Archive - Dec 28, 2012

While the US is caught in a rancorous debate over allowing the government to define just what was and wasn't meant by the Second amendment, and how best to limit it and give the government even more powers, China is more focused on its version of the First. Because on Wednesday we reported that in its attempt to make the Internet "healthier, more cultured and safer" and to curb what Chinese regulators dub "rumors and vulgarity" it would pass a law making internet anonymity impossible. Sure enough, said proposal has now been enacted into law, which just happens to also ensure that the First amendment is never an issue China has to worry about. Per Reuters: "China unveiled tighter Internet controls on Friday, legalizing the deletion of posts or pages which are deemed to contain "illegal" information and requiring service providers to hand over such information to the authorities for punishment. The rules signal that the new leadership headed by Communist Party chief Xi Jinping will continue muzzling the often scathing, raucous online chatter in a country where the Internet offers a rare opportunity for debate." So much for reform. And so much for a democratic definition of what constitutes "illegal" information. But fear not: like in China, once the various US amendments start seeing encroaching government "redefinition" ultimately they it will be the First's turn. Alas, by then it will be too late: any complaints will by then be deemed "illegal" too.

Did you hear me yesterday...or do I need to say it again.  Buy the dip in US Treasuries..it is the only way.

• Lawmakers, Obama in last chance talks on "fiscal cliff" (Reuters)
• Obama Summons Congress Leaders as Budget Deadline Nears (BBG)
• Hopes for fiscal cliff deal fade  (FT)
• Iran starts navy drills in Strait of Hormuz (Reuters)
• Looming Port Strike Deadline Pressures Obama to Intervene (BBG)
• Home Depot to Lowe’s Busiest Season Threatened by Strike (BBG)
• 'Whale' Capsized Banks' Rule Effort (WSJ)
• China tightens Internet controls, legalizes post deletion (Reuters)
• Goldman Sachs Buying Japan’s Exporters on Abe Policy Bets (BBG) and preparing one Goldman alumnus to take over the BOJ
• IPOs Slump to Lowest Level Since Financial Crisis After Facebook (BBG)
• Blackstone seen sticking with SAC despite insider trading probe (Reuters) - what a shock
• Mistry at Tata Helm as Investors Query $500 Billion Goal (BBG)
• High-Speed Traders Race to Fend Off Regulators (WSJ)

We could say that news is actually relevant or matters in this "market" but we would be lying, just as we would be lying if we said that this market has not become so utterly predictable, with yesterday's late day market surge - on yet another ridiculous catalyst - visible from so far away, it was almost painful to watch it take place in real time. Sure enough, futures are now sliding back, and giving back much of yesterday's gains - but don't worry, in a day full of even more meetings and flashing red headlines, at least some combination of carefully phrased MSM words will set off today's algo-driven buying frenzy, guaranteeing yet another "retail investor" decides they have had it with this farcical "free market" casino for ever.

The relatively calm foreign exchange market and equity market in Asia ended abruptly in Europe. It is difficult to find the culprit, other than position squaring in thin markets, but the euro has come off a cent, dragging the franc. The MSCI Asia Pacific Index gained more than 0.5%, while European bourses are broadly lower, with the Dow Jones Stoxcx 600 off 0.3% near midday in London, led by utilities and financials. Fixed income markets are subdued. Italy's bond auction was adequately received, especially holiday conditions. There have been a few developments to note. First Japan's data was disappointing and this can only bolster the new government's attempt to stimulate the economy both monetarily and fiscally. Worker cash earnings fell a whopping 1.1% in November, nearly three times larger than the consensus. This may have been a factor behind the poor retail sales, which were flat. The consensus had expected a 0.4% increase. Weak incomes and domestic demand may have, in turn, weighed on output. In November, industrial production fell 1.7%, more than three times the decline expected.