Archive - Mar 2010

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 ...

Across the pond, the FSA has just announced that it is launching a probe to focus on the front-running of block trades. Without doubt this is dictated by the recent bust including Moore's
block execution trader, who likely was involved in just this (note:
this is purely speculation absent further data). Images of Flash Trading, HFT, algos gone wild, and all sorts of other computerized frontrunning come to mind. When are the useless excuses for human detritus over at the SEC going to do a comparable probe? Oh wait, they are watching kiddy and tranny porn as we speak, and counting their Wall Street salaries once they leave their cushy taxpayer subsidized offices. Sorry, go back to demanding an increase in your budget you worthless examples of reverse evolution. In the meantime, we present some obvious block manipulation data in the SPY which if we had anything remotely resembling a market regulator would be immediately probed. Maybe the FSA can LBO the SEC? Surely Goldman can provide financing.

Must watch roundtable with two of the most prominent thinkers of our generation, Daniel Kahnemann and Nassim Taleb. Topics discusses include the GSEs, which according to Taleb "is sitting on a barrel of dynamite" (and everyone agrees), cognitive biases, patterns (and their lack), and risk and denial perceptions. Via DLDConference.