Archive - 2010

The key events overnight shaping this morning's futures picture revolve around the re-revised Q3 US GDP number (consensus of 2.8%), rumors of China buying Portuguese bonds (again), European spreads which are once again widening (here we go again again), and a surge in Japanese imports resulting in a cut to Japan's GDP forecasts.

Merry Christmas, from the US Financial Oligarchy Infrastructure, to the US Taxpayer

After this morning’s report of a sharp setback in mortgage loan applications (mortgage applications tumbled 18.6% last week as refinancing applications plummeted 24.6%. ) we have the third round on third-quarter GDP and sales and prices of existing homes… There is a modest $1.5-$2.5 billion POMO later.

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 22/12/10

Retail traders are notoriously wrong at picking market direction/tops and bottoms. Most retail traders very naturally seem to adopt a counter-trend stance and this offers very accurate signals for individuals looking to trade against this group. This daily report is designed to help traders focus their efforts on higher probability pairs.

The quick answer to the headline of this article is yes.

Keynes' ghost bothered him. He didn’t know whether it was a dream or not. Then he remembered that a spirit should visit him at the opening NYSE bell...

When a week ago we reported that JP Morgan has denied it owned more than 90% of the copper positions on the LME, we suggested that this could very well mean that Blythe Master's firm could just as easily control 89.999% of the copper and still not misrepresent the truth per that non-commital press release. Turns out our unbridled cynicism was spot on as usual. The Wall Street Journal has just reported that in the copper market "a single trader has reported it owns 80% to 90% of the copper
sitting in London Metal Exchange warehouses, equal to about half of the
world's exchange-registered copper stockpile and worth about $3 billion." Oh and yes, while JP Morgan technically is not singled out, we will be delighted to issue a retraction the second JP Morgan approaches us with a refutation that it is not the trader in question. And while we are at it, we also will repeat our claim that it was indeed JP Morgan that reduced its massive silver position, as per the recent FT article: as above we will immediately issue a retraction and apologize should JPM's legal department contact us that we are wrong on this. Somehow we don't think that will be an issue. And so it is once again made clear that the biggest market manipulating cartel in the world is not only JPM's commodity trading operation, but the "regulators" at the CFTC, who are doing all they can do to delay implementing rules on position limit- a stalling tactic whose sole purpose is to make the life of Jamie Dimon as comfortable as possible while he corners the copper market (and offloads his PM shorts to some "foreign bank"), even if that means the complete collapse in faith in the commodity market. Presumably, this means that Mr. Gensler has received an outsized Christmas gift to assuage his conscience. As for the commodity market, well, just look at what has happened to the stock market now that everyone knows it is nothing but a house of cards scam where a few robots front run each other. We are confident to quite confident tomorrow's ICI report will confirm that 33rd consecutive outflow from domestic equity funds. It is a pity that the same fate will now happen to the commodities market, as everyone tells Gensler to shove his corrupt market, and moves to physical. Frankly, it couldn't happen to a nicer group of so-called regulators.

From the UK to the US, the day of reckoning has arrived...

James Bullard, President of the Federal Reserve Bank of St. Louis was on CNBC Monday, December 20, 2010 mostly defending the Fed’s QE2. What struck me as totally self-contradictory were some of Bullard’s statements regarding the QE2, and inflation, which I will outline and rebuff here.

First president Obama becomes Bush in all but name with respect to his predecessor's economic policies, and now he follows by espousing Bush's interpretation of "civil rights" as well. According to Pro Publica, the White House is preparing an Executive Order for indefinite detention. And while the premise behind a comparable draft has been circulating around for 18 months, the uptake was seen as problematic. The "humanitarian" premise behind the order is that it will "provide for the periodic reviews of evidence against dozens of prisoners held at Guantanamo Bay... and allow for the possibility that detainees from countries like Yemen might be released if circumstances change." That's the theory. The "practice" is that the Order will, as the name implies, afford the administration the option of "indefinite detention as a long-term Obama administration policy and
makes clear that the White House alone will manage a review process for
those it chooses to hold without charge or trial." In other words all those, and we assume that the Order is not merely targeting those involved in September 11, and is wider in its scope, who are perceived by the administration as "high value detainees" will be denied due process, and will be held in captivity essentially indefinitely with no legal recourse, for as long as the "review process" so deems fit. As for the "theory" aspect, Politico summarizes just how much of a bold lie Obama's promise two years ago to close Guantanamo has become: "Nearly two years after Obama's pledge to close the prison at Guantanamo,
more inmates there are formally facing the prospect of lifelong
detention and fewer are facing charges than the day Obama was elected." In other words, Obama has one upped Dubya not only when it comes to Republican economic policy, but has in fact surpassed his abrogation of basic human rights. And seeing how in the aftermath of the Assange arrest (speaking of which, Julian better run following this announcement), it is only a matter of time before that whole 'Internet free speech' premise is perceived to be a form of treason, by the likes of Biden, Palin and Lieberman, potentially punishable if not by death, then certainly indefinite, lifelong detention.

These days, it’s hard to draw any conclusion other than that the train is gaining speed on wobbly tracks perched over a rickety bridge. Most notably, unemployment has again risen – to 9.8% from 9.6% – very much not the direction things should be headed given the amount of money the government has pumped into the economy. The latest data shows that this nation of 310 million souls managed to add just 39,000 jobs in November. That, unfortunately, falls short of even keeping up with a population growth of about 1% – doing just that requires generating a net of about 250,000 jobs a month. As for eating away at the millions of unemployed and the many millions more who are underemployed… oh, well. Of course, the mainstream financial media wastes no time in pointing to this latest dismalia as proof positive that the Fed’s recent decision to energetically restoke the money machine with upwards of $100 billion a month was the right decision. This despite the clear evidence that adding debt to debt is having no real effect, except begetting more debt. This is a lesson that, so far, appears to be making no headway in the cognitions of Washington’s policy makers, even with the latest election results delivering a sharp rap across the knuckles to the power elite.

But will the documents just show shenanigans (bolstering the case that WikiLeaks is psyops or political theater) or criminal wrongdoing?

Yesterday we got to hear Doug Kass recite Howard Marks' most recent views on gold by memory (badly) and come up with the conclusion that gold may drop 25%, something not even Marks was foolish enough to suggest. Today, we present a contrary view, that of the extremely original and always provocative Simon Black, aka Sovereign Man. Writing from Auckland, New Zealand, the activist who has previously openly defended expatriation as a means of "revolting" against the collapse of US economics and society, turns his attention to gold and shares his thoughts on what to look for "when the market tops." As always Black, who has encountered more cultures in the past few months than most do in their entire lifetime, gives an unorthodox view on the metal's prospects, which if nothing else, are based on a much broader sampling of data, than merely the (biased) read of the opinion of just one other person. His conclusion is not that surprising for someone who has a worldview that is wider than just the FDR through the West Side Highway: "People are only starting to wake up to the reality that unbacked paper currency is fundamentally flawed, and it will be a long time before this belief becomes widespread once again, just as it was in ancient times."

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 21/12/10