Archive - Mar 2011

We have suspended foreclosures until such time as we have substantially addressed the noted deficiencies in our processes.

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 01/03/11

Counterfeit money exploits trust by presenting a facsimile of authenticity. A high-quality counterfeit bill (for example, the $100 bills exported by North Korea) are facsimiles of authentic paper notes which then gain the trust of users. A counterfeit gold bar is a piece of lead coated with a layer of authentic gold. The mechanism is the same: a veneer of integrity tricks the buyer into trusting the validity of the entire bar. The U.S. has a deeply counterfeit economy.

Following the insider dump of well over $1.3 billion in shares a fortnight ago, this week insiders sold "just" $503 million in shares of their companies, in 118 transactions. Alas, while the selling to buying ratio was a modest 61.4x at last check, the ongoing collapse in insider buying has once again reared its ugly head, and only $4 million worth of stock was purchased. The biggest insider purchases in the past week focused on CB Richard Ellis, Lorillard and Noble, with all at a million or less. On to selling, which is relentless: the top selling names were Sara Lee ($122 million), Franklin Resources ($51 million), and Intuit ($37) million. As for full month February, forget about it. Insiders sold a total of $5.4 billion and bought $128 million, a 41.6x ratio. In layman's terms: they can't wait to dump all they can, leading with Sensata insiders who sold $1.2 billion, followed by Microsoft selling $575 million and Molycorp $363 million.

After a two month delay, gold is about to take out it all time high, silver has just passed $34.50, and, shockingly, the dollar is down as the Chairsatan drones on.

The Securities and Exchange Commission today announced insider trading charges against a Westport, Conn.-based business consultant who has served on the boards of directors at Goldman Sachs and Procter & Gamble for illegally tipping Galleon Management founder and hedge fund manager Raj Rajaratnam with inside information about the quarterly earnings at both firms as well as an impending $5 billion investment by Berkshire Hathaway in Goldman.The SEC’s Division of Enforcement alleges that Rajat K. Gupta, a friend and business associate of Rajaratnam, provided him with confidential information learned during board calls and in other aspects of his duties on the Goldman and P&G boards. Rajaratnam used the inside information to trade on behalf of some of Galleon’s hedge funds, or shared the information with others at his firm who then traded on it ahead of public announcements by the firms. The insider trading by Rajaratnam and others generated more than $18 million in illicit profits and loss avoidance. Gupta was at the time a direct or indirect investor in at least some of these Galleon hedge funds, and had other potentially lucrative business interests with Rajaratnam.

Why choose to participate in a system that doesn’t work? A system that is designed to drain the people of wealth instead of enriching them and their lives? A system that is constructed upon irrational principles, faulty laws, and unstable values? A system on the verge of collapse? This is the question that the Alternative Market Movement (AMM) poses to the American citizen. Why continue living under an economic structure that is poised to erupt, threatening you, your family, and your ability to provide a meaningful future for them? Would anyone voluntarily choose to live under the barrel of a gun their entire lives?

This is the prototype for a set of silver coins commemorating the heroes of PONZI-USA...

Fed Kansas President Honeig recently uttered a series of absolutely INCREDIBLE remarks concerning the US Federal Reserve. He said the US has “deeply” undermined free-market capitalism and that the TBTF banks pose the “greatest” risk to the economy. This kind of aggressive is a clear indication that Hoenig has seen the writing on the wall and is distancing himself from Bernanke in order to present himself as a potential future Hawk Fed Chairman.

The total farce that is US diffusion index data continues, with the manufacturing ISM printing at 61.4 on expectations of 61.0, and compared to 60.8 previously. Contrary to what the respondents actually said (see below) there was not one adverse thing to be gleaned from the ISM data. In fact, the data is now so unbelievably ridiculous that the Employment Index came at 64.5, the highest since 1973! And this as the country sees roughly 17% in U-6 underemployment, and the number of Americans on food stamps, well over 40 million, is at an all time record. This lunatic number inspired the ISM's Ore to say that "Employment looks fantastic" even though in the next sentence he confirms that "many US companies are in a margin squeeze." Um, psychotic medications much? The US Department of Truth has now gone full retard.

Ben Bernanke, who is expected to appear before the Senate for his biannual Humphrey Hawkins presentation any second, has just released his latest Monetary Policy Report to the Congress. Some of the highlights from the report: i) Bernanke says longer-term inflation expectations will remain stable, and risk of deflation has become negligible; ii) The Fed has tools needed to withdraw stimulus, and reiterates rates will remain low for extended period; iii) A sustained oil price rise would be a threat to growth, price stability, particularly if it unmoors inflation expectations; iv) The recent rise in commodity prices likely will lead to only temporary and modest increase in US inflation; The live CSPAN webcast can be watched here.

How about an S&P 500 down to 666? The Saudi regime falls, and 12 million barrels a day disappears from the market for the indefinite future. Unemployment hits 15%. Obama is toast. Your broker turns bearish and tells you to sell everything. Welcome to the Great Depression II. It starts raining frogs.

No missing tank rumors were disseminated in the copy and pasting of this latest Reuters blurb on what is happening in Iran now. Incidentally, if the reports from Bahrain are even remotely true, it is all downhill from here as the religious aspect of the food revolutions comes out front and center. "Iran's security forces have been deployed to the streets on Tuesday ahead of a planed opposition rally calling for lifting house arrests imposed on opposition leaders, an opposition website reported. "A large number of security forces have been stationed at main streets and some squares of Tehran since noon to prevent gathering of opposition supporters," said the Sahamnews website. It is unclear if any Bloomberg reports were beaten with broomsticks as a result of this latest crackdown on demonstrations.

Yesterday we reported that as part of the brave US crackdown on Libya, up to $30 billion in Libyan assets have been frozen (and as noted yesterday, we still look forward to finding out just which US banks were the biggest recipients of Libyan recycled capital, whose source was naturally mostly the US and Europe... and actually European too, but more on that in a second). According to the latest BIS deposit data, however, this is merely half of the deposits held by all Libyan residents aborad as of September 2010. Incidentally this makes Libya the third "richest" country in MENA when looked at the amount of foreign deposits, just behind Saudi Arabia with $156 billion and the UAE with $75 billion (although both of these countries have massively more assets compared to Libya's nominal $1.6 billion). Bloomberg digs deeper into the number: "Most deposits were from banks in Libya, including branches of foreign institutions, while $8.2 billion was from non-bank Libyan residents, according to quarterly banking statistics compiled by the BIS and last released on Jan. 28." And now that Libya's seized assets are in the no man's land of international judicial limbo, and Libyan depositors likely to start a wholesale scramble to recoup whatever capital is still unlocked, how long before every nation in the revolutionary region decided to do the prudent thing and convert their deposits into tangible assets before some politicians decides to do the same asset freeze with their money. Lastly, just which European banks are the recipients of these hundreds of billions in deposits between the region's three biggest oil exporters?

All those naively hoping that Saudi Arabia has suddenly developed some altruistic bent and will act against its own interest by increasing excess production (which according to Jim Rogers it simply does not have), to keep oil prices lower, are advised to reevaluate. According to CBS, citing "the conclusion of an internal report prepared by a major investment firm based on information from its extensive and knowledgeable contacts within OPEC" Saudi Arabia won’t take "significant steps to bring down the price of crude oil until Brent, the grade traded most on the open market, reaches $120 a barrel, about 8 percent above current levels." More from CBS: "In the report, which was made available to MoneyWatch on the condition that the firm not be named because briefings with its contacts are off the record, the OPEC sources reiterate their earlier analysis of the oil market, which has proven to be on the nose. They contend that the delicate political situation  across the Middle East and North Africa - including the fragile state of affairs within Saudi borders - is preventing the kingdom from doing the sensible economic thing and increasing production to keep prices under control." Which simply means that Rogers and all those doubting the veracity of Saudi's motives, not to mention the kingdom's rhetoric that it has boosted output to over 9 million bbls/day, have been correct, and the supply/demand dynamics of the stock market have been largely unchanged since Libya took over 1.6 million barrels of oil from the market.