Archive - Jun 20, 2011
Indian Gold And Silver Imports Surge By Stunning 500% In May
Submitted by Tyler Durden on 06/20/2011 23:19 -0500India's heretofore "insatiable" appetite for precious metals will need to find a new adjective to describe it, after it surged by an absolutely unprecedented 500% in May MoM, and 222% compared to May of 2010, touching on a massive $8.96 billion in imports in the past month. Putting this number in perspective the yearly average Indian imports are about $22 billion: in one month the country will have imported about half its average quota for the year! And while inflation may have much to do with it, events like the Sensex flash crash from last night certainly are not helping matters: "The gold story is puzzling" added financial analyst A S Kirolar. "Consumers are shying away from stocks and bonds and heading to safe
assets like gold and real estate, but one cannot understand this given
the meagre 12% growth in imports of petroleum and oil products." Granted demand is not just at the retail level as ever more institutions are buying up gold: "Analysts maintained that India's central bank, the Reserve Bank of India's decision to grant licenses to seven more banks to import bullion has helped push up demand. Karur Vysya Bank, State Bank of Bikaner and Jaipur, State Bank of Hyderabad, Punjab and Sind Bank, South Indian Bank, State Bank of Mysore and State Bank of Travancore were added to the list. As of the start of 2011, some 30 banks in India have been granted permission to import gold and silver. Jewellers are getting easy supplies which is also helping push up demand. Moreover, the flow of scrap is also expected to fall from a yearly average of 200 tonnes, which could again boost imports, underlining the insatiable appetite of the Indian consumer." Add ongoing Chinese demand for PMs, and one can see why calls for an imminent gold crash absent a global deflationary vortex are largely overblown.
What if 8% is Really 0%?
Submitted by Leo Kolivakis on 06/20/2011 23:15 -0500According to Mebane Faber, by investing in a portfolio with uncertain outcomes, pension funds could experience increasingly volatile and even negative returns. Paradoxically, in an effort to chase the universal 8% rate, pension funds may be laying the groundwork for returns even lower than the risk free rate...
THe LaST BaiLouT iN ATHeNs
Submitted by williambanzai7 on 06/20/2011 22:38 -0500Until the next one...
China Conducts Emergency Reverse Repos To Calm Money Market Liquidity, Fails, As 2 Week SHIBOR Hits Record 8.6%
Submitted by Tyler Durden on 06/20/2011 22:24 -0500
Yesterday, when we pointed out the surge in the overnight SHIBOR, many were quick to dismiss this dramatic contraction in liquidity, because it happened to be a replica of a comparable such move before the Lunar New Year which did not end result in an end of the world type event. And while many ignored this very disturbing interbank lending lock up sign, there was someone who did not: the PBoC. According to Market News, "The People's Bank of China has conducted reserve bond repurchase agreements with at least one bank in a bid to ease liquidity conditions, local media reports said Tuesday. The National Business Daily cited an interbank market trader as saying the central bank injected at least CNY50 billion into the China Construction Bank on Monday via a 14-day reverse repo at 7.5%." Which incidentally is how it should be done: want to get emergency funding from your central bank? Sure. But it will cost you a whopping 7.5%. Now the question of whether CNY50 billion is enough (and in related news, the USDCNY parity just dropped to a fresh all time record low of 6.4690) is a different matter altogether: we expect to get today's updated SHIBOR fixing any second, and have a feeling more reverse repos will have to be injected before this is over.
Global Tactical Asset Allocation Q3 Update: Fixed Income
Submitted by Tyler Durden on 06/20/2011 21:37 -0500Following the release of its quarterly equity market update, Global Tactical Asset Allocation has released the must read Q3 debt update, which covers virtually every aspect of the fixed income space with more granularity than can be found in the best sellside research report. Since the imminent global insolvency is not about equities, and all about coupon and variable rate instruments, this could we be the most important update piece from Damien Cleusix this quarter. Your all in one compendium on fundamentals, technicals, and everything inbetween can be found inside.
Presenting Obama's Latest $50,000 Non-Recourse, Interest-Free Gift To "Troubled" Homeowners
Submitted by Tyler Durden on 06/20/2011 21:03 -0500Today the Obama administration launched its latest $1 billion "stimulus" in the form of the Emergency Homeowner's Loan Program (EHLP), certainly not to be confused with Homeowner Emergency something something, which would be abbreviated HELP (and would be way too cute). The formal reason for the program is to provide emergency loans to 'homeowners' facing foreclosure, or basically all of them, to help tide them over "a temporary financial crisis", the Department of Housing and Urban Development (HUD) has announced. The informal reason is to provide thousands of Americans with a $50,000 recourse and interest-free loan for up to two years (money which will go down to paying down equity an underwater mortgage, and will thus never be repaid), so that earned income, instead of being used to make mortgage payments, will be rerouted into such far more critical capital needs as the latest iPad or buying share ot LNKD at $122. But don't think for a moment that everyone will be able to access this money: "the program is available to homeowners who have seen their incomes fall and who could lose their homes to foreclosure due to circumstances beyond their control, including involuntary unemployment, underemployment, economic conditions or an illness" which, actually in retrospect, is all of them. Well, the effort of getting off one's couch and actually picking up the forms may be unavoidable. Of course, that process in itself may well limit 80% of the eligible participants.
Bailout Eve Caption Contest
Submitted by Tyler Durden on 06/20/2011 18:26 -0500
This just happened. What was really said however will never be reported... Which is why we leave it to our readers.
SocGen Tries To Make Sense Of The Complete Chaos That Is Europe Ahead Of The Greek Vote Of Confidence, Fails
Submitted by Tyler Durden on 06/20/2011 18:22 -0500If anyone has a clear idea what is going in Europe, you are smarter than us, and may move on to a different post. For everyone else, here is a must read piece from SocGen that tries to make sense of what is rapidly becoming the biggest clusterfuck in modern European history, in which everyone hates the outcome that is predetermined by the bankers, yet nobody knows just how to achieve it. From SocGen's James Nixon: "What is so surprising is how much the Eurogroup appears to have handed the initiative to Greece itself; if the Government falls after Tuesday’s vote of confidence presumably we reach the point where the crisis starts to get really sporting. And, if there weren’t hurdles enough, the latest from Mr Papandreou is a referendum on the whole kit and caboodle in the autumn. The risk for the Eurogroup is that the gambit of pressuring Papandreou may now backfire with some of the Greek press seeing this as a full frontal attack on the PM. In many respects the situation in Greece very closely mirrors the political situation in Portugal. The right-wing business orientated opposition is unhappy that their spendthrift socialist government still haven’t bitten the bullet and undertaken root and branch reform of the public sector. Hence Mr Papandreou continues to rely too heavily on hypothetical increases in tax revenue rather than wield the axe over his own supporters. As in Portugal, the opposition may be prepared to bring down the government over this if they can and force new elections. This would leave the Eurogroup having to negotiate with the different political parties in Greece in order to secure agreement on further austerity."
A Little Fly On The Wall Defeats The Big Banks
Submitted by Tyler Durden on 06/20/2011 17:37 -0500Back in April 2010, Zero Hedge wrote an article titled "Banks Stifle First Amendment, Attempt To Create A Tiered Market Of "Clients" And "Everyone Else" As Theflyonthewall.com Is Blocked From Instant Stock Research Reporting" describing how "Theflyonthewall.com, which is a news aggregator service (much like most
of the blogosphere these days, but without the snarky commentary), and
is hosted on Zero Hedge, has just seen a major driver of its business
model cut off, after several banks just won an injunction that blocks
Fly from notifying its clients when a bank may have issued a research
event such as an Upgrade or, on those extremely rare occasions nowadays,
Downgrade. The banks who feel violated by everyone getting access to
information about their sellside detritus contemporaneously, not just
wealthy accounts and wire services, are Barclays,
Bank of America Corp.’s Merrill Lynch, and Morgan Stanley." We spared no words to explain the stupidity of this action: "this injunction is about the dumbest thing one could imagine: news of sell side research changes are reported immediately by Bloomberg, Reuters and all the major newswires. Why did Lehman, Morgan and Merrill not take them on? Oh yeah, limited budget. And now that they have a case precedent, the door is open to demand cashola or threaten with shutting down the big boys. As for the rest of the blogosphere - good luck." Well, it won't come to that. Our friends at Fly just won their case.
CME Cuts Treasury Futures Margins By 30% In Under Three Weeks Despite 20% Jump In Volatility
Submitted by Tyler Durden on 06/20/2011 17:18 -0500
While it didn't lower ES margins just like before the S&P rout started several weeks ago, the CME has just decided to lower margins across virtually all interest rate products. Again. This is the second consecutive margin drop in under 3 weeks, following an identical action on June 3 when the CME slashed IR margins initially. Some examples: TEN maintenance and initial margins are down from $2160 and $1700 to $1485 and $1100 respectively, or over 30% each in under weeks, 17 (the 30 Year UST Bond Futures) maintenance and initial margins are down 3713 and 2750 to 2700 and 2000 respectively, another 30% drop, and so on. Most amusingly is attempting to validate this margin cut when looking at the Treasury complex vol expressed by the MOVE index. Oddly enough from 71.50 at the beginning of June, or a 2011 low, vol since surged to nearly 2011 highs, or a roughly 20% jump. Yet it is precisely this jump in volatility that somehow is conducive to not one but two margin cuts in three weeks. Luckily, the end of QE3 in precisely 10 days has nothing to do with this decision which makes investing in Treasurys by speculators so much more easy...
Paulson Dumps All Sino-Forest Holdings: $750 Million+ Realized Loss
Submitted by Tyler Durden on 06/20/2011 16:31 -0500Done and Done. PAULSON & CO. SELLS ALL OF ITS SINO-FOREST HOLDINGS.
The world's smartest investor just capitulated, confirming he has fallen pray to the oldest trick in the stock fraud world. And so much for careful "due diligence" underlying each and every decision at the fabled fund.
Rough estimate of loss on his stock and bond holdings: $750 million+.
S&P Profit Margins Have Now Peaked
Submitted by Tyler Durden on 06/20/2011 16:03 -0500
Well, technically they peaked some time ago (contrary to mainstream media propaganda), but we were waiting for another quarter to confirm our findings. For the sake of recreating our results, courtesy of CapitalIQ, we ran an analysis for all S&P 500 companies excluding companies that belong to the S&P Financials Sector Index, ending up with a universe of 418 companies. Then we looked at the last 3 years of gross profit margins on a quarterly basis (13 data points), and did a simple average, simple median, and trimmed mean (excluding top and bottom 15%), and got the following result.
RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 20/06/11
Submitted by RANSquawk Video on 06/20/2011 15:18 -0500RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 20/06/11
41% Of Belgian Central Bank Gold Has Been Lent Out
Submitted by Tyler Durden on 06/20/2011 15:10 -0500Some very disturbing revelations from CLSA's Chris Wood who in his latest Greed and Fear note discusses an event that may be all to prevalent within the central banking community: the less than overt lending out of central bank gold to "other entities" in return for picking up nickels in front of a steamroller. In this case, the central bank of governmentless Belgium, which had 41% of its gold out at the end of 2010 on loan. Naturally, the lent out gold is being used by some other key entity, potentially to mask its own inventory deficit, in exchange for the paltry sum of 0.3% on the total loan. Wood's conclusion: "This is a reminder that the paper gold market is significantly larger
than the physical market. Just like a run on a bank in a fractional
banking system, GREED & fear suspects it will be very hard to settle
all the paper claims to gold physically in a real scramble for the
metal. This is why in a parabolic spike physical gold is likely to trade
at a significant premium to paper claims." We couldn't have said it better ourselves.
Final Stock Volume: 32% Below Average, As Buysiders Dump Corporate Bonds En Masse
Submitted by Tyler Durden on 06/20/2011 15:09 -0500
Virtually all other times when stock volume was as pathetic as today's in recent history, were holidays. The chart below speaks for itself.





