Egon von Greyerz, rhetorically, asks: "Gold has gone up for 12 straight years in a stealth market. In the last ten years gold has had a compound annual growth of 20.5%. This is an absolutely outstanding return but investors should not look at gold as an investment but as money. Gold reflects governments’ deceitful actions in totally destroying the value of paper money by printing unlimited amounts of it. With gold up 7 times since the bottom in 1999, is it too late to jump on the Goldwagon?" The answer is logical. As for the follow through: "The world is now staring into the abyss and we are most likely entering the Dark Years which I wrote about two years ago. The consequences will almost certainly be unlimited money printing and a hyperinflationary depression." And there are those who say we are pessimistic...
The trading today was consistent with the last three days, with one exception: Dealers bought calls. Dealers bought them in fence form, but they were careful to sell volatility in premium while covering their short calls. Examples include the 1700/2000 Risk Reversal and other structures of that type that sold premium yet bought skew. Remember the December 2000 Call is a 15 delta item now, hardly a typical skew option, yet it has premium of over $22. Volatility is by no means cheap. Simultaneously, it is by no means unjustified. Up until today, between the call liquidation and the straddle selling we would have said the market was poised for a quick sell-off or a slow move higher. Today’s risk reversal trading by dealers makes us lean toward the latter, and at a slightly faster pace. Our technical analysis below highlights levels to watch. Options just don’t show us washing out right now. Perhaps another two or three margin raises will do the trick. Conclusion: Mildly Bullish
Paulson & Co.'s latest 13F is out. As has already been extensively discussed, Paulson largely has eliminated his BAC stake, which in recent days is rumored to have been cut to zero, although as of June 30 was a little over $660 Million, or 60.4 million shares, a substantial 52% cut from the $1.65 billion or 123.6 million shares at March 31. In the process he made BAC his top 12 position, a far cry from where it was in 2010. Overall, Paulson deleveraged substantially in Q2, with the bulk of his positions declining across the board, although he did cut his whopping 1.8 billion Citi stake by just 19% to $1.4 billion, which is where the pain trade for the fund is contained (for those wondering, his JPM position was cut by just 6%). Paradoxically, as of June 30, Paulson actually added $160 million to his Capital One position and a whopping $300 million to his Wells Fargo position making these his top 6 and 8th positions, respectively. Somehow we doubt his LPs will be too happy with this decision. Paulson added new positions in Life Technologies, Savvis, News Corp, Southern Union, Mosaic, Tenet, Walter Energy, Grifols, NYSE Euronext (probably an M&A arb), Agnico Eagle Mines, and State Bank Financial. These are highlighted in green in the table below. Any simple additions are bolded. Paulson cut his entire stakes in Alcon, Alberto Culver, Atheros, Boston Scientific, CIT, Cooper Companies, Emergency Medical Services, International Paper, JC Penney, Kinross Gold, Lorillard, Marshall & Isley, Novell, Pride Intl, RC2 Corp, Seagate, Smurfit Stone (so much for that whole paper trade), St Jude, Talecris and Wilmington Trust. We expect major selling in Paulson's Q3 update unless like last year, his fund rises from the ashes of reality courtesy of yet another round of easing. Somehow we doubt it (the Phoenix thing, not the Easing).
I am confident in predicting we are about to have another Global Financial Crisis—I’m calling it The Sequel: Same movie, same players, same story. Only this time around—like all good sequels—the financial crisis we are about to experience is going to be bigger, longer, and uncut by bailouts. By the way, that is the key difference between 2008 and 2011: We’re not going to have a Hollywood Ending this time around. The governments of Europe and the United States, as well as their respective central banks, do not have any weapons to fight off this 2011 financial crisis, as they did in 2008, for the simple reason that they used them all up—they’re out of bullets, both monetarily and politically. So when The Sequel hits the big screen, there won’t be a Big Daddy Government deus ex machina to come save the day in the third act twist. When The Sequel hits, we’re on our own.
Here is the updated 13F summary just filed from Third Point as compared to the holdings as of March 31. We leave readers to do their homework on how Dan Loeb is positioning himself per his holdings as of 45 days ago. Stakes completely cut since March 31 include Apple ($69MM), Aspen Tech ($51MM), Carefusion ($20MM), CBS Corp ($25MM), KKR ($20MM), Madison Square Garden ($2MM), PHH ($65MM), Smurfit-Stone ($87MM), Tesoro ($67MM), Textron ($37MM), Viewpoint Fin ($21MM) and YPF SA ($45MM).
When witnessing this latest vapor volume melt up, what can one say but victory for the bulls... Oh yes, ignore that the relentless rally is on 40% of the past 10 day average volume. 1.8 million ES contracts on 4.46 million 10 DMA. Irrelevant: inverse distribution or something is the conventional spin. Europe is fixed, and no recession is coming - just cover any and all shorts before Google buys them all. Also ignore when a month from today we are back to the level when two ES contracts send the market limit up.
RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 15/08/11
Our Biggest Surprise From The "Patriotic Millionaires For More Taxes Initiative": Whitney Tilson Makes Over A $1,000,000Submitted by Tyler Durden on 08/15/2011 - 14:44
When we read about the "Patriotic Millionaires" initative, in which anyone can submit a name and an email address, and indicate they make over a million dollars, while patriotically proclaiming their desire to be taxed more, our biggest surprise was not that nearly 400 Americans gave the IRS a carte blanche to go through their 2011 tax returns line by line, but that Whitney Tilson actually makes over a million per year. It appears the "Value" Investing Congress still has money left over after spending millions on R&D for uncovering revolutionary ways for its VIC conference invite (80% off, but only if you respond in the next 10 minutes) blast mail to pass through every single spam filter known to man (or so it would appear to disinterested 3rd parties who have tendonitis from hitting unsubscribe countless times). That said, we are confident all of these patriotic individuals will gladly submit at least an additional 10% of their gross income to the IRS, and provide proof of doing so, regardless of how successful their highly patriotic and altruistic campaign ends up being. Because otherwise those tempted to do so, may actually accuse said "millionaires" of hypocritical posturing. Incidentally, perhaps next said self-proclaimed millionaires, who count in their ranks such rich men as Nouriel Roubini, Leo Hindery, Mike Steinhardt, and Edie Falco can also disclose the liability side of their balance sheets.
We were a little torn as to who should receive today's captain obvious award of the day. For a while Atlanta Fed's Lockhart was in the lead, who in a speech to the Rotary Club of Atlanta came up with this pearl of wisdom: "the stock market may not tell the economy's direction." Does this mean that the efficient market hypothesis is now dead and that the Chicago School of Voodoo should hand out refunds for decades of indoctrinated lies? Nonetheless, the winner was sealed when we read about an actual paper writtedn by BCA Research's Dhaval Joshi, which found that "Quantitative Easing is good for the rich, and bad for the poor." And there you have it: all those scrathcing their heads, confused, wondering how it is possible that QE which was supposed to make everyone richer, did not do so, have an explanation. And nobody could have possibly come up with this conclusion before: it is a true blessing that BCA decided to invest the capital and manpower into cracking this indecipherable quandary (which truth be told apparently stumped the geniuses at the Fed not once, but twice, and will continue to do so them every single time the S&P drops below 1000).
In the aftermath of the first of may town hall meetings (there is a second one tonight), it is only fitting to present this chart courtesy of Real Clear Politics which summarizes data across all the different polling services indicating Obama's approval and more importantly disapproval rating. The message is clear: all time low. Time to resurrect and kill Osama for the 3rd time? Or maybe Obama can spend another day spamming his vastly reduced Twitter followers?
As if hedge funds did not have enough to worry about with redemption requests galore after last week's epic rout and vol surge, today's Google stunner acquisition of MMI caught a near record number of them with their pant down. The company, which had over the past year, ever since its spin off, become one of the most despised public companies, saw a 250% increase in its short interest since December, peaking at 25 million shares short, dropped to just under 20 million shares, or essentially the second highest to date. These are precisely the institutional shorts who are hating their live right now as they are sitting on a $260 million paper loss, enough to wipe out several mid-size hedge funds. Speaking of, following rampant rumors spread by CNBC's strategy session last week that various funds were blowing up left and right (in addition to perennial bete noire Paulson & Co of course), we have yet to hear of even one casualty. Just how tight of a lid are prime brokers keeping on their hedge fund client casualties if not one peep has been uttered about who blew up? Following today's trouncing in MMI, we doubt this secret will be such a secret for much longer.
...Courtesy of the teleprompter:
OBAMA SAYS SOLVING DEFICIT IS `NOT THAT COMPLICATED'
Translated: "My fellow Americans, I forgot my antipsychosis medications this morning, and god bless. Thank you." Watch the town hall webcast below.
Panic In DC As Starbucks' Schultz Calls For CEO Boycott Of Campaign Donations, Urges Americans To Go On Strike Against Their PoliticiansSubmitted by Tyler Durden on 08/15/2011 - 11:56
In today's most underreported news of the day, which could potentially have the biggest impact on the future of America, none other than America's CEOs, or at least one of them: Starbucks' Howard Schultz, has mass blasted an email to fellow CEOs asking for a consensual boycott on donating to political campaigns in order to encourage the nation's muppets, elsewhere idiotically called "leaders", to solve America's budget and debt impasse. Bloomberg quotes from the CEO's e-mail to business leaders:"I am asking that all of us forego political contributions until the Congress and the President return to Washington and deliver a fiscally disciplined long-term debt and deficit plan to the American people." Cue panic, terror, homicidal and suicidal screeching, and overall sheer existential angst in D.C., whose critters suddenly face the nightmare scenario of having no corporate bribes, period, until they get to do their job.
They can strike... Or they can create post-modernist art. They appear to have taken the latter approach for now. Once they realize that artistically beheading fictitious clowns (whose burgers cost over $17 in Zurich, thank you stable dollar policy) does not pay the entitlement benefits, the former is next in the queue.