Archive - Jan 2011 - Story

Future mayor Emanuel's first promise once the Illinois Supreme Court elects him? To live in Chicago. Full filing from the Supreme Court of Illinois attached. It is unclear if the invoice for services rendered comes with the filing or later.

Today's $35 billion in 2 Year Notes came at a 0.65% high yield, slightly better to the When Issued, as the Primary Dealers continue to take down near two year high levels. And with PDs now turning and flipping to the Fed as soon as a day or two later, this is nothing more than the Fed basically buying up a major portion of the auction: in today's case it was 58.13%, higher than even last month's surging 57.58% which was the highest since August's 58.68%. Directs took down a now traditionally high 14.89% (and nobody still has any clue who the UK "fund" that has bought nearly $300 billion of USTs in the last year is), while indirects dropping to 26.97%, which was the worst Indirect take down since February 2009, with the exception of January when foreigners staged a year end wall off, buying only 26.97% of the auction. Otherwise, the Bid to Cover was 3.47, in line with recent auctions, and overall the auction had little impact on the broader curve. After all the Fed will never allow an auction to fail: not when it is taking down nearly 60% of each incremental gross issuance directly (and 100% indirectly).

Look around you, America. Everything needs to be done. The barns are falling down: the cities, the schools, the houses. The railways have been pulled up, the factories and mills are closed, the silos knocked over, the fields paved, the ports silted in and ruined. The children have run away; your poor and the old are abandoned. Who did this to you? You did it to yourself, and if you want a nation that functions, one that can feed and clothe you, one that has decency and prosperity and goodness, you’re going to have to go make one. That means grabbing the shovel that’s closest to you and starting there. That means if you see a need, some failure, some ugliness, you are the only one who’s going to change it into beauty and success. That means helping, sharing, teaching useful skills to everyone who’s willing to do the least work—for we must each do all we can. That means displacing the corrupt everywhere they’re found, everywhere they’re protecting each other, methodically, legally, one by one, starting in every Town, State, and National body, in corporations, public groups, government hall, and in your living room.

Ten days ago, we ran a story in conjunction with The Forensic Factor "Is Telestone Technologies (TSTC) A "RINO" In Sheep's Clothing?", in which we presented TFF's thesis on why Telestone Technologies (TSTC) may be simply the latest Chinese fraud stock, the latest in a list of companies so long that very soon it will be impossible to trade any Chinese company (no matter how pristine) without allegations of fraud swirling all around it. Immediately following the publication, the stock plunged by 20%, confirming that these companies are truly nothing but story investments, and when even the slightest whiff of impropriety appears, everyone bails in droves. TSTC's management team was forced to go public with an attempt at refutation, which however has achieved in doing nothing for the stock price. Today, TFF presents its follow up thesis on TSTC. As usual, the smoke certainly appears is here. We leave it up to regulators to determine if there is fire...

Zero Hedge reader Jason submits the following rebuttal to yesterday's most hilarious segment on CNBC, which was Steve Liesman's explanation of how a 100% jump in wheat prices is really nothing to be concerned about. "I viewed CNBC on Monday morning and was amused at the attempt to convince consumers Moms and Dads on a budget who buy groceries) that a 50% increase in wheat will not impact their grocery budget. The logic used (see the story as recorded by CNBC) is beyond ridiculous to the point of incompetence. Anyone who actively listens vs. passively dozing off, and I know that is hard to keep from doing, would have seen right through this.

Since FX trading is rapidly eclipsing stocks as the main market of choice for retail investors, it is useful to chart how the foreign exchange market has developed over time. Below, we present a recent comprehensive summary on the evolution of the foreign exchange market written by Brown Brothers' global head of currency strategy Marc Chandler.... Cause in today's centrally planned world, you either have 5,000x leverage on every trade, or you are too little to be bailedout.

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 25/01/11

Inflation is actually much higher than what the BLS claims it is; something that purchasers of college tuition, pharmaceuticals, or health insurance know all too well. To give the BLS some credit, they must try and estimate a single rate of inflation that applies to everyone equally. But that is a completely impossible task. An octogenarian living in Seattle on a meager pension and taking lots of prescription medications will have a totally different inflation experience than an 18 year old living in their parent's basement eating Ramen noodles. But even after spotting the BLS some slack, there are some enormous and glaring errors in their methods that render the official inflation measure hopelessly - and dangerously - inaccurate. In this article, I am going to reveal how US inflation numbers are badly understated, how this practice short-changes institutions and fixed-income individuals alike, and why this means fiscal and inflationary train-wrecks are the most probable outcome for the US -- and, by extension, the globe.

CUSIP 912828PM6 due 12/31/2015: $5,488,000,000, 71.1% of total

Today's mortgage fraud stunner comes from Bloomberg's Jody Shenn who reports on the ongoing lawsuit between Ambac and former Bear Stearns mortgage unit EMC, now part of JP Morgan. In what can only be classified as fraud-cum-double dipping-cum-AIG/Goldman, "JPMorgan Chase & Co. demanded that a lender repurchase bad
mortgages even as it resisted calls to buy back the loans from bonds
created by Bear Stearns. “That would be pretty bad” if true, said Joshua Rosner, an analyst at
New York-based research firm Graham Fisher & Co. He said such
allegations show why “investors and consumers have a right to be
distrustful of the banks’ statements." The bottom line is that JPM, which has so far been able to escape largely unscathed from the fraudclosure scandal, is about to take front and center. The reason: the very first line of the just released Exhibit 1 to the Ambac lawsuit: "In mid-2006, Bear Stearns induced investors to purchase, and Ambac as a financial guarantor to insure, securities that were backed by a pool of mortgage loans that - in the words of the Bear Stearns deal manager - was a "SACK OF SHIT." But the stunner, and nothing short of a full-blown scandal if proven true, is that Bear Stearns (aka JPM) after funneling misrepresented loans with Ambac's insurance, "implemented a trading strategy to profit from Ambac’s potential demise by “shorting” banks with large exposure to Ambac-insured securities." This needs its own congressional hearing right now, followed by a few wristslaps. After all such wholesale fraud can never possibly be prosecuted in the world's most advanced country.

We have received a disturbing update on the situation in Egypt (one of Africa's most populous countries will just under 90 million): "Twitter is now blocked in Egypt, and apparently many phone lines have had data services disabled." What happens next is anyone's guess.

And so the latest shoe to drop in robosigning falls. Diana Olick reports that BofA has stopped its issuing notices of default in non-judicial states, such as the all critical California and Arizona, which explains the dramatic drop off in NODs in January. Previously explained by Koolaid guzzlers as an indication of economic improvement, it turns out this was merely yet more fraud being perpetrated by the big banks, which are now trying to cover up their slime trail. According to Bank of America's Dan Frahm, "We did conduct a review of the Notice of Default process. As a result we stopped the NOD process in non-judicial states." And so the double dip just got far worse.

Today, the Fed's openly fraudulent operations desk will buy back $6-8 billion of bonds maturing between 01/31/2015 – 06/30/2016 starting at 10:15 am Eastern. Below we present a table showing the 10 cheapest CUSIPs that the Fed SHOULD be buying, considering that it should be monetizing, as it is supposed to, the best bang for the buck bonds. Note that nowehere in the list is CUSIP 912828PM6 due 12/31/2015 or the last 5 Year auctioned off, which is in fact one of the bonds trading richest relative to the entire spline. In other words, if the Fed ends up accepted a bulk of PM6, someone in Congress should really pretend they give a rat's ass about the 300 million or so US citizens raped daily by the kleptocratic elite, before said (mostly armed) 300 million finally realize what a complete criminal fraud the PD-FED complex is.

In our relentless pursuit of the completely locked up Chinese interbank market (here and here), we stumble upon today. And boy was today a doozy. Both the 7 Day SHIBOR and repo rate, which effectively both show the same thing, i.e., the rates in the unsecured interbank lending market, have jumped to fresh multi-year highs after posting a slight improvement yesterday. And guess who is to blame (in addition to the Chinese new year) - why snow, of course.

Something funny happened on the way to the "wealth effect": we call it affectionately, the "poverty effect." At least for those who have homes. The November Case Shiller index confirmed that the double dip in housing is accelerating, with the composite index posting its 5 sequential decline. The 20 city composite came at -1.59% Y/Y on expectations of a rebound to 1.7%. Perhaps the Chaircreature should finally consider lowering those mortgage rates instead of focusing so much on the Russell 2000. What we are amazed by is that all that abundant California snow was not blamed on this one particular negative surprise.