Deja vu all over again. Looks like Goldman is about to be stopped out once more on its most recent EURUSD call. The Euro is now over the 1.35 stop limit. And so Goldman makes a boatload yet again as clients lose. Keep an eye on the official close. We wonder if this means third time will be the charm for GS which should next go EUR bullish (once again, and less than a month after the first failed such call).
- Former Bernanke colleage and co-author Vince Reinhart: "Geithner and
Bernanke Are Wrong about Fed Power. Letting the Federal Reserve keep a
hand in bank supervision and regulation is a mistake." (The American) Please read : Monetary Policy Alternatives at the Zero Bound: An Empirical Assessment Author(s): Ben
S. Bernanke, Vincent R. Reinhart, Brian P. Sack Source: Brookings
Papers on Economic Activity, Vol. 2004, No. 2 (2004), pp. 1-78,
in which the authors (among whom is Brian Sack, head of the Fed's
trading desk) recall the golden days of Roosevelt's dollar devaluation,
and hint at what's to come for the US currency
- The Greek ex-Goldman guy who just blew up the 12 Year fly by is now preparing to issue $16 billion in dollar denominated bonds by early May. Ah yes, nobody can see behind the ruse of issuing bonds in the world's worst currency. Brilliant. Here's the funny part - Tim Geithner plans to issue $16 trillion denominated in Greek Drachma (Bloomberg)
- Emerging market currencies show short-term cracks (Reuters)
- Gartmore may face withdrawals after investigation (Bloomberg, Telegraph)
- Steve Forbes: "President Obama and Speaker Nancy Pelosi rammed ObamaCare through the House by unprecedented parliamentary trickery, bribery and deceit." (Forbes)
- Obama to permit oil exploration off Virigina coast (Reuters)
- Bill Clinton's $20 million break up with Ron Burkle (Daily Beast)
- iPad sales anyone's guess as analysts skip estimates (Bloomberg)
And just to make the miss a little more palatable, February was revised from -20K to -24K just to not show a double dip inflection point. Also, keep in mind the increasingly largest employer, the US Government, is not accounted for. Next up: Friday NFP and a +200,000 consensus, of which February snow counter-adjustments and census is about pretty much all of that.
- Asian stocks decline on concern rally may overvalue earnings; Yen weakens.
- Australia gives in-principle approval for Nomura unit to set up 2nd Australian stock exchange.
- Australian retail sales and building approvals unexpectedly tumbled by 1.4% in February.
- Consumer confidence in US improves, Home Prices climb amid job optimism.
- Greece plans to sell a global bond in dollars to help raise 11.6 billion euros.
- Ireland's banks will need $43B in capital after 'appalling' lending.
- Japanese business sentiment approaches pre-crisis levels, Tankan may show.
RANsquawk 31st March Morning Briefing - Stocks, Bonds, FX
Call it poetic justice. In its pursuit to kill CDS "speculators", Greece has shot itself in the foot, and potentially hit a major artery. Earlier today Greece tried to do a quick drive by with a €1 billion in a reopening of a 12 Year auction. Instead, it barely managed to get €390 million off: a miss by 61%, which anywhere else would have caused the organizers to scrap the auction and never mention it again (but not here). The lack of demand for the remarkably stupid surprise auction, orchestrated by former Goldmanite Petros Christodoulou, achieved no incremental funding for Greece but merely spooked the entire curve, and forced buyers of yesterday's 7 Year auction to take immediate losses, as the bond traded down from 6% to 6.27% (not to mention a move wider in CDS). This is the third sequential auction in which primary buyers have taken post break losses. At this rate of disappointment (yesterday the 7 Year had a meager 1.4 Bid To Cover ratio), soon Greece will be unable to pull anything issuance off. Yet the bigger reason for the lack of demand is even simpler: the hounding of all those who hedge exposure with CDS. It doesn't matter if one has naked or hedged positions - any purchase of Greek protection is enough to get the European secret services scouring through your garbage. And this is precisely what Zero Hedge and many others have been warning about for weeks. And just in case we might not have been clear enough, here is Deutsche Bank explaining once again, just how negative for primary issuance and for sovereign borrowers, the escalation in the anti-CDS rhetoric is.
In what could be a first step to appeasing the US and its requests for CNY revaluation, Caijing has reported that China may be considering expanding the daily yuan trading band. The yuan currently fluctuates up to 0.5% around the central CNYUSD parity set by the PBoC - today, for example, the CNY was stronger by 1 pip from 6.8264 to 6.8263. As reported by Market News, citing an
unidentified Chinese government source, "If the central bank does not want to see a quick rate hike, a
better way to fight inflation would be to expand the daily yuan trading
band to allow the yuan to appreciate properly." One interpretation of this development is that China, anticipating a delay of the Treasury report widely expected to brand China a currency manipulator, will placate the US just marginally and split the baby in the middle, by allowing a trading band expansion. Of course, this will do nothing to actually revalue the Yuan, devalue the dollar and boost US exports, but it will allow the Obama administration to save face and say "look, China made a concession" which the teleprompter will explain is an indication that the Obama administration now has the upper hand in Sino-US negotiations, followed by a round of applause from yet more to be soon unemployed people.
Forget April - for Jim "Mad Money" Cramer March may well have become the cruelest month. First, we broke the news that Cramer's TheStreet just became the object of an investigation by the SEC. What should be more troubling for the Mad Money Maestro is that the latest Mad Money Nielsen numbers just came in. And they stink: March was the weakest month for Jim Cramer's show in well over a year. After posting a slight improvement in February courtesy of the market's consternation with Greece, March was a collapse. Expect many more sound effects, props, gimmicks (luckily, no incremental cleavage is possible) shortly. Also expect much more pro-cyclical stock advice (buy if the stock market is going up, sell if vice versa), and more big picture proclamations that are refuted within 24 hours. Also expect many more ads for male incontinence products as the show has to resort to showing increasingly "distressed" advertising inventory.
The Census aims to be every man’s hero. It promises an economic stimulus, a reduction in unemployment, and greater funds for every community. Of course, the reality is much closer to a game of musical chairs with your money. And guess who will be left standing? The most immediate impact of the Census is that it distorts unemployment rates. With 1.2 million hired temporarily during the fall, the Census is already skewing the unemployment numbers in the government’s favor. Specifically, the fall data shows unemployment at 9.8% (Sept), 10.1% (Oct), and 10% (Nov). Who can forget the hoopla over the November reduction from 10.1 to 10? To government officials, it was as if the clouds had parted after a relentless hurricane, “proof” that the massive stimulus spending was working. In an attempt to get a clearer picture of the effect from the Census on unemployment data, we evenly subtracted the 1.2-million Census bump across fall’s unemployment rates and found the new numbers ringing in at 10.1% (Sept), 10.4% (Oct), and 10.1% (Nov). If a one-tenth-of-a-percent drop in November was a reason to celebrate, then a three-tenth-of-a-percent October upward revision is a reason to cringe. In the months ahead, expect the same number games.
Beginning in January 2009, and every single business day since then, the Fed has been buying up Mortgage Backed Securities (in a very non transparent market). The program, which ends tomorrow, will have transferred $1.25 trillion of MBS "on behalf" of the US taxpayer, representing the single biggest asset on the Fed's balance sheet, and backing up such liabilities as currency in circulation (yes, that dollar in your pocket is collateralized more than half by rapidly devaluing, and in many cases cash flow non-producing houses) and excess reserves. Ironically, this year's biggest April fool's joke may end up being not only quite scary but very much true: on midnight of the night of March 31 into April 1 the Fed's MBS program ends, and the market will be on its own for the first time in over one year. What happens next is anyone's guess but here are some suggestions.
Surely this must be worth a strong buy upgrade of the REIT sector by someone (too bad most banks already have these in the "conviction buy to the grave" category). Bloomberg TV reports that the office vacancy rate in downtown NY has dropped to September 11th levels, and is about to pass 14%. In other words short reality, long hopium and office REITs, and presto - 100% P&L overnight. Who needs such boring things as cash flows when you have record vacancies and guaranteed, undipsuted bailouts.
Lockyer Redux: "Unfair To Compare Cali With Greece" But Fair To Scapegoat Cali's Problems On Speculators... Just Like GreeceSubmitted by Tyler Durden on 03/30/2010 - 17:56
As we expected, Bill Lockyer has decided to go the media circus route. He won't be the first (G-Pap already did that. We have not heard much from him ever since it was uncovered that the biggest speculator in Greek CDS was Greek Post Bank), and he certainly won't be the last (there are about 49 other bankrupt states in America). But at least the Greeks were consistent - blah blah CDS = satan blah. From the attached clip, please someone explain in plain English just what it is that Lockyer is trying say: "If someone is in the market concurrently marketing risk claiming that there's some risk associated with these issues I don't know to what extent it affects investor perceptions and nervousness that might cause yields to increase. That's the question - we are not making any allegations." uh...................what? Did the Red Hot Chili Peppers, like, infiltrate the Cali Capitol and infuse the HVAC with legalized marijuana? Is the question how dare someone disclose that an investment may actually fall in value (and why)? Hold on, isn't the Connecticut AG suing the rating agencies for not doing just that?
Earlier we presented one side of the possible consequences of branding China a currency manipulator. In the realm of pundits nowhere is the China debate more pronounced than between Nobel (or is it Oscar) winner Paul Krugman and Morgan Stanley Asia Chairman Stephen Roach, in which the latter has proposed some amusing applied sporting goods suggestions vis-a-vis the former. Last night, the Morgan Stanley strategist made his case even clearer in an Op-Ed in the FT, titled "Blaming China will not solve America's problems." As we are fairly confident that the last thing America needs at this point is to antagonize its primary lender (sorry Ron Insana, the whole "if you owe a bank one trillion, you own the bank" is the most stupid thing one can say in this particular relationship), we would tend to agree that scapegoating at the national level, while easy to do (just ask Bill Lockyer and G-Pap), only shows the market that one is hopeless to actually fix the underlying problems and instead seeks to distract from the matter at hand. Roach's argument, by the way, is spot on: America is deflecting from the savings problem (which incidentally, after yesterday's PCE once again outpacing Consumer Incomes, slipped to 3.1% or the lowest levels since 2008). At this rate we will soon be back to negative savings, and the anger at China will be greater than ever. Why look to ourselves to fix a problem that so easily can be scapegoated onto others. And if it means purchasing a few more MaxiPads, pardon iPads, so much the better (out of curiosity, we wonder just where the components for the iPad are made, and just where it is assembled...).
The tragic news of the 29 March twin suicide bombings of two Moscow Metro stations during the morning rush hour has produced outrage worldwide, with the Kremlin quickly adding that the attacks were carried out by the Caucasus Mujaheddin, a northern Caucasus-based militant Islamist guerrilla group that claimed responsibility for the bombing of a Moscow to St. Petersburg express train last November. The grim death toll can be seen as yet another statistic in the Kremlin’s ongoing war with Chechnya separatists that erupted in December 1994. Underneath and driving the savagery of the last 16 years is a resource that few commentators note – oil.
Former SEC Staffer Blasts The Regulator's Short Selling Ban Lunacy, Calls Decision Purely Motivated By PoliticsSubmitted by Tyler Durden on 03/30/2010 - 15:05
As if anyone needed more proof that the corrupt, biased, inefficient, and outright worthless SEC should be disbanded right now, this instant, here is former SEC staffer Erik Sirri, who ran
the SEC’s division of trading and markets, confirming that all the SEC does is supervise Wall Street's stealth transfer of wealth from the middle class to the Wall Street kleptocrats (as in, "you have only stolen enough to buy just one G-V?"), and does so with a political bias at that. As Bloomberg reports "The U.S. Securities and Exchange
Commission’s decision to restrict short selling was a political
decision rather than one based on evidence, according to a
former agency official who says it may set a precedent for
future decisions." And what politics was involved pray tell? Why, the type that would make the new president incredibly unpopular even before he was sworn in. It becoming increasingly clear with each passing day that this country's equity market is nothing but a sham and a teleprompter-friendly mirror before which Obama can act glum, even as the very regulators allow the market to be manipulated in a way that encourages risk taking, and thus delay and inevitable and terminal crash. But to Obama a crash in the future is worth a hundred rallies in the present. Just as a bankrupt America in five years is worth(less) a mid-term election won (by the narrowest of margins) in November. Not only is the fiscal and monetary policy of this country doomed to an eventual debt repudiation outcome, so, we are now certain, the markets will hit 36,000, wiping out all the shorts on the way, only to be followed by a surgical collapse straight to zero. You will have only the current and past administrations to thank for that, together with all their crony, corrupt, and incompetent regulatory agencies, with the SEC (and CFTC) at the very top of that list. In the meantime, and borrowing from a very prescient French (wo)man in the ending days of that particular civilization, After This Administration, The Deluge.