Bank Of America Scrambles To Defend Itself From Henry Blodget's Allegations It Is Massively Undercapitalized

Early this morning, Henry Blodget penned a post titled "Here's Why Bank Of America's Stock Is Collapsing Again" in which he used Zero Hedge data among other, to determine that the capital shortfall for the bank is between $100 and $200 billion. It took BAC exactly 6 hours to retort. Below is the full statement.

 

 

2 Year Auction Prices At New Record Low Yield Of 0.222%, Well Inside Of 3 Month LIBOR

Today's auction of $35 billion in 2 Year bonds was supremely forgettable aside from the yield, which once again was at an all time low, well inside of Libor, at 0.222% (to be expected since all bills for the next 3 months are yield negative rates), 1 bp inside of the When Issued of 0.23%. Even the internals were very boring, Directs, Indirects and Dealers all came on top of averages, with takedown ratios of 15.88%, 31.64% and 52.51%, and the Bid To Cover at 3.44, just wide of the LTM average of 3.38. All in all, a completely unremrkable way for Investors to park cash in what is the new equivalent of 4 Week Bills.

 

Watch Live Video From Libya As Rebels Enter Gadaffi's Compound

Since nothing can be taken at face value or believed in Libya any more, here, without any commentary, is a live video stream direct from Tripoli, where rebels are now said to have entered the Gadaffi compound, via RT.

 

 

 

As 4 Week Bill Auction Closed At 0.000%, Bill Rates Now Negative Through November

That today's just completed 4 Week auction was not surprising: it closed at 0.000% - after all where is that money going to go: Bank of America? Gold (don't answer that)? Spam? What is surprising is that when it comes to preserving copious amounts of cash, investors are willing to bid up the entire Bill curve not just overnight, but well over two months. That's right - as seen on the second chart below, the entire curve is now negative through November!

Guest Post: Getting Off The Globalist Chess Board: Safe Haven Relocation

The Founders never intended that we simply sit around and wait for “officials” to save us. We must work both in the public and in the private arenas. We certainly don’t have time to wait for lawmakers to find their sanity or their honor, and so, in many respects we must walk away from the rigged game entirely, and take matters into our own hands. This means first and foremost decoupling from the broken mainstream financial system, and building networks for Alternative Markets as well as for mutual defense in the event of disaster. First steps towards this end include relocating away from areas with a high potential for danger. Of course, in any region, prepping with food storage, survival gear, and a personal garden is essential. Ideally, your neighbors should also be aware, prepared, and already involved in food production and barter. You should strive to build such robust community wherever you are (even if in the city), but country settings definitely offer greater opportunity. Rule #1: Go where the food is! Regardless of the state you live in, get out of the city and into a rural area.

 

7 Charts Showing The Lock Out Of European Capital Markets And The Surge In Counterparty Risk

It is not 2008. It is far worse. Unlike 3 years ago, the central banks were not all in on "bailing out the world" and thus actually had dry powder to do so, as they eventually did: where will the status quo go for a global bail out this time? Below we present 7 Bloomberg charts, following yesterday's indication of a liquidity lock out, showing all too well the surge in counterparty risk, but more importantly the lock out in European capital markets. To all those who thought that transferring ever more peripheral risk to the European core would have no consequences (sorry, it did: German CDS is wider than the UK for the first time ever), and did not hedge appropriately, our condolences.

Pershing Square Loses 6.7% In First Two Weeks Of August, Down 11% For The Year

Since our subscription to the HSBC HF tracker appears to have expired, we now rely on Bloomberg Brief's for hedge fund performance update. And what an ugly update it is, especially for members of the old groupthink guard, led by Pershing Square's Bill Ackman. To wit: "William Ackman’s Pershing Square Capital Management LP dropped by 6.7 percent in the first half of August to drop year-to-date returns to -10.57 percent, according to HSBC Private Bank data." And while we know of the scorched earth currently happening on the 50th floor of 1251 Avenue of the Americas, another big time hedge fund, Owl Creek, is getting pummeled behind the scenes: "Owl Creek Asset Management LP’s $4.8 billion offshore fund was down 9.3 percent in the first 12 days of August, according to HSBC Private Bank data. The fund, managed by Jeffrey Altman, is down 9.16 percent year-to-date through Aug. 12."

Disappointing Richmond Fed And New Home Sales Seal The Recessionary Deal

And so the double dip confirmation resumes, with the Richmond Fed printing at -10, the lowest since June 2009, well below consensus of -5, a collapse from June's -1, and the lowest since June 2009. From the report: "In August, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — declined nine points to -10 from July's reading of -1. Among the index's components, shipments lost sixteen points to -17, and new orders dropped six points to finish at -11, while the jobs index inched down three points to 1." And more: "Other indicators also suggested additional softening. The index for capacity utilization declined eight points to -14 and the backlogs of orders fell seven points to end at -25. Additionally, the delivery times index moved down twelve points to end at -4, while our gauges for inventories were virtually unchanged in August. The finished goods inventory index held steady at 17 in August, while the raw materials inventories index added one point to finish at 19." And the final nail in the economic coffin was New Home Sales which came at 298K, down from 312K upward revised prior, and missing the consensus of 310k: the lowest in 5 months. "Housing data over the past three months indicates that there is little appetite in the consumer sector to take on the risk of purchasing a home at a time when prices are likely to decline further,’’ says Bloomberg economist Joseph Brusuelas. As Bank Of America (RIP) said yesterday, one false word out of Beranke on Friday, and we will see what could possibly be the most epic market crash ever. For those wondering why stocks surged on this horrible news: look no further than the central planners in the Marriner Eccles building who are now expected to do "the right thing" for stocks.

Bob Janjuah: "It's Only Just Begun" - Sees S&P 500 "Fair Value" At 800-900

From Bob Janjuah's latest: "We are in a balance sheet recession which will take at least 2 to 3 more years to clean up. The cost of capital will keep rising. The outcome is weak trend growth – I feel 1% pa on a 2 to 3 year basis in the balance sheet impaired West is the central case. Soft patches will be the norm. Cushions against economic shocks will be thin/non-existent. Aggregate real Earnings and Incomes will stagnate/fall. Defaults (amongst weak balance sheet corporates, consumers, AND sovereigns) will rise and P/Es will fall. In this world, and using the S&P 500 purely as a risk proxy, I see ‘fair value’ for the S&P down in the 800/900 area. I think we will see these levels trade in the next 12/15 months. And we may even „undershoot? to levels last seen at the lows of Q1 09."

Vice Chairman Of Germany's CDU Party Demands Gold As Collateral From European Bailout Recipients

Yesterday we had the Bundesbank making a very strong case for why a pan-European bailout (funded by Germany), would need a "fundamental change of regime occurs involving an extensive surrender of national fiscal sovereignty" (beneficial for Germany), today we see the next and final stage of the proposed annexation of Europe by Germany - that which focuses on procuring that which is really important. Hint: not spam. From Spiegel: "Minister Ursula von der Leyen pushes the hard line: any financial aid for euro countries should only come against collateral - as gold reserves or industrial holdings."  More google-translated conditionality: "The CDU politician wants to ensure future aid allocations from the rescue fund through extensive security of the country. The ARD Berlin Studios said the minister, who is also vice-chairman of the CDU party, many of these countries had large reserves of gold and industrial holdings, which they could use for such collateral." And now we know the next steps: i) Eurobonds will come after there is a change to the European constitution which make Germany supreme ruler, and ii) at that point Germany will have all the gold in Europe pledging its bailout. Yes, gold.... not spam.

Bank Of America CDS Now Offered At All Time Wides: Full Fin CDS Rerack

And while stocks continue to blissfully exist in some parallel universe, the rout in financials has just entered overdrive, of particular note Bank of America, which has just passed it all time wides on the offered side. When the mid-market is north of 400, probably in about 2-3 hours, it may be time to cue the Lento from Chopin Piano Sonata, No. 2 in B-flat minor, Op. 35.

Gold Reaches $1,913.50 – Smart Money Moving Into Silver As UBS Says $50 Silver In 3 Months

UBS have raised their 3 month forecast for silver sharply from $30/oz to $50/oz. They suggest that investors are too nervous to short gold and may be preferring to buy silver instead. Silver remains more than 16% below the record nominal high seen in late April 2011 and in January 1980. While gold at $1,888 is now 120% above its nominal 1980 high of $850/oz. The inflation adjusted high for silver is over $130/oz and those who understand the fundamentals of the silver market are positioning themselves for the possibility of a move to these levels in the coming months. Speculative fever in the silver futures market remains muted with COT data showing net longs well below the records seen in April. Silver is volatile but in the current climate what isn’t? Recently, there has been huge volatility in currency and bond markets and entire equity indices have been as volatile as silver. While silver is volatile, what makes silver valuable is the fact that like gold it has no counterparty liability or risk (with silver coins, bars or allocated storage) and therefore cannot go bankrupt unlike banks and sovereign governments. Media coverage of silver remains minimal with big brother gold getting some of the limelight recently.

Today's Economic Data Docket - New Home Sales, Richmond Fed, $95 Billion In Debt Issued

Two economic data points today - New home sales and the Richmond Fed index. Since LaVorgna just hiked his Richmond Fed estimate, leading the consensus to rise from -7 to -5, we would be particularly concerned about this number missing by a mile. Also, Treasury issues $95 billion in new 4 week, 52 week and 2 year debt, for net new cash of $46 billion.

Plunging German Investor Confidence Sends European Bank Risk To Record

Just like yesterday we have the makings of a perfectly schizophrenic day. While stock futures are rapidly higher to begin with, as on Monday, on news of a slightly better than expected PMI out of China, we are very concerned whether this algo induced ramp can be sustained. The reason is that earlier today we got an absolutely abysmal German ZEW investor confidence number which dropped to -37.6 from -26, a doubling of the previous -15.1, and the lowest since December 2008. This epic collapse can only be compared with the stunner out of the Philly Fed last week. The biggest component of the ZEW, the current situation, imploded from 90.6 to 53.5, trouncing (to the downside) expectations of 85.0. Additionally, the eurozone economic sentiment dropped to -40 from -7.0. So what is the immediate impact? Well, as we said equity futures are completely ignoring that Europe's growth dynamo is now confirmed to be in a double dip recession. However, not debt: as Bloomberg reports, "the cost of insuring European bank debt against default rose to a record as German investor confidence fell to the lowest 2 1/2 yrs+ on concern the region’s debt crisis will curb growth." Specifically, iTraxx Fin soared to record 255 bps, +5 overnight, while SovX (the sovereign CDS index) was 5 bps wider to 302, just off the record 206 form July 18. We give stocks, which are once again soaring on renewed expectations of a QE3, a few hours before they realize that the news is actually i) very bad and ii) as has been said countless times, stocks have to drop far more, before LSAP resumes for the third time.

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