Archive - Jun 2011

When we first started paying attention to the physical ("Registered") silver held in COMEX warehouses on April 20 following the explosion in the silver price, the total amounted to just over 41 million ounces. As of today, a short 6 weeks later, the total physical silver held throughout the entire Comex complex, has dropped by 30% over that period. As of close today, the total amount of Registered silver is now 28,773,375 ounces, a decline of 2.9% overnight from 29,636,513. This is due to a withdrawal of physical from both Brinks and Scotia Mocatta, as well as the ongoing reclassification of 438,708 ounces of Registered into Eligible silver over at HSBC (but wait, it will revert back to Registered any moment... we promise). At this rate of withdrawal and "adjustment", there will be no physical silver left in the entire Comex in about 5 months. At that point, even one delivery intention will send the price of silver to previously unseen levels.

Ladies, don't say we never treat you...

First we had the bread (or some other Oscar Meyer product)...Now comes the circus. Politico reports that Pelosi has just called for a "Weiner Ethics Inquiry." Um... What is there to inquire: the guy sent out pictures of his wiener in clear abuse of his political position (leaving his family drama aside) from a Twitter account that was obviously that of an elected official. It's unethical - period (to spare various other adjectives that come to mind). He should resign immediately. Then again, New Yorkers once again get precisely the representatives that they deserve. A far better inquiry (and thus use of taxpayer capital) would be to discover who else among the political elite does just the same on a daily basis (Weiner is certainly not alone), and has merely not been caught yet.

Last Thursday we attempted a rough estimation of how much the Treasury has been dipping, or as it is also known "disinvesting", into the G-fund and the Civil Service Retirement and Disability Fund (CSRDF). Courtesy of Stone Mountain, we now have a definitive number. Even we did not realize how bad it is: in a nutshell, since the debt ceiling breach in mid May, Tim Geithner has replaced one IOU (that of the Fed) with another (that of the Treasury) in the G Fund to the tune of $57 billion, and in the CSRDF of about $22 billion. In other words, retirement funds have seen a "disinvestment" of nearly $80 billion in the past 3 weeks just to make space for further funding of bloated government, defense spending, and healthcare benefits. But don't worry: Tim promises it shall all be well.

Panama is an example of how I see governments moving in the future– like Singapore, Chile, Hong Kong, and may others, Panama is the kind of place that seeks to attract foreigners, to compete for them by providing a number of incentives. Panama does this most pointedly with its retirement ‘pensionado’ program, but there are a number of other such programs. In fact, the country’s immigration law has so many different categories, it’s possible for just about everyone to find a way to move here. In other places, immigration is unfortunately a four letter word. The borderless Schengen area in Europe is on the verge of disintegration as a number of countries in the region begin to put up border checkpoints to restrict the free movement of people (and capital). In the United States, the government has been eager to show that it’s not slacking on the illegal immigration issue. The result has been an increase in the size and scope of its persecution against “undocumented workers” as well as the businesses which hire them. I can just imagine the conversations within the hallowed halls of government: “those who break the law must be punished accordingly…”

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 06/06/11

Watch the pathetic confession from the congressman live here. Nonetheless, a very "regretful" Wiener refuses to step down.

It seems that Europe once again shot its last bullet a few days too early (to use a more polite phrasing than the alternative) with the announcement from last week that the Greek bailout was a done deal. As we speculated, various complications will soon emerge for anyone who cares to read the fine print in the bond indentures which preclude the imposition of Collective Action Clauses, thereby making an enforcement of a "voluntary" maturity extension problematic if anything. Below we present an article that appeared in Handelsblatt in the last hour, which indicates that opposition to the rescue has emerged not only from Slovakia, but from the UK as well. The English is about as garbled as possible thanks to Google translate, but oddly enough far more understandable than the periodic soundbites of outright lies from the pathological troica of Rehn-Junker-Trichet.

"Isn't it pretty obvious that Groupon is a massive Ponzi scheme?--Jose Ferreira (Knewton Blog)

Comparing ES to the broader RISK basket discussed extensively previously, it appears that following several days of decoupling of the S&P contract to broader risk, today we saw the opposite, when around 1 pm the two series diverged and never looked back. The selling pressure was certainly focused on stocks, led by financials and energy stocks. The shift to defensives is becoming palpable: following our pair trade advice to retrench into consumer staples and utilities while shorting discretionary and industrials (better known as the QE Unwind trade) would have returned almost 4% since inception on May 16.

Throughout most of 2009-early 2011, any and all bad news regarding the US economy was perceived as positive for stocks due to traders’ belief that a weak economy would mean more money printing from the US Federal Reserve. That situation now appears to have changed. The last two months have seen big misses on virtually every economic data point: the PMI, ISM, Housing, etc. However, rather than rallying, stocks have dropped nearly 5%, taking out numerous lines of support.

It's one thing for the EU to vote on a rescue plan for Greece that bounds the population into lives of servitude to pay off Central Bank loans but quite another to get the people to accept it.

Now that both the early April swing support of 1283.75, which also happens to be the 150 DMA, have been taken out, the next support in the market is the 200 DMA, which is also the post-Fukushima March lows. A breach of that level would mean the market goes negative for the year. As a reminder: the next 30 minutes are NYSE circuit breaker coffee break time.

It appears Jean-Claude Jun(c)ker has been sniffing hallucinogenic Spanish cucumbers again:

• JUNCKER SAYS EURO OVERVALUED VS OTHER MAJOR CURRENCIES
• JUNCKER SAYS EURO AREA SHOULD HAVE EXCHANGE-RATE POLICY

The tautological question of whether he is lying we leave to the logicians. What is apparent is that Europe is finally getting pissed they are dead last in the FX race to the bottom. Cue Tim Geithner's strong dollar policy.

And in far more important news, Greece's G-Pap says that he is willing to consider a referendum on the Greek bailout measures. If so, it's goodbye EUR: a referendum has a snowball's chance in a Comcast business channel in passing.

Presented without commentary (well, we'll say one thing: for QE3 to work, it would have to be a surprise... so much for that).