BP stock up notably on the news.

Goldman's Jan Hatzius is now seeing a revised Q1 GDP, which will be announced this Friday, up from 3.2% (Goldman's estimate is 3.4%) to 3.7%. However, far from a good sign, this merely means that the imminent slow down is coming, and any gain in Q1 GDP over and above estimates, will result in a commensurate drop in Q2 and onward economic growth: As Hatzius points out: "Inventories are beginning to pile up at a rapid pace in the durable goods sector. These inventories rose 0.7% in April following increases of 0.6% and 0.7% in March and February, respectively. This is much faster than most companies will see as sustainable; hence some slowing in production is likely if recent - highly tentative - signs of abatement in orders (in the New York and Philadelphia Fed surveys) are at all indicative." Surely, this is nothing that a few extra trillion in QE or new fiscal stimulus can't fix, courtesy of the Central Committee.

• China to have surplus diesel and gasoline next year, accdg. to PetroChina
• Europe crisis chokes Asia-Pacific loan market on concern exports to slump.
• Hedge funds inflows to Asian managers will surge this year, accdg. to Barclays
• Japanese exports increase for fifth month as Asian recovery boosts demand.
• Asian shares gain as global sell-off eases; Won, Kiwi advance against Yen.
• China's $300B sovereign fund will maintain investment in Eurozone, Xinhua says.

Insanity is upon us, let's make it official. The market in S&P futures is up 26 ticks overnight despite a dismal close last night on absolutely NOTHING. There are people out there who will say that it is all based on the positive news out of Korea. First of all a war between North and South Korea was never priced in the market in the first place. There were a couple tremors in the market but yesterday we opened grossly unchanged so clearly the story was not a bother for the markets. Furthermore last night's sell-off had nothing to do with the Koreans who were sound asleep when US equity markets decided to tank in the last hour of trading. Before we delve into the price action and update targets and levels, it is worth noting that: a) volatility is here to stay and getting worse b) the market is broken and a true disaster waiting to happen, one day we will get a move down and there will be utter complete liquidation that even the mighty plunge protection team won't be able to stop. - Nic Lenoir

We often talk about industry themes in the portfolio because individual companies in the same industry usually face similar economic drivers. When these economic drivers slow it is common that many companies in an industry experience distress at the same time. Two of our current industry themes are financials and media. Among other reasons, financials are experiencing distress as a result of the credit crisis and media companies are experiencing distress as a result of the significant slowdown in advertising in 2009. In both cases, we think that the analyst community is underestimating each industry’s emergence from distress and this out of consensus view provides support for our investment thesis. In most cases, our positions in these industries have a direct catalyst event that we feel will drive price performance in our respective positions. In others, the catalyst has passed, and we hold a position that we feel has not yet fully benefitted from the catalyst event (such as long equity). In the few that are non-event driven, valuations drive the investment when securities’ prices are tainted by membership in a distressed industry. Catalyst or not, our investments are underpinned by fundamental analysis where we seek to find mispricing of true value. - Alden Global Capital

And there are those who wonder how Sprott's PHYS could have traded at "ludicrous" NAV premium of over 20%. Coinupdate.com reports that prices at which the Greek Central Bank is selling one ounce gold equivalents are as high as $1,700 (40% over spot), and prices on the black markets are even higher. The punchline, as Athens slowly returns to a forced gold standard: " A popular spot for street vendors to sell their coins is near the Athens Stock Exchange.  There the traders wait for citizens to bring payments received from unloading their paper assets like stocks and bonds." That's good - downtown Manhattan close to the NYSE has some free space for gold vendors to set up shop as well, they just need to push some of the frontrunning/collocation boxes off to the side. And in other rhetorical ruminations, is it safe to say that the last days of the fiat experiment are among us now that people themselves are bypassing the government and enforcing their own gold standard?

In October of last year we wrote an extended piece discussing the conflict between the bankrupt Lehman Brothers estate (i.e., its unsecured creditors) and Barclays, in which JPMorgan played a prominent part, as it was the critical tri-party repo clearing bank on all of Lehman's collateral that would subsequently go to Barclays. As we summarized, extortion attempts back then by Barclays only had the adverse effect of making Jamie Dimon very, very angry: "Barclays' attempt to nickel and dime JPM (and the US taxpayers) so infuriated Jamie Dimon that he penned an angry letter to John Varley,
Barclays Group CEO (which CC:ed Barclays' president Bob Diamond),
threatening with litigation in case Barclays is intent on sticking JPM
with Lehman collateral that it thought was without value and not worth
assuming in a time when every single day stock prices were crashing
further lower." As we expected in October, the resolution would most likely involve litigation, as by dint of its collateral clearing position, JPM had unprecedented knowledge about Lehman's affairs: a special status that would likely be abused in a court of law. Sure enough, here is the lawsuit: the estate of Lehman Brothers, desperate to pick another several bps in recovery on their Lehman General Unsecured Claims, has sued JPMorgan, claiming Jamie Dimon's bank pushed Lehman into bankruptcy by forcing it to turn over $8.6 billion in collateral. As Lehman was completely insolvent long before JPM demanded any incremental collateral comfort, claiming that JPM was the catalyst for Lehman's bankruptcy is absolutely the same as saying that Goldman forced AIG's bankruptcy by increasing its collateral demands. While both arguments are ludicrous, should the JPM case proceed to court, it is tantamount that AIG immediately seek legal action against Goldman Sachs on identical grounds.