Rumor Gadaffi Shot Sends Crude Plunging; UPDATE: US Government Has No Reason To Believe Gadaffi Has Been KilledSubmitted by Tyler Durden on 02/24/2011 15:40 -0400
Update: U.S. government has no reason to believe that Gaddafi is dead
Just a completely unfounded rumor for now. If it proves false, watch the vicious snapback...
The last time we presented the silver backwardation chart, it was "only" $0.50 or so between the front month and the long end. In the week since then the difference has jumped to what we believe is a new record of $1.50 or so. Now that the CBOE is issuing CEBOs and allowing plain Jane investors to bet on imminent corporate bankruptcies, would it be so kind to issue a contract or two on the COMEX... Pretty please?
"The big news this week from Saudi Arabia is that upon his return to the Kingdom after a three month medical absence, King Abdullah has decided to implement a massive $36 billion payoff to his people to stem off any revolt. Amongst other things: “The measures include a 15 per cent salary rise for public employees to offset inflation, reprieves for imprisoned debtors, and financial aid for students and the unemployed” according to the Financial Times...So the payoffs have begun in earnest and the question is, when will banker puppet Obama will engage in similar tactics. My guess is very soon. More and more people are aware of the sham that is his presidency and as the people realize they have been sold out to make sure the financial oligarchs got their record Christmas bonuses and can fund his 2012 run he will need to give a pay raise to the 15% of Americans on food stamps." Mike Krieger
Unlike yesterday's weak 5 year bond auction, today's auction of $29 billion in 7 Years was completely unremarkable. The bond priced at 2.854%, in line with the When Issued, and came at a 2.86 Print To Cover, pretty much unchanged from the previous 2 auctions. Directs once again came weak at 4.48%, the lowest since October 2009, which is yet another confirmation of our view that February UK purchases will be drop, and whether that's China, Petrodollars or shadow Fed purchasing, the "UK" February total will barely budge. Indirects came in line with the average at 49.66%, while Primary Dealers were at 45.86%, the highest since November. But altogether considering some of the weirdness we have seen in the primary issuance market, this was a perfectly normal tip of the belly auction.
RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 24/02/11
Laszlo Birinyi, best known for his straight line extrapolation method applied to everything, except of course crude which would result in WTI hitting 10 trillion by the time the Hungarian says the S&P would approach 2,854 in three years, has released his list of Teflon Twenty companies that supposedly are immune to any news. Arguably these are the stocks that comply best with the ruler interpolation method of price prediction. These also happen to be the biggest momo names in the world. Once the market crack is confirmed, these are the names that will result in early retirement for those who STFD. On the other hand, it also means we will have many more years of Birinyi, and his attempts at 20+ kHz communication, on Comcast, coming up with totally insane predictions.
Liquidations Coming: Hedge Fund Margin Debt Surges - Total Free Cash Lowest Since July 2007, Just Prior To Quant Wipe OutSubmitted by Tyler Durden on 02/24/2011 12:54 -0400
The NYSE has released its January margin debt data. Not surprisingly, total margin debt hit a peak of $290 billion, the highest since September 2008, but the one category that shows just how much purchasing is occurring on margin is total Free Credit less Total Margin Debt drops to the lowest since the all time credit bubble peak in July of 2007! At ($45.9 billion) this number is just below the ($52.8) billion last seen just before the August 2007 quant wipe out which blew up Goldman's quant desk, and arguably was the catalyst for the beginning of the end. In other words, as we have shown, everyone is now purchasing on margin and the level of investor net worth is the lowest in over 3 years. Which means that should the market decline from this week persist and the Fed be unable to stop it, the margin calls will start coming in fast and furious, and unwinds in otherwise stable products like gold and silver are increasingly possible as hedge funds proceed to outright liquidations.
A week after S&P announced it was converting its European ratings to unsolicited as was reported previously, the rating agency now proceeds to do the same to the world's most insolvent banana republic: "Standard & Poor's Ratings Services today said it converted its issuer and issue credit ratings on the U.S. federal government (AAA/Stable/A-1+) to "unsolicited." Unsolicited as in nobody wants it. In other words, following Europe, the US will now lock out S&P in providing the agency with information. "We are converting our issuer credit ratings on the U.S. government to "unsolicited," as we do not have a rating agreement with the sovereign. Standard & Poor's will nonetheless continue to rate the U.S. government and classify the ratings as unsolicited, as we believe that we have access to sufficient public information of reliable quality to support our analysis and ongoing surveillance, and because we believe there is significant market interest in the U.S. government rating." It is a good thing then that by now everyone knows just how relevant S&P's ongoing AAA/Stable rating on the US is.
Reuters reports that authorities have arrested a 20-year-old Saudi national on charges he tried to use a weapon of mass destruction and potentially targeted former President George W. Bush, the Justice Department said on Thursday. Khalid Ali-M Aldawsari, who was admitted into the United States in 2008 on a student visa, was arrested in Texas on Wednesday by FBI agents. He was accused of purchasing chemicals and equipment to make an improvised explosive device, the Justice Department said. Last time we weapons of imaginary destruction surfaced, Iraq got bombed back to the stoneage. It is so difficult to see where Obama is going with this...
Congratulations Centrally Planned Garbage Motors: GM slides to below its IPO price, hitting $32.75. And now we get to see if GETCO has been swimming with no bathing suit on the entire time.
Add another lunatic to the roster:
- BULLARD SAYS 'NEVER SAY NEVER' REGARDING POSSIBILITY OF QE3
- BULLARD SAYS INFLATION EXPECTATIONS ARE HIGHER, A SUCCESS OF QE
- BULLARD SEES OPTION OF BUYING BONDS MORE GRADUALLY INTO 3RD QTR
- BULLARD SAYS INFLATION WILL PROBABLY ACCELERATE
And Ahuel "Foley" Weber chimes in:
- WEBER SAYS INTEREST RATES CAN ONLY MOVE TO NORTH
While the quant funds are desperately seeking modelers for a "deranged middle east dictator" algo, the US economy continues to prolapse. From the release: "Sales of new single-family houses in January 2011 were at a seasonally adjusted annual rate of 284,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 12.6 percent (±11.2%) below the revised December rate of 325,000 and is 18.6 percent (±15.4%) below the January 2010 estimate of 349,000. The median sales price of new houses sold in January 2011 was $230,600; the average sales price was $260,300. The seasonally adjusted estimate of new houses for sale at the end of January was 188,000. This represents a supply of 7.9 months at the current sales rate." Less than 500 homes (Z) sold in the over $750,000. And the stunner: only 19k non-annualized homes were sold. The lowest monthly total ever. (and as JT Smith points out, of the 19K, 53% were vacant lots or under construction).
FmxConnect uses several proprietary indicators to predict volatility trends. One indicator, the TrendVol actually gives directional signals as well. Simply stated, if this week closes above 1416, there is a high likelihood of a 75 to 175 move higher in gold over the next 2 months. Although if the indicator hits, we'd expect the move to happen in a more compressed time. The signal does not usually waste time letting you know if it is right or wrong. The indicator combines Bollinger bands, implied volatility, skewness, and historical volatility to determine speed and direction of a potential move. The actual calculations involve using these indicators to create and proprietary oscillators.
Gaddafi's Private Plane, Reportedly Loaded With Gold, Ready To Leave For Zimbabwe As Early As TomorrowSubmitted by Tyler Durden on 02/24/2011 10:38 -0400
The latest news from the ABC.net.au should come as no surprise to those who know all too well that one can't eat gold: "Gaddafi own private plane is loaded with gold bullion and lots of hard currency, mainly dollars, and is preparing to flee to Zimbabwe to stay there with his friend Robert Mugabe." Yet there is speculation that instead of pulling a Ben Ali, Gaddafi may pull a Hitler: "Earlier, one of Mr Gaddafi's former ministers predicted the Libyan leader will follow in Adolf Hitler's footsteps and commit suicide rather than give up power. Mustapha Abdeljalil, justice minister until he quit over the bloody crackdown on protesters, says he expects Mr Gaddafi to make good on his pledge to die on Libyan soil rather than slink into exile. "Gaddafi's time is up. He is going to go like Hitler. He is going to commit suicide," Mr Abdeljalil told Swedish media." In either case, we are skeptical that much of Libya's oil infrastructure will survive the binary outcome. As a reminder, Libya had 143.8 tonnes of gold (or Tungsten as the case may be) as of December 31, per the WGC.