Archive - May 11, 2010

Another wild trading day with Algo/Igor/Robo programs running amok, as if Marlon Perkins was airhorn blasting the Wildebeest herds from a helicopter. Crazy moves back and forth, with intraday boner runs, followed by shanks, clothesline drops, so fast that the 19-year old gamers cannot even follow the motion.

Do you see what happens Larry when a CNBC anchor and a trader discuss a concept that is not prominently featured every day on Page 6? The punchline from Steve Grasso: "Michelle, I love you despite not having common sense on this issue." 4 out of 5 moronic bloggers would certianly not be so generous as to add the the last qualifier. But yes, when even people MCC, whose "talents" are elsewhere, become trading pundits, you know the end of the trading world is nigh.

Explains it all really.

Everyone's favorite permabear, Bob Janjuah, was interviewed by Bloomberg TV's Erik Schatzker. Among Bob's observations were that the EURUSD is going to parity, that Treasury yields will surge, that the European bailout is at a dead end in Europe, that the S&P fair value is at 850, and that gold will "easily" see $1,500/ounce this year. Not much new here for those how have followed his musings on Zero Hedge, but a terrific ten minutes for those who have yet to be introduced to Bob.

Well, we had a two whole days of HFT-free markets. That was about all we could ask for. And now, like evil German-sounding robots from the future, they are back. The market is melting straight up without interruption, and without any volume. Retail is now completely out of the market, and our advice to everyone is to stay out and let the computer blow themselves up again. In the meantime, please don't ask how and why Goldman and JPM can both have a perfect quarter. The chart below says it all.

Yesterday we discussed the statistically impossible trading desk results of Goldman Sachs, which reported in its 10Q that it lost money on exactly 0 days last quarter, and was profitable on 63 out of 63 days. Today we find that the rape and pillage of the middle class was not isolated to Goldman, and that JP Morgan also had a flawless quarter. And if the odds of Goldman making 63 out of 63 are virtually impossible in any universe in which risk goes hand in hand with return (but in those in which monopolies are encouraged and bailed out), the coincidence of the two main firms that control the world having a perfect track record is impossible². And since things in reality tend to be zero sum, when everyone makes money, someone may be tempted to ask the question, just who is losing money? And the answer, dear taxpayers, and [Goldman|JPMorgan] clients, is you.

The direct, unbiased, Wall Street Puffery filtered, skinny on Wells Fargo's latest results.

And so liquidity overflows once more, with investors stampeding to get first into stocks and now into bonds, with the 3 year $38 billion auction closing at 1.414% and an all time high BTC of 3.27[actually November 2009 was the only time that BTC was slightly higher at 3.33, so for all you purists out there, now you know]. But no, there is no bubble. It is just that investors are diversifying by buying bonds, stocks, commodities and gold all at the same time.

• $38 Billion 3 year closes at 1.414% (1.307% Low, 1.370% Mid), 1.776% previously
• Bid To Cover 3.27x, previous 3.10, average 3.00. This is an all time high BTC
• Indirects at 50.7% vs average 50.91%
• Direct take down 16.5%
• Primary Dealer hit ratio 14.99%
• Allotted at high 22.27%

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 11/05/10

Even as the toothless Sanders amendment passes unanimously and with the full endorsement of Chris Dodd (all you need to know) the Vitter amendment is voted down 62-37. In the meantime, America still pretends it is not a bankster-controlled despotic regime, in which the wealth of the middle class is funneled every day into the Wall Street/Propaganda ponzi. We will provide the rollcall and names of all financially secure for life, pardon, nay voters shortly.

MOODY'S: EURO PACKAGE `MARGINALLY INCREASES' RISK AMONG GOVS.
MOODY'S: SAYS MORE RISK BETTER THAN EURO AREA DE-INTEGRATING
MOODY'S SAYS EURO PACKAGE `ALLEVIATES LIQUIDITY CONCERNS'
MOODY'S: SAYS EURO-AREA `FISCAL RETRENCHMENT' MUST COME FASTER

This market is a joke: 3 days after the powers that be ended up causing the biggest market crash in history, they have now pushed the autopilot button, which basically means nobody among the 5 entities that still trade, is allowed to sell. And the algos chase every offer into the stratosphere. This will continue until the next time the banks needs to pass a Trillion dollar bailout or push a few hundred billions in treasury supply and get all the idiots chasing after the "riskfree" assets.

A London newspaper on Tuesday reported that Britain's Prime Minister Gordon Brown will resign on Tuesday and hand over power to Conservatives leader David Cameron, who won last week's elections but failed to secure a majority.

The report from the London Evening Standard comes among rising speculation that talks between the Labour Party and the Liberal Democrats have collapsed.

This should add to the already massive vol in cable and all other FX pairs.

5 minutes before the European close, market volume becomes dismal, algos take over and take the market goes green, even as the EURUSD takes out 1.27 to the downside, and as stocks have completely decoupled from EURJPY. Once again, with computers firmly in charge, the old trading patterns are back, and will likely draw the market higher, higher, higher until the next time the market goes bidless and drops 30% in 1 minute.

Bernie Sanders is talking right now on C-Span 2, where Vitter will discuss his amendment as well. Both of these are critical to exposing the covert activities of the Fed. If the Sanders bill passes as is, it will disclose prior information. If the Vitter amendment also passes, then the original form of S.604 will likely be implemented. Furthermore, Sanders just announced that according to his revised amendment the GAO is required to investigate conflicts of interest when banks were being bailed out.

Watch the debate live here.