Archive - Feb 3, 2011

Earlier today we noted that the ICE was considering establishing size limits in [insert surging commodity here], in this particular case cotton. This has just been formalized as per the press release below, and explains why cotton is among the worst performing softs today. If gold continues refusing to play along with the script, look for the CME to do something comparable with gold and silver (for the third time) shortly. But never, and we repeat never, expect the Globex to do something crazy like hiking margin requirement on ES.... Ever.

Is it just remotely possible, that 50% of the people in the United States of America can't possibly afford to live in Bullish Projection America and that the growth that is priced into the markets is, perhaps, overly optimistic?

I debated whether or not to write today. To be completely honest I feel as if I have said as much as I can and don’t want to start sounding like a broken record. That said, we have clearly entered the next stage in this tragic circus called the global monetary and financial system death spiral. The final stage comes when the system consumes itself as a result of its refusal to reform and we are there now. The fact that most people are completely unaware of it or have such strong “normalcy bias” they can’t see what is directly in front of their faces is immaterial. It is here, it is irreversible, and it will unleash a cyclone of chaos and confusion that will leave many literally suspended in disbelief as the entire false paradigm most of humanity has lived under for their entire existence is washed away forever. - Mike Krieger

Hosni Mubarak sure is learning from the best criminals in the world.... Fast. Well over two years after Hank Paulson told Congress that the world would end unless he was given unlimited power to give the banks however much money the needed, Egypt's despotic president has done exactly the same, and in an interview with ABC's Christiane Amanpour, "said he's fed up with being president and would like to leave office
now, but cannot, he says, for fear that the country would sink into
chaos." And there you have it: the same mutual assured destruction strategy used by bankster and by despotic tyrant alike. One wonders - is there really any difference between the two.

This is a translation of Ben Bernanke's speech today to the National Press Club. The short translation: We don't know what we are doing!

For all those who were wondering why someone just bought a massive 75,000 put spread block on JPM earlier, here's the reason. Just out from the NYT, disclosing a suit filed previously against JPM by Madoff trustee Irving Picard under seal: "Senior executives at JPMorgan Chase expressed serious doubts about the legitimacy of Bernard L. Madoff’s investment business more than 18 months before his Ponzi scheme collapsed but continued to do business with him, according to internal bank documents made public in a lawsuit unsealed on Thursday. The lawsuit against the bank was filed under seal on Dec. 2 by Irving H. Picard, the bankruptcy trustee gathering assets for Mr. Madoff’s victims. At that time, David J. Sheehan, the trustee’s lawyer, bluntly asserted that Mr. Madoff “would not have been able to commit this massive Ponzi scheme without this bank.” But with the case under seal, there was no way to gauge the documentation on which the trustee based his $6.4 billion in claims against the bank — until now."

How does NFP effect a market?

Some observations from Credit Suisse

Traders take note. The inflation trade is back in full effect. It is overstretched in some areas, but that state can last quite a while. And we you consider the idiocy coming our of the Fed (QE 3!?!?!) and the ECB, it’s not surprising. Until someone reigns these lunatics in, commodities will be ramping higher, trumping even stocks’ performance.

The firm which exposed RINO for the fraud it is has released its latest Chinese scam target: China MediaExpress Holdings (Nasdaq:CCME)."Muddy Waters LLC has initiated coverage on China MediaExpress Holdings, Inc. (CCME) with a Strong Sell rating and an estimated value of $5.28."

Sorry, we can't take credit for "chairsatan" - that one has Bill Gross written on it all the way... What can we say: the man sure can be a genius, especially when he isn't buying government subsidized BAB bonds. And when subsidies no longer work out, coming up with creative epithets sure is a great way to let off steam. That said, watch the full Bernanke NPC Q&A at the link below.

The lies come hot and heavy:

• Initial claims for unemployment insurance have generally been trending
  down, and indicators of job openings and firms' hiring plans have
  improved
• QE 'Effective at easing financial conditions'
• Recovery likely to be 'more rapid' in 2011 than 2010
• 'Overall inflation remains quite low'
• Recovery in consumer, business spending may be solid
• Economy seems to have strengthened in recent months

But here's the only one that matters:

• Unemployment, inflation likely to defy Fed mandate

Which mandate is that Genocide Ben: would that be the mandate to kill off half the world with your revolutionary policies before the Russell hits 36,000?

Perhaps those 2 days of December 1,800 gold call purchases we discussed yesterday indicated someone (not Doug Kass mind you), knew something...Gold has just surged by $20 in minutes. Unless Blythe can find a way to contain this, this could get very ugly, very fast.

And so the tide rising all commodities keeps coming: rough rice has just passed its December 2009 high and is now at its highest since October 2008. When we predicted on Monday morning that "rice is next", little did we think that it would be up by 11% in 4 days. And with this important resistance level broken, it is smooth sailing to the next two resistance levels of $20 and $24. Of course, Bangladesh will be in flames long before any of those are hit. But a speculator has to eat, right. After all, none of this is Gen Ben's fault.