Archive - Mar 2010

Recently, whistleblower Andrew Maguire gained substantial notoriety among LBMA circles after disclosing what could be an epic cabal of commodity price manipulation, and was subsequently involved in what could be classified as an attempted hit-and-run. In a first media appearance, Andrew is interviewed in this exclusive with Eric King of King World News, where he is joined by GATA director Adrian Douglas, who also made ripples at the recent CFTC hearing in which he used the words of former Goldman analyst Jeffrey Christian against him in proving that the gold market is nothing but one big Ponzi, in which a run to deliverables would result in 99% unsecured claims (a 1 in 100 dilution).

Even as the adjusted Case-Shiller index came in at a 0.4% sequential increase, the deterioration in the index' unadjusted series continues, with the number a mirror image across the X-axis, coming in at -0.4%, the biggest decline in over a year. After having troughed in October of 2009, the unadjusted index had declined by 0.2% in November and December, and in January took another new leg down by 0.4%, as house price declines across the major MSA accelerated yet again.

• A morbid, reverse Robin Hood: Ben Bernanke is stealing from the old to give to the rich (WSJ)
• Greek credit spreads deteriorate rapidly post 7 Year GGB Issue: The yield on the new notes rose to 6.32 percent, up from 6
  percent when they were issued yesterday, ABN Amro Bank NV prices
  show. Yields move inversely to bond prices. The yield premium on the Greek seven-year security widened
  about 5 basis points to 339 basis points over benchmark German
  debt. The 10-year
  Greek bond yield jumped 15 basis points to 6.47 percent, and the
  difference in yield, or spread, with benchmark 10-year bunds
  widened 14 basis points to 330 basis points. (Bloomberg)
• The drop occurs even as first day trading picture is supposed to determine need for full EU bailout (Bloomberg)
• Stocks: a rally that defies gravity (BusinessWeek)
• Beijing gears up to reform equity trades (FT)
• Time for Obama to put Americans back to work (NYT)
• Downtown New York towers empty empty as best office market falters (Bloomberg)
• Tomorrow QE ends. Will investors take over the Fed's mortgage market making dominance? (Bloomberg)

• Asian shares were higher Tuesday, with steel firms leading gains in Japan.
• Greece sells €5B of seven-year bonds to refinance debt.
• Japan industrial output drops 0.9%, Jobless rate unchanged on sluggish recovery.
• Nikkei surges to 18-mth high
• OPEC, IEA, IEF to unveil measure to combat oil-price volatility.
• U.S. Treasury to sell $73 bln in bills.
• US and Vietnam sign nuclear energy agreement.

RANsquawk 30th March Morning Briefing - Stocks, Bonds, FX etc.

RANsquawk 30th March Morning Briefing - Stocks, Bonds, FX etc.

It's got a reassuring name and a nice, sugary taste ... but there's no real medicine in it.

Guess what the top performing asset of 2010 has been? Decades of production downsizing, huge Chinese buying, and waning competition from Canada because of a strong loonie, conspire to take lumber up a blistering 39.9% YTD. (WY), (LPX), (CUT).

The General Accounting Standards Board, or GASB, is likely to move toward changes that would increase the pension liability that local governments display on balance sheets by tens of billions of dollars. If the modifications are approved, many already cash-strapped states and municipalities would likely have to increase the amount they are supposed to pay annually to their pension funds to help cover the shortfall. As if that isn't bad enough, federal criminal investigators are looking into possible wrongdoing involving investment transactions of public pension funds including Calpers, the nation's biggest public pension fund. How many more pension bombs are set to explode?

Do these observations imply upcoming curve flattening?

If you were one of the unlucky few caught exposing Barclays' shenanigans over the past year while acquiring Lehman at subfiresale prices (and being sued for that now), you probably were not invited to the annual Lehman Brothers (yes, that's how it will always be know, and always with Brad Rogoff leading the charge) HY conference, this year held at the Phoenician in Scottsdale, AZ. On the other hand, even if you were invited, but like quite a few people, spent all your time in Jenna Jameson's Babe's Cabaret, and need to send your boss a summary of all you"learned" you must be about as pleased as Tim Geithner at a Tax Cheats Anonymous meeting. Fear not - here is the full presentation deck, chock full of cool stuff stuff, pretty graphs and bullish, bullisher, bullishest ideas. So buy all the worst junk before the market crashes again and Lehman still has gobs of crap paper on their books. Cause this time the Repo 105 reacharound just ain't gonna cut it.

Following our update last week, Gold has continued its appreciation today. Overall commodities and emerging markets were the main driver. The key chart today is copper which broke out to make new highs on the year (and since August 2008 for that matter). Given what we have been stressing on the triangle observed in the Shanghai composite and AUDCAD, this could be a major development. In parallel to this break in Copper, AUDCAD actually broke out of its triangle to the upside. Two things to keep in mind though:

a/ Flase breaks for triangle are extremely frequent

b/ Copper had a major false break into new highs in July 08 before experiencing a virtually uninterrupted 70% sell-off

- Nic Lenoir, ICAP

China may have just taken the first retaliatory step against Google, after the search enginge decided to relocated its service out of Hong Kong. As the website created by Google to keep track of Mainland China service availability indicates, mobile services for the first time have become partially blocked on March 28.

March 29, 2010 Total US Debt Subject To Limit: $12,629,674,000,000.

Total debt at the beginning of March: $12,383,717,000,000

Net debt (includes Trust Funds and marketable debt) issuance month to date: $246 billion

• Net Bills issued: $107 billion
• Net Notes issued: $138 billion
  
• Net Bonds issued: $13 billion
  

Debt limit: $14,294,000,000,000.

Debt capacity: $1.665 trillion and dropping. At $220 million per month in net new issuance as projeced by the CBO, this will last the US just under 8 months.

I am back from yet more travel, this time a couple of days in Florida, and a quick 24 hours on the –rainy- shores of Lake Como at the Spring Ambrosetti forum. Of note: the state of the world/me being an optimist. Judging by the mood of people at Ambrosetti, and the nature of the questions and comments I received on both the two panels I was on, and separately in conversation, people continue to think my optimism is , sort of nuts. At the heart of it, people simply find it impossible to believe that global demand can remain above 4pct-ish if the US is struggling. There is one major dilemma with this, substantially held view, it is called “ the evidence”. - Jim O'Neill