Archive - Nov 2009 - Story

Goldman Sachs, Morgan Stanley, BP, TOT, Shell, DB and Societe General founded the Intercontinental Exchange in 2000. ICE is an online commodities and futures marketplace. It is outside the US and operates free from the constraints of US laws. The exchange was set up to facilitate "dark pool" trading in the commodities markets. Billions of dollars are being placed on oil futures contracts at the ICE and the beauty of this scam is that they NEVER take delivery, per se. They just ratchet up the price with leveraged speculation using your TARP money. This year alone they ratcheted up the global cost of oil from $40 to $80 per barrel.

“Three consecutive monthly declines is unprecedented for our report, and on first blush an indication that the foreclosure tide may be turning,” said James J. Saccacio, chief executive officer of RealtyTrac. “However, the fundamental forces driving foreclosure activity in this housing downturn — high-risk mortgages, negative equity, and unemployment — continue to loom over any nascent recovery. And despite all the efforts and resources directed at helping homeowners avoid foreclosure, we continue to see foreclosure activity levels that are substantially higher than a year ago in most states.

• The net expands: SAC Capital, Balyasny ex-analyst under probe in insider case (WSJ, Bloomberg)
• Weil: Blankfein invokes god and man at Goldman Sachs (Bloomberg)
• How do you know the Treasury Secretary is lying? Geithner stresses strong dollar's global role (Reuters)
• And the final nail in the coffin's dollar: under pressure from a lying Geithner, China sets plan to let currency move higher (Globe and Mail, h/t Geoff)
• KKR values Dollar General at 30x P/E in upcoming IPO, double Wal-Mart (Bloomberg)
• IEA warns oil rise could derail recovery (BBC)

• Gold hits record high of $1,121.90/oz, driven by speculation of dollar weakness.
• Asia stocks, currencies gain after Australian jobs report; gold at record.
• Australian employers unexpectedly hire 24,500; currency jumps on rate bets.
• Brazil economy to grow 9 percent in 4th quarter as domestic demand surges, top official says.
• Brazil government defends reliability of power grid after blackout leaves 60M in dark.
• Dollar falls to 15-month low on bets Fed rate to stay near zero.
• Euro up to $1.500 in European morning trade, Asian equity gains slow.

How else does one explain his rambling, otherwise totally off-topic "farewell" address on CNN tonight?  We never bought the whole "Lou Dobbs is going to Fox" story.  What, because he had some fiery comments about immigration at one point suddenly he's got the kind of right-wing credentials to be on Fox?  We think not (but we've been befuddled by stupidity before).  How absolutely apropos would it be to have a candidate for high office in the United States from the pinnacle of a toothless media establishment?

In my capacity as a casual comment viewer on Zero Hedge I have found myself of late issuing an unduly expansive number of warnings for bad behavior in print.  One hates to use the heavy hand of moderation on a site dedicated to transparency and throwing sunlight on the cipher-laden world of finance, but I need to make something absolutely clear:

Anyone directly advocating violence against any individual, group of individuals, institution or organization is going to feel the sting of the lash from here on out.

This kind of psychotic noise gives us a bad name (kill the messenger, you know), tends to attract the attention of authorities, particularly in the United States (which is already predisposed to wonder after our subversive criticism of The One and the National Security™ risk we present to Bailout Nation) and more importantly, is antithetical to the goals and purposes of Zero Hedge.

To be even more specific:

Zero Hedge and the legal team here will vigorously oppose thorough all the legal means at our disposal any attempt to obtain, coerce or outright steal data from our offshore servers.  This probably won't take much effort since we keep very sparse logs in the first place.  However, it is not impossible to imagine that we would entertain a very narrow exception if asked to cooperate with authorities.  To wit:

The credible threat of future violence.

There is no moral position we are willing to entertain that would permit us to stand idly by and ignore cases like these.

Let me provide some examples so there will be no misunderstanding:

• "Let's throw [all the bankers/banker x/that loser currently on trial] in jail."  [Stupid on a truly Henry VIesque level, even forgetting for the moment that you probably only know as much about any particular case as you have read that afternoon in the New York Post - but borderline - seems to suggest due process (of a sort) at least]
• "Let's kill all the bankers."  [Stupid on a truly Henry VIesque level, and also infringing - violence]
• "The next time you meet a Goldman employee, crack a fucking bottle over their skull."  [Beyond stupid.  Intensely infringing]
• "I'm going to slit [hedge fund manager's throat] when I next see her at L'escale in Greenwich."  [So mercifully free of the ravages of intelligence so as to be mistaken for a mineral.  Infringing to the level that causes serious and animated debate among the Senior Staff at Zero Hedge over the wisdom of proactively reporting this potential conduct to the authorities]

Hey.  How about you do yourself and all of us a favor?  Just because it's borderline and we appear to be tolerant, don't just defecate all over the whole of due process jurisprudence (due process IS in the Constitution of the United States, you know.  You don't hate the Constitution.  Do you, my outraged patriot friend?) as well as immediately brand yourself as a reactionary, populist tool who differs with Barney Frank only in the degree to which you tolerate violence by calling for hanging some random douchebag banker.

Following up on our earlier disclosure about potential insider trading in 3Com stock, we have uncovered something interesting. Did Goldman (in)advertently tip off clients that 3Com was potentially in strategic negotiations? 3Com was previously supposed to present at Goldman's Data Center Techtonics Conference today at the Sheraton Hotel in New York (Agenda below). In a limited distribution note, Goldman yesterday advised selected clients that 3Com had withdrawn at the last minute from the Conference. As those in the industry are well aware, any last minute switches of this kind are indicative of imminent good or bad news dissemination, and more often than not are associated with some strategic announcement.

If we added up all the gold ever mined on the planet, its total value would equal no more than $5 trillion at today’s prices. Yet, look at how this compares to the debt and bailouts and other monetary mischief of current governments. The U.S. government has thrown over twice as much at the economy in the past 12 months. The U.S. debt is more than double this amount so far this year. Total global government bailouts are almost four times larger (and this is a conservative figure; one estimate puts it at $24 trillion). I intended to include annual gold production as one of the comparisons, but the chart isn’t big enough and neither is your monitor: 2008’s global gold production equaled about $73 billion, and to make that figure discernable on the chart would require the Global Bailouts bar to hit the ceiling above your head. That’s how small the gold market is.

With a half-day in credit yesterday, and the usual meltup in equities on no volume (free money, straight from the Fed, come get your free money: just buy a stock, any stock: since you can't get money anywhere else, buy, buy, buy into the stock bubble), yesterday CDS painted a gloomier picture. As the image below demonstrates, wideners outpaced tighteners. Asonly a few increasingly more powerless computers trade equities these days, we, as usually , warn readers to keep track of developments in the credit arena, and we are hopeful that the regulators will consider our proposition to gradually allow retail trading in CDS products (after the minimum notional is reduced substantially).

3Com's acquisition by Hewlett Packard for $7.90/share after the close today came as a surprise to many, but not all. Because someone bought 3 times the open interest in November $5 calls and 15 times the open interest of the December calls. In summary: 3,961 Nov $5 calls were purchased today (964 open interest) for $0.65, as were 3,269 December $5 Calls (210 open interest) for $0.85. The profit, assuming the insider action was by one entity, is about $870,000 on the Novembers and $650,000 on the December strikes, for a not too shabby illegal daily P&L of $1.5 million. This is so blatant it is sufficiently stupid that even the SEC will presumably catch the perpetrator. Here's to hoping the trader ends up being Galleon's Raj Raj buying options from his E-Trade account while on bail. Of course, we fully expect any prosecution case against the perpetrator to fall apart at the seams courtesy of a completely inept legal team at the SEC and the Justice Department.

There is nothing the administration hates more than the anti-propaganda truth, especially the kind that discloses the pathetic situation of the economy. Which is why Larry Summers must be positively loathing the most recent report from the Pew Center On The States, entitled "Beyond California: States in Fiscal Peril", which, as the observant among you may surmise, discusses states in fiscal peril. In short, that would be all of them. A snippet: "California’s problems are in a league of their own. But the same pressures that drove it toward fiscal disaster are wreaking havoc in a number of states, with potentially damaging consequences for the entire country."

With the NY Composite and SPY hitting a "double top", the slide rule technicians operating the robots immediately sold stocks after the opening spike to "lock in profits". Now we have to use some forensics to see if another bear market is going to resume, or if this thing is going to keep going. Unfortunately for the bears, some favorite instruments of speculation were being dryhumped with a vengeance, showing no signs of weakness or distribution.

Let us bow our cephalopods:

Our Chairman,

Who Art At Goldman,

Blankfein Be Thy Name.

The Rally's Come. God's Work Be Done

On Earth As There's No Fear Of Correction.

Here we are approaching 2010 and we have not yet punished the thieves who caused the Greatest Heist in History. It’s one thing for justice to allude Osama bin Laden as he scurries through miles of mountainous terrain. It’s another when the assholes who screwed us are sitting in luxury high-rises going about their daily business in plain view.

In the latest attempt to prove that nobody ever learns anything from history, the Bank Of England is practically betting the Devonshire farm that by putting the UK's economy on nitrous, it will recapture all the lost output during the recession, and that it will be able to time the stimulus exit perfectly, thus avoiding hyperinflation, or so thinks Citigroup economist Michael Saunders. We are fairly confident that the Weimar Republic also did not have hyperinflation as a policy end goal. Saunders was quoted by Bloomberg, that “Policy has been set to produce a boom to close the output
gap in the next few years.”