POSTS: WEDNESDAY 08-11-10
GEO-POLITICAL TENSIONS - ISRAEL / KOREA / IRAN
IRAN
ISRAEL
KOREA
Here's Where A U.S. Warship Is Teasing China Into A Rage
BI
SOVEREIGN DEBT & CREDIT CRISIS |
GREECE
SPAIN / PORTUGAL
FRANCE
GERMANY
ITALY
UK
UK near top of economic gloom rankings
FT
Opinion poll shows much higher confidence in developing countries
U.K. Consumer Sentiment Drops to Lowest Since Aftermath of 2009
GDP Plunge BL
Employers warn of 'jobless recovery'
FT
Criticizing King
WSJ
Justice ministry staff warned of £2bn cut
FT
JAPAN
National
debt hits 190% of GDP at ¥900 trillion
Kyodo News Much of the debt can be attributed to massive
economic stimulus measures the government repeatedly took after
the burst of the bubble economy...
Why the Japanese see an opportunity in U.S. bonds
LA Times “The Japanese have been big buyers of
Treasuries...They’re betting on us becoming them.”
Majority of mortgages now adjustable-rate
Yomiuri
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CHINA
Chinese economy shows further signs of slowing
FT
Industrial production and retail growth slacken
China Output Growth Weakens; Inflation Rises to 3.3%
BL
China’s industrial output rose the least in 11 months, retail
sales growth eased and new loans climbed less than estimated,
adding to signs that a slowdown in the world’s third-biggest
economy is deepening.
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China's trade surplus reaches record high
Finance Asia
High
trade surplus 'likely to remain'
There was also disturbing economic news in China, with a
report showing that its
trade surplus surged in July to an 18-month high, a sign of
weak domestic demand. Materials and industrial group shares in all
regions have lead declines in equities, and an auction of US
Treasury bonds was strongly bid as investors continue to seek the
safety of fixed income. The
Shanghai Composite index tumbled 2.9 per cent, taking the
index to its lowest level of the month. Hong Kong’s Hang Seng
index was down 1.5 per cent. For both, it was the worst-one day
drop since late June. |
How Fifty Percent Of China's 'High Tech' Companies Are Actually Fake
BI
Spiking Food Prices Shoots Chinese Inflation Past Government
Targets BI
China Said to
Order Banks to Reclaim Loans From Trust Companies
BL
Chinese Regulators Order Banks To Expose Their Massive Off-Balance Sheet
Loan Portfolios BI
USA
Worker
Productivity in U.S. Unexpectedly Fell in 2nd Quarter
BL
U.S. May Be Trapped in Japan-Like Deflation Within 3 Years,
Schroder Says BL
The Cleveland Fed (via
PragCap) takes a look at bank lending
volume pre- and post- recession trough. The chart is a
little unclear, but if you look closely, you can see that the
line for the 2007 recession is currently tracking well below
average, right around the worst one they have measured (1990).
The bad news: if we continue on the 1990 path, we've got
several more quarters of contraction before a turnaround
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Structured Notes Are Wall Street's `Next Bubble,' Whalen Says
BL
Using the same “loophole” that allowed OTC sales of CDOs and
auction-rate securities, firms are pitching illiquid structured
notes whose value is partly derived from bets on interest rates |
U.S. Is Bankrupt and We Don't Even Know It
Laurence Kotlikoff
Beware the light at the end of the tunnel
MW
Commentary: It's a debt train about to collide with federal obligations
Mapping US Treasuries – Here be deflation
FT Alphaville
Deflationary fears send Treasuries off charts
FT
Fed's Total 2-10 Year UST Monetization Over Next 12 Months- $340
Billion ZH
US House agrees $26bn in state aid
Obama signs emergency bill to halt teacher layoffs
AP
House passes state aid bill; Obama signs into law
Reuters
Oregon tax hikes don't stop revenue bleeding
Stateline
California City With $800,000 City Manager May Default On Debt, Warns S&P
BI
HUNGARY
Hungary Sees No Problems in Refinancing Debt Through 2012, Borbely Says
BL
FOMC MEETING ANALYSIS
Statement
FOMC Word For Word Changes ZH
Fed
Looks to Spur Growth by Buying Government Debt
BL
Fed Moves from "QE" to "QN"
NTrust
Fed Reverses Exit Plans, Sets $2 Trillion Floor for Holdings
BL
The Federal Reserve reversed plans to exit from aggressive
monetary stimulus and decided to keep its bond holdings level to
support an economic recovery it described as weaker than
anticipated.
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Fed Sees Recovery Slowing
WSJ
After cutting short-term interest rates nearly to
zero in December 2008, the Fed essentially printed money to expand
its portfolio of securities and loans to above $2 trillion, from
$800 billion before the global financial crisis. Its purchases of
mortgage-backed securities and U.S. Treasury debt, aimed at
keeping long-term interest rates down, were discontinued in March.
The Fed began talking about an "exit strategy" from the
unprecedented steps it took to prevent an even deeper recession.
But on Tuesday, the Fed shifted its stance.
The Fed, facing an economic recovery that it termed "more
modest" than anticipated, said it will stop shrinking its huge
portfolio of securities by reinvesting the proceeds of maturing
mortgages in U.S. Treasury debt.
Fed officials spent the weeks ahead of Tuesday's meeting
contemplating how to address an economy that was losing momentum.
The government estimated late last month that growth slowed in the
second quarter to a 2.4% annual rate, too slow to bring the
jobless rate down quickly. More recent data suggests that figure
could be revised down below 2%, raising questions about whether
the economy is, as Federal Reserve Chairman Ben Bernanke has put
it, achieving "escape velocity" so it can flourish without
extraordinary government support.
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Fed downgrades recovery outlook
FT
Monetary policy bias shifts toward easing
Deflationary fears send Treasuries off charts
FT
A downgrade of the US Federal Reserve’s economic outlook and a
pledge to purchase longer-term government as the Fed seeks to
maintain its extraordinarily easy monetary policy by not allowing
its $2,300bn balance sheet to contract.
The Federal Reserve announced it will buy longer-term
Treasuries to support the fragile economic recovery but left
benchmark overnight interest rates steady in a zero to 0.25 per
cent range. The announcement means that maturing bonds on the
Fed’s balance sheet will now be reinvested but does not constitute
a fresh round of quantitative easing.
“The makers of domestic monetary policy took the middle road between doing
nothing and expanding quantitative easing,” said Steven Ricchiuto, chief
economist at Mizuho Securities.”The decision to re-invest maturing Agency and
Agency MBS was maintaining the status quo.” “The initial response of the equity market, I believe, will be reversed as soon
as investors realise that the Fed only took a baby step when the economy needs a
giant leap” |
Most economists sees U.S. rate hikes beyond mid-2011 - poll
Reuters
The
median of forecasts was for a 20% chance of deflation over the next year
Monetary policy in a time of deleveraging
Nutting
Commentary: The Fed can't do much more to get credit flowing
Hoenig, Top Fed Official, Warns Fed Risks Repeating Past Mistakes
HP
Crudele:
”QE is the time-honored tradition used mostly by bankrupt,
underdeveloped nations to make its people feel richer...” |
Let's Be Honest, This Was Just The First Step Towards Way More
Quantitative Easing
BI
Fed Shuns Passive Tightening, No QE2 in Sight- Caroline Baum
BL
Why The Fed's Halfway Move Was Its Worst Option, And Today Was Bad
News For The Bulls
BI
Last night, we characterized the path the FOMC
took at its meeting today as one that “risks becoming the worst outcome.”
Making Replacement Purchases of securities is the option we liked least for the
markets. On the positive side, in taking this course of action, the Fed
has clearly indicated that they are willing to act should the recovery
falter. On the negative side, in shifting policy the Fed gives credence to
economic weakness, indicating that it warrants a response.
The problem is
this response will not move the needle in its influence upon the economy, and
for every sign of weakness that emerges, investors will be looking for a
response from the FOMC. Thus far, it is a
positive sign that the market did not take today’s move and extrapolate it into
a more pessimistic scenario. This offers hope that our fears may be
unfounded. That being said, it is still early and the FOMC just officially
eased policy and the S&P 500 lost 60 basis points today and the Russell 2000
lost 2%. If you are in the
bullish camp with us, you don’t feel good about that result.
More importantly, the Fed is now part of
the story. A few days ago it wasn't, and that's not good.
At this stage of recovery, you want Fed policy to be accommodating for
investing,
but you don’t want it to be the
reason for investing.
We view it from this perspective, from its April peak to its July low the S&P
500 dropped 17%. Despite the pain of the drop, there was a major positive
for investors, barely a word was heard from the Fed. The lone exception
was that the barely used Central Bank swap lines re-opened to help Europe.
The equity market bottomed on its own and rallied on its own, without an
adrenaline boost from the Federal Reserve. It is not often that the equity
market experiences a correction of such magnitude, without being accompanied by
a policy response from the Federal Reserve.
Now that the FOMC is back into the mix and intervening, that healthy progress in
the market is tainted.
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PIMCO- Basically The Fed Move Was Only Good For Blowing More
Bubbles BI
Here Is The Simple Reason Why QE Is Unnecessary
ZH
DODD FRANK ACT
AIG
Faces Fed Scrutiny as Dodd Law Spares Buffett's Bets
BL
US regulators tighten control over Wall St risk
FT
Fed staff delve deeper into riskier activities
RATING AGENCIES
Chief
Executives in U.S. Less Confident on Jobs, Survey Shows
BL
RRESIDENTIAL REAL ESTATE - PHASE II |
EXPIRATION FINANCIAL CRISIS PROGRAM
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PENSION & ENTITLEMENTS CRISIS
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The Fed Can
Print More Money, But It Can’t Print Jobs
KudlowVisualizing
Job Prospects By State ZH
GOVERNMENT BACKSTOP INSURANCE |
OTHER TIPPING POINT CATEGORIES NOT LISTED ABOVE
Study:
Recession Cost Small Businesses $2 Trillion
Inc.
Firms Spend More—Carefully WSJ
Companies in the U.S. are stepping up purchases of equipment
and software. But much of the spending is aimed at replacing older
equipment or to improve efficiency—not to raise production or
boost hiring.
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FLASH CRASH - HFT - DARK POOLS
Today's Dose Of "Crop Circle" Quote Stuffing Algos Focuses On V, DUG And
TRN ZH
MARKET WARNINGS
GOLD MANIPULATION
the DOW is up over 1000 points - Yet the public withdraws $50B and
this?
BarCap to slash jobs in cost-cuts FT
Several
hundred could go after sharp fall in market activity
Main Street's Boycott Of Capital Markets Succeeding- Barclays
First Casualty, To Fire Hundreds Due To Plunge In Market Activity
ZH
VIDEO TO WATCH...
QUOTE OF THE WEEK
“In reality, however,
borrowers – not lenders, were the primary bottleneck in Japan’s
Great Recession. If there were many willing borrowers and
few able lenders, the Bank of Japan, as the ultimate supplier of
funds, would indeed have to do something. But when there are
no borrowers the bank is powerless.”
Richard Koo -- The Holy Grail of Macro Economics
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ZH - Zero Hedge - Business Insider,
WSJ - Wall Street Journal, BL -
Bloomberg, FT - Financial Times |