Archive - Apr 2010

The US Military issues its official retort to the Wikileaks video. Here are the official US Army recommendations based on that episode:

I ratify the appointment of the investigating officer, MAJ [Blanked out]

The recommendation that:

-(10a) Members of the press be encouraged or required to wear identifying vests or distinctive body armor within the MND-B AOR is (approved) (disapproved) (remanded to the BCT Cdr).

-(10b) Coalition Forces be notified when members of the press are operating in their AORs is (approved) (disapproved) (remanded to the BCT Cdr).

-(10c) Condolence payments be made to families of the two children wounded in this engagement is (approved) (disapproved) (remanded to the BCT Cdr).

I remand the matter to the 2/2ID Cdr for appropriate action.

According to Bankingnews.gr, yesterday's disclosure that Greece would attempt to raise money by targeting US bond investors is now being refuted, and that this will likely "not happen." With record wides across the bond complex, it is not difficult to see why. In the meantime the entire high beta euro sovereign market is melting down. We are stunned US stocks are not up on this latest piece of horrible news: the market has proven quiet resilient in climbing the wall of sovereign bankruptcy in recent months. And now for some comic relief: after alienating Germans in perpetuity, Greece is now targeting the US, and the IMF and specifically its main backer - the US. I guess if you have to go down in flames, might as well try to burn all those who are trying to help you, if only you would cut your profligate ways... Which simple requirement, as was already disclosed, is out of the question. Bankingnews.gr is blaming the plunge in 10 Year GGB on American selling. We are not sure if a "Short Party" is the same as a "Pants Party." We don't want to find out.

"While the pundits and the papers try to force fit the economic data to the market action, currency controlled again.

Quite simply, you could credit the better numbers in the ISM service sector and in Pending Homes sales for moving stock prices higher. With a little finesse you could even credit that data with sending crude prices higher (economic recovery, etc.).

It is less easy to credit that data with helping to push gold higher. Today’s rule of thumb is that if the Troika (oil, gold and stocks) is moving in the same direction, the catalyst is currencies. If the Troika is up, odds are that it’s based on a weakening in the dollar. Conversely, if the Troika is down, you can bet the dollar is probably firming.
Is that boring and frustrating? You bet it is! But it is the dominant force in today’s markets." - Art Cashin

We know it blends. The real question: is there an app for GETCO's DMMs to "see" the order flow ahead of everyone else? Time for an iPad push on the floor?

And scene - Greek 10 Years now at worst level since 1998. Well, that bailout thingy lasted all of 10 days. Next stop: US bond investors to gobble up every piece of Greek debt with Other People's Money.

Update: 405. Capitulation. Too bad that chapter in the CDS scapegoating manual is missing.

• Typical headline these days: Euro weakens, Greek bonds slump on funding concern; stocks gain (Bloomberg)
• LBO capital raising plummets 81% from peak in 2008 (Bloomberg)
• Times gropes at hope with talk of job surge (Post)
• The man who knew all about Repo 105 even as our own Fed was retarded, RBA's Glen Stevens hikes discount rate to 4.25% to cool his overextracting economy - watch for the AUD carry trade (Bloomberg)
• A Florida doctor has told patients who voted for Barack Obama that they should seek care elsewhere (RCM)
• California's $500-billion pension time bomb (LA Times)
• Mighty America's 5 stages of rapid decline (MarketWatch)
• Tanker rates seen sinking 35% amid refinery cutbacks (Bloomberg)

Update: 392 now

As we expected yesterday, the Greek rebellion over having the IMF on boad of the bailout package is about to give the GGB curve some prolapse issues: GGBs are tumbling, and no - not from CDS buying - this is all cash sellers baby. Oh, and good luck Greece with selling your bonds to US investors - they may be dumb, but they are not that dumb (unless of course you make your Bond covenant lite, add a 6 month Call, and use at least half the proceeds for dividends to Greek dictatorshipholders). Also, bankingnews.gr says the spread is about to hit 400 bps imminently. Prepare to have a deja vu freak out over Greece all over again - maybe 3rd time is the charm.

• Asian markets traded mostly higher with Australian market reaching an 18-month high.
• Australia raised its cash rate target a quarter percentage point to 4.25%.
• Bank of Japan may keep policy unchanged as Tankan shows economy improving.
• China says firmer yuan not key to U.S. trade imbalance.
• Euro declines on speculation Greece will struggle to raise further funds.
• Fed finds record-low OECD inflation.
• Interest rates climb; 10-year Treasury yield touches 4 percent for 1st time since June.

RANsquawk 6th April Morning Briefing - Stocks, Bonds, FX etc.

RANsquawk 6th April Morning Briefing - Stocks, Bonds, FX etc.

There are many factors which affect rental prices, including: (1) the general health of the economy; (2) demographics; (3) housing strength; (4) population growth; (5) migration patterns; and (6) wealth distribution.

In 2008, when Lehman went bankrupt because of all the “toxic assets” on its balance sheet, the severe credit crisis that happened as a result was because everyone realized that Lehman was the canary in the coal mine. All of the American banking system was insolvent, for more or less the same reason: Assets on their books simply were not worth anything close to their nominal value. Between September, 2008, and March 2009, the Fed backstopped the entire US banking system—but it still wasn’t enough. The losses were too great, the holes in the balance sheets too big.
So on April 2, 2009, a key FASB rule was suspended: Specifically, rule 157 was suspended, related to the marking of assets to market value—the so-called “mark to market” rule. However, ever since April 2, 2009, when the FASB rules were suspended, the American banking system has been floating on nothing by air. By suspending rule 157, none of the banks have had to admit that they’re insolvent. With the suspension of mark-to-market, accounting rules are now basically mark-to-make-believe.

Who would have thought that Obama's fate would be decided not by his passage of the "historic" healthcare reform, or his pathological inability to disengage from the kleptos on Wall Street, or even the exponential growth in the US debt, but by what is shaping up to be a November (potentially Nuclear) D-Day out in the middle east. Pakistani newspaper The Nation, quotes former Israeli defense minister Ephraim Sneh, who in an Op-Ed in Haaretz, says that "Israel will be compelled to attack Iran’s nuclear facilities by this November unless the US and its allies enact crippling sanctions that will undermine the regime in Tehran." It appears that Israel is not taking the recent deterioration in its relations with the US lightly. If China and the whole botched CNY issue is any indication of just how incompetent and impotent US foreign policy has become, Obama has about 6 months before the defense/war complex sounds the victory horn (and the president gets to experience first hand just how much better unemployment in this country really is getting) in the shadow of the mushroom cloud.

A response to those who want to turn back a clock.

A new requirement for CNBC in its quest to regain some of its collapsing ratings: drunk guests, or at least people who do an amazing Jeff Macke impersonation. To wit, Sean Brodrick of Weiss Research, explaining why oil is going to the moon: "Just today... well, that's interesting, right today, we're seeing the, uh, a bond, actually move, like, lower so as the move lower, as they move out of the bonds, it moves into the, uh, it, like, moves into energy. However that's short-term. In the intermediate term I think we should see $93 to, like, $98 just because of this expectation that around the world things will improve." It is not fair that CNBC hides these diamonds in the rough, and does not give them their own shows, either to segue into Cramer, or to rule over that much coveted 8pm spot which used to be Dennis Kneale's kingdom. It would do miracles to those collapsing ratings. In other news, these are the kinds of people who are left to trade markets: should explain pretty much everything.