Archive - 2011 - Story

That ACA is suing Goldman over Abacus, as Charlie Gasparino first reported, is not surprising. After all, everyone wants a piece of free lunch, especially when there is a case in the docket. What is however surprising, is that according to plaintiff lawyer Marc Kasowitz, ACA has ‘documents that show Goldman Sachs told ACA Paulson was long on the ABACUS investment.’ If this is indeed the case, this becomes a clear case of fraud, pure and simple, no question about it, with clear intent to misinform, and is not even remotely defensible by Lloyd Blankfein's statement to Carl "Shitty Deal" Levin, that Goldman was merely making markets. If this piece of paper does exist, there is clear intent to misrepresent, and what is stunning is that this never was made clear during the SEC trial. Since we can assume that the SEC had access to this information, and had this been exposed, it would have made settlement virtually impossible as it would have clearly but Goldman in the position of having broken the law, we can merely validate once again, that the SEC is nothing short of Goldman's latest public-private acquisition a la Facebook.

Following this week's ebullient ADP private payrolls report, the sellside has succumbed to an orgiastic frenzy suggesting that tomorrow NFP number may be as high as 580,000 (as reported earlier). While there is no chance on earth of that happening absent all of US data gathering to have been outsourced to Beijing, what is more interesting, is that organizations which track employment trends in real time have found that neither is ADP's optimism justified, nor is there absolutely any basis to expect a blow out NFP number tomorrow. Gallup has found that not only did the unemployment rate increase in December from 9.4% to 9.6%, that disgruntled part-time workers who want full-time work increased from 8.6% to 9.4%, the highest since September, but that the most important metric in a labor force increasingly consisting of part-time workers, underemployment, has surged to 19%, the highest since June!

Some more trouble in Borg paradise? After Steve Jobs' health issues two years ago resulted in one of the biggest selloffs in Apple stock in recent history, is the trouble shifting to the CFO post, currently filled by Peter Oppenheimer? Bloomberg reports: "Apple Inc. approached Blackstone Group LP Chief Financial Officer Laurence Tosi to become its finance chief, three people with knowledge of the matter said." But why? "Steve Dowling, a spokesman for Apple, said the company is “not conducting a CFO search.” Current CFO Peter Oppenheimer “loves the company and is extremely happy in his role,” Dowling said." So someone is not telling the whole story. And that is something Apple fans certainly do not like.

After Paulson & Co. was underperforming the market substantially in the middle of 2010, with it Advantage and Recovery funds decidedly negative through Q3, the last minute push in the market to get financials green through the end of 2010 at all costs (literally, now that we know that Fannie, and its "recused" GC Tim Mayopoulos, is sacrificing a few trillion extra in taxpayer capital just to bail out such insolvent mortgage lenders as BofA), resulted in a strong close to the year for man who made billions on Paolo Pellegrini's ideas (and Goldman's client "dedication"). Then again, not very surprisingly, the best performing strategy in Paulson's barbell bet on inflation: the Paulson's Gold fund, which ended the year up about 35%. What will be interesting is finding just how much of BofA Paulson has left at the end of Q3, and whether he has given up on his price target of $30 for the bank which was supposed to be achieved by the end of 2011. Stay tuned on February 15 to find out...

While many will say I am a perma bear and just see everything as half full, I cannot wait until the day that I can sell all of my precious metals and commodity exposure and start to invest in non-mining and commodity businesses and equities generally. I have no doubt that this day will come but this is all a process and we are very, very far away from that day from a price perspective. A large part of my intent in writing these notes is to catalyze the change so that it happens as quickly as possible. The quicker we can change the guard within the elite class on Wall Street and Washington the quicker we can get on with human ingenuity. Very early on I noticed that what Aldous Huxley and others have called the “power elite” have almost total political and economic control of the system. Remember the quote attributed to Mayer Rothschild over two hundred years ago that perfectly and simply states: “Give me control of a nation's money and I care not who makes the laws.” Combine this quote with Lord Acton’s: “Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men” and you can start to really put all the pieces together on how money power works and how it has taken the entire world hostage to its selfish ends. - Mike Krieger

We were only partially serious when we predicted that following the just released FAO data confirming food prices have just hit an all time high, we were expecting food riots to ensue imminently. Alas, as all too often happens these days, we were right. 2011 first and certainly not last rioting comes out of Algeria, where Bernanke's genocidal policies are first to take root. From the Associated Press: "Riots over rising food prices and chronic unemployment spiraled out from Algeria's capital on Thursday, with youths torching government buildings and shouting "Bring us Sugar!" Police helicopters circled over Algiers, and stores closed early. Security officers blocked off streets in the tense working-class neighborhood of Bab el-Oued, near the capital's ancient Casbah, and areas outside the city were swept up in the rampages. The U.S. Embassy issued a warning to Americans in Algeria to "remain vigilant" and avoid crowds. Riots on Wednesday night in the neighborhood saw a police station, a Renault car dealership and other buildings set ablaze. Police with tear gas fired back at stone-throwing youths through the night." Algeria's violence is unfortunately just the start. The big to keep an eye out on is rice. If the liquidity makes its way there, the Chinese soft landing may just become much, much harder.

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 06/01/11

Though the complexities may appear endless, the global economy's coming implosion is really fairly easy to understand: here are four charts which do the heavy lifting.

Keep Waddell And Reed far from the sell button...

Paging JC Trichet: time for the spanking of the wolfpack. The reason for the anal prolapse in the Portuguese 10 year is that it is now expected that the country will issue new debt on the 12th... and that the auction will be less than stellar. And not helping matters is that elsewhere, the EUR just got taken to the woodshed following the release of the EU's consultation paper "which aims to abolish the excuse that a bank is too big to fail" and "asks whether bank bond holders should share in paying for future bailouts and seeks to give greater authority to national regulators over bank leadership and business strategies when a country's economic stability is at risk." If this thing passes, watch out below SovX and iTraxx Fins. The FAQ and the actual release can be found here. Those who wish to avoid the 100 pages, can read the Dow Jones summary below.

Yup. Gozer must be coming, cause the Stay Puft marshmallow man recently quit the Obama administration.

While the slide in the ES following today's POMO is not to surprising (there are almost no economic data catalysts that can by fudged by either the BLS, Census Bureay or the Commerce Department today so POMO on meant buy, and POMO off means sell), is not surprising, what is shocking is the brazen arrogance of the Primary Dealers to flip what is pretty much an asston of the just issued 5 Year PM6 5 Year, which was auctioned off a week ago, and of which the primary dealers are flipping like deranged homeowners at the top of the housing bubble, without even a pretense of keeping the bond for at least a week or two! This is the purest definition of monetization: of today's $6.8 billion POMO, more than half, or $3.5 billion consisted merely of flipping precisely this CUSIP. Nobody, not even primary dealers, want to hold any recently issued government paper anymore. If even the PDs are expecting a total collapse in the Treasury market, does that means stock are a buy?

As we predicted in September, the US, which is issuing debt at a clip of about $125-150 billion per month (in line with the Fed's monetization of every single newly printed dollar of debt), will likely hit its debt ceiling as soon as March. We finally get confirmation from none other than tax expert Tim Geithner, who in continuing his tirade of scaring the bejesus out of anyone dumb enough to listen to him , has just confirmed our concerns. Not only that, but he has also written a letter to Dear Mr. Leader Harry Reid in which he uses big and scary words to make it clear just how fucked this country is if it can not issue about $2 trillion in debt each and every year. Because the only way to avoid bankruptcy is, as Joe Biden once said, to issue way more debt.

Just out on Reuters, which notes that Tiny "TurboTax" Tim Geither says hitting the debt limit could have catastrophic economic consequences, potentially worse than impact of 2008-09 financial crisis. Bold/underline ours. Expect much more threats of total and complete annihilation unless the dumbest guys in the room get what they want.

... That's what some model (quite possibly from Ford or Wilhelmina) in Barclay's FX department predicts tomorrow's NFP number will be. And just in case the first number is wrong, basedon what can only be attributed to Barcap borrowing Birinyi's ruler, the firm says there is a 95% confidence interval that the actual number will come at 450,000. And there's your whisper number. .