Investment of the ECU Group, discusses Greece and the very severe implications of what the final outcome will look like. "Trichet said the Greeks are crooks, and they've been lying about the numbers. There is a deeply embedded corruption within the Eurozone. Combined with the endemic European socialism and there is just no way you are going to get spending cuts and tax raises and maintain a GDP that makes any sense of the percentage aspect of debt to GDP. So the whole show is wrong. This is an intractable situation, this is going to continue on and on. The onle hope for the Eurozone, and the Euro as a currency, is that sameone takes the spotlight soon, and that may be the United States." Watch the rest as Philip's perspective is spot on... Not to mention that he sees gold as the only alternative to the fiat bonfire soon to engulf the western world.

As part of a package involving substantial International Monetary Fund financing and a majority of European financing, euro area member states are ready to contribute to coordinated bilateral loans.

This mechanism, complementing International Monetary Fund financing, has to be considered ultima ratio, meaning in particular that market financing is insufficient. Any disbursement on the bilateral loans would be decided by the euro area member states by unanimity subject to strong conditionality and based on an assessment by the European Commission and the European Central Bank. We expect euro member states to participate on the basis of their respective ECB capital key.

Someone at 33 Liberty is so getting fired today.

No commentary. Bernanke must be feeling sodomized.

The cacophony of craziness surrounding the impending implosion of the Euro has become deafening, now rivaling the decibel levels heard inside the New Orleans Superdome. Yet stocks repeatedly shuck off this hysteria and climb higher and higher.

You didn't think China would fund America's insane spendorama for ever, did you. Here's Goldman on the second, and much more relevant, part of Obamacare and the stock market reflation trade: tax rates going through the roof.

The small banks will lend, if we just stop the too big to fails from stifling competition ...