Archive - Mar 2011

There is no pleasure in "I told you so" when things fall apart. Many of us recognized the artifice and folly of the credit-housing bubble "Bull market" as early as 2004, but few cared to listen because they were deeply complicit in the Status Quo's legerdemaine: their home was rising in value, their pension fund was being fattened, their sales were rising on the onrushing tide of abundant, cheap credit, their tax revenues were soaring, and their benefits/perquisites were notching higher with every tick up of the stock and housing markets. Faith in a centrally planned economy operating under the flimsy guise of cartel-State "capitalism" was supreme, as were greed, self-absorption and an overweening sense of entitlement to consumerist "prosperity." Both corrupt political parties enthusiastically embraced the bubble-culture of fraud and speculative excess, for they too benefited from the illusory glow of "permanent economic growth" and the ever-richer contributions from the fiefdoms, cartels and Financial Elites who gained the most from the credit-based frenzy. The "prosperity," "growth" and "wealth" were all illusory, but the pain is real. Hardworking, dedicated, smart, experienced people are being laid off into an economy with few prospects. Young people are graduating from university into the same bleak atmosphere of a paper-thin facade of magical thinking and propaganda finally crumbling. Things are falling apart because the economy has been undermined by financialization and the extreme concentrations of capital and State power. I think these charts tell the story rather well...

While a crippled Europe continues to gladly enjoy being in the shadow of Fed-driven revolutions and natural disasters, its time in the sun is coming to an end. Soon everyone will realize that just today, 2 Year Greek bonds traded at all time wides of over 17%. That's right - holders of Greek bonds for 2 years will be rewarded with a 17% gain if the country actually repays these at maturity. Alas, for those who are paying attention, this has a snowball's chance in Hades of happening. And speaking of Hades, Knight Capital's Alfredo Viegas has released a note explaining not only why Greece has just passed the Rubicon following the release of its disastrous budget deficit details earlier, but also advising those who care, how to be positioned to best profit from Greece's descent into Hades, which will be promptly followed by the rest of the Eurozone. His advice: short Spanish and Italian cash bonds (this trade will work just as well using horrible, evil CDS which no politician still understands and therefore continue to be the scapegoat for everything).

Just because Deloitte has signed-off on China MediaExpress Holdings' filings and has yet to step-down does not mean there isn't any fraud. Unfortunately, some people seem to think Auditors are an all-knowing, all-powerful force for good to protect investors. This, the case is not.

First the bad news:

• It is coming. According to Japan's trade minister a leak will likely take place as the pressure is released imminently by TEPCO.

The good news:

• The radiation released will be small.

It is unclear if the same measurement methods as are used in the calculation of Core CPI will be applied in calculating leakage. As to whether this "small amount" of radiation is alpha, beta or gamma, those interested to find out will get an answer based on the amount of extra fingers grown over the next month.

I said it! Bill Gross said it (and put his money where his mouth was by selling off all US treasuries)! Common sense says it... Central Bank manipulated interest rates are too low. They will rise. What happens when they rise during a supply glut of real estate, foreclosure issues and a slow economy??? Put it this way... What made the markets crash in 2008: unemployment, slow economy, snow... Or real estate prices getting in touch with reality?

Earlier today, Goldman New York Fed plant, and Jan Hatzius predecessor, Bill Dudley, emerged from his ivory tower to make a trek to Queens to deliver prepared remarks written by some intern, discussing the prospering state of the New York burrough (speech link). Unfortunately for the multi-millionaire, things quickly went from Unicorny and Rainbowy to horribly wrong. During the Q&A, one audience member asked: "When was the last time, sir, that you went grocery shopping?" A stunned Dudley did not have the heart to elaborate that the caviar and ambrosia eaten on the Dudley family table is hand delivered through the Fed's G-6 from Kamchatka, so instead, as Reuters reports, he "tried to explain how the Fed sees things: Yes, food prices may be rising, but at the same time, other prices are declining. The Fed looks at core inflation, which strips out volatile food and energy costs, to get a better sense of where inflation may actually be heading." At which point he proffered his sage advice to the increasingly restless natives: "Let them eat iPad."

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 11/03/11

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 11/03/11

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 11/03/11

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 11/03/11

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 11/03/11

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 11/03/11

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 11/03/11

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 11/03/11

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 11/03/11