- API reports surprise declines in US fuels inventories.
- China ordered some lenders to increase their reserve ratios by 50 bps from Nov. 15.
- China posted a larger-than-forecast $27.1B October trade surplus.
- EU fined 11 airlines a total of $1.11B for forming cartel to fix air-freight tariffs.
- FDIC Board voted to take initial steps to implement higher fee structure for its deposit-insurance fund.
- G20 draws up two-tier bank plan; Global and national regulators to split focus.
Several data points today, with data on claims (accelerated by a day) and imports supplementing a twin (trade and budget) deficit day… But since all econ news is now noise, with good news beinbg sold, and vice versa, at 2 pm we get the new POMO schedule, which is really all that matters.
RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 10/11/10
After recent reports that Afghan President Hamid Karzai and other government officials received bags of cash from Iran, it's no surprise that Afghanistan would be near the top of a ranking published last week of the most corrupt countries in the world. The Corruption Perceptions Index from Transparency International, a nongovernmental organization based in Berlin and operating in 70 countries, ranked the Central Asian country second only to Somalia and tied with Myanmar for its perceived level of government corruption.
China Flips Off Geithner (Again) As Trade Surplus Beats Expectations And Surges To Second Highest In Two YearsSubmitted by Tyler Durden on 11/10/2010 - 00:04
China just metaphorically flipped off the US, and the G-20, by not only beating trade expectations, but trouncing them, with a net positive trade surplus of $27.1 billion, compared to estimates of $25 billion. This was the second highest number since January 2009, and lower only to July's $28.7 billion. The main reason for the surge in exports was the trade balance with the EU, which at $14.5 billion is the highest since October 2008. In other words, Europe's strong currency is already impacting the continent's economic output, as end users opt to import stuff from China, instead of having it produced domestically, and not to mention stockpiling inventory in hopes that pricing power will allow prices to go up (instead of just squeezing margins even more). Ultimately, Europe is the one that is now getting hit by a double whammy of the CNY-USD peg (as the CNY is now at very low levels to the euro), as well as the recent surge in the EURUSD, due to the Fed's policies. Therefore, Europe has to continue battling not one monetary regime, but two, as its net trade balance with both the US and China are getting worse by the month. As for the all important Chinese trade balance with the US, it came flat with September, both at $18 billion, even though both imports and exports declined proportionally. Elsewhere, and possibly in anticipation of increasing inflation dangers and overheating, but still unwilling to depeg from the USD, Bloomberg reports that China has ordered some banks to raise reserve ratios by another 50 bps. This will be the second such move in under a month - last time it was another 50 bps move to 17.5%. Of course, this is no different than putting a cork in the proverbial dam.
First Casualty Of Goldman's New "Client Facing" Regime Is Down, As Head Of European Block Trading Is Sacked Over Compliance ViolationsSubmitted by Tyler Durden on 11/09/2010 - 22:11
The first casualty of Goldman's new "client facing" regime, now that prop trading is presumably dead and all prop traders have shifted one seat to the left, pretending they all do flow (even as they still take massive inventory positions) is Alexandre Harfouche - a managing director and head of the firms' European block trading divions. Harfouche was sacked for "failing to make proper disclosures to the bank’s compliance department" according to the FT. And now that Goldman is spreading the lie that it no longer does prop trading even thought it, well does, block trading is basically the latest iteration in the nomenclature of what Goldman does when commingling prop and client order flow, before it proceeds to split up an order block via internalized algos, or dumping it in the market. It is thereby precisely at the level of block order aggregation that potential front-running violations can occur, which is why Zero Hedge would be very interested to find out just what were the circumstances associated with Harfouce's termination. Unfortunately, "while
Goldman did not specify the reasons for Mr Harfouche’s departure,
people close to the situation stressed that no securities law had been
violated and no client had been harmed by the events that led to his
dismissal." So he was just fired on general principle? Yeah, right. And while we were trying to access Harfouce's FSA record, we had no luck as the now defunct English regulator's website is down. Lovely.
A couple of luminaries share their perspectives on recent developments in the precious metal space. First, we have Jim Rickards sharing his thoughts on what today's Comex margin hike means for trading. And second, and just as important, is Peter Schiff, who grades WB president Robert Zoellick's call for a new gold standards, and its implications for the future. Both are as always insightful and enlightening.
In an exclusive collaboration between Nanex and Zero Hedge, we are pleased to present to our readers the first part of a multi-series project that will demonstrate the flash crashes of 2010, and subsequently, of 2009 and 2008. The concern is that since the number of mini crashes, precipitated in most part by HFT algorithms gone wild, is simply staggering, it is impossible to present all the individual events in one presentation due to size limitations. The reason - there have been 549 "flash crash" events in 2010 to date alone! We dare anyone at the SEC to go through this list and look anyone in the eye and tell them that i) the market is not broken and ii) that High Frequency Trading is not a major scourge to proper and efficiently operating markets. And while we do not want to take away from the recent uproar at ETFs, courtesy of the Kauffman foundation (and its chairman who as we presented earlier has a rather sizable conflict of interest in DST Systems, Inc) none of the presented 549 crashes are ETFs implicated: this is (mostly) all HFT, baby, all the way.
A crazy day in the markets closes, and one of the biggest non-market related stories still has no closure. As per the AP, nobody still has any clue what the "missile" sighting was. A suggestion being floated by the Pentagon is that this may have been a "private company." NORAD chimes in: "We can confirm that there is no threat to our nation, and from all indications this was not a launch by a foreign military." In other words, nobody knows nothing.
EUR fell against the USD on Tuesday amid ongoing concerns over the unsustainable debt levels in Ireland and Portugal, which are both due to tap the primary markets on Wednesday. The move lower saw the pair breach the key 76.4% Fibonacci retracement level and also consolidate below 1.3900. Position squaring ahead of the upcoming Quarterly Inflation Report by the BoE on Wednesday, as well as vague market chatter that the central bank may increase its mandated inflation target which currently stands at 2% meant that GBPUSD finished lower on Tuesday. USDJPY finished the session higher on Tuesday amid renewed strength in the USD as investors continued to fret over the implication the latest widening of the peripheral spreads will have on the PIIGS states ability to raise money in the primary markets.
RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 09/11/10
When JPM/HSBC Don't Like The Results, The CME Just Changes The Rules: Full Revised Silver Margin ScheduleSubmitted by Tyler Durden on 11/09/2010 - 15:50
Here is how the CME just changed the rules just as the Fed was losing the game. Full new margin schedule attached.
And if that doesn't work, there is always confiscation.