Facebook Down Most In Week, Under $30 On Heavy Volume
A $29 handle and elevated volume. Chart still shows distinct support level at zero. Time to flip coins.Egan Jones Jars Market Out Of Rumor Hypnosis
UPDATE: EURUSD at 1.2478 as we post.
While European, US, and commodity markets (ex-Spain) were enjoying
the hope/hype of ECB rumors and QE chatter, Egan Jones just burst the
bubble. back to reality. Within minutes of their downgrade of Spain,
EURUSD was plunging faster than Facebook and along with that cornerstone
of correlated risk markets, gold, silver, oil, copper, and US equities
had smashed lower.
Egan Jones Cuts Spain Again: From BB- To B, Outlook Negative
The little rating agency (or is that former, now that it is public knowledge that Egan-Jones missed a comma in their NRSRO application?) that just refuses to go away, has done it again, and downgraded Spain from BB- to B (negative outlook of course), and on the edge of the dreaded triple hooks, mere days after it cut it from BB+ to BB-.Overnight Sentiment: Everyone At The Bailout Trough
Futures are well bid overnight even though following a modest short covering squeeze of the new record number of EUR shorts, the primary driver of risk, the EURUSD is now back to mere pips above its 2010 lows. It is somewhat confusing why equities are so jubilant about what can only be more imminent bailouts, following statements by the ECB's Nowotny who made it clear that the ECB is not discussing the renewal of bond purchases and that the central bank provides "liquidity not solvency." Adding to the confusion was a release in Chinese daily Xinhua which said that China has no intention of introducing large scale stimulus. All this simply means that the only possible source of liquidity remains the Fed, whose June FOMC decision could make or break the global stock markets, pardon economy, and why this Friday's NFP print is so critical. Absent a huge miss, it will be difficult to see the Chairman pushing through with another $750 bn-$1 trillion in LSAP. Which Europe desperately needs: first we got Italy pricing €8.5 billion in 6 month bills at much worse conditions than April 26, with the yield rising over 2%, or 2.104% to be precise, compared to 1.772% previously, and a BTC of 1.61, declining from 1.71. More importantly, the Spanish economic deterioration gets even worse after Spain just recorded a record (pardon the pun) plunge in retail sales. From AP: 'A record drop in retail sales added to Spain's woes Tuesday as the country struggles to contain the crisis crippling its banking industry and investors remained wary of the country's ability to manage its debt. Retail sales dropped 9.8 percent in April in year-on-year on a seasonally-adjusted basis as the country battles against its second recession in three years and a 24.4 percent jobless rate that is expected to rise. The fall in sales was the 22nd straight monthly decline, and was more than double the 3.8 percent fall posted in March, the National Statistics Institute said Tuesday." So all those focusing on the Greek economic freefall may want to shift their attention west.“Absolutely Every One” – 15 Out of 15 – Bluefin Tuna Tested In California Waters Contaminated with Fukushima Radiation
05/29/2012 - 11:00
Spain to go to market to fund banks, regions
Eric De Groot at Eric De Groot - 14 minutes ago
Spanish bond yields are rising again, and its third largest bank was
nationalized over the weekend as their domestic economy contracts at an
alarming rate. The sovereign debt contagion is clearly not limited Greece.
The need to act decisively will grow as the infection continues to spread
throughout Europe. Headline: Spain to go to market to fund banks, regions
MADRID (Reuters) -...
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High End And Economic Sensitive Stocks Are Breaking Down
Admin at Marc Faber Blog - 19 minutes ago
There are more and more stocks that are breaking down – economic sensitive
stocks and companies that cater to the high-end. That suggests to me the
economy is likely to weaken and the huge asset run is likely to come to an
end with significant asset deflation. -* in CNBC*
*Related: Tiffany (TIF) *
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
Hard Work Pays Dividends
Admin at Jim Rogers Blog - 38 minutes ago
Hard work pays dividends. - *in a Gulf News interview*
*Jim Rogers is an author, financial commentator and successful
international investor. He has been frequently featured in Time, The New
York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The
Financial Times and is a regular guest on Bloomberg and CNBC.*
Every Trader Must Come To Terms With Losing
Admin at Jim Rogers Blog - 2 hours ago
As you may have noticed, futures trading is a humbling vocation. Every
trader must come to terms with losing, because all traders lose. In fact,
most traders lose most of the time. It`s the bottom line that counts -
winning more than you lose. - *in Hot Commodities*
*Jim Rogers is an author, financial commentator and successful
international investor. He has been frequently featured in Time, The New
York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The
Financial Times and is a regular guest on Bloomberg and CNBC.*
Greece Pours $22.6 Billion Into Four Biggest Banks
Eric De Groot at Eric De Groot - 3 hours ago
More money pours in and deposits and capital flee Greece. Officials have
warned that the state could run out of cash to pay pensions and salaries by
end-June. As Jim suggests, this could be key to timing. Headline: Greece
Pours $22.6 Billion Into Four Biggest Banks Greece handed 18 billion euros
($22.6 billion) to its four biggest banks on Monday, an official said,
allowing the...
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China's ICBC has big dreams for bullion business
Eric De Groot at Eric De Groot - 3 hours ago
Negative lease spreads represent the paper that leans on price. As price
declines, the paper is removed and lease spread expand towards zero (see
table). Reuters reports that the Chinese through the the world's largest
bank by value are pushing to gain entry into this lucrative game of
control. Gold and Silver Lease Spread Composite Table: Headline: China's
ICBC has big dreams for bullion...
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content, and more! ]]
Mailbox
Eric De Groot at Eric De Groot - 3 hours ago
Breakout remains in tact as the support zone is quite wide (see chart).
Chart: S&P Gold (Formerly Precious Metals Mining)* S&P Gold from 1945,
Barron's Gold Stock Index from 1939-1945, 1922-1939 Homestake Mining has
the price fallen back below the longterm breakout? the latest chart ive
seen is april 2012 and the indices fell 20% more since then....
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100 Percent Odds Of A Global Recession
Admin at Marc Faber Blog - 4 hours ago
I think we could have a global recession either in Q4 or early 2013. 100 percent (odds). - *in CNBC * *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.*
Frontrunning: May 29
- JPMorgan dips into cookie jar to offset "London Whale" losses: firm has sold $25 billion to offset CIO losses (Reuters)
- Storied Law Firm Dewey Files Chapter 11 (WSJ)
- The European "Wire Run" - Southern Europeans wire cash to safer north (Reuters)
- Bankia Tapping Depositors for Bonds Leaves Spain on Bailout Hook (Bloomberg)
- Glitches halt new Goldman trade platform (FT) such as reporting prices and seeing trading spreads collapse?
- Japan, China To Launch Yen-Yuan Direct Trading June 1 (WSJ)
- Another fault line? Italy Quake Kills Nine in North of Country (Bloomberg) shortly following another Italian quake
- RIM Writedown Risked With $1 Billion Inventory (Bloomberg)
- China’s Wage Costs Threaten Foreign Investment, EU Chamber Says (Bloomberg)
- Dollar Scarce as Top-Quality Assets Shrink 42% (Bloomberg)
Bad News Recoupling
Perhaps
we can finally dismiss the decoupling myths and hopes and dreams as
nothing but the natural economic lags we were so clear about during the
first quarter elation this year. As is clear from Citigroup's Economic
Surprise Indices, Europe and the US are once again in sync from a macro-economic cycle perspective (both in terms of missed expectations and deteriorating data). What is more worrisome is the very
close similarities between the last year or so evolution of the macro
picture in the US and Europe with what occurred in 2008 (as is
clear from the red and green ovals). We heard again and again then (as
now) that markets would decouple but as the markets began to roll-over
they reinforced one another in the downward spiral and we know how that ended.Has The SNB Restarted The Printing Press?
The game for the Swiss National Bank seems to have changed completely. Again the central bank had increase money supply, as measured by deposits at the SNB by local banks and by the Swiss confederation, this time even by 13219 mil. francs (source). This money printing implies that the SNB had to buy in Euros in similar quantities in order maintain the floor. We have speculated that the SNB will double or triple the Forex reserves before it gives in and the floor will break. At the current speed of 13 bln per week, this will result in 676 bln. CHF per year, i.e. they will have tripled money supply and currency reserves in one year. This sum exceeds slightly the Swiss GDP, implying that a break of the floor from 1.20 to 1.10 (about 10%) on the basis of 50% Euros in the SNB reserves would result in a loss of around 5% of GDP at the central bank. Moreover, in the week ending in May 25th, nothing really extraordinary happened, what would happen in case of a Greek euro exit?Is Germany's CDS Pricing A 6% EUR Devaluation?
Whether
the market is expecting more significant deterioration with the
European debacle or somewhat perversely a rapid-response by the ECB
(with its flood of EUR overwhelming USD), it appears the USD-denominated Germany CDS
spreads are once again pricing in notable devaluation in the EURUSD
exchange rate. Given the US and (almost explicitly given its dominance)
Germany are more currency issuer than user, default risk is not
the main driver of the CDS spread but currency re-/de-valuation (some
might call it inflation) is much more of a factor. After
EURUSD and German CDS being tightly coupled for months, last
summer-to-fall's Eurocalypse disconnected them as the CDS market led
exchange-rate lower. It seems with the current dislocation that
USD-denominated (and EUR paying) German CDS are expecting EURUSD at around 1.1750 - or a 6% devaluation of the EUR.
With today's dismal confidence data seeming enough bad data to spark
QE3 hopes over here, we can only imagine the relative size of print-fest
the two central banks will need to create in order for CDS to be
correct.Did Another European Bank Just Lose LTRO Eligibility?
Back
on the 11th of May something very curious happened: the ECB's line
item 5.2 from its "Consolidated financial statement of the Eurosystem",
or in other words, the LTRO money handed out to various European banks,
dropped by €10.8 billion. There is one problem with this: this number
is not allowed to decline. Or technically, if it does, it means something is wrong.FacePlanted To New "All Time" Lows
Previous
lows from last week's pre-market action have just been broken as
market-makers adjust to options trading on the IPO of the decade which
just printed $30.10 - or all-time lows - now down 33% from its post-IPO highs. Volume is a little higher than the last couple of days but remains significantly below the first few days' exuberant exiting. Put volume is outpacing Call volume by around 1.5-to-1 with $25 strike Puts among the most active.Consumer Confidence Plunges
Just
as expected, with the June FOMC coming in fast and furious, the data
better start coming in bad to quite bad. Sure enough, here is consumer
confidence (not from UMich, but from the Confidence Board, because we
need at least two indicators for every economic data point to maintain
the Schrodingerian Baffle With Bullshit illusion long and
strong) setting us off on the right, er, wrong path, with a 3 sigma
miss to expectations of 69.6, dropping precipitously from 69.2 to 64.9,
the lowest since January, the third miss in a row, and undoing all the
"gains" from the recent bipolar UMichigan consumer confidence which in
turn soared for no reason whatsoever. Finally, 12 month inflation
expectations drop from 5.8% to 5.6% - not good for a central bank hoping
to get consumers to spend or gamble. This is either good or bad for stocks.Europe's Stress Scenarios And What Goldman Sees As Priced In
Exit
from the Euro would be very painful for Greece. Cut off from the ECB’s
liquidity facilities, the Greek banking system would face collapse.
And, as foreign lenders cut their credit lines to Greece and depositors
struggled to extract their deposits ahead of the banks’ failure, the
Greek financial system – and with it the Greek economy – would seize
up. Given the costs of exit for both Greece and other Euro area
countries, a powerful incentive exists for the two parties to reach a
compromise that permits continued Greek membership of the Euro area but
in the meantime the pan-European game of chicken continues and
with each iteration of this game, the political cost to the two
parties involved has increased. Goldman sees three key scenarios from this: Muddle Through
(this is their 'Goldilocks' base case and implies continued Greek EMU
membership, and ECB funding for Greek banks, but also continued pressure
on Greece to reluctantly implement reforms while at the same time the
remaining Eurozone countries very gradually deepen their policy
integration) - which is modestly positive (though likely more
range-bound) for equities and bonds with weak growth and Fed QE3
potentially pushing EURUSD up to 1.40; a Fast Exit (the least likely and most bearish scenario with Greece walking away unilaterally
potentially knocking 2 percentage points of Euro-area GDP - even
assuming substantial central bank counter-measures - and if the firewall
were ineffective, a Euro-unraveling and an associated double-digit
fall in Euro-area GDP); and a Slow Exit (Greece excluded once firewalls are in place
- with pan-European deposit guarantees now front-and-center as opposed
to simple banking bailouts to avoid the now-critical bank-run's
contagion - which constitutes modest GDP impacts and compression in risk
premia - and appears to what the market is discounting as likely). Simply put CB counter-measures are assumed to save any dramatic downside unless Greece surprises unilaterally.March Case Shiller Misses Expectations: Housing Set For Quadruple Dip
Following the now long-gone LTRO induced risk ramp through March, many of the C-grade economists out there predicted that housing would bottom in March (this time for real) and it would be smooth sailing from there. Alas, the just released March Case Shiller data puts this latest speculation very much in doubt (once again), following a miss of consensus expectations in the Top 20 Composite of a 0.20% increase, printing at half that, or 0.09%, and more importantly, a decline from the February rate of increase, which was 0.15%. The non-seasonally adjusted number declined by 0.03%, the 7th consecutive drop in a row. All this begs the question: did housing just quadruple dip, with a February local extreme in the Sequential rate of change. As the chart below shows, we had comparable peaks in the summer of 2009, in April 2010, and again in April 2011, following which the downward slide resumed every single time once the temporary benefits of monetary and fiscal easing subsided. Also, recall that March was the last month receiving benefits of a record warm winter: in effect a mini demand pull program. And now comes the hangover. Bottom line: based on a broad index, housing is about to decline once again, and make a total joke out of all those who, yet again, made "bold" annual housing bottom predictions.
"Ten Days Later" - Bankia: The Supreme Irony
... Ten days later the discovery process is complete: Bankia is now the biggest bank failure in Spain's history.
The Buyers Have Left The House
Slowly, surely the largest investors in the world are no longer buying the debt of Europe.
Recently the Chinese sovereign wealth fund, China Investment Corp.,
said that they were done and would no longer be buying European debt.
The risks are just too great and the way Europe does business is also
having a serious effect. You see, Europe does not count any contingent
liabilities, sovereign guaranteed debt, derivatives, bank guaranteed
debt, regional guaranteed debt or promises to pay for various entities
as part of their calculation for their debt to GDP ratios. What can
clearly be said then is that the numbers we are given, the data that is
flouted day in and day out as accurate is nothing short of a
con game built on a Ponzi scheme that rests on the back of a financial
system that has been purposefully designed to distort the truth.
Regardless of your opinion about all of this there are consequences to
this type of manipulation that are in the process of becoming realized.
Eventually, when hopes and prayers give way to reality, losses are taken
and I submit that we are just at the beginning, just at the start, of
seeing realized losses begin to hit balance sheets. The European nations
and banks have performed a neat new trick, nailing themselves to the
Cross, and it is now only for Pontius Pilate to pick up the spear and
begin.Director Of Spain's Failed Bankia To Leave With €13.8 Million Termination
If
those in charge are still confused why the general population is not
very "appreciative" of the banker social substratum, the following
example should provide some color. Following the ever greater public
bailout fund black hole that Spain's Bankia has become (first of many zombies),
we now learn that one of its financial directors, Aurelio Izquierdo,
will be entitled to €14 million in pension and termination benefits.
Supposedly in compensation for running the bank straight into the ground
after just one year of operation, and lying fabulously about its financial performance,
in the process suckering in thousands into investing their hard earned
cash so that oligarchs such as Aurelio can promptly retire to a
non-extradition locale. And this, dear powers that be, is why the
general public continues to scratch its head at how it is remotely
possible that incompetent crony capitalists get paid tens of millions
for blowing up their firms, while everyone else is stuck footing the
soon to be soaring inflation bill (because print they must, and print
they will).Today’s Items:
Despite talk of Greece leaving the
Euro-zone and forfeiting the Euro, Greece’s debt is guaranteed at $1.3
trillion, and has an actual debt to GDP ratio of 421.67%. If Greece
decides to stay in the Euro-zone then the question will shift to whether
Europe will allow her to remain.
Spain’s 10-year yields rose 16 basis
points to 6.335 percent. Spain has underperformed compared all the euro
zone countries still financing themselves via markets. On top of public
debt, Spain is hobbled by a banking sector overwhelmed by bad debts tied
to a property market boom that bust and has some way further to fall.
Most Greeks want to stay in the euro;
however, they are hearing of the dreaded drachma about to fall out of
the closet again. To that end, Greek investors are sending their hard
earned money to Swiss banks where they believe it will be safer. Safer?
So, when the euro bank runs accelerate, the Greeks will be even further
from their wealth.
Next…
25 Signs That The Smart Money Has Completely Written Off Southern Europe
http://theeconomiccollapseblog.com
25 Signs That The Smart Money Has Completely Written Off Southern Europe
http://theeconomiccollapseblog.com
Here are a few…
1. Lloyd’s of London is publicly admitting that it is rapidly making preparations for a collapse of the euro-zone.
2. Spanish stocks continue to drop like a rock.
3. The head of the Swiss central bank has admitted that Switzerland is developing an “action plan” for how it will handle the collapse of the euro-zone.
1. Lloyd’s of London is publicly admitting that it is rapidly making preparations for a collapse of the euro-zone.
2. Spanish stocks continue to drop like a rock.
3. The head of the Swiss central bank has admitted that Switzerland is developing an “action plan” for how it will handle the collapse of the euro-zone.
With the financial market effectively in chaos, the Keynesian fiat money experiment is coming to an end.
There are effectively three different options available.
1. Print money til there is a hyper-inflationary event.
2. Do not print and fall into a global deflationary depression.
3. An unlikely plan that recently came into focus – which is to reboot the whole global monetary system.
The path most likely to be chosen will be printing; thus, after preparing keep stacking.
There are effectively three different options available.
1. Print money til there is a hyper-inflationary event.
2. Do not print and fall into a global deflationary depression.
3. An unlikely plan that recently came into focus – which is to reboot the whole global monetary system.
The path most likely to be chosen will be printing; thus, after preparing keep stacking.
Capital controls on physical gold and
silver are beginning to hit the streets. Dealers, like that in Chicago
and even Arizona are being told to photograph the gold and silver they
buy and upload it to a designated site within 24 hours. In short, the
governments are getting desperate over these metals of tradition.
Remember, silver and gold are to rebuild your wealth after the system
collapses.
In an act that seems like the State government of California would rather play Farmville
instead of supporting real farms in California, they, in an attempt to
shore up the state budget, went in and put taxpayer money down on
Facebook, which opened at $38 and has been declining in value ever
since. Did they think Facebook was their new golden goose? They
certainly are not making any real friends. In short, add California’s
taxpayers, unknowingly, to the list of suckers who bought Facebook
stock.
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