Archive - Jun 23, 2011
China Formally Working With IMF To Avoid Eurozone Restructuring
Submitted by Tyler Durden on 06/23/2011 22:44 -0500Step aside IMF, China is now in the driver's seat. Officially.
"Other Fed Assets" Hits Record $133 Billion, More Than The GDP Of Kuwait
Submitted by Tyler Durden on 06/23/2011 22:26 -0500
That the Fed's balance has hit another record high (and will do so for at least two more weeks) should come as a surprise to nobody. After all, when something is at a record and grows relentlessly, it is pretty safe to say next week will be another record. That said, there were several curious observations in this week's H.4.1 update. First and foremost is that the "other Fed assets" category just hit an all time high of $132.7 billion. This category, which is now larger than the GDP of Kuwait, is apparently so comprehensible and transparent to the hoards of FOMC precleared journalists, that for the second meeting in a row, nobody feels like asking a question about just what is contained in this asset class. We also hope that nobody attempts a correlation between the Other Fed Assets class and the S&P. Another notable thing is that as we suggested back in January, the amount of MBS prepays continues to drop and has slowed down to a trickle. Elsewhere, the Fed's excess reserves are once again back to chasing Bernanke's expanding asset class, with over $40 billion more in cumulative asset expansion since the start of QE Lite, than excess reserves. Lastly, looking at the Fed's custodial treasury holdings, there was another small decline in USTs held in proxy by the Fed: the first decline in 4 weeks, since the May 25 second biggest historic drop, discussed previously on Zero Hedge. Aside from these, it was smooth sailing for the Fed, where the average maturity of SOMA holdings declined just modestly from 61.6 to 61.5 months.
THe DeBT CoLoSSuS
Submitted by williambanzai7 on 06/23/2011 22:20 -0500Why man, he doth bestride the insolvent world...
Like a Debt Colossus...
Guest Post: The U.S. Monetary System And Descent Into Fascism An Interview With Dr. Edwin Vieira
Submitted by Tyler Durden on 06/23/2011 21:23 -0500"Given the current state of things, I'm sure there are a lot of people deliberately deciding to adopt a low profile, politically or socially. A lot of this has to do not so much with politics but what your neighbors or your coworkers will say about you, right? If you tell them something that is actually happening in the world, you will be labeled a conspiracy theorist; they’ll look at you as if you're crazy. But what about the activists? At a certain stage, the great mass of people will look around for leadership figures. When the economic crisis comes, they’re going to want someone to tell them how to get out of it. They’re not going to know the answers themselves. The question is, will there be activists, leadership figures, proposing the right solutions – and how soon will they come along?" Edwin Vieira
On The Mysterious Case Of The Phantom Stock Trades
Submitted by Tyler Durden on 06/23/2011 21:11 -0500Our friends at Themis Trading have put together another quite fascinating white paper which makes a disturbing observation: on an intraday basis, the widely watched market gauge indices such as the Dow Jones Industrial Avereage, the S&P 500, the Nasdaq and the Russell 1000, are based on less than 30% of all shares traded, therefore conveying incomplete trading data. The reason, which is intuitively known by all who follow the increasingly more fragmented and more compartmentalized into dark pools and other various ATS venues, market topology is that as Themis says: "the market has become increasingly dominated by trading volume from arbitraging index, ETF, and other derivative movements versus the underlying equities.... Nowadays, in a world of microsecond trading, these indexes have become phantoms - they reflect some trades involving their components, but not the majority of them." In other words it is becoming increasingly obvious why in a world of HFT, ETF, algo, ATS and everything else penetration, there is now a scramble between the legacy exchanges to merge. The alternative is a slow, painful death due to terminal obsolescence brought upon from unregulated trading venues, which often times see the alternative trading system operator have exclusive firewall and gateway privileges, where anything goes and where such obsolete constructs as Reg NMS are routinely ignored: after all how can the SEC possibly track down the billions of unique trades each and every day and catch all the transgressions. Themis provides a solution to this skewed motivation for all traders to increasingly vacate the actively regulated open exchanges: "indexes should be calculated based on every trade involving a component that crosses the consolidated tape, which includes trades from non-primary exchanges such as BATS, DirectEdge and NYSE Arca."
Big O and the IEA - WTF?
Submitted by Bruce Krasting on 06/23/2011 21:04 -0500I'm confused. Some questions.
Charting The Fed's Abysmal Recent Predictive Track Record
Submitted by Tyler Durden on 06/23/2011 19:56 -0500
The Fed's atrocious predictive track record is nothing new: just recall the famous clip that put together all of his horrendous calls on the economy in the pre-credit bubble years. Everybody knows how those turned out (the clip can be found here). Well cut the guy some slack, Fed apologists may say: after all how many could possibly foresee the X-sigma events that marked the 2008 market crash. Fair enough (and the answer to that question is many, but that is the topic of another post). So, in order to keep it apples to apples, from the stand of a post "Great Financial Crash", instead we have compiled the FOMC projections from the last 6 Fed meetings, in terms of GDP, unemployment and inflation projections: the three key metrics that the Fed tracks and attempts to estimate. We present the results below. They are quite self-explanatory.
DOE Announces Details Of Strategic Petroleum Reserve Firesale
Submitted by Tyler Durden on 06/23/2011 17:46 -0500Following the earlier general announcement that the SPR would sell 30 MM barrels of oil a lot of questions were left unanswered, such as what kind of crude will be sold, where will it be sold from, and at what price. The wait for answers is now over: The DOE has just released all the missing data. Per Reuters: "Under the terms of the U.S. sale that were issued by the department, the government does not plan to stagger the sale of the oil and will offer all 30 million barrels in one bid sale. The department will offer "sweet" crude oil from three of the reserve's storage sites: Bryan Mound and Big Hill in Texas and West Hackberry in Louisiana. The oil will have a base price of $112.78 a barrel, a spokeswoman for the SPR said." Which does not however mean that this is the price at which the oil will be sold: "Traders can bid above or below the "Base Reference Price" of $112.78, which is derived from the last five days of trading of Light Louisiana Sweet crude oil, as assessed by energy pricing agency Argus. Companies will submit their bids for the oil through a special department website. Delivery of the oil to the winning companies would take place over the month of August. Winning companies would pay for their oil during the month after the crude is delivered." Which simply means that China will convert quite a bit of America's trade deficit from dollars into oil.
Parts of Nebraska Nuclear Facility Already Under 2 Feet of Water ... But - So Far - Emergency Flood Walls Are Protecting Electrical Equipment
Submitted by George Washington on 06/23/2011 16:35 -0500What's happening in Nebraska?
The Soap Opera Just Got Very Exciting: Eric Cantor Will Propose Balanced Budget Amendment To US Constitution
Submitted by Tyler Durden on 06/23/2011 16:29 -0500Well now things are really getting downright exciting. From GOP House majority leader Eric Cantor "We are being asked by the Obama Administration to approve a debt limit increase. While President Obama inherited a bad economy, his overspending and failure to enact pro-growth policies have made it worse and now our national debt is currently more than $14 trillion. House Republicans have made clear that we will not agree to raise the debt limit without real spending cuts and binding budget process reforms to ensure that we don’t continue to max out the credit card. One option to ensure that we begin to get our fiscal house in order is a balanced budget amendment to the Constitution, and I expect to schedule such a measure for the House to consider during the week of July 25th. I have no doubt that my Republican colleagues will overwhelmingly support this common sense measure and I urge Democrats to as well in order to get our fiscal house in order."
Russ Certo's Macro Thoughts On Today's Global Coordinated Crude "Rate Cut" And Other "Market Schizophrenia"
Submitted by Tyler Durden on 06/23/2011 15:44 -0500Good afternoon. Quick synopsis of macro-thoughts. I’m not used to writing market comments or market updates anymore given the all things government and policy impacts on markets. It seems too often that it was as simple as the Treasury is selling the Fed is buying. And that was it. Simple. Whatever the reasons, there are implications of today’s bizarre events. There are lots of views which can be observed by schizophrenic price action in markets today. Let me share mine.
RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 23/06/11
Submitted by RANSquawk Video on 06/23/2011 15:33 -0500RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 23/06/11
Radioactive Dust From Japan Hit North America Days After Disaster ... But Governments "Lied" About Meltdowns and Radiation
Submitted by George Washington on 06/23/2011 15:05 -0500Cover up? What cover up?
Another Algo Gone Wild
Submitted by Tyler Durden on 06/23/2011 14:48 -0500Once upon a time, it was fascinating to watch crazy algos go nuts and send the price of any given stock soaring a few hundred percent higher or lower however briefly, then watch as the horrified exchanges come in right after and cancel all trades in hopes of eradicating all signs that the market is now a busted backdoor parlor in which Toby Maguire could make trillions if only hooked up to the Fed discount window IV drip. Now it is like watching a donkey show on infinte rerun. Sad is the only word that can describe it. Yet like true donkeyshow rubberneckers, we present the latest and greatest blatant algo gone wild, as usual courtesy of Nanex: "On June 21'st the stock CNTY ratcheted violently in three cycles within a six minute period, taking the price (in the first and second cycle) to over 100% of it's price just minutes prior. Within fifteen minutes the price had returned to it's previous trading level. As evident by the sheer volume of canceled trades (shown below), this was not normal market behavior and while the majority of these trades were canceled, many were not, raising even more questions."
VALUEx Vail 2011 – Thoughts from the conference
Submitted by Vitaliy Katsenelson on 06/23/2011 14:09 -0500At the core of VALUEx is that there are no star speakers, and all the content (i.e. presentations) of the conference are participant-generated.







