Archive - Apr 27, 2011

BFD, what took you so long? TYVM

While today's 2:15 pm FOMC press conference is still some time away, it is never too late to reserve your seats: the conference will be presented below live. We will liveblog the event in the off chance Bernanke says something that may be even modestly unexpected, such as the truth.

Citi's Steven Englander looks at today's so overblown FOMC statement it is getting ridiculous now, and gives some hypotheticals that could result in some strength (lol) or further weakness for the dollar.

Potential USD (even bigger) negatives (than just the Chairman breathing):

1) focus on the disappointing performance of the US economy, the downward pressure on real wages and weak levels of core inflation

2) reiteration of the view that global imbalances and inflation reflect misguided currency policies in EM

3) opening a door to QE3 if the outlook disappoints further

Pop Quiz: Let’ s suppose, hypothetically, you are trading a non-Russell 1000 stock. All of the sudden, out of nowhere, the network at a major exchange is hacked by some foreign intruders. Data becomes corrupted and the high freak “liquidity providers” head for the exits as fast as they can. Stop limits are being triggered everywhere and the phantom bids that represent today’s equity market have all but vanished. Your sell order gets executed 29% away from the last trade. Exchanges are able to quickly locate the source of the network intrusion and shut down the hackers (we know, not likely, but just play along). The stock you were trading quickly recovers after it brief loss and is now back to trading at its pre-hack level. In addition to your trade that got executed 29% lower, there were over 200 other “bad trades” that were executed far from the reference price. Question for you: Does the exchange break your trade since it was “clearly erroneous”? If you answered “No”, then you are correct. How can that be, you say. Didn’t the SEC put in place all sorts of rules since the May 6th “Flash Crash” that would protect your order from this type of situation? Well, in September of 2010, the SEC approved a little known FINRA rule request (Rule 11892) which created a new category for breaking of “clearly erroneous trades”.

A guess on the question that the WSJ will pose to Bernanke. It's all a set up.

Those who want to watch US politics devolve into a complete farce, can do so below, as the president caves in to a person who has serially bankrupted more corporations than anyone else in history. In the meantime, this is what the whie house had to say on the issue. Those who wish to watch Donald Trumps' take on the matter can do so here.

I invite all to peruse the mainstream financial media and sell side
Wall Street’s take on JP Morgan’s Q1 earnings before reading through my
take. Pray thee tell me, why is there such a distinct difference?

So, it looks like I’m a hyperinflationist after all. Reminds me of the joke about the cowboy who chats up a woman at a bar – a lesbian, as it turns out. She tells him she spends her days thinking about nothing but women. “As soon as I get up in the morning, I think about women,” she says. “When I shower, I think about women. When I watch TV, I think about women. I even think about women when I eat. It seems that everything makes me think of women.” The cowboy goes home that night thinking that maybe he’s a lesbian too.

And so hopefully the whole birth certificate meme can be put behind us, Trump's attention grab campaign will finally end, and people like Ron Paul will have a chance to actually run for president. Full statement from the president to come at 9:45am.

March Durable Goods came at 2.5% in line with expectations fo 2.3%, with the previous number revised far higher from -0.9% to 0.7%. However, durable goods ex the volatile (and oh so snow dependent) transportation segment was 1.3% on expectations of 1.9% (with the previous plunge here of -0.6% remaining unchanged). While this month's ex-number was weak, the prior month's revision likely means the trendline was smoothed down, although both February and march were still modestly weaker, confirming that while Q1 GDP will be low, the pain will continue to be felt in Q2.

GoldCore submits: "Many of our clients have taken profits on certificates in recent days. Most continue to be prudent and continue to maintain a core holding (for portfolio diversification and financial insurance purposes) but there are definitely concerns amongst some of a bubble. Others have taken profits on certificates and bought gold and silver coins and bars (in secure storage or delivered). Recently orders for coins and bars have outweighed those for certificates and there is definitely an increased preference for physical coins and bars and for taking delivery. Our ratio of sell orders to buy orders is the highest it has ever been."

With all eyes focused on the Fed's largely irrelevant first ever presser, during which only "Congressionally accredited" journalists will "ask" questions, we also get durable goods which we anticipate will confirm the recent downward economic trend indicated by the Dallas and Richmond Feds, as well as all the horrendous double dipping housing data.

• Hilsenrath: What to Watch in Fed Statement: ‘Inflation Expectations' (WSJ)
• Japan Debt Outlook Cut to ‘Negative’ by S&P on Reconstruction (Bloomberg)
• China’s Wen to Spur Investment, Tap Resources in Southeast Asia (Bloomberg)
• Holding Bernanke Accountable (David Leonhardt)
• Hong Kong Exchange And Clearing Chief Prepares for 'Seismic Change' From China (WSJ)
• Because Europe is not enough...China Seeks Bigger Role in Australia Economy (WSJ)
• Tank convoy seen moving around Damascus (Reuters)

As we reported yesterday, The Treasury Borrowing Advisory Committee, easily the most important 3rd party advisory structure at the US Treasury currently, chaired not surprisingly by JP Morgan and Goldman Sachs, released a letter to Tim Geithner, doubling up his calls for untold death and destruction, not to mention plunging year end bonuses, if the US is not allowed to kick the can down the road for another 1-2 years. For those curious, in addition to the Matt Zames chaired committee, other members include Soros, Tudor, Bank of America, BNY, Moore, Alliance Bernstein, Morgan Stanley, Round Table IMC, Brevan Howard, PIMCO (lol), Dodge & Cox, RBS, and Western Asset Management. The full M.A.D. letter is presented below.

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 27/04/11