Archive - May 2011 - Story
May 31st
Ahead Of Tomorrow's ISM Plunge
Submitted by Tyler Durden on 05/31/2011 23:05 -0500
May surveys had the largest ‘negative surprise’ since Bloomberg started tracking consensus estimates in 1998. In addition, several of the reports have shown some of the largest two and three month rates of decline on record. Whether this is indicative of a mid-cycle slowdown, or something more serious, a continuation of the recent deterioration could well set the table for QE3... Oh, and tomorrow's ISM will likely be a bloodbath, which in continuation of today's bizarro market (and world) will mean the S&P closes at least 2% higher.
Big Trouble In Little Goldman's VPN Firewall (Or NYT's Editorial Department)?
Submitted by Tyler Durden on 05/31/2011 22:44 -0500This evening's latest NYT Story-Morgenson Joint Venture story about Goldman beats a well-beaten drum: the question, which has been discussed extensively on Zero Hedge and elsewhere before, of just how ridiculous and ludicrous is the notion, used by Goldman in both Congress and before the SEC, that Fabrice Tourre, then a midlevel 28 year old whose story has been told millions of times, worked completely and entirely alone when perpetrating the Abacus CDO "transgression" (for which Goldman neither admitted nor denied guilt). Obviously this is such BS that nobody but an entity as entitled (and for the implications of perceived infinite self-entitlement look no further than DSK or David Sokol) as Goldman (and hence the SEC which needs Goldman for future employment prospects) could possibly believe it. There is however, a link in the story that is so weak, that it raises extensive questions about either the credibility of the entire narrative, or the complete worthlessness of Goldman's IT security and VPN firewall, two possibilities that demand further inquiry.
Guest Post: EU - A Flawed Foundation, But Brilliant Strategy?
Submitted by Tyler Durden on 05/31/2011 19:25 -0500
The European banks are slowly but surely, through a tactic of Financial Arbitrage, moving more and more sovereign debt to the ECB and EU. Someone must pay for this debt and that will eventually be the entire European taxpayer base. That is the goal. In the initial stages of the Euro dream everyone was benefiting. Like an initial user of drugs the early stage is euphoric before the issues associated with the addiction surface. This stage fostered tremendous growth in debt - never ending Corniche housing villas in Spain and Portugal, embarrassing pensions and social benefits in Greece, tax advantages for off shoring corporations in Ireland or unjustifiable and hidden local government spending in Italy. It has been a captive market for the Asian Mercantile Strategy and a financial retail market boon for US financial instruments created from the never ending supply of freshly minted US fiat paper...Be aware that the mercantile financiers are so opposed to risk that operating as the secured bond holders of the banks they make the profit from the banks - not the shareholders. The financiers get first distribution of profits and are always kept whole. The public typically attacks the bank owners, not those who insidiously control and profit from its operations - the senior secured bond holders. It is the senior secured bond holders who must take the Greek 'haircut' but as part of the strategy they have their political mouthpieces vehemently opposing it...Forcing the Greeks to sell all that's left of the family jewels is now seen as a key part of the political solution. But who will want to buy them when there is every possibility of Greece leaving the euro? Capital is already fleeing Greece as fast as it can; what's the chance of attracting it for Greek assets? Someone is going to get real fire sale prices.
Theatrical Vote To Raise Debt Ceiling By $2.4 Trillion Begins; Does Not Pass
Submitted by Tyler Durden on 05/31/2011 18:04 -0500Update: As expected, debt ceiling does not pass. Final vote:
- Nay (Republicans 236, Democrats 82), total: 318
- Yea (Republicans 0, Democrats 97), total: 97
- Not Voting (Republicans 3; Democrats 6); 9
As we reported first today, any minute now the Congress will pretend to vote on HR1954, a clean debt ceiling increase of $2.4 trillion to $16.7 trillion. This will not pass. Why Congress is doing this bullshit, and why the US debt ceiling is now nothing but a farce, is a question voters should ask themselves next time they vote for their representatives. Watch the tragicomedy live at C-Span below.
Now That The Banker Bailout Plan Is Set, Here Are The Greek Islands About To Hit Ebay And Fund Another Record Wall Street Bonus Season
Submitted by Tyler Durden on 05/31/2011 17:40 -0500
The description of the Greek bailout plan in the NYT has just one salient paragraph. Here it is: "With great reluctance, European governments have come to the conclusion that an additional €60 billion now, while politically unappealing, would be less costly than the unquantifiable public funds that would be needed if a restructuring of Greece’s debt produced a Lehman Brothers-like contagion that spread not just to Portugal and Ireland but possibly Spain and the financial system as a whole." Ah yes, with "great reluctance" European governments, bought and purchased by bankers, have decided to bail out their sources of capital. As for the conclusion, the only thing that matters is how long before European taxpayers realize that once again they are the mark in this latest pathetic attempt to ignore reality, which incidentally for those who are clueless, is the following: "“Greece’s G.D.P. is already declining and now the government will need to cut another €7 billion in spending,” said Jason Manolopoulos, who manages a hedge fund based in Athens and Geneva and is the author of “Greece’s ‘Odious’ Debt: The Looting of the Hellenic Republic by the Euro, the Political Elite and the Investment Community.” “That is only going to make the debt to G.D.P. figures worse,” he said. “There is no getting around it: Greece is insolvent.”" So while the bankester cartel is dead set on bleeding the last drop of hemoglobin from the petrifying Greek corpse, here, courtesy of the WSJ is what will soon be purchased by special purpose entities controlled by the same banks that are just now getting bailed out.
Guest Post: The News Cycle: Full of Sound And Fury, Signifying Nothing
Submitted by Tyler Durden on 05/31/2011 16:40 -0500The Mainstream Media has completely failed to make sense of the global financial crisis. By "make sense" I mean a framework of interpretation that properly attributes responsibility to the causes and players and which explains the key dynamics in common language. A framework of interpretation doesn't disappear in the next news cycle: it is constantly reinforced by additional interpretation and illumination. The news cycle now lasts at best the length of a playoff series. Mr. bin Laden's news cycle didn't even last as long as an NBA playoff; the demise of the "most dangerous man in the world" was shoved into the ashbin of history within a few days, with little interpretation beyond fist-pumping and a few fusty pontifications by the usual suspects, i.e. the "experts" trotted out during "big events" to explain it all away. The full quote from Macbeth (Act V, Scene V): It is a tale told by an idiot, full of sound and fury, signifying nothing. Every "news event" is terribly important, until a few hours later it is unimportant. This is a form of madness, a madness which goes unrecognized in the crazed, turbulent flood of "news."
Here Is Your Chance To Demand Answers From The Fed's General Counsel, Scott Alvarez
Submitted by Tyler Durden on 05/31/2011 16:01 -0500For all Zero Hedge readers who have long waited for their chance to ask Mr. Scott Alvarez of "Have The Federal Reserve Or Prime Brokers Ever Tried To Manipulate The Stock Market?" fame a question about life, the universe or why the CME decides to hike ES margins in an environment of rising realized vol, here it is. Tomorrow, at 2PM, Ron Paul will lead a hearing by the Financial Services Committee, which will luckily be carried by C-SPAN meaning one will be actually able to hear the dialog (alas, the House continues to believe that investing in microphones for their internal webcasts is a bad idea), titled: "Federal Reserve Lending Disclosure: FOIA, Dodd-Frank, and the Data Dump." The witnesses will be Mr. Thomas C. Baxter, Jr., General Counsel, Federal Reserve Bank of New York, and the one and only Scott G. Alvarez, General Counsel, Board of Governors of the Federal Reserve System. While the usual heeming and hawing will follow each and every question, what is unique about this session is that the FSC actually allows anyone to submit questions for the honorable lawyers. The link to submit questions is here: we urge Zero Hedge readers to take advantage of this opportunity and have Mr. Paul read their questions to the two general counsels, even if no legible answers will be (ever) forthcoming.
RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 31/05/11
Submitted by RANSquawk Video on 05/31/2011 15:31 -0500RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 31/05/11
And Scene: CME LOWERS ES, SP, YM Margins, Despite An INCREASE In Realized Vol
Submitted by Tyler Durden on 05/31/2011 15:05 -0500Speechless. Just.... speechless.
Must.Close.At.Highs.Of.Day
Submitted by Tyler Durden on 05/31/2011 15:01 -0500click click click
C:\FRBNY\Sackster\Market Manipulation\CloseAtHOD.exe /routethrucitadel
Push Any Key to Execute?
[any key pushed]
LNKD Now Below Break Price
Submitted by Tyler Durden on 05/31/2011 14:48 -0500
Well, that took all of 8 days. To all who bought the shares from the bankers and primary allocators who wasted exactly 10 milliseconds to flip this flaming dog turd to the greatest momo fools out there with an E-trade account and $10k in discretionary cash (now well less), our condolences.
Super Rich Indians Abandon Super Cars En Masse To Avoid Arrest In Massive Smuggling And Tax Fraud Crack Down
Submitted by Tyler Durden on 05/31/2011 14:36 -0500
One of the benefits of living in a developing country is discovering that pretty much nothing is ever as it seems. The latest news out of the Telegraph confirms that, by reporting on a crack down in a massive stolen-car scam which has seen the country's millionaires abandon their supercars, among them Bentleys and Aston Martins, literally on the streets of New Delhi in droves: up to 400 cars are suspected of being part of the tax-scam and theft ring. It turns out that these same cars, which were sold to top Bollywood film stars, and a couple of Indian international cricket players, were stolen from around the world, then resold by the top car dealer as second hand and falsely claimed the cars were being supplied tax-free to diplomats in order to avoid India's double taxation of luxury vehicles. "More than 40 cars are now impounded in a government car park. Models parked in the lot include Porsche Panameras, sold in India for £250,000, a Bentley Continental Supersport, costing £350,000, several Aston Martin Rapides, with a price tag of £290,000 and a Maserati, costing £170,000." But while the dealers were merely providing an unmet, if illegal, service, the ultimate enabler of this behavior is naturally the Indian Central Bank, which despite attempts to cool inflation, has created massive pockets of wealth in a society that only compares to China (and the US of course), in the schism between the few uberwealthy, and the masses of less than privileged lower classes.
An Inversely-Correlated Take On Corporate Profits And Dollar Destruction
Submitted by Tyler Durden on 05/31/2011 13:51 -0500
One of the more interesting correlations (not causations) to have emerged following the surge in corporate profit margins is that of the inverse relationship between now record corporate profit margins, and net exports & services originating from the US. While we certainly will not imply one is a cause of the other or vice versa, we would be remiss to not point out the irony of what would happen should this correlation preserve itself in an environment in which US exports end up being curbed due to a surge in the US dollar once the frailty of the Eurozone no longer allows the EUR to appreciate on desperate one-time (if recurring) rescue measures. And with China largely ignoring US demands to revalue its currency and import more US goods and services (no laughing), is it safe to say that this chart is the one most direct confirmation that the weak dollar policy adopted by the Fed has had it most proximal impact nowhere else than on surging corporate profit levels (and Wall Street bonuses of course).
JP Morgan On QE 3: "No Way, Jose"
Submitted by Tyler Durden on 05/31/2011 12:41 -0500Just out from the only economist at JP Morgan who is even remotely credible, Michael Ferolli, responding to the question if QE 3 is coming. "Our answer is: no. We think it is very, very unlikely. In a nutshell, we don't think the inflation or inflation expectations data are near the point where the Fed would consider further large-scale asset purchases, and even if the inflation data were to start to move in that direction the potential political fall-out is so great that the Fed would be extremely reluctant to purchase more assets....The recent economic activity data has been decidedly disappointing. By some broad measures such as GDP, it could well be the case that the first half of this year will look even worse than the second and third quarters of last year -- the quarters leading up to the FOMC's decision to purchases another $600 billion of assets. While the growth data may look similar, a crucial difference thus far has been inflation...Even if we are wrong on a second half rebound, we still believe the political hurdle for further asset purchases is tremendously high. The backlash from Capitol Hill after last Fall's decision probably took the Fed off-guard, and the political impact was not a prominent factor debated in the lead-up to the November decision....As such, it appears that without taking significant political risks there is little the Fed is able to do to support the recovery if growth fails to rebound as anticipated next quarter." So... everyone feel convinced now?
Jim Grant And James Turk Discuss The Endgame Of The Keynesian Experiment
Submitted by Tyler Durden on 05/31/2011 12:34 -0500
Two of our preferred commentators, Jim Grant, of Grant's Interest Rate Observer, and James Turk, of the GoldMoney Foundation, sat down earlier today to discuss the history and mission of the Fed, how mission creep has taken it wildly beyond its initial purpose into the territory of QE, ZIRP and other fiat currency experiments. While not breaking ground on any notably new concepts, they talk about "who benefit from zero interest rates and how savers are penalized by this easy money policy. They explain that the US have been off the gold standard since 1913, Bretton Woods being only a shadow of the classical gold standard." The two also discuss the fiscal profligacy of the US government. Alas, they conclude that every paper currency in history has eventually gone to zero (see earlier piece on Roman hyperinflation). James and Jim also talk about ZIRP and the absence of the bond vigilantes after over 30 years of bull market in bonds. How traders no longer care about fundamentals, like balance sheets, but rather focus on very short time horizons and the spreads between funding costs and yields. How this situation is unsustainable. They see gold still as a very under-owned, misunderstood and marginal asset still shunned by institutional investors, with a few notable exceptions which indicate that the tide could be turning. They see a gold standard in the future, although timing is always uncertain. At the end they talk about the history of US post civil war specie resumption and parallels to a return to the gold standard in the future.



