Another day, another binary HFT mad finger intervention making a mockery of the NBBO, and the general market. Earlier, following absolutely no news, Merrill Lynch Canada Inc (NYSE: HCH) which had closed at $115.93, decided to trade up 30% for no reason at the open, hitting a price as high as $144.99 after some computerized stock trading Frankenstein blew a fuse and ripped through every offer on its way $30 dollars higher. This continued for about 30 seconds between 9:34:14 and 9:34:49 when 1,700 shares went apeshit about 25% over the NBBO. Yet if this was an isolated incident it would be fine, but just over an hour later, the same algo went berserk again, going to town with the stock in the upper $130s, trading another 1,200 shares (see below). An embarrassed NYSE had to immediately come out and DK all the trades, providing no explanation for the DK'ing. After all, we all know that when it comes to HFT algos blowing up the market, be it 5/6, today, or last week when WaPo traded a few million percent higher for a second and tripped circuit breakers, nobody knows nothing. And as long as the HFT lobby continues to hire every single person from the SEC who believes they are owed a far greatersalary from the frontrunning lobby, the lack of knowledge will continue.

It's getting close: the fabled -10% annualized change (see David Rosenberg) which guarantees a recession is now just 3.1% away, which at this rate of collapse will be breached in two weeks. The ECRI is now at December 2007 levels, the time when the last recession officially started. The index dropped from an annualized revised -5.8% (previously -5.7%) to -6.9%. As a reminder, from Rosie, "It is one thing to slip to or fractionally below the zero line, but a -3.5% reading has only sent off two head-fakes in the past, while accurately foreshadowing seven recessions — with a three month lag. Keep your eye on the -10 threshold, for at that level, the economy has gone into recession … only 100% of the time (42 years of data)." We are practically there.

The only thing worse than the oil flowing out of the GoM gusher, is the BS now openly flowing out of the government propaganda machine, which has jumped the shark beyond all semblance of credibility. How consumer confidence in May was the highest in over two years, at 76, higher than April's already ludicrous 73.6, and highest since January 2008, is not even worthy of commentary. It must have been the flash crash, the BP oilspill catastrophe, the market's 10% drop and Europe's bankruptcy that really pushed consumer confidence to that near record level... Just who do these people call to "gauge" confidence anyway: just Barack Obama, the president, the POTUS, and the Teleprompter in Chief (not necessarily in that order)? We must have missed when the Chinese ministry of propaganda, data fudging and bullshit, LBOed the US government's data dissemination bureaus (no doubt with Goldman Sachs pocketing a cool billion in advisory fees, and even throwing in a free second lien on Mykonos in the process), but with this most recent release we have no doubt it happened.

By now, everyone is well-aware the US, as the Federal level, is insolvent, and continues to exist merely thanks to 1) the ability to print money and 2) having the world's reserve currency for the time being. Yet more and more are focusing not only on the calamitous, and even more bankrupt, state fiscal picture, but increasingly so on the smallest bankrupt quantizable element: local governments. The following surprisingly objective note from Goldman's Alex Phillips separates fact from propaganda in this increasingly more critical discussion, now that the question of how soon the administration will need to provide state bail out funding reaches critical mass.

The final Q1 GDP revision came in at 2.7%, a huge drop from prior, and especially the first GDP forecast which was 50 bps higher. Trillions in stimulus and the economy barely grew. Time to revise Q3 and Q4 GDP forecasts to just over 1%, and to whack those S&P EOY forecasts. Digging through the data, consumer spending fell to 3% from 3.5% earlier, business investment was revised down to 2.2% from 3.1% previously. The only imprvoement, the PCE price index rose to 1.6% from 1.5% prior. All in all, a complete disaster.

• Asian stocks decline on US growth, Greek default concerns.
• German luxury carmakers add shifts and cut breaks to meet demand
• Monsoon rains may be more than predicted, helping output of crops in India.
• Mortgage rates on 30-Year U.S. loans slide to record 4.69%
• Yen near two-week high against Euro on speculation global economy slowing.
• Adobe enters into stock repurchase agreements for $400M.
• Alibaba.com buys US e-Commerce site Vendio to boost sales outside China.
• AO Smith lowers 2010 EPS below consensus, due to one-time charge from flood.