THESIS 2011: Beggar-Thy Neighbor -(OPEN ACCESS - 37 Pages of 217) >> GO

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FEBRUARY 2012: MONTHLY MARKET COMMENTARY - (Subscription Plan II)

The European Central Bank's (ECB) unprecedented use of a three year, low cost LTRO (Long Term Repurchase Agreement) policy initiative may have removed some of the short term pressures from the EU Banking crisis, but like the Greenspan PUT, the unintended consequences are not yet fully understood. One is the moral hazard which is fostering financial "games" to be played with reckless abandon. Some of the mischievous and cunning games are frankly questionably as being even legal! But then, nothing is illegal if the regulators and those organizations charged with surveillance are not bothering to investigate. Extend > Pretend > Bend is the new approach. MORE>>

MARCH 2012: GLOBAL MACRO TIPPING POINTS -(Subscription Plan III)

The Obama Budget is A Campaign Budget. Nothing changes until after the fall election and precisely on december 31st, 2012. Suspect budget assumptions and and the outcome on this date will make a $5T difference over 10 years. The markets will not wait and be hedl hostage to the outcome. The World Economic Forum's 2012 Risks Report, the IMF's Global Financial Stability Report and our proprietary Aggregated Global Risk Level Index (AGRLI) all suggest that like the US, global macroeconomic risks are increasing. The consensus findings are that the center of gravity of Global Macro issues are a combination of Chronic Fiscal Imbalances and a Global Governance Failure. We submit the US Budget as evidence of the later.   

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MARKET ANALYTICS & TECHNO-FUNDAMENTAL ANALYSIS

FEBRUARY 2012: MARKET ANALYTICS & TECHNICAL ANALYSIS - (Subscription Plan IV)

The market action since March 2009 is a bear market counter rally that has completed a classic ending diagonal pattern. The Bear Market which started in 2000 will resume in full force when the current "ROUNDED TOP" is completed. We presently are in the midst of of a "ROLLING TOP" across all Global Markets. We are seeing broad based weakening analytics and cascading warning signals. This behavior is typically seen during major tops.  This is all part of a final topping formation and a long term right shoulder technical construction pattern.

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>> LONGWave >> VOLUME & VOLATILITY December 12th, 2011

EURO EXPERIMENT :  ECB's LTRO Won't Stop Collateral Contagion! Released December 27th, 2011
I would argue that the problem short term is a shortage of real collateral and that US dollar cash, versus 'encumbered' cash flow, is now king. It is clear that the rampant advancing Collateral Contagion will quickly eat the futile LTRO attempt like ravenous wolves. A well circulated Tweet from PIMCO bond king Bill Gross said it all: " What does LTRO stand for? 1- A shell game; 2-Cash for trash; 3 Three-card Monti; or 4. All of the above." Here is the stark reality of what forced the ECB to offer unprecedented three year loans at absurd rates and most alarmingly, the acceptance of collateral that no other financial institutions will accept. The ECB has sacrificed its balance sheet in yet another EU "kick at the can". MORE>>

ECB - LTRO 2 -- Offering Day

Europe banks hungry for second helpings 02/29/12 FT

• The Unpredictable Market Reaction To LTRO-2 02/29/12 BI
• The Final LTRO Preview - Bottoms Up 02/29/12 Zero Hedge
• The LTRO Bubble Has Popped, And Europe Is About To Find Itself In A World Of Trouble 02/29/12 BI
• Beware sovereign stress if ECB backdoor bet backfires 02/29/12 FT

HOUSING - Home prioces Decline

Home Prices Decline 02/29/12 WSJ

• Is Housing An Attractive Investment 02/29/12 Zero Hedge
• The Housing Recovery In One Index 02/29-12 Lance Roberts

• Consumer Debt Falls on Less Mortgage Borrowing 02/28/12 WSJ
• Extend-and-Pretend-coming-end 02/28/12 James Quinn
• Slower Foreclosures for Costliest Homes 02/28/12 WSJ
• Housing is the rotting core of US recovery 02/28/12 Robert Reich - FT
• Fed MBS Purchases May Be Breach Into Fiscal Policy 02/28/12 Plosser

IRELAND - EU Treaty Vote

Irish EU treaty vote threatens chaos 02/29/12 Ambrose Evans-Pritchard, Telegraph

• Ireland calls vote on European fiscal pact 02/29/12 FT
• Unsuccessful Irish Referendum Would Prevent A Future ESM-Funded Bailout 02/29/12 Zero Hedge
• Damn the Voters, Full Bailouts (and Existing Policies) Ahead 02/29/12 Mish

ECB - LTRO #2

Did Nowotny Just Take The Market's Punchbowl Away? 02/27/12 Zero Hedge

It should come as no surprise to readers as it has been long pointed out that the need (and expectation) for all "transitory" measures to become permanent and exponentially larger to maintain this mirage of sustainability, but comments from ECB's Nowotny just took the shine off the day as Gold, Oil, Financials, ES, and AAPL all dropped notably (pulling back to TSY's outperformance) as he strongly suggested this is it (via Bloomberg)...

• NOWOTNY SAYS SMP IS MORE OR LESS ON HOLD
• NOWOTNY SAYS 3-YEAR LOANS WILL NOT BECOME A REGULAR FEATURE
• NOWOTNY SAYS NOT `CONVINCED' ABOUT CASE FOR HIGHER FIREWALL
• NOWOTNY SAYS ECB HAS PROBLEM OF ADDICTED BANKS

Europe gets ready for round two of bank loans 02/27/12 Telegraph

• Draghi must be wary of Ltro elixir’s power 02/27/12 FT
• At the E.C.B., the Tweak That Quietly Saved the Banking System 02/27/12 NY Times
• A Sneak Preview Of The Tranching & Subordination Of Eurozone Government Bonds 02/27/12 Zero Hedge
• Presenting Europe As A Giant CDO 02/27/12 Zero Hedge
• Lloyds and RBS eye €15bn ECB loans 02/27/12 FT

EU - Capital Flight Continues

GREECE - "Selective Default"

S&P Declares Greece in Default 02/28/12 WSJ Standard & Poor's cut Greece's long-term credit rating to selective default from double-C. The move was expected, as S&P said this month that " it would consider Greece in default if it added "collective-action" clauses to its sovereign debt, effectively forcing all bondholders to accept a bond-swap offering. ..."

S&P - FULL RELEASE

• S&P Downgrades Greece to "Selective Default" 02/28/12 BI - Greece is now in selective default according to S&P, which just amended its rating from CC (junk) to SD (selective default). This comes after Greece instituted retroactive collective action clauses to force bondholders to participate in an upcoming debt restructuring and submitted a formal offer for its creditors to participate in a bond swap last week. The "selective default" designation differentiates what's happening right now from disorderly default (or "D" rating), since the current debt restructuring is being managed and guaranteed by other EU countries. The move is primarily a technical one; private Greek bondholders are being asked to voluntarily trade in their holdings of Greek bonds for ones with longer maturities, but are now being forced to do so through a collective action clause (CAC) that could make this restructuring obligatory.

G-20 FINANCE MINISTERS - Mexico City

G-20 Defers Move On Aid for Europe 02/27/12 WSJ - Officials from the world's leading economies deferred for months key decisions on international aid for Europe as they awaited more euro-zone action to fight the Continent's debt crisis. They anticipate an agreement to expand Europe's rescue fund next month. That move "will provide an essential input in our ongoing consideration to mobilize resources" to the International Monetary Fund.

European leaders this week plan to discuss combining money left in a temporary bailout fund with a permanent facility launching this summer, to create a combined €750 billion ($1 trillion) fund that could support struggling economies such as Italy and Spain. But Germany's reluctance is likely to push that decision later into March, or further into the spring. At the same time, the IMF wants to expand its lending capacity by $500 billion to almost $1 trillion by raising money from its member nations. Together, the European and IMF funds could provide $2 trillion in rescue capacity to guard against further global turmoil.

• G20 to Europe: show us the money 02/27/12 Reuters
• G20 insists eurozone must help itself 02/27/12 FT
• G20 turns up pressure on Germany 02/27/12 FT
• Mantega calls for more eurozone flexibility 02/27/12 FT
• G20 Inches Toward $2 Trillion in Rescue Funds for Europe 02/26/12 Reuters

Merkel’s intransigence 02/2/12 FT

GERMANY - Bundestag Backs Bailout

Germany Approves Greek Aid - Lower House's Overwhelming Approval Gives Merkel a Mandate to Approve Aid Package in Brussels This Week. 02/28/12 WSJ

• der SPIEGEL: 'Europe is Pouring Money Into a Bottomless Barrel' 02/28/12 Spiegel
• Merkel Takes Heat on Greece 02/28/12 WSJ
• der SPIEGEL: Merkel Rebukes Minister for Comments on Greece 02/28/12 Spiegel
• Merkel- No Guarantee Second Greek Bailout Will Work 02/28/12 Zero Hedge

EU Demographic Problem - 02/28/12 Reuters Graphic Behind the ugly economic news coming out of Europe – as the eurozone seems to be heading into its second recession in less than three years – lies a still more ominous set of data that is likely to have repercussions for Europe’s economy and the choices available to its policymakers for many years to come. The consequences of an aging citizenry are numerous. First, and most dramatically, in any society, retirees consume a disproportionate percentage of a government’s social spending, ranging from pensions to healthcare. Secondly, they tend to consume fewer consumer goods, meaning that they aren’t contributing to the economy’s growth in that way, either. Finally, when they retire from the workforce – which happens at a relatively early age in many European nations – they contribute far less to government tax revenues. Economies already battling to balance budgets and tackle lofty public debt levels will face additional challenges as a result.

More burden on the EU "Social Entitlement Program" and significantly less people to pay

How Exactly Does that work?

Smuckers investor presentation

GAS PRICES - Call For Action Building

Political Battle Over Oil Prices Heats Up 02/27/12 WSJ

• Gas Prices Annoy Consumers but Don't Dim Outlook Yet 02/27/12 WSJ
• Oil Weighs on Some Asia Markets 02/27/12 WSJ
• How Ben Bernanke Should Deal With Higher Oil Prices 02/27/12 BI
• Surging Gas Prices Threaten One Of The Best Years American Farmers Have Ever Had 02/27/12 BI
• There's Been A Major Swing In What People Are Scared Of In Just The Last 8 Days 02/27/12 BI

Countdown to Market Peak Has Begun 02/28/12 Puplava the annual rate of change in oil prices (red line, shown inverted and advanced), the S&P 500 (black), and the ISM Manufacturing PMI (blue line). The rate of change in oil prices leads the rate of change in both the ISM and the S&P 500 and the recent advance in oil is pointing to economic and market weakness by the summer. Note the two peaks in the red line for oil (again, shown inverted) which indicates we may see a small sell off in late spring followed by a subsequent sell off in early summer.

Financial Repression: How Sneaky Governments Steal Your Money 02/27/12 Munknee.com

Extend And Pretend Coming To An End 02/27/12 Jim Quinn - Burning Platform

In the U.S. we now have the perfection of cloaked crony capitalism: corporate cartels use their vast concentrations of capital and revenue to buy the political leverage needed to write regulations specifically designed to eliminate competition. Recall that the most profitable business model is a monopoly or cartel protected from competition by the coercive Central State. Imposing complex regulations on small business competitors effectively cripples an entire class competitors, but does so in "stealth mode"--after all, more regulations are a "good thing" (especially to credulous Liberals) which "protect the public" (and every politico loves claiming his/her new raft of regulations will "protect the public.") This masks the key dynamic of crony capitalism: gaming the government is the most profitable business model. Where else can you "invest" a few hundred thousand dollars (to buy political "access" and lobbying) and "earn" a return in the millions of dollars, and eliminate potential competitors, too? No other "investment" even comes close.

Portugal, Italy, Greece And Spain Owe $20 Billion To Big Drug Companies 02/27/12 BI

Animation- America's Metamorphosis To A Welfare State 02/27/12 NY Times

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