Archive - May 2010 - Story

I wasn’t going to write this week so this will be extremely brief. The entire charade that has been propagated on humanity is coming completely unglued and there is absolutely no stopping it. I have only one request to those that are reading this. If you know of specific incidences of corruption or serious wrong-doing come forth and tell everyone now. This is your last chance. When this things breaks the 99% of people on this planet that have been unwilling victims of a very small group of elitist political and corporate players and others will be so completely destroyed they are going to go after people and in a very serious way. This must be done calmly and without violence but it must be done and it will be done. At that point the backstabbing and selling out by people that previously held alliances with one another will be so chaotic it is going to be tough to separate those did the most harm from those that were willfully ignorant. I fear that being willfully ignorant will not be a defense that will appease many so it is best to come out before that point is reached. For those that have read A Tale of Two Cities or just generally know your history remember what happened in the aftermath of the French Revolution. There was illogic and indiscriminate punishment applied in many cases. I hope this never happens and I will fight to prevent it all the way but the best thing one can do now is come clean if there is anything you need to come clean about. Bob Dylan said it best in the quote at the top. This is the chance. Do not let it pass you by because of fear or greed. Truth is all that matters. - Mike Krieger

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 20/05/10

Update: Futures now 7 handles lower. 46 point move in ES: that is almost a 5% move in the S&P for now.

The correction, soon to be crash, is here: the market had a bigger relative open to close move today than it did on May 6. We closed at the day's lows on massive volume, despite definitive central bank intervention, regardless whether it was the SNB, the ECB, or the Fed. The central planners have lost control of the market, and all thanks to the inevitable collapse of hyper capitalist Keynesianism coming out of the formerly most communist country in the world. A day of ironies. And it's not over. Futures are already down another 4 handles. The correction is coming, and it will be a bloodbath. The Fed can not push rates lower. It will print. It is inevitable. It is our destiny.

Another PIIG with massive GDP cuts coming to a Fed FX swap funded bailout trough near you. And speaking of Fed-funded FX swaps, here is the joke du jour courtesy of the NY Fed's Tarullo: "Federal Reserve swap actions not a bailout for anyone, and certainly not a bailout for Greece." What was that line from Macbeth... And yes, The Fed is definitely bailing out Europe with its FX swaps, and most certainly Greece. But at least Tarullo comforted those who have been brainwashed enough to listen to his ramblings that the Fed has no further action under consideration regarding the European bailout. Judging by our unimpressed response, the force is weak with that one.

Well, what are they gonna say: "We used US taxpayer money (thank you Ben Bernanke FX swaps) to prop up the European currency and kill the dollar." mmmk.

The move in the EUR has just hit ridiculous levels, with the nearly 300 pip intraday move comparable only to the EURCHF surge seen yesterday after quadruple SNB intervention. And frazzled US quants, having no clue what to do, decide to once again turn on the EUR signals pushing the market higher, with a 10% chance of a green close. Make no mistake - this is reciprocal liquidation, where morning margin calls in all other pairs were met by EURUSD covering of shorts,exacerbated massively by what is now almost certain ECB (not SNB) intervention. The negative here is that Germany will look at the Eur response and pitch its naked short ban to all other European countries, which will now gladly accept the proposal, myopically hoping for another 1-2 bp move in the EURUSD. We believe there may well be an announcement of a Europe-wide naked short covering ban this weekend, coupled with the imposition of a transaction tax.

It should come as no surprise that the short-term funding markets for European banks are getting increasingly problematic. Unfortunately for the ECB, which can intervene with a 6-12 hour time horizon to prop up the euro, there is nothing it can do to limit the bleed in Libor. Confirming this, Libor simply refuses to slow down its constant creep higher, causing increasing pain to all those who have sold the Ted spread and Libor-OIS, both of which are back to September 2009 levels. Yet while a surging Libor in itself is a troubling phenomenon, what is even scarier is looking at the offers provided by constituent banks to the Britsh Bankers Association, which compiles the data and provides an ex-outlier quartile adjusted Libor rate. The dispersion between the top and bottom bank in today's EUR LIBOR panel was a whopping 33% today, begging the question of just how healthy the upside panel outliers are.

The long-debated topic of whether the ECB intervenes on behalf of the euro can now be put to rest. 120 pip move in a minute is not a short cover. It is, and always has been, forced central bank intervention. Bernanke is so happy Trichet is doing his work for him for the time being. Be very wary of buying stocks on this intervention, as Central Bank involvement now at best leads to a 12 hour temporary "fix" to the market that Bernanke et al want to sustain.

Total panic in the market. PPT now out protecting the critical 1,070 level in ES. As the chart below shows, if the 1,070 level in ES is taken out, watch out for a repeat of the flash crash.

Unconfirmed: RBS back up now. No idea what caused the black out, but likely a liquidity run.

In case you needed confirmation of the wipe out you are seeing on your monitors, here comes Bill Gross. Just headlines for now via Reuters:

• GROSS: FINANCIAL MARKETS EXHIBITING "MINI RELAPSE" OF FLIGHT TO LIQUIDITY
• GROSS: HEDGE FUNDS AND OTHER LEVERAGED POSITIONS NOW LIQUIDATING TO PRESERVE CAPITAL

So you mean Prime Brokers allowing 5x leverage for 130/30s was actually a bad idea?

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 20/05/10

We received this in our tipline:

I don’t know if this is appropriate for your tip line or if it’s even “news” but TD Ameritrade online access is “down.”  It seems to be the whole system…

Supposedly a technical issue with no forecast for when it will come back up.  They also don’t have a system to automatically notify customers of such issues –or their resolution.

Phone support’s advise agreed that I “should just keep hammering on it.”

In addition to the obvious rant about this status, it’s still another vote for why you should never keep all your assets at any one broker.

We have been unable to confirm it as we get automatically disconnected from TD Ameritrade's new customer contact number: 800-454-9272. If any readers are experiencing the same issues, please advise. If TD is indeed down, we wonder how long before all the other retail brokers follow suit.

Regular readers will know Zero Hedge's fascination with Hugh Hendry, who so far has been spot on in his predictions on this business cycle and bear market rally. Here is his most recent May 2010 letter, in which topics are critical as China and hyperinflation/deflation are deconstructed in a way that only the former Goldman/Odey partner can. Must read.

We are trying to procure the report, reported by RanSquawk. If true, Europe's contagion is set to go global, and the JGBs are about to find out what a reversion to the one way tightening path for decades means. Also should stop the JPY appreciation dead in its tracks, and refocus the debt vigilantes on that final bastion of Keynesiansm, the United States.