Watch Obama Make More Impossible Promises About The Budget

Submitted by Tyler Durden on 04/13/2011 13:38 -0400

Two years after Obama promised to cut the budget in half by the end of his first term (it appears he was confused by math symbols: he meant divide by half), here he is again, reading from the teleprompter, and making a bunch of senseless promises that have no chance in hell of coming true. Most notably, Obama will promise to cut $4 trillion over the next decade. Of course since by $2020 the budget deficit will be measured in quadrillions, a $4 trillion cut out of $X quadrillion is actually perfectly feasible. Which is why we take back everything we said: Obama will absolutely come through on his promise.

 

GFMS 2011 Gold Survey Released, Sees Gold Price Surpassing $1,600 Before Year End

GFMS, arguably the most respected precious metals consulting company, has just released its much anticipated 2011 Gold Survey. While the rather expensive 128 page report is not available for public consumption (yet), the gist is as follows: GFMS sees gold prices averaging $1,455 an ounce this year and sticking to a range of $1,319-1,620 an ounce, executive chairman Philip Klapwijk told delegates at the launch of its Gold Survey 2011. Klapwijk said the market had probably already seen the lows for this year, after prices slipped towards $1,300 an ounce in late January during a broad-based sell-off of commodities.Quoting Klapwijk: "Overall, we would not be surprised, therefore, to see gold break through $1,600 before the end of the year." Neither would Goldman, which needs to buy some more, thus expect a downgrade shortly.

Obama Speech Details Leaked: Promises To Cut $4 Trillion In Deficit Over Next 12 Years (Or Less)

Submitted by Tyler Durden on 04/13/2011 12:18 -0400

In about an hour, the Teleprompter in Chief will once again address a nation on the topic of the exploding US deficit, which he can only hope has the attention span of an HFT algorithm, and has forgotten his proclamations on the same issue from early 2009. Among the things Obama will discuss:
Sets a goal of reducing US deficit by USD 4trl in 12 years or less, according to a congressional source
Implements a deficit plan would curb deficits to 2.5% of GDP in 2015, 2% toward end of decade according to a congressional source
Wants US debt on "declining path", enforced by "debt failsafe" trigger of broad cuts, according to a congressional source
Seeks $770bln in savings by 2023 in cuts to non-security discretionary spending according to a congressional sourceGood luck with that. In the meantime... a clip from Obama circa February 2009 on where Obama saw the budget by the end of 2012. That did not...quite... work... out.

IMF Releases Global Financial Stability Report, Sees $3.6 Trillion In Bank Maturities Over Next Two Years

Submitted by Tyler Durden on 04/13/2011 09:22 -0400

The IMF has released its 2011 Global Financial Stability Report which summarizes the fund's view on the causes for ongoing market instability and proposes some solutions on how to continue. Not surprisingly, the IMF sees the key threat as follows: "The main task facing policymakers in advanced economies is to shift the balance of policies away from reliance on macroeconomic and liquidity support to more structural policies—less “leaning” and more “cleaning” of the financial system. This will entail reducing leverage and restoring market discipline, while avoiding financial or economic disruption during the transition. Thus, ongoing policy efforts to withdraw (implicit) public guarantees and ensure bondholder liability for future losses must build on more rapid progress toward stronger bank balance sheets, ensuring medium-term fiscal sustainability and addressing excessive debt burdens in the private sector."  The key issue here is that as the IMF correctly observes household leverage, still at unsustainable levels, continues to be a threat to the financial system (despite aggressive attempts to transfer leverage from the private to the public sector) and may further weaken banks (but not if one listens to JPM - it's all unicorns and rainbows there). Yet the scariest news: "Global banks face a wall of maturing debt, with $3.6 trillion due to mature over the next two years." But that's ok- these banks will focus on funding US Treasury issuance first, ergo no need for more QE...

David Stockman On The Fed's Path Of Destruction

Submitted by Tyler Durden on 04/13/2011 11:19 -0400

David Stockman concludes his two part series on Crony Capitalism (part one here) with this scathing take down of the Federal Reserve. Hopefully this is nothing new to anyone at this point... "The destructive result of the Federal Reserve’s earlier housing and consumer credit bubble became the excuse for embracing a destructive zero interest rate policy which is self-evidently fueling even more destruction. This destruction is namely, the exploitation of middle class savers; the current severe food and energy squeeze on lower income households; the illusion in Washington that Uncle Sam can comfortably manage $14 trillion in debt because the interest carry is close enough to zero for government purposes; and the next round of bursting bubbles building up among the risk asset classes... So in the present circumstances, ZIRP and QE2 amount to a monetary Hail Mary. There is no monetary tradition whatsoever that says the way back to U.S. economic health and sustainable growth is through herding Grandma into junk bonds and speculators into the Russell 2000."

RIMM CEO Mike Lazaridis Abruptly Terminates BBC Interview

Submitted by Tyler Durden on 04/13/2011 10:08 -0400

An odd update for RIMM shareholders. In an interview with BBC Click, RIM CEO Mike Lazaridis, who has had quite a bit of trouble convincing the market about anything lately, apparently was unable to convince the interview host not to ask a set of questions relating to RIM security issues in India and the Middle East. As a result, Mike proceeded to simply walk out of the interview. Rather odd behavior for a CEO whose credibility level is already perceived as low to quite low by the market. Then again, we expect nothing less from the Chairman on April 27 during the first ever Fed press conference, when someone asks him what exactly the $130 billion or so in "Other Assets" on the Fed's balance sheet actually are.

Banks To Get Away Scott-Free Again? Mass Fraudclosure Settlement To Be Announced Today Without Financial Penalties

Submitted by Tyler Durden on 04/13/2011 10:19 -0400

As we noted earlier, JPM recorded $650 million in costs to "foreclosure-related matters" read legal costs associated with Robosigning (and if JPM is over half a billion, BofA legal invoices are certainly in 9 digit territory by now). Obviously, this is a situation that has to be resolved as USSA kleptocracy can not be forced to pay for prior (and ongoing) transgressions. Which is why we were not surprised to learn that "Bank regulators plan to announce settlements later on Wednesday with the largest lenders over allegations of shoddy foreclosure practices, but the pacts will not include financial penalties." All those who had been hoping for an equitable judicial treatment for criminal bank actions are urged to bottle their righteous indignation and stow it away (at this rate of inflation indignation will be worth 50% more in a mere 3 months). "The Office of the Comptroller of the Currency, the Federal Reserve and the Office of Thrift Supervision have spent the past few days completing the settlements with some of the largest U.S. banks, including Bank of America Corp, Wells Fargo & Co, JPMorgan Chase and Citigroup Inc. The pacts would resolve only part of a large probe involving a group of 50 state attorneys general and about a dozen federal agencies." But don't worry banks, won't actually have to part with even one dollar: "JPMorgan Chase & Co Chief Executive Officer Jamie Dimon said on an earnings conference call that the regulators would release consent orders that would make the banks address weaknesses in foreclosure affidavits. Fines will probably come later, he said." Probably. Although don't hold your breath.

Spanish Situation Worse Than Expected: China Rumored To Inject $13 Billion Directly Into Spanish Banks

Submitted by Tyler Durden on 04/13/2011 11:00 -0400

As if holding $36 billion (€25 billion) in Spanish sovereign debt wasn't enough, China now appears to be going all in as Spain's white knight. Reuters reports that in addition to keep the government solvent, China is now going direct to Spain's troubled banking system. "Chinese investors including the country's sovereign wealth fund may inject $13 billion into Spanish banks, a government source said on Wednesday after Spain's premier met financial authorities in Beijing." Then again, recall that it was Portugal which relied last exclusively on China as a last chance rescuer. Which is why we disagree completely with this statement: ""If this is true it is positive for the market. If CITIC or another Chinese vehicle invests 9 billion euros that would represent around 5 percent of the equity in the Spanish banking system," said a London-based analyst who asked not to be named." Uh, no. It means that the market, like a good Pavlovian dog, will now start dumping Spanish paper in expectations of yet another bailout. And the more Spain is forced to buy to preserve it cross-linked investments in the PIIGS, the more dumping. After all such is life in centrally planned bizarro world.

Treasury Sells $21 Billion in Ten Year Bonds As Indirect Interest Drops

Submitted by Tyler Durden on 04/13/2011 13:17 -0400

The Treasury just sold $21 billion in a 10 Year reopening (9 year 10 months), at a high yield of 3.494%, just below last month's 3.499%. Overall the auction turned out weak pricing outside of the when issued, confirming that the butterfly-ES correlation (which is primarily driven by the 10 Year) is working. And just as the market dipped into the auction the natural response would be a pick up following the placement. The internals were weak: Primary Dealers were forced to take down more than half (51.7%) of the auction (with every intention to flip to the Fed in a week or so), the highest Primary Dealer takedown since February 2010. In return, Indirect Bidder interest slumped to 42.4%, the weakest showing since October of last year, and the balance, or 5.9% was filled by Directs. The low Bid To Cover completed the weak picture, coming at 3.13, the lowest since December, but in line with a one year average. More importantly, with this $21 billion and yesterday's $32 billion, US debt is now $53 billion higher than the unsettled total disclosed yesterday of $14.268, or $14.321. This is far above the debt limit. It also means that the debt actually subject to the limit is now $14.269 billion, or $25 billion below the ceiling. And keep in mind there is another $13 billion in 30 Years to be auctioned off tomorrow (granted offset by $19.2) billion in maturities. Will the Treasury last through July without a debt ceiling increase at a rate of issuing $125 billion in net debt per month? Not a chance in hell.

Guest Post: FBI Raids Chuck E. Cheese For “Undermining U.S. Currency”

Submitted by Tyler Durden on 04/13/2011 08:59 -0400

The FBI and the Secret Service showed their willingness today to utilize the expanded definitions of “counterfeit currency” and “domestic terrorism” brought about by the recent conviction of Bernard von NotHaus of the alternative currency outlet “Liberty Dollar” when the agencies initiated a surprise raid on an unsuspecting Chuck E. Cheese establishment in Des Moines, Iowa. “Haven’t you ever been at the laundry mat with a pocket of change thinking you have plenty of quarters, only to discover that most of them are Chuck E. Cheese tokens?!” railed Anne Tompkins, Department of Justice prosecutor in the Liberty Dollar case, as she read from a carefully prepared DHS script. “That is close enough to counterfeiting for me! It is a blatant destabilization of our democratic economy! What are you supposed to do, let your underpants wallow in filth while Chuck E. Cheese makes a profit? I say no to these financial terrorists!”