Wednesday, October 19, 2011

Bart ready to speak his mind on the CFTC mess/Germany,France in disagreement as to how to aid the EFSF

Good evening Ladies and Gentlemen: Gold fell today by $5.80 to $1646.00 as the bankers continue their relentless attack on the precious metals. Silver may be the target of their interest due to the new position limits and elimination of the phony exemptions. The detail in the new legislation is in the fine print and many are going over the details and we will report them as they come in.  Silver

The Doctor Needs A Priest, Stat

Doctor copper that is. Because apparently someone forgot to tell China that "Europe is fine." As a result, over the past 3 days we have seen a relentless selloff in all risk assets and commodities when China is open (the weak GDP print sure didn't help), at time bordering on liquidation, but most notably in copper which is now down 7% on the week, and which in a feedback loop forces domestic speculators to sell anything that is not nailed down, due to copper's use a core Letter of Credit pledge. As a result, any drop in copper leads to leveraged selloffs in all other assets, which leads to even more selling in copper and so on. Perhaps the Beijing editions of the FT or The Guardian can promptly put an end to this lunacy, which can be ignored by vacuum tubes only for so long...

Bank Of America's $8.5 Billion Settlement Deal Falls Apart

While Morgan Stanley only recently became a second derivative for everything European-related (thank you financial short selling ban in Europe, and also thank you Mr. Gorman for updating investors on your firm's $39 billion gross derivative exposure to French banks (not France the country). What's that? You didn't provide one? Oh, our bad, just as it is "anonymous bloggers" bad that your CDS blew out this quarter and generated over $3 billion in "income" for your firm - you are truly welcome), Bank of America has, for quite a while, been a proxy for all that is wrong with America's mortgage industry, courtesy of that most value-destroying purchase of the insolvent criminal entity that was Countrywide Financials. For a while the market was content that the proxy would not be in need of a shallow grave, unlike the US housing market (go ahead, ask where PrimeX closed today), after the bank managed to bribe enough "plaintiffs" and proceed with a quick and painless $8.5 billion settlement on all of its mortgage putback claims. A settlement that, however, had a very weak link: "Article 77", a critical provision enabling the deal in its current form. And as we first reported and explained back on August 26, said weakest link was attacked by David Grais of Walnut Place, who "filed a request to transfer the lawsuit from State Court to Federal Court where everything basically begins a new." Well, today Grais won, and Bank of America lost after US District Judge William Pauley ruled that "Bank of America Corp.’s proposed $8.5 billion settlement with Countrywide Financial Corp. mortgage-bond investors must be considered in federal court instead of the New York state court where it was first filed." Not content with making a factual statement, the Judge proceeded to skewer the bank which, on top of evertyhing, recently decided to stuff its depositors with a bill as large as $53 trillion should things turn sour, added "The settlement agreement at issue here implicates core federal interests in the integrity of nationally chartered banks and the vitality of the national securities markets."  Integrity? From a bank which secretly, though with the Fed's blessing, has tried to put its client interests over those of depositors of over $1 trillion, and over the objections of the FDIC? Don't make us laugh.

Steve Wynn Epic Anti-Obama Rant Part II - Full Audio And Transcript With Complete #OccupyWallStreet Thoughts

One quarter after going on an epic anti-Obama monologue at the end of his Q2 earnings call, Steve Wynn comes back with a sequel, confirming that when it comes to completely justified anti-presidential rants, he is truly second to none. Topics touched upon include massive government deficits, the business climate, the administration's horrendous handling of the economy, and of course, Occupy Wall Street. His damning conclusion: " I am watching my employees standard of living drop off because of deficits. I think that the American public is beginning to make the connection between deficits and their own loss of the standard... I say right now that the Democratic agenda of spend and bribe the public has bankrupt this country, and until it stops, the citizens of this country are in for more hard times. And fancy speeches aren't going to change that. Only a fundamental realization that citizens are going to have to take real, sophisticated responsibility for how we allocate the resources of this country."

Less Than Two Months After Its First Rate Cut, Brazil Once Again Lowers Key Interest Rate 50 Bps To 11.50%

The world may not be re-entering a recession (after all just look at the S&P in the past two weeks - reputable economists will tell you there is no way the market can soar like that if the world was entering a double dip - and everyone would believe them because they have a Ph.D.), and America may be decoupling from everyone all over again just like every other time it was supposed to decouple but didn't, however Brazil is not waiting around to see the result. Less than two months after its first rate cut, the Brazil central bank just cut its main "selic" interest rate by another 50 bps, this time citing a "more restrictive global environment" instead of "substantial economic deterioration." At the end of the day, the result is the same. So will China finally follow suit and join the global loosening game?

European CDS Ban Sends 1 Year Greek Bond Yield To 188%

Well, it is not just the CDS ban, the fact that Greece is now done is also a modest factor, but since nobody can short Greek default risk unhedged, the only option is to short the bonds. As they did today en masse. Greek 1 Year bonds: the most liquid proxy for default in the absence of 1 Year CDS, closed at 183%, after hitting an all time high of 188%, following yesterday's 173% close. To all those who bought 1 Year Greek bonds when yields hit 100% a month ago because "they just couldn't possibly drop any more, and you would double your money in one year guaranteed", condolences for the 50% loss. We are certain that a new batch of bottom callers will emerge, this time calling for doubling your money in six months.... Then three.. Then one and a half... etc... Until finally Zeno's paradox catches up and you either double your money overnight or you lose it all.

Tough Day For Our Calamity Economy
10/19/2011 - 20:25
Ugly numbers speak volumes on how Fed policies hurt the economy. But those policies enable Congress and the White House to run up deficits that make the Eurozone look benign. 

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