Archive - Apr 16, 2010
Kevin Gaudet, federal director of the Canadian Taxpayers Federation, isn't surprised that there is a growing frustration felt by private-sector workers who must work longer and pay high taxes longer to provide for public- sector workers who work shorter careers and receive significantly better benefits in retirement. But the solution he proposes isn't going to rectify this great inequity - it will only ensure pension poverty for the masses.
We expected Dylan to explode during today's show. We were disappointed as he somehow managed to contain it, and did a pretty good recap of the Goldman affair (if a little too many matchbox cars on the show for our taste). The notable take home for us was that CT AG Blumenthal said that "criminal charges have to be pursued against Goldman." We are sure Cuomo is not too far from this line of thinking. And we would be remiss if we did not point out that credit has to be given where it is due: Gretchen Morgenson (whom half the blogosphere was bashing a month ago over semantics) and Louise Story broke the entire story 4 months ago, and the SEC complaint reads verbatim from the authors' December 24 article.
Summary of the week's key bullish and bearish economic events
As Wall Street bombshells go, the lawsuit that the Securities and Exchange Commission filed against Goldman Sachs Group Inc. is about as big as it gets. Who knew the folks at the SEC still had it in them to accuse a major Wall Street bank of fraud? And who could have guessed that Goldman’s canned explanation for its behavior during the subprime mortgage bubble -- that it simply was serving clients’ needs -- could come so unglued so quickly?- Jonathan Weil
Can someone please explain to us what the nature of this post is: “Zero Edge” — Rebutting Faulty Tax Analysis" which appeared today on Barry Rithholtz' blog. We are confused by the whole premise of some guy called called Matt Trivisonno taking offense at our unadjusted and unredacted tax withholdings data, and saying we are misrepresenting something or another. What is more confusing to us is that we have never read anything by Mr. Trivisonno before. Matt, not sure what the problem is - we are merely showing that the Treasury is collecting less money in taxes than it did in 2009. And as for contrarians, we were focusing on the puppets of the government such as Steve Liesman who were making these false claims (at least on an actual cash flow basis - I am sure your adjustments will lead you to whatever conclusion you desire). Period. I am happy to share the primary data with you or anybody else: it is all public and anybody can grab the data directly from the Treasury. If Matt wishes to challenge what the raw data is showing, we are happy to open a forum to him on Zero Hedge. We will post an update on the ongoing deterioration in gross tax withholdings (actual, unrecasted, unmodified or seasonally adjusted) shortly.
That said, we are very amused by Barry's distinction between his blog and ZH. To wit:
ZH is a blogger who covers Wall Street.
I am a Wall Streeter who blogs.
Barry is too kind, although since we cover Wall Street, and Barry considers himself a "Wall Streeter", does that mean we should be covering him as well? Thanks for the heads up!We are lucky that Barry points out what Wall Streeters do: "While he was typing, I was speaking to our clients, doing a Tech Ticker interview for Yahoo, a radio interview, and then making arrangements with NBC World News Tonite." So that's what Wall Streeting is? We will make a note.
Like A Swiss Watch, The Witchhunts Are Here: Blankfein, Fuld, Bernanke, Geithner, And Schapiro All To Testify Before Congress As Distraction Game ContinuesSubmitted by Tyler Durden on 04/16/2010 16:55 -0500
In keeping with the tradition of bread and circuses, Obama has managed to channel the public anger at precisely the right time to deflect from the fact that today the US debt increased by $51 billion as seen below. This has many wondering if the whole SEC action against Goldman (which some have already pointed out is a rather weak case) is nothing but smoke and mirrors to distract the broader public for a few weeks until anger once again dies down while in the meantime the administration pushes this country deeper and deeper into insolvency. If it means sacrificing the SEC which, whose downfall is a given anywa, and will take a few years of legal wrangling and millions in legal fees charged to Goldman's shareholders, so be it. For those who care where the real news is, we direct your attention to today's Daily Treasury Statement, which disclosed that total US debt just jumped to $12.817 trillion, $51 billion higher on the day, $101 billion higher for the month of April, and $965 billion higher for the fiscal year beginning October 1, 2009 (so six months ago).
I know I'll raise my hand to the aforementioned question. The issue is,
as I huffed and puffed about how overvalued GS is, particularly
considering the amount of risk that it faced, I got a lot of blow back. Goldman has a lot of risk surrounding it that no one wanted to recognize - until now!
I presented my thesis on China and Japan at my alma mater University of Colorado at Denver at International Executive Roundtable yesterday. Here is updated version of my China presentation.
Oil prices were under selling pressure from the opening bell on Friday, having sold off in trading overnight. In the trading overnight in Asia and in Europe, oil prices were being sold in reaction to a lower equities and a stronger US dollar. This was in sharp contrast to the previous six out of seven days, or the period ended on Wednesday, during which fundamentals had played a leading role. For the first five days of that period, ending on Tuesday, oil prices had declined based on heavy inventory levels. On Wednesday, they rallied after this week’s DOE report showed a drawdown in crude oil stocks and a slightly larger-than-expected draw in gasoline inventories. Demand had also shown Oil prices were under selling pressure from the opening bell on Friday, having sold off in trading overnight. In the trading overnight in Asia and in Europe, oil prices were being sold in reaction to a lower equities and a stronger US dollar. This was in sharp contrast to the previous six out of seven days, or the period ended on Wednesday, during which fundamentals had played a leading role. For the first five days of that period, ending on Tuesday, oil prices had declined based on heavy inventory levels. On Wednesday, they rallied after this week’s DOE report showed a drawdown in crude oil stocks and a slightly larger-than-expected draw in gasoline inventories. Demand had also shown
Spreads widened dramatically today, closing at their wides, as overnight weakness from GOOG's miss combined with further contagious stress in European sovereigns and financials was slammed down following the SEC's charges against GS. IG widened the most close-to-close in over two months and HY underperformed as derisking, which started overnight, was clearly in play and perhaps the initial gappy nature suggest that this rally remains very fragile.
The just released CFTC Commitment of Traders indicates that the big banks increased their net short gold exposure to the highest since early 2010, hitting -292,244, a jump of -24,396, and an increase of -69,361 from two weeks prior. Also, in the week ended April 13, the outright Commercial short positions in Gold hit a 2010 record. Gold traders who observed this spike in commercial shorts, especially when combined with the surprising strong gold price action over the past two weeks, are concerned that the news about Goldman, and its ramifications on Paulson's holdings of GLD, may have leaked over the past 10 days to allow banks to front-run today's hit in the price of Gold. The question of whether or not Paulson's worries will materialize into an actual partial or full-scale liqudation will be an open ended question for some time: today many of the key Paulson positions, primarily in financials and commodities have gotten hit hard, leading many to believe that the market may force his hand.
RANsquawk 16th April Market Wrap Up - Stocks, Bonds, FX etc.
How quickly things can unravel for the PigMen Prop Desk traders at Goldman. Wall Street gets busted. However, Joe Sixpack is unfazed, as retailers once again are immune and resilient from any type of convulsion, algospasm, or Black Swan event impacting the financial markets.
Any time Erin Burnett tells a guest "You will not be back, you have to be more polite than that" you know the "guest" is telling the truth, the one commodity rarely if ever discussed on General Electric's circus station. Enter (or rather, exit) R&R Consulting's Sylvain Raynes, a structured finance expert, who at 3:10 into the clip takes on what he calls the "public relations officers" for Goldman, and asks "is it all right if I am a little critical?" Apparently the answer is no. First, Sylvain completely destroys Cramer's false "breaking news" about Goldman being long Abacus, using the same logic we discussed earlier: "It's quite possible that Goldman had an equity position, they probably wrote it off on the closing date. So they stood to lose a few million and make a few hundred million... Goldman was clearly in the know, they knew what they were doing. In fact, if they are defending themselves against a fraud charge they will have to make a case that they didn't know. I think too highly of Goldman Sachs to think that they didn't know what they were doing... These deals were made to be shorted." And the kicker "We don't have time to go into details, I want to remain shallow in deference to Mr. Cramer." At which point all hell breaks loose and the Goldman alumni just blow their collective lids. Best CNBC comedy since the Pisani-Liesman/Jeff Macke chronicles.
We start our update concluding the week like we started it: with the Vix. We pointed out a morning star on the Vix last Monday, and today the market was finally given a reason to validate the reversal with the news of GS being sued by the SEC. If it had not been for this piece of news it would have been something else. People are often quick to point that the market turned because of such or such event, but what is most important when an event occurs is that the market be positioned the wrong way so that the exogenous shock applied to the system generates the maximum amount of resonance. - Nic Lenoir