As POMO Ends, Stocks And Commodities Tumble 

Submitted by Tyler Durden on 05/17/2011 11:16 -0400

Just as POMO ends, the floor gets taken out of the market. And this was just a $6.4 billion operation (monetizing the recently issued 5 year). To think there still are those who believe the Russell 2000, pardon, the economy and the wealth effect can be sustained absent quantitative easing. The market is finally, with about a 3 month delay, pricing in the end of QE2. We wonder how long before it starts (since 2011 is a replica of 2010) pricing in QE3...

 

So Much For The McDonalds Jobs Renaissance: Burger Maker To "Hire" Computers Going Forward 

Submitted by Tyler Durden on 05/17/2011 09:56 -0400

If nothing else, last month's 62,000 minimum wage, part time-job expansion program by McDonalds generated lots of commentary on whether it should or should not be counted in the April NFP number. While paying a bunch of janitors (sub) minimum wage will have precisely 0.00% impact on GDP, the possibility that America could convert even more full-time into part-time jobs, generating a few more press opportunities for the teleprompter was certainly bullish, sure generated a lot of contradictory blog posts. Alas, even paying minimum wage appears to be too much of a chore for the world's largest burger chain. Enter computers. From Fox Biz: "McDonald's is jumping on the technology bandwagon with a new system that will soon change the way European customers order food -- picture computers instead of humans asking whether customers prefer fries and supersizes. The fast-food restaurant, known for its golden arches, Big Mac burgers and Happy Meals, will replace cashiers with touch-screen terminals and swipe cards at its 7,000 chain restaurants in Europe, according to the Financial Times. That would mean, in part, the end of cash payments." Also picture no more millions of job applicants for something, anything at the Golden Arches. And like that another several million of America's lower class are about to become outsourced to robots.

The US Debt Limit Breach Is Now A Cartoon

You asked for it, and Next Media Animation delivers. 

 

 

 

 

 

 

 

Russell Napier: The Bear Market Bottom Will Be S&P 400 

Submitted by Tyler Durden on 05/17/2011 11:42 -0400

It is no secret that CLSA's Russell Napier has not been a fan of QE2. As he pointed out in his recent prominent note, "whether equities will fall further depends on how flexible and successful the Fed’s next monetary package will be. Given the risk, investors are better off watching from the sidelines." He further explained: "A risk to reflation would send equities sharply lower. The failure of QEII will undermine investor faith in a monetary solution. With equities near bubble valuations, based on cyclically adjusted PE, a failure to reflate risks major downside. The Fed will try again with a new package, but investors would do best by waiting to see how it plays out." Since as of now we still don't know when and if there even will be a package, here is Napier once again, interviewed by the FT's Long View, presenting his updated views on the economy. His outlook, which we agree with entirely, is that first we will see another major deflationary shock, following which the Fed, already boxed in a corner, will have two choices: let major financial institutions fail, or proceed to monetize outright. Regardless of which outcome is picked, Napier's target for the S&P, which just happens to coincide with that of Albert Edwards, is not pleasant for the bulls: 400 (or somewhere in that vicinity). And that will be the true generational buying bottom.

Guest Post: US Government Seizes Pension Funds, Invades Pakistan 

Submitted by Tyler Durden on 05/17/2011 13:01 -0400

There are certain times in life when a man is faced with overwhelming adversity… times when he has no reason to adhere to society’s norms anymore. It is in these instances that the true quality of his character comes shining through. One of these situations is when he’s broke. Dead, flat broke. Some people, even when staring deep into their own financial abyss, still hold to their moral principles, honor their obligations, and keep their word. For others, the boundaries of morality are quickly blurred into shades of gray, and things like fraud, thievery, and deception become perfectly legitimate tactics in their minds. Speaking of broke, faced with what is tantamount to the official insolvency of the United States of America, policymakers have opted to seize funds from the retirement accounts of public sector workers in order to keep the government running. Wow. America’s leaders are willing to engage in cannibalistic thievery in order to continue funding government operations. I wonder what sorts of operations are so important that they are willing to steal from their own people in order to finance? Any ideas? Apparently, starting a shooting war in Pakistan was at the top of their list. 

 

 

 

 

Mohamed El-Erian Blasts The "Feudal" Traditions Of The IMF, Officially Denies He Is In The Running To Become The New DSK 

Submitted by Tyler Durden on 05/17/2011 13:07 -0400

Mohamed El-Erian is back to doing what he has been doing best lately: writing opeds. Today, the man who some speculated could well be the replacement for DSK himself, has written a scathing posting blasting the IMF's sad state, focusing on the specifics of the "head" position as well as the qualifications required to attain it. His coup de grace: "This feudal selection approach must be changed; and now is the time to do it. Without a credible and quickly-recovering IMF, Europe will face even more uncertain prospects, progress on structural reforms in advanced economies will recede, and the world will find it more difficult to make room for rapidly growing emerging economies." As for speculation that MEE (in keeping with acronymis) could be the next DSK: "I will not be part of this process; I already have a great job, here in California." His words of wisdom: "Hopefully, governments of the world can finally come together and open the selection process to a pool of other candidates from around the world. By so doing, they would cast aside a tradition that no longer serves a purpose consistent with the spirit of multilateralism and its required effectiveness."