Bill Gross Smells End Game Approaching

Eric De Groot - 59 minutes ago

The US has been engaging in stealth default for years. For example, gold was removed from circulation and made illegal for citizens to own in 1934. Silver was removed from circulation in 1964. Also, the in...

 

 

 

 

Morgan Stanley Goes Short Treasurys.... Again 

Submitted by Tyler Durden on 06/17/2011 13:09 -0400

It has not been Jim Caron's decade. The Morgan Stanley rates strategist, riding on the coattails of the always wrong Morgan Stanley economics team led by David Greenlaw, has been wrong in his annual rates call year after year after year. Which is unfortunate because while unable to see the forest for the trees, Caron does have a better grasp of rates than most other Wall Street penguins. That said, just like everyone else in the status quo, Caron has just come out with another short duration call (i.e. sell bonds), probably the 6th time in a row he has done that in the past 3 years. Perhaps 7th time will be the charm. Amusingly, Caron, terrified to be seen in the same camp as Bill Gross who is short bonds on fears that there will be nobody available to step in an buy the 80% of gross issuance that has been monetized by the Fed to date, make this very loud caveat on his short bond call: "To be sure, our shift toward short from neutral duration has nothing to do with the end of QE2 and related concerns that there will be a lack of demand to buy US Treasuries once the Fed stops buying them. As we have stated many times in the past, the outlook for the economy will be the main driver of yields, not the end of QE2." No, instead Caron believes that the sell off in bonds will be due to the same bullish economic growth call that he has been predicting over... and over... and over... and over... etc. More interesting is how he suggests the trade is implemented: in MS' view the best way to be bearish on rates is with a DV01 neutral 7s-10s flattener: "we continue to recommend being short 5s on the 2s5s10s fly. In line with the butterfly, and in order to express a more robust short duration position, we recommend a curve flattener on the UST 7s10s curve: · Sell $133.7mm OTR 7y Notes; · Buy $100mm OTR 10y Notes." Perhaps those who want to be short bonds, but for the right reason, that predicted by Zero Hedge and then Bill Gross, this may be one of the better ways to put the trade on. 

 

 

 

 

Listen to this NOW...and pay close attention to what he has to say...

 

Jim Sinclair’s King World News audio interview is now available!

Click here to listen to the interview…

Global Tactical Asset Allocation Q3 Update: Equities 

Submitted by Tyler Durden on 06/17/2011 11:26 -0400

The latest quarterly slidedeck from Damien Cleusix' Global Tactical Asset Analysis is out and as always it is replete with insightful and exciting observations, outlooks and charts. His thesis summary: "Markets seems to be in the typically slow and frustrating cyclical top formation process. Our cyclical models are giving sell signals one after the other while leverage is reaching levels typical of cyclical market turns. It would be imprudent to bury the Bull too soon but It seems to be in bad hape. A contra-trend rally is to beexpected so on and the behavior of the markets (participants, internals) during this rebound should be carefully analyzed to decide if we can send the Bulls obituary (a waterfall decline without intermitting rebound would settle the case)." 

 

 

 

 

Greek Math: €12 Billion In, €18.2 Billion Out... And That's IF The Impossible Happens 

Submitted by Tyler Durden on 06/17/2011 10:46 -0400

Here is a simple summary of the Greek bailout math explained with just 2 numbers. First, the country has to do the impossible. As Citi's Jurgen Michels summarizes: "Once the whole new cabinet is announced, parliamentary discussions ahead of the vote of confidence will probably  start on Sunday, with the vote actually taking place next week on Tuesday evening. Even if the new government manages to pass the vote of confidence, it will still have to submit to Parliament the new austerity package for approval, probably sometime later next week or the week thereafter. This will be key for the smooth disbursement of the next tranche of EU/IMF loans, of €12bn." In other words, the Greek government has to pass 2 near-Sysiphean tasks before it can even hope to sniff the IMF's €12 billion in rescue funding. That's number 1. Number 2 comes from the chart below, which shows the debt and interest payments through August. This number is €18.2 billion. This number does not include the billions in deficit spending that will also have to be funded somehow over and above debt paydown. Ergo, the math for a viable Greece is as follows: €12BN > €18.2BN  + X. Simply said, unless somehow Greece discovers how to tax its citizens and actually record net revenue in July, the best the ECB can hope for before it has to mark its tens of billions in Greek bonds to about 45 cents on the dollar, is one month. So will someone please explain to us why again the EUR is up today? Actually the only possible reason is that Europe is now pricing in the fact that China will be the de facto owner of at least 2 European countries by this time next year, however not in an Asset Purchase Transaction but Stock, whereby China also acquires the liabilities. Which in turn may explain why Russia's just announced minutes ago that China may turn into "zone of risk" for the global economy.

George Papandreou Releases Statement Following Recent Government Reshuffle And FinMin Scapegoating 

Submitted by Tyler Durden on 06/17/2011 12:16 -0400

This stuff is funny. Especially when google translated... 

 

 

 

 

Guest Post: Corporate America Really Really Cares About Its Employees (Really) - A Distributed Rant 

Submitted by Tyler Durden on 06/17/2011 12:01 -0400

Scrape away the Human Resource Department rah-rah about "our mission" and how much your loyalty is "valued," and what's left? A paycheck and a sucking sound. Let's state the heretical obvious: Corporate America, you suck. We could count the ways--subverting democracy via your lobbying and campaign contributions, your sabotage of competition via regulatory capture, and so on--but what really matters is how you treat your employees. We know: you really really care about your employees. Really. The propaganda would be laughable if it wasn't so bald-faced. Do corporate managers really believe in the Big Lie theory, that the bigger the lie, the easier it is to sell? 

 

 

 

 

 

UMichigan Misses, 5 Year Inflation Expectations Rise To Second Highest In 2011 

Submitted by Tyler Durden on 06/17/2011 10:11 -0400

Bizarro time is here, now that we have another market surge based on another economic indicator miss, in this case the uber-irrelevant UMichigan confidence, which came at 71.8 on expectations of 74, and a drop from May's 74.3. Granted the only reason stocks are rising is not on any fundamentals, but purely due to the clobbering the USD just took, which sent the EUR surging, and pushed the Dow into triple digit territory. To whoever continues to trade this centrally planned farce, our condolences. The only relevant data in the index was that the 5 year inflation expectations jumped from 2.9% to 3.0%, the second highest in 2011, and only below March's 3.2%. Time for the Fed to panic once again, now that Operation Twist 2 is just matter of months if not weeks. 

 

 

 

 

 

Forget "Blood Diamonds", Here Comes "Conflict Gold" 

Submitted by Tyler Durden on 06/17/2011 09:52 -0400

In what could be the oddest development in the precious metals market in a long time, the World Gold Council has just unveiled an initiative whose sole purpose if to combat "conflict gold." From the just released notice: "The World Gold Council today announces that, working together with its member companies and the leading gold refiners, it has produced a draft framework of standards designed to combat gold that enables, fuels or finances armed conflict. The draft standards represent a significant, industry-led response to this challenge and are designed to enable miners to produce a stream of newly-mined gold which is certified as ‘conflict free’ on a global basis." While we are confused what exactly is being pursued with this action, aside from the creation of a black market for gold of course, it does seem that the logical end result will be a decline in the total supply of "certified" gold. On the other hand, it will also afford the WGC or any prevailing authority the ability to brand any country it so chooses (Indonesia?) a sourcer of "conflict gold" and effectively clamp down on the production of the yellow metal. Additionally, what better way to deprive a gold sourcing country of massive export revenues than to effectively make their product unsellable in the "legitimate" market. Which then would lead to a surge in fair market value due to supply considerations. Which begs the question: is this the preparation for the "golden" endgame?