Since last week the ratio of selling to buying was #Ref!, it could really only go up. And it has. In the week ending January 21, the S&P 500 saw 2 insider buys (Tiffany and Fastenal for a total of $131,227) and 60 insider sales, worth $373 million, for a total insider sell-to-buy ratio of 2,842x. The biggest selling occurred in Discovery Communications ($101 million), Tiffany (where the $54 million just modestly offset the $119,259 in buying), Apollo Group ($44.8 million), McKesson ($40 million), and Hewlett-Packard ($25 million). So just like the government's definition of inflation, where if you strip away everything you have deflation, absent all the selling in the last year, which now amount to about $20 billion, there has been nothing but insider buying.
Whispers Of The Inevitable Unwind Of The Fed's SFP Program And The Ensuing $200 Billion Liquidity Injection CommenceSubmitted by Tyler Durden on 01/25/2011 - 16:30
It was less than 24 hours ago when we first suggested that the Fed's Supplementary Financing Program is about to end. In addition to providing a $200 billion debt ceiling buffer (which the government will fill up in about a month), we noted that the end of this program, which was previously introduced to gradually phase out the ridiculous (in Q1 2010) amounts of liquidity, would provide an additional $200 billion in excess liquidity over a two month period, or effectively doubling the impact of POMO, which monetizes roughly $110 billion in bonds per month. Specifically, we said: "We are confident the US Treasury will announce that beginning with the week of February 14, it will no longer roll maturing 56-Day Cash Management Bills, which means that for the ensuing 8 weeks, one on every single Thursday, there will be a total of $200 billion in incremental liquidity flooding the market, and probably sending stocks, commodities, and everything else that is not nailed down into the stratosphere all over again." Today, Bloomberg has a full story on just this topic, which discusses precisely the end of the program. It is safe to say that within 2-3 weeks, the SFP unwind will commence, and the market will price in another $200 billion in additional free liquidity, which in turn will lead to excess bank reserves surging to about $1.7 trillion in the next 4 months, 70% higher from where they are now. If you think the market is worried about inflation now, wait until June. And that excludes that virtually certain QE2+ announcement: there is no way that the Indirects can shoulder the burden of buying $3-4 trillion in US Treasuries over the next 2 years. The Fed will have no choice but to continue monetizing everything.
In Jeremy Grantham’s 4Q Letter, he summarizes what went well and not so well in 2010, then looks ahead to 2011, sharing what he believes to be critical issues for investors to focus on.He also continues his series of Letters to the Investment Committee with a piece called “On the Importance of Asset Class Bubbles for Value Investors and Why They Occur.” Must read.
1 minute 23 seconds into the clip below a solitary Egyptian protester stands up to a riot police water cannon in an attempted recreation of the Tiananmen Square tank hold up... And gets blasted squarely in the face. Cause that's how Egypt rolls. Plus, whatever happens in Egypt stays in Egypt right? In other news, the first casualty has been reported, after reports from Khaled Said claim Egyptian police in Suez opened fire live ammunition killing Mustafa Reda Mahmoud Abdelfattah, 20 years old.
Ever since Zero Hedge's advent just over two years ago, one of the most improper things we claimed happened routinely on Wall Street, was that the big banks' prop traders would consistently, and completely against regulations, populate their massive trading floors with both flow and prop traders, who often sat side by side, within earshot and front run the big clients' orders. Some may recall that point #8 of our follow up query to Goldman's Lucas van Praag in December 2009 was precisely a request to get the seating chart together with assigned responsibilities of all Goldman traders. To wit: "we are still hoping to get a seating chart of Goldman's trading floor (via legitimate channels) which clearly discloses flow and prop traders' seats in order to disclose to the general public that flow and prop traders do not share the same information flow, especially that emanating from core clients who tend to move markets the second they announce their trading axes to Goldman's flow traders." The reason we bring it up is that once again we seem to have been just a year ahead of the curve. In a just announced settlement, the SEC has fined Merrill, and supposedly its insolvent Bank of Calcutta taxpayer funded holdco, $10 million for doing precisely this! From Bloomberg: "The SEC found that Merrill operated a proprietary trading desk from 2003 to 2005 on the firm’s main equity-trading floor in New York, where market makers received and executed customer orders. While Merrill told clients their order information would be used on a need-to-know basis, proprietary traders got information and used it to place trades on Merrill’s behalf after executing the customer orders, according to the statement"...... So, does everyone finally understand how Goldman's (et al) prop group has no trading loss day (at near 50% margins) every single day year after year now?
Update: Alshaheed reports that Egyptian police in Suez has opened fire live ammunition killing Mustafa Reda Mahmoud Abdelfattah, 20 years old
The last time a scene like this happened in Greece, Waddell and Reed sold some futures. This time around, nobody even cares. In the meantime, riot police has now escalated to firing tear gas at protesters, as the riots have metastasized to Alexandria, the Nile Delta, and the cities of Mansura, Tanta, Aswan and Assiut (not without Hillary Clinton voicing her opinion, who has called the Egyptian government stable). But the most notable update is that according to reports, Jamal Mubarak has left Cairo to London while Husni Mubarak is fending off tiger sharks at the Sharm el Shekh. Unclear how much Egyptian gold either may have absconded with.
Who says QE2 is an abysmal failure at generating a "wealth effect" for the broader population (see today's less than stellar housing news)? Bloomberg reports that on Wall Street 56% of bankers received a larger bonus than last year. It is great that according to the BLS the average American is also making more money than in 2009. Oh wait. Additionally, fifty percent of U.S. respondents were satisfied with the payout, while 34 percent were dissatisfied and 16 percent were neither, according to the survey.
Future mayor Emanuel's first promise once the Illinois Supreme Court elects him? To live in Chicago. Full filing from the Supreme Court of Illinois attached. It is unclear if the invoice for services rendered comes with the filing or later.
Today's $35 billion in 2 Year Notes came at a 0.65% high yield, slightly better to the When Issued, as the Primary Dealers continue to take down near two year high levels. And with PDs now turning and flipping to the Fed as soon as a day or two later, this is nothing more than the Fed basically buying up a major portion of the auction: in today's case it was 58.13%, higher than even last month's surging 57.58% which was the highest since August's 58.68%. Directs took down a now traditionally high 14.89% (and nobody still has any clue who the UK "fund" that has bought nearly $300 billion of USTs in the last year is), while indirects dropping to 26.97%, which was the worst Indirect take down since February 2009, with the exception of January when foreigners staged a year end wall off, buying only 26.97% of the auction. Otherwise, the Bid to Cover was 3.47, in line with recent auctions, and overall the auction had little impact on the broader curve. After all the Fed will never allow an auction to fail: not when it is taking down nearly 60% of each incremental gross issuance directly (and 100% indirectly).
Look around you, America. Everything needs to be done. The barns are falling down: the cities, the schools, the houses. The railways have been pulled up, the factories and mills are closed, the silos knocked over, the fields paved, the ports silted in and ruined. The children have run away; your poor and the old are abandoned. Who did this to you? You did it to yourself, and if you want a nation that functions, one that can feed and clothe you, one that has decency and prosperity and goodness, you’re going to have to go make one. That means grabbing the shovel that’s closest to you and starting there. That means if you see a need, some failure, some ugliness, you are the only one who’s going to change it into beauty and success. That means helping, sharing, teaching useful skills to everyone who’s willing to do the least work—for we must each do all we can. That means displacing the corrupt everywhere they’re found, everywhere they’re protecting each other, methodically, legally, one by one, starting in every Town, State, and National body, in corporations, public groups, government hall, and in your living room.
Ten days ago, we ran a story in conjunction with The Forensic Factor "Is Telestone Technologies (TSTC) A "RINO" In Sheep's Clothing?", in which we presented TFF's thesis on why Telestone Technologies (TSTC) may be simply the latest Chinese fraud stock, the latest in a list of companies so long that very soon it will be impossible to trade any Chinese company (no matter how pristine) without allegations of fraud swirling all around it. Immediately following the publication, the stock plunged by 20%, confirming that these companies are truly nothing but story investments, and when even the slightest whiff of impropriety appears, everyone bails in droves. TSTC's management team was forced to go public with an attempt at refutation, which however has achieved in doing nothing for the stock price. Today, TFF presents its follow up thesis on TSTC. As usual, the smoke certainly appears is here. We leave it up to regulators to determine if there is fire...
Zero Hedge reader Jason submits the following rebuttal to yesterday's most hilarious segment on CNBC, which was Steve Liesman's explanation of how a 100% jump in wheat prices is really nothing to be concerned about. "I viewed CNBC on Monday morning and was amused at the attempt to convince consumers Moms and Dads on a budget who buy groceries) that a 50% increase in wheat will not impact their grocery budget. The logic used (see the story as recorded by CNBC) is beyond ridiculous to the point of incompetence. Anyone who actively listens vs. passively dozing off, and I know that is hard to keep from doing, would have seen right through this.
Since FX trading is rapidly eclipsing stocks as the main market of choice for retail investors, it is useful to chart how the foreign exchange market has developed over time. Below, we present a recent comprehensive summary on the evolution of the foreign exchange market written by Brown Brothers' global head of currency strategy Marc Chandler.... Cause in today's centrally planned world, you either have 5,000x leverage on every trade, or you are too little to be bailedout.
Inflation is actually much higher than what the BLS claims it is; something that purchasers of college tuition, pharmaceuticals, or health insurance know all too well. To give the BLS some credit, they must try and estimate a single rate of inflation that applies to everyone equally. But that is a completely impossible task. An octogenarian living in Seattle on a meager pension and taking lots of prescription medications will have a totally different inflation experience than an 18 year old living in their parent's basement eating Ramen noodles. But even after spotting the BLS some slack, there are some enormous and glaring errors in their methods that render the official inflation measure hopelessly - and dangerously - inaccurate. In this article, I am going to reveal how US inflation numbers are badly understated, how this practice short-changes institutions and fixed-income individuals alike, and why this means fiscal and inflationary train-wrecks are the most probable outcome for the US -- and, by extension, the globe.