Archive - Apr 2011 - Story

As Bespoke points out, bearish sentiment as calculated by Investors Intelligence in the past week plunged by a whopping 32 from 23.1% to 15.7%. This is the most bullish since late 2009. Empirically speaking, this is bad news for the market, as there are virtually no contrarians left and everyone is on the same side of the boat. As John Lohman demonstrates, the returns 1, 3, 5 and 10 weeks following a more than 25% drop in bearish sentiment are as follows: -0.92%, -2.07%, -1.99%, and -1.95%, respectively. Yet of all these, only the drop in November 2009 was actually executed in an environment of central planning such as the one that continues through today: and in that one the market actually rose 0.01%, 1.38% and 3.22% in the 1, 3, and 5 weeks following (and dropped 1.6% ten weeks later). Will the current shift in sentiment revert to the average, or will the market continue to price in aggressive Fed central planning? Stay tuned and find out.

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 06/04/11

The Fed has just announced that of the 52 Maiden Lane II CUSIPs offered as part of a Bid List circulated on April 4, the Fed has just sold 42 of these CUSIPs, for a total face value (not price paid) of $1.3 billion. The actual cash exchanged is likely about 50% of this amount, as the Fed has kept the OID it used when purchasing the full $39.3 billion back in October 31, 2008 for $20.5 billion pretty much flat. The list of auction winner(s) will be made available shortly, as will the actual amount of proceeds received by the Fed and the IRR on the transaction. Since there is another $38 billion in ML2 assets left, look for many more such Bid Lists over the next several months until the market crashes and yield chasing finally ends.

Following weeks and months of lies that Portugal does not need a bailout, that is is not Ireland, Greece, Algeria, Tunisia, Egypt, Middle Earth, Uranus, etc, the country finally realized it is bankrupt, unless it comes, hat in hand, bagging for a bailout from Jean Claude Trichet (who now is scratching his head how to spin this latest sovereign default as bullish ahead of tomorrow's rate hike). Which it just did. Reuters has compiled the reactions by those who felt like sharing their views on this foregone conclusion.

Or how in kleptocratic America, wealth effect poverty effects you.

World Bank president Robert Zoellick is currently speaking live on Reuters Newsmaker, and is discussing numerous topics related to the future of the monetary system, notable among them most likely being the fate of the dollar, and whether or not he still stand behind his recent statement that a return to the gold standard is needed for the world.

One of the sad side effects of the recent record in food stamp participation is that apparently the 44.2 million Americans who now subsist below the poverty line and rely on the government for basic food needs, have become quite a drag on otherwise insolvent state and local governments. And with monthly increases projected to keep rising in line with the Russell 2000 as the Wealth Effect is constrained to Wall Street, and no end in sight to the Poverty Effect, states are getting nervous. Never fear: the US taxpayer is here. In a press release, the USDA has just announced that it "will award grants to improve access to and increase participation in the Supplemental Nutrition Assistance Program (SNAP). The grants are for state and local governments and private non-profit organizations to develop projects that simplify SNAP application and eligibility systems and find efficiencies in the administration of the program with the goal of providing critical nutrition assistance to those in need." Translation: the Fed is about to add the bailout if the Food Stamp program to the infinite list of subsidies that rely exclusively on the generosity of Vassarionovich-Packard.

Update: It's Official. Portugal is Bankrupt:  Portuguese finance minister says the country will have to use European Union mechanisms to resolve its debt problems, to make announcement at 8PM.

In the biggest shocker to come out just hours before the ECB's announcement tomorrow, which many see is a guaranteed rate hike, Journal de Negocios has just announced that according to the Portuguese Finance Minister, the country needs a bailout, after weeks and weeks of Greece-style denials. And yes, nobody could have foreseen this, and all that jazz.

• *DJ Obama Admin Says IRS Would Shut Down If Budget Not Passed
• *DJ Obama Admin Says National Parks, Smithsonian Would Close
• *DJ Obama Admin: Cherry Blossom Festival Wouldn't Happen If Budget Not Passed
• *DJ Obama Admin: Roughly 800,000 Govt Employees Would Be Affected By Shutdown
• *DJ Obama Admin: EPA Permitting Would Stop If Budget Not Passed
• *DJ Obama Admin: Social Security Beneficiaries Would Continue To Receive Payments
• *DJ Obama Admin: Electronic Tax Refunds, Collections Would Continue
• *DJ Obama Admin: Military, Law Enforcement Will Continue To Function
• *DJ Obama Admin: Military Personnel Would Earn Paychecks, But Not Receive Them Immediately
• *DJ Obama Admin: White House Staffing Would Be Lower During Shutdown
• *ZH: POMO will continue come rain or snow: Russell 36,000 will not be denied, US bankruptcy notwithstanding

In order to make the biggest strawman so far in 2011 really scary and nasty, the administration just announced that as part of a government shut down, the IRS would end up being closed. While according to some this is the ulterior motive all along to avoid the premature outflow of tens of billions in cash due to federal tax refunds hitting the IRS next week, which without a debt ceiling hike would push the country into technical default possibly as soon as next week (debt subject to the limit was $14.2 trillion two days ago, just $94 billion under the ceiling and with about $74 billion in debt to be issued next week a $20 billion tax refund withdrawal would push the Treasury over the limit), what is far more amusing is that as the WSJ reminds us, the Fed would still be able to monetize debt regardless if the government was operating or not. Ergo nothing can end POMO ahead of time, not even a complete US government shutdown.

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 06/04/11

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 06/04/11

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 06/04/11

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 06/04/11

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 06/04/11