Archive - Dec 2010 - Story

Just claims, wholesale inventories, and the Fed’s balance sheet today...

RANsquawk European Morning Briefing - Stocks, Bonds, FX – 09/12/10

Despite rumors that various splinter forces within the Republican party are attempting to block Ron Paul's fateful chairmanship of the Monetary Policy Subcommittee, we now have confirmation that the only sane politician left will now be Ben Bernanke's direct nemesis during any and all future Congressional spectacles starring the printing unchallenged one. And with US debt creeping ever closer to the debt ceiling, coupled with the dollar for dollar monetization of the US deficit, such spectacles will soon be plenty.

Following up on the earlier news of more Chinese rate hike speculations, we present what is arguably the most comprehensive summary of the country that conventional wisdom sees as becoming the world's biggest economy within a decade, and less than conventional wisdom sees as the biggest bubble in the history of the world. As report authors HSBC point out: "What emerges from this guide is a more complex picture of China than even many experts have assumed. For anyone hoping to conclude a business deal in China it offers this message: don’t assume you only have to deal with decision-makers in Beijing. You must also make sure local officials are on your side. Whether you are a China expert or a mere beginner, we hope you enjoy what follows." Must read for everyone (especially Americans) to get a sense of what the future rulers of the world will be like.

With just 48 hours left until the rumored rate hike by the PBoC either this Friday or over the weekend, the verbal war in China is second only to the hacker war currently gripping the internet. First, the China Securities Journal, the same publication that warned that a rate hike was imminent earlier in the week, quoted Ba Shuson, a researcher with the State Council's Development Research center, who said that China's inflation in November may have peaked at a stunning 4.8%. He also added that "it will take time for the government’s measures to fight price gains to take effect." Of course the government would actually have to institute measures to fight price gains: if the just released Australia payrolls number is accurate, Chinese inventory stockpiling hit an all time high this month, and in exchange the country will likely see a huge influx of capital, making its inflationary problems even worse, although we won't know for sure until the trade surplus data is released later this week.

Refiners typically draw down crude oil inventories for end-of-year tax reasons. There are a couple major accounting methods, with LIFO and FIFO the most popular. Basically, LIFO means that the latest purchase is the first to be sold, which works especially well this year. That means that the most expensive crude oil is refined while earlier purchases remain on the books in storage. Those companies using FIFO sell the first barrels bought first. And FILO accounting holds the first purchases for last, which is very much like LIFO. LILO is basically a version of FIFO. - Cameron Hanover

Another big day in rates today as the UST 10yr yield traded as high as 330bps today due to the tax cuts extension, BAB expiration, and various technical dynamics. Chinese rate hike rumors, especially with tomorrow’s liquidity-draining 3yr bond auction cancelled (further telegraphing tightening) and the pushed-up data release schedule, helped to send USD higher today, which exacerbated the yield surge. However, a weak but tolerable 10yr auction in the afternoon provided a bid for bonds and helped lift stocks to new 52wk highs.

Less than an hour ago we asked (rhetorically, we hoped) how long until Twitter caves to the same gestapo tactics that have caused Wikileaks to be banned virtually everywhere else. The answer turns, is, less than an hour.

But do not despair: @Anon_Operations is already reborn as @AnonOpsNet

Though brokerage analysts are frequently wrong with their recommendations and price targets, there is value in their research. The key is to know what to look for and what to ignore...Treat brokerage research as just one part of your analysis, not the sole reason to buy or sell a stock. Research reports are written for mass audiences and the arguments stated in a report may or may not apply to your investing style or personal criteria.

So much for the rotation out of bonds. Last week equity domestic funds saw outflows of $1,801MM, which is the 31st consecutive outflow and yet more confirmation that retail is done with stocks. Oddly enough, or not really as everyone by now knows who the only remaining buyers are, as the overlay shows, despite $93 billion of outflows, the stock market is at 2010 highs, courtesy of the Federal Reserve. And contrary to the myth, after a brief respite, the inflows in credit have resumed. Aside from that, any...minute...now... the retail idiots will jump in and pick up the 100x fwd P/E hot grenades. Just you wait.

Operation Payback has supposedly taken its latest victim: Sarah Palin, who previously called for the execution of Assange, has had her site hacked, and her credit card details taken. Her take: "No wonder others are keeping silent about Assange's antics,” Palin emailed. “This is what happens when you exercise the First Amendment and speak against his sick, un-American espionage efforts." Frankly, we very much doubt anyone, let alone a sophisticated hacker network, would bother with someone of Palin's "intellectual" capacity and significance, and would actively demand that she produce her serverlog (assuming she knows what this is) to confirm the fact, as many have already voice a suspicion this is just the latest attempt of the vice presidential candidate pathetically whoring for yet more media attention.

Yesterday's highlighted chart was the plunge in the 30 Year bond. Today, we take it one step further and demonstrate what happens to an asset class once it become clear (or unclear) that the government may not prop it in perpetuity. Presenting the average yield on Build America Bonds, which has just hit an 11 month high. If this collapse is a harbinger of what will happen once a Federal props are removed, feel free to just imagine what would happen to stocks if and when the Fed were to withdraw its support of the stock market...

As we await confirmation of 31 consecutive domestic equity fund outflows, we have the displeasure of sharing the latest farcical spectacle from the Senate Banking Committee where a bunch of corrupt "regulators" will tell the world they have no idea what caused the Flash Crash, and have even less ideas on how to prevent it from happening, but that in the meantime nothing is allowed to change in the market structure as otherwise their tithes from the HFT lobby may end.

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 08/12/10

After taking out MasterCard.com earlier, the hacker organization Anonymous Operation, via its WikiLeaks supporting Operation Payback has just launched its attack on visa.com. And, lo and behold, Visa.com is now down.

As of this posting, the operation has succeeded in under one minute: www.visa.com is down