Silver Reaches New 31 Year High At $38.50/oz - Backwardation Ends But COT Data Is Bullish

Submitted by Tyler Durden on 04/04/2011 07:08 -0400

Silver for immediate delivery has gained another 1.7% to $38.50 an ounce, the highest level since February 1980, the year silver reached a record of $50.35/oz. An ounce of gold bought as little as 37.32 ounces of silver in London today, the lowest level since September 1983. Silver has come out of backwardation and returned to contango with longer dated future prices again higher than nearer month contracts and spot for delivery (see table below). This suggests that default on the COMEX, as warned of by some analysts, is not imminent and the tightness seen in the physical silver market may have abated somewhat. However, the Dec12 contract trading at only cents over spot for delivery (less than 10 cents) suggests that tightness remains. Given the degree of tightness in the physical silver market, silver may return to backwardation sooner rather than later. The latest COT report shows speculative long positions, or bets prices will rise, outnumbered short positions by 37,139 contracts (see news and chart below). This is a level of net longs by hedge fund managers and other large speculators that was seen as long ago as 2002.

IMF Says US Must Raise All Taxes, Cut All Entitlements By 35% To Contain Future Budget

Submitted by Tyler Durden on 04/04/2011 10:35 -0400

In what is either a delayed April Fool's report, or its latest exercise in rhetoric the IMF asks the humorous question: "An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?" The obvious answer is naturally the Fed. The unobvious answer, according to the IMF, is the impossible: a slashing all of USSA's entitlement benefits by a whopping 35% combined with a hike in all tax rates. From the IMF: "This paper updates existing measures of the U.S. fiscal gap to include federal laws up to and including the mid-December 2010 federal fiscal stimulus. It then applies the methodology of generational accounting to establish how the burden of adjustment required to attain fiscal sustainability is shared across generations. We find that the U.S. fiscal and generational imbalances are large under plausible parametric assumptions, and, while not much affected by the financial crisis, they have not improved much by the passing of the Final Healthcare Legislation. We find that, under our baseline scenario, a full elimination of the fiscal and generational imbalances would require all taxes to go up and all transfers to be cut immediately and permanently by 35 percent. A delay in the adjustment makes it more costly." Such drama: have these people really not heard of the Fed. What is rather shocking is that Larry Kotlikoff, who has made it all too clear the US is bankrupt, was used as a consultant: "We are extremely grateful to Lawrence Kotlikoff who acted as a consultant providing unique inspiration,
guidance and supervision." Are massively dissenting voices now credible sources of information? What next: Fed white paper citing Zero Hedge?

Former CIA Analyst Tells Truth About Libya Intervention On CNN, Hilarity Ensues

Submitted by Tyler Durden on 04/04/2011 11:05 -0400

Former CIA analyst Michael Scheuer appeared on CNN and told his lovely blonde and brunette anchors the truth about what is really happening. The hilarious Stepford Wives reaction and the unprecedented cognitive dissonance the ensues is worth the price of admission. 

 

Goldman Capitulates (Again): Downgrades Q1 GDP To 2.5%, Sees Outlook For H2 As "Messy"

Submitted by Tyler Durden on 04/03/2011 20:44 -0400

No QE3? Really? Oh yes, Zero Hedge 1, Goldman Sachs (who can possibly forget Goldman's shark jumping "New US Golden Age" report from December after all it took was one bad NFP print for Goldman to launch QE2 back in August?) 0 (here and here)

Thanks To 60 Minutes' Report On Fraudclosure, US GDP Is About To "Soar" By $50 Billion

Submitted by Tyler Durden on 04/03/2011 21:31 -0400

Several days ago, courtesy of an analysis by JPM's Michael Feroli, we quantified that the implied "rents" benefit to the US economy arising from squatters not paying mortgages is about $50 billion per year, or just about 0.4% of GDP. Today, thanks to 60 Minutes, this number is about to soar, because if anyone didn't know before that paying mortgages is for suckers, now virtually every single mortgage borrower, and there are about 48 million of them, will think long and hard before mailing out the next mortgage payment. And if not all, then certainly the 11.1 million underwater mortgages will be one step closer to throwing in the towel on feeding the mortgage monster. Considering that 4.6 million mortgages are currently delinquent for 30 days or more, look for this number to at least double as everyone who is underwater says no mas to a losing game. Which of course is precisely what the banks want: consider that the "rents" benefit is about to double to $100 billion per year, all of which will accrue to the banking system first, then one can see why a $20 billion settlement deal is not a bad investment for the bank to generate a 2.5x ROI in a few short months.

60 Minutes Overtime | Mortgage Mess: Who Really Owns Your Mortgage?

 

 

 

Japanese Government Covered Up Surging Radioactive Fallout Data

Submitted by Tyler Durden on 04/04/2011 07:30 -0400

Back On March 14th, Zero Hedge first disclosed data originating from the SPEEDI (System for Prediction of Environment Emergency Dose Information) database, which showed that while radiation in the Ibaraki prefecture were about 30 times above normal, the core affected regions were "Under Survey." In subsequent posts we compared the "Under Survey" category to one step below what the BLS does on a daily basis - i.e., make up stuff. But at least in Japan, they did not even make data up: they just refused to release it. Well, we now have official confirmation from NHK that once again our well-grounded skepticism (and cynicism) was as usual absolutely spot on: "It has been learned that the Japanese government withheld the release of computer projections indicating high levels of radioactivity in areas more than 30 kilometers from the troubled Fukushima Daiichi nuclear power plant. The estimates were made on March 16th following explosions at the plant by an institute commissioned by the government using a computer system called SPEEDI. The system made its projections on the assumption that radioactive substances had been released for 24 hours from midnight on March 14th, based on the available data." Of course, had the disastrous SPEEDI data been reveled in time, not even the hundreds of billions (or trillions in Yen) of emergency money pumped by the BOJ, would have been able to prevent a complete market disaster. In other words: Nikkei 1; Human Life 0. In the meantime we wonder what superpowers the X-Man from the affected regions will soon develop.

One Minute Macro Update - European Inflation Taking Hold

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

The debate over the future of QE2 continues, this time with dovish comments out of NY Fed President Dudley on Friday. Economic releases are light today after Friday’s positive labor data. Look ahead to inflation numbers later in the week with PPI on Thursday and CPI on Friday. We are now experiencing a slew of firms downgrading growth forecasts in FY2011, which should put even more pressure on the job market to drive Fed policy. The IMF has officially denied any reports that the organization had pushed for a haircut on Greek sovereign debt. Euro zone PPI increased 0.8% MoM v a revised down 1.3% prior and 6.6% YoY v a revised down 5.9% prior. Food and energy prices led the increase, but the rise was seen across most goods. Libya’s conflict moved to negotiations as rebels called for a cease fire on Friday. Reports out yesterday indicate that two of the Libyan leader Qaddafi’s sons are calling for an end to the conflict, proposing a transition to democracy that would push their father out of power. A breakdown of Japan’s Tankan manufacturing survey released this morning showed that expectations for the sector are negative with confidence dropping to -2 this June from 6 in March. 

 

 

 

No Fly Zone Succeeds: Libyan Rebels To Sell First Oil Cargo

Submitted by Tyler Durden on 04/04/2011 08:30 -0400

And so the real goal of the Libyan "No Fly Zone" succeeds: Reuters reports that the Libyan rebel alliance, which already has its own central bank and supposedly fiat printing machines, is about to sell its first oil cargo in the coming week."The agency said Liberian-registered tanker Equator was due to arrive in the rebel-held eastern Libyan port of Tobruk on Monday to load a cargo of Serir/Mesla blend crude oil. The agency quoted Wahid Bougaighis, head of the newly established oil company, as saying: "They are coming for sure because there was a contract signed already."" It remains to be seen how K-Daf feels about honoring contracts signed by insurgents. In the meantime, the chocolate lovers lobby is finally stirring about imposing a comparable No Fly Zone in Ivory Coast. You know, for human rights violations. 

 

 

 

Dennis Lockhart And The Atlanta Fed Gnomes: 1) Max Out Your Credit Card, 2) .......... 3) Profit

Submitted by Tyler Durden on 04/04/2011 09:18 -0400

Atlanta Fed's Lockhart is the first Fed talking head on the wires today advising the general public to, gasp, spend: "A less consumption-dependent economy will help rebalance the country's external accounts—the trade and current accounts. It's unlikely and even undesirable that there be a drastic shift away from consumption, so less American consumption will not fix the global imbalances.[sic]" In other words: 1) max out your credit card 2) .... 3) profit. 

 

 

 

And Here Comes Bank Of Lynch's Ethan Harris Plagiarizing Hatzius (Again) And Lowering Q1 GDP

Submitted by Tyler Durden on 04/04/2011 09:59 -0400

In an absolute stunner of an announcement Bank of Countrywide Lynch's top notch head of economoplagiarism follows in Jan Hatzius' coattails once again and lowers Q1 GDP. All of Wall Street will promptly follow as it always does.