Archive - Oct 9, 2012

Couldn't happen to a nicer crony capitalist's favorite stock:

• U.S. FILES CIVIL MORTGAGE FRAUD SUIT AGAINST WELLS FARGO
• U.S. CLAIMS WELLS FARGO FALSELY CERTIFIED FHA LOANS
• GOVERNMENT SEEKS DAMAGES AND PENALTIES FOR RECKLESS LOANS
• FHA FORCED TO PAY `HUNDREDS OF MILLIONS' FOR DEFAULTED LOANS

Well, Charlie: "Suck it in" (even more than just the recent epic collapse of BYD of course). As for Wells, sorry Warren, but just like gold, you can't really fondle that stock certificate, held by DTCC in proxy, either.

A few days after the Fed launched QEternity we posted a roadmap for the post-QE track that Oil prices have mysteriously followed. We are now T+20 days from QEternity which corresponds to the post-QE trough based on the average of QE1 and QE2. What is fascinating about the following chart is just how closely the price of WTI crude has tracked the average path post-QE that we laid out three weeks ago. Is this the short-term lows? Who knows, but it seems that the divergence between WTI and Brent is narrowing with WTI playing catch up...

One of the most successful con jobs in the history of the world has been the concept of unbacked paper currency… or fiat money. Over the last 100-years or so, governments have been able to convince people that their pieces of paper, backed by nothing but promises, actually have ‘value’. This seems truly bizarre when you think about it. Governments tend to be untrusted, serial failures. Yet people readily accept their guarantees the world over. As such, it’s high time for creative, thinking people to consider their options and start trading their pieces of paper for something of value.

Much of Southern Europe is in a deep recession, and Greece is an unnecessary distraction.

"This could be Heaven or this could be Hell."--Hotel California

Gallup just announced the results of their latest poll and find Romney has overtaken Obama 49% to 47% among 'Likely Voters'. Obama still holds the lead among 'Registered voters' but this headline was enough to cause a dramatic crash (back under 60%) in Obama's odds on Intrade's market. Critically, the entire post-QEternity bump that Obama-believers had bought, has now been retraced as it seems the old adage "As Goes AAPL, So Goes Obama" is proving true...

Was the trip a terrible plan, or one that achieved the desired objectives?

And we would have gotten away with it too if it weren't for those pesky Zero Hedger's

The fallout in the aftermath of last week's infamous tweet by Jack Welch in which he dares to accuse the BLS of manipulating labor data (the same BLS which has already been purposefully caught leaking data, but never actually caught red handed manipulating it: after all things like these don't happen, Liborgate notwithstanding), something which it did (although the one thing that nobody dares to say is "why" because if suddenly it becomes clear that if this most critical of economic indicators is fudged, then every other one must be) has begun. Moments ago, in response to perceived political badgering by Fortune and Reuters, Jack Welch, the CEO of Chairman of GE from 1981 to 2001, just after the company's stock peaked at $593 billion, the outspoken critic of Obama has decided to sever ties with both the CNN-controlled publication and with the Thomson Reuters organization, and instead going forward will use the WSJ as a platform. What drove Welch over the edge is the now traditional media response of attacking the person instead of the argument whenever the status quo is threatened, in this case predicated by articles by both Fortune and Reuters.

Recession drives contingent liabilities into present liabilities quickly and with force and the cattle are now out of control and the stampede has begun. For those of you perhaps wishing for and certainly waiting for some type of “Lehman Moment” to flee; you may find it soon. The danger has always been that Europe will believe its own stuff and then make judgments based upon it and if this turns out to be the case then the decisions will be wrong and the consequences horrific.

While hardly a crash, today's AAPL driven market swoon is certainly not the stuff centrally-planned market confidence is built on (not to mention yet another day of various abnormal stock trading patterns in some of the more retail-heavy held stocks which will hardly break the pattern of domestic capital flowing out of equities and into bonds). And as we have seen in the past two weeks, when even green days have resulted in the infamous "market conditions" clause being triggered for companies attempting to sell equity or raise debt, today's red day, assuming of course, the fat pipe between Citadel and the FRBNY is not unclogged for the last hour of trading ramp, may mean that a surge of "market conditional" excuses by companies and underwriters is imminent. The reason: as the WSJ reports there are no less than 10 IPOs in the next 3 days. Should today's market tone persist into the close, we would be very surprised if even half of these price in a market in which the primary market bid disappears on even a -0.01% close.

Many times what "should" happen does not happen. For example, global stock markets "should" decline as the global economy free-falls into recession, as global recession is not exactly an ideal scenario for rising corporate sales and profits or demand for commodities. Yet global markets are by and large rising significantly. Sometimes what "should" happen is simply being delayed. In other cases, some other dynamic is at work. Stock market bulls, for example, say the "other dynamic" is global money-printing by central banks, and this "easing" will power stocks higher even as sales and profits sag. Analysts who believe fundamentals eventually over-ride monetary manipulation believe the stock market decline has only been delayed, not banished. A similar tug-of-war is playing out between those who feel the U.S. dollar "should" decline in the years ahead and those who see the dollar strengthening significantly.

Key take-aways from today were: The IMF is gloomy, so is Draghi. Banking Union is months away. ESM and OMT ready to go, but no one wants that first dance. Spain is analyzing.

Oh, and an iPhone is just that. A phone.

Nothing new, nowhere.

Didn't get fooled again yesterday, but still facing denial today...

This post is to address all of the #fanbois & rose colored #iPhone5 investors who spread FED (oops, I mean FUD) regarding my views & accuracy on Apple. Well, the facts simply speak for themselves - and they're starting to get rather loud! Read on...

While the recent revelations of multi-year LIBOR manipulation (but, but how was that possible: it involved thousands of people, operating for years, manipulating numbers - all the traditional reasons presented against conspiracy theory crackpots alleging that manipulation may be going on here, or there, or at the BLS, or somewhere), which we had said had been happening for the past 3 years, confirmed that the entire rate-based derivative market was a giant scam, at least one market spared from cartel whistleblower, i.e., insider, humiliation, was the commodities market. No longer. As the FT first reported, a Swiss trading office of Total Oil Trading sent a response letter to IOSCO (the International Organization of Securities Commissions), alleging that the same kinds of market "pricing" shennanigans that have been now exposed to have taken place over bottles of Bollinger, may have been pervasive in the crude market as well.