Archive - Jan 2011

They might just do this.....

It has been a while since we had one of those "before Asia opens" kind of Sundays. Today just may be one. BBC has just reported that the Irish Green party has pulled out of the ruling coalition with Fianna Fail which is "expected to bring forward the general election from 11 March." In other words suddenly the entire Irish "rescue", taken for granted for over a month, will have to be reexamined, once the new ruling party, which will certainly be from the current opposition reevaluates the terms. Elections are now expected to come some time in mid-February. Look for peripheral bond spreads to go whooosh tomorrow.

Numbers may be rigged or "smoothed out", but can't fool the regular Chinese Joe's and smart money. I believe if China stays on its current "prudent course", the real consumer inflation could hit double digit by early next year.

Tonight's dose of the surreal....

An analysis of world-wide clean tanker spot fixture volume in 2010 characterizes a sobering picture of developed-world economic health. A significant 8.3% contraction in total reported fixtures from 2009 marks a downturn from what had seemed to be a market on the mend from the depths of the 2008 financial crisis. Although many pundits point to a rapidly-growing eastern
demand for tonnage in crude tanker markets as reason for optimism, nearly all market participants are left scratching their heads looking for any similar signs of optimism in the product shipping market.

Demonstrating Humankind's remarkable ingenuity with financial and philosophical innovation, Non Sequitur's Stone Age geniuses Ook and Mook invent money, wealth and Taoism with only sticks and stones...

Many investors today, as they learn more about the nature of the Federal Reserve, are asking themselves how the US, the supposed land of the free, permit a non-Government-based cartel to take control of its monetary system? Who controls the Fed? And just how did they attain this unbelievable power to operate with the Government’s approval?

In my last article, I outlined the current financial/ economic relationship between China and the US. In particular I focused on the manner in which China is diverting its money and resources away from the US Dollar and US economy. Indeed, in my opinion, when push comes to shove it is China, NOT the US who holds the trump cards on the major issues.

The announcement by Brian Cowen that he was resigning as the leader of the Fianna Fail party, but is going to stay on as Taoiseach (Prime Minister) until the March 11 election, has put the Irish bailout into question.

After a week ago we learned that the central bank of Tunisia had parted with 23% of its gold stash courtesy of now deposed president who fled the country with a 1.5 ton shipment of gold, it appears that Egypt is preparing for a comparable spike in revolutionary activity. Only unlike the now former Tunisian president whose gold sequestering actions were retroactive and thus, quite lucky to succeed, Egypt has taken proactive measures. According to Egypt News, the country's airport has intercepted 59 shipments of gold directed for the Netherlands "worth tens of millions." The gold, as well as an indeterminate amount of foreign currencies, was hidden in pillow cases: uh, cotton may not show up on X-Rays, but gold sure does. We eagerly await to learn how big the decline in the country's official holdings 75.6 tonnes of gold will be after this most recent episode confirming that gold is precisely money. And all this happening despite gold's complete and thorough inedibility.

Over the past twenty years, few people have been as discredited in their worldview as New York Times columnist Thomas Friedman. The thorough fall from pedestalized grace of the Pulitzer Prize winner, whose latest book, "The World is Flat: A Brief History of the 21st Century," not at all surprisingly won the inaugural Goldman Sachs/Financial Times Business Book of the Year award, can only be compared to that other New York Times columnist who will go down with the debt-leaking titanic, kicking and screaming, that no matter the impending global default, he is right. And as the premise of globalization goes through its own death rattle, just like the ridiculous Keynesian notion that only more debt can save us from record debt, globalization's biggest advocate is monetizing his last remaining ounces of credibility. Below, we present Fora TV's recently released Asia Society interview with Friedman who discusses at length his view on the parallels and differences between China and the US. Note: absolutely nothing of significance will be learned in this presentation, which is merely a rehash of stale, faulty and thoroughly discredited assumptions yet it is a good starting point to learn about all that is flawed in the prevailing view of how the two countries are supposed to coexist in the future. In other words: take verything Friemdna says and flip it 180 degress, and you will be on the right path.

Rumors that a special interagency organized crime task force called "Operation Action Jackson" would be targeting organized financial crime this weekend appear to have been completely unfounded...

The number of Americans filing first-time claims for unemployment insurance payments fell 37,000 in the week ended Jan. 15, the biggest decline since February 2010, to 404,000, figures from the Labor Department showed today. The four-week moving average dropped to 411,750 from 415,750. While the trend in claims is no doubt headed in the correct direction, it is important to stress that the current level of initial unemployment claims is still above the trailing 10 year average of 396,486. That fact is amazing given the massive number of layoffs which occurred during the last 3 years. So layoffs are still above trend and hiring is below trend. Those are the facts.

Is it really all just about (the dream of) "Models & Bottles" or is it something more?

The schizophrenia at Goldman continues. After one part of the FX trading desk told clients last week to chase the EURUSD up to a 1.37 stop limit, in John Noyce's most recent update on his EURUSD views he notes: "The ST structure is not particularly clear, but we are certainly uncomfortable chasing the recent bounce and are watching for signs of the market again peaking/turning to the downside." Uh... So one part of Goldman says to chase the EUR, while another part says it is not comfortable chasing it. Well, win win. Too bad the rest of us don't have access to the discount window and if all that 5,000x margin does not work out our way, we can't go running to our former co-worker Bill Dudley (not to mention our subordinate Brian Sack who personally came over to us and introduce himself) and demand another bail out.