Reuters

It's not quite snow. But it's close. Reuters reports that traffic in the Suez Canal has been disrupted since 8am GMT after a ship ran aground due to "engine failure in bad weather." There is no indication of foul play yet.

No, snow was not blamed in this latest, and certainly not last, broke state snafu. But wait until you read the official excuse...

• Budget Forecasts Bigger 2011 Deficit (WSJ)
• Geithner Tells Obama Debt Expense to Rise to Record (BusinessWeek)
• Hussman: Rich Valuations and Poor Market Returns (HussmanFunds)
• Amazon.com said it is closing Irving facility, will not hire 1,000 people in retaliation over sales tax issue (DallasNews)
• China in talks over Panama Canal rival (FT)
• Rising China Bests a Shrinking Japan (WSJ)
• In placing stock bets, listen to the shorts (Reuters)
• Rallies Draw Crowds against Berlusconi (FT)
• Roubini’s Next Crisis Is Scary Food for Thought (Bloomberg)
• Egypt Army Suspends Constitution, Meets Protester Demand (Bloomberg)

Earlier today the Euro dropped to a three week low in the mid 1.34s, following a Reuters report that troubled German lender WestLB may have hit a snag in its restructuring plan. Per Reuters: "Aid for WestLB hangs in the balance, a source told Reuters
on Monday, as the bank struggles to come up with a rescue deal
as it enters the final stretch to present a restructuring plan
to the European Commission. "The WestLB news doesn't provide a great deal of optimism to
the euro at the start of the week."." Not at all, although the 100 pip move lower is par for the course for the one currency that has now absorbed all the vol of the Fed-manipulated and irrelevant stock market. The only question on most investors' minds is whether WestLB will follow Danish bank Amagerbanken A/S as the second one to follow with a senior bondholder restructuring per the new European guidelines. While Amagerbanken was small and isolated, it is time to see just how willing Europe truly is to put its insolvency where its mouth is.

All those who were hoping that Egypt would open its stock market today, as had been indicated previously by the Egyptian Central Bank, will be disappointed. Not only will the CASE not open today, but it will remain shut on Monday and Tuesday as well. The reason: the Thermidor reaction at local banks is starting. Per Reuters: "Egypt's central bank declared Monday a bank holiday after a series of worker protests and strikes on Sunday at state-owned banks." Oddly enough, in the power vacuum immediately following a revolution, when the country has just transferred power to a supposedly beneficial, but not really, military regime, Egypt's number one priority is not to keep the general casino open. What a disgrace. More from Reuters: "Banks were also due to be closed on Tuesday, which is an official holiday marking the Prophet Mohamed's birthday. "Employees are demanding higher salaries," Deputy Central Bank Governor Hisham Ramez said by telephone, adding that strikes were mainly at state and not private banks." But do not despair, according to the perfectly efficient ($25MM AUM) EGPT ETF, the Egypt stock market is currently 15% undervalued. All that is needed to make sure that someone can pocket a guaranteed 14.6% arbitrage is for the Egyptian financial industry to have enough people left employed to open the stock market.

Or will they help out their old pal?

Barely an hour has passed since Mubarak's departure, and the religious tensions in the middle east are already starting to flare up. First up: the Jordan Muslim Brotherhood has immediately taken advantage of a vacated podium and said that what happened in Egypt should be a lesson to all Arabs. While hopefully nobody will be able to hijack the success of the Egyptian people, one wonders just how heavily the various Middle Eastern regime are sweating tonight. Elsewhere, Al Arabiya reported that the Swiss foreign ministry has announced that all of Mubarak's assets have been frozen. That, of course, excludes all the gold that Mubarak has with him. Notably, however, Switzerland refuses to indicate how much money was frozen.

Now that the Egyptian military is in charge, it is time to meet the new ruler. Hopefully not the same as the old ruler.

As the Treasury releases its long-awaited GSE report on "Reforming America's Housing Finance Market" the one asset class that moved is gold. The reason: D.C. proposes, very tentatively, to decrease the role of the government in GSEs, as rumored previously, considering that the banks would love to get an ever greater piece of the securitized GSE action. Not helping is the soundbite from the administration: ""The GSE model is dead," an Obama administration official
told reporters as the Treasury Department released a
long-awaited report on options to revamp housing reform.
" As Reuters reports: "The housing "white paper" presents three different visions for replacing mortgage finance giants Fannie Mae and Freddie Mac, which are set to be slowly wound down. The paper does not make a single recommendation, but broadly outlines alternative possibilities to reduce the government's role in the mortgage market. That strategy aims to "open a dialogue with Republicans that would lead to a consensus outcome within a couple of years," said Michael Barr, a professor at the University of Michigan and a former Treasury Department official." In other words, just like the findings of the president's commission on the deficit, this paper will be glossed over by a bunch of beltway politicians and then promptly forgotten as whatever the banking lobby wishes to happen behind the scenes, happens. As for actionable proposals, the paper core recommendation is "increased guarantee fee pricing, increased down payment requirements, and other measures – to bring private capital back into the mortgage market and reduce taxpayer risk."

• Per Reuters: Obama admin seeks to wind down Fannie, Freddie, bring private capital back to mortgages: Treasury report
• Paulson Says Fed Gave ‘Little’ Oversight to Subprime (BusinessWeek)
• PBOC Plans Overhaul of Money Policy (ChinaDaily)
• China sees U.S. stoking Brazil and India anger over yuan (Reuters)
• U.S. Not "Satisfied" With China's Progress on Boosting Yuan, Brainard Says (Bloomberg)
• Mubarak Defiance of Ouster Calls Angers Protesters (Bloomberg)
• Hopes High for China’s Push on Inflation (FT)
• Seoul’s Capital Controls Begin to Bite (FT)
• Blankfein Sought U.S. Blessing on Executive Pay, Feinberg Says (Bloomberg)
• Beggars can be choosers: Greece Joins Italy in Objecting to Proposed EU Debt-Reduction Benchmarks (Bloomberg)

Trade and confidence today….There is a $6-8 billion POMO for bonds due 08/15/2016 – 01/31/2018: the battle between reality and central planning continues

While the confusion rages over whether Mubarak [will|will not] step down, after Reuters just reported that according to Egypt's information minister Mubarak is not stepping down, suddenly concern about the Suez Canal has flared up again. Luckily, the Egypt armed forces have now secured it, so all is well.

• Mervyn King (the UK's Chairsatan) Faces Ticking Clock on Interest-Rate Increase as U.K. Inflation Soars (Bloomberg)
• Bernanke (our own Chairsatan) Warns Against Steep Budget Cuts (Reuters)
• Bernanke Makes Sure Fed Reminds Congress Deficit Bigger Than QE2 (Bloomberg)
• China Developers Move Beyond Shanghai, Beijing, Defy Curbs (Bloomberg)
• Was Weber Sacrificed for the Euro? (WSJ)
• Wall Street Justice Means Nobody Gets Pinched: Jonathan Weil (Bloomberg)
• Weber's Withdrawal Opens Up ECB Race as Debt Crisis Persists (Bloomberg)
• Credit Suisse Cuts Profitability Goal as Net Misses Estimates (Bloomberg)
• Now that Ron Paul actually has some power over the Fed, what is he going to do with it? (Slate)
• Asia Moves Up a Gear in Fighting Inflation (Reuters)
• Egyptian Party Pulls Out of Talks After Threat of Army Role (Bloomberg)

Now that it is increasingly becoming apparent that WikiLeaks may have jumped the shark on their Bank of America suspense build up, defense against what data the whistleblowing organization may or may not actually have is rapidly becoming a moot point. One word of advice: instead of Assange deciding just how disastrous any/all documents in his possession may be, perhaps he can finally release them to the general public so those who actually know what they are looking at can decide for themselves and process any data rapidly. Of course, that would destroy the circus freak aspect of the whole fiasco... Reuters earlier noted that the BofA document is actually likely quite innocuous, per Julian's own admission: "Assange has said privately he does not know if his cache of internal Bank of America (BAC.N) data, whose public release he has suggested might be imminent, contains any big news or scandal, according to three people familiar with the WikiLeaks leader's private discussions about the material." Yet that has not prevented private firm Plantir Technologies from putting together a presentation describing the distributed architecture of Wikileaks (and how really there is little one can do to take Wiki down).

• Two Fed Skeptics of Bond Purchases Say Inflation Underscores Stimulus Risk (Bloomberg)
• 'Heavy Lifting’ Looms as China Rate Below Inflation (BusinessWeek)
• Rothschild to take control of the weather next (EarthNews)
• Underground world hints at China's coming crisis (Telegraph)
• Wait A Minute--Why Should I Hate Bernie Madoff? (Forbes)
• Egyptian Unrest Throws Deficit Goals Off Course as Yields Rise (BusinessWeek), all they need is Paulson pitching blank check TARP now
• SEC to Wean Markets Off Credit Ratings (Reuters)
• You don't say: Commodity prices could squeeze economy, just as in 2008 (Barrons)
• And speaking of, did anyone even notice that Moody’s lowered Jordan's debt outlook (BusinessWeek)?
• Asia Fights Inflation With Stronger Currencies  (WSJ)