John Williams (of ShadowStats):  The Great US Collapse Nears Read and follow his advice...or you will soon live to regret it...Yes it really is that serious...you have been warned...

Guest Post: QE Is The End Of America As We Know It

Submitted by Tyler Durden on 03/21/2011 07:46 -0400

Each time we begin to approach the end of an announced QE period, the nervous jitters of financial markets start to set in. Will Bernanke continue with QE(n+1) or won’t he? Now it’s true that professional traders live and die by their ability to front run rumor and perception, but for long term investors who fret over such decisions, it demonstrates a fundamental lack of understanding of what QE really is. To put it succinctly, QE is an economic deal with the Devil. Once it is begun in earnest there can be no turning back. It must be played to its ultimate conclusion.

China Imports 245 Tonnes Of Silver In February And Qatar SWF “Interested” In Buying Silver

Submitted by Tyler Durden on 03/21/2011 09:33 -0400

Central banks and sovereign wealth funds with massive exposure to the dollar, such as the Russians and Chinese, are not going to shout from the roof tops their intentions to diversify into gold and silver bullion as this would lead to a surge in bullion prices and an even greater depreciation of their dollar holdings. China imported 245.6 metric tons of silver in February. The figure is close to the 260.6 metric tons imported in February 2010 and suggests that the Chinese are more than willing to buy silver at over $30 per ounce. It also suggests that the record Chinese imports of 3,475,394 kilos seen in 2010 (a massive four fold increase from 2009) may be again attained in 2011. News that Iran and other nations with large dollar currency reserves have greatly increased their gold reserves (see News) will not come as a surprise to our readers. It stands to reason that they would given the degree of exposure which most creditor nations have to the U.S. dollar. It also stands to reason as some of them do not have cordial relations with Washington and may be reluctant to fund the U.S. continuing imprudent fiscal policies. 

Treasury Quid To Banker Pro Quo: "You Can Raise Dividends If You Buy My Toxic Mortgages"

Submitted by Tyler Durden on 03/21/2011 09:42 -0400

To all those wondering why the Treserve scrambled on Friday to allow banks to resume paying dividends (even something as downright hilarious as Citi's $0.01...Is that the lowest recorded dividend yield in history?) here is your answer. The Treasury just announced it would sell its $142 billion MBS portfolio, supposedly to the same banks who are now using their cash on the books to satisfy shareholders too. The Treserve will sell $10 billion per month depending on market conditions, meaning a downtick in the market will now crash not only that given day's POMO (a UST market operation), but also have a reflexive impact on the entire MBS trading complex. As usual we can't wait for Directive #1 which will make selling any share an act of treason. 

A Million HFT Algos Suddenly Cry Out In Terror And Are Suddenly Silenced As Citi Announces 1 For 10 Reverse Stock Split

Submitted by Tyler Durden on 03/21/2011 08:19 -0400

While the wacky desperation antics of America's nationalized bank (that would be Citigroup for the cheap seats) enter the surreal zone, after the bank just announced a 1 for 10 reserve stock split (finally returning the stock price to Al Waleed's cost basis, if not entrance market cap) and a 1 cent dividend (which effectively means the Fed can now exit the prop each failing bank game... but won't), the bigger question is what happens to the momentum algos that traditionally traded 500 million shares of Citi stock, providing a supporting base for the market courtesy of massive momentum surges that provided a buying feedback loop mechanism driven out of pure churn volume. Those days are now over, as the volume will plunge pro rata from half a billion to a measly 50 million shares. Furthermore, with algos receiving liquidity rebates on a volume basis, it is conceivable that the biggest piggy bank to the 3 man Ph.D. HFT operations is about to break, as exchanges cut their rebate payouts by 90%. And with the stock market these days being far more a function of volume churn than technicals or, heaven forbid, fundamentals, what happens with the natural HFT support to the market is anyone's guess. One simple assumption: the next time the S&P does a May 6, or a USDJPY flash crash, the liquidity providers will pull out that much faster, leading to a massive freefall without any of the foreplay. 

Frontrunning: March 21

Submitted by Tyler Durden on 03/21/2011 08:03 -0400

• A Crisis That Markets Can’t Grasp (NYT)
• World Bank Says Japan Quake Rebuilding May Take Five Years (Bloomberg)
• Central Banks to Maintain Pressure on Yen (WSJ)
• Japan Faces Fresh Food Safety Crisis (FT)
• Coalition Air Strikes Rein in Gaddafi (FT)
• Geithner to Decide on Regulation of Foreign-Exchange Swaps (WaPo)
• Help Housing? Dump Uncle Sam (Forbes)
• Oil Companies Fear Nationalisation in Libya (FT)

Japan, Libya and Yemen Black Swan Formation Update

Submitted by Tyler Durden on 03/21/2011 07:37 -0400

While US stock futures continue doing their own thing, primarily on the back of JPMorgan's $20 billion financing for AT&T to buy T-Mobile (gotta love proximity to the discount window and/or excess reserves), with ES surging by 16 points overnight (but not Sprint - sorry guys, you are on your own) after the world apparently did not end, the black swan formation refuses to disperse. Here is the latest news update from Japan, Libya, and Yemen. 

 

 

 

One Minute Macro Summary - Brief Nuclear Relief

Submitted by Tyler Durden on 03/21/2011 07:34 -0400

Futures positive this morning as Japan’s nuclear crisis made a step forward and U.N. allies took control of Libya’s airspace. Portugal’s government will present its fiscal austerity plans to Parliament today. Portuguese PM Socrates has warned of his resignation if the plan does not get passed while the main opposition party which has reached majority position has shown no support for the cost-cutting. The potential political turmoil will make a foreign bailout likely. Sunday’s German regional election in Saxony-Anhalt, showed less support for Chancellor Merkel’s CDU party which lost ground in the victory. Its lead in the region’s coalition will likely remain the same, but foreshadows a greater potential upset in the next round of election on March 27. U.N. allies began airstrikes on Libya this weekend, taking control of the country’s airspace and stopping Qaddafi’s advance on rebel outposts. Meanwhile, Syria and Yemen continue to see social unrest, adding to upward pressure on oil prices. Japan managed to gain control of two of six nuclear reactors, but the situation still remains dangerous despite the accomplishment.