Archive - Jan 2010 - Story

"Apologies for the extended silence as I was travelling in Asia. I will be back later with a broad update on markets as there is a lot to talk about. Quickly first in fixed income we have a potential evening star in formation. As can be seen on the 30-minute chart we are leaning on channel support, and a close below 117-19+ would validate the candle-stick pattern at the daily level. There is little divergence in the indicators but if this rally was a correction within the bear trend then it is often-times the case that the market reverses without much warning. 118-10 is the major resistance above, and 117-03 should be support here in the short-term. As long as 118-10 is not violated we keep an eye on the long term support at 114-01 now." - Nic Lenoir

• Samuelson: China's $2.4 trillion global grip (RCM)
• Game over Tishman Speyer: look for CRE CMBS numbers to plunge next month (Bloomberg, WSJ)
• More Bernanke-fail threats for the peasantry: fire and brimstone, Geithner edition (Politico)
• Obama's bank plan could level high-frequency field (Reuters)
• UBS tax ruling by Swiss court may prompt new U.S. legal battle (Bloomberg)
• Goldman to cap London partners' compensation at 1 million pounds (Bloomberg)

• Asian stocks fall for sixth day on Obama plan to curb banks, Yen weakens.
• Bank of Japan said to be open to expanding Emergency loans, bond purchases.
• China property data may 'under-represent’ bubble risks, World Bank says.
• German consumer confidence declined for a fourth month in a row.
• Gold futures climbed as much as $10/oz on weak USD.
• Nymex crude oil futures slightly higher at $74/bbl helped by a weaker U.S. dollar.

Update: The book has now closed for European Orders at €23 Billion in orders

• Greece 5yr €uro Benchmark – Books > €11bn/Spread revised
• Issuer: The Hellenic Republic A2 neg/ BBB+ neg/ BBB+ neg RegS / 144A
• Amount: €uro Benchmark Cpn: tbc % ann, act/act
• Settlement: t+5 (tbc) Maturity: 20 August 2015 (5 years)
• PriceGuide: MidSwaps + 350/365bps ****
• Leads: CS, DB, Eurobank EFG, GS, MS & NBG + coleads B&D: DB (duration manager) Timing:
• Books open, pricing no later than mid week

RANsquawk 25th January Morning Briefing - Stocks, Bonds, FX etc.

We are often accused of being paranoid here at Zero Hedge, generally by our many detractors. Occupational hazard, we suppose. So when we pen missives wondering about the use of "National Security" exceptions to SEC disclosure and filing requirements for public companies, we tend to get a lot of smug "you're crazy" correspondence. Then a little time passes, and someone like Reuters writes an article.

In response to the earlier post on Treasury's supply/demand imbalance, a keen reader shares the following insight:"if there are ~16t usd assets in banking per the article and ~1% are in treasuries today that means 9% conversion of assets to treasuries remains....the banks are woefully undercapitalized. 9% of 16t is 1.44t so the banks can't meet the 10% requirement although some will get close....my concern is that the 1t usd sitting in the fed may already be in treasuries and that it is not truly cash - frn...." That would be very ungood.

A milestone in Bernanke’s nomination was reached this morning …. the Sunday political talk shows. John McCain came out this morning against Bernanke. So here’s what we know. As of this morning (noon CT, January 24) … Bernanke needs 60 votes to end a filibuster of his nomination (known as cloture). After cloture, he then needs 51 to be reappointed. So, the bogey is 60 for cloture.

Rentech's RIEF investors can't be too happy. After underperforming the S&P by about 30%, and seeing AUM in the once fabled quant fund evaporate, they now have to contend with disclosure that there is "no assurance that trading of the Medallion Funds may will not have a negative effect on the trading of RIEF." Luckily for a now-retired Jim Simons (speaking of, what non-extradition countries has the billionaire code-breaker taken to vacationing in these days?), those same RIEF investors sure do seem to have a lot of patience.

I have never voted Against the Democrats in my life, BUT I WILL THIS TIME just like the people of Mass. did last week.

Its your time to stick up for the people of New York State and this country we call home. I will be watching to see what you do for us.

The people of America are to the breaking point and if we snap how long do you think Citi, Bank of America, and Wells Fargo will last if everybody stops paying ther Morgages and Credit Cards.

Economics 101: when supply is greater than demand, prices fall; when supply is $700 billion greater than demand, prices plunge. An in-depth look at the supply-demand mismatch of the 2010 US Treasury market demonstrates that the truth is much worse than you may think, and why Bernanke's first act upon reconfirmation will likely be the announcement of the second part of Quantitative Easing.

Fast forward to 7 min 50. At this point what more can be said: Stewart is simply jealous because Cramer draws far more laughs every time the former Goldman Private Wealth Management expert (the kind of wealth where you become a millionaire, if you started of a trillionaire) shows up on TV.

Nearly a year ago, Zero Hedge first brought broad public attention to the nebulous aspects of the dark and dirty underworld of the market, exposing the "second-tier" of privileged market participants, consisting of quant traders, high frequency trading, flash trading, sponsored access, co-location, latency arbitrage, Morgan Stanley's discussed-below PDT operation, and many other topics (check our Glossary for much more). In April, Zero Hedge wrote an open letter to the quant community, pleading for more transparency absent which the eventual result would be "larger, systematic problems at the largest, most sophisticated quant managers." Since April, the impact of market neutral quants has progressively declined, as factors, one after another, have failed, and market neutral indexes are probing multiyear lows (HSKAX). The question of who has stepped in to replace the whales' liquidity provisioning is still unanswered, although the explosion of small, inexperienced 3 man quant shops consisting of a math Ph.D. and two programmers, may be part of the answer. The integration of Goldman within the structure of the NYSE and other exchanges, may be another: at last check, Goldman is still a key component of the NYSE's SLP program, regarding which there is still barely any information, despite promises by NYSE representatives to the contrary (and with Goldman's prop operation potentially terminally crippled, the question of how extensively intertwined prop trading is with liquidity provisioning, will be a major topic going forward). Today, the WSJ's Scott Patterson takes advantage of the recent furor over quants and in extensive article promotes his new book "The Quants" in which "he suggests how this new breed of mathematicians and computer scientists took over much of the financial system—and the damage they inflicted in the 2007 meltdown." We are glad that, after nearly a year of writing about it, the topic of the market systemic threat presented by a small subcommunity of quantitative traders is finally emerging on the mainstream scene.

It appears that the debate over the reappointment of Bernanke will likely come down to an impending U.S. Senate Cloture vote, barring a further uptick in political pressure on President Obama, who increduously seems to have missed the message of the vast majority of Americans who are opposed to Bernanke's renomination. I'm no Senate parliamentarian but it is important for us to understand some of the subtleties of this matter, some of which I'm sure I haven't thought about but am confident that the ensuing comments from Zero Hedge readers will fill in the blanks and lay out other options.

We conclude the Damien Cleusix series on Tactical Asset Allocation by presenting Damien's thoughts on Commodities. "Global growth (China tightening could take the upper hand given investors obsession with the story…) will be the referee with regard to the timing as continued robust growth could mask some of those dynamics for some time but ultimately we will have a correction to be remembered...Observers have focused too much on what happened to financial markets to explain the rapid slowdown we witnessed in 2008-early 2009... our contention is that even without it, we
would probably have a "commodity price too high" induced mild recession..."