Archive - Jan 2011 - Story

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.

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 27/01/11

By now it should be clear even to the most optimistic observer that the global financial system has given itself over to systemic lawlessness. Once international banks were effectively allowed to print their own money in an unregulated “shadow” system and have it redeemed full value by national taxpayers, the charade was over. The only thing left, at this point, given the full cooperation of governments and an eerie world-wide non-enforcement of law, is for banks, like a cancer to savage and consume every concrete store of non-counterfeit productivity and asset value. Not only have governments from China to the United States committed themselves to a chess game meant to eke out relative advantages on a sinking ship, but they have positively rewarded those who are speeding the collapse. A simple, cannibalistic economic rule now persists until a new system emerges: Economic manipulation, destruction, and extortion are simply more profitable, far more profitable, than good old fashion value creation. Disaster capitalism will be pursued full force.

The second today's POMO ended, the market flushed. The catalyst: the announced Submitted to Accepted ratio, which came at a whopping 5.8x, far higher than both the average and median. We have long claimed that PDs will spike the S/A ratio when in need of immediate Fed liquidity, and thus any time there is a high S/A ratio, watch out below. Well, as the chart below shows, this is precisely what happened today. Furthermore, the beatdown is taking down the commodity complex as well. Is the market starting to finally realize that everything is just a house of cards? (and yes, QE3 is coming. Plan accordingly).

Are all Fed employees currently watching Angelides carefully to see if their name is mentioned (or better yet barricading the doors to keep the FBI out)? Sure seems that way. Either way, great use of tax dollars to keep the Fed's henchmen employed. Since it take only one man to print, and another to refill the ink, aren't all these apparatchiks redundant? Perhaps, just like BBC reports based on witness reports out of Cairo Airport where there apparently is a group of private jets waiting for high-level officials, so the distinguished gentlemen (and ladies) are merely busy transferring whatever is left in the unauditable Fort Knox to their own currently warming up Cessnas?

We will get to the text shortly (and at last check the word count for "Goldman" was well over 200 and rising). For now, enjoy the charts in the 662-page (with appendices) report. Also, cutting to the puppet chase, the FCIC said during the hearing that it has made criminal referrals (more than 0, less than 1000). Won't go into details. Wristslapping to follow.

At 10:00 am Eastern, the FCIC will release the final version of its 500+ page Inquiry report, which will disclose that all of Wall Street is one big fat fraud, populated by criminals, who never go to jail, and whose settlement arrangements with the SEC is at most 1/50th of the illegally obtained profits. We will present the full report as soon as it is released: it will provide countless hours of reading entertainment. In the meantime, below is the live release of the report to a live monkey audience.

Readers know our fascination with pointing out the relentless "flip that bond" game that the FRBNY's team of Sack Frost and the 18 Primary Dealers enjoy playing with each other, which just happens to be funded to the tune of millions of dollars each day when there is a POMO (which would be everyday). Two days ago we pointed out the most blatant case of documented taxpayer rape to date, when Brian Sack monetized 71% the just issued 2.125% of 12/15, even though it was not anywhere among the 10 cheapest bonds. We had nothing to add to that - at this point only Congress, and perhaps Rand Paul, can do something about this shovelling of taxpayer money into the banker hole on a recurring daily basis. All we can do is continue to monitor. Which is why we present today's cheapest bonds that the Fed should be buying. These are the bonds that the Fed should be buying as they represent the best IRR to taxpayers. This is at least the theory. What will happen, is Sack Frost will instead most likely end up buying either the PW4s issued in December: the 0.625% of 12/31, or and this would be just stunningly daring, the PR5: the 0.5% of 1/13, auctioned off two days ago, which has not even settled yet.

Earlier this week we predicted that the US Treasury would wind down its SFP program, unleashing $200 billion in 56-day non-rollable "Fed bonds" on the market. We predicted this would occur by mid-February. As of a few minutes ago, the Treasury has just confirmed that starting February 3, this will be precisely the case. Per the Treasury, supplementary financing account to fall to USD 5bln, with the reason being the traditional explanation: decreasing funds in account as country nears debt ceiling. As the revised table below shows, each Thursday beginning February 3 we will now see an incremental $25 billion in extra liquidity as the maturing 56-Day CMB is not rolled.

After the December economic collapse (in the US, UK and China) was blamed entirely on this stunning for the winter phenomenon called snow, it is time to dump the market's problem on it too. The NYSE has just invoked Rule 48. Please, like we are supposed to believe there are still humans trading Bernanke's monopoly board.

Expectation of 405,000... Print: 454,000! Worst print in forever (well, October). The BLS calls it a "weather related backlog." Read - snow. Call it what it is - Stagflation, baby.

Non-seasonally adjusted number came at 482,399, as 161,913 people fell off extended benefits.

Continuing claims: 3,991K on expectations of 3,873K.

And just to complete the stagflationary picture, durable goods decreased by 2.5% on expectations of plus 1.5%. "This decrease, down four of the last five months, followed a 0.1 percent November decrease. Excluding transportation, new orders increased 0.5 percent. Excluding defense, new orders decreased 2.5 percent."

The freefall in the BDIY is just ridiculous: following a steep plunge it has now gone in freefall, and is down 3.9% overnight to 1,186. And to all who are claiming that the index is merely indicating a supply glut from the onslaught of new ship arrivals, well the entire orderbook (in progress) has been public and transparent - to claim it is a surprise is about as "naive" as stating that 5 computers and a bunch of NYU kids control the US stock market. As for how much longer it will keep dropping? Well: he post Lehman low was 663. There is still a lot of pain. Especially if one is a non-chartered dry bulk shipper... With leverage.

A smattering of today's headlines across Egypt's state and private press... And a quick glance at Albania, where three people have already been killed in recent anti-government riots: is this the fuse that lights up Europe?