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).
RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 09/02/11
Bernanke Central Planning UnLP Rejoices As It Sends ES Surging In Last Print Of Day, Dow Closes GreenSubmitted by Tyler Durden on 02/09/2011 17:16 -0400
Below are the closing prints in ES. The E-mini closed right above VWAP in one block. In a word: Unbelievable, or rather - "who gives a shit." Does anyone even pretend this closen market is anything less than utterly and criminally manipulated? Does anyone care? We didn't think so. The only mantra remaining: Must. Close. Green. With ever fewer exchanges, expect to see much more clowning around to a centrally planned stock market near you soon.
Why Contrary To The Chairman's Lies, A Record Steep Yield Curve May Be The Most Bearish Indicator AvailableSubmitted by Tyler Durden on 02/09/2011 16:38 -0400
The most important characteristic of current capital markets, aside of course from now completely irrelevant stocks, which there is no point in even discussing any more as the Russell 2000 has become nothing more than a policy tool for Bernanke in pitching idiot Congressmen how "successful" his failed monetary policy has been when all it indicates is how good he is at manipulating stock prices, is the record steepness of the yield curve, as we have been pointing out month after month (oddly the topic never gets boring as it hits a new record wide with each passing month). And while to Ben the steepness is simply more good news to regale his questioners, who have no idea what the difference between a bond price and yield is, with, it is just as easily the most bearish indicator available. Nick Colas explains why "the bears also have more fodder from the steep yield curve than an Alaskan salmon run: the long end of the curve could be blowing out over inflation fears, persistent government debt issuance, or even a future downgrade of U.S. sovereign debt." But don't worry- the Chaircreature will never acknowledge that there is a yang to every ying. Especially not when the ying has to be so well priced, that Bernanke's midichlorian count has to be off the charts to get his liquidity extraction timing perfectly and avoid either a hyperdeflationary or hyperinflationary collapse.
For all those who were wondering which countries are next to follow in the footsteps (no pun intended) of revolutionary Tunisia and Egypt... there is an app for that. Or should be... But there certainly is now an index. But what it makes up for in lack of iPad downloadability it makes up for in sheer name coolness. Step aside Big Mac index and meet the Shoe Thrower index. And while we are still very partial to Jim O'Neill's N-11 (next BRICs) as being the best indicator of countries next to revolt, the Economist presents a slightly less GSAM-chagrined collection of countries to go under next.
"Paul Tudor Jones did not issue report on S&P500 or bonds, according to Abernathy MacGregor, public relations firm representing Tudor Jones."
The days of the inverse triple (then double, then single) leveraged ETFs are coming to an end. And in a market where the only direction is only up, with zero volatility, zero distributions, and now, zero volume, we wish them a quick and painless death. Barclays Bank has just announced it is suspending creations of its inverse leveraged ETN to the S&P500, in an act that is supposedly "a reflection of what rising stock prices can do to the price of a security designed to produce profits in a falling market" but is really a capitulation by one of the last leveraged ways to play the failure of central markets. Of course, Iosif Vissarionovich Bernanke will fail eventually, as central planning always does, but by then there will be no readily accessible ways to play the downside.
With all the discussion over how "stable" Europe is in the past month, one might actually take the European bankercrats' word at face value. And nothing could be more hazardous to one's health than believing a corpulent gentleman from Brussels. Because while Herman Van Rompuy is literally sending out haikus via twitter, his continent continues to burn. Today, the Portuguese 10 year hit a fresh lifetime high yield (and low price for those who failed bond math 101). One would think that with virtually everything backstopped by the ECB, Europe would show at least some resiliency. No such luck. In fact, things are getting progressively worse as Germany continues to procrastinate on the one decision that has any hope of being at least a stop-gap interim solution, namely a united bond issuance authority. Instead, Europe continues to go all in on its failed EFSF contraption which will work for a few months, and then will have to be bailed out with an even bigger CDO: an EFSF3? The only question around this time is who is indicating (wink) that they are long the equity tranche? As for Portugal's completely non-viable interest rate: just close your eyes and stick your hand in the sand. Trust Bernanke- it works for him (and he is a Ph.D.).
Just like in yesterday's 3 Year bond auction, the surface results belie the fireworks within the internals in today's auction. First, the superficial data: the $24 billion in 10 Years came at a 3.67% high yield, the highest since April 2010 (around the time the market starting nosediving and had to be rescued from a double dip through QE2). The Bid To Cover was 3.23, compared to 3.3 previously and 3.17 LTM average, so nothing special, right? Wrong. The take down is where the true story is: after Indirect interest in yesterday's 3 Year bond plunged to a multi-year low, today nothing could be further from the truth as the Indirect Take down was an all time high 71.3%, with foreign central banks taking down $17 billion of the $24 billion total. And maybe even more curious was that for the first time in over 2 years, the Direct Bidders were virtually non-existent, taking down a tiny $118K of the $24 million or about 0.5%. Compare this to the 14.9% in the last auction, and the 12.21% in the last twelve auctions, and a big red alarm should be going off. Basically, someone said "No Directs" in today's auction: the hit rate was a ridiculous 2.2%! Something major has changed in the auction dynamics and it started with yesterday's 3 Year. We wish someone smarter than us could explain to us how there is such a huge aversion to the short end by Indirects, and such a sudden love affair to the 10 Year, coupled with the complete expiration of the Direct bid.
Federal Reserve Chairman Rudolph Shalom Von Bernankestein will testify before the House Budget Committee starting at 10 am Eastern today. Congressional employees of the Fed and the Banking syndicate are expected to question the Fed's plans on avoiding inflation and the current unemployment rate. We expect more of the same "QE is working because after spending $2 trillion we got 650,000 part time jobs, and we are certain it is working because rates are surging, and wholesale mortgage are now again at the higest since April, which doesn't make sense but I am a Princeton economist (Ph.D.) and you don't get this complicated stuff."
Wondering why the market suddenly appears as if Bernanke said he thought the dollar has hit a technical bottom? The reason is that there is a rumor (for now) that Paul Tudor Jones has just called a top in the S&P, and is also expecting a bounce in bonds. Unclear if PTJ used the Tepper "balls to the walls" trademark when referring to the selling that may commence. And boy are we hoping the selloff with a huge surge in volume that resulted, is not a response to what one man thinks or else there really is no point in trading anything ever again.
Standard & Poor's Ratings Services has lowered its long-term and underlying ratings on the State of New Jersey's general obligation (GO) debt to 'AA-' from 'AA'. "The lower rating reflects our concern regarding the stresses from the state's poorly funded pension system, substantial postemployment benefit obligations, and above-average debt levels," said Standard & Poor's credit analyst Jeffrey Panger. The downgrade also reflects the application of Standard & Poor's newly adopted criteria on U.S. states, which more transparently incorporates debt, pension, and other postemployment liabilities, along with other rating factors.
The erosion of the American middle class is of little concern for one simple reason: it no longer matters much on the global stage. All that Global Corporate America needs from America is a stable foundation that won't offer up any surprises or spots of bother. As the discretionary purchasing power of the American middle class erodes, four times as many new potential customers appear elsewhere, hungry to taste the Oreos, become consumed by the iPhone, etc., and ten times as many are potential buyers of toothpaste and other basics. U.S. corporations are pulling $500 billion in profits from non-U.S. sales, and they hold $1 trillion in stashed overseas profits in various tax havens. All the growth in their revenues and profits are coming from non-U.S. sources. Spending $3-$5 billion on lobbying and campaign contributions is an "investment" with extremely high returns: for that small sum, U.S.-based global corporations make sure the U.S. government and citizenry don't become overly burdensome or obstructive.
After the ABC Consumer Comfort index yesterday plunged to 2011 lows (stunning we know: don't these ungrateful, unwashed discontents not realize the Russell 2000 is about to take out the Fed's 36,000 limit order) due to surging gasoline prices, today we see precisely what this means from a simple supply/demand perspective. According to just released DOE data, total gasoline inventory has just hit what is virtually an all time high... and certainly the highest since 1990. Surely, this is bullish or something. It is certainly refreshing to see that at least the key equation of economics, that surging price results in plunging demand, has still not been LBOed by Bernankestein.