Thursday, December 2, 2010

Morning Update/ Market Thread 12/2 – The Whole World in Bonds…

Good Morning,

Equity futures are below break even this morning. The dollar is higher, euro lower, bonds are slightly lower as are both oil and gold.

The Monster Employment Index dropped from 136 to 134 in November. Again, not a terribly important measurement, but it is used to set expectations for tomorrow’s BLS release.

Weekly jobless claims jumped from last week’s trumped up 407,000 to 436,000. Consensus was expecting 425,000 – here’s Econospin:
Jobless claims failed to extend their push lower in the latest data. Initial claims came in at a higher-than-expected 436,000 in the November 27 week vs a revised 410,000 in the prior week. Yet next to the 410,000, the latest total is the best of the recovery. The improvement is reflected in the four-week average which is down a convincing 5,750 to 431,000 for its best level of the recovery.

Continuing claims also ended their run of improvement, rising 53,000 in data for the November 20 week. Yet the four-week average did improve, down 29,000 to 4.289 million for its best level of the recovery. The unemployment rate for insured workers held unchanged for a third week at 3.4 percent. Those on extended benefits and those filing for emergency claims both increased.

The latest data in this series are a bit disappointing yet fall far short of reversing prior improvement. Four-week averages in this report point to gains for tomorrow's monthly employment data. Markets are showing no significant initial reaction to the results.

Actually the markets sank following this release. If you remember from last week, the actual number of claimants jumped by more than 50k yet was adjusted lower. This week the number was pushed higher by nearly the same number – I’m assuming that’s due to the holiday week, but the DOL does not state so.

Pending Home Sales data is released at 10 Eastern.

Yesterday’s 250 DOW point romp came on yet another giant gap higher, thus denying any retail investor a chance to enter. Again, this market has been taken over so thoroughly that there are very few retail investors left – or should be. Note that the rumor of the U.S. bailing out Europe came in the afternoon well after the romp had already occurred. What’s that tell you about insider knowledge? And then the rumor was denied, or was it? The last rendition I heard is that the “Fed” was going to “lend” $300 billion to the IMF (not a legal entity) so that they in turn could enslave Europe – on OUR nickel. I did hear that Congress would have to approve such funds, but don’t bet your life on it. And all I can say is that should it occur, it won’t be a bailout of the people of Europe, it will be yet another bank bailout for which they will be simultaneously enslaving us as well! THIS NONSENSE HAS TO BE STOPPED.

The media is making WikiLeak’s Assange out to be a criminal, they are doing a full court press. I note that this morning CNN has a headline that says WikiLeak’s release of bank data “Won’t wreck banks.” Just so that you’re not scared, right? But note that’s the worry, otherwise they wouldn’t be making a headline out of it! And thus they turn a whistleblower who’s not even the actual whistleblower into a criminal! The truth is that he is protecting the actual whistleblower by hiding his identity. Why does he have to hide their identity? Because whistleblowers who provide meaningful data in this society get whacked or attacked! It is our Administration and bankers who belong on the most wanted list, certainly NOT Assange. To all Americans who think you are being patriotic by bashing Assange, you are in fact on the opposite side with your "thinking" and need to really contemplate the brainwashing that’s transpiring.

And finally under pressure the “Fed” released data on the more than $9 Trillion it lent out and backstopped during this still evolving financial crisis. You knew they wouldn’t release it all, and indeed we’re now learning they didn’t:
Fed Withholds Collateral Data, Denying Taxpayers Gauge of Risk

Dec. 2 (Bloomberg) -- The Federal Reserve withheld details on individual securities pledged as collateral by recipients of $885 billion in central bank loans, denying taxpayers a measure of the risks they faced from its emergency aid.

The central bank yesterday released data on 21,000 transactions from $3.3 trillion in emergency lending to stem the financial crisis. July’s Dodd-Frank law required the Fed to disclose the names of borrowers, the size and interest rates of loans, and “information identifying the types and amounts of collateral pledged or assets transferred.”

For three of the Fed’s six emergency facilities, the central bank released information on groups of collateral it accepted by asset type and rating, without specifying individual securities. Among them was the Primary Dealer Credit Facility, created in March 2008 to provide loans to brokers as Bear Stearns Cos. collapsed.

“This is a half-step,” said former Atlanta Fed research director Robert Eisenbeis, chief monetary economist at Cumberland Advisors Inc. in Sarasota, Florida. “If you were going to audit the facilities, then would this enable you to do an audit? The answer is ‘No,’ you would have to go in and look at the individual amounts of collateral and how it was broken down to do that. And that is the spirit of what the requirements were in Dodd-Frank.”

Fed spokeswoman Susan Stawick in Washington declined to comment.

Public Disclosure
The public disclosure of the lending data should have been prevented because it could spur runs on the banks listed, said Darrell Duffie, a finance professor at Stanford University.

“That’s a very destructive process,” he said. Still, with the data released, “if you’re justified in getting the information, then you’re justified to get enough information to judge the risk the Fed took,” he said.

It is “specifically impossible” to know how much risk taxpayers were taking by looking at pools of collateral grouped by asset class and rating, said Sylvain Raynes, a principal at R&R Consulting in New York and co-author of “Elements of Structured Finance,” published in May by Oxford University Press.

“I need to know the individual composition because a $2 billion pool can be one asset of $2 billion, which would be very risky, or 2,000 assets of $1 million each, and that’s not risky at all,” Raynes said. “The spirit of Dodd-Frank was not respected, and they used the vagueness in the wording of the law to weasel out of fulfilling their duty to the American people.”

What bullshit! How long are the people going to stand for this? You go to the airport and you let them grope you? You apply for a loan and they will demand to see every last aspect of your personal finances, yet when they STEAL money from you, you are not allowed to see jack. That’s because the “FED” is an illegal enterprise who never should have been given the power to create money – its WAY past time to take that power back and to imprison those who would get in the way of that occurring.

And now we’re learning that the central banks are going to have their first European Union joint bond offering! Again, this is probably not legal, but here’s the article:
Europe bailout fund to issue bonds

EFSF BONDS: EUROPE’S BAILOUT fund will issue € 5 billion-€ 8 billion of bonds next month, in what will be the first ever debt offering by the euro zone as a single entity.

The European Financial Stability Facility (EFSF) will use the triple-A rated debt to help fund its part of the € 85 billion Irish rescue.

Klaus Regling, the head of the facility, said in Singapore yesterday most investors would come from Europe, but there had been strong interest from Asia and the Middle East, where the offering would be a “new way to diversify for investors who are looking for high-quality triple-A assets”.

The bond is likely to be priced at a higher interest rate than similarly rated debt from Germany and France. The news came as prospects of the European Central Bank increasing its purchases of bonds led to market interest rates falling for the so-called peripheral euro zone countries such as Spain, Italy and Ireland.

RIIIIGGGHHT! Give me a BREAK! Triple-A rated? What a joke! “Testing demand,” again, what a joke! We know where the “demand” will come from… it will come from the same asshat bankers who simply make up the money from nothing and again indebt the people who will have to slave their lives away to pay it! What a con, the greatest con in the history of the planet by far.

SPX 1200 will now act as support and it appears that we have a wave 5 underway. This wave will be based on nothing but phony money, while real people with what little money they have left continue to withdraw their money from the markets, now into our 31st week of continuous mutual fund outflows. Wave 5’s are notoriously difficult to play – sometimes they truncate, sometimes they extend. They are the distribution wave, the wave that causes people to capitulate just in time for the real reversal to finally come. Front running, as I’ve repeatedly said, is a fool’s game – as is this entire market at this juncture in history.

Fool’s Overture: Roger Hodgson