Archive - Oct 8, 2011

Tyler Durden's picture

Did Foreigners Bail Out The US Stock Market... By Dumping $56 Billion In Treasurys?





Something curious happened recently: for the first time in over a decade, perhaps ever, the US saw a record $25 billion worth of Treasury bond outflows from the Treasury's custodial account in the week ended September 28. Just as curious is that in the past 5 weeks we have seen relentless selling of Treasurys from the same custodial account which, with Treasury International Capital data 3 months delayed, and largely incorrect until its annual revision, is the only real source of recent (and somewhat accurate) foreign activity in US bonds. In fact, starting with the week ended September 7, through last Thursday, foreigners appear to have dumped a massive $56 billion worth of Treasurys (don't take our word for it - check it here, courtesy of the Fed). This is quite disturbing for two reasons. One explanation for this move would be to look back to the Quant crash in early August 2007, which preceded the market's secular (and all time) high, when various quant funds blew up for reasons still not completely known. The reason why this date is important is that it was the catalyst for the next biggest concerted dump of Treasurys, when in a subsequent span of 4 weeks, foreigners sold $47 billion in Treasurys... but at least the market's precipitous move lower was prevented, if only for a few brief months. Also curious is that the recent move is in direct contrast to the Custodial Account reaction to the Lehman implosion in 2008 when 20 weeks of consecutive UST inflows, beginning September 10, saw $300 billion in "safe haven" purchases. So while the market plunge back then was accompanied by a shift into Treasurys, this time around, the biggest market volatility since Lehman has seen a record sequential exodus out of bonds. Which begs the question: did Tim Geithner make a few phone calls, and tell foreigners to dump Treasurys (knowing full well Op Twist was coming and the Fed would backstop the entire curve), and to buy stocks instead in order to prevent the next relapse of the Great Financial Crisis?

 

ilene's picture

Occupy Wall St – Systemic Change Please





The system doesn’t work, and they don’t want to reduce this to a set of technocratic little fix its and paste-its.

 

Tyler Durden's picture

The Dutch Central Bank Answers 10 Questions About Its Gold





Three weeks ago, the Dutch asked their central bank where their gold is. The central bank has responded. Courtesy of Vrijspreker, here are both the replies, as well as the key follow up questions. And while the bulk of the answers are expectedly trite, and generic form, "DNB’s physical gold holdings function as the ultimate reserve and anchor of trust in times of financial crisis. Further, gold is being held for diversification reasons." This appears just slightly different from our own Chairman's definition of gold as mere barbarous tradition.

 

Tyler Durden's picture

Guest Post: Breaking Down The Bullish Argument





Equity bulls have found solace in the abnormally high bearish sentiment readings. Seems everyone wants to be considered a contrarian. Rather than follow the herd these free thinkers venture out into the cold dark tundra alone and unafraid. They proclaim to the world "huge bearish sentiment to propel the stock market rally."  The great omen of Wall Street is to fade the herd and where better to find their direction than a simple sentiment survey. When it says go east they go west. When it says to ying, they yang. The American Association of Individual Investors declares this survey to be the true contrarian indicator. Who to argue with history and years of precedence. Surely a simple analysis of the data will substantiate this modern day folklore? Or will it?

 

rcwhalen's picture

Sol Sanders | Follow the money No. 87 -- Hello? Something in the water?





Could more conspiratorial environmentalistas’ interpretations of our times be correct, that is, someone has been putting something in the water and we are all being lobotomized, even without major brain surgery?  You could make the case this week. Much of the world’s leadership, even though presumably suckling their bottled water, exhibits all the manifestations of imbibing something adversely affecting the normal cognitive processes

 

Tyler Durden's picture

"Dexia's Funeral Will Be Announced On Sunday" As "Weakest Link" Slovakia Prepares To Bury The Euro





A few days ago we mocked the market's naive belief that a loose union of 17 different countries and hundreds of separate political organizations, each torn by thousands of unique interests and lobby groups, can all agree unanimously in the pursuit of the common monetary (read: banker) good, over that of their own people. Yet that did not stop stocks from enacting the second weekly massive short covering squeeze, in 3 weeks, purely on hype, rumors, innuendo and lies. And just like the last time the market soared by nearly double digits in a few short days, only to plunge when hopes of a quick resolution were mercilessly dashed, Monday has all the makings of another epic risk off day. Because while all it takes is a rumor (of a plan for a plan) to start a squeeze, we are about to get some very nasty actual events which will demand immediate and forceful intervention by the powers that be, something which Europe (and the US) has proven is virtually impossible. The events in question are, as Reuters reports, that i) "Dexia's Funeral Will Be Announced On Sunday" and, as Bloomberg reports, that ii) Slovakia’s ruling Freedom and Solidarity party won’t back the overhaul of the European bailout mechanism after Prime Minister Iveta Radicova rejected the party’s conditions for approval, a lawmaker said. Said otherwise, bonds are currently thanking their lucky stars the bond market is closed because not only will Europe have to deal with the headline risk that the weakest link in Europe, the tiny country of Slovakia, can scuttle the entire second Greek rescue operation, and thus, lead to the expulsion of Greece from the eurozone following its bankruptcy, but this will have to take place as Europe fights the stem the contagion resulting from the collapse and nationalization of the first Greek bank, which nobody, nobody, could have foreseen.

 

Phoenix Capital Research's picture

The Unfolding Economic Disaster





It is now clear the US economy has broken down in a BIG way. Indeed, no less than Ben “green shoots” Bernanke has stated that the recovery is “close to faltering.” This, coming from a cherrleader like Bernanke is essentially an admission from the powers that be that the US economy is a disaster.

 

EconMatters's picture

Let The Dust Settle Before Getting Into Apple





Gone are the days of the continued stellar Apple stock returns in the iSteve era, while investors are now looking for the next Apple. 

 

Tyler Durden's picture

Think An American Economic Resurgence Is Imminent? Don't Be Stupid, Warns Goldman





The recent brief uptick in economic high frequency indicators got you up? Feeling like suddenly the recession can be avoided because train traffic, whose sole goal is to stock up on even more soon to be liquidated inventory, hasn't yet collapsed? Happy by the beat in Non-farm payrolls, even though the beat was primarily a function of a one-time Verizon-strike boost, even as tax witholdings have hit an inflection point and are now declining? Amazed by the surge in car purchases, funded entirely by GM-targeted subprime loans issued by Uncle Sam, which have now declined for the first time in a year? Don't be silly, warns Goldman's Jan Hatzius, and presents a list why while the C-grade commentators out there may be caught off guard by the brief pick up in economic activity and proclaim the period of inverse economic growth over, it is all, quite, pardon the pun, "transitory."

 

Tyler Durden's picture

Chart Of The Week: European "Fear And Loathing" Hits Record $1.3 Trillion





The topic of the European "Ice-nine"phenomenon is nothing new to regular Zero Hedge readers: every day we point out the increasing freeze in European interbank lending (in both the traditional and shadow formats), in various money markets, in commercial paper, in broad fixed income issuance, and in the overall collapse in market liquidity, so deftly masked for now by daily political and central bank rhetoric, which for all its market kneejerk reaction glory is merely unsubstantiated innuendo and lies - keep in mind that the last time the incoherent and disorganized Troika came to an actual decision was July 21, with the second Greek bailout, and even that has not yet been implemented! So while hopes still percolates faintly on the surface, the riptide just below it has grown to record proportions. Presenting the chart that everyone who has an opinion on Europe, one way or the other, has to see. Here, courtesy of Diapason's Sean Corrigan, is the epic "Fear and Loathing" in the European banking system, in all its $1.3 trillion glory, or nearly double where it was when Lehman filed for bankruptcy. Banks may say they trust each other, they may promise the system is viable, they may even submit bogus (if increasing) Libor indications to the collusive organization that is the BBA, but the truth is, in vivid color, presented below. Never before have European banks parked as much of their hard earned cash with the only two remaining pillars of "stability", the Fed and the ECB. And with Dexia about to be nationalized, and an unpredictable, and highly contagious, waterfall chain of events about to be unleashed on Europe all over again, will the worst case scenario transpire and the ECB's credibility be swept away? If so, prepare for all the money in the world to funnel into the binary number-based safety deposit box located in the servers of 33 Liberty street. Then the two ultimate questions become: how long before the Fed's own viability is questioned by the global vigilantes (who have finally started asking the right questions), and who will bail out the central bank tasked with bailing out the world?

 

Tyler Durden's picture

Fund Blamed For Gold Sell Off, Salida Capital, Tumbles 37% In September, 49% YTD





Last week, a fund rumored to be on deathwatch, was Toronto-based, gold and energy-focused hedge fund Salida Capital (whose gold exposure, in addition to Paulson's, were both factors in the rapid drop in the price of gold last week, following concerns that it was being liquidated in the open market - for more on Salida's gold exposure, read the attached letter). The fund promptly came out and refuted said rumors, however upon review of its monthly P&L, we are somewhat skeptical about its survival chances, even if, in principle, we agree with the fund's investment philosophy. The reason for our skepticism is that Salida was down a whopping 37.2% in September, and 49.4% YTD, a collapse which only compares to that of Paulson's Advantage Plus, and demonstrates vividly just how much of a misnomer the name "hedge" can be when applied to members of the asset management industry. What is worse, however, is that the reason attributed for this epic collapse is amateur hour 101, and any LPs should be far more concerned by the explanation provided for this underperformance than the actual underperformance itself.

 
Do NOT follow this link or you will be banned from the site!