Archive - Feb 11, 2011

• Per Reuters: Obama admin seeks to wind down Fannie, Freddie, bring private capital back to mortgages: Treasury report
• Paulson Says Fed Gave ‘Little’ Oversight to Subprime (BusinessWeek)
• PBOC Plans Overhaul of Money Policy (ChinaDaily)
• China sees U.S. stoking Brazil and India anger over yuan (Reuters)
• U.S. Not "Satisfied" With China's Progress on Boosting Yuan, Brainard Says (Bloomberg)
• Mubarak Defiance of Ouster Calls Angers Protesters (Bloomberg)
• Hopes High for China’s Push on Inflation (FT)
• Seoul’s Capital Controls Begin to Bite (FT)
• Blankfein Sought U.S. Blessing on Executive Pay, Feinberg Says (Bloomberg)
• Beggars can be choosers: Greece Joins Italy in Objecting to Proposed EU Debt-Reduction Benchmarks (Bloomberg)

Boots on the ground in Somalia? Maybe sooner versus later.

When back in November, long-before anyone had even heard of expert networks, Zero Hedge compiled a forensic analysis of SAC's 13F filings and holdings in various biotech companies (in this case ITMN, CYBX, MYGN) which had undergone actionable clinical trials and the result was either price surges or plunges, we concluded that there was indirect evidence that at least based on changes in stock holding patterns, SAC, one could certainly claim, was trading with a near-100% batting average ahead of critical clinical trial outcomes, leading to questions about trading propriety of the world's most infamous hedge fund. We also repeatedly asked the question: "Did SAC consult with an expert network or an outside consultant on any of the trades?" This was before it was made clear a few weeks later that there was a huge SEC operation looking at expert network hedge fund collusion. We are happy to see that today, roughly three months later, Bloomberg has extended our holdings analysis and has come to the conclusion that "SAC’s trading mimics insider dealings identified by prosecutors." In other words, the circumstantial evidence against Stevie Cohen and his trading methods continues to mount.

Today at 8:30 am the US trade deficit for December will be revealed. The consensus is $40.5 billion. Yet the final number could come well worse of even the bleakest expectations. Citi's Stephen Englander looks at export patterns by key trading partners and concludes "that the risk of a big negative surprise and a number beyond the pessimistic Citi forecast is not out of the question. We already have indications from a number of US trading partners about their exports to the US and these indications point to a sharp surge in US imports." In addition to the logical substantial deterioration to GDP numbers, a surge in the trade deficit would have one other key consequence, namely that "a deterioration in US trade performance, if it persists, would suggest that much of the direct impact of QE2 was spilling abroad." In other words QE worked... Just not for the US. Look for a sharp drop in the dollar if Englander is proven true.

Equities soft for a second day on geopolitical concerns, which outweighed the mild positive on Jobless Claims observed yesterday. Treasuries are rallying in the early going as a result of higher oil and the rising unrest in Egypt as well as record EM outflows over the past week. We still classify the jobless data as a mild positive as it still has not passed the test of time and still is a long way from progress given that the participation rate has dropped significantly during this recession. Today will see Trade Balance reports for December (-$38.3B prior, -$40.5BE) as well as UMich Confidence for Feb (prelim, 74.2 prior, 75E).

Trade and confidence today….There is a $6-8 billion POMO for bonds due 08/15/2016 – 01/31/2018: the battle between reality and central planning continues

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 11/02/11

The S&P closed up today despite earnings more disappointing than...

Nobody messes with the Hoss!

Retail traders are notoriously wrong at picking market direction/tops and bottoms. Most retail traders very naturally seem to adopt a counter-trend stance and this very accurate signals for individuals looking to trade against this group. This daily report is designed to help traders focus their efforts on higher probability pairs.

The U.S. economy has become increasingly dependent on asset bubbles, financial legerdemain, credit expansion, Federal borrowing and the manipulation of risk trades to maintain the illusion of "growth." Compared to an economy based on organic demand and productive growth, the current U.S. economy is a travesty of a mockery of a sham, and has been since 2001. There are a number of factors at work, but let's start with two: the ratchet effect, and the Keynesian Project. The ratchet effect is a key feature of addiction. When one beer no longer creates a "buzz," then the consumer drinks two, and so on, until a six-pack is the new baseline. Below that level of consumption, the addict gets panicky, for the entire necessity of creating a buzz is at risk of catastrophic failure.

For now, developed markets remain strong, but the potential for EM spillover into DM exists. Perhaps it is the FX mode of transmission that catalyzes it, as the USD was bid today and looks to be creating a significant cycle bottom.