English Central Bank "Eased" Diamond Out

Anyone wondering if the reason why Diamond resigned less than 6 hours ago is because he suddenly grew a conscience, will be disappointed. The real reasons are two: on one hand politicians were concerned he would make it public where all the bodies were buried as reported last night, in the process taking down at least half the English political establishment, obviating his departure from the public eye immediately, and, more importantly, as BBC's Robert Peston reports, the English Fed, that "impartial" and "apolitical" institution known as the Bank of England, got involved. From Peston: "I have learned that Bob Diamond's departure was encouraged by the Governor of the Bank of England, Sir Mervyn King, and the chairman of the Financial Services Authority (FSA), Lord Turner.

Diamond Cracks: Here Are The Shocked Reactions

A bottle of Bollinger has brought down Bob. This is just the beginning, because one knows Barclays by definition was not alone. Many, many more banks will emerge, hopefully their bankers were not quite as dumb as Barclays' henchmen to discuss in retainable, email format their plans for interest rate manipulation, although we doubt it. In which case many more executives will fall as all those "conspiracy theorists" over the past 4 years are proven right once again, and as politicians scramble to cover up all loose ends which may expose them as instrumental (and bribed) in the fact that the "market" is once big farce. In the meantime, courtesy of the WSJ, here are the shocked, nay stunned, reactions to Bob Diamond's resignation.

Barclays CEO And COO Are Lie-borgate Casualties Two And Three

First the Chairman Marcus Agius, and now both Barclays' CEO Bob Diamond and the COO del Misser are quitting. Full sweep.

Farage On EU Summit 'Breakthrough': "It's Not Credible; Nobody Believes You"

Judging by the modest rallies in what was already hugely oversold risk asset markets in a perfectly timed illiquid 'holiday' mode, it would appear that, just as MEP Nigel Farage blasts his European Parliamentary leaders, "Breakthrough? Nobody believes you". The new bailout vehicle - the ESM - is doomed before it starts as he notes "the wheels are coming off" highlighting the legal challenges in Ireland and Germany, the Estonian Justice Minister saying it won't fit their constitution, but most fun of all, the erudite Englishman barks "the Fins and the Dutch seem to have broken the agreement that was made in the middle of the night". Perhaps the "little countries" don't have a say in Europe anymore as his frustration with Barosso and Van Rompuy in their self-congratulatory smugness is clear when he jibes that "The Euro-crisis appears to be insoluble" noting that their incessant public calls that the worst is over or finger-pointing and blaming others has made them "an international laughing stock". It appears, like us, Farage does not see this as a game-changer - concluding that vacations should be put on hold as "the markets will all but guarantee we'll all be back here in August".

Gold Coin Demand In H1 2012 Shows Fundamentals Driving Current Demand

Fundamentals (inflation expectations, longer-term savings and investment objectives) should be driving current demand for gold coins. And, this is exactly what we are seeing. In June 2012, the US Mint sold 54,500oz of coinage gold, up on 53,000 in May 2012. Total for H1 2012, US Mint sales of gold coins in terms of total weight sold are down 41.3% on H1 2011 and it is down 49.8% on H1 2010 and 50.3% on H1 2009. Dramatic? Sure, when one disregards consideration of drivers for 2009-2011 demand for coins being coincident with extreme risks in other markets. Total H1 2012 demand was at 338,000oz still well ahead of H1 average demand for 2000-2007 period when it was 165,679oz, but down on 531,750oz average for H1 2008-2011 crisis period. Exactly the same picture - return to fundamentals - is seen in the number of coins sold. Consistent with still robust demand drivers, H1 2012 average coin sold contained 0.60 oz, while H1 2000-2007 period average was 0.51oz and H1 2008-2011 period average was 0.76oz.

Germany Rumbling As Spiegel Leads With "Euro Endangers German Economy"

Objective analysis, or media spin to gauge popular reaction to Plan Z? Whatever it is, today's staff lead article in the English section of Spiegel has a piece that will likely raise more than a few eyebrows: "The common currency union was supposed to benefit the economy of the entire European Union. Now that the euro is struggling, however, it is bringing growth down with it. Germany's economy, once seemingly immune to the crisis, is now facing mounting difficulties."

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Housing Rebound or Relapse?

Eric De Groot at Eric De Groot - 2 hours ago

Negative equity, restricted access to credit, and falling demand will continue to prevent a meaningful recovery for years to come despite recent influx of hope (Housing Rebound or Relapse?). Why? The recent up tick in new home sales must be framed within the context of ebb and flow of time. Once positive momentum reached the sell zone on February 2012... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

 

And Bob Diamond Resigns 'Under Pressure'

Food inflation fears as US crop prices surge

Eric De Groot at Eric De Groot - 3 hours ago

A combination of monetary inflation and unusually hot and dry weather is beginning to reverse the downward momentum in the CRB foodstuffs and spot indices (chart 1 and 2). The public's patience with monetary inflation will disappear quickly when rising input costs pushes consumer prices higher in the months ahead. Chart 1: CRBFoodstuffs And Year-over-Year (YOY)... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

Biderman On Europe And The Rally: "It's All Bullshit"

The sensible Sausalitan is back and this time he is taking on the "baffle 'em with bullshit" conclusion of last week's "non-game-changer" EU Summit. After some self-congratulatory chatter on his timely call for markets to ebb from April, Charles Biderman (CEO of TrimTabs) chokes back the spittal as he reflects on what came out of the mouths of European leaders last week: "I cannot see anything new from last week's summit" as he summarizes the findings clearly "The ECB possibly will print more money and save some Spanish and Italian banks". We can't help but agree with Charles when he adds: "Where have I heard that before? Printing Money To Save Banks - wow, how original?". Biderman still believes the Fed will engage in more money-printing but the stock market's current rally is temporary and will falter once again until Bernanke pre-announces his next print-fest. "Money-printing is the only solution left for Central Banks and in reality without fundamental changes in the way Europe and the US is run, the best money-printing can do is keep the dieing alive a bit longer"

Dear Person Seeking a Job: Why I Can't Hire You

Potential employers have to respond to the incentives and disincentives that exist in today's world, and those do not favor conventional permanent employees. We know you're hard-working, motivated, tech-savvy and willing to learn. The reason we can't hire you has nothing to do with your work ethic or skills; it's the high-cost of the Status Quo, and the many perverse consequences of maintaining a failing Status Quo. The sad truth is that it's costly and risky to hire anyone to do anything, and "bankable projects" that might generate profit/require more labor are few and far between. The economy is different now, and wishing it were unchanged from 30 years ago won't reverse the clock. We have to respond to the incentives and disincentives that exist in today's world, and those do not favor conventional permanent employees except in sectors that are largely walled off from the market economy: government, healthcare, etc. But these moated sectors cannot remain isolated from the deflationary market economy forever.

Europe Squeezes Green But Safe-Havens Remain Bid

EURUSD sold off back to retrace 50% of its post-EU Summit spike gains but thanks to a mini-ramp-fest in the last 30 mins of the European day, spiked back up nicely into the green for the day. The same was evident in Italian and Spanish sovereign bond spreads which had leaked ever so gently tighter all day until the last 30 mins where they compressed 5-7bps more - still hardly a ringing endorsement of the game-changing moment of last week (and still wide of their initial spike tights of Friday morning). European equity markets gained on average around 1% (with France and UK underperforming) - again helped by a late-day surge of risk-on-ness (which was miraculously evident in US equity markets also). Oil prices continue to surge (with Brent over EUR80 once again) and we suspect are as much a driver of correlated risk-on as anything else but perhaps most importantly - away from the squeeze fest in every other asset class - Swiss 2Y rates are pushing back lower once again back under -30bps (down around 4bps today) as it is clear that a bid remains for safe-havens (gold and silver also surging) despite the optics of improving spreads on sovereigns and a 10% rally in bank stocks (which remember will need to be 'resolved' before the ESM can step in at par).

ECB Further Eases Collateral Terms

Two weeks ago, the ECB, which is now largely expected to cut rates by at least 25 bps imminently, announced it was aggressively expanding the eligible collateral pool of worthless "stuff" it would accept at face value in exchange for fresh EUR bills, in essence engaging in clear cut money printing with the footnote that it was really a loan. The only problem is the loan quality is absolutely worthless and the ECB knows this. Hence money for nothing. Today, the ECB has released another announcement on collateral eligibility, saying that "counterparties participating in Eurosystem credit operations should be allowed to increase current levels of own-use of government-guaranteed bank bonds subject to the ex-ante approval of the Governing Council in exceptional circumstances." However, lest it be seen as merely the latest confirmation that Europe no longer has money good assets, and the ECB is merely encouraging banks to pledge anything they can get their hands on in order to obtain a short-term liquidity injection, it also added the following rider: "[counterparties] may not submit such bonds or similar bonds issued by closely linked entities as collateral for Eurosystem credit operations in excess of the nominal value of these bonds already submitted as collateral on the day this Decision enters into force." But before someone takes this to mean that the ECB actually cares what "assets" on its balance sheet make back its now record €3+ trillion in liabilities, it added Rider B: "Governing Council may decide on derogations from the requirement laid down in paragraph 1." Translated: the free for all rehypothecation race is on, and probably in its last lap, as once any and all collateral is already pledged, the ECB's only hope will be to allow already hypothecated collateral to be rehypothecated. Something which in a non-banana republic would have cost Jon Corzine his job.

Goldman Lowers Q2 Tracking Estimate To 1.5%

As the stock surge on escalating bad news accelerates, here is one more datapoint that should be good for at least 5 more S&P points: Goldman just lowered its Q2 GDP forecast even more, from 1.6% to 1.5%.

Former French President Sarkozy Home, Office Raided By Police

Things in broke Europe are becoming stranger by the minute. Stepping away from the Bank of England telling private institutions what to do, and overriding fiduciary responsibility, we now shift to France, but not in the context of the Second Great Socialist Revolution and its Fairness Doctrine annex, but to the home and office of ex-president Nicholas Sarkozy whose home and office where just raided according to Politique in connection with long-running allegations that his presidential campaign had been illegally funded by France's richest woman Lilliane Bettencourt. Do you see what happens Larry when there are no PACs and it is illegal for rich people to outright bribe politicians?

Swirlogram Crashes Into Contractionary Brick Wall

Following our discussion of the significant drop in Goldman's Global Leading Indicator (GLI), the 'Swirlogram' depiction of the business cycle (that we have described in detail here and here) has crashed hard into a contractionary phase. Three things stand out dramatically: 1) the velocity of entry into contraction (which empirically suggests a much harder landing) is extreme; 2) the difference between the initial and final data is dramatic indicating the false sense of hope from seasonals had given investors coming out of Q1; and 3) the current position of the Swirlogram is at nearly the same place as this time last year (with growth close to 2011 lows) - which we note was only solved by globally coordinated central bank largesse. With the market seemingly buoyed by risk sentiment currently, and with macro fundamentals still deteriorating, it appears biasing to the short-side makes sense should data weakness continue.

The Bank Of England Made Me Do It

Wonder who was pushing Barclays to manipulate its rate? Why none other than the English Fed. From BBG:

• BARCLAYS SAYS BANK OF ENGLAND CALLED ON OCT. 29, 2008 ON LIBOR
• BARCLAYS SAYS DIAMOND MADE NOTE OF CALL
• BARCLAYS SAYS DIAMOND RECEIVED CALL FROM PAUL TUCKER
• BARCLAYS SAYS TUCKER SAID `CERTAIN' BARCLAYS DIDN'T NEED ADVICE
• BARCLAYS SAYS TUCKER SAID DIDN'T ALWAYS NEED TO BE SO HIGH (Supposedly LIBOR)
• BARCLAYS SAYS DEL MISSIER CONCLUDED INSTRUCTION HAD BEEN GIVEN
• BARCLAYS SAYS DEL MISSIER TOLD RATE SETTERS TO LOWER RATES

In other words, a central banks was directly and indirectly involved in manipulating interest rates. Say it isn't so. Fast forward two months when the BOE's Tucker testifies that the Chairsatan made him do it.

Enron Redux Has JPMorgan Probed For Abusive Energy Trading

While the CIO was clearly not populated by the smartest guys in the room, it appears the bank that just can't get a break has hit another snag as the Federal Energy Regulatory Commission is probing them over 'bidding practices' and abusive trading in California and Midwest energy markets. Via Bloomberg:

• *FERC PROBES POTENTIAL POWER-MARKET MANIPULATION BY JPMORGAN
• *FERC ASKS U.S. COURT TO ORDER JPMORGAN TO PRODUCE DOCUMENTS
• *FERC SAYS PROBE COVERS JPMORGAN'S `BIDDING PRACTICES'   :JPM US
• *FERC SAYS CALIFORNIA, MIDWEST OPERATORS CITED ABUSIVE TRADING

Is there a wondrous capital structure here for Bethany Mclean to investigate? We can only assume that JEDI Morgan is 'not the Chewco FERC is looking for'.

France Gives "Fairness Doctrine" Details; Will Tax Millionaires At 75%

With the Great June Socialist Revolution spilling over into July, here are some details as they become available from France:

• FRANCE TO HAVE NEW TAX RATE OF 45% FOR WEALTHY
• FRANCE TO TAX INCOME OF MORE THAN EU1 MLN AT 75%, AYRAULT SAYS
• FRANCE TO TAX CAPITAL INCOME AT SAME LEVEL AS WAGES
• FRANCE TO RAISE TAXES FOR LARGE COMPANIES, BANKS, OIL FIRMS

But... FRANCE TO ANNUL PLANNED VAT INCREASE PLANNED BY SARKOZY
After all, it's only fair. In other news, we are rotating our secular long thesis away from Belgian caterers and into tax offshoring advisors, now that nobody in the 1% will pay any taxes ever again.

US Military Re-Surging In Persian Gulf As Turkey Scrambles Jets For Third Day And Iran Fires Medium-Range Missiles

US military "surge" is back in the Persian Gulf + Iran fires medium-range missiles + Turkey scrambles jets for third day in a row = $100+ Brent

Secrets Of The Trade

I don’t know, in my rather straight down the middle Kansas City mind I prefer a reality where one plus one is two and not where some European auditor, when asked about the sum of one plus one says, “What number would you like?” This was the way of it in “Alice in Wonderland” of course as the meaning of the word was determined by the speaker but this is not a wise path to be followed by an investor. Recently I wrote about Firewalls and the hocus pocus of their being touted as the cure-all for Europe. Europe missed the train on this one altogether as no amount of money, either pledged or funded, will do one thing to help the worsening financial crisis of the countries in Europe. You may think of the nations of Europe as horses in a corral. What is the value of a bigger and bigger fence that surrounds them if the horses are full of cancer? The fence, of whatever size, does nothing and I mean nothing to help the sickness of the horses. Europe is battling with windmills when they should be addressing the financial health of each country. “The horses are sick,” I say, “forget fiddling with the fence.”

Daily US Opening News And Market Re-Cap: July 3

After two days of solid gains, European equities continue the upward trend and are seen higher at the North American crossover, with the Basic Materials sector leading the way, followed by financials. The moves in equities follow overnight reports from Chinese press, once again calling for the PBOC to slash their RRR, as well as expectations that this Thursday both the ECB and the BoE will conduct monetary easing, possibly boosting future commodity demand. In the fixed income markets, the European 2s/30s curve continues to see bear-steepening following last night’s announcement from the Dutch Central Bank that has changed Dutch insurers’ Solvency II interest rate curve; modifying the maturities in which the firms must hold assets towards the longer-end. Today also saw official confirmation from the Irish debt agency that they are to return to capital markets with T-bill issuance on July 5th, their first return to the market since 2010. Investor reaction to this news is evident in the shorter-end of the Irish yield curve, where the 2-yr bond yield spread against their German counterpart is firmly indicating the risk of returning to the market; currently wider by around 20bps.

Frontrunning: July 3

• The next Enron: JPMorgan at centre of power market probe (FT)
• Former Brokers Say JPMorgan Favored Selling Bank’s Own Funds Over Others (NYT)
• Ex-JPMorgan Trader Feldstein Biggest Winner Betting Against Bank (Bloomberg)
• Finland Firm On Collateral As Spain Aid Terms Discussed (Bloomberg)
• Heatwave threatens US grain harvest (FT)
• Wall Street Is Still Giving to President (WSJ)
• Greenberg Suit Against U.S. Over AIG To Proceed In Court (Bloomberg)
• Crisis forces "dismal science" to get real (Reuters)
• Hope continues to be as a strategy: Asia Stocks Rise On Expectation Of Monetary Policy Easing (Bloomberg)

Today’s Items:

First…
European Manufacturing Contracts For 11th Consecutive Month As Unemployment Hits Record
http://www.zerohedge.com

Euro-zone manufacturing sector contracted for the eleventh successive month.  The rate of decline in Germany, which currently has an average unemployment rate of 5.6%, was the steepest for three years. Meanwhile, Euro-zone unemployment, in May, hit a record of 11.1% with Spain at 24.6%.

Next…
Devalue the Euro?
http://brucekrasting.blogspot.com

When the current laugh-out-loud agreements are seen as inadequate, there is only one currency option left…   Devalue the Euro by 20% or more. A devaluation of the Euro would be approved in Brussels in a heartbeat with Germany that would be initially reluctant because of inflationary pressures.   The timing would be critical, like a Sunday evening announcement, to minimize the worldwide chaos of people getting out of the Euro too quickly.

Next…
EU Embargo On Iranian Crude Oil Now In Full Effect
http://www.ibtimes.com

The European Union’s economic sanctions have come into effect for Iranian crude.  Yes, the Europeans get to pay more for gas while China, India, and Russia get to corner Iranian crude.   U.S. experts, and that is a joke in of itself, claim that the existing sanctions have cut Iranian oil exports from 2.5 to 1.2 million barrels a year.   Guess they never heard of the term… Black Market?

Next…
Central Planners Are Destroying the Financial System
http://kingworldnews.com/

Since the financial meltdown in 2008, many gimmicks have been created to keep the economic system going.  Relative to paper currencies, gold has compounded in the neighborhood of 18% per year.   The system is addicted to creating ‘wealth’ with electrons and paper.   The current path of debased currency will collapse and will want to be in physical gold, silver, and yes…  Copper.

Next…
10 Sobering Realizations the Eastern U.S. Power Grid Failure is Teaching Us
http://www.naturalnews.com

Here are a few…
1. The power grid is ridiculously vulnerable to disruptions and failure
2. Without electrical power, acquiring food and water in a major U.S. city can become a difficult task
3. Cell phones and the internet are vulnerable and cannot be counted on in an emergency.

Next…
Republicans See Way to Repeal Obama-care
http://www.ft.com

Republicans are claiming that they can overturn Obama-care, with a razor-thin majority, if flip-flopping bankster Mitt Romney is made our next dictator.   All this, while Democrats are trying, unsuccessfully, to insulate themselves that they supported Obama-care,
the biggest tax hike on Americans in American history.   Gee, I feel better already.

Next…
Google Helping in Attack on 2nd Amendment
http://www.prisonplanet.com

Google Adwards has changed its policy and will no longer show, within Google Shopping, any results for guns or gun accessories.   Of course, the best thing to do when buying guns, or gun accessories, is to not go through the internet.  If possible, buy local.

Finally, Please prepare now for the escalating economic and social unrest. Good Day

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