• Asian, European stocks, commodities fall; Treasuries rise after Germany bans short selling.
• Consumer prices in US may show inflation contained as economy recovers.
• Germany to ban naked short-selling on certain financial stocks, soverign bonds.
• Hedge Funds bet Europe's $1 trillion rescue package won't cure debt crisis.
• Private Equity-backed US IPOs leave buyers with worst returns in decade.
• US Regulators proposed new curbs to tame volatility; circuit breakers for every stock.

If there was any doubt about where futures will open tomorrow, the following article from the Telegraph should assuage all doubts: "Traders greeted the move by BaFin, the German regulator, with a mixture of anger and astonishment. One bond trader said he expected Wednesday's trading session to be one of the most volatile in living memory: "It will be complete chaos, I really don't know what the Germans think they are doing.""Without the two-way flow the German market is likely to become utterly dysfunctional," said one London-based bond trader. "Nobody ever thought they'd do this in a million years and it raises the long-term question of who is now going to want to buy their debt."

The market’s immediate response to the ban announcement was to sell the Euro. Such a response makes sense as when faced with the inability to manage risk in debt, stock or CDS markets, participants sell what they can. And that means the Euro. But by having inadvertently further undermined the Euro, today’s actions increase the risk of failure in the entirety of the liquidity support program as the Achilles heal of the European intervention is its potential to undermine the currency. Unlike the US policy response, massive liquidity support from the ECB can create the perception (if not the reality) of a debt monetization scheme. While the US explicitly monetized the debt, it benefited from a flight to quality and worlds reserve currency status, neither of which the Euro enjoys. A precipitous decline in the Euro remains the risk to the outlook, and on display today as the Euro declines led the selloff in broad risk markets. - Jeffrey Rosenberg

After earlier we saw the decimation of the European currency, it is now Asia's turn where an impressive bloodbath is now raging. The AUDUSD is in freefall, having moved a massive 300 pips from yesterday's high to today's low. At under 50 pips from 0.855, the AUDUSD will likely breach 0.85 at which point the destruction at carry desks will become an epidemic, and full liquidations will soon ensue, coupled with billion dollar margin calls, forcing global asset liquidations at bulge brackets. With the carry collapse pervasive, don't look to futures to stage any miraculous Fed-inspired ramps tonight: Germany may have well called the Fed's bluff.

What does a failed community bank that is not TBTF or have its former CEO running the Treasury have to do to not end up on the TGI Bank Failure Friday dinner list of busted banks? Simple - be located a few blocks from where the president grew up and to which he has a sentimental attachment. Additionally, casually dropping a few mentions of criminal CDO investigation this, grand frontrunning jury that, is sure to bring instant wire transfers from a few TBTF parties (whose former CEO did run the Treasury), even if these parties are the same that last week were on the receiving end of yet another Wall Street themed fire and brimstone sermon. Today ShoreBank, which should have failed in a normal capitalist society, received a reprieve after the Obama administration did not force banks to bail it out. In fact categorically so. Because otherwise what kind of a fair and efficient system would we have, if preexisting ties and crony relationships were all that matter in determining life or death. After all that's how things worked in Russia. And Russia was an evil empire.

One of the benefits of working for the US Treasury, in addition to printing infinite amounts of debt at ever higher Bid To Covers, is the ability to confiscate stuff. As part of the UST's Seized and Forfeited Program, every several months the Treasury organizes assorted auctions for items that one would typically find at a Goldman Sachs Hamptons Fried Calamari party. At this point, it seems Tim Geithner finds himself in possession of a few extra Veyrons, SLR Maclarens, Bentleys, Stingrays, Spyders and Murcielagos, and needs to urgently get rid of these just in case the Direct Bidders decide to stop taking down up to 30% of each and every UST auction. The upcoming auctions for 2010 will be held in Broward Country, FL, June 3; Riverside, CA, June 9, 2010; Miami, FL, August 11, 2010, and Dayton, NJ, on September 1, 2010. The US Treasury page for the upcoming auction can be found here, as to whether the final auction prices are reasonable, you can check what recent auctions have closed for at this link. Below is the flipbook of all the ridiculous items currently in the possession of the Treasury, and which are now auctionable.