Archive - May 2011

The fog of lies seeping from the corrosive tar pits of Washington D.C. is getting thicker by the day, our social environment has become a vortex of confusing mismatched messages and conflicting data, and getting a straight answer from any mainstream outlet has become a fools errand. For those of us who are awake and aware, it seems as though our senses are under attack every minute of everyday. We are overwhelmed with illusions, delusions, mirages, and unsupported opinions masquerading as cold hard fact. Sometimes, we need media that inspires us and teaches us, rather than attacking us with amoralist rhetoric and rewriting our history in real time. Sometimes, we need to know we are not alone in our daily fight against disinformation. We need to know that there are, and always have been, others out there who see the truths that we see. Sometimes, we just need a break from the propaganda machine. In the hopes of providing for you as many moments of rest as possible, I have listed below some of the films and other media which have, at the very least, messages that support the vestiges of liberty and free thought. Some people may disagree with certain choices, and certainly, not all of the films below are examples of “artistic auteurism”, but at least they don’t spew up the bile of globalism and collectivism all over your living room when you watch them, which is always a nice change of pace. Onward with the show…

And now the replica commodity crack down from last week is complete, with a near identical price action repeat of what happened last Thursday and Friday.

First the AIG refiling, which may be pulled if the offering price has to be at a loss for the Treasury (below $29) and now:

• GM STOCK SALE MAY BE DELAYED UNTIL MID-AUG. OR SEPT.: NY TIMES

It seems market conditions now are any pullback in the Russell 2000 more than 1%

Every regulator in the universe will be present at Senate Banking Committee hearing discussing Dodd-Frank (Do-nk) Monitoring Systemic Risk and Promoting Financial Stability. Which means there will be nobody to greenlight a margin hike for at least 2-3 hours, as supposedly even Blackberries are not allowed. Which means crude may even lift a few offers before today's take down brings it to $80 by EOD courtesy of Obama's E*trade account.

From a note: The rating on Goldman Sachs stock is being lowered to Sell from Neutral. The price target is being cut to $120 per share from $163 per share. It now appears that the pressure on the Justice Department to bring a criminal lawsuit against Goldman is building to a high pitch. The new Matt Taibbi article in Rolling Stone Magazine is another all-out attack on the company. However, this time the attack is backed by a 650 page Senate report signed by both a Democrat and a Republican.

Once again someone forgot to tell gas station operators that the CME is doing all it can to generate a feedback loop which kills commodity prices and general price stability (price plunges, vol surges, leading to margin hikes, leading to more plunges, leading to even more vol and even more margin hikes, etc). After gas prices rose by about a cent yesterday, the rise according to AAA continues, with average gas prices on the verge of a post 2008 high, even as crude prices have taken a nearly $20 hit in the past two weeks. Yesterday the average regular price was $3.984, up from $3.962 yesterday, and unchanged from a week ago.

Anybody who has been following me since 2006 knows me to be a real estate bear. I was massively bullish from 2000 to 2005, after which I started selling off my investment assets. No, it wasn’t perfect timing, intellect, luck or a gift from God. It’s called a spreadsheet. Simply do the math and the truth will be self-evident!

While last month's upward revised 478K number was not repeated, just released initial claims still continued at the NFP busting 434K, worse than consensus of 430K. At this level of initial ciams, the economy is losing about 50K jobs per month. According to the release, the primary factor was New York State, which saw a surge in Initial Claims of +24,431, due to "Layoffs in the transportation and service industries." Continuing claims were just as bad, at 3,756K on expectations of 3,700K, with the previous number revised, how else but, higher to 3,751K. And just as notably, the 99 week cliff impairs eve more people, as a total of 17K people dropped off EUC and Extended Benefits. Elsewhere, PPI came higher than expected, with April PPI data at 0.8% on expectations of 0.6%, up from 0.7% before, confirming that delayed downstream inflation effects will plague the economy for a long time. Concluding the trifecta of bad data was advance retail sales, which came at 0.5%, below expectations of 0.6%, with the previous revised much higher from 0.4% to 0.9%. And retail sales ex the volatile autos and gas was up a token 0.2%, compared to expectations of 0.5%, down from a revised 0.7%.

Globalization sure can be fun: just as the Fed has now ordained Japan to carry out the global reliquification scheme in the form of a new, and powerful batch of QE, so the regional war on (Fed liquidity engorged) speculators has just gone global. Following 5 consecutive silver margin hikes by the CME (which oddly did nothing on yesterday's price collapse even as the silver vol surged to near record levels) at which point it would appear silly for the exchange to continue its speculator eradication campaign, the memo has now been sent to foreign bourses. Sure enough, the Shanghai Gold Exchange has just announced it is hiking both the silver margin to 19% as well as the price limit on gold to 13%.

• Don’t Let Go of the (Wall Street) Anger (William Cohan)
• Blame Washington, D.C., Not Wall Street (RCM)
• Fed Officials Divided on Policy Outlook (Reuters)
• Goldman Sachs Viewed Unfavorably by 54%. (Bloomberg)... although either that number is really 154% or Junker "edited' it
• Bill Proposes Mortgage Shake-Up (WSJ)
• Obama Defense Cuts Under Fire (FT)
• Japan Confirms Fukushima Nuclear Reactor 4 Leaning And In Danger Of Complete Collapse (Intel Hub)
• Portugal's Aid Plan Advances (WSJ)
• UK Country Risk: Is Lloyd's of London Too Big to Sue? (IRR)
• Osama Bin Laden Journal Said to Outline Plots (Bloomberg)
• Italian, and Goldmanite, Set to Lead Europe's Top Bank (WSJ)

Following last week's surge to 474,000, everyone will be seeking confirmation of whether the dramatic deterioration in labor conditions is permanent or merely "seasonally adjusted." We also get PPI and retail sales data, and the last of three auctions ($16 billion in 30 Year notes) which effectively puts the US over the ceiling. Lastly, Bernanke talks to the Senate Banking Committee on regulatory issues.

And so the stealthy campaign by Europe to asset strip its debtor prison nation continues. After on Saturday it was made clear that Europe will force Greece to issue an effective DIP loan ahead of its own bankruptcy, collateralizing post-petition creditors, and pushing existing sub noteholders lower in the cap structure, so the same scheme will now be used by Europe to grant Portugal rescue funding in exchange for Finland's "agreement" to help save the country. Per Bloomberg: "Finland will back a bailout for Portugal provided the third euro member to require aid in 12 months agrees to conditions including state asset sales. In addition, Finland wants a guarantee that bailout donors will get their loans repaid before private investors, he said." Which simply said, means that as PIIGS, already held hostage by a monetary union which threatens with world extinction should it be unwound, and by bankers who promise to never lend money should they be forced to take even once cent in senior debt impairments, will next be forced to literally sell themselves off at n blue light special auctions, where the liquidation sale biggest bidders will be none other than the very same financial institutions who have put these countries in their terminal predicament. Incidentally, all this is coming to municipalities and local governments in the US very, very soon.

For those wondering what is causing today's most recent commodities drubbing look no further than the PBOC, which a few minutes ago announced it was hiking the RMB deposit reserve ratio by 50 basis points. Following the hotter than expected CPI print from Tuesday night, this is not unexpected, yet it merely makes the stagflationary outcome even more possible, as aside from inflation all other economic indicators pointed to a sharp slow down. And while China is tightening, Europe, as we predicted, will soon be forced to undo its most recent foolish rate hike, and likely loosen substantially following a crunch in the continent's industrial production. "Production in the 17-member euro area slipped 0.2 percent from February, when it advanced 0.6 percent, the European Union’s statistics office in Luxembourg said today. Economists had forecast a gain of 0.3 percent, the median of 25 estimates in a Bloomberg News survey showed. Production rose 5.3 from March 2010 after increasing an annual 7.7 percent in February." As a result, the EUR drop is causing the USD to jump yet again, causing futures and commodities to tumble. Simple. Or is it?

Lets keep it simple, shall we?

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