PIMCO Prepares For Global Inflation, Sees QE3 If "Recovery Sputters"

Submitted by Tyler Durden on 03/23/2011 08:50 -0400

As was first disclosed by Zero Hedge, PIMCO trimmed its Treasury holdings in February to zero. While many speculated that the reason is concern for global inflation, we now have the confirmation courtesy of a rhetorical Q&A with Saumil Parikh released by the Newport asset management giant. In a nutshell: "Setting aside immediate oil shocks, we believe global inflation has cyclically troughed and we see a secular upswing in inflation, which naturally will put upward pressure on interest rates. We see three key global factors as potentially adding to inflation over a long horizon: (i) The degradation of sovereign balance sheets and the structural inflexibility of fiscal deficits. (ii) Emerging markets used to export disinflation to the developed world, but over the secular horizon we see them as exporting inflation. (iii) As populations age, they tend to save less and consume more. Demographics may thus become an inflationary force globally, though possibly this risk will be balanced somewhat by demographics in emerging nations. In the near term, we anticipate most, though not all, global central banks are likely to err on the side of allowing inflation to rise above stated or implied targets during 2011. In the U.S., if the economic recovery sputters, the Fed could expand quantitative easing. But further deficit accommodation would pose inflation risks. Obviously nothing new here, and just a confirmation that in order to preserve the Wealth Effect, Bernanke will be forced to put the global Genocide (And Printing)Effect into overdrive.

 

Radiation Level At Fukushima Reactor No. 2 At Its Highest Level Recorded So Far, Neutron Beam Observed 13 Times

Submitted by Tyler Durden on 03/23/2011 08:52 -0400

Per the Japan Nuclear Agency: the Radiation level at Fukushima reactor No. 2 at its highest level recorded so far. Only headlines for now. And just as the market was starting to buy the endless lies that things are getting better. And some more truthy news from Kyodo: Electric Power Co. said Wednesday it has observed a neutron beam, a kind of radioactive ray, 13 times on the premises of the Fukushima Daiichi nuclear plant after it was crippled by the massive March 11 quake-tsunami disaster.

 

Fukushima Smoking Gun Emerges: Founding Engineer Says Reactor 4 Has Always Been A "Time Bomb", Exposes Criminal Cover Up

Submitted by Tyler Durden on 03/22/2011 22:21 -0400

It was only a matter of time before someone grew a conscience, and disclosed to the world that in addition to the massive cover up currently going on with respect to the true extent of the Fukushima catastrophe, the actual plant itself, in borrowing from the BP playbook, was built in a hurried way, using cost and labor-cutting shortcuts, and the end result was a true "time bomb." Bloomberg has just released a report that if and when confirmed should lead to the prompt engagement of harakiri by the Hitachi executives responsible for this unprecedented act of treason against Japan's citizens. Quote Bloomberg: "One of the reactors in the crippled Fukushima nuclear plant may have been relying on flawed steel to hold the radiation in its core, according to an engineer who helped build its containment vessel four decades ago. Mitsuhiko Tanaka says he helped conceal a manufacturing defect in the $250 million steel vessel installed at the Fukushima Dai-Ichi No. 4 reactor while working for a unit of Hitachi Ltd. in 1974. The reactor, which Tanaka has called a “time bomb,” was shut for maintenance when the March 11 earthquake triggered a 7-meter (23-foot) tsunami that disabled cooling systems at the plant, leading to explosions and radiation leaks....“Who knows what would have happened if that reactor had been running?” Tanaka, who turned his back on the nuclear industry after the Chernobyl disaster, said in an interview last week. “I have no idea if it could withstand an earthquake like this. It’s got a faulty reactor inside.” What follows is the harrowing tale of a criminal cover up at the only reactor that luckily was empty when the catastrophe occurred. We can only imagine what comparable horror stories will emerge in the next several days as other whistleblowers emerge and disclose that Reactors 1 through 3 (which unfortunately do have radioactive fuel in their reactors) passed the same "rigorous" quality control process that makes them the same time bombs just waiting or the signal to go off (and probably already have... but since the truth is the last thing the public will uncover one can only speculate).

Radiation In Tokyo Drinking Water Jumps To Twice Infant Safety Level

Submitted by Tyler Durden on 03/23/2011 07:06 -0400

The latest news out of Tokyo, and the reason why the Nikkei took a big turn lower in overnight trading, is that according to the latest disclosure by Tokyo authorities on Wednesday, "water at a purification plant for the capital of 13 million people had 210 becquerels of radioactive iodine -- more than twice the safety level for infants." While the threshold itself may not be all that material, it merely reinforces the perception that either the government is covering up something far more sinister, or the authorities have lost control of the situation, with incremental bad news creeping up every single day. As a result, as we have claimed from the very beginning, one of the world's most populous cities, located just 150 miles away from what may soon be the next Chernobyl per prior whistleblower disclosure, could likely soon be a ghost town with dire implications for the Japanese and world economy. 

 

 

 

Egypt Stock Market Opens, Plunges, Triggers Circuit Breakers, Closes

Submitted by Tyler Durden on 03/23/2011 07:32 -0400

So much for that $25 million EGPT ETF as being a leading indicator. AP dscribes what can only be summarized as the funniest plunge-protection free market reopening in history: "Shares on Egypt’s stock exchange plunged Wednesday as the market reopened after being shut for nearly two months because of the mass protests that toppled former President Hosni Mubarak. Egypt’s finance minister was on hand as men dumped confetti on the trading floor to mark the resumption of trading. But within seconds of the opening, trading was once again halted as an intense sell-off drove shares below pre-set limits put in place to slow any sharp declines. The market reopened half an hour later. The benchmark EGX 30 index was trading down 9 percent at 5,137 points by early afternoon, recovering slightly from a drop of nearly 10 percent earlier. Finance Minister Samir Radwan called on investors not to panic." Of course, where some see panic, others may see responsible selling of liquid assets as the clusterflock of black swans is now flying high in the troposphere and following the Gulfstream.

New Close Up Video Of Fukushima Destruction Released, As Black Smoke Prompts Evacuation Of Plant

Submitted by Tyler Durden on 03/23/2011 08:19 -0400

Tokyo's utility company said on Wednesday that black smoke has been seen emerging from Unit 3 of the crippled nuclear plant in northeastern Japan, prompting a new evacuation of the complex. Officials with Tokyo Electric Power Co. said on Wednesday that workers from the entire Fukushima Dai-ichi plant have been temporarily evacuated. Operators of the power station have been desperately trying to cool the reactors and spent fuel pools at the plant after it was damaged by this month's tsunami, which knocked out power to the cooling systems. Unclear if TEPCO has any other good news straw men up its sleeve post the completion of Operation Power Chord. We still believe a concrete sarcophagus will be the next step. 

 

 

 

One Minute Macro Summary - Earthquake To Be At Least ¥2.75T Hit To Japanese GDP (For Now)

Submitted by Tyler Durden on 03/23/2011 07:55 -0400

Markets in positive territory this morning, despite mounting debt stress in Europe. MBA mortgage applications grew 2.7% v -0.7% the week prior. The increase exhibits a different trend than this week’s disappointing housing data which included a fall in February existing home sales and a -0.3% drop in the house price index v -0.2%E in January. The Portuguese government will vote on proposed fiscal austerity measures today. Given the country’s political divide, approval appears unlikely, which would further stress the debt-strapped nation and lead it quickly to an EFSF tap. It now appears EFSF expansion will take until the end of June to be resolved according to news reports, which will not bode well for those issuers trying to play hardball with the group of payers. SOVXWE traded 10bp wider yesterday and traded into 174bp this AM. Japan’s government announced yesterday that damage due to the recent earthquake will reach $185B to $308B, an amount equivalent to the damage of almost four Hurricane Katrinas. That makes it the most expensive natural disaster the world has ever seen. The government also indicated that the earthquake will take -¥2.75T hit on GDP for the fiscal year that begins on April 1. 

 

 

 

Irish 10 Year Bonds Take Out Stops, Yield Surges Past 10% For First Time In History

Submitted by Tyler Durden on 03/23/2011 09:21 -0400

Now that Europe is expected to keel over any minute, starting with the collapse of the Portuguese government, and proceeding right through the bankruptcy of Ireland, the market is starting to once again wake up. The first snooze button: Irish 10 Year bonds just passed above 10%, with numerous stops hit (see chart) for the first time in history. For all those who missed Citi's recommendation to buy Ireland CDS in advance of an event of default, the report can be found here. Said CDS are still a bargain offered at 630, considering they hit 680 in January.