Archive - Feb 11, 2011

Pension system investment directors overseeing more than $217 billion in California and New Jersey cut millions of dollars in projected costs by reducing the fees they pay to asset managers...

Must watch

For all those on revolution withdrawal, fear not: there are at least 20 more countries to go (many of which hilariously fall in Jim O'Neill's N-11 list - does the N stand for Next to revolt Jim?). Tomorrow, we may get the next one. Thousands of police are reportedly being drafted into the Algerian capital ahead of planned pro-democracy marches, opposition groups have said. Said Sadi, the head of the Rally for Culture and Democracy (RCD), said authorities were moving to prevent Saturday's protests in Algiers from taking place."

The bears are back summarizing the most recent developments in the silver market including backwardation, some insider "conspiracy theories", the Comex' paper to physical imbalance, the coming endgame, and what all this means in terms of options for one Kamakayz [sic] Bernank.

Just in case someone was confused about the relationship between liquidity, currency devaluation and nominal (not real) asset prices, the St. Louis Fed was kind enough to email us their weekly M2 level. And after last week's surprising drop, M2 once again rose, this time by a whopping $40 billion. Oh and before someone says that M3 is still declining, it isn't. Or rather the much more important monetary aggregate, that including all shadow banking liabilities is now increasing as we indicated during the last Z.1 spread. In one month, when the next Flow of Funds report is released we are confident we will confirm that in Q4 shadow banking increased by at least half a few hundred billion on an annualized basis. In other words the central bank reliquification is now on in full force, both in America and in every other place that has central banks. Which also explains why central banking hawks are now virtually extinct (cf: Axel Weber).

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 11/02/11

John Mauldin, who wrote a wonderful foreword to my Little Book of Sideways Markets, published an excerpt from the Little Book in his latest newsletter, so here it is:

I love America and have lived here all my life. I criticize my country because I want to save her from the self-destructive, anti-American path that Bush and Obama have put us on. Just as the Egyptian people felt a need to speak out, so do I ...

Since it is obvious that Bernanke is now taking his central planning tips from Laszlo "Let Me Just Whip Out My Ruler" Birinyi, and is dead set on growing the market in basically a flat line (there has been no volatility in stocks in the past 6 months - none), we decided to extrapolate the market based on the Woods Hole event, and determine when stocks will take out the all time previous closing high of 1,565.15 from October 10, 2007. In a nutshell: at the rate of ascent demonstrated since the confirmation of QE2, the S&P will pass its all time high in 96 working days, and will hit a fresh all time high on June 27, 2011 (roughly at the time housing will be about 40% down from its all time highs, and real unemployment adjusted for labor farce [sic] participation is 13% and real U-6 is 23%). Put that date in your calendar. Presumably at that point Bernanke will concede that he has created enough of a "wealth effect." Although since by then we will have started QE3 for about a month, we may well surpass Zimbabwe's daily average stock market gains 250% of at some point in Q3, and put von Havenstein's "wealth effect economic miracle" to shame in Q4.

Zero Hedge had an opportunity recently to ask Eric Sprott a variety of questions touching on everything from investment recommendations, to policy guidelines, to a general outlook for the world economy. As Sprott has long been a rare voice of contrarian reason in a field of lemming-like uniformity, lately driven by nothing more than a pursuit of centrally planned momentum and Bernanke-induced "heatmapping", we believe the answers were vastly more interesting and illuminating than anything available for mass media consumption.

From the Judge: Although this "original" Note and Mortgage is an "original," it has nothing to do with the subject property of this action. Additionally, the Assignment of Mortgage is a complete sham. Court finds that this document is fraudulent.

Just in case there was still any lingering doubt that prices in the US are surging far above whatever the CPI may indicate, we present the MIT Billion Price Project. Unlike the CPI which is a gross misrepresentation of what is really happening on the ground in price terms, MIT actually compiles real time price data about a universe of products. From the methodology section: "our data are collected every day from online retailers using a software
that scans the underlying code in public webpages and stores the
relevant price information in a database. The resulting dataset contains
daily prices on the full array of products sold by these retailers. Our
data include information on product descriptions, package sizes,
brands, special characteristics (e.g. “organic”), and whether the item
is on sale or price control." The attached chart confirms what anyone (but not Ben Bernanke) who actually buys goods and services in the US knows all too well.

Defense Minister Field Marshal Mohamed Tantawi will travel to Washington, Tampa, and Chicago March 24-28. He will meet senior officials in Washington and at USCENTCOM HQ in Tampa, and view U.S. civil defense arrangements in Chicago. Mrs. Tantawi and as many as five senior generals will accompany him. Tantawi will seek assurances that the USG will not condition or reduce military assistance to Egypt in the future. He will emphasize Egypt’s continuing value to the United States as an indispensable ally in the region, and he will press to return BRIGHT STAR to a full field training exercise. The eighty-year-old veteran of five wars with Israel is committed to preventing another one ever. But he is also frozen in the Camp David paradigm and uncomfortable with our shift to the post-9/11 GWOT. Recognizing that he is reluctant to change, we nonetheless should urge Minister Tantawi towards a broader and more flexible partnership based on shared strategic objectives, including border security, counter-terrorism, peacekeeping and civil defense. End Summary.

Just a thought...

Alexandra asks, "Simon, what do you make of this Egypt soap opera? Mubarak is such an ass... he's in, he's out, he's in, he's out...." Ha. Well, as I have just received a flurry of emails and text messages from some friends in the area, I see that he seems to be unofficially 'out'. We'll see if it lasts. I suggested early last month that this would be the year for Mubarak and other aging autocrats to finally croak or get kicked out. I really admire Egyptians' dedication vacating this thug from office... but at the end of the day, they are only going to trade one crook for another. These protests are underpinned by the erroneous belief that government is capable of providing solutions, and if they can just get the 'right' government in place, things will start ginning. This is the same attitude around the world-- it's all about getting the 'right' people into office, whether by 'free and fair' election, by protest, or by force. What people just about always find out a few years later is that the new guy is just as bad as the old guy... and that the more things change, the more they stay the same. There's right and wrong in this world... and standing against Mubarak is clearly right. But we all have a finite about of time, energy, and financial means at our disposal, and directing those resources towards political change, while just, generates a very low return and comes at a steep opportunity cost.