And so the battle of propaganda begins: on one hand we have the US government demanding the population take a leap of faith that Osama was killed then promptly converted into lead-containing fish food, now Iran has stepped up to the plate claiming it has 'evidence' that bin Laden was in fact dead long ago. From RIA: "Iranian Intelligence Minister Heidar Moslehi said Tehran has evidence
that al-Qaeda leader Osama bin Laden had died of disease long before the
United States' alleged raid on the terrorist, FARS Iranian news agency
said. "We have accurate information that bin Laden died of illness some time ago," Moslehi said." And since Osama's body was promptly dumped at sea, and Obama decided to not release any pictures of the corpse, the conspiracy brigade will surely have a field day with this one. We can only hope Iran's evidence takes a shorter time to produce than WikiLeaks' Bank of America "killer" expose.
And so we see why the proverbial 15 minute inflation reduction, even achieved though such brute force methods as relentless margin hikes everywhere except in the ES and 100x forward P/E stocks, is nothing but hot air. After dropping by over 10% in a few days, crude is now trading at a level that corresponded to gasoline in the low $3.00 range. Instead, as AAA reports, average gas prices did decline.... by $0.006. Apparently in his extended Princetonian studies, Printocchio never got to the class which says that prices are sticky on the way up, and refuse to plunge with the same enthusiasm, especially when involving margin starved companies which are more than happy not to undercut each other on overhead prices for a long, long time.
And another major source of physical demand in the already very undersupplied silver market appears. Just released from Sprott Asset Management, who recently added to the perfect storm in silver by cashing out on the record PSLV premium and converting proceeds to miner stocks: "The Sprott Silver Bullion Fund is an innovative offering, being the
first mutual fund in Canada to invest primarily in unencumbered, fully
allocated silver bullion. The Fund's objective is to seek to provide a
secure and liquid investment for investors seeking exposure to silver
bullion without the inconvenience associated with direct investment." We can't wait to discover how many tons of silver this mutual fund will soak up imminently, and where the always exciting adventure of "COMEX registered silver" takes us next...
Reuters Special Report On What Caused The "Causeless" Crude Crash; Other Hedge Fund Casualties IdentifiedSubmitted by Tyler Durden on 05/09/2011 - 10:31
A tremendous report by Reuters' Matthew Goldstein, Svea Herbst, Jennifer Ablan, Emma Farge, David Sheppard, Claire Milhench, Zaida Espana, Robert Campbell and Josh Schneyer, identifies that while the shaky macroeconomic conditions and an overbought market were among the key reasons for last week's history crude rout, the match that caused an unseen before plunge in commodities was, you guessed it, "computers." Naturally, this is not unexpected to Zero Hedge readers who have been warned about the massive instability of a market comprised almost entirely of unsupervised algos, since the spring of 2009 (a phenomenon which the CFTC and SEC will not "comprehend" and/or change, until it is too late). Additionally, in addition to the previously identified losses at Clive Capital and Andrew Hall's latest plaything, Reuters also identifies BlueGold, Winton Capital and FTC. Basically, throw out a name that has energy exposure (let's not forget Touradji or Centaurus) and you likely have a winner. Must read.
As gasoline prices passed $4 per gallon in Connecticut, Sen. Richard Blumenthal and Rep. Joseph D. Courtney joined President Obama in denouncing "speculators" and urging investigation of manipulation in the oil market. There are a few problems with this.
Enjoying WTI at sub $100? Since we have at most two months of WTI trading sub $115 (and Brent at $130, assuming the WTI-Brent spread does not finally collapse) according to JP Morgan, enjoy it while you can. From Lawrence Eagles: "Although oil prices fell sharply last week, on Friday we raised our Brent crude price forecast to $130/bbl for 3Q2011 due to a tight supply/demand outlook. While product cracks and crude differentials also saw some readjustment, we do not expect a major realignment in differentials going forward as the underlying pressures remain intact." In other words, as we said last week, nothing has changed (except for some margins). And since all commodities correlate as one, and since Jim O'Neill was out earlier today bashing commodities (the surest contrarian sign ever), time to load up the boat courtesy of the CME's persistent banging the speculator is likely here.
Join Secretary Geithner And Clinton As They Deliver Remarks At The Opening Of The U.S.-China Strategic DialogueSubmitted by Tyler Durden on 05/09/2011 - 09:20
Because you wouldn't want to miss lots of empty words being delivered with the appropriate dose of pathos (or is that pathology?) and hypocrisy.
Yes, Geithner, and the US "strong dollar policy" take center stage again... Hilarity (at least for Chinese students) ensues.
Your daily diversion comes from German government advisor Bofinger:
- Eurozone needs a very comprehensive solution, or may not remain intact over next 12 months
- Need to consider EU stimulus measures for Greece in addition to belt-tightening
- Have to change overall approach for Eurozone periphery countries
Euro now sliding since apparently the EURUSD traders did not get the Friday memo that the G-7 have decided fair value for the pair is 1.35 tops. Oh yes, in the meantime we can't wait for Germany to get back to the DEM which will buy about $10 USD and make German exports a thing of the ancient past.
If Too Big To Fail was made into HBO namedropping comedy hour, this certainly deserves its own 90 minute, Bollywood produced, TheOnion directed, 3D motion picture:
- GREEK FINANCE MINISTRY SAYS S&P CREDIBILITY IN QUESTION
- GREECE SAYS S&P MOVE ISN'T JUSTIFIED
Pretty much says it all. Elsewhere, Greek prosecutors are "investigating" Der Spiegel. No Citigroup bond runs to be scapegoated this time...
Greece Downgraded From BB- To B As S&P Believes More Than 50% Principal Debt Reduction Would Be RequiredSubmitted by Tyler Durden on 05/09/2011 - 08:22
- Under our sovereign ratings criteria, a commercial debt rescheduling typically constitutes a default.
- In our view, there is increased risk that Greece will take steps to restructure the terms of its commercial debt, including its previously-issued government bonds.
- Accordingly, we are lowering both the long- and short-term ratings on Greece to 'B' and 'C', respectively.
- We are leaving both ratings on CreditWatch Negative.
- Fannie Mae requests additional 8.5 billion dollars in government aid (Xinhua)
- U.S. Will Press China to Hasten Yuan's Rise (WSJ)
- European Officials to Revamp Greek Aid (FT)
- Europe Pressured to Revise Irish and Greek Bailouts (Reuters)
- Krugman: The Inflation Monster Under the Bed (NYT)
- Euro Holds No. 1 Spot as EU Shows Resolve on Greece Debt (Bloomberg)
- EU to Cut Emerging Nations’ Trade Benefits (FT)
- Japan Reaffirms Nuclear Energy Use (NYT)
- The truth behind the popular markets adage of 'sell in May' (Telegraph)
- What to watch, on the Street and on the court, to determine whether the rally will continue…or fizzle (Barrons)
When I had the honor of leading the True Finn Party to electoral victory in April, we made a solemn promise to oppose the so-called bailouts of euro-zone member states. These bailouts are patently bad for Europe, bad for Finland and bad for the countries that have been forced to accept them. Europe is suffering from the economic gangrene of insolvency—both public and private. And unless we amputate that which cannot be saved, we risk poisoning the whole body. The official wisdom is that Greece, Ireland and Portugal have been hit by a liquidity crisis, so they needed a momentary infusion of capital, after which everything would return to normal. But this official version is a lie, one that takes the ordinary people of Europe for idiots. They deserve better from politics and their leaders. To understand the real nature and purpose of the bailouts, we first have to understand who really benefits from them. Let's follow the money.
Goldman's Jim O'Neill Plays Dumb Cop Again, Sees Commodity Prices Dropping, Contradicts, Well, GoldmanSubmitted by Tyler Durden on 05/09/2011 - 07:47
Confused about the Goldman "approach" to forecasting? After reading the following most recent note from GSAM chairman Jim "BRIC" O'Neill you won't be: just predict the opposite of everything your other colleagues at Goldman anticipate, and you are covered. Indeed, in his latest note, the BRICster not only directly contradicts David Greely's latest note that the long-term prospects for commodities are strong as ever by saying that "This suggests to me that commodity prices could weaken further." (for what "this" is, read the note). As for Thomas Stolper's soon to be stopped out prediction of a EURUSD hitting 1.50, O'Neill has some contrarian cold water for that too: "In my book, even with the likelihood that the Fed will remain friendly post QE2 termination, the Euro belongs in a 1.20-1.40 range." So there you have it: one firm, an infinite number of outlooks. That way, they will always be right. As for who Goldman's clients should listen to? We suggest - nobody. But since that REDI/Sigma X feed needs serious soft dollar cash infusions, that is probably not an option. So just flip a coin. Someone will be right.
It was the best of times, it was the worst of times....This time is different.....There is nothing new under the sun.....All of us---by “us” I mean human beings---tend to think too much with our egos and not enough with our rational minds. When we are young, we think we have unique and novel insight into life and the human condition, as if we are the first person to have ever thought certain thoughts. We all read---at least back when I went to school---the classic literature, the Greek playwrights and Shakespeare, but it is only when we reread these works as adults that we realize that everything has been thought of before. The best we can do is put a slight sidespin on it. We are humbled. We bring this same tendency---a belief in our uniqueness---into the issues that face our time on Earth. “There has never been a better time to be alive.”...." This is all going to blow up faster than most people think, and it is TEOTWAWKI.”....Somewhere in the middle probably lies the truth. Many of us---myself included time to time---fear that life as we know it is about to come to an abrupt and painful end. Others---most visibly those who are wheeled out as guests on CNBC---think things are on a rise as far as the eye can see. And for some---I am thinking John Paulson and David Tepper---times have never been better. Who is right? Maybe nobody.