Archive - Jun 9, 2011
Former Bailout Inspector General Neil Barofsky: "You Should Be Scared. I'm Scared. You Can't Not Be Scared. You Can't Look At What Happened In The Run-Up To 2008 and See How It's Not Going to Repeat Itself, Given What We've Done"
Submitted by George Washington on 06/09/2011 23:53 -0500Sigtarp speaks truth to power ...
Capital Context Update: Bond Breadth Bad
Submitted by CapitalContext on 06/09/2011 20:54 -0500Stocks outperformed credit at the index level today but there was a significant shift in internals in corporate credit that provides the context for continued weakness in risk assets.
The Story Of The Berserk Nat Gas Algo Just Got Really Strange
Submitted by Tyler Durden on 06/09/2011 18:21 -0500
This is where things get downright bizarre...
Guest Post: The Future Of Transportation: It’s A Relay Race…Not A Marathon
Submitted by Tyler Durden on 06/09/2011 17:55 -0500In 2007, Shai Agassi starting a company called Better Place. The concept behind it was changing out batteries that power a car, instead of filling your car with gasoline. Shai Agassi looked at the problem correctly. He saw transportation fuel as a never ending relay race. But what if there was a technology that could do the same thing, without changing out the battery?
30% Of People With A 401(k) Have Taken Out A Loan Against It: New All Time Record
Submitted by Tyler Durden on 06/09/2011 17:47 -0500About a year ago Zero Hedge posted an article titled: "Record Number Of Americans Using Retirement Funds As Source Of Immediate Cash" after a report by Fidelity uncovered that "plan participants with loans outstanding against their 401(k) accounts had reached 22 percent versus 20 percent a year earlier." It is now time to revisit this very important topic because if recent press reports are true, last year's record number has just increased by another 50%. "On "The Early Show" Thursday, financial journalist and Newsweek
columnist Joanne Lipman said, "Right now we have 30 percent of people
who have 401(k)s have loans against their 401(k)s, which is a historic
high. And the problem is, it's growing like crazy: By 2014, we're
expecting to see 30 million people take loans against their 401(k)s." The raiding of the last ditch piggybank is on, and who can blame them? With banks setting the example of always reverting to the Discount Window (or the Excess Reserve stash as is now trendy) when in trouble, ordinary working Americans are merely following in the footsteps of their financially more "literate" betters. Unfortunately, unlike the "depositor" institutions, nobody will replenish these funds should they not be repaid and the retirement money is gone for good.
It's Official: "Nuclear Fuel Has Melted Through Base Of Fukushima Plant" ... "Far Worse than a Core Meltdown"
Submitted by George Washington on 06/09/2011 17:04 -0500"Nuclear Fuel Has Melted Through Base Of Fukushima Plant" ... “The Findings of the Report, Which has Been Given to the International Atomic Energy Agency ... Described a 'Melt-Through' as Being 'Far Worse than a Core Meltdown' and 'The Worst Possibility In a Nuclear Accident'"
Hillary Clinton Seeks To Run World Bank
Submitted by Tyler Durden on 06/09/2011 16:28 -0500Update 2: State Department official says Clinton would not even take World Bank job if it was offered - CBS News
Update: NBC WIRE: From Philippe Reines, a Clinton spokeman: "It's 100% untrue, Reuters is wrong. That's on the record."
Phew, that was scary...
We are surprised that the "recidivist rapist" post-DSK PR backlash took so long. Yet it is now here. From Reuters:
- Secretary of State Hillary Clinton has been in discussions with the
White House about leaving her job next year to become head of the World
Bank, sources familiar with the discussions said Thursday.
Far more importantly, another rat leaves Obama's sinking ship. In the meantime, feminists everywhere rejoice, because, you know, Hillary, extremely experienced in economic, bankruptcy, and other financial issues is a woman. Next up: Oprah seeks to run the Bilderberg group, in order to give it a more "streamlined", humane appearance and Rachel Maddow in rumored to run the Trilateral Commission. Obviously, Erin Burnett is a shoo in for the CFR. And yes, the world has now officially gone crazy.
The Handling of the Economic Crisis May Lead to Civil Unrest
Submitted by George Washington on 06/09/2011 15:50 -0500I hope not ... But Bennie, Timmy, Bammy and the boyz keep pushing on the wrong strings ...
US Treasury Burns $90 Billion in 8 Days
Submitted by Tyler Durden on 06/09/2011 15:44 -0500More scary stuff from the US Treasury which has resumed living auction to auction, even as it has plundered over $80 billion in G and CSRD retirement fund money to provide cap under the debt ceiling, a number which will eventually rise to $270 billion by August 2nd at which time all bets are off unless the politicos in DC finally relent with their soap opera and allow the inevitable $2 trillion debt ceiling hike (which probably won't happen. Instead Congress will start voting on incremental $200 billion debt ceiling hikes month to month in order to keep the public glued to their TV in a demonstration of just how fiscally prudent Congress is). In the meantime, here's the math: in the first 8 days of the month of June, the Treasury has seen its cash balance decline from $112.6 billion to $23.5 billion: a solid burn rate of $90 billion in just over a week. But lest readers think that this is due to paying down debt, it isn't: total US debt was flat (at the ceiling), while intragovernmental holdings declined by $20 billion to accomodate another $20 billion in marketable debt (see the plunder of retirement accounts discussed above). So how does one reconcile this data? Simple - in June the Treasury has collected $44 billion in withheld individual income taxes (and a whopping $400 million in corporate tax), while spending double that, or $89 billion. Fiscal prudence? Rhetorical.
RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 09/06/11
Submitted by RANSquawk Video on 06/09/2011 15:23 -0500RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 09/06/11
Stock Volume Collapses: Must Be An Up Day
Submitted by Tyler Durden on 06/09/2011 15:21 -0500
Sure enough, just like every other single up day in recent history when the up volume is a pale shadow of what happened over the past 6 days of concerted selling, today was no surprise. As the MVOLNYE chart below shows, following a day in which almost 4.1 billion shares were traded, we followed up with a complete wash out in volume, as once again it was merely the churners and the vaporware algos that sent the market higher on horrible initial claims data, and a trade deficit number which was only lower than expected due to supply disruptions.... and somehow that is supposed to be good for the economy? As usual, the Wall Street shortbus brigade fails to understand that absent a massive stimulus in Japan, none of the recent weakness, which originates in Japan, will revert to the mean. And so far no stimulus is coming. Which means that the Q2 GDP "strength" due to the beancount GDP boost from artificially lower imports will merely serve to further collapse Industrial Production in future months. But one has to not get paid millions of dollars and work at 60 Wall Street to actually grasp this very simple fact.
Guest Post: Fun With Inverse ETFs
Submitted by Tyler Durden on 06/09/2011 14:49 -0500I love Exchange Traded Funds (ETF). In theory. In practice they are being abused by issuers and traders alike (see Beware of systemic risk in ETF). But that’s another topic. Today let’s take a look what can happen with inverse ETF through the compounding effect. I like inverse ETF (i.e. SH) on the stock market, because if I am wrong (market goes up), my problem gets smaller (ETF goes down). If I had sold short the market (i.e. SPY or via futures) my problem would get bigger. Of course this “advantage” comes at a certain cost in form of a potential performance drag. To make it clear, let’s look at 4 simple examples...
PIMCO Still Short US Treasurys, Changes Reporting Methodology On Treasury Exposure; Has $85 Billion In Cash
Submitted by Tyler Durden on 06/09/2011 14:14 -0500Pimco has just released its May Total Return Fund holdings data, and we are delighted to discover that following all the recent debate over whether PIMCO is or is not short Treasurys, the firm has relented and has actually changed the way it reports it exposure, which in turn is precisely just as we had speculated: a modest long cash position offset by a substantially larger swap short. Yet combining the three (the firm now breaks out its "Government Related" category into Government- Treasury, Government- Agency and Swaps and Liquid Rates, which had been lumped before), we find that on a Market Value basis PIMCO is still short government securities to the tune of -3%, a minimal increase in its exposure from April when this was -4%. Yet on a duration weighted exposure basis, the firm's Swaps and Liquid Rates, the flagship fund's positioning is a whopping -31! Just as importantly, semantics aside, TRF's net cash position declined from 37% of its $243.2 billion in AUM to...35%, or $85 billion in cash. Hardly much of a vote of confidence in US government paper.
A PRaYeR FoR THe SHePHeRD aND HiS TBTF FLoCK
Submitted by williambanzai7 on 06/09/2011 13:54 -0500Behold...
The "Fractal" Limit Order Buster: The Latest Market Manipulation Algo Gimmick
Submitted by Tyler Durden on 06/09/2011 13:28 -0500
Yesterday, just after 8 pm Eastern we presented a very curious move in NatGas trading on the NYMEX when under very light volume, the NG performed something akin to a sine wave expansion, with about 12 peaks and troughs with ever increasing amplitude, until ultimately it triggered a major sell off when it appeared to touch off an avalanche of limit orders about 3% from the prevailing price, leading to an almost instantaneous 8% drop in Natgas which was promptly recovered. We dubbed this a fractal pattern, and after a follow up with the trade forensics experts at Nanex, it appears this was a very spot on designation, as zooming into the pattern indicates increasing levels of self-similarity and complexity. Yet aesthetic observations aside, this latest algo appears to be nothing more than a limit order-busting market manipulation device, whose sole purpose is to destabilize and generate volatility for the creator of the algo. Curiously, as Nanex indicates, the algo is not limited to Natgas but also appears to recur in other far more liquid instruments, such as the SPY, when a comparable fractal pattern was observed in broad daylight. As to how the algo itself profits from the price instability it generates: we are unsure. One could certainly trade the increased volatility through derivatives, by buying vol cheap in advance of such as limit order triggered waterfall, especially in very thin markets, and then selling the vol at the apex of a given move. Obviously, this is merely speculation. That said, we are dead certain Finra and the SEC are promptly pursuing the trader responsible for this glaring attempt at market manipulation in order to find out precisely how one profits from such fractal algorithms.






