Futures Jump On Second Global Bailout Announcement On Lehman's Third Bankruptcy Anniversary

Tyler Durden's picture

Strawman-of-the-night: G7 OFFICIAL SAYS EUROPEAN GOVS WEIGHING TALF-LIKE PGM: CNBC

TALF was the Fed's backstopped loans for buying ABS (in order to improve the liquidity of the ABS markets which were apparently pricing in a fire-sale as opposed to a fundamentally terrible environment).

The ECB equivalent, we assume, will be ECB funded non-recourse loans provided to third parties enabling the purchase of Sovereign debt (which acts as collateral). If these guys can't agree on Euro-bonds, debt buybacks, or an EFSF extension, agreeing to an ECB taking all the risk and missing out on any upside seems highly intractable - but crazier things have happened.

 

More as we get it...

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vote_libertarian_party's picture

...and tomorrow a loopdy loo quadruple witching options expiration day...

lolmao500's picture

You know what's important and making future rises? This :

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100011987/ch...

China to 'liquidate' US Treasuries, not dollars

A key rate setter-for China's central bank let slip – or was it a slip? – that Beijing aims to run down its portfolio of US debt as soon as safely possible.

"The incremental parts of our of our foreign reserve holdings should be invested in physical assets," said Li Daokui at the World Economic Forum in the very rainy city of Dalian – former Port Arthur from Russian colonial days.

"We would like to buy stakes in Boeing, Intel, and Apple, and maybe we should invest in these types of companies in a proactive way."

"Once the US Treasury market stabilizes we can liquidate more of our holdings of Treasuries," he said.

To my knowledge, this is the first time that a top adviser to China's central bank has uttered the word "liquidate".

 

And it begins. China will buy everything they can. Apple, Intel, etc...

Very bullish... 

http://www.rediff.com/business/slide-show/slide-show-1-heres-what-china-...

Here's what China can buy with $3-trn forex

3)Instead of buying up debt, China can buy equity. Meaning, instead of putting most of its reserves into US government securities, China could instead go on a shopping spree in the corporate world.

It can gobble up Apple, Microsoft, IBM and Google for less than $1 trillion. By buying all the major corporations, it can dictate terms and prices to the world.

5)Rich love buying property, and nobody is richer than China -- at least in terms of the foreign exchange reserves it sits on. . so it can acquire hot property.

China can buy all of Manhattan, calculated The Economist. The island's taxable real estate is worth only $287 billion, according to the New York City government.

The properties of Washington, DC, are valued at just $232 billion. China can go from being America's banker to its landlord, The Economist said.

6)Three trillion dollars would buy about 88 per cent of 2011's global oil supply, says The Economist.

China can buy up all the oil, raise the prices and enjoy the profits.

7)It would take only $1.87 trillion (at 2009 prices) to buy all of the farmland (and farm buildings) in the United States.

If China acquires all the agriculture farms and farm buildings, it can easily control the world's food prices, as America is the biggest exporter of food products, according to The Economist

8)China could theoretically buy America's entire Department of Defence, which has assets worth only $1.9 trillion, according to its 2010 balance sheet, says The Economist.

Most of this amount would actually be able to buy all the land, buildings and investments made by the US Department of Defence. The entire armament -- guns, tanks and other military apapratus -- is valued at $413.7 billion, says The Economist.

Stax Edwards's picture

+1000 Phenomenal Find LOLMAO! (Your name makes me think this is a hoax)

Sidebar: While uber bullish for US equities, keep in mind this will be done in an orderly fashion or the shit will hit the fan in a Apocalyptic manner.

This if f'n nutso!  If true reclibrate all models and GET THE FUCK LONG BITCHEZ!

Anyone have confirmation of this type of talk from official sources?  I am not buying in to this just yet, but amazing stuff.  This is the stuff world wars are made of.

Spirit Of Truth's picture

So China is planning to buy into the stocks of companies they will be ruining by jerking up U.S. rates?

SwingForce's picture

China doesn't need sell their Treasurys- they are marginable 90% so I hear:

http://www.xtranormal.com/watch/12373724/q-a-w-larry

St. Deluise's picture

Interest rates in the US are not determined by the UST market.

They are determined by the federal reserve, who can keep rates as low as the dollar's "strength" will allow.

DavidC's picture

Yes, quite - and after a two and a half year ramp up of stock prices to the detriment of the economy as a whole.

I don't see that happening somehow. The Chinese are NOT stupid, they will wait and buy stocks when no-one else will touch them with a barge pole - and that WON'T occur at these levels.

DavidC

Cdad's picture

What are you talking about?  The Chinese are the worst capital allocators on Earth.  I think it is entirely plausible that they would buy these stocks at their all time highs...or near to.  I don't know if this is true or not, but entirely plausible.  They rushed in to buy the Euro when everyone else pretty much figured out that it was an over priced currency.

The thing with the Chinese is...they uttterly lack imagination.  Why do you think the reverse engineer and copy everything?  Chinese investors would make the absolute best and LAST buyer of these equities.  And should the story be proven true, it would be the penultimate sell signal for everything they are buying.  And you can bet your last dollar that Wall Street would do just that, and give them the business.

Again...I am not saying this story is true...but plausible?  Entirely.

 

LarryDallas's picture

100% agree. While the Chinese are very well positioned, I can't shake the idea that they will ultimately end up as the "1980s Japanese" of this era, buying high and being left holding the bag, ruining their strong position by not being patient or creative enough. You hit the nail on the head Cdad and don't forget their attempted MS investment back in 07. Surprised they're not looking at BAC now too...

DeadFred's picture

I'm not the brightest crayon in the box when it comes to the stock market but even I can see that it would be better to sell the treasuries first to tank the market, THEN buy the stock. I've been posting my fears here for some time that China might be planning a power grab and this would be such a simple way to do it. I'd start with Europe first and start selling their bonds, once the Bernank pulls QE3 out of the hat they can announce their disgust and start selling Treasuries. Who would blame them? Their disgust would be valid.

Religion Explained's picture

The FED frontruns the chinese....

PivotalTrades's picture

If The US Gov wont allow ATT to buy one of their competitors do you think they will alow China to buy controlling interest in major US corporations?

sun tzu's picture

The Chinese bought $4 billion of Blackstone IPO at $30 which immediately plummetted into the teens

Chaffinch's picture

If China is going to 'slowly' dump 3 trillion of US Treasuries then doesn't that imply that the Chairsatan is going to end up buying them? I'm not the best at working this stuff out, but, yes, that's gotta be bullish for equities, and bullish for the metals, because it means increasing money supply and increasing inflation - doesn't it?
And it seems to me that China is thinking that with an ever-sinking dollar it would be better of buying something more real. Mr Li says 'pro-active' and is talking about buying stakes in companies - which is more like buying the company rather than just buying a few shares here and there.

Zonker's picture

and how will they get past foreign ownership issues not to mention US Security?  Not believing it even if it were possible.

lolmao500's picture

Front companies. Front individuals.

I mean you don't think that it's weird that so many chinese end up in Northern America and they've got money to buy lots of stuff? With the crappy salaries they earn in China, how is this possible? Me thinks China is funneling money to their citizens privately... then they come here and buy stuff...

Chaffinch's picture

According to Bloomberg there are more than a million millionaires in China now.
And 393 with more than $100 million
http://www.bloomberg.com/news/2011-05-31/china-s-millionaires-jump-past-...

Zeilschip's picture

Problem for the US is that China will only let the yuan appreciate against the dollar if they can buy real US assets. If these purchases/investments are blocked by the US it doesn't make sense for China to let go the peg.

DeadFred's picture

There are a lot of companies to buy outside of America. They wouldn't be allowed to buy much here so they buy up Europe first. All the European banks can be purchased for less than Apple, at least they can be once the Chinese start some serious selling.  At bankruptcy with a promise to recapitalize, sure they'd sell to the Chinese.

Chaffinch's picture

Tyler - I think you should run this story from The Telegraph - it is dynamite!

iDealMeat's picture

This kills QE3 no?  or..  is this QE3?

 

rocker's picture

We already got QE3.  No interest rate increases for two years. 

The financial swap lines will be a extension of QE3 for Germany on the backs of U.S. Taxpayers.

It's good we are not bailing out Americans. The French need more help than Americans.  Right.

Never forget. This is to bail out the bankers. Not the people.

tocointhephrase's picture

Plus the 5 helicoptor drops yesterday. Man we are drowning in $'s

Smiddywesson's picture

I don't mean to be disrespectful, but if China could snap its fingers and buy up whatever it wanted, why the f*** haven't they done so already?  The direction of this abortion has been painfully obvious for years.  China is playing a game with very high costs against the combined efforts of the Fed and the ECB.  These are the most powerful, inventive, and crooked forces in human history.  Good luck to the Chinese, it they corner the market in the USD, we will just move to a wampum standard.  The Chinese know this, and that is why they are shaking their spears and whining like teenage girls.  Bitches, they are going to get screwed.  

The China story depends upon an unsustainable system being sustained into infinity.  I laugh at that foolishness.

Chaffinch's picture

I think you're reading this wrong Smiddy - I think the Chinese have been playing a long game very patiently stacking up a huge pile of dollars (similar to the US in the 1920s according to The Telegraph article link) and now they are thinking they will unload them and get something real instead. How many would they have to unload in one go to persuade Ben Bernanke to shift to The Wampum?
What choice do they have apart from using their T-Bills for scrap paper?

Smiddywesson's picture

Not saying you are wrong, I just think that the game changes as it progresses.  People who think we will have runaway deflation or hyperinflation, or the Japanese will take over the world in the 80s, don't recognize that the game changes.  We'll see.

And yes, the Chinese played a wonderful hand under the old system.  I'd be a fool to disagree with you on that point.

Chaffinch's picture

Yep - the game changes, and I am probably daft to even begin to believe what Mr Li has chosen to say to a journalist in the UK, but surely they must be thinking of doing SOMETHING with that big stack of dollars.
(if you are reading this, Mr Li, why not buy all the Gold on Comex and the LBMA?)

IQ 145's picture

I wish they'd buy Hawaii; it couldn't possibly be run any worse than it is now.

mendigo's picture

i suspect this is already underway, but in a more subtle fashion

one would think that china does not want to be holding so much in UST's or dollars. one would think they would be unloading them for physical assets or for just about anything else (commodities, equities) as fast as possible - thereby driving up the cost of all that stuff (in dollars). one would think they would do so by whatever means neccesary. they will have us gagging on our own shit.

DeadFred's picture

+1 Your report isn't getting much play but it has several mainsteam reports. After some thought it occurs to me this may be a shot across Bernanke's bow. Announce more QE next week and you are dead meat may be the message. Sorry if I'm duplicating what someone else has said, I haven't read everything yet

jdelano's picture

If china wants to make a move to buy us equities then it would be in their interest to let Europe crash. Then, once our markets have plummeted in tandem they could scoop up apple at $90

Chaffinch's picture

'If china wants to make a move to buy us equities then it would be in their interest to let Europe crash. Then, once our markets have plummeted in tandem they could scoop up apple at $90'
Yes - except that the longer they wait the less their Treasuries are worth. And if they are going to want a significant chunk of, say, Apple, they are probably going to have to pay quite a bit more than the quoted share price.
And whilst I agree that Europe will crash, there is no knowing how long that will take to happen. It should have happened already, but they keep delaying the inevitable.

rocker's picture

Your kidding right. WTF happened today. How long will the short covering tag last?

WSP's picture

As long as it takes to squeeze the shorts and jack the market higher.   Then, the let the market go down to draw in more short selling suckers, rinse, repeat.   The market will never reach fair value until every short seller has given up.  Right now the crime syndicate is using short sellers money to keep the markets moving up and this will not stop until every short seller is broke.   At that point the crime syndicate hopes we will be through the worst of it and the fiat ponzi scheme casino can once again stand on its own two feet----until then, short the market at your own peril (and the crime syndicates gain).  The crime syndicate has the techonology, tools, and information to destroy any and all who seek fair value and they will use it to their utmost advantage as they have since March 2009.

I love how whenever the market goes down the media always blames short sellers when the truth is short sellers are the only thing keeping this ponzi scheme going.  

Cdad's picture

The market will never reach fair value until every short seller has given up.

Uh huh.  So when the market is falling, it will never reach fair value until every long has given up?

Sorry, but this is a flat out stupid comment.

St. Deluise's picture

So when the market is falling, it will never reach fair value until every long has given up?

Yes, exactly.

banksterhater's picture

He is right. You are WRONG. The marketmakers know all the short interest, until the dumbass pathetic shorts finally CASH OUT , MOVE TO SIDELINES, they are shooting fish in a barrel with algos seeking short pivots. STOP playing into their hands. Then it will be a vacuum on a waterfall correction.

SheepDog-One's picture

I hope the shorts are getting their asses served up to them roast with an apple on top...piss off, shorts.

WSP's picture

One of these days short sellers will piss off, but you won't like the result, because that is when the market will free fall and the sheeple's monthly 401k contributions won't be enough to keep this ponzi scheme going.  Until that time, the market will indeed move higher, but not because of valuation or fundamentals but rather, the complex set of dynamics that got us to where we are.  It is just like the massive debt compounding----at some point it will end, but intelligent "investors" who read balance sheets and income statements, and thus, are inclined to short the market, are the ones getting reamed unfairly.  In other words, to be successful in our corrupt markets, you really have to be a dumb sheeple who doesn't understand accounting because those are the only fools who would buy into the fiat ponzi scheme casino.   Like all pyramid ponzi schemes, at some point it will end.  Then again, Bennie and the Inkjets may just keep printing and debasing, which will cause the market to move higher, albeit the value of your "winnings" will be debased with the currency and in the end you won't have as much as you started with in real inflation adjusted terms.  Of course, most sheeple will say I "doubled my money" in the market, even though the value of their currency has been debased by 90%.   This is exacly why the Federal Reserve and the corrupt crime syndicate get away with it----because the masses (the sheeple) do not understand basic finance and just blindly give the market their money so that it can "go up"!    In summary, the market is a game of musical chairs played largely by ignorant fools (the masses, the sheeple) via their 401k's and the crime syndicate is more than happy to "feed off" these contributions like parasites on a host.  At some point the host is going to die, and when that happens, regardless of politics, fair value will arrive and in real inflation adjusted terms it will be much lower.  Perhaps you should study the Zimbabwee markets which skyrocketed when they debased their currency.  In fact, you can own a trillion dollar Zimbabwee bill for $2 off ebay.   The fact that their market moved higher while their government was debasing the currency did not make it a good value---it was just the lesser of two evils.

Ever seen the movie "Idiocracy"  ---- that sums it up pretty nicely!

whstlblwr's picture

You think there are stupid shorts left in the market after last two years? They burned off. All that's left is "smart money" LOL.

IQ 145's picture

I've seen the stupid shorts right here on this blog; and I begged them not to do it; doesn't do any good. You bet your ass there are stupid shorts in this market; thousands of them; but not for long.

WSP's picture

I think not.  Think about it.   We all know the market is grossly overvalued, and we also know that the main horsepower being used to gun the market higher is short sellers (having to purchase back shares they shorted in the hopes the market would go down). 

The crime syndicate is using the same concepts that individual companies have used for many years.   When short interest in a stock goes way up, companies will strategically release good news forcing the short sellers to "cover" their short bets --- purchasing shares in the open market.  The crime syndicate (Fed and their criminal banking oligarch) is using this same strategy individual company’s use on a market wide basis since so many people are trying to short.  When you short a stock, you "borrow" the shares----unless you think the market is going to 0, at some point you have to cover (or buy back the shares).  When too many short sellers are squeezed at the same time and buy the shares they sold short, it causes prices to go higher.  Add into the mix the corrupt algo's and you get what you are seeing now---a ramp in stock prices for no fundamental reason---just scared short sellers who cannot take the pain of losing unlimited capital when the market goes higher for no fundamental reason (other than the corrupt banking cabal squeezing the short sellers a$$es via their algos).

If you don't understand that, I am sorry, perhaps someone can explain it better for you.

With that said, you also stated "when the market is falling, it will never reach fair value until every long has given up".  Yes that is also true----we have a society of brainwashed sheeple that do not understand what they are buying when they go long a fiat Ponzi scheme “stock”.   Most public corporations fair value is dramatically lower than the market price.  Between accounting fraud and money printing (via stock options by executives), fair value is much, much lower, but because of market dynamics (not true free market valuation), stocks are grossly overvalued.   One of the reason for this was the introduction of retirement savings plans in the 1980s----go back and look at a chart of the S&P and watch the parabolic rise once the sheeple started blinding giving the crime syndicate their money each month.   The crime syndicate has taken advantage of this and uses any and all mechanisms to manipulate the markets higher including strategic short squeezes.  Sure, this has gone on for many years, but has been greatly exacerbated in recent years by algos, fascist government collusion, and the fact that finance now comprises 25% of our economy.  Add to this all these criminal fund managers whose livelihood depends on the markets going up, and regardless of fundamental valuation, the markets moves higher.  Short sellers make the matter worse because when they analyze companies and recognize that they are 90% overvalued, their natural tendency is to borrow shares to sell short.  The crime syndicate then uses this dynamic to move prices higher to force these short sellers to capitulate and buy back their borrowed shares at undesirable (higher) prices.

At the end of the day, this becomes a huge topic, but rest assured what I said not only makes sense but is exactly one of the dynamics at work.  Again, I am sorry you don't understand it and I also apologize that I am not willing to spend the time to fully explain it, so ridicule and ignore it as you wish----it doesn’t make what I said any less true and most people who frequent ZH completely understand what I am talking about.

 

 

Bicycle Repairman's picture

If you don't understand what WSP is saying, try shorting for a while.  Then you will.

J 457's picture

Well said, but there are always exceptions.  Case in point, whoever was short RIMM did quite well today, and there are others who have shorted and made money.  As unpredicatable as the market has now become, long or short has become a risky proposition. 

IQ 145's picture

It's an internet blog.

topcallingtroll's picture

Excellent point.

Bankrupt all the nonbelievers who try to short?
Hope that automatic 401 k deductions carry the day?

Zonker's picture

Here's a solution for you - Cover your shorts and go long!  It's called trading and what the market has been doing for hundreds of years.  You think all this is new?  No difference between the 1920s and today except everything is posted in Blogs.

WSP's picture

Sir, there is a HUGE difference between the 1920's and today.  Enough said!

IQ 145's picture

You're wrong and he's right. and nothing you said above makes any sense at all. get a book out of the library on the subject of markets.

IQ 145's picture

What I said; over and over, and over again. Does no good. They read a negative article in the blog, so they have to rush out and short the stock, the market, whatever. Chart, what chart? What's a chart? You don't short things when they're down on their recent, tested and re-tested lows and rallying. Unless, of course, you're a member of the public. But really, would it be so terrible to make a few bucks for a change? Try it you might like it. Hint; the market is rallying. It doesn't matter why; and you don't have to like it.