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Musings On The Market As Brazil Clown Ruled Eligible To Sit In Congress

Tyler Durden's picture




 

From Nic Lenoir

S&P futures started the day vertical and did not really look back: the reason? Talks of announcement of further bond purchases by the ECB on Thursday. Now that is excellent news. The only central bank that was somewhat trying not to completely dilute its currency into oblivion in order to bail out its overleveraged government, banks, and anything else worth more than $500mm, is throwing the towel completely. On the back of that one must concede data was slightly better than expected, but headlines attributing the market strength to China's PMI are simply stunning by their candor: 55.3 versus 54.8 the previous month when the survey pointed to 55.4? Talk about a blow out. Typically the margin of error on those surveys is greater than the uptick from last month, and if I were cynical I would say the margin of error on Chinese data releases is close to the number itself. The numbers are made to match the growth target.

I guess the only surprise is that Gold was not stronger. In terms of fundamentals this is just about as supportive of precious metals as could be, and it stopped the rise of the USD! I was surprised by the weakness in FIxed Income as well. Yesterday's price action in the late afternoon was a bit of a warning sign but still, it was quite a move. Let us hope that tomorrow's ECB announcement and Friday's NFP will not disappoint.

In any case, today was the perfect opportunity for GS to come with a revised much more bullish forecast for the economy. The nature of the arguments advanced seemed a bit suspect: basically foreign demand and public demand will more than make up the lack of private demand. That is excellent news but it may somehow miss out on the fact most governments in Europe are going to keep cutting drastically public spending, there are certainly new members in Congress trying make the country lean that way as well, and the brilliant Albert Edwards' chart on Chinese leading indicators is not exactly positive. Unfortunately now growth forecasts are becoming as volatile as the markets: it's the tail wagging the dog. The Fed must be proud in succeeding in having the S&P dictating the economy instead of following it.

Personally I do not think the fundamentals have changed one bit. Certainly the private sector has surprised in November to the upside as people trampled their way to Black Friday bargains, but from there to extrapolate +3.7% growth in 2012 is more than an exageration. Probably more a good opportunity to short squeeze those who sold equities realizing Greece was only the tip of the European iceberg, with the help of $8Bn more in cash provided by the Fed.

With my view being solidly anchored in the camp of slower rather than accelerating growth, I do not expect a reflationary sell-off is sustainable in Fixed Income for now. A solvency crisis could make bonds tank, but growth will not be strong enough to achieve that for quite a bit more time. I like focusing on the ERU2 future. The chart attached shows that as long as we remain above 98.00 there is no reason to panic. If that level is broken surely a much large sell-off is at works, but until then I keep a preference for constructive price action in Germany and US Fixed Income, with I must admit slightly less conviction than Monday morning.

Finally I thought that to share my increasing despair in today's society and the path the world is engaged on, I attached a link with an uncanny story of how Brazil is celebrating their newfound wealth accumulated thanks for the Federal Reserve and at the expense of the American taxpayer by electing a clown in Congress. I used to think that calling our politicians clowns was a figure of speech, but apparently it is no longer the case. At least we can applaud Brazil for having the guts to things so literally.

Good luck trading,

Nic Lenoir


Brazil Clown Ruled Eligible to Take Seat in Congress (Update1)
2010-12-01 18:16:58.819 GMT

By Andre Soliani

Dec. 1 (Bloomberg) -- Brazilian clown Francisco Everardo Oliveira Silva, who goes by the stage name of Tiririca, can read and write enough Portuguese to take his seat in congress, the Sao Paulo electoral court said.

Tiririca, whose 1.35 million votes led all candidates in the Oct. 3 congressional elections, was accused by a prosecutor of forging a document to prove he could read and write.

Brazilian law bans illiterate people from public office.

“A rudimentary reading and writing knowledge is enough,”
the electoral court said in a statement posted on its website today. Tiririca has “a minimal understanding of the content of the text, in spite of his difficulties in writing.”

Tiririca won the lower house seat for the state of Sao Paulo after appearing as a clown in campaign ads and using the punch line “It can’t get any worse.”

He will be among elected deputies who will be confirmed on Dec. 17, the electoral court said, citing the decision by Aloisio Sergio Rezende Silveira. Lawmakers take office Feb. 1.

The public prosecutor can appeal the decision, a press officer at the court, who can’t be identified because of internal policy, said.

 

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Wed, 12/01/2010 - 19:25 | 770124 Spalding_Smailes
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German bank agrees $500m Chinese loan deal

By James Wilson in Frankfurt

Published: December 1 2010 18:13 | Last updated: December 1 2010 18:13

HSH Nordbank has agreed a $500m loan facility from China Development Bank and the German bank is in talks with the Chinese state-owned lender over how to further their business ties.

The announcement by HSH Nordbank raises the possibility of closer links with China Development Bank including a strategic partnership, and will lead to speculation about Chinese interest in eventually taking a stake in HSH Nordbank, although such a move is not thought to be under discussion at the moment.

HSH Nordbank is one of the more troubled of the country’s public-sector Landesbanken.

 

 http://www.ft.com/cms/s/0/f2b111d0-fd6d-11df-a049-00144feab49a.html#ixzz16uY7oAQw

Wed, 12/01/2010 - 19:55 | 770215 Dismal Scientist
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Whats your point ? The Landesbanken are screwed, and have been since 2005 when the state guarantee was removed, and they all went on a mad dash for yield. Its inevitable they look wherever they can for capital...

Wed, 12/01/2010 - 19:33 | 770153 willien1derland
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Awesome post as always Nic - unfortunately I am fixated on the Brazilian Clown story - I would propose the US elect the cast of 'Golden Girls' to the Supreme Court using the same tagline --> “It can’t get any worse.” - However I believe they would do a much better job!

Wed, 12/01/2010 - 19:59 | 770220 knukles
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I had personally proposed running for the Senate several years ago using the line; "Can't be any worse than the other guy.", and proposed that I command Chair of the Newly Constituted Senate Hindsight Committee, figuring that there'd always be work a plenty to keep staff and sitting members out of mischief.  But alas, nobody thought it worth while enough  to finance the campaign since I sure as hell wasn't gonna put a damned thing into it other than my good looks an a few hours a week (Figured I could set an example for my then soon to be peers before I arrived.), so I just figured that I had to start smaller and every once in a while and much more happily than I'd probably be in the public spotlight, simply extend my insightful intellectual musings in other likely more practical and  influential venues.

Wed, 12/01/2010 - 19:33 | 770154 Waterfallsparkles
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I think the stamped on Black Friday was because the only way people can afford to buy anything is if it is 95% off.  For the Average American it is probably the only way they can possibly have anything under the tree this year.  I think the rampage on Black Friday shows the desperation of Americans.

Wed, 12/01/2010 - 19:35 | 770161 RobotTrader
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Really, it all boils down to this:

Trade With The House

Which way does TPTB want markets to go?  Either they are deliberately crashing the tape in order to give their Wall St. cronies the chance to pick up bargains on the cheap, or they are jamming stocks up to attempt to create the "self reinforcing feedback loop".

Basically our job as traders is to determine which way the house's money is going and then ride with the house, long or short.

Think Like A Criminal

When sentiment reaches extremes, what directional change is likely to allow the Wall St. cronies to make the most money in the fastest period of time?  Must think like a crook, and say, which way is Goldman likely to turn the tape to blow out the most guys caught offsides?  Just pretend you are Blankfein when you are reading the tape, and seeing your biggest clients positioned the wrong way.

......................

Trying to trade on macro themes, looking at fundamentals, etc. is  a total waste of time.  Unless you are interested in getting eaten in the jungle.

Wed, 12/01/2010 - 19:47 | 770200 Xibalba
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99% of my time is spent on 1% probabilities..... - LB

Wed, 12/01/2010 - 20:42 | 770319 Bendromeda Strain
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Ja ja, works like a charm. When it gets really ridiculous, petition to become a bank. Just don't be stupid enough to forget that it ain't reality, and it ends badly.

Wed, 12/01/2010 - 19:36 | 770163 Xibalba
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In Hawaii, a comic named Bu'Laia ran and almost won.  Thank heavens for the ballot fixing....

Wed, 12/01/2010 - 19:58 | 770217 HarryWanger
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Actually, there were many reasons for the market to be up today - tons of data reflecting a slow growth trend is undeniable right now.

This afternoon we nailed down the final points on our international licensing agreement. This takes us from US/Canada to Europe/Asia starting in Q2 2011. 

These are smart business people and they all said the pickup that they've seen has been remarkable. The exact thing we are seeing. This means we can hire a few more people full time as we expand.

As a small business person selling consumer discretionary items I have a direct view into how the consumer is acting and how optimistic they are. Believe me, we were concerned two years ago when it all blew up but this fall has been phenomenal for many of us out in consumer goods. I and those I met with the past two days, see no reason for that to fade any time soon.

Wed, 12/01/2010 - 20:11 | 770244 espirit
espirit's picture

You don't do your own grocery shopping, do you Harry?

Wed, 12/01/2010 - 20:25 | 770283 mynhair
mynhair's picture

Harry, you really didn't start that dildo business you talked about on MW, did you?

Wed, 12/01/2010 - 22:15 | 770484 Seymour Butt
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+1

Wed, 12/01/2010 - 20:26 | 770286 Iam Rich
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Harry...the real question is how were these guys acting two and a half years ago, just before everything blew up?

Wed, 12/01/2010 - 20:35 | 770302 Raynja
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Let me get this strait, you signed an international licensing agreement and that's why you believe the market was up today. Lmao.

Wed, 12/01/2010 - 21:28 | 770418 knukles
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You sell licensing agreements?

Wed, 12/01/2010 - 20:32 | 770267 mynhair
mynhair's picture

In Amerika, they are klowns; that's the misunderstanding.

'Clown' infers a knowledge of private enterprise.

Laughs vs laughable.

Wed, 12/01/2010 - 20:31 | 770299 RobotTrader
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Wed, 12/01/2010 - 20:39 | 770303 mynhair
mynhair's picture

Very interesting.  Do you see the EST after the date and time?

Any problem there?

It's  7:34 PM Dec 1 EST.

Aussieland ain't on EST.  Moron site.

Times on both are fooked.  Just post bouncing boobs; it's all you can handle.

Wed, 12/01/2010 - 20:42 | 770318 RobotTrader
RobotTrader's picture

Sorry.

Those charts are straight off the Yahoo Finance page.

As long as I've used them, they are very accurate.  Keep in mind that the quotes are probably 20 minutes delayed.

 

Wed, 12/01/2010 - 20:45 | 770331 mynhair
mynhair's picture

Must be a link to them?  The NZ time is now correct.

Thu, 12/02/2010 - 00:25 | 770873 Justin Credible
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Gag on hairballs much?

Keep your litter tray to yourself please.

Thu, 12/02/2010 - 00:11 | 770824 spekulatn
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Yahoo Finance data needs a scrub son. Besides, now a dayz trust nothing.

Wed, 12/01/2010 - 21:33 | 770425 Joe Davola
Joe Davola's picture

Clowns make you laugh, Al Franken doesn't even rise to that level.

Thu, 12/02/2010 - 01:32 | 771000 gwar5
gwar5's picture

The clown can sit? That means he won?

Well, good news. The circus is in town.

Do NOT follow this link or you will be banned from the site!