New Jersey Borrowing a Sign of Coming Muni Crisis: Whitney

New Jersey's move to take out a short-term $2.25 billion loan to pay its bill is symbolic of how difficult state and municipal financing will be in the year ahead, analyst Meredith Whitney told CNBC Tuesday.

Horrible 5 Year Auction Sends Treasury Complex Into A Tailspin 

It has been a long time since we had seen a 5 Year auction as ugly as today's: printing at a 1.615% high yield, the 5 Year had a 3.5 bps tail off the bat to the 1.58% WI where it was trading before. The internals were just as ugly, with the Bid To Cover coming at 2.59 a plunge from May's 3.20, and the lowest since June 2010. Not surprisingly, Indirect interest evaporated once again, tumbling from 47.1% to just 37.6%, with Primary Dealers having to take up more than half, or 52.1%, once again, the remainder going to Direct Bidders. Too bad they will have no more opportunities to flip these back to the Fed. Which as expected starts to confirm Bill Gross' thesis that in the absence of the Fed monetizing, rates are about to go higher. One look at the second chart shows the relentless selling in bonds since Sunday. And as reported previously, with a barrage of issuance due in the months following the debt ceiling hike, which will probably be some time in July or August, look for the sell UST thesis to start getting its long overdue confirmation.

Muddy Waters Announces It Has Started A Short Position In Spreadtrum (NASDAQ: SPRD) 

There was a time when markets looked to pre-discredited titans such as John Paulson new position announcements and surged appropriately on any kind of news. Now, it is small, actually due diligencing outfits, such as Muddy Waters, which move stocks by up to 50% on mere position initiations. To wit, MW has just reported that is has started a short position in Spreadtrum Communications, (SPRD). "Muddy Waters, LLC has begun researching Spreadtrum, Communications Inc. (NASDAQ: SPRD), and we have taken a short position in it. (Please see our disclaimer below.) We have identified a number of issues in SPRD's filings, and we believe that there is a high risk of material misstatement in the reported financials. Our concerns are gravest regarding 2010 and 2011 numbers. The below link is to an open letter we have written to SPRD chairman Li regarding our concerns." Next up: stock implosion.

LCH Hikes Margins On Portuguese And Irish Bonds To 80%, Above Market Prices On Numerous Issues 

Submitted by Tyler Durden on 06/28/2011 11:15 -0400

Once this number passes 100%, one will need to deposit more cash than bond par notional to short the cash product. With CDS trader stigmatizing no longer working, the criminal cartel continues to target cash players. It is interesting that some market prices on bonds are below the actual cash requirement threshold (80%). In essence LCH just set a fake recovery rate on PIIGS cash bonds at 80 cents on the dollar. 

 

 

 

 

 

Italian Bank Trading Dominates Sigma X For Second Day In A Row Following Rumors Of Tremonti Resignation 

Submitted by Tyler Durden on 06/28/2011 12:36 -0400

Following up on our inaugural post tracking Sigma X transaction, where as we first reported Italian banks had captured the imagination of the big money, accounting for the three most active positions in Goldman's Dark Pool, today's update should not come as a surprise. For the second day in a row, the most actives continue to be UniCredit and Banca Monte dei Paschi di Siena (Intesa has fallen from 3rd to 12). This builds on earlier rumors of a major shake up (see below) in the Italian government, where Finance Minister Tremonti has allegedly threatened to resign again, and this time Berlusconi may be prepared to accept the resignation. Should this happen, look for Italy CDS and Bund spreads to react appropriately. The Sigma X signal is merely the continuing writing on the wall.

Guest Post: Greece Is A Kleptocracy 

Despite a veritable flood of financial and political analysis about Greece, nobody seems to have noticed the obvious: Greece is a kleptocracy. Here's the real dynamic in Greece: The Kleptocracy--broadly, the political and financial Elites of the nation--saw a stupendous opportunity to embezzle hundreds of billions of euros from greed-blinded European banks at super-low rates of interest. Being kleptocrats, they sniffed out the basics of the bezzle right away, and have been playing it ever since: we're not paying any of these loans back, so go get the money from the European Central Bank (ECB) and the German taxpayers, or declare bankruptcy. Your choice. The Greek kleptocrats knew all along that the German, Dutch, French and Finnish taxpayers were easy marks, just as they knew the European Union Power Elites would fall all over themselves to "save the euro" which was the centerpiece of their "one Europe" strategy of domination. Only the Greek kleptocrats just beat them at their own game. The entire game plan of the "one Europe" Elites depends on nation-states actually complying with non-enforceable codes of conduct and on European banks making prudent loans. Neither condition held: Greece's Elites reckoned they could game the system and string along the Eurocrats, if not forever, then certainly long enough to engorge their Swiss accounts with euros skimmed from the banks, and they've played that hand to perfection. Their performance is truly a thing of beauty, a masterful display of the Big Con. 

 

 

 

 

 

Breakdown Of Greek Austerity Measures 

Submitted by Tyler Durden on 06/28/2011 11:00 -0400

For those asking, here is a full breakdown of the actual proposed fiscal measures to be implemented if the mid-term austerity vote passes tomorrow, courtesy of the BBC. 

 

 

 

 

 

'Defensive' is not always defensive

Posted by: Smart Money Europe

Post date: 06/28/2011 - 08:19

In the current market environment, many investors are positioned in what they perceive to be ‘defensive’ market segments, such as healthcare, telecoms, staples and utilities. To us, this is the wrong choice!

 

 

 

 

Pensions Move to Direct Hedge Fund Investments?

Posted by: Leo Kolivakis

Post date: 06/28/2011 - 08:30

Specialist hedge fund consultants are at “the leading edge of the phenomenon of many pension plans, especially public plans, moving to direct hedge fund investment,” said David Harmston, partner and global head of Albourne Partners' client group. Is he right?

 

 

 

 

Ben Davies: Revolting PIIGS

 

 

Why Gold is Better than Government Bonds

Author: goldnews | Filed under: Precious Metals News Investors worldwide have awoken to the value of gold since the recent global financial crisis got underway, but still many do not understand why the fundamentals for gold are so strong. Read the rest of this entry »

Ron Paul on the Gold Standard and Liberating Gold & Silver (video)

Author: goldnews | Filed under: Central Bank News, Precious Metals News TheStreet questions Congressman and Presidential hopeful Ron Paul about the feasibility of the US returning to a gold standard and his views on the future of the US economy. Read the rest of this entry »