Archive - May 14, 2010

If you were wondering why the market is spooked by rumors that Germany may be returning to the DM, here is actual fact that French President is on the verge of reinstating the franc. And with that, the euro is nothing more than a political toy for Merkel, Sarkozy and whoever the current non-indicted head of the Italian government is, to achieve their political goals. The currency is now dead. Parity coming within a few weeks.

The title pretty much sums it up...

One of the most delayed IPOs in the history of capital markets, that of Apollo's Noranda Aluminum, which first was allegedly coming to market in 2008, has finally priced. And it's a stunner: after preliminary expectations for raising as much as $266.7 million (16.66 million shares at $16/share), the company barely managed to attract interest for 30% of this amount, or a paltry $80 million. The 70% reduction in the price is a record for 2010 IPOs and shows that the IPO window in which the Goldman "Idiot Money" Rolodex is put to full use, is pretty much shut. Only this time it wasn't Goldman leading the underwriter brigade: GS was only fourth in the line up of managers. This IPO debacle is exclusively the work of lead manager Bank Of America, which more or less explains the fiasco. If you need a crap REIT upgraded you go with Merrill. Everything else will end in tears. And it also goes to show that if you need to find fools willing to part with their money, Goldman is and always will be the way to go. We are very much surprised Leon Black is not fully aware of this. As a result even pro forma for the IPO, Noranda is still leveraged 5x+, or more than three times its peer universe average. Dear latest money investors: our message to you is to prepare to lose your entire investment within a year.

• Foreign investment in China up 25% in April amid growing interest in rebounding economy.
• Euro breaks 14-month low as debt-cutting steps may hurt growth.
• Hong Kong economy expands 2.4 percent in 1Q, fourth straight quarter of growth.
• India inflation eases to 9.6 percent in April, but food and fuel costs remain troublesome.
• Oil prices fell below $74/bbl amid expectations a slower economic recovery in Europe.
• Sales at U.S. retailers probably rose in April for a seventh straight month: Survey.

"Last year we awarded Dylan Ratigan one of our First Amendment Awards for Outstanding Journalism for his job calling out the scammers who were bringing down the economy. Dylan and I were chatting about how things have played out since then, and what we need to do to continue fixing the broken infrastructure of capitalism …" Wall St Cheat Sheet

Many analysts expect gold prices to fall back near $800 an ounce over the next ten or twelve months as demand from jewelry has been weak, and that much of gold's recent strength has been speculative in nature. However, similar to crude oil, gold also has become an asset class in itself and trades beyond market fundamentals.

If you want to avoid all the red ink in the futures this morning, and dig your head deep in the sand of denial, here is Goldman Sachs to the rescue. As we pointed out a few days ago, Jim O'Neill, who is likely more devastated by Man U's loss of this year's Premiership title than the daily accumulating of new and improved criminal charges against his firm (his response to that, and to anything else: "BRIC"), earlier led a call titled 'Why the World is better than you think.' We have decided to pass, but to avoid being branded non-objective pessimists, we provide our readers with the means to listen to the replay - this way you can get all your 100% RDA Vitamin H1 and Joseph Cohen hot flash..backs all at once.

As of early this morning, all of Europe is plunging, not just the euro but all non EMU currencies as well: the EURUSD was in the mid 1.24 range, the GBPUSD is about to breach 1.45, while the Polish Zloty and Hungarian Forint are tumbling. Guess who is up: Gold, surging by over 1.2%, and at $1,245 at last check. The LBMA attempt to contain gold has failed and the market is preparing for a second assault on the $1,250 big resistance, whose take out will next take gold to $1,500. And while Greece is striking again, now the European core is accelerating the squeeze of the periphery: Romania is slashing its government budgets by 25%, and its pensions by 15%, which has resulted in immediate protests. We expect to see many more signs that the Greek contagion is only now spilling over into the social sphere.

Manipulation in commodity prices continues via employment of non-deliverable, cash-settled only, dollar denominated futures contract for Crude Palm Oil

On the 5th of March in 1946, in Fulton Missouri, at Westminster College, Winston Churchill delivered an address (since christened the "Sinews of Peace") lamenting the burgeoning power and influence being slowly but surely gathered up by the Soviet Union.  Perhaps the address will be familiar to some of you owing to its most famous passage....

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 14/05/10

With six consecutive intraday triple digit swings from high to low in the DJIA index beginning last Thursday, volatility has returned to US markets with a vengeance. So who’s going to win the battle between the bulls and bears now? With the loss in confidence in global markets and the further exposure of the rigging games of markets precipitated by the 700 point drop in the DJIA in ten minutes last Thursday, sustained volatility and further corrections are likely in our near future. If so, then where’s the safest place to be now?

Things are starting to heat up. Video below the article.

I am Ex CEO of mid sized Wall Street Firm. Known for equity research; reasonably good trading; acceptable Investment Banking. Now retired
Equity Block Trader early in career. May have traded more 1,000,000 share blocks than anyone over 10 year period.

Executed 1st program trade that I am aware of. Manually handled blocks of stock vs options on the XMI for expiration October of 1983.
Oversaw global equity trading, for top 5 firm. Was senior trader and oversaw hedge book during 87 crash. Still have time and sales from that day for all trades on NYSE.

Can read the tape as well as most.

I cannot come up with any explanation for market activity for last 15 months other than treasury intervention. Probability of other explanation is nonexistent.

But if that is the case…and I was Tim, how would I work it…starting in March 09.