September 12th, 2013
Poor Greece: the country that just reported yet another all time record high unemployment rate, this time for the month of June when the jobless rose from 27.6% to 27.9%, apparently does not know that all it had to do to see its unemployment plunge to 0% or thereabouts, was to upgrade from abacus to solar-powered calculator, as the US BLS just proudly announced it did when it reported the latest batch of absolutely garbage "data".
A few days ago we showed what happens when the Bureau of Labor Statistics is caught in a blatant lie. And while we exposed the difference between the NFP and the JOLTS data series, which in some ways are the "stock" effect of labor, it meant that the BLS also had to adjust its "flow" component: the initial weekly claims. Lo and behold, moments ago the DOL just reported last week's initial claims, which printed at a ridiculous 292K, 38K below expectations and the lowest level since April 2006, down from last week's 323K. On the surface great news. The problem once again is that this was a bold faced lie. Only this time even the BLS admitted as much:
- LABOR SAYS CLAIMS DROP DUE TO COMPUTER UPGRADES IN TWO STATES
- LABOR SAYS FAULTY REPORTING BY STATES RESPONSIBLE FOR DROP
Specifically, a larger state and a smaller one that retooled their computer networks still provided the Labor Department with applications counts. Furthermore, the BLS also said that the decrease in filings probably didn’t signal a change in labor-market conditions. In other words, the number is garbage, and the BLS knows the reporting is faulty, but let's go ahead and report it anyway.
Yesterday's record Verizon bond offering, which to some had an eerie sense of deja vu to the TXU 2007 mega-LBO just before the market blew up, caught many by surprise: not only did the underwriters have no problem obtaining over $100 billion in orders to oversubscribe demand for the $49 billion offering, but following the break the bond immediately proceeded to trade a whopping 40-70 bps tighter implying yield pricing could have been done well lower, but the CDS also ripped 11bps tighter. Because nothing says less default risk like $49 billion more in debt. But where did all this demand come from? Did accounts simply have $100 billion in cash lying around? The answer is no, and as the following breakdown of the post-break action in VZ from Deutsche demonstrates, what happened yesterday was a great rotation into the NSA-favorite company and the Telecom space in general, and out of virtually every other credit in the market.
There was a time when, if selling a sizable amount of a security, one tried to get the best execution price and not alert the buyers comprising the bid stack that there is (substantial) volume for sale. Of course, there was and always has been a time when one tried to manipulate prices by slamming the bid until it was fully taken out, usually just before close of trading, an illegal practice known as "banging the close." It appears that when it comes to gold, the former is long gone history, and the latter is perfectly legal. As the two charts below from Nanex demonstrate, overnight just before 3 am Eastern, a block of just 2000 GC gold futures contracts slammed the price of gold, on no news as usual, sending it lower by $10/oz. However, that is not new: such slamdowns happen every day in the gold market, and the CFTC constantly turns a blind eye. What was different about last night's slam however, is that this time whoever was doing the forced, manipulation selling, just happened to also break the market. Indeed: following the hit, the entire gold market was NASDARKed for 20 seconds after a circuit breaker halted trading!
- Syrian Rebels Hurt by Delay (WSJ), U.S. seeks quick proof Syria ready to abandon chemical weapons (Reuters)
- Lavrov Brings Acerbic Pragmatism to Syria Meet With Kerry (BBG)
- Five years after Lehman, risk moves into the shadows (Reuters)
- U.S. shares raw intelligence data with Israel, leaked document shows (LA Times)
- Japan to raise sales tax, launch $50 bln stimulus (AFP) - so 1) lower debt by sales tax, then 2) raise debt through stimulus.
- Blackstone’s Hilton Files for $1.25 Billion U.S. Initial Offer (BBG)
- Second Life Bankers Thrive in Dubai as Boutiques Boost Fees (BBG)
- Brussels probes multinationals’ tax deals (FT)
- Wall Street's Top Cop: SEC Tries to Rebuild Its Reputation (WSJ) ... and fails
- Tablet sales set to overtake PCs (FT)
- The end of angst? Prosperous Germans in no mood for change (Reuters)
Jitters from Syria still abound, as confirmed by reports from the Israeli army that two shells had hit the Southern Golan region. Despite the reports that the shelling appeared to be errant, WTI remains near session highs as markets remain sensitive ahead of the meeting between US Secretary of State Kerry and Russian Foreign Minister Lavrov in Geneva over the next two days. Buying of the 10Y is also prevalent and the yield on the benchmark bond was has dropped below 2.90%, or at 2.88% at last check. Today's key economic news in the US session will be the weekly claims report, the Fed buying 10 Year bonds at 11 am followed by the Treasury selling 30 Year bonds at 1 pm (this follows the Fed buying 30 Year bond yesterday: yes ironic).
A SmartKnowledgeU Exclusive Interview with World Bank Whistleblower Karen Hudes: "The World Will Reject Central Bankers"Submitted by smartknowledgeu on 09/11/2013 22:29 -0500
An exclusive SmartKnowledgeU interview with World Bank Whistleblower Karen Hudes, in which we discuss the growing adoption of competitive currencies to fiat such as gold and silver, the reasons why the masses still largely remain ignorant of banking criminality, and the turniing tide against immoral Central Banking activities.
As the AFL-CIO blows off Obamacare, it seems unions have been hard at work in recent days. In a ruling on Tuesday, current and former 'dancers' from the tastefully decorated (from what we hear) Midtown Manhattan Rick's Cabaret have won a class-action suit that protects them under labor laws and entitles them to minimum wage at least. The club, having argued unsuccessfully that the strippers were independent contractors, plans to appeal the Judge's ruling that the dancers are 'the main attraction" and integral to it success (though personally we would only go there to read the articles). Whether this will raise (or lower) the price per dance, VIP room access fees, mark-ups on beer and bottles of vodka, or acceptance (or not) of EBT cards has yet to be made clear.
Political analysts over the next year or so, and historians well into the future, are likely to point to the fall of 2013 as a fundamental inflection point in American politics. That period, they will say, is when the American people forced a major new direction in American foreign policy. Before the events of this fall, the country’s electorate largely delegated foreign policy to its political elite—and largely supported that elite as it projected American military power with more abandon than the country had ever before seen. Even as the government steadfastly expanded the range of international problems that it said required U.S. military action, the electorate accepted that expanded international role and that increasingly promiscuous use of force. Those days are gone now.
Stanley Druckenmiller's World View: "Catastrophic" Entitlement Spending, "Bizarre" & "Illusory" Asset Markets, & Beware The TaperSubmitted by Tyler Durden on 09/11/2013 20:50 -0500
During an extended interview with Bloomberg TV, billionaire investor Stanley Druckenmiller provided a seemingly fact-based (and non-status-quo sustaining, commission-taking, media-whoring) perspective on a very wide variety of topics. The brief clips below touch the surface, with the detailed annotated transcript below providing details, as Druckenmiller opines on the looming catastrophe in entitlement spending "when you hear about the National debt being $16tn; if you actually took what we promised to seniors and future taxes, present value to both of them, that number is $200tn," why the Fed exit will be a big deal for markets, "it is my belief that QE has subsidized all asset prices and when you remove that, the market will go down," and his changing views on Obama "I was drinking the hope and change Kool-aid... in hindsight, he probably needed more experience for this job." Looking back to the financial crisis, he warns, "...a necessary condition to have a financial crisis, in my opinion, is too loose monetary policy that encourages people to take undue risk and go on the risk curve and do silly things. We should have shut this down in 1998, 1999. The NASDAQ bubble, we should have raised rates, we didn’t. Then we got the implosion."
Just three weeks ago, Goldman Sachs cried 'uncle' when their market-making options algo-machine exploded in a fit of guilt causing the firm to face hundreds of millions of dollars losses (should the exchange not have DK'd the deals). Nanex has investigated the rogue algo and here are the findings... "As soon as option quotes in the affected symbols began exceeding theoretic economic values by some threshold, quotes (and therefore liquidity) on other options exchanges for those contracts would immediately disappear - bid/ask prices would go to zero at other exchanges. Within 10 seconds of starting, one algo, in effect, completely destroyed the concept of the National Market System and obliterated liquidity..." As they sadly conclude, what was the fine for shutting down an options exchange, and destroying liquidity in hundreds if not thousands of options contracts? There was no fine. Worse, they were able to get the trades busted. As in, pretend we didn't just do that. Pretty shocking. Until there are financial consequences for firms that turn on market disrupting algos, the markets, will continue to be disrupted.
Vladimir Putin Addresses America In NYT Op-Ed; Calls For Caution In Syria, Denounces "American Exceptionalism"Submitted by Tyler Durden on 09/11/2013 19:45 -0500
"If we can avoid force against Syria, this will improve the atmosphere in international affairs and strengthen mutual trust. It will be our shared success and open the door to cooperation on other critical issues.... No one doubts that poison gas was used in Syria. But there is every reason to believe it was used not by the Syrian Army, but by opposition forces, to provoke intervention by their powerful foreign patrons, who would be siding with the fundamentalists. Reports that militants are preparing another attack — this time against Israel — cannot be ignored... The potential strike by the United States against Syria, despite strong opposition from many countries and major political and religious leaders, including the pope, will result in more innocent victims and escalation, potentially spreading the conflict far beyond Syria’s borders.... It is alarming that military intervention in internal conflicts in foreign countries has become commonplace for the United States. Is it in America’s long-term interest? I doubt it. Millions around the world increasingly see America not as a model of democracy but as relying solely on brute force, cobbling coalitions together under the slogan “you’re either with us or against us.”
Despite PIMCO, DoubleLine, and pretty much every other major mortgage bondholder in the world litigating the actions, Richmond, California's leaders approved this morning a plan for the city to become the first in the nation to acquire mortgages with negative equity in a bid to keep local residents in their homes. Richmond's city council voted 4 to 3 to use the power of 'eminent domain' (as we discussed here most recently) to seize underwater mortgages and refinance them. City council members opposed to the plan countered that using eminent domain would put Richmond at risk of expensive lawsuits that could destroy the city's finances; and sure enough, Richmond had no takers last month when the successor to its redevelopment agency put $34 million of bonds up for sale to refinance previous debt. As Reuters reports, investors holding the mortgages targeted by Richmond dispute altruism motivates the plan and are set to meet in court for the first time tomorrow.
I’ll scratch your back and you can scratch mine is the motto of the National Security Agency according to the latest revelations made about the data stored by the immense surveillance program of the NSA, which routinely provides intelligence data with Israel.
Israel's richest person Beny Steinmetz, who amassed his $7.4 billion net worth beginning in the diamond trade, has seen his Geneva home raided by Swiss police following a request from the Government of Guinea. The West African country, as Bloomberg reports, approached Swiss prosecutors following an investigation into claims that bribes (shock, horror) were paid for mining licenses by Steinmetz's mining company BSG Resources. This follows raids of London-based Onyx Financial (run by a director of BSG) and the arrest of a BSG employee on charges he interfered with the U.S. grand jury probe (witness tampering, obstructing a criminal investigation and destruction of evidence in a federal investigation). He has pleaded not guilty. All sounds above board we are sure... just ask Eike Batista...