Archive - Dec 28, 2011

testosteronepit's picture

The US Auto Industry Drifts Off To China





China has set out to conquer the global automotive markets, but not by flooding them prematurely with Chinese-branded vehicles. It’s a government priority. And it’s through the back door

 

Tyler Durden's picture

Iran Outlines Key Steps And Actors In A Potential Straits Of Hormuz Closure





While the Iranian war game naval exercises have been ongoing for almost five days, or half of the projected 10, tensions in the Straits of Hormuz region have been rising culminating with today's interchange between the head of the Iranian Navy and the US 5th Fleet (which for various reasons we can not present you with a status update today). One question that remains is just what would a closure of the Straits looks like. Luckily, the Middle East Media Research Institute's blog has caught a release by an Iranian website Mashreq News, which spells out the step by step details of just how such a closure would be enacted.

 

Tyler Durden's picture

CNN/Time Poll Finds Romney, Paul Iowa Photofinish, PPP Has Paul In Lead For Second Week





When a week ago we reported the latest weekly data from the Public Policy Polling institute, many were stunned to learn that Ron Paul was in the lead in the Iowa caucuses. In light of the neverending media onslaught against the Texan, this is not very surprising. The discrepancy between PPP and other, more "accepted" polls such as the CNN/Time was borderline ridiculous, when it came to the standing of the anti-Fed crusader (attacks against whom have recently passed into the Twilight Zone as per this NYT article). Just released, however, is the latest CNN poll information, which is far more in line with what PPP predicts, namely an Iowa photofinish between Paul and Romney. "Twenty-five percent of people questioned say if the caucuses were held today, they'd most likely back Mitt Romney, with 22% saying they'd support Rep. Ron Paul of Texas. Romney's three point margin is within the poll's sampling error. The poll's Wednesday release comes six days before Iowa's January 3 caucuses, which kickoff the presidential primary and caucus calendar. The Iowa caucuses are followed one week later by the New Hampshire primary." In its previous poll, CNN had Gingrich in the lead with 33%, followed by Romney and Paul with 20% and 17%. So while CNN implicitly admits that Paul may well be in the lead net of sampling error, it masks this by making the story focus on something totally irrelevant: the fact that somehow Santorum's support is surging.

 

Tyler Durden's picture

Market Closing Snapshot





On another day of abysmal volume, any and every 'good' news was roundly sold, with risk, the euro and PMs all closing just off the lows.

 

EconMatters's picture

Beijing's Great Bailout to Defuse Ticking Local Debt Bombs





Since Chinese local governments, unlike the U.S. municipality, do not have the option of filing for bankruptcy, Beijing most likely would need to do a great bailout of local authorities either in installments or at one fell swoop

 

Tyler Durden's picture

Things That Make You Go Hmm, Such As Looking Back At The Key Events Of... 2012





With everyone and the kitchen sink busy sneaking away from the trading floor or holiday dinner to pen predictions for 2012 that will "hopefully" have a success rate of at least 50%+1 (or in Byron Wien's case, even just 1%), others such as Grant Williams have taken the opposite route, and in his latest Things that Make You Go Hmm, he has writen a retrospective, from the point of view of a man sitting on the edge of the end of the world, namely December 20, 2012, and looking back at the key events of the year. Among the primary "memories" of 2012 was the capitulation of Germany and the full backstop of the ECB of sovereign debt, the departure of Greece, Portugal and Spain from the Eurozone, the attack by the US of the Bushehr nuclear reactor leading to an oil price surge to $188 and $5 gas prices at the pump, the nail-biting electoral win of Hilary Clinton over Michael Bloomberg, the predicted but delayed municipal bond meltdown, the announcement of QE3 with $800 billion of MBS purchases in February followed by QE4 in which the Fed cut the rate on overnight reserves, this time however promptly followed by a spike in inflation, the parallel surge of gold to $2400, especially after the MF Global whistleblower revelation that gold had, after all, been manipulated all those years, the epic collapse of the Chinese housing market and the economy' hard sinking, and much, much more.

 

Tyler Durden's picture

A Strategic Alpha Preview Of 2012: Hope And Expectations





The EU is still a massive risk to the global economy but so is political inaction, over- regulated or manipulated markets, high unemployment and geo-political shifts. QE is a concern as central banks abandon inflation targeting and indeed growth to maintain ratings. The EU is still throwing liquidity at a solvency crisis at both sovereign and banking level. EU banks not only have a cash problem, more specifically, as ECB President Mario Draghi says : "hoarding at the ECB signals that the problem afflicting the Euro-zone is not so much about the amount of liquidity but that this liquidity is not circulating around the region's banks". I am not surprised as they all know that each has a similar or worse problem sitting in the vaults.... In the first throes of the new deflationary cycle the Dollar will do well, as the fight intensifies and the US uses the Dollar as a monetary tool and prints more Dollars, it will fall precipitously. Correlations will break this year and many of the “relative value” trades will implode. Gold will break away from being pressured by a strong Dollar as the hunt for alternatives to Fiat currency explode. The likes of the AUD will fall steeply as the global growth story rolls over as we have suggested for a long time. But it is China that holds the key. Hard or soft landing is the question. Can they really have a soft landing if the developed world implodes? No chance.

 

Tyler Durden's picture

Currency Wars Update





Yesterday, the fine folks of Tradition Analytics were kind enough to explain (once again) just how it is that the Fed has boxed itself into a corner, where in order to maintain the already outlierish growth rate of monetary supply, the Fed will have no choice but to print (same with the ECB), or else risk a massive economic collapse (thank you Austrian theory). Today, the same group provides an update on what everyone knows has been the status quo's only way of dealing with the deleveraging tsunami since March 18, 2009: currency warfare. In the note below, they provide a recap of the recent history of FX warfare, as well as an update of where we stand currently. Keep in mind, currency warfare only works to a point. Then it escalates into other, more violent forms, first trade wars, then real ones.

 

George Washington's picture

The Tide Is Turning Against SOPA … And We Might Actually Succeed In Stopping It





Time to redouble our efforts … the tide may be turning, and we have a chance of winning.

 

Tyler Durden's picture

Former Fed VP Accuses Bernanke Of Bailing Out Europe Via Currency Swaps





First it was Zero Hedge. Then Ron Paul joined in. Now it is the turn of a former Dallas Fed Vice President, Gerald ODriscoll, to outright accuse the Fed of bailing out Europe courtesy of "incomprehensible" currency swaps, and implicitly accusing Bernanke of lying that he would not bail out Europe even as he has done precisely that. And not only that: by cutting the USD swap spread from OIS+100 to OIS+50, the Fed has made sure it gets paid less than ever for extended Europe the courtesy of bailing it out all over again. Incidentally, O'Driscoll says, "America's central bank, the Federal Reserve, is engaged in a bailout of European banks. Surprisingly, its operation is largely unnoticed here." One thing we can say proudly - it has been noticed loud and clear here...

 

Tyler Durden's picture

Update On The "Non-Printing" ECB's Parabolically Rising Balance Sheet





While the surge in the ECB's balance sheet has been discussed to death on these pages, with a particular emphasis on what we believe the key correlation driver-cum-pissing contest of 2012 will be - namely the relative size of the ECB vs Fed balance sheets - it is often best to see things for oneself. Such as the fact that the balance sheet of the European Central Bank, which has been accused of not printing, has grown at the fastest non-pre apocalypse pace in history for a modern central bank (the only exception is the Fed, whose balance sheet grew from under $1 trillion to over $2.2 trillion in the aftermath of the money market collapse), increasing by EUR800 billion, or over $1 trillion, in six months, to E2.73 trillion (obviously an all time record). Annualized this is an increase of over $2 trillion or more than the Fed did in all of QE1. So, just what happens next year when the banks box Draghi in a corner and the Goldmanite decides to actually... print. Perhaps this is a question, as before, left best to our German readers, who unlike their detached from reality peers in the US, know that hyperinflation is and can be all too real.

 

Tyler Durden's picture

US Navy Says Any Disruption To Straits Of Hormuz "Will Not Be Tolerated"





Just out from Reuters:

  • U.S. FIFTH FLEET SAYS ANY DISRUPTION OF NAVIGATION IN HORMUZ STRAIT "WILL NOT BE TOLERATED"

Compare this statement with what an Iranian navy chief said earlier...

 

Tyler Durden's picture

EUR Plunges In Thin Market, Below 1.3000





While it is unclear what just spooked the EURUSD, sending it lower by 70 pips in minutes, perhaps a better question is why the EURUSD is not thousands of pips lower to begin with. As a reminder every single large bank is pushing for a lower EURUSD on hopes that a EUR collapse will kill the market and send the ECB scurrying into printing money. The problem there is that the ECB just announced its balance sheet expanded to EUR 2.73 trillion, an expected increase of over EUR 200 billion in one week (since the LTRO), and a whopping EUR 800 billion in 6 months (that's $1.1 trillion... in six months)! As such, good luck selling to the Germans on the ECB board that EUR 1.6 trillion annualized is insufficient. Lastly, and as a reminder, here is the only correlation that matters in 2012.

 

 

Tyler Durden's picture

Art Cashin Exposes The Behind The Scenes Panic In Europe





Think "all is fine" in Europe after today's largely irrelevant Italian bill auction (the auction was for 6 month debt - even Greece can raise that kind of money)? Think again. Here is the Fermentation Committee Chairman explaining why Europe is so hard pressed to create a fake sense of calm, allowing those who know the real story to take advantage of the situation while they still can, and sharing the behind the scenes truth you won't get anywhere else. Certainly not SWIFT.

 
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