For those wondering why David Tepper will be strangely missing from
CNBC for his annual pre-QE cheerleading appearance, we now have the
answer. As Institutional Investor
reports,
the Appalloosa head man, who was long everything but mostly financials
in the form of BofA and Citi last year, and managed to get out just in
time before the wipe out which left his colleages at Paulson and Co.
dazed following a 34% YTD loss, has decided to invest in a strange
asset: cash. "
Sources say he
has gone 30 percent to 40 percent in cash, which is very high for him.
Some of his cash is invested in U.S. Treasuries, which have in turn
risen in value in recent weeks." II clarifies: "Keep
in mind that Tepper had about 30 percent in cash entering 2009,
shortly before he started buying up banks such as Bank of America
before anyone else had the guts to do the same and racked up
triple-digit gains by the end of the year." And in a very odd
development for the man known to take aggressive risks ahead of everyone
else, we learn that "he
will remain cautious until there is improvement in the European bank
crisis. Of course, if the markets tank, you can be sure he’ll be
aggressively scouring for bargains." Alas, the markets refuse to tank
on generic expectations that the second market start to tank, dip
buying materializes on vapor volume and expectations that the Fed will
once again kick the middle class in the gonads only to make stock
chasers whole. Yet if even Tepper is staying on the sidelines, just
what informational advantage does the HFT momentum pursuing crowd have?
Good
evening Ladies and Gentlemen:
Gold was whacked in the wee hours of the morning and continued during
the comex trading session.
Gold finished the comex session at $1814.20 down a huge $55.70 from
yesterday. The price of silver did not follow the lead of its older and
wiser cousin gold as it slipped by only 23 cents to $41.57. I guess
the world was excited that Obama was wishing to
While it is all too clear that a year from today, right about the
time QE4 is gearing up for deployment, QE3 will have had absolutely no
impact on the economy (in the upside case; the downside case would
imply millions in job losses primarily in the financial sector courtesy
of record low 2s10s and even lower Net Interest Margins, aka Carry
Trades), just as QE2 ended up doing nothing not only for the US economy
but for the stock market as
well, what is somewhat disturbing is that the only primary purpose of
Operation Twist, namely the lowering of 10 Year bond yields in order to
make consumers "weathier" through cheaper refis, has already failed.
Presenting Evidence A: 10 Year Treasury Yields (inverted axis where
lower yields are plotted higher) and the MBA Refi Index,
which today dropped by 6.3%, the third week in a row,
sending the Refi index to 3169.4 from 3915.5 in the beginning of
August. As the chart makes all too obvious, the correlation between the
two series has been as close to 1 as possible... at least until talk of
QE3 via Operation Twist not only picked up but was made virtual fact
through Wall Street's wholehearted acceptance of more monetary easing.
What has happened recently is a substantial break between dropping
yields and increasing refinancings. It thus begs the question: if an
ever flatter 2s10s curve, the explicit objective of Op Twist which has
gotten priced in in the past several weeks, has no impact on the housing
market currently languishing in a historic depression, then just why is
the Fed focusing on lowering long bond yields even more?
Wimpy was a glutton, and would consume burgers at a ferocious rate
but could rarely pay for his habit. The phrase implies the underlying
feeling that the person will unlikely actually pay for the hamburger (or
whatever) on Tuesday (or ever, for that matter). Does that describe
the United States of America in general and specifically our Keynesian
President Barack Obama? Obama’s speech tomorrow night is no longer a
secret. For whatever reason, the White House purposely leaks the major
themes of the speech. Based on the Bloomberg article below I’d say my
article from two weeks ago anticipating Obama’s plan is about 99% on
the mark. How stupid and gullible can the American people be? One month
ago Obama signed a supposed $2.1 Trillion deficit cutting bill over ten
years with 60% of the identified cuts between 2018 and 2021 (TUESDAY).
A full 1% of the total cuts ($21 billion) were slated for 2012. The
left wing libtards screamed like a stuck pig about these horrific cuts
that would destroy the American economy and starve orphans and old
people. Paul Krugman’s head started to spin and green vomit was
projected all over the NYT press office. Well our cost cutting,
spending focused, deficit hawk president (WIMPY) held the line on
spending for exactly 30 days. He is asking for $300 billion of burgers
for 2012 and he promises to pay for them at some time in the future
(after his hoped for 2nd term is up in 2016). The balls on this guy are
immense. Not only that, but its the same bullshit he’s been peddling
for two and a half years.
JP Morgan, whose Banker In Chief has not spared harsh words in the
past to describe the POTUS, has released its just as uncompromising
assessment of tomorrow's Obama speech which if predictions are correct,
will be such a load of hot air, that the mere non-news factor alone
should send the market into a volumetric coma on Friday, hence pushing
ES limit up easy by close of Friday. Michael Feroli's take: "Cynically,
one could say this is merely pushing back the fiscal drag past the time
of the next election. More constructively, one could argue that this
is pushing back the fiscal drag to a point in time when household
sector balance sheet repair has hopefully progressed enough that the
private sector can generate self-sustaining growth momentum. Either
way, the Republicans in the House are unlikely to be easily impressed
by the President's arguments. None of the major programs proposed has
received much support from Republicans, and if any were eventually
passed it would probably only be after bruising negotiations later in
the year.
All in all, we anticipate that little will come out of tomorrow's speech to make us re-think the near-term outlook." The outlook, in question and
presented previously, being one that jives with the S&P at 900, and certainly not at 1200.
While
volumes have been very low the last couple of days, as one would
expect given the seasonals, market schizophrenia has been very
surprising. Financials went from worst to first and managed to pull out a
rather edifying 1.2% rally in the last 20 minutes of today - now up
almost 3% since Friday's close. High Yield Bond ETFs also diverged
notably from the equity markets.
Access to Fed backup support “leads you to subject yourself to
greater risks,” Herring says. “If it’s not there, you’re not going to
take the risks that would put you in trouble and require you to have
access to that kind of funding.” All of this might conceivably make
citizens revolt against an entity that uses their money to secretly
fund the “Wall Street aristocracy.” It might make them vote for a Gary
Johnson or a Ron Paul, someone who favors dismantling the Fed. Or not.
When a story as big as this one generates a bare minimum of media
coverage, you know it’s probably headed for that huge waste bin in the
corner of the parking lot. The one marked
Bailout Fatigue.
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