Archive - Feb 2011 - Story

For all those who were wondering why someone just bought a massive 75,000 put spread block on JPM earlier, here's the reason. Just out from the NYT, disclosing a suit filed previously against JPM by Madoff trustee Irving Picard under seal: "Senior executives at JPMorgan Chase expressed serious doubts about the legitimacy of Bernard L. Madoff’s investment business more than 18 months before his Ponzi scheme collapsed but continued to do business with him, according to internal bank documents made public in a lawsuit unsealed on Thursday. The lawsuit against the bank was filed under seal on Dec. 2 by Irving H. Picard, the bankruptcy trustee gathering assets for Mr. Madoff’s victims. At that time, David J. Sheehan, the trustee’s lawyer, bluntly asserted that Mr. Madoff “would not have been able to commit this massive Ponzi scheme without this bank.” But with the case under seal, there was no way to gauge the documentation on which the trustee based his $6.4 billion in claims against the bank — until now."

Some observations from Credit Suisse

The firm which exposed RINO for the fraud it is has released its latest Chinese scam target: China MediaExpress Holdings (Nasdaq:CCME)."Muddy Waters LLC has initiated coverage on China MediaExpress Holdings, Inc. (CCME) with a Strong Sell rating and an estimated value of $5.28."

Sorry, we can't take credit for "chairsatan" - that one has Bill Gross written on it all the way... What can we say: the man sure can be a genius, especially when he isn't buying government subsidized BAB bonds. And when subsidies no longer work out, coming up with creative epithets sure is a great way to let off steam. That said, watch the full Bernanke NPC Q&A at the link below.

The lies come hot and heavy:

• Initial claims for unemployment insurance have generally been trending
  down, and indicators of job openings and firms' hiring plans have
  improved
• QE 'Effective at easing financial conditions'
• Recovery likely to be 'more rapid' in 2011 than 2010
• 'Overall inflation remains quite low'
• Recovery in consumer, business spending may be solid
• Economy seems to have strengthened in recent months

But here's the only one that matters:

• Unemployment, inflation likely to defy Fed mandate

Which mandate is that Genocide Ben: would that be the mandate to kill off half the world with your revolutionary policies before the Russell hits 36,000?

Perhaps those 2 days of December 1,800 gold call purchases we discussed yesterday indicated someone (not Doug Kass mind you), knew something...Gold has just surged by $20 in minutes. Unless Blythe can find a way to contain this, this could get very ugly, very fast.

And so the tide rising all commodities keeps coming: rough rice has just passed its December 2009 high and is now at its highest since October 2008. When we predicted on Monday morning that "rice is next", little did we think that it would be up by 11% in 4 days. And with this important resistance level broken, it is smooth sailing to the next two resistance levels of $20 and $24. Of course, Bangladesh will be in flames long before any of those are hit. But a speculator has to eat, right. After all, none of this is Gen Ben's fault.

The Criminal Reserve once again lives up to its name...

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 03/02/11

"Based on our research, China Agritech, Inc. (listed on NASDAQ as CAGC) is not a currently functioning business that is manufacturing products. Instead it is, in our view, simply a vehicle for transferring shareholder wealth from outside investors into the pockets of the founders and inside management. Our price target of $2 is based on the cash currently reported on CAGC’s books—$45.8 million—divided by the number of shares outstanding. The company’s remaining business does not, we believe, exceed $7.5 million in revenue per year. If the overhead associated with maintaining a listed company is taken into account, there is no profit. Since we believe China Agritech has no valuable technology, intellectual property, customer relationships, or capital assets, there is no value to the company other than dissolution value." LM Research

According to Al Jazeera, the Egyptian Central Bank has just imposed a withdrawal limit of $10,000 on all banks in order to prevent a systemic bank run that will promptly wipe out what is left of the financial system. Look for this number to be cut to $100 in the first several minutes after banks reopen (whenever that actually happens). As for all that central bank currency "gold backing", somehow we have a feeling that Egypt's 75.6 tonnes in gold is about to be drastically adjusted. Also, it is not too late to reevaluate that long EGPT thesis.

Like PM, like MP. At least in Italy they don't hide when going about their prostituing business, either on the receiving or giving end... From IBT: "A member of the Italian government led by Italian Prime Minister Silvio Berlusconi was caught ogling at an escort's website on his iPad during a no-confidence debate on Wednesday. Simeone di Cagno Abbrescia, 66, was photographed checking several scantily-clad women at a time when the three-times-married MP, a member of Silvio Berlusconi's ruling centre right People of Freedom party was in the chamber to take part in a no confidence vote. The MP was more interested in checking out 'Dolly, 39' and 'Daisy' who charged £400 for three hours on his iPad." The mea culpa: it literally just popped up - "I was looking at my messages when a window opened up and I couldn't help looking at the pictures of those lovely girls. I was just being curious. Sometimes you have to be in the house even when the debates are not exciting," Telegraph quoted Simeone di Cagno Abbrescia as saying. "Sometimes these messages from girls just pop up when you are looking at your email. I have never been with an escort," Abbrescia added." What next: someone photographs Gen Ben putting in a limit buy order 1 billion ES on his iPhone version of REDI?

The January non-manufacturing ISM came at 59.4, higher than expectations of 57.2, and compared to 57.1 previously. From the report: "The Non-Manufacturing Business Activity Index increased 1.7 percentage
points to 64.6 percent, reflecting growth for the 18th consecutive month
and at a faster rate than in December. The New Orders Index increased
3.5 percentage points to 64.9 percent, and the Employment Index
increased 1.9 percentage points to 54.5 percent, indicating growth in
employment for the fifth consecutive month and at a faster rate. The
Prices Index increased 2.6 percentage points to 72.1 percent, indicating
that prices increased at a faster rate in January. According to the
NMI, 13 non-manufacturing industries reported growth in January.
Respondents' comments are mostly positive about business conditions;
however, they still remain cautious about the sustainability." But why cautiousness- this is after all the 18 consecutive months of growth? Or is someone concerned what happens when Gen Ben closes the floodgates? With the dollar jumping on the results and stocks falling, it goes to show just how irrelevant economic data is for the bizarro stock market. And yes, prices paid jumped from 69.5 to 72.1, the highest since September 2008. Nothing to see here.

The latest letter by Absolute Return Partners' Niels Jensen is a must read for anyone still on the fence about the Chinese "thesis." With many prominent pundits pitching either side of the China bull/bear case, often times covering up weaknesses in their arguments with extended and superfluous rhetoric, sometimes it gets easy to get lost in the noise: here is where Jensen's ability to create signal shines through. Jensen starts off with the official revelation that Chinese GDP is a made up number, discussed previously on Zero Hedge. "In a leaked 2007 cable Li Keqiang, who is the favourite to become the next premier, confided that official Chinese GDP figures are “man made” and “for reference only” (surprise, surprise), and that one should rather look at alternative measures such as electricity consumption, rail freight volumes and bank lending, if one wants a true picture of economic growth in China." It is all downhill from there.

When last month we highlighted the FAO's periodic report which noted that food prices had surged to a fresh all time high, Zero Hedge first predicted that food riots were imminent. Fast forward 6 rioting countries and 2 revolutions later, to today when we get an update from the UN's Food and Agriculture Organization, where we read that, not surprisingly "the FAO Food Price Index (FFPI) rose for the seventh consecutive month, averaging 231 points in January 2011, up 3.4 percent from December 2010 and the highest (in both real and nominal terms) since the index has been backtracked in 1990." And while it is painfully obvious to anyone who shops for groceries, but not to Genocide Ben, nothing is ever obvious to him, here is Reuters' take on the numbers: "Up for the seventh month in a row, the closely
watched FAO Food Price Index touched its highest since records began in
1990, in nominal terms, and topped the high of 224.1 in June 2008,
during the food crisis of 2007/08." Yes, oil may not be at its all time highs from the summer of 2008, but food has already surpassed it.