Archive - Feb 14, 2011 - Story

The much anticipated Paulson & Co. 13F is out and there are quite a few changes. First, the total equity AUM has increased from $23 billion to $30 billion. Paulson is now bigger than many mutual funds: "nimble" unwinding should the market ever sell off again sure will be an amusing sight. After all, his top 10 positions, which amount to $16 billion, represented 55% of his entire equity AUM (of 102 names). While there are not many dispositions, most notable is the decline of Paulson's third biggest holding - Bank of America - by 10% from 137.8 million shares to 123.9 million. Also, as Zero Hedge speculated, Paulson reduced his holdings in Citi modestly, from 424 million shares to 413.5 million (it appears he was selling to Tepper). Otherwise the top two holdings, the GLD for the dollar denomination shares, and Anglogold, are still in first and second place. In terms of notable increases, Paulson added 7.9 million shares to his Anadarko stake (conceived in Q3), bringing the total to 21.3 million, making it his 5th largest position. Rounding out the top 10 are Hartford (a small decline), Suntrust (a 5 million share increase), Comcast (flat), Capital One (3 million shares added) and MGM (flat). Buffett fans will be delighted to learn that Paulson added 5 million shares to his Wells position, making it his 11th largest holding at $635 million. Those curious what other additions are in Paulson's portfolio can do so by looking at the green highlighted rows in the table below (also, the rightmost column shows increases in green and declines in red). As for complete dispositions, here is the list: Hewitt Associates, NBTY, Mariner Energy, Mirant, Burger King, General Growth Properties (Ackman will not be pleased), Airgas, Family Dollar, Starwood, Zymogenetics, Potash, Mead Johnson, Boyd Gaming, and Starwood Property Trust.

The consensus expectation for Chinese CPI was 5.4%. Zero Hedge's expectation based on just announced manipulated CPI data was 4.9%. Guess who was correct... In the meantime, Chinese food prices are not increasing by 5% every ten days, or over 400% annualized. Or at least, they are not doing so on rice (most likely fake) paper.

You know what would have been really cool? If Obama had just said - you know what - the budget can't be balanced, deal with it. And you know why? Because over the past two years, the economy, that was trashed by the banking sector, still sucks. And, during the entirety of the Bush administration, while prepping the economy to suck, debt to pay for wars and tax cuts kept growing. And, when the banking system was facing the abyss, we opened our checkbooks, we stimulated the hell out of it, but we did it mostly through issuing Treasury debt and the magical Fed printing machines - so it doesn't show up in the budget that we're all debating, except for a couple hundred billion to Fannie and Freddie and what remains of the stellar TARP project. And you know what? I admit that was a stupid thing to do. It was stupid when it started under Bush, and it was stupid when it continued under me and the economic team I appointed to keep it going. The bailout binge increased our public debt by 50% under my reckless economic advisors, Treasury Secretary, the Federal Reserve. And, hell if other countries decide to dump Treasuries in bulk, and their interest rates rise, and Bernanke can't QE them down fast enough, our budget deficit will gap like the Grand Canyon.

As we speculated earlier, China has just lowered the weighting of food in its CPI. The reason: the nearly 5% surge in food prices in the past 10 days. Turns out the US can still learn a thing or two about data manipulation from the Chinese...

No, snow was not blamed in this latest, and certainly not last, broke state snafu. But wait until you read the official excuse...

I’ve finally had the time to thoroughly study Bernanke’s entire Press Club speech, his appearance before Representative Paul Ryan’s House Budget Committee and bulk of the recently released 2005 FOMC minutes. The conclusion I have drawn from all this data is that the captain of our economy, Ben Bernanke, is either an economic imbecile or a financial terrorist. Through evil intent, or sheer stupidity, the outcome remains unchanged. The bottom-line: He has hijacked our economy flight and changed our destination. Bernanke is about to crash Flight 666 and all 308 million of us sitting helplessly in the passenger cabin into Zimbabwe’s airport known as Hell’s Hyperinflation Field.

This one caught us by surprise. Today, Deutsche Bank announced it was suspending new issuance in the PowerShares Agriculture Double Long ETF, the DAG. What is odd, is that unlike last week's announcement by Barclays that it would start unwinding its triple inverse S&P ETF (BXDD), which has logically been plunging as the market levitates ever higher on ever lower volume, the DAG has done exactly the opposite. In fact, as the chart below shows, the DAG is trading close to its 52 week high, having tripled from the 52 week low in July (yet still $12 away from its all time high reached in 2008). Therefore, this is not a performance issue, which needs a reverse stock split to be resolved, and likely indicates some deeper issues with creation of shares in what is rapidly becoming the hottest asset space.

When we pointed out our volume chart earlier, which indicated that volume is now a laughable joke, we received one of the traditionally amusing responses, "ZH misses the point on volume because they data mine and only compare it to the volume during the crisis. SPY volume is STILL higher today than it was pre-2007. So are we to believe that the crisis volume levels are the "real" levels for volume? If you compare back to pre-crisis, volume is actually still pretty high." Here is our response.

David Tepper's Appaloosa has released its Q4 holdings. During the quarter the famously bullish investor made some major additions to his portfolio, the most notable of which is the increase in his Citi position from 51.3 million shares to 117.5 million: a 66.2 million increase, which brings the total to $555 million as of December 31. In other words, Appaloosa's bigest position is now the same as that of John Paulson. And that's just the start of Tepper's incursion into financials: the Chatham, NJ fund also increased its holdings in Wells Fargo Perpetual Preferred Convertible stocks from 292,019 to 335,482 shares, bringing the total holding to $336 million, closely followed by the last of the TBTF trinity: Bank of America, which saw an addition of 2.6 million shares to bring the total to 334 million shares. Total equity AUM increased by $1.5 billion between Q3 and Q4 as much cash was deployed to purchase mostly financial stocks. Other notable additions were Hewlett Packard, Wells Fargo common, Microsoft, and pretty much all of the top 25 positions. New positions were initiatied in Micron, Dean Foods and United Continental Holdings. In fact the only decline among the top 25 was in Fifth Third Bancorp, which saw an 825,500 share drop in Q4. It seems that the biggest hedge funds are now the holders of pretty much the same stocks: hopefully, just as has been the case over the past 6 months, nobody will ever have to sell, as there is nobody left who is not on the same side of the reflation trade.

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 14/02/11

Fedex plunged after hours only to retrace almost all of the drop, after investors were assuaged that the reason for the company's guidance cut was snow (in December, yes unbelievable), and plunging margins (this is one-time: just recall Goldman's most recent lies on the topic). In other words, while QE3, 4 and 5 is now the norm (i.e., perfectly recurring), such things as snow, and plunging profits, are transient. After all, it is only a matter of time before the Vissarionovich Jr. finds a way to subsidize his pet Russell 2000.

"The Court recognizes that an adverse ruling regarding MERS’s authority to assign mortgages or act on behalf of its member/lenders could have a significant impact on MERS and upon the lenders which do business with MERS throughout the United States. However, the Court must resolve the instant matter by applying the laws as they exist today. It is up to the legislative branch, if it chooses, to amend the current statutes to confer upon MERS the requisite authority to assign mortgages under its current business practices. MERS and its partners made the decision to create and operate under a business model that was designed in large part to avoid the requirements of the traditional mortgage recording process. This Court does not accept the argument that because MERS may be involved with 50% of all residential mortgages in the country, that is reason enough for this Court to turn a blind eye to the fact that this process does not comply with the law." Judge Robert Grossman

There was a time when news, especially very bad news, moved stocks. The last time that occurred was in the middle of 2009, before most robots had any idea just how massive the chairsatan's schizoid break with reality was. Now, that the appropriate sociopathology is fully priced in, bad news tends to have an even more profound upside impact on stocks than good news, as it guarantees that the Zimbabwe stock market will be upon us far sooner than if the economy were to have to go through another inter-QE episode. Which is why the just released news out of US Bankruptcy Judge Robert Grossman of Central Islip, New York, that MERS lacks rights to transfer mortgages will likely send the entire S&P circuit breaker up.

Today, in what is supposed to be an original piece, the NYT suddenly discovered that the stock market is no longer relevant.... it is probably our turn to say thanks - to think of all the jeers we got when we said that nobody really cares about stocks any more back in the spring of 2010, and in the summer... and in the fall... and winter... not to mention every single other time when we demonstrate that volume in stocks is now below abysmal. But just to validate with one charts what it takes some bloggers several pages of extended narrative to convey, here is today's ES volume chart. 884k shares traded, on 1.387MM average. This is nearly 40% below average. Perhaps it is time for some more essays about just how worthless and how irrelevant the stock market is, now that only a few machines trade it. After all, the NYT sure can do with the page views... And yes, some people are rotating their decimated muni holdings into stocks. The Golden Age for the ponzi scheme is back!

Today's dose of late afternoon S&P deux ex machina comes from the Fed Advisory Council, presumable a council populated by bankers, which basically gives a reprieve to the credit card companies.

• FED DURBIN RULES DRAW `BROAD AND DEEP OPPOSITION' FROM BANKS
• FED RULES 'EXTREMELY DAMAGING' TO CONSUMERS, BANKS, CARD FIRMS
• FED ADVISORY COUNCIL SAYS REGULATOR SHOULD WITHDRAW PROPOSAL

Mistakes are not be made as billions more are stolen from the populace.