Archive - Apr 28, 2011

Earlier we reported on a completely inexplicable 10% surge in the IWR ETF resulting from a whole lot of busted trades. We didn't know precisely how many trades were involved until the kind folks at Nanex sent us this cheat sheet. The answer: 1,379,128 shares of IWR! Which, at the prices crossed, amounts to just over $130 million. We wonder: which algo could afford to lose $130 million on what in retrospect was a busted fat finger, and just what is the purpose of lifting every single offer into an offerless market beyond the point of ridiculousness? Luckily, the trades, which crossed just after close, did not happen 5 minutes earlier, or the market would have seen a fully blown inverse flash crash, carrying across all asset classes. On the other hand, we know of one person who is very focused on the Russell 2000 as an indication of the overall strength of the economy. Is the Fed now, in perpetuating its 3rd mandate, solely focused on buying IWR (and/or other) ETFs?

Posted below are 21 statistics about college tuition, student loan debt and the quality of college education in the United States….

As vaguely rumored earlier, and largely anticipated, the CME instituted another margin hike, presumably for a broad swath of commodities but apparently focusing on one particularly: silver, this time 10%. This is on top of the 9% margin hike from Monday. If anyone was wondering the reason for silver's swoon earlier (and subsequent jump) was, now it's clear. By now it is becoming rather clear that all the CME does is provide ever better reasons to BTFD. As always, we continue to hold our breath until there is a comparable maring hike for the ES. We may soon run out of oxygen.

While stocks seemed in a world of their own today relative to Treasuries, FX carry, PMs, oil, and even the USD, they managed to make solid gains amid above average volume following a series of dismal macro prints this morning. Credit outperformed but we outline why the velocity of moves may slow a little here.

From the bears who explained Quantitative Easing, we now get a crash test dummy simplifying the Federal Reserve's current outlook on life, the universe and everything, courtesy of yesterday's press conference. All confusion abandon ye who enter.

One wonders just what algo told the IWM to not only lift every offer but to do so for a whopping 10% higher than the overall market. Because if you like this market about 50% overpriced, you will love it at 60%. Or was this just Brian Sack telegraphing what the endgoal for the Russell 2000 is before QE2 ends? In other news does anyone even recall what a capital market is like without at least one Chinese fraud being exposed, or at least one synthetic CDO, read ETF, doing some Circque De Soleil acrobatics? We can't wait to hear what the exchanges will use as an excuse for this inverse flash crash.

One animated gif is worth a thousand FOMC press conferences

From Reuters: SYRIA'S MUSLIM BROTHERHOOD MOVEMENT CALLS ON SYRIANS TO TAKE TO STREETS TO DEMAND FREEDOM - DECLARATION ISSUED AHEAD OF FRIDAY PRAYERS .

And so it just became religious.

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 28/04/11

This is what the US economy has been reduced to: McDonalds reports that as part of its employment event to hire 50,000 minimum wage, part-time (mostly) workers, subsequently raised to 62,000 it received a whopping 1 million applications, or a Tim Geithner jealousy inducing 6.2% hit rate (h/t X. Kurt. Osis). Alas, the US economy is now so pathetic that the bulk of the population will settle for anything. Literally anything. And the saddest part: over 938,000 applicants were turned away. Here's hoping to Burger King needs a few million janitors in the immediate future too. And yes, aside from reality, things in America are really recovering quite nicely.

Not good for long-suffering RIMM shareholders: "RIM now expects fully diluted earnings per share for Q1 to be in the range of $1.30-$1.37, lower than the range of $1.47-$1.55 previously forecasted by RIM on March 24, 2011. This shortfall is primarily due to shipment volumes of BlackBerry smartphones that are now expected to be at the lower end of the range of 13.5-14.5 million forecasted in March and a shift in the expected mix of devices shipped towards handsets with lower average selling prices. Gross margin for the first quarter is expected to be similar to the 41.5% previously guided. This mix shift is also expected to result in revenue that is slightly below the range of $5.2-5.6 billion guided on March 24. Expected shipments of BlackBerry PlayBook in the quarter continue to be in line with our previous expectations and we have not experienced any significant supply disruptions in Q1 due to the impact of the Japan earthquake."

We are right on track for the next American revolution but it's a slow train so grab those fish while you can, my friends - you may need them to barter with down the road!

Gold prices seem to be setting new highs daily. Of course those would be highs not adjusted for inflation or debasement of the dollar. If we were to set real highs, we would have to see gold prices rise near $2400 per ounce - maybe higher! Obviously, a dollar today is worth far less than a dollar was in 1980 when gold and silver hit long-standing record highs of $850 an ounce and $54 respectively.

Just to help you put things into perspective, in 1980 a postage stamp was $.15 cents, a gallon of gas was $1.25 and the Median Household Income was $17,710.00. Our entire Federal Debt was just $909.1 billion and government spending was a paltry $590.95 billion. Here's one more little tidbit, the Dow reached a high of 1000 and a low of 759.

Probably the only piece of economic news that matters today, and possibly all year, no scratch that, since the "End Of The Recession" (NBER ^TM) - according to Reuters: "The April 20-23 Gallup survey of 1,013 U.S. adults found that only 27 percent said the economy is growing. 29 percent said the economy is in a depression and 26 percent said it is in a recession, with another 16 percent saying it is "slowing down," Gallup said." That means that more Americans think the country is in a Depression, let alone recession, than growing. Cue crickets and a Bernanke press conference where he discusses alien abductions and 8 toed mutant Madagascar lemurs.

Former SAC portfolio manager Donald Longueuil has just pled guilty to charges of insider trading (before the (in)famous Judge Jed Rakoff) in Federal District Court in Manhattan. Dealbook reports: "Mr. Longueuil described in court how after reading news reports about the government’s insider trading last fall he destroyed his hard drive that contained incriminating evidence. The government, however, dropped its obstruction of justice charge against Mr. Longueuil. Under the plea agreement with the government, Mr. Longueuil faces a prison sentence between 46 months to 57 months. Judge Rakoff could depart from those guidelines." And he certainly will if Longueuil, who is a cooperating witness, drops some juicy bombs about every DA's public enemoy number one: ole Crown Lane, Greenwich residing blue eyes himself.