Las Vegas

• Euro zone formally approves 2nd Greek bailout: statement (Reuters)
• In a First, Europeans Act to Suspend Aid to Hungary Unless It Cuts Deficit (NYT)
• UK Chancellor Looks at 100-Year Gilt (FT) - What? No Consols?
• Hilsenrath: Fed's Outlook a Tad Sunnier - (WSJ)
• Banks Shored Up By Stress Test Success (FT)
• U.S. dangles secret data for Russia missile shield approval (Reuters)
• Wen Warns of Second China Cultural Revolution Without Reform (Bloomberg)
• Wen Says Yuan May Be Near Equilibrium as Gains Stall (Bloomberg)
• Merkel Says Europe Is ‘Good Way’ Up Mountain, Not Over It (Bloomberg)

Lies, damn lies and charts.  Why no one in charge dares utter the "F" word (fraud).

While the discipline of behavioral finance is relatively new, the performing art of magic has long exploited many of the same principles about human nature and decision-making.   While much is made of the smoke-and-mirrors market we exist in, Nic Colas, of ConvergEx Group, reviews the 'Basics' of this ancient form of entertainment, courtesy of a recent Smithsonian magazine article by Teller (the quiet half of Penn & Teller), and draws some analogies to the modern world of investing and economic analysis.  The seven crossover points include pattern recognition, overconfidence, and the illusion of free choice. It seems to us that investors can benefit from reminding themselves that their own powers of perception are severely limited.   As Nic points out, if we can be regularly fooled by a Las Vegas magic act, then many of the same flaws in our thinking must be at play when we watch the screens at work.  We seek out patterns that don’t really exist.  We confuse choice with freedom. We grow emotional and limit our ability to process information.  Watching a show, this is amusing.  Making investment decisions, not so much.

I'm not a very good hedonist, I guess.

Here I am in Las Vegas, and to my way of thinking, everything I hate about the human race is conveniently compressed into one tidy package.

And I ask myself: what's my problem? Why do I let places like this get to me so much? I mean, after all, why should I care what other people do with their time and their lives? What business is it of mine?

• Greeks Struggle to Resolve Their Differences (WSJ)
• China May See Deeper Slowdown on Crisis: IMF (Bloomberg)
• Banks to take a hit on US home loans (FT)
• Europe’s banks face challenge on capital (FT)
• Smaller Interest-Rate, Credit-Default Swap Trades Seen On Horizon  (WSJ)
• Pro-European elected Finland president (FT)
• Push Sputters for Credit-Default Swap Futures (WSJ)
• China Money Rate Rises as Central Bank Gauges Demand for Bills (Bloomberg)
• China Takes On Skeptics of Aid to Euro Zone (WSJ)

Vegas means comedy, tragedy, happiness and sadness all at the same time.--Artie Lange

Following yesterday's news out of Zillow of a 0.77% drop in April home values compared to March, today we get an update from CoreLogic which in turn looks at the latest trends on "underwater" (or negative equity) mortgages in the US. In summary: "10.9 million, or 22.7 percent, of all residential properties with a mortgage were in negative equity at the end of the first quarter of 2011, down slightly from 11.1 million, or 23.1 percent, in the fourth quarter. An additional 2.4 million borrowers had less than five percent equity, referred to as near-negative equity, in the first quarter. Together, negative equity and near-negative equity mortgages accounted for 27.7 percent of all residential properties with a mortgage nationwide. In the fourth quarter, these two categories stood at 27.9 percent." The most impacted state is Nevada, which has 62.6% of all mortgages underwater (with another 4.8% in near-negative), followed by Arizona, Florida and Michigan. California is fifth with 30.9% of all homes underwater. We doubt these millions of "homeowners" are benefiting much from the wealth effect.

The owners of this Las Vegas staple probably invested all the club earnings one day into daytrading LVS or WYNN, and by the looks of things, busted out. In other news, Las Vegas is thriving and business is doing really hot.

The $3 billion Las Vegas casino which Zero Hedge discussed at length previously (must read for anyone curious how big banks now decide which companies get to live or die), has thrown in the towel. Deutsche Bank's strong arming tactics have won yet again: that other bloated monstrosity, the Cosmopolitan, will now be safe knowing that its biggest competitor on the crappy side of the strip will likely face liquidation.

Sheldon Adelson, who recently made headlines for losing the most amount of money in the shortest time last year, after his Las Vegas Sands (he owns 336 million shares) stock price dropped from $100 to a little over $2, issued a plan for reducing its debt in the 10-K it filed early today.

Among the vaguely Leninist plan's bulletpoints are the following: