Archive - 2011

I can't help wondering if Ben Bernanke can even read. I realize that sounds harsh, but how on earth can he claim inflation is under control? I mean, does this guy even bother reading anymore? He’s an academic right? Isn’t his entire job supposed to consist of reading and thinking?

As we predicted in September, the US, which is issuing debt at a clip of about $125-150 billion per month (in line with the Fed's monetization of every single newly printed dollar of debt), will likely hit its debt ceiling as soon as March. We finally get confirmation from none other than tax expert Tim Geithner, who in continuing his tirade of scaring the bejesus out of anyone dumb enough to listen to him , has just confirmed our concerns. Not only that, but he has also written a letter to Dear Mr. Leader Harry Reid in which he uses big and scary words to make it clear just how fucked this country is if it can not issue about $2 trillion in debt each and every year. Because the only way to avoid bankruptcy is, as Joe Biden once said, to issue way more debt.

Just out on Reuters, which notes that Tiny "TurboTax" Tim Geither says hitting the debt limit could have catastrophic economic consequences, potentially worse than impact of 2008-09 financial crisis. Bold/underline ours. Expect much more threats of total and complete annihilation unless the dumbest guys in the room get what they want.

Want to make a killing in a companies manufacturing a paint that will turn your home into an energy source? How about diet pills made out of stem cells? How to turn $12k into $1.65 million trading from your dorm room. Cashing in on short opportunities in the penny stock market. An exclusive interview with penny stock trader Tim Sykes on Hedge Fund Radio.

... That's what some model (quite possibly from Ford or Wilhelmina) in Barclay's FX department predicts tomorrow's NFP number will be. And just in case the first number is wrong, basedon what can only be attributed to Barcap borrowing Birinyi's ruler, the firm says there is a 95% confidence interval that the actual number will come at 450,000. And there's your whisper number. .

It is a good thing that America has a functioning, objective and analytical media, as otherwise we might need David Rosenberg to point out that one of the key factors for the avoidance of the technical double dip was a completely unexpected number fudge courtesy of the Commerce Department which, at the most crucial stage in the economy's conversion into a re-recession, miraculously "found" $46.3 billion in personal income that "the consumer thought wasn't there before." In other words, the government literally pulled a number out of thin air which created a relative sequential boost to the economy, even though it was just a non-recurring accounting adjustment to continuous numbers and should have been completely ignored! By then it was too late (very much in the same way that the BLS has had 44 out of 52 adverse data revisions after the data has been reported, when it is too late for its to impact asset prices): it set off a chain of events which resulted in a jump in ISM, diffusion and various other indices (not to mention the BLS endless data adjustment) which caused a last second avoidance of the double dip becoming official. Oh and the Fed's QE2 did not hurt either...

Either someone in China is pumping out 100 capesize ships every single day, and doing their best to push charter rates to just below zero, or, gasp, transpacific trade is really falling off a cliff (i.e., Chinese inventory accumulation has been put on hold). Of course, if it is the second, we will know in February when China reports its January trade surplus (and the US respectively reports its trade deficit). Should the gross imports and exports number plunge, it may confirm that the BDIY which is only mentioned by the MSM when rising, and ignored when plunging, may actually be relevant. And speaking of plunging, today it dropped for the third consecutive day by more than 4%, hitting 1,544, a 4.8% drop overnight, and the lowest number since April 2009.

The seasonal adjustment in the last week's sub 400k initial claims is starting to water out, and the resulting jump in initial claims from 388K to 409K was to be expected. Of course, last week's 388K was revised as always to a worse reading of 391K. More importantly, as we have been noticing for the past 3-4 weeks, the Unadjusted claims continue to surge, and in the last week jumped by 52k to 577,279, nearly 170k more than the Seasonally Adjusted number. Those on continuing claims declined from 4,150,000 to 4,103,000 even as the NSA number again surged from 4,116,779 to 4,390,661. Lastly, those on extended claims were a wash as those on EUCs dropped by 134K while those on extended claims jumped by 110K.

Once upon a midnight dreary, while insolvent weak and weary...

• Foreclosures May Be Undone by State Ruling on Mortgage Transfer (Bloomberg)
• As expected, retail sales miss blamed on snow, although how icy conditions are preventing web surfing is beyond us: December retail sales dented by blizzard, frugality (Reuters)
• Boehner Vows to Cut Size of Government (FT)
• If at first you don't succeed... Obama renominates MIT economist Diamond for Fed Board (Reuters)
• PBOC Extending Biggest Cash Crunch Since Lehman (Bloomberg)
• Just a little more inflation: Coking Coal Contract Price May Rise 33% on Australian Floods (Bloomberg)
• Andy Xie: This year may start out looking like the last, dipping down later and then resurfacing with hope. (MarketWatch)
• Yes, banks really are doing everything they can to restore shadow banking: JP Morgan Markets Its Latest Doomsday Machine (or Why Repo May Blow Up the Financial System Again) (Naked Capitalism)
• BofA Introduces Fees to Replace Debit-Card, Overdraft Charges (Bloomberg) - we are confident Elizabeth Warren will have a lot to say about this...hopefully she has something to do as well
• Fed Should Stop Buying Bonds; It Is Falling Far Behind the Economy (David Malpass)

If you are not worried about the recent explosion in mass deaths of animal in "isolated" locations, you may be after seeing this map presenting the pan-global graveyeard of inexplicable mass deaths, which far from isolated, are literally taking the world by storm. Did the Mayans forget to carry the zero?

News again refuses to register, as reverse decoupling is the only relevant metric in the world: the US will pull the world out of its doldrums, and that's all that matters. That economic "growth" may actually mean the end of QE and the elimination of about 300 S&P point purchased via Brian Sack, is completely ignored.

The one man in finance, who after Buffett and Munger is way overdue for retirement, Blackstone's Byron Wien who at 77 is only made relevant once a year with his atrocious following year forecast, which due to its ongoing track record of being right approximately on zero out of ten predictions, provides Wall Street with an annual bout of uncontrollable laughter. So far this has been an innocuous exercise in worthlessness, but not any more. According to Bloomberg, Wien's latest forecast may have so infuriated the New York pension system that they may no longer invest money with Blackstone. "The New York City Comptroller’s office backed out of a scheduled meeting with Blackstone Group LP and trustees for the city pension funds who want the firm to repudiate chief strategist Byron Wien’s statement that public- employee retirement benefits are too high." The reason: "Last January, Wien, 77, said in his annual forecast that taxpayers 'literally can’t afford the benefits we have given our retirees in state and local governments and we have to change that.'" The result: New York State pension administrators are not amused.

Following this morning’s Monster Employment Index, we have claims, retail chain stores, and the Fed’s balance sheet. Speaking of the latter, there is $6-8 billion in 1/31/2015 – 6/30/2016 bonds to be monetized, which means futures are already levitating.

That whole reverse decoupling meme, where the US is supposed to bail out the world (courtesy of a "stimulative" payroll tax cut of all things) better work soon, cause after an insolvent Eurozone, and a tightening China where the interbank lending market is all but dead, now we get a UK PMI index which plunged from 53 to 49.7 (on expectations of 53). This was the lowest print in the index since April 2009. And confirming the trend that every single diffusion and manufacturing index in the US has been warning about, is that corporate input costs surged to the highest since September 2008 as average cost inflation accelerated markedly in December. Following in the footsteps of Walmart, Tesco will likely start selling 49 ounce coffee in 33 ounce coffee containers next (at the same price of course), hoping nobody will notice.