Archive - Nov 2010 - Story

As if the recent scandals surrounding Harbinger's redemptions, his money withdrawals from a locked up fund, and his pledging of artwork to procure a loan for a mysterious capital need were not enough, next we read courtesy of Matt Goldstein that Phil Falcone is also facing an informal probe in the fund's "investments and trading in securities of particular issuers." What is very curious is that Harbinger Group was once the very infamous Zapata Corp, which has been implicated in everything from the Kennedy assassination, to the Bay of Pigs, to Watergate, to Iran Contra! While we will ignore any possible link between Falcone and the Bushes (not to mention the CIA), we will point out that Phil Falcone is chairman and CEO of the current iteration of Zapata, and that Harbinger Inc and Harbinger Capital Partners are intimately tied. And this is where the real problems arise.

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 18/11/10

The only clear winner from today's GM IPO? All those who got IPO shares and flipped them to the sheep. And of course GETCO, which churned 452 million of GM's 478 million share float: in other words 95% of the entire float was traded by computers! As for everyone else, you lost: with the stock closing at the lows of the day, all retail investors who bought in post the break, and on the way down ended up with losing positions.We eagerly await the teleprompter's appearance at 4:15 pm eastern to spin this in the right way and convince people that a loss is really a gain.

One thing I do not want this article to be is a giant bashfest of New York City. I love this place. It is where I was born and it has shaped my personality in every way. The energy is like nothing else on the planet and it will always hold a spot near and dear to my psyche. Who knows, maybe I will return. That said, the current leadership in this city, and by that I mean the financial services industry and the TBTF banks in particular are destroying the city to such a degree that I think it could take a generation to recover. I hope I am wrong on this, but the longer the paper ponzi pushers control this town the worse the devastation will be... I feel very uncomfortable in New York City right now. It and Washington D.C. are at the heart of the gulag state and I have chosen to physically remove myself from it. Even if none of this was happening, I still feel like I eventually would have found myself out West. It just feels like the journey I am meant to take. The lower taxes and open spaces aren’t so bad either.

After a weeklong smackdown in muni securities of all kinds, both cash and synthetic (read CDO-like ETF time bombs), today for the first time we have seen confirmation that investors are starting to say enough. Reuters reports that for the first time since April 14, mutual fund investors withdrew a net $115 million from tax-exempt funds last week. "Funds are the largest players in the municipal market so to the extent there are outflows, that will put more upward pressure on rates[downward pressure on prices]? said Jack Bauer, managing director of fixed income at Manning & Napier, a money manager in Fairport, New York, who oversees $25 billion in assets. "It's been kind of ugly this week." See Jack Bauer is all confused - one would have though that 28 consecutive outflows from domestic stock funds may have put in just a little "downward pressure" on stocks. Wrong and wrong - in fact stocks have proven that they levitate best on fraud, mark-to-krazy klowns, and scammery precisely when redemptions and Fed-Citadel involvement is highest. Which is why we expect that once there is no money left in stock funds (a few weeks at this rate) and in muni funds soon, muni will actually surge to never before seen highs as the bizarro effect appears in full force, and whatever muni ETFs are out there will do an SRS circa November 2008.

As discussed earlier this week and last week, Murphy's law is verified in the bond market as we are inching closer to 122-30 in TY futures and the 5Y future is leaning dangerously on the 100-dma, eyeing the 118-30 support below. The market is arguably still long but trimming. All the buying last week post long end supply is getting stopped out for those who did not cash in on a quick buck, and a lot of pre-FOMC positioning is getting pushed out as well. The irony? People are starting to feed the sell-off mentioning next week's supply... just when real money is about to step up and bid the market again! If you have been playing from the short side the past couple weeks you have been right. I tried to play that way mostly with more or less success catching the tops on the pullbacks (or missing them by a few ticks), and even schatz which I thought would hold up broke the 108.80 level.

A last minute attempt by Democrats to pass a 90 day extension of jobless benefit just failed to pass in Congress. Before the vote, which only sought a 3 month extension instead of a year long one, Steny Hoyer said: "I think every Democrat will vote for it. I'm hopeful that the Republicans will vote for it." However, since democrats brought the measure up as a "suspension" bill, meaning that it required the approval of two-thirds of the House to pass, instead of under normal house rules which would have allowed the vote to pass, the extension failed. Therefore just like the last time this extension failed, look for up to 4-5 million unemployed to fall off EUC and extended claims over the next few months, with a hit of up to 2 million by the first/second week of December. To be sure, there was also a political flavor: as NBC reports "But with suspension bill now coming to the floor on the last day of votes before the Thanksgiving vacation, the vote will give House Democrats the opportunity to argue that the GOP blocked unemployment benefits for the jobless during the holiday season."

Following our last poll which saw the vast majority of Zero Hedge readers agreeing that the next iteration of monetization (not if but when) would focus on municipals, today Art Cashin agrees that in a world in which things are right out of Alice in Wonderland, with Bernanke in the role of the Mad Bearder, this is precisely what could happen.

This is completely unrelated to anything financial, but since financial news is now extinct, at worst irrelevant, and at best, upside-down, might as well have a laugh...

It was only a matter of time before some entrepreneur decided to assist Bernanke in adding his 2 cents (or more) to the M1 courtesy of the latest TSA megaflop. Here is a look at the shirts the will soon grace every airport terminal across the country, courtesy of ETSY.

Must. not. let. price. break. $35.

Yesterday we all had the displeasure of reading the latest piece of sycophantic brownnosing by what has become everyone's most hated hypocrite. Today, the brilliant Sean Corrigan of Diapason Securities strikes again with the letter that should have been written. We hope someone of greater repute (not to mention circulation, reach and net income) than the NYT will grow some balls and post this.

In his latest letter, in addition to again broaching the subject of the upcoming Eurozone collapse, SocGen's Albert Edwards shares his increasingly high level of conviction that the US will slip into recession and also explains why Ben Bernanke's trashing of the dollar is just a "devious ploy" to force a real exchange rate revaluation on the Chinese via rampant food price inflation. Keep in mind, in China food prices are actually important, noted and measured, and were the primary reason for the October spike in inflation which oddly caught so many by surprise, probably more for the reason that the government actually agreed to disclose it. In essence, Albert argues that the Chairman has raised the stakes on the global monetary game to such a level, that he risks social discontent either in the US or in China, or both, should China refuse to blink in what has quickly become the most important game of chicken in the history of modern economics.

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX – 18/11/10

Tuesday's senatorial farce hearing in which fraudclosure was brushed under the rug under the vigilant stare of one Chriss Dodd is being repeated today, this time in Congress, titled: "Robo-Signing, Chain of Title, Loss Mitigation and Other Issues in Mortgage Servicing." Those wishing to waste some time may do so at the following link. As Maxine Waters is present, the farce will be complete.