POSTS: FRIDAY 07-16-10
GEO-POLITICAL TENSIONS - ISRAEL / KOREA / IRAN
IRAN
IRNA Reports Two Bomb Blasts Hit South-Eastern Iran
Iran-Backed Militias Seen As Threat to Bases in Iraq
WSJ
Iranian-supported militias targeting American bases now pose a
more serious threat to U.S. forces than al Qaeda as they seek to
exert influence over Iraq's uncertain political makeup, the top
American general in Iraq said |
ISRAEL
KOREA
SOVEREIGN DEBT & CREDIT CRISIS |
How the ECB Engineered the Euro's Recovery
Dorsch
GREECE
SPAIN / PORTUGAL
Spanish Bond Sale Eases Funding Concern
-
Euro Stregthens
BL
FRANCE
GERMANY
ITALY
UK
ICELAND
JAPAN
IMF asks Japan to push ahead with sales tax hike
AFP
CHINA
Chinese economy starts to cool down FT
USA
Latest Economic Deterioration Confirmation- Philly Fed Plunges To
5.1, Consensus At 10.0, Previous At 8.0 ZH
Results from the Business Outlook Survey suggest that regional
manufacturing activity continues to expand in July but has slowed
over the past two months. Surveyed firms reported a
decline in new orders this month compared with June.
Employment showed a slight improvement this month. The survey’s
broad indicators of future activity continue to suggest that the
region’s manufacturing executives expect growth in business over
the next six months, but optimism has waned notably in recent
months.The survey’s broadest measure of manufacturing conditions,
the diffusion index of current activity, decreased from a reading
of 8 in June to 5.1 in July. The index, although still positive
and suggesting growth, has fallen for two consecutive months (see
Chart). Indexes for new orders and shipments also suggest
a slowing this month: The new orders index fell 13 points, to its
first negative reading in 12 months, and the shipments index
decreased 10 points but remained positive. Indicating weakness,
indexes for both delivery times and unfilled orders fell and were
in negative territory this month.
The index is now back to mid-2009 levels.
Full
release
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European Short-Term Funding At Worst Levels Of 2010
ZH
For all that talk about good news out of Europe, it would be
great if there was any "good" news to actually report, instead of
just ECB's ongoing monetization of ever more sovereign debt at
higher and higher yields, and the Eurozone regulators pretending
its insolvent banks are healthy. Case in point - every single
overnight funding indicator is now at the worst levels of 2010,
including Libor, Interbank Deposit Rates, Repos and Commercial
Paper. Nobody is willing to drink the European stability Kool Aid
- the entire continent continues to be locked out when it comes to
the ever critical ST funding market. As all this debt accumulates
and needs to roll, it means the ECB will soon be required to
provide not only long-term but short-term funding. In the
meantime, the market continues to buy euros from Goldman.
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Barclays Sees European Banks Needing Over $100 Billion In Capital
After Stress Tests ZH
Producer Prices Fall More Than Forecast on Fuel, Food
BL
Jobless claims fall
Manufacturing in N.Y. Area Expanded at Slower Pace in July
BL
FOMC Says It Will Take At Least Five Years To Get Growth Back On Track
BI
The Federal Reserve Open Market Committee has come out with
their minutes, on delay, from their June meeting. The
result is a cut in projected growth rates and the FOMC expects
hiring to remain slow. The headline, though, is that members
felt it would take at least 5 years to move
back to the previous growth path:
Participants generally anticipated that, in light of
the severity of the economic downturn, it would take some time
for the economy to converge fully to its longer- run path as
characterized by sustainable rates of output growth,
unemployment, and inflation consistent with participants’
interpretation of the Federal Reserve’s dual objectives;
most expected the convergence process to take no more
than five to six years/strong>..
Fed members are also considering more
stimulus to deal with the current situation.
Projections for GDP growth, cut by 0.2%:
Projections for Unemployment:
Read the full report here
|
U.S. State CDS Tightening After Rough Month Of June BI
CDS prices on U.S. state sovereign debt is decreasing at
the moment, but serious concerns remain about some states.
Illinois, California, and New York still have extremely
high CDS prices, due to concerns about the state of their
fiscal positions. Illinois has just passed Iceland on the list
of
highest sovereign default risks.
From CMA Datavision:
|
HUNGARY
Dick Bove- This Was Not A Good Quarter For JPMorgan BI
Dick Bove spoke with CNBC this morning about JPMorgan's
earnings, and how they are slightly misleading about the real
state of the bank.
- 0:45 Jamie Dimon is not telling us what JPMorgan will
be doing to offset the costs of financial reform; he will
likely be adding new charges for accounts.
- 2:30 These are manipulated earnings based upon the
company moving reserves and counting them as earnings, if
you are a bear on the stock.
- 3:00 This is not a good number for JPMorgan in anyway,
shape, or form.
- 4:00 Banks are all going to do the same thing,
explaining away reducing the amount of reserves they have.
But if the economy is not as strong as they suggest, those
reserves will come back.
- 5:00 Can we trust the banks' vision on the economy?
They are now increasing their vulnerability, but they may
be wrong about the economy.
- 6:00 Regional banks will show some increase in
revenue, but the majors will not.
- 7:20 Banks are shrinking their loan portfolios,
reducing the money supply at the highest rate since the
depression, and there is no way the economy can grow
robustly if that money supply isn't high.
- 99:00 Jamie Dimon missed it completely on housing;
there is no indication they knew what was happening.
|
DODD FRANK ACT
Finance-Overhaul Clears Senate Hurdle, Moves to Final Action
BL
The
Ugly Truth About Financial-Regulatory Reform
Harvey Pitt
US Senate passes financial reform FT
Bill lays out route map for Wall St FT
Congress's Approval of Finance Bill Shifts Focus to Regulators
BL
Here's the financial reform bill that just passed the Senate BI
-
As CNBC's Kate Kelly reports,
there's also language in the bill that could prevent banks
from hedging their exposure to trades done on behalf of
clients. This is a response to the Goldman ABACUS scandal,
and the idea that banks are taking positions contrary to
their clients wishes. Major banks are said to be very
concerned about this.
-
As for the consumer protection
agency, it remains unclear what shape it will take. Much
of it may depend on who is helming it, and what political
party is in charge. This was previously seen as a
particularly controversial measure, but nobody is all that
worried about it right now.
|
RATING AGENCIES
Citi Explains How It Hid Risk WSJ
Citigroup for the first time publicly detailed one way it
dressed up its balance sheet and incorrectly hid risk from the
public, involving "repo" transactions. |
RRESIDENTIAL REAL ESTATE - PHASE II |
U.S.
home foreclosures reach record high in second quarter
LAT
If that pace continues through the year, the number of homes
taken by banks is likely to top 1 million by the end of 2010 |
Some
Sellers Slashing Prices, While Banks Mow the Lawn
CNBC
EXPIRATION FINANCIAL CRISIS PROGRAM
|
PENSION & ENTITLEMENTS CRISIS
|
GOVERNMENT BACKSTOP INSURANCE |
BBP - British
Petroleum
|
OTHER TIPPING POINT CATEGORIES NOT LISTED ABOVE
Greenspan Says Congress Should Let Bush's Tax Cuts Lapse BL
FLASH CRASH - HFT - DARK POOLS
MARKET WARNINGS
ICI Reports Largest Equity Fund Outflow In Two Months, Coinciding With
Short Covering Market Surge
Remember how the market surged last week? One would think this
may have been driven by something as fundamental as actual capital
instead of HFT channel stuffing, frontrunning, and other no volume
gimmicks, and that retail might actually be participating
in a rally for once... One would be wrong. According to ICI even
as the market was surging, once again - on no volume, it was
merely an orchestrated means for mutual funds to sell out of
stocks at slightly better prices to cover another week of massive
outflows. In the week ended July 7,
ICI reports that domestic equity mutual funds saw $4.1 billion
in outflows, the largest outflow in the past 2 months, and the
third biggest weekly redemption in 2010! This is
also the tenth sequential outflow, amounts to $34 billion in total
outflows YTD, and represents a losing streak even worse than that
of the BDIY.... Yet stocks jumped. One day we hope
congress will ask the Fed to explain this particular observation.
And yes, in other lack of news, investors no longer trust stocks
period: $6 billion in capital was allocated to taxable bond funds.
Nobody cares about 10% returns with the possibility of a total
wipe out. 4%, capital preservaton, and staying away from the
corrupt and broken stock market is more than enough for most
Americans nowadays.
|
GOLD MANIPULATION
VIDEOVIDEO TO WATCH
This places Obama in a difficult position
He must politically talk austerity while the money supply collapses
The bottom line here is that Americans don’t believe in
President Obama’s leadership,” says Rob Shapiro, another former
Clinton official and a supporter of Mr Obama. “He has to find some
way between now and November of demonstrating that he is a leader
who can command confidence and, short of a 9/11 event or an
Oklahoma City bombing, I can’t think of how he could do that.”
I found this quote in an FT article earlier in the week and it
sent chills all over my body. This is how the strategists in
Washington D.C. think. They are sick, twisted people.
This guy doesn’t even realize how sick and twisted what he said is
which is why he said it. Imagine what they say off the
record! |
Guest Post- The Dangers Of A Failed Presidency ZH
I have been calling Barrack Obama’s Presidency a failure for
at least six months now and it seems that I now have considerable
company in this assessment as it becomes obvious to most. It
is not a failure because of the Republicans. It is not a
failure because of events beyond his control. It is a
failure because this was a man that filled a depressed and
downtrodden nation with the audacity of hope. When I voted
for the man I knew it was against my personal financial interests.
It was clear what he would do with taxes. Nevertheless, I
got to the polls and voted for this fifth avenue creation thinking
maybe, just maybe he might do some of the things he said.
Most important to me were two issues related to the
military-industrial complex (see Eisenhower’s warning on this
during his Farewell Address
http://www.youtube.com/watch?v=8y06NSBBRtY) and civil
liberties. George W Bush was turning America into a
depressed police state with perpetual war and consolidation of
power between a corporate oligarchy and entrenched political
class. A nation where the masses voluntarily gave up many of
the liberties the founding fathers fought for merely to ease the
fear that consumed them and which was propagated by the
administration and the media. I and many others that voted
for him even though they disagreed strongly with his economic
policies thought he would at least reverse this trend. Why
did we think this? Cause he said so. How foolish we
were.
That being said, the real answer was certainly
not John McCain as I think we would be in just as bad shape with
him. I think that what this experience has taught us is that
the President of the United States answers to others behind the
scene. There are many theories on who these others are but I
will keep it very simple. There is clearly a power elite
that consists of a union between big corporate and financial
oligarchs and career bureaucrats in Washington D.C. These
are the folks that pull the strings of all administrations.
All you have to do is look at the trends that have been in place
since George W Bush and continue under Obama to see what these
players want. Bigger government and thus more Federal power,
more wealth for the oligarchs (thank you Federal Reserve) and an
erosion of the middle class, and reduction of civil liberties in
the name of the 1984-like never-ending “war on terror.” I
believe in a war on terror of my own. A war against the
terror that Washington D.C. is constantly trying to inject into
your head so that you sheepishly give away all you rights and
power to them. That’s my war on terror.
Ok, so
what do I mean by “The Dangers of a Failed Presidency.” I
mean that it is July of an election year and Obama’s magic spell
that held sway over the American people and the world for about
three months has completely washed away. I mean that the
printed money mirage recovery that we have had to tragically watch
is ending and we have no job growth to speak of other than a few
hundred thousand census workers. The public has no appetite
for more spending and Bernanke has no cover to print more money
(yet). As such, if people think things are in freefall now
for this administration just wait and see how the next several
months pan out. This then brings me to the following quote:
The bottom line here is that Americans don’t believe in
President Obama’s leadership,” says Rob Shapiro, another former
Clinton official and a supporter of Mr Obama. “He has to find some
way between now and November of demonstrating that he is a leader
who can command confidence and, short of a 9/11 event or an
Oklahoma City bombing, I can’t think of how he could do that.”
I found this quote in an FT article earlier in the week and it
sent chills all over my body. This is how the strategists in
Washington D.C. think. They are sick, twisted people.
This guy doesn’t even realize how sick and twisted what he said is
which is why he said it. Imagine what they say off the
record! You can take this quote in many different ways but
none of them are good. I am not going to say anything beyond
the fact that I would be VERY suspicious if some sort of event
occurred before the elections. Google the term “false flag.”
Also remember Rahm Emmanuel’s famous quote of “you don’t
ever want a crisis to go to waste; it’s an opportunity to do
important things that you would otherwise avoid.” Think
about this deeply. This doesn’t mean do what the public
wants, or follow the constitution. It means that that those
pulling the strings of power have the opportunity to do what THEY
want, what fits THEIR ideology. Hitler is the most famous
modern example of a leader that used a crisis to form his fascist
state. Again, I am not talking about Obama in isolation.
I am referring to the power structure that has been firmly in
place since the 9/11 attacks. Many call it a silent coup.
I agree with this assessment.
This email is not
meant to create fear. It is actually meant to get people
ready if things get crazy for whatever reason. It is a
challenge to people. I challenge everyone to think about how
they would react should another terrorist attack or something
along those lines occur. I was there for 9/11 and I saw the
buildings go down in person. I know what it was like to be
manipulated by my own government and media in the wake of such an
emotional trauma. I also see that what we have done since,
with things such as the Patriot Act and two wars that are still
ongoing, and I have reflected on how they have changed America for
the worse and provided a fertile ground for the elite to take away
more of our rights and our wealth. So my rallying cry is
that we must be strong and fearless in the face of fearful events.
In the wake of anything that may occur in the years ahead we must
not react on emotion and NEVER give away our inalienable rights in
the name of protection from big brother. Be fearless, strong
and resolute. Spend more time with your neighbors and build
things up at the local level. If we have those supports then
we will be less inclined to cry to the magicians in D.C. and the
Federal Reserve for “help.” |
QUOTE OF THE WEEK
"In a market, the cumulative
expenditure of the modestly endowed easily trumps the expenditure
of the rick. And even the rich are ultimately answerable to the
market: They became rich by satisfying customers, and will remain
rich only so long as they (or their investments) continue to
satisfy consumers. Consumer sovereignty is far more powerful a
constraint on the rich than political sovereignty. Indeed, even
the erosion of the rich by democracy is ultimately self-defeating,
for it eliminates that class of men and women in public life who
are under no financial pressure to remain at their posts, pursuing
policies in which they no longer believe. It is no coincidence
that the democratization of politics has been accompanied by a
decline in resignations on points of principle or of honor. The
vast majority of modern politicians simply needs the money.
rong>But even the restoration of a rentier political class
would not be enough to restore the blessings of good government.
As long as politicians must compete for votes, they cannot govern
honestly, or even disinterestedly. They cannot reverse decisions or
policies that have proved unworkable. They must persist, even in
intellectual error, and cannot escape a certain narrowness of
vision. To release politicians from this predicament, a
revolution is required. That revolution must be one not
of blood, but of constitutional and political ideas. It must put
an end to democracy without limits, before the prosperity of the
species is destroyed and liberty extinguished...The only lasting
solution to the plague of unlimited democracy is to attack
democracy at its moral foundation: the political equality of the
citizen."
Dominic Hobson Editor-in-Chief Global
Custodian magazine |
ZH - Zero Hedge - Business Insider,
WSJ - Wall Street Journal, BL -
Bloomberg, FT - Financial Times |