Archive - Aug 12, 2013

In a shocking twist for the New Normal, a US judge has actually upheld the constitution...

Bloomberg's Jon Weil, who has compiled the following stunning array of lies regarding the DOJ's enforcement activity disclosed by none other than its head, Eric Holder, is far too kind when he says that the "fast and furious" Holder owes the American people an apology. What we really owes is at least a resignation (and frankly much more, but it is too early on Monday to become too politically incorrect). And considering that the DOJ in its now former employee Lanny Brauer's words refused to prosecute those banks which were deemed "too big to prosecute", the lying here has now became a meta phenomenon, as the DOJ is effectively caught lying about lying. How many more meta levels of higher up fraud "inception" can Holder take this, before the American people finally demand his head, metaphorically-speaking of course? Sadly, judging by the response to unprecedented scandals coming out of this administration so far, the answer is... more.

Gold shorts covered an enormous 23,518 futures contracts last week - the equivalent of 2,351,800 ounces of gold. With JPMorgan appearing to be calling everyone (here and here) to get their hands on gold to deliver, it seems our concerns over a short-squeeze are starting to solidify. The last time shorts collapsed at this fast a rate was in the 1999/2000 period which saw a considerable 33% squeeze ramp in gold prices over the space of 3 weeks in the fall of 1999. Notably, the gold short position still remains huge compared to historical values - having fallen back only to the previous all-time record high levels (i.e. plenty of room for moar squeeze).

Those who did not read Zero Hedge in March 2011 will be shocked, shocked to learn that yet another "news" service, one owned by Deutsche Börse, was merely disguising as an HFT-facilitating, instanews disseminating, speed roadblock removing provider, who just happened to charge $375,000 per year for its frontrunning services. The firm in question, as the WSJ reports today, was "founded by an investment firm and now owned by the Deutsche Börse stock exchange, Need To Know News has operated with an overriding mission: sending data directly from the government through high-speed lines to financial firms that are able to trade on it instantly. Some have paid $375,000 a year for the service." Of course, those who did read Zero Hedge in March 2011 will already know all about Deutsche Boerse's "news dissemination" strategy which was covered here first with "Alpha Flash: For All Your Nanosecond, Collocated, Algorithmic Frontrunning Needs" in which we tongue-in-cheekly asked "Ever feel like your nanosecond algorithmic frontrunning skills are becoming obsolete? Unable to scalp even a few extra pennies from illiterate orphans, widows and kittens armed with REDIPlus 9.0? Despair not, for Deutsche Boerse [and Need to Know News LLC] has Alpha Flash just for you."

• Solyndra Cola: California aims to 'bottle sunlight' in energy storage push (Reuters)
• Ackman may sues himself after all - Penney Board Assails Director William Ackman, Considered 'Rogue' After Releasing Deliberations (WSJ)
• CFTC subpoenas metals warehousing firm as inquiry heats up (Reuters)
• Obama Plan to Revamp NSA Faces Obstacles (WSJ)
• Japan growth slows in second quarter, adds to sales tax uncertainty (Reuters)
• China Urbanization to Hit Roadblocks Amid Local Opposition (BBG)
• Parents Losing Jobs a Hidden Cost to U.S. Head Start Budget Cuts (BBG)
• US seeks better access to Africa as part of trade pact review (FT)
• Singapore Cuts Trade Outlook as China Slowdown Caps Recovery (BBG)
• White House Sifts Fiscal Ideas With Band of Senators (WSJ)
• Spain may ask United Nations for support over Gibraltar (Reuters)
• Michigan Safety Net for Boomers Frays on Bankrupt Detroit (BBG)

The middle of the month brings a mixture of second-tier macro numbers punctuated by the market-moving (and Taper-cementing) retail sales report. We get IP, CPI and PPI from the US this coming week. In terms of hard activity numbers, US retail sales on Tuesday will be the highlight which as a reminder is, in addition to Jackson Hole, seen as one of two key pre-Taper catalysts to keep an eye on. Outside the US, the key data will be the quarterly publication of German, French and Eurozone GDP, as well as Japanese GDP, which has already been released (weaker real growth, higher inflation). The second week of the month also tends to show the first survey results with the Phily Fed and Empire surveys on Thursday. In Germany the ZEW will come on Tuesday. Finally, from an FX point of view, we will be focused on balance of payments related data, with the trade balance in India and TIC data in the US. After a few very weak TIC releases in recent months we would expect more evidence of weak capital inflows into the US.

Despite an overnight surge in the Chinese markets, with the Shanghai Composite closing up 2.4% following reports that China will not only continue with its "liquidity tightening" operation by, paradoxically, cutting RRR for smaller banks, but launch a stimulus for several Chinese provinces and city governments "on the quiet" in the form of jumbo-sized bank loans, and GDP news in Japan that were so bad they were almost good (although not bad enough to close the Nikkei in the green) US futures continue to take on water following the second worst week of 2013 as the market now appears resigned to a Taper announcement in just over 5 weeks (as we have claimed since May). News in Europe continues to be bipolar, with the big picture confirming that only dark skies lie ahead following yesterday's news that a new Greek bailout is just around the corner, or rather just after the Merkel reelection (even though Kotthaus perpetuated the lies and said a second cut in Greek debt is not on the agenda - although maybe he is not lying: maybe only Greek deposits will be cut this time), offset by on the margin improvements in the economic headlines, even as credit creation remains not only non-existent but as the FT reports (one year after Zero Hedge), some €3.2 trillion in financial deleveraging is still on deck meaning an unprecedented contraction in all credit-driven aggregates (one of which of course is GDP).