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Complete April And YTD Hedge Fund Performance Summary





Now that the market (and by market we mean AAPL of course) suddenly feels like it could have far less bid-side support, and hedge fundies, up until this point relishing that definitely certain year end bonus, are once again getting very nervous that the comp situtation could be a replay of 2011, we bring them some respite: because the only thing that can bring a smile to a PM with a red P&L is known that the guy down the street is redder. Below is that latest full breakdown of monthly and YTD performance courtesy of HSBC. And yes, as pointed out yesterday, it does seem that David Tepper, did Topper-tick the market...

 
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Santelli Explains Why A Broke California "Likes" A Hot Facebook IPO





The unsurprising and yet depressingly real budget data from California today should shock no-one and CNBC's Rick Santelli provides the most succinct and even more saddening reality check on the situation this morning as he points out the $15.7 billion shortfall and how cuts and compromise will fill that gap. His sane response to the implicit rise in taxation that this compromise realistically requires will mean - happy feet as Californians leave the state. His rant is one of the best but a little later in the day, the problem appears to be on its way to being fixed by none other than the hoody-in-chief himself. According to Bloomberg, Facebook Inc.’s initial public offering likely will account for 20 percent of California’s personal income growth this calendar year, the state fiscal analyst said. The state expects personal income to grow 4.9 percent in 2012. If the Facebook IPO were excluded, that would total 4.0 percent, the agency said. Money paid to company executives, investors and insiders would equal 1 percent of all personal income in 2012, the agency said. So two things come to mind: 1) we sure hope there are more mega-IPOs due next year to fund CALI's shortfall or we may have to pull the 'transitory' or unsustainable card out of the drawer; and 2) how will all those Facebook employees (and the corporation itself) feel when they start facing higher taxes (as Saverin just pre-emptively did?). Will they follow Santelli's happy feet out of the state? In the meantime, it would appear that the Facebook IPO is just the snake-oil medication that everyone needs - how could the IPO go wrong?

 
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Guest Post: That Which Is Unsustainable Will Go Away: Pensions





One of the few things we know with certainty is that which is unsustainable will go away and be replaced by another more sustainable arrangement. Whether we like it or not, or are willing to accept reality or not, unsustainable public pensions will go away. What makes "defined benefit" pensions unsustainable? 1) Promised cash/benefits packages that are not aligned with the fiscal realities of what can be contributed annually to the pension funds 2) New Normal low yields on low-risk investments and 3) skyrocketing costs of healthcare benefits.

This is easily illustrated with basic math.

 
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FBI Opens Inquiry Into JPM Loss





Earlier we were complaining that the newsflow was on its way to getting full-retard surreal. It just crossed that line. From NBC:

NY FBI Opens Inquiry into JPMorgan Chase Loss

 
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Doing God's Real Work - Hollande's Plane Returns To France After Being Hit By Lightning On Way To Merkel Visit





No, this is not a joke:

  • HOLLANDE'S PLANE TURNS BACK TO PARIS AFTER BEING HIT LIGHTNING EN ROUTE TO BERLIN - PRESIDENTIAL SOURCE

Greece lightning? Even Zeus demands deleveraging, pardon, austerity.

 
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Euro-Dumpfest Continues As LTRO Banks Implode





Just when you thought you'd seen the worst, its gets worsterer. While US equities are oscillating in a broad range trying to ignore the Eurocalypse, European asset markets had one of the worst days of the year today across the board. Spanish and Italian bond spreads are 40bps wider this week alone (adding 15-20bps today) and Portugal (sorry Stevie) are 52bps wider this week as our prediction that a compressed basis would remove any technical support for the bonds has come true. With sovereigns deteriorating rapidly, and given the forced contagion of the LTRO program, it is no surprise that financials are imploding. Senior and Subordinated credit spreads are underperforming dramatically with Subs +90bps and Seniors +55bps in May, while high-yield credit is 100bps wider and broad European equities (Bloomberg's BE500 index) are tracking them lower now practically unchanged for the year (and back below its 200DMA). Of course, while Greek bank runs are accelerating (and are likely beginning in Spain) and ASE is at all-time lows, the hope remains that if things get ugly enough, the ECB will save the day and Draghi will magically re-appear. The hope of another LTRO is meaningless, though likely inevitable, as it will only exacerbate the stigma that we have been so accurate on. With collateral in short-supply, especially in Spain, any further encumbrance will crush LTRO-facing bank debt and equity-holders via subordination and so it may make sense to be even more long the 'stigma' divergence between LTRO and non-LTRO.

 
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Has The Greek Bank Run Started?





 
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Guest Post: Drone Warfare In America





How would Obama supporters feel if they learned that their beloved President was running far-to-the-authoritarian-right of arch-hawk Charles Krauthammer on one particular civil liberties issue? Sadly, the answer is that the most Obama supporters probably wouldn’t feel very much at all, because support for Obama has always predominantly been emotion-driven (he promised change “you can believe in”, not “change that I can logically convince you will be beneficial“).

 
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Is Spain In Danger Of An Imminent LCH Margin Hike?





The Greek new-election news this morning pushed sovereign spreads wider across the board in Europe. Spain and Italy have leaked back off those high spread levels in the last hour (while Portugal has not) but critically, Spain is rapidly approaching a very significant Maginot Line, as noted by Bloomberg's chart-of-the-day today. In the past (in the case of Portugal and Ireland) when the bond spread on European sovereigns relative to AAA-rated European debt has reached 450bps, the LCH has slapped on significant margin hikes. At a time when cash/collateral is in extremely short-supply (as indicated most obviously by the rapid deterioration in EUR-USD basis swaps recently), Spanish 10Y spreads are perhaps a day or two of weakness away from the point of no-return. When Portugal broke this level it rapidly accelerated from 450bps to over 800bps in less than three months.

 
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It's Official: Greece To Pay May 15 Bond Maturity





Earlier, we reported on media speculation that this was a done deal. We now get confirmation.

  • GREEK FINANCE MINISTRY TO PAY EU435 MLN BOND
  • GREECE SAYS TODAY'S DECISION DOESN'T PREJUDICE FUTURE DECISIONS - no, just those you have to COMPLY with

In other words, just as Zero Hedge predicted in January, non-Greek law bondholders, who did not comply with the PSI, had all the leverage. And again: congratulation to all those who were not Steve Rattnered into agreeing to the PSI, and held out: the 135% annualized return is worth it. Just keep this in mind when the PSIs of Portugal, Ireland, Spain and Italy take places next.

 
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A Greek Affair To Remember And Mr. Hollande's Opus





We suspect, when we look back on Europe some months from now, that we will see; a love affair gone badly due to conditions beyond anyone’s control and a separation that, while bound in great sadness, is what the Fates have determined for the actors in this grand drama. Extending the unreality, foillowing news that Greece will - as expected - hold new elections, today the new French President and the German Chancellor will meet for the first time. They will issue a statement promising cooperation, a brighter Europe, some vision of a grand alliance and an eternal pledge for the spirit of unity between the French and the German people. Believe none of it. The Germans are already targeting Vichy as the new place of government in France and there is an active search underway to find the decedents of Marshal Petain. There was an armistice between Germany and France in 1940 and there may be a new one announced today but the new one, like the old one, will be a short lived affair as the goals of France and the goals of Germany could not be further apart.

 
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Homebuilder Confidence Rises To 5 Year High As Actual Sales Remain Near All Time Lows





America may not sell many new homes (read - sales are near or at all time lows), but that does not prevent homebuilders from having a dream, or in this case confidence that soon, soon, SOON, things will finally improve. Sure enough, in May the NAHB homebuilder confidence soared to 29, from 24, on expectations of a 26 print. Of course, these numbers are completely meaningless, and only serve to get the algos ramping momentum in an upward direction. In the meantime, the reality of actual sales, can be seen on the chart below.

 
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The Greek Neo Nazi Manifesto





In case anyone was wondering why such a fuss was made about a few far left and far right parties gaining ground in the Greek elections, here is the leader of the Greek Golden Dawn party - treating us to his world view. No commentary necessary.

 
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Art Cashin On The Way To The European Egress





If there was one analogy we had not heard so far to the deplorable European situation, it was that to P.T. Barnum's infamous "Egress." Following this morning's Art Cashin note, that is no longer the case. Granted, since it references a museum exhibit, such as what the EUR, not to mention European socialism which recently ran out of other people's money, will soon be, it is about time...

 
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Ok, You Better Be Sitting Down For This One...





Seriously...

  • STRAUSS-KAHN FILES COUNTERCLAIM IN LAWSUIT BY HOTEL MAID
  • FORMER IMF CHIEF SEEKS DAMAGES FROM HER FOR ALLEGED FALSE CLAIM

Time for the Onion to admit reality has bested it and graciously close down.

 
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