Archive - 2012

January 5th

Tyler Durden's picture

Holiday Week Gasoline Demand Plunges To Lowest On Record





While Americans were purchasing stuff they don't need with money they don't have to impress people they don't like in the holiday week (but making sure to keep those tags off - you don't get record gift returns if you damage the product or rip the tags off), it appears they did so by walking everywhere. Either that or when it comes to determining real consumer purchasing power, the real answer lies at the pump. According to MasterCard, U.S. gasoline demand sank 14 percent from the prior week to the lowest level in more than seven years of records, as reported by Bloomberg. "Drivers bought 8.16 million barrels a day of gasoline in the week ended Dec. 30, down from 9.46 million the week before, according to MasterCard’s SpendingPulse report. MasterCard’s data goes back to July 2004." So we have just had the lowest gas demand week on record, and that's with gas still at relatively low prices considering what has happened with WTI. One wonders what will happen to end demand when prices finally trickle through. Or perhaps this is all just the central planners' insidious plan to get everyone in America to buy Government Motors magically exploding electrical fire hazard bumper cars? The people demand to know.

 

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Guest Post: Iran & the Strait of Hormuz: Bad Bluff or Good Gamble?





Was Iran born to bluff, or is it really much closer to building a nuclear weapon than anyone really knows? Now that the Islamic Republic has made its intentions clear, one has to assume that it has given away a certain measure of strategic surprise. If it really wants to get the most that it could – militarily – from an attack on tankers moving through Hormuz, it should have never even raised it as a possibility. By discussing it, we figure Iran has given the US “notice” that it might not have had in the event of an attack from the blue. Weren’t the maneuvers in the Straits (by Iran) enough to raise the question without raising alert conditions from the West and from Israel?

 

Tyler Durden's picture

SNB's Hildebrand Defends Himself From Insider Trading Accusations, Says Will Remain Head Of SNB





The head of the SNB Philipp Hildebrand has released his first public remarks over the allegation that he, his wife, or his daughter (it is still not quite clear just who frontran the Swiss Bank) profited massively by trading the CHF ahead of the SNB currency floow announcement. Below is a summary of his statement via Reuters and Bloomberg.

 

Tyler Durden's picture

I'll Hold Yours If You Hold Mine: The Italian Ponzi Comes Home





So, according to this, Mediobanca is the largest shareholder of UniCredit.  I guess it could be custodial, but does explain why they are part of the underwriting group that backstopped the deal. At the risk of making a mountain out of a mole hill, Unicredit is the largest holder of Mediobanca (8.7% according to Bloomberg). Remember when CDO's all bought each other's BBB and BB tranches, because no one else would?

 

Tyler Durden's picture

European Deathwish Exposed: Greek Bailout Package Delayed By Three Months





Looks like Europe plans (and we use the term very loosely) on pushing its fate literally to the wire. Yesterday we explained why for Greece March is D(eadline)-Day, and as Greece itself stated, absent bailout cash coming in, it is game over: for Greece, for the Eurozone, and for Europe as the serial chain of defaults and exits begins. Which is why we read with great surprise minutes ago that according to the European Commission, the entire Greek bailout package has been delayed by three months because of delays in payouts of the 2011 tranche! Naturally this is supposed to have the optics of punishing Greece for doing absolutely nothing to fix its fiscal situation but all it will do is send the market (the European one that is - America is still stuck in some idiotic limbo where it fools itself that it can exist in isolation from the world's biggest economy) even more into Risk Off mode, as the world will be forced to wait until the 11th hour and 59th minute to find out if the Euro and Eurozone will survive for a few more months. In the meantime, Mario Monti is off to Brussels to satisfy an unscheduled craving for Belgian beer and chocolate, or something.

 

Tyler Durden's picture

EURUSD Dips Below 1.28 As All Hell Breaks Loose In Italian Financials





Much to the chagrin of the US Department of Mass Disinformation, the market has completely ignored the ridiculous ADP data, and has focused squarely on what is happening in Milan where the serial halting of bank trading has resumed. Following the 4th unhalt of UniCredit, its stock is now down 15% on the day as it scrambles to catch up to the fair value represented yesterday courtesy of the rights offering to be about 43% below the market price. As a result while the robotic decoupling in the US continues, as somehow America is supposed to be able to import and export from and to itself and completely ignore that it has about $3 trillion in European bank exposure, the EURUSD has just dipped to below 1.28 for the first time in over a year. Lastly, not helping things is the already noted implosion of refiner Petroplus which just announced that access to all of its credit lines has been suspended, sending the stock down 20%. Looks like it will be a long, cold winter for Europe even as the US decouples to a Dow 36,000 mushroom cloud.

 

Tyler Durden's picture

Seasonal Adjustment Pushes Initial Claims Below Expectations At Least Until Next Week's Revision





That this week's consensus "beat" of 375K initial claims will be revised to a miss next week is irrelevant - all that maters in a job election year is to fudge the numbers. Which is why the fact that "only" 372K initial claims were filed in the last week of 2011, even as thousands of bankers were being laid off, is all that matters. Of course, last week's revision was as always higher, from 381k to 387k, which means that next week, the beat of consensus will become a miss, but by then who will care - there will be another fake and soon-to-be-revised number to fixate on and push futures even higher from fair value. And confirming that it is all in the seasonal adjustment, is the observation that while SA claims improved by 15K, Not Seasonally Adjusted they increased by +37,423 hitting 535,112. In other words a 3K job difference to consensus is due to a statistical smoothing adjustment based on BLS data integrity.

 

Tyler Durden's picture

ADP Private Payroll Comes 8 Standard Deviations Above Estimate





The US economic "indicators" have once again entered the magic unicorn-cum-Department of Truth zone as if to prove to China that when it comes to data fudging the US really can be unparalleled. The just released December ADP private payrolls jobs, which has been completely uncorrelated to the NFP for the past several years (R squared of 0.003), came at a ridiculous 325,000 jobs on consensus of 177,000 private jobs. As a reminder this is a carbon copy replica of what happened in December 2010 when ADP soared and the NFP disappointed materially. But all is fair in love and robotic kneejerk reaction stimulation: ES +5 points on this latest ridiculous datapoint. Oh, and proving the "validity" of the data is that the number was about 8 standard deviations above consensus - aka statistical noise.

 

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Hungarian Yields Soar, CDS Hits Record As Bill Auction Fails





Less than a week after a fully failed 3 Year Hungarian bond auction (in which all bids were rejected by the government) sent Hungarian yields surging on December 29, things have gone from bad to worse culminating with today's 1 Year Bill auction which sold just HUF 35 billion ($140 million) in 1 year bills at a staggering 9.96%, a surge of over 2% compared to the yield for the same maturity debt sold just on December 22. To say that this is unsustainable is an understatement. Alas, with the IMF and EU out of the bailout picture following Hungary's refusal to yield to demands to make its central bank a puppet of the state, ironically categorized by Europe as concerns of central bank "independence" it is likely that Hungary will see far more pain in the coming days as the ECB is certainly not going to be buying Hungarian debt - after all it has its hands full already with those other collapsing Eurozone countries. And punctuating the new year comfort are Hungarian CDS levels which just soared to new records over 750 bps. It is only a matter of time before ISDA decrees that any and every Hungarian default event will be fully voluntary thereby collapsing this latest default protection house of cards.

 

Tyler Durden's picture

Frontrunning: January 5





  • ECB Cash Averts ‘Funding Crisis’ for Italy, Spain (Bloomberg)
  • Bailout talks in Greece ‘crucial’, Premier says (WSJ)
  • Spain sees €50bn of new bank provisions (FT)
  • Fed says expand Fannie, Freddie role to aid housing (Reuters)
  • France’s Borrowing Costs Rise at Bond Sale (Bloomberg)
  • Europe worries linger after French auction (Reuters)
  • PBOC Suspends Bill Sale as Money Rates Rise Before Holiday (Bloomberg)
  • Turkey warns against Shi'ite-Sunni Cold War (Reuters)
  • New capital rules for banks ‘delayed to 2H’(China Daily)
 

Tyler Durden's picture

Euro, Iran and Asian New Year Buying Fuels Gold





Gold's fifth day of price rises is the longest rally we've seen in two months. Concerns about the solvency of European banks and sovereigns is overcoming the 'risk on' appetite of late 2011 and early 2012. The euro has fallen to 1.2840 USD and to €1,256/oz. Growing tensions with Iran including the European Union's preliminary agreement to ban Iranian oil, will fuel gold's  safe haven status for investors. Gold is trying to consolidate above psychological levels of $1,600/oz, £1,000 and €1,200/oz. The 200 day moving average is $1,631.60 which remains resistance. The intraday high hit $1,624.66, was gold's highest price since December 21. We expect gold demand to pick up ahead of the Chinese Lunar New Year, The Year of the Dragon, which begins on January 23.

 

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French Auction Fails To Sell Max Projected As Bid-To-Cover Plunges





UPDATE: EURUSD is moving to new lows for the day now at 1.2831

French 10Y bond spreads had widened almost 50% (from 100bps to 149bps) in the last week of trading ahead of this critical auction and the EURUSD is over 200pips lower. The auction results are in and it is not a total disaster but the bid-to-cover dropped significantly to its lowest since October 2010 and they missed their maximum target.

  • *FRANCE SELLS TOTAL EU7.963B VS MAX TARGET EU8B OF BONDS
  • *FRANCE SELLS EUR4.02 BLN 3.25% 2021 BONDS; YLD 3.29%
  • *FRANCE SELLS EUR690 MLN 4.25% 2023 BONDS; YLD 3.5%
  • *FRANCE SELLS EUR1.088 BLN 4.75% 2035 BONDS; YLD 3.96%
  • *FRANCE SELLS EUR2.165 BLN 4.5% 2041 BONDS; YLD 3.97%
  • *FRANCE SELLS 2021 BONDS AT AVE. YIELD 3.29% VS 3.18% DEC. 1
  • *FRANCE 2041 BOND BID-TO-COVER 1.82 VS 2.26 AT DEC. 1 SALE
  • *FRANCE 2021 BOND BID-TO-COVER 1.64 VS 3.05 AT DEC. 1 SALE

EURUSD is leaking a little lower and 10Y French spreads are widening modestly but the initial reaction is unimpressive for now.

 

Tyler Durden's picture

Euro Slumps To 15 Month Lows As BTPs Crack 7% Yield





UPDATE: EFSF said to get EUR4bn of orders for 3Y issue is providing some cover (at what rate? We offer to buy 1tn at 300% yield...)

With plenty of time left until France unleashes its supply (and a dismal consumer confidence print earlier), there is a plethora of notable market moves: Unicredit is halted down 7.9% (seems to be the culprit for the initial risk-off turn in Europe), but Deutsche Bank is down over 5% on liquidity problem rumors, EURUSD traded under 1.2850 at its lowest level since September 2010, 10Y Italian bonds have pushed well above 7% yields and 510bps spread to Bunds as Unemployment rises to 8.6%, Belgian 10Y yields are over 4.5% - highest in 3 weeks, and the rest of European Sovereigns are all leaking wider (near wides of the year). Risk assets (CONTEXT) broadly are under pressure but ES (the S&P 500 e-mini futures contract) is holding off yesterday's early morning lows for now. Commodities are all dropping fast with Gold (actually outperforming in this slide) back at $1615, Oil at $102.50, and Copper approaching $340. Treasuries are bid but trading in line with Bunds' movements so far in general. Some chatter of ECB buying in the last few minutes is stabilizing things a little here.

 
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