Archive - Jan 12, 2012
Large Bank Earnings or Why BAC Went to $4
Submitted by rcwhalen on 01/12/2012 22:41 -0500Analyst surveys have now risen to the level of fact, as we all know. Thus Bloomberg and other news outlets feature detailed reports about the opinions of the Sell Side community as though these musings were burned into stone tablets with the fire of the Holy Spirit.
Guest Post: Why QE3 Won't Help "Average Joe"
Submitted by Tyler Durden on 01/12/2012 21:24 -0500
Are the markets already front running a potential announcement of a third round of Quantitative Easing (QE 3)? Maybe so. We had expected QE3 at the end of last summer as the economy weakened substantially from the impact of the Japanese earthquake/debt ceiling debate/Eurozone crisis trifecta. However, with political pressures running high due to the raging battle in Congress raising the debt ceiling there was little support from the public for further intervention. Furthermore, with inflation, as measured by CPI, already outside of the Fed's comfort zone, the Fed opted to institute "Operation Twist" (O.T.) instead. With the Euro-Crisis on the broiler, another debt ceiling debate approaching, the U.S. economy struggling along as Europe slips into a recession and corporate earnings being revised down there are plenty of reasons for stocks to decline in price. Yet, they have continued to inch up. With short interest on stocks having plunged in recent weeks it certainly sounds like the markets are betting on something happening and soon.
Foreigners Sell Record $85 Billion In Treasurys In 6 Consecutive Weeks - Time To Get Concerned?
Submitted by Tyler Durden on 01/12/2012 20:35 -0500
Last week, when we pointed out what was then a record $77 billion in Treasury sales from the Fed's custody account, in addition to noting the patently obvious, namely that contrary to what one hears in the media, foreigners are offloading US paper hand over first, there was this little tidbit: "The question is what they are converting the USD into, and how much longer will the go on for: the last thing the US can afford is a wholesale dumping of its Treasurys. Because as the chart below vividly demonstrates, the traditional diagonal rise in foreign holdings of US paper has not only pleateaued, but it is in fact declining: a first in the history of the post-globalization world." Well as of today's H.4.1 update, the outflow has increased by yet another $8 billion to a new all time record of $85 billion, in 6 consecutive weeks, which is also tied for the longest consecutive period of outflows from the Fed's Custody account ever. This week's sale brings the total notional of Treasurys in the Custody account to just $2.66 trillion (down from a record $2.75 trillion) and the same as April of last year. And since the sellers are countries who have traditionally constantly recycled their trade surplus into US paper, this is quite a distrubing development. So while the elephant in the room could have been ignored 4, 3 and 2 weeks ago, it is getting increasingly more difficult to do so at this point, especially with US bond auctions mysteriously pricing at record low yields month after month. But at least the mass dump in Treasurys explains the $100 swing higher in gold in the past month.
Good news from Treasury! Tax-Payer’s Bank Ramps Up Assets
Submitted by Bruce Krasting on 01/12/2012 18:50 -0500Where black is white and white is black.
Germany Is Just Buying For Time… More Bailout Funds Aren’t Coming
Submitted by Phoenix Capital Research on 01/12/2012 18:36 -0500The EU, in its current form, is most certainly in its final chapter as both the political environment and market conditions have rendered all proposed “solutions” to the crisis moot.
Eric Sprott: "The Financial System Is A Farce"
Submitted by Tyler Durden on 01/12/2012 17:02 -0500- Central Banks
- China
- Commodity Futures Trading Commission
- Davis Polk
- Eric Sprott
- European Central Bank
- Eurozone
- goldman sachs
- Goldman Sachs
- LTRO
- Meltdown
- MF Global
- None
- Precious Metals
- President Obama
- Reuters
- Securities Industry and Financial Markets Association
- SIFMA
- Sovereign Debt
- Wall Street Journal
2011 was a merry-go-round of more bailouts, more deferrals and more denial. Everyone is tired of the Eurozone. It’s not fixable. There’s too much debt. The politicians don’t know what’s going on. Nothing has structurally changed. We’re still on the wrong path. There’s more global debt than there was a year ago, and it’s the same old song: extend and pretend, extend and pretend,… around and around we go,… and it isn’t fun anymore. Just as we wrote back in October 2007, and again in September 2008, we feel compelled to state the obvious: that the financial system is a farce. It’s a complete, cyclical farce that defies all efforts to right itself. This past year continued the farcical tradition with some notable scandals, deferrals and interventions that underscored the system’s continuing addiction to government interference. With the glaring exception of US Treasuries and the US dollar (which are admittedly two of our least favourite asset classes), it was not a year that rewarded stock picking or safe-haven assets. Many developments during the year bordered on the ridiculous, and despite some positive news out of the US, we saw little to test our bearish view. If anything, our view was continually re-affirmed.
David Rosenberg Shares The "Lament Of A Bear"
Submitted by Tyler Durden on 01/12/2012 16:47 -0500Yesterday, in a must read post, Gluskin Sheff's David Rosenberg played the devil's advocate and presented a much needed experiment in contrarianism, attempting to unravel what it is that bulls may be seeing in the economy and the market (an analysis which may have to be revised after today's pro forma 400K in initial claims and deplorable retail sales update). While we don't know if anyone was converted into the permabullish fold as a result, it certainly was useful to have a view of what "sliding down the wall of satisfaction" means currently . Today, Rosie is back to his traditional skeptical self with today's publication of the "Laments of a Bear", which is yet another must read inverse view of everything that yesterday was not. Our advise to readers: be aware of both sides of the argument and make up your own mind. Plus at the end of the day the only thing that really matters is what side of the bed Bernanke wakes up on...
RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 12/01/12
Submitted by RANSquawk Video on 01/12/2012 16:41 -0500Credit Outperforms Stocks As Asset Correlations Deteriorate Further
Submitted by Tyler Durden on 01/12/2012 16:28 -0500
Thanks to disappointing macro data early on and better-than-expected European auctions (and ECB not cutting), the EUR went bid early on, accelerate after the Europe close, and stayed that way for most of the day (EURUSD squeeze? or ES-EUR convergence?) ending a one-week highs. Credit markets gapped tighter around their open (thanks to Europe's early strength) but leaked back as the morning wore on. Stocks underperformed credit overall as IG and HY credit rallied into the European close and held gains - while HYG (the high yield bond ETF) significantly underperformed on the day (compressing its NAV premium further despite a modest late day pullback) which should be mildly concerning for bulls (given the size of flows and momentum behind it recently). ES (the e-mini S&P futures contract) converged with VWAP and CONTEXT around lunch then pulled higher into the close managing to tag the day-session open but broad risk-drivers did not participate so much (and we saw higher average trade size volume come in covering at the close). Oil is down 2.6% on the week (sub $99) seeing its biggest 2-day drop in a month and while Gold and Silver leaked lower from midday highs, Copper managed to hold onto its gains (now up over 6% on the week). Volume ended about average for the year in NYSE stocks and ES (though still well down from December).
Thrilling Thursday - Clackety Clack, Don't Look Back
Submitted by ilene on 01/12/2012 15:53 -0500This is very likely the time to be fearful when others are greedy.
Why Do Zombie Banks Hate Writing Off Bad Loans? Jonathan Weil Explains
Submitted by Tyler Durden on 01/12/2012 15:43 -0500Wonder why all bank earnings over the past 3 years are fake? Wonder why few if any banks ever dare to take major write offs and represent the true nature of their financials? Wonder no longer: Bloomberg's Jonathan Weil explains.
Obama Sends Request To Congress For $1.2 Trillion Debt Ceiling Increase
Submitted by Tyler Durden on 01/12/2012 15:09 -0500Update:
- HOUSE TO VOTE JAN. 18 ON OBAMA'S DEBT-LIMIT INCREASE REQUEST
Two days ago we wondered how long it would take for Obama to restart the debt ceiling theater. Not that long it turns out.
- OBAMA SENDS CONGRESS REQUEST TO RAISE DEBT CEILING
- OBAMA NOTIFICATION STARTS 15-DAY CLOCK FOR CONGRESS TO VOTE
So with Congress in recess, will Obama succeed in passing another automatic vote using base trickery? The same Obama, who as recently as 3 hours ago warned Congress that any attempts to pass approval on the Keystone Pipeline without his involvement are "counterproductive"... In other news, America' new debt ceiling of $16.3 trillion, or 107% of GDP is now just a formality, about to be interrupted by a little circus clowning.
MF GLOBAL 4-1-9
Submitted by williambanzai7 on 01/12/2012 14:39 -0500URGENT MESSAGE: I am Dr. Bakare Tunde Obama III, the cousin of Nigerian Astronaut, Barrister Jon Corzine...
The West Blinks - Iran Embargo Likely To Be Delayed By Six Months
Submitted by Tyler Durden on 01/12/2012 14:12 -0500
UPDATE: Oil Sub $100.
And so the escalation ends, if only for the time being, as Iran chalks a (Pyrrhic?) victory.
- EU IRAN OIL EMBARGO SAID TO BE LIKELY DELAYED BY SIX MONTHS
Why? Because the world slowly realized that the potential surge in oil prices would tip a world already on the verge of a recession even deeper into economic contraction. Not rocket science, but certainly something the US president apparently has been unable to comprehend, especially if hoping that he would merely transfer exports from Iran to his close ally Saudi Arabia which would cement its European market monopoly even further. Or, perhaps, someone just explained to Obama that Embargo in January + QE3 in March = No Reelection...
In other news, crude is now dumping.
Guest Post: Dear U.S.A.: Your Account Is Overdrawn
Submitted by Tyler Durden on 01/12/2012 13:54 -0500Dear U.S.A.--your overdraft protection is about to be pulled.
Dear United States of America: We regret to inform you that your withdrawals exceeded your deposits last year by $1,600,000,000,000 ($1.6 trillion), including your "supplemental appropriations" spending.
Your account does have an overdraft protection, and so bonds were sold to cover your $1.6 trillion overdraft. While we value your business, we feel obligated to remind you that this is the third year that your overdraft protection exceeded 10% of your gross national product (GDP), and it seems your account is on course to register yet another $1.6 trillion overdraft in fiscal year 2012.
Currently, your overdraft account exceeds your GDP of $15 trillion.








