Archive - Jan 2011

Today, history is being made in the Middle East. The Arabian streets woke up to the sound of sniper fire as a regime is defending itself, against the people of its own nation. The flames of anger have been fanned by decades of corrupt authoritative rule.

Following the first quantitative revolutions (of the variety inspired by quantitative easing) in history, we now have the first images of what quantitative looting looks like. If this is any indication of what to expect the next time Waddell and Reeds sells a few extra contracts, we are going to need much bigger forklifts.

Chairman of the Federal Reserve, Ben Bernanke, in an attempt to soothe global markets in the midst of a breakdown of uncivil society in Egypt, where strongman Hosni Mubarak is struggling to extend decades of control through iron-fisted use of security forces, scheduled a hasty Washington D.C. press conference at eight thirty EST Friday morning.

The Egyptian president (?) is speaking liverecorded (unclear from where). Somewhere, the Bernank is rehearsing the very same speech. Long, meandering speech, whose conclusion is that government is at fault. The government will be sacked and be replaced with new government tomorrow. Long Riot futures.

Following my thoughts on the fireworks going off everywhere in emerging markets, if you are not short emerging yet (EEM is a great proxy. Look at Bovespa in Brazil or TUR the Turkish ETF, it is all looking horrible and about to get completely decimated), you can still buy silver and sell Spanish equities. A few weeks ago when silver had broken the 50-dma I had pointed that it should retrace towards 25.80/26.50. We came right around those levels and caught a huge bid today. Confirmation by breaking out of the bearish downtrend channel since the recent highs would point towards new highs. Meanwhile the IBEX has completed a consolidation wedge and held resistance at 11,000. As a long as we stay below the afore-mentioned resistance the next stop on the way down is 9,600.

We were doing some diligence on Egyptian (now historic) gold holdings but unfortunately the following link no longer seems to work:http://www.cbe.org.eg/ To those who guessed correctly that this is the web site of the Egyptian Central Bank, you win whatever is held in the vaults of said building. Which we are willing to bet against all that is held in our own tungsten warehouse in Kentucky, is absolutely nothing. To any potential readers in Egypt, may we recommend you go politely enter the building at 31 Kasr El-Nil Street, Cairo, go to the basement and check on the precious metal inventory. There should be 75.6 tonnes of gold. Which incidentally may also be a sufficient motive for someone to pull off a Die Hard 23.

Jim Grant, who will never be accused of being a fan of the Criminal Reserve, and whose views on what will happen to asset prices in a printer-happy world are gradually being validated, appeared on Bloomberg TV, telling Margaret Brennan upfront that Bernanke owes the world an apology. Alas, after various revolutions around the world have been catalyzed by Bernanke's policies, we have a feeling that ever more oppressed people will soon see the Printer in Chief as a patron saint of violent revolution, alas against crony regimes fully supported by the US (and hopefully the US will view it the same way when its time comes). That aside, Grant's criticism of the Fed should really start to grate on the Chaircreature: "I think what would be very good for the Fed if there would be a confession, the Fed should confess that it has sinned grievously, and is in violation of every single precept of its founders and every single convention of classical central banking. Quantitative Easing is a symptom of the difficulties that the Fed has created for itself. The Fed is running a balance sheet which if it were the balance sheet attached to a bank in the private sector would probably move the FDIC to shut it down. The New York Branch of the Fed is leveraged more than 80 to 1. Meaning, that a loss of asset value of less than 1.5% would send it into receivership if it were a different kind of institution...The Fed is now in the business of manipulating the stock market." Jim also has some very critical discussions on how the Fed never settles up on the $3.4 trillion in custodial debt on its books. As always, we can't get enough as more and more mainstream figures turn to bashing that biggest abortion of modern capital markets.

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 28/01/11

Make no mistake ... a revolution in Egypt is a refutation of American policy.

It's not as if this couldn't have been seen coming. For those that believe this event, and all of the other events of the recent past, and the Pan-European Sovereign Debt Crisis, and the China bubble, and... Well I think you can taste the flavor of this post. Contagion is in the air. It's hard to determine precisely the where and the when, but I don't think the question is "if"...

Steve Abrahams, Head of MBS and Securitization Research predicts home prices to drop nationally another 5-11% through 2012 (Florida of course will take much longer.) Oooo, fun!

Welcome to 2011 Ponzi Man. The party is just getting started...

...in which we learn that the head fixed income trader, Brad Rosenberg, of the fund whose boss made $5 billion in 2010 has traded over $100 billion in bonds.

The outgoing press secretary of the White House is supposed to hold a press briefing at 3PM to share the White House's views on this week's events in Egypt. Earlier, Hillary Clinton already made a statement which pretty much asked Egypt's citizens to go back home and resume purchasing iPads. We are quite curious to see how the White House will spin the overthrow of one of its favorite regimes over the ages. Even more so, since this is a revolution inspired to no little part by none other than the Federal Reserve and more specifically its genocidal monetarist practices.

"As is the case with most 'gold panel' commissions, those who control the game make sure they can skate away."