Friday, October 28, 2011

"Adolf Merkel": Presenting The Greek Gratitude For The 50% Debt Haircut

One would think that considering that their debt, or rather about 60% of it, was haircut over the past 2 days, the Greeks would be grateful to Germany who not only orchestrated this transaction over the vocal protests of her French vertically challenged counterpart, but effectively has pledged a substantial portion of German GDP to preserve not only the Greek welfare state but soon that of all the other European countries. One would be wrong.

It's Not Over: EUR Shorts Barely Budge, Leading To Concerns For Another Levered Squeeze

Last week we warned of the possibility for a massive short squeeze melt up purely due to the fact that the most leveragable driver of the stock market, the EURUSD, had barely seen a change in net short positions despite recurring noises that Europe would somehow pull a magic money tree out of the hat and all should be well. Well, they pulled it, and the EURUSD soared over 300 pips. There is one problem, however: as the latest CFTC Commitment of Traders update indicates, there was barely any change in net non-spec EUR bearish bets which remained stubbornly fixed near the 2011 highs, at -76,512 contracts, just off the prior week's -77,720. Granted the USD net long dropped yet again, from 41,751 to 32,110 contracts. But the one all important driver for yet another potential squeeze has hardly budged. The one saving grace: this data is as of October 25, just before the massive rip started. As such it is possible that a substantial portion of these shorts has covered. Alas, we won't know until next Friday. By then, weak hand bears, spooked by merely the possibility of another ramp, will likely continue to cover into any even modest dip. It won't be until this total short position moves materially higher that the chance of any material downtick in the market will reappear.

White House Orders Review Of Energy Department Loans To Avoid Solyndra Subpoena And Exercising "Executive Privilege"

The Solyndra-gate scandal, which the GOP realizes has the potential to shake the Obama administration to the very top, refuses to go away. Earlier today AP reported that to a republican Subpoena demanding all documents instead of just those selectively produced, "could trigger a claim of executive privilege by the Obama administration and elevate the political stakes. The loan is being investigated by two House committees, which have released Solyndra-related documents from federal agencies including the Energy and Treasury departments and the Office of Management and Budget." The White House has refused a request by the House Energy and Commerce Committee for all internal White House communications about Solyndra. White House Counsel Kathryn Ruemmler said the committee leaders' request has implications for "long-standing and significant institutional executive branch confidentiality interests." Naturally: it would be a big hit to the presidency's interests if it was uncovered that crony capitalist vigilante #1 himself is more than willing to distributed taxpayer capital to the highest bidder. So instead the The White House is ordering a review of loan guarantees made by the Energy Department after a California solar company that got a half-billion-dollar federal loan went bankrupt. There are more than two dozen of these to a variety of clean energy companies." And here is where the latest joke from this president jumps the shark: "[White House chief of staff] Daley said he's tapping a former Treasury official to conduct the review." A former Treasury official... of the Obama administration?

Gold And US Dollar As Safe Havens

Eric De Groot at Eric De Groot - 34 minutes ago

Capital will increasing seek safe havens of gold and the best looking horse in the glue factory – the US dollar as debt crisis worsen in Europe despite political assurance. That’s why the breach of the down 45 line in 2009 in the US dollar index has raised some eyebrows of concern. U.S. Dollar Index [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

Guest Post: Performance Anxiety

Performance anxiety can, whether you're honest about it or not, cloud your decisions in this market. Do you cave to the relative performance derby in order to retain investors? Its a real issue if you've been on the wrong side of this market or any side for that matter. The volatility has made investors punch drunk. I'm talking about customers that say flat out: "If you don't get more invested, I'm pulling my account". How quickly they forget that 2 weeks ago they were of the opposite mindset. Let me share my story - as I'm sure there are a million like it. I've been receiving daily calls from an investor for the last 3 months (yes, I should have already fired him). We've been in 70% cash, which two months ago - in his words - enabled him to sleep at night. Now he can't sleep and is constantly hyperventilating at all the money he is "losing" by being under-invested. Cramer put him over the edge last night.

In The News Today

Jim Sinclair’s Commentary

This announcement seems to have had an impact as appliances speak so much to US basic economic conditions.

Whirlpool to cut 5,000 jobs to reduce costs By MAE ANDERSON
NEW YORK (AP) — Appliance maker Whirlpool Corp. plans to cut 5,000 jobs, about 10 percent of its workforce in North America and Europe, as it faces soft demand and higher costs for materials.
The world’s biggest appliance maker also on Friday cut its 2011 earnings outlook drastically and reported third-quarter results that missed expectations, hurt by higher costs and a slowdown in emerging markets. Shares fell 12 percent in premarket trading.
The company, whose brands include Maytag and KitchenAid, has been squeezed by soft demand since the recession and rising costs for materials such as steel and copper. Due to its size, Whirlpool’s performance provides a window on the economy because it indicates whether consumers are comfortable spending on big-ticket items.
Whirlpool has raised prices to combat higher costs, but demand for items like refrigerators and washing machines remains tight. Whirlpool is also facing discount pressure from competitors.
To offset slowing North American sales, Whirlpool has turned to emerging markets. But the company said Friday that sales have slowed there, too.
Steep costs and the dour global economy are affecting the entire appliance industry. Swedish appliance maker Electrolux said Wednesday that its third-quarter net income fell 39 percent and cut its forecast for demand in North American and Europe for the year

Jim Sinclair’s Commentary

There is no tool in anyone’s toolbox to stop a financial run, no matter how camouflaged, except the utilization of QE to infinity.
Gold will be in the $2000s shortly.

Inside Deutsche Bank Debate on U.S. Sliding Into Japan Malaise 2011-10-27 16:07:08.82 GMT
By Vivien Lou Chen

Deutsche Bank AG (DBK)’s Ajay Kapur says the U.S. is sliding into an economic malaise similar to Japan’s so-called lost-decade of the 1990s. The Hong Kong-based strategist draws the parallel using similarities in demographics and financial-market performance.
Binky Chadha, head of the bank’s U.S. equity strategy team in New York, and Michael Biggs, one of its London-based economists, disagree, citing variations in the nations’ growth rates and credit demands.
The researchers aired their differences in a 28-page report Deutsche Bank released Oct. 17 and distributed to clients. The debate underscores the uncertainties facing the world’s largest economy. Fifty-six percent of respondents in a quarterly Bloomberg Global Poll of 1,031 investors, analysts and traders said a Japan-like scenario is “very” or “fairly” likely.
The Deutsche Bank report “mirrors a similar discussion among policy makers at the Federal Reserve,” said Tim Duy, a former U.S. Treasury economist in international affairs who now teaches at the University of Oregon in Eugene. “How much of the current malaise will be relieved by traditional, cyclical forces versus the possibility of a much more protracted period of sub- optimal growth such as that experienced by Japan?”
Robert Feldman, head of Japan economic research at Morgan Stanley (MS) MUFG Securities Co. in Tokyo, said he thinks the U.S. is “a little bit less likely” to fall into Japan-like deflation “than pessimists think.” Fed officials “studied Japanese experiences very closely,” and “the right lesson they drew is you have to move quickly and very, very big.”

Jim Sinclair’s Commentary

With allies like this who needs enemies?

US fury as Karzai backs Pakistan Last Updated: Thursday, October 27, 2011, 10:13
The Obama administration should rethink its commitment to the fight in Afghanistan, according to American politicians furious with Afghan president Hamid Karzai for saying his country would back Pakistan in a war with the United States.
Anger over Mr Karzai’s remarks is likely to surface today when US secretary of state Hillary Clinton testifies before the house foreign affairs committee, her first congressional appearance since her trip last week to Afghanistan and Pakistan.
In an interview last weekend, Mr Karzai told a Pakistani TV station: “If fighting starts between Pakistan and the US, we are beside Pakistan. If Pakistan is attacked and the people of Pakistan need Afghanistan’s help, Afghanistan will be there with you.”
He said his government would not allow any nation, including the United States, to dictate its policies.
Those comments drew a sharp rebuke from members of US Congress, including some who have been strong supporters of the decade-plus war in Afghanistan.
Norm Dicks of Washington state, a senior Democrat, said: “Without the assistance of the United States, $468 billion from the United States Treasury and the supreme sacrifice of 1,820 American soldiers who have died during Operation Enduring Freedom, Afghanistan would still be ruled by a gang of Taliban thugs with few individual liberties and no popularly elected leaders.”

James Turk reviews Jim Rickards' 'Currency Wars'



Kevin Michael Grace: Auguries -- What's behind door No. 3?


Trapped in Amerika
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