Archive - May 20, 2010

The S&P just broke the 200-dma which held as support yesterday and on May 6/7. AUDJPY broke through 76 which was the key support we had bounced off of as well. Put your helmets on if you are long risk here. Unless we have a massive reversal on the day and we close above the key levels mentioned here above: this could open the flood gates for a lot more de-risking. A lot of stops have been triggered when the S&P future crossed 1,100 and anybody still long will probably have to bail out and head for cover. On a side note apparently funding markets in USD remain very difficult to access for most foreign players, and we are going to get to a point where outright FX buying of USD and selling USD denominated assets will be the primary source of funding. This can get very nasty very quickly, especially since corporate flows in FX seem to indicate that corporates are still short USD and keep pushing the amrekt as they try to cover. - Nic Lenoir

The latest market rumor is that Europe is on the verge of instituting a pan-continental naked short-selling ban, primarily focusing on killing CDS trading which Germany has had success in bringing other countries over to her perspective. Incidentally yesterday Greek CDS ended the day 40 bps higher, once again proving that market regulation left in the hands of politicians will always backfire. Also in the rumor column: France to institute 3 year public sector wage freeze. We know what a "storming" of any particular building in Paris tends to result in. Conviction pair trade of the day: long guillotine manufacturers, short Goldman "conviction buys" (the latter is a given natural short hedge to any long trade).

The last time Greeks were shown to be storming their parliament on live TV, we got a 1,000 point drop on the Dow Jones. Today, another 100,000 protesters of austerity are expected to hit the streets as the entire country is essentially shut down. From the BBC: "Much of Greece's transport network has been immobilised, as trade unions stage another 24-hour general strike against austerity measures. Ferries are tied up in port, railway stations shut, and the Labour Ministry occupied by communist protesters. Organisers are hoping that up to 100,000 people will join protests on the streets later. There are fears of renewed violence after protests in Athens two weeks ago led to the deaths of three people. The country's main civil service and public sector unions say they represent some 2.5 million workers. "People are bleeding financially but they will participate in the strike," Ilias Vrettakos, a senior member of the ADEDY union, was quoted as saying by Reuters." And for those who wish to follow the strike and potential Storming Of The Parliament Part 2, here is a live feed from the main Parliament square.

First a glance at the macro scene in China and then a look at how our China short thesis has played out thus far. Feel free to compare my work to Goldman and the other big banks, the challenge is welcome.

1.    N. Korea denies sinking S. Korea ship, warns that any retaliation will trigger 'all-out' war
2.    White House calls ship sinking a peace-challenging 'act of aggression' by N. Korea
3.    White House says North Korean action is challenge to international peace and violation of armistice pact

Discussing the natural gas market outlook and some mitigating factors prompting oil and gas companies to drill their gas shales even in the face of weak natural gas prices.

RANsquawk 20th May Morning Briefing - Stocks, Bonds, FX etc

Without getting into the politics of who’s right and who’s wrong in the Thailand conflict, let’s investigate an extremely important and underlying current of this conflict and every major economic conflict that is occurring in the world today - how a fraudulent global monetary system so significantly contributes to conditions of oppression and class division warfare.