Archive - Sep 2010

• ADB raises Asia ex-Japan growth f'cast for this year to 8.2% vs. July view of 7.9%.
• ADB says Asia must refrain from tightening 'too quickly'.
• Asian stocks fall on European debt concerns, Metal prices drops.
• Fed weighs a more open-ended, smaller-scale bond purchase program.
• German consumer confidence f'casts 4.9 pts for Oct, a rise from rev 4.3 pts in Sept.
• AIG's Asian unit gauges demand for its Hong Kong listing; plans to raise $10-15B.
• China Airlines plead guilty to fixing prices on air-cargo shipments, pay $40M fine.
• Exelon Corp. to sell $900M of debt to fund its purchase of a Deere's wind-power unit.

Key events dominating today are Case Shiller, Confidence (both Conference Board and ABC) and Richmond Fed.

Having just returned from Greece, I can vouch that Canada's pension system is among the world's strongest, but that doesn't mean that we can't improve it.

RANsquawk European Morning Briefing - Stocks, Bonds, FX – 28/09/10

Retail Traders as a herd are wrong...most of the time (sorry guys its true).

This daily report is designed to help traders find opportunities to trade against this group. The premise is very simple we are looking for 66% of retail traders to be trading either long or short a currency pair, we then look for opportunities to fade (trade against) this group.

Just because it was less than half a year ago, and just because it is certain to occur again, and just because so many have already forgotten what that "end of the world" feeling was like and are back to collecting pennies in front of an out of control rollercoaster, here is, once again, the historic CNBC footage from May 6, in the minutes leading to the 1,000 point drop on the Dow Jones, when the Fed lost all control. Hopefully this will remind all those who are supposed to fix the market, yet continue to merely enforce the interests of those who brought the market to this pathetic state, just how many tens of trillions of dollars are at stake.

The following is Part I to David DeGraw’s new book, “The Road Through 2012: Revolution or World War III.” This is the second installment to a new seven-part series that we will be posting throughout the next few weeks. You can read the introduction to the book here. To be notified via email of new postings from this series, subscribe here.

Ben will now buy a 100B a month. The sky is the limit. Insanity.

Our friends at Nanex have completed a full forensic analysis of the flash crash, on a tick for tick basis, between the fateful times of 14:42pm and 14:52pm on May 6. Under permission directly from Nanex, we present to you a fascinating and fully interactive chart, which is the bast to date analysis of everything that transpired during the flash crash. On the chart below (after the jump), every underlined component is a hyperlinked module with extensive detail associated to any one individual fragment of the flash crash. As Nanex, demonstrates, the key catalysts commence at 14:42:43.600 with a bout of quote saturation, move on promptly to heavy selling in the ES, and concludes at 14:42:44.100 with heavy selling of the SPY, QQQQ and all ETFs immediately following. It is all downhill from there.

Barry Ritholtz is once again in Zero Hedge-marketing mode, which is probably not too surprising: this marks only the second time in under a week in which Mr. Ritholtz has exhibited a fascination with Zero Hedge, previously demonstrating a borderline obsession by actually scouring through tweet mentions of our humble blog. And humble we are - we have paid Barry exactly zero for this ongoing free advertising fest. That said, we are confident Barry will be happy with us reposting his entire post for our readers because he does bring up some valid questions, to which we provide our own brief perspective.

Apparently the reach for yield knows no bounds. The junk bond market is returning to the bad old days that we saw the last time this market topped in 2007. Inferior credits are now flooding the market with dubious conditions, lax covenants, but premium terms. Banks may not be willing to lend, but investors of every stripe are more than happy to. Investors are once again paying Rolls Royce terms for jalopy credits. (JNK), (HYG), (PHB).

Well, if there is anything the SEC is actually capable of doing, it is to market its worthless and corrupt old self. According to Reuters "the upcoming flash crash report will show that regulators have a "very deep understanding" of the marketplace, giving the public a measure of confidence, the head of the U.S. Securities and Exchange Commission said on Monday. "It will paint a very clear picture of how the markets operated on that day," SEC Chairman Mary Schapiro said in an interview, adding she expects regulators will issue the report "in the next several days." Well thank fucking god that the regulators will at least have an "understanding" of how $1.5 trillion in market cap was lost in the span of 15 seconds, and was immediately found again, courtesy of the New York Fed, and that we will once and for all know that HFT is nothing but a ravenous cancer deeply embedded in everything market related, that should have been chemo'ed years ago, when that hyperventilating fringe blog started discussing it (luckily, in less than 100 paragraph rambling and somnolent streams of consciousness). But no, the SEC decided to wait until 20 weeks of fund outflows have put a nail in the coffin of investor confidence. And, by the way, the SEC report will do absolutely nothing to change the public's perception of the market, as nothing at all will change. Because if it did, it would cause roughly $50 billion in annual revenue to evaporate, and the market lobby will simply not allow that. On the other hand, hanging HFT out to dry, will confirm that the SEC actually had a very "non-existent" understanding of the marketplace, for allowing HFT encroachment for so long. In retrospect, we take that back. The only thing the SEC can do to begin the act of restoring confidence in the marketplace is for everyone at the world's most worthless organization, from Mary Schapiro to the lowliest analyst, to hand in their resignation effective 2 years ago, when the greatest experiment in market manipulation began in earnest.

Sources in the Gulf region report that Iran is preparing for a possible attack by Israel and/or the United States on one or more of its nuclear production units by stockpiling arms and munitions with its proxy militias in Kuwait and Bahrain. This comes as Bahrain arrests 23 opposition leaders accused of terrorism offenses and hints that Iran is behind an alleged plot to overthrow the government. Bahrain's attempted coup reports should be taken seriously, as Iran knows that its best chance of fighting the US and/or Israel is by proxy. Hitting Bahrain hard would greatly upset the overall security situation in the Middle East and Gulf region.

The Fed's preferred voicebox, WSJ's Jon Hilsenrath is out with another article discussing what the imminent QE2 may look like. The summary is that contrary to expectations for a "big bang" intervention, the Fed will instead do $100 billion in QE a month until such time as it deems fit. A few observations on this article.

One has to wonder by now just what is so magical about the Dow 1,000 that Prechter has been so infatuated with since time immemorial. Why not 999? Or 1,001. Oh well, as the rest of the world continues to expect the Dow's drop to precisely 1,000, Prechter's call for a surging dollar (ahem), for a plunge in gold (ahem, ahem), and for a rout in stocks, has left quite a few investors with some unpleasant margin calls. What is odd, is that Prechter seems to completely miss the natural hedge offsets of his bearish trade, and he confuses both inflationary and deflationary outcomes that reinforce each other's loss, in his blind pursuit of a market crash. Perhaps Mr. Prechter would be wise to heed the statement from Brazilian finance minister, who earlier acknowledged there is now a full-blown war of central bank attrition. And, no this is not a zero sum war, as all currencies are devalued equally against each other, but absolutely lose value against other fixed assets like gold.