Archive - May 2011 - Story

The 2011 Milken conference launched today (full line up here) and while nothing revolutionary is usually exposed during the several days of its duration (which however does not prevent it from hosting some of the better LA parties in May), it does invite some of the more luminary thinkers of our time. As such it is no surprise that as part of its inaugural panel for this year's event, "The Shape of Things to Come: Understanding the New Global Economy" speakers were Pimco's Mohamed El-Erian and Guggenheim's Scott Miners both of whom very often grace the pages of Zero Hedge. Additionally, the panel saw the presence of Laura Tyson, former Chairman, National Economic Council and Rubern Vardanian Chairman and CEO of Russia's Troika Dialog. Follow 77 minutes of solid view and opinions by some of the more controversial people in a climate of unanimous, and often times foolish, consensus.

Earlier we reported that Sprott had sold $35 million worth of PSLV, which caused many to panic that the precious metals guru had indicated the market top in the market. Well, as it turns out and as he just told the Globe and Mail “We haven’t lost our enthusiasm for silver.” Quite the opposite...

Gold just plunged by $20 for no reason whatsoever. So let's take a guess at what happened here: some ETF caused the NYSE to hit LRP thresholds, causing numerous stocks to "break", and the result is an immediate algorithmic margin call satisfied by gold selling? Or not, at his point does anyone really care. Point is obvious: scare all holders into submission. Can the royal "they" just confiscate everything not in paper form (and thus out of Fed control) already and end this charade?

DJ NYSE Reviewing Possible Bad After-Hours Trades In Many Stocks

PM Eastern Daylight Time May 02, 2011 (MORE TO FOLLOW) Dow Jones Newswires

Were they known as, sales? And in other news, Gold just plunged by $30 for no reason whatsoever. Flash crashes for everyone!

As usual for all those still confused by today's news, here is Next Media Animation with their now traditional prompt recreation of the key events in animated form, including such aspects of process including the 1 gazillion Call of Duty points (also known as $25 million), the Osama Bin Bye Bye street chants, and last but not least, the 72 virgin gang bang.

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 02/05/11

Last week two silver margin hikes of 9% and 10% did nothing, which is why this week's first hike (of many more) by 12% to the maintenance and initial margins was to be completely expected. We believe that nothing short of 100% margin (coupled with not one single ES margin hike by the Globex) will eventually placate the ardent Comex risk managers who are terrified their models may end up being wrong about "stuff." One thing is certain: the panic is palpable and the administration will stop at nothing to prevent the $50 limit order from triggering silver's surge to triple digits. We wish them all the best in this endeavor and are grateful for any and all BTFD opportunity.

Phlebas the Phoenician may not be Osama bin Laden, but the circumstances of his untimely end are oddly comparable to those surrounding the expiration of the Al Qaeda leader. Yet is there more than meets the eye. Once again, it is Politico sounding the alarm horn on a issue that is sure to inflame the "conspiratorial" bent of the population. As Politico notes in its latest must read analysis of the Osama endspiel, "while the watery grave may help diminish bin Laden’s status as a martyr to his followers, it was already fueling conspiracy theories; as the administration resisted releasing even photographs of the slain terrorist leader on Monday, a predictable haze of myth and rumor had already, inevitably, began to rise around him." Yet even the most grounded can not help by ask: why not at least present his body briefly to the "free world" and then shoot him into outer space if necessary (for all those who buy the "no shrine" theory). Although at the end of the day, the mission is more than successful: the population has a brand new and truly enveloping distraction to keep its preoccupied with largely irrelevant, although very emotionally charged, issues for a long time.

After announcing it issued $265 billion in marketable debt to fund $445 billion in financing needs (including the wind down of $195 billion in SFP cash management bills), the Treasury has just announced it expects to need just $142 billion in Treasury issuance in the April-June quarter. This ridiculous amount is more than 50% lower than the previous estimate of $299 billion disclosed on January 31, and confirms that the Treasury is now scrambling to appear prudent to Congress with its debt needs. That it will need far, far more at the end of the day is beyond question. The reason for the over 50% plunge in borrowing needs "largely relates to higher receipts and lower outlays." Well, that's great - perhaps the treasury can explain why its preliminary cash need for the July-Sept quarter are $405 billion (compared to $396 billion a year earlier). Altogether, this advance estimate is ludicrous and shows that Geithner has totally lost a grip on reality. Yet on the other hand, in order to make his point, the market needs to crash (just like the May 6th crash killed any hope of an Audit the Fed bill). Looks like risk is duly noting its duty to act appropriately when record 2011 bonuses are at stake.

WASHINGTON - The United States Mint will open sales for the 2011
American Eagle One Ounce Gold Uncirculated Coins at noon Eastern Time
(ET) on May 5, 2011.  The coin's cost is based on the United States
Mint's pricing structure for precious metals products.  Current pricing
information is available at http://usmint.gov/pressroom/index.cfm?flash=yes&action=goldplat.

Orders will be accepted at http://www.usmint.gov/catalog or
at 1-800-USA-MINT (872-6468).  Hearing- and speech-impaired customers
with TTY equipment may order at 1-888-321-MINT (6468).  A $4.95 shipping
and handling charge will be added to all domestic orders. 

Customer
demand will determine the number of 2011 American Eagle One Ounce Gold
Uncirculated Coins minted.  There is no order limit. 

From the just released Greenlight Capital letter: "Much like Charlie Sheen, who seems to believe that all publicity is good publicity, recent market behavior suggests that we are in the part of the cycle where “all news is good news.” This was true for the broad market, which shrugged off the continued escalation of commodity prices, unrest in the Middle East, a catastrophe in Japan, tightening monetary policy outside the United States and a deceleration of domestic economic growth....this quarter we were repeatedly confuzzled when we read company news announcements that we expected to cause falling stock prices, only to see them rise instead – and sometimes sharply at that. Nonetheless, we believe that this environment is cyclical, and that it will continue this way... until it doesn’t. Since we don’t expect to be able to call the turn, we believe our best course is to concentrate on generating better alpha." In other words, shorting is for wimps. It appears everyone has now given up on hedging. Last time this happened was in the summer of 2008 when nothing could dent the market.

In addition to all the already highlighted factors (margin hikes, Cramer buy recommendations, Chinese slowdown concerns, etc.) another possible reason why silver holders (at least of the recent variety, those who have been long since ~$10 could not care less) recently have had a difficult time with estabilishing positions in a suddenly very volatile silver market, is that according to a recently released 13-D by Sprott Asset Management, the head of the world's first silver physical ETF has taken profits on over 1.6 million shares of PSLV, across various funds, for total proceeds of just over $35 million, including up to $6.4 million for personal gain by Sprott.

Submitted by Kurt Brouwer of Fundmastery

China’s economy: #1 or #126?

There have been plenty of reports that China’s economy is overtaking
the U.S. economy and that it may soon outstrip the U.S..  As an example,
in a recent piece, my MarketWatch.com colleague Brett Arends, reported
on a study by the International Monetary Fund on the size of China’s
economy.  The IMF study suggested that by one economic measure China’s
economy would look almost as big as the U.S. economy in a few years.  Of
course, that set off my innate skepticism so I did a little digging.  
In this post, my goal is to cover two questions:

• How big is China’s economy compared to ours?
• And, is it really going to surpass our economy in size any time soon

Minutes ago, the Pentagon released a 5 page powerpoint presentation showing exclusive details of the Abbottabad compound where bin Laden was supposedly killed (and where the PCR test to confirm he was in fact "he", took about 1/20th the time it usually takes in leading US Universities). And even as the Pentagon collects kudos from the population for spending hundreds of millions and taking ten years to eliminate a person who is now largely irrelevant tactically (if not symbolically), Fars News out of Iran proposes an alternative explanation of everything that happened on Sunday night: "The West was fully satisfied with bin Laden's performance during the past years and today… it was obliged to kill him to prevent possible leakage of the priceless intelligence that he had," member of the parliament's National Security and Foreign Policy Commission Javad Jahangirzadeh told FNA on Monday. Surely not something that the US public would want to hear...