Mexico

From Breaking News: Local media is reporting Congresswoman Gabby Giffords, a Democrat, was shot ‘point blank in the head at a town-hall like event in northern Tucson. Is this the beginning?

Update from NBC News: Dem Party in Tucson saying Giffords taken to hospital, 5 others also shot. Shooter apparently in custody.

Update 2: from Fox Phoenix: 12 people shot at Gabby Giffords community meeting. Congresswoman among the injured, while CNN reports 6 dead and 15 wounded.

Update 3: NPR confirms Gifford has died. Gawker has provided a description of the shooter.

Update 4: Reuters refuting the previous NPR news, and states that Giffords is still alive, in surgery, nine other patients brought in from shooting, per a hospital spokeswoman

We better figure out what's killing the bees ...

Another reason to buy silver!

• American politicians and citizens alike have no clear vision of the
  costs of a seemingly perpetual trillion-dollar annual deficit.
• Policy stimulus is focused on maintaining current consumption as
  opposed to making the United States more competitive in the global
  marketplace.
• Dollar depreciation will sap the purchasing power of U.S. consumers,
  as well as the global valuation of dollar denominated assets.

By Bill Gross

The Daily Mail is rapidly becoming the most discredited rumor spreading enterprise in the known universe. As if last week's completely bogus Imax rumor was not enough, today the newspaper is going to town on BP, claiming that Shell is interested in bidding up the name. While we couldn't care loss what the intangible benefit to the tabloid is from spreading these rumors which take about 2-4 hours to be refuted, we are stunned that investotrs, pardon, robots, are so stupid to keep falling for this. Then again, as all robots do now is scan headlines and trade accordingly (the faster the better), this is not really all that surprising. And once the momentum HFT algos are activated, it's off to the races. We cant't wait for Daily Mail to spread the next Radioshack LBO rumor whose sequential number may have as many zeroes a the new US debt ceiling.

And then there was one... correlation desk. Following Reuters news that the US government would allow 13 oil firms to restart deep-water Gulf of Mexico drilling without the new environmental review (under certain conditions), oil drops, drillers spike... and precious metals plunge. Obviously, this is just because silver extraction is so very closely tied to how deep underwater a given jack up can reach. Record correlations may have declined, but only to be replaced with correlations that no longer make absolutely any sense. This is just how ridiculous the power of Wall Street's correlation desks is now that almost nobody is trading.

The market continued to rise today on volume lighter than Ben Bernanke's private sector experience and even lighter than ad sales for...

"Most people believe that most oil in the world is produced by the big oil companies, the Exxons, the Shells, the BPs, the Totals of the world... That is not true. Most oil in the world is produced by national oil companies.”

Though he’s no longer running one of the largest companies in the world, former President of Shell Oil John Hofmeister warns that the outlook for gas prices in the coming decade is not looking good: "when prices are so high - $5 a gallon for gasoline by 2012 - I believe that’s going to happen - that’s going to set a new tone, it’s going to be panic time on the part of the politicians, they’re going to suddenly get some kind of a sense we better do something." The scary thing is that Mr. Hofmeister is basing his $5 per gallon gasoline prediction on supply/demand issues, not even taking into account the unfettered digital creation of dollars by the Federal Reserve.

My list for the year.

With Frau Merkel continuing to talk tough about the need for fiscal discipline, and rejecting euro bonds, it appears that there will have to be more market turmoil before the inevitable decisions are taken. GREED & fear says inevitable because it still seems likely that the end game will involve some form of German acceptance of collective fiscal responsibility and debt restructuring. This is partly because the German establishment is so committed to the euro and partly because of the practical fact that German banks have such big exposure to the debt of the European periphery countries. The past week have seen further signals that the above will be the end game.

Continuing with the key words to describe 2010's New Normal, promptly after "Jobs" (and the lack thereof) and "Currency" (it is a very fitting metaphor that recently terrorism takes place in the form of weaponized printer cartridges), the 3rd one that should come to mind is "Stuck" - as in the quicksand the economy has found itself, whereby it sinks with every second there is no fiscal and monetary stimulus, and all other primary aspects of the new normal that are going nowhere fast. One of the better illustrations of this newly-found immobility has to do with the Fraudclosure scandal that sizzled in October and November, then fizzled as the banks and the media have done everything in their power to keep it out of sight and out of mind. And Stuck describes far more than just a state of pervasive mortgage insolvency (and bank undercapitalization): it has become a state of mind, whereby the entire nation is seemingly permanently divided on virtually all key issues. We review some of the more salient 'adhesive' trends in the past year.

Tonight's must read piece of introspection comes from the keyboard of Russ Certo over at Gleacher, who has compiled a fantastic look back at the key events that transpired and shaped 2010, and summarizes the key market themes that prevailed in the now past year. In summary: "the answer to the question of what were the main themes in the market
is ...............valuations in equities, credit spreads, sovereign
spreads, exchange rates, mortgage interest costs, bank earnings, net
interest margin, accounting schemes, tax code, debt ceiling and more are
all related.  Related to the ebb and flow of monetary and fiscal policy
aspiring to make adjustments to imbalances caused by earlier failed
fiscal and monetary policies.  How, circular indeed." In other words, not only does history not only rhyme, but chases its tail, and the more things change, the more absolutely nothing has changed. We are where we started, and in fact are in a far worse position, as increasingly fewer last resort levers to push and pull are available to the fiscal and monetary authorities. We jest when we suggest that a Martian bail out of plant Earth will soon be required, but pretty soon, in our Onion (or is that Douglas Adams?) reality, NASA may find itself with the prerogative to rapidly find semi-intelligent and very wealthy life on other located within a few parsecs. We can only hope that the restaurant at the edge of the universe is an In and Out Burger.

Extend-and-pretend won't work for the economy, and it won't work for the Gulf either ...

Jim O'Neill, who after migrating to his latest and greatest position within Goldman as Chairman of GSAM, was expected to keep a low profile, has realized he has yet to meet his match at Goldman in the permacheer department. Which is why he now has a weekly column sent out as pep talk to all Goldman clients. His latest, "2010 was exciting with risks. 2011 will be even more so!" is basically a call to arms, in which he gives everyone to all clear to buy double inverse VIX ETFs on margin. And yes, in pursuing the last margina consumer, O'Neill has once again abandoned the BRICs and continues to pound on his latest N-11 concept, which contains such pent up purchasing powerhouses as Nigeria, the Philippines and, yes, Iran. Although with the prevalent thought for 2011 now being an inverse decoupling, in which the US is supposed to lead the world to new heights (so contrary to just 4 months ago... and all it took was a payroll tax cut), we fail to see how any of this is relevant. Then again, we often have the same question about Jim's writing in general. Full commentary presented below.