Archive - Jan 27, 2011 - Story

Optimism is so important that Merrill Lynch, one of the oldest firms on Wall Street adopted a “bull” as their logo and the phrase “be bullish” as their mantra. [Editors note: despite Merrill Lynch’s best attempts of providing uplifting advice to America and the World, they’ll remain as one of the poster children for the 2008 market collapse. I guess being eternally bullish didn’t exactly workout for the mighty Merrill Lynch]. Ok, Merrill Lynch was obviously married to positive thinking. But should everyone on Wall Street be painted with the same brush? We’ll let the numbers speak for themselves as we examine the success of the professional World of economists.

Per assorted tweets from the country that is only second (but certainly not last) in experiencing first hand the Genocidal one's monetary policies, the Egyptian government has now effectively shut down the internet, text messaging and possibly land lines -link. This includes Facebook and Twitter. Ironically this act of desperation in Egypt which seeks to prevent the ongoing televising of the revolution, would be precisely the match that would set off America on a certain path to revolution: not ongoing banker rape, not Primary Dealers stealing from babies, not Greek president G-Pap robbing your wallet... merely a shutdown of Facebook and Twitter (and possibly cable) and 300 million well-armed American will promptly go apeshit.

And so Chicago politics continues in the good old fashion way. From the Illinois Supreme Court: "Given the record before us, it is simply not possible to find clearly erroneous the Board’s determination that the objectors failed to prove that the candidate had abandoned his Chicago residence. We therefore reverse the decision of the appellate court and affirm the decision of the circuit court, which confirmed the Board’s decision. So there will be no mistake, let us be entirely clear. This court’s decision is based on the following and only on the following: (1) what it means to be a resident for election purposes was clearly established long ago, and Illinois law has been consistent on the matter since at least the 19th Century; (2) the novel standard adopted by the appellate court majority is without any foundation in Illinois law; (3) the Board’s factual findings were not against the manifest weight of the evidence; and (4) the Board’s decision was not clearly erroneous."

Desperation kitchen sink anyone? The M2, which up until now was merely diagonal, is about to go parabolic. In the week ending 1/17/2011, Seasonally Adjusted M2 surged by $46.6 billion, the biggest weekly increase in the broadest tracked monetary aggregate (ever since the cost-cutting associated with discontinuing the M3) since 2008. One look at the chart below indicates precisely what is fueling the endless market ramp. Furthermore, for those who realize there is a 93% correlation between M2 and gold, we would certainly recommend putting on the M2/Gold convergence trade on.

And there you have it: blame that shocker of a non-recurring event known as snow in December. Someone should explain to Jeff Bezos that Amazon benefits from record snowfalls. It sure would inspire some confidence in shareholders if the CEO actually knew that he was running an online retailer. Did someone dissolve crazy pills and forget to tell us about it? When will someone finally blame fiscal and monetary policy (all QE1, Lite and 2 of it), for one-time, non-recurring $4.5 trillion in stimulus? We dread to imagine what Stay Puft marshmallow man will materialize if it ever snows on the Abominable Chairman's printers...

"The world has paid with tens of millions of unemployed, who
were in no way to blame and who paid for everything. It caused a lot of anger. Too much is too much. The world was stupefied to see one of five biggest U.S. banks collapse like a house of cards. We saw that for the last 10 years, major institutions in which we thought we could trust had done things which had nothing to do with simple common sense. That's what happened... There is an ocean between flexibility and the scandal we saw.  So if people present me as obsessed with regulation,
it's because there is a need for regulation. I don't contest the principle of securitisation, but when
one offshore country guaranteed 700 times its GDP, are we in the
market economy or in a madhouse? Bonuses don't bother me, provided there are also ...
draw-downs when there are losses. When things don't work, you
can never find anyone responsible. Those who got bumper bonuses
for seven years should have made losses in 2008 when things
collapsed." - Nicolas Sarkozy

"I see more inflation and more currency turmoil as we go forward. There are huge debt imbalances in the world. U.S. is the largest debtor nation in the world and all the assets are in Asia. The largest creditors in the world are China, Korea, Japan, Taiwan, Hong Kong, Singapore – this is where the assets are and the debts are in the West. Those imbalances have to be resolved. They frequently lead to more currency turmoil. We’ll see more inflation, we’ll see more governments fall. We just saw Tunisia fall – more are coming because the world is going to continue to have these problems, and especially inflation that is going to cause more social unrest."

All one can say is oops. That margin compression sure does suck:

Q4 EPS USD 0.91 vs. Exp. USD 0.88

Q4 net sales USD 12.95bln vs. Exp. USD 13.03bln

Net sales are expected to be between $9.1 billion and $9.9 billion, or
to grow between 28% and 39% compared with first quarter 2010

Operating income is expected to be between $260 million and $385
million

We have yet to see snow being blamed for the After Hour stock collapse

Oopsie

Following the release of the yesterday's revised CBO projections, we, together with anyone with half a brain, were stunned by the ridiculous assumption that somehow the US government can grow its revenue by 50% (!) in the span of 3 years. Since absent a wholesale increase in taxes, which won't happen ahead of the Obama presidential elections, this has a snowball's chance in happening, the only recourse to the government is to cut spending. But where? Most major governmental expenditures are non-discretionary, yet spending has to be cut... Which brings us to the topic of this post: most likely the biggest sacrificial lamb will be companies on the dole of not only the US government, but certainly foreign governments (where unlike in the US, austerity is rampaging without mercy). Courtesy of data prepared by Lehman's (now Barclays after the Blue Light special rushed purchase of Lehman NA in bankruptcy court) Matt Rothman we present the companies whose revenues are comprised at least 50% of sales to governments, both foreign and domestic.

My generation is coming into its own and we don’t buy the bull shit of our parents’ generation. We don’t believe in Democrat or Republican. We don’t believe in the system itself. We will be the ones making the decisions going forward. We will default on the astronomic promises our parents made to themselves. We will create an entirely new monetary and financial system. Real free-market capitalism will flourish, not this socialism for the rich garbage Obama loves so much. We will focus on doing good while doing well. Not because the government forces us to, rather because we are witness to and victims of this sick, twisted creation of our parents generation that celebrates total greed without the slightest concern of the consequences to others. - Mike Krieger

Today's $29 billion in 7 Year bonds closed at a 2.74% high yield (95.59% allotted at high), a slight drop from the 2.83% in December. The Bid To Cover was 2.85, a hair less than the 2.86 in December, and in line with the last 12 auction average of 2.875%. The auction came well inside of the When Issued, confirming the auction was much stronger than expected. As a result the entire bond complex has seen prices jump on the back of the very well accepted auction. Indirects, who have recently been skittish from left of the belly auctions showed some modest enthusiasm and bought up 42.2% of the auction, almost certainly to turn around and sell it in the open market, as the Fed is a 1:1 buyer for all gross issuance in 2011: i.e., the fact that Indirects taken down close to half is pretty much meaningless.

Ahead of tomorrow's national street protests, which are expected to count in the millions and which may be the final nail in the current administration's regime, Egyptian opposition leader Mohamed ElBaradei has just landed in Cairo, arriving from Vienna, to join a growing wave of protests against Mubarak inspired by Tunisia's overthrow of their authoritarian president, as Reuters reports. Mr ElBaradei was formerly the head of the UN nuclear watchdog, the IAEA, and who had found no traces of any nukes in Iraq in 2003 right before the invasion that proceeded regardless, said the government should not use violence against the demonstrators. Before his departure, he also told the BBC that he is going to Cairo to join street protests there. More importantly, he said the country "must change and he is ready to lead the transition if asked." With committed leadership, it appears the next US puppet regime is about to tumble.

When the market seems like it is about to roll over, who you gonna call? Why future Treasury Secretary Jamie Dimon of course... Courtesy of IOIA, we now know whose ETF desk has a sole purpose in life to hit the Chairchopper's Russell 2000 target of 36,000 before June, when it all goes to hell.