Corn Price Plunges To Lowest Since July 1, Hits Revised Daily Limit As Sellers Outnumber Buyers By 2000 To 1
by Zero Hedge - September 30th, 2011 12:01 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Back in April, when we first discussed the hike in daily corn trading limits from $0.30 to $0.40, we had some cynical observations, namely that “inviting not only more vol (read bottom line for the business) but more margin, the CME is exposing speculators to far greater impacts from margin hikes (and drops). Which of course means a far great capacity and ability to kill any commodity rally dead in its tracks.” Well, there is no margin hike today (yet), although based on today’s action we fully expect one. The reason, we are currently at today’s down 40 cent limit, a price of $5.925 a bushel, the lowest since July 1, and by the looks of things it will get far worse: as the chart below demonstrates right now sellers outnumber buyers by a ratio of 2000 to 1. Expect this ratio to get even bigger once the CME hikes corn (and who knows what other commodity) margins as soon as today.
h/t John
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DiggSEC Report On Credit Raters Finds Leaks And Conflicts Of Interest
by Zero Hedge - September 30th, 2011 11:39 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
In what is perhaps the biggest face-palm moment of the day, the SEC’s summary report on credit raters found 22 pages worth of supervisory failure and conflicts of interest concerns at each and every one of our NRSROs. However, perhaps the most notable headline, via Bloomberg was potentially much more litigiously serious:
*SEC SAYS `LARGE’ CREDIT RATER APPEARED TO LEAK PENDING RATING
*SEC DECLINED TO IDENTIFY WHICH RATER MAY HAVE LEAKED DECISION
Now who could it be?
Further headlines, via Bloomberg, include:
*SEC STAFF FOUND CONCERNS AT EACH OF THE NRSROS
The Staff is concerned that the apparently unnecessary delay in release and publication of some credit rating actions increases the possibility that pending credit rating actions will be inappropriately disseminated.
*SEC STAFF FOUND FAILURE IN MAKING TIMELY/ACCURATE DISCLOSURES
*SEC STAFF CITES SOME FAILURE TO MANAGE CONFLICTS OF INTEREST
But have ni fear, this will not continue:
*SEC DECLINED TO NAME NAMES IN CREDIT RATERS REPORT FOR FAIRNESS
*SEC STAFF EXPECTS CREDIT RATINGS AGENCIES TO ADDRESS CONCERNS
2011 Nrsro Section15e Examinations Summary Report
Robert Eisenbeis | Do the math
by Zero Hedge - September 30th, 2011 11:36 am
Courtesy of ZeroHedge. View original post here.
Submitted by rcwhalen.
Bob Eisenbeis is Cumberland’s Chief Monetary Economist. Prior to joining Cumberland Advisors he was the Executive Vice President and Director of Research at the Federal Reserve Bank of Atlanta. Bob is presently a member of the U.S. Shadow Financial Regulatory Committee and the Financial Economist Roundtable. His bio is found at www.cumber.com. He may be reached at Bob.Eisenbeis@cumber.com. — Chris
The deficit reduction ‘super commission’ has now begun its deliberations amid fractious discord among its members. The official target is to reduce the deficit by a total of $1.5 trillion over a period of 10 years, although the actual number may still be up in the air. The question is whether this is a sincere effort or simply a cosmetic and symbolic action to create the appearance of progress as the election next year comes into increasing focus.
Let us briefly the review the problem. The country is on a non-sustainable fiscal path. Government revenues have been nearly constant as a percentage of GDP, which has averaged 17.9 percent of GDP since 1952. In contrast, while expenditures have averaged over 20 percent of GDP, spending has been on a stead upward trend, standing now at about 25% of GDP. The current deficit is about 10% of GDP, which is the gap between revenues and expenditures.
Unless the current gap is addressed, the deficit will only become worse. OMB projections show that under likely scenarios entitlement spending – principally Social Security and healthcare – will exceed expected revenues by 2050, leaving nothing for discretionary spending or defense. The main cause of this problem is not, as the current presidential debates may imply, Social Security. Rather, the principal problems are accelerating expenditures on Medicaid and Medicare.
Now consider what the ‘super commission’ will accomplish if it achieves its goal of reducing the deficit by $1.5 trillion within 10 years. Current GDP is slightly less than $15 trillion, and assuming it were to grow at even the modest rate of 1.5% per year over that period, the cumulative estimated deficit would total about $10.5 trillion. A reduction in this total by $1.5 trillion is trivial compared to the size of the problem.
Even if the commission were totally successful in achieving its goal, we would still be…
ECRI Makes a Recession Call
by Chart School - September 30th, 2011 11:35 am
Courtesy of Doug Short.
Today the ECRI publicly announced that the U.S. is tipping into a recession.
Early last week, ECRI notified clients that the U.S. economy is indeed tipping into a new recession. And there’s nothing that policy makers can do to head it off.
ECRI’s recession call isn’t based on just one or two leading indexes, but on dozens of specialized leading indexes, including the U.S. Long Leading Index, which was the first to turn down, before the Arab Spring and Japanese earthquake to be followed by downturns in the Weekly Leading Index and other shorter-leading indexes. In fact, the most reliable forward-looking indicators are now collectively behaving as they did on the cusp of full-blown recessions, not "soft landings."
Read the report here.
The Weekly Leading Index (WLI) growth indicator of the Economic Cycle Research Institute (ECRI) posted another week-over-week decline, now at -7.2 from last week’s -6.7. The interim high of 8.1 was set in the week ending on April 15.
For a close look at this movement of this index in recent months, here’s a snapshot of the data since 2000.
Now let’s step back and examine the complete series available to the public, which dates from 1967. The ECRI WLI growth metric has had a respectable record for forecasting recessions and rebounds therefrom. The next chart shows the correlation between the WLI, GDP and recessions.
A significant decline in the WLI has been a leading indicator for six of the seven recessions since the 1960s. It lagged one recession (1981-1982) by nine weeks. The WLI did turned negative 17 times when no recession followed, but 14 of those declines were only slightly negative (-0.1…
Will Start Of Landesbank Mortgage Litigation Against Bank Of America Push Stock To New 52 Week Lows?
by Zero Hedge - September 30th, 2011 11:16 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
When all is said and done, Bank of America will have no choice but to charge its 6 to 8 remaining clients about one million dollars each time an ATM transaction is executed because the bank will be so deep in mortgage putback litigation it will have a negative market cap. The latest news for the bank is about the worst possible kind: the wave of lawsuits filed against the Countrywide toxic mortgage receptacle has just jumped across the Atlantic, and after the Norwegian sovereign wealth fund recently started proceedings, the real threat, German banks, have just realized that Bank of America is nothing but a legal liability piggy bank and have sued Moynihan’s house that taxpayers built. Furthermore, since it is precisely purchases of toxic MBS and RMBS from BAC and other banks that caused the collapse of the Landesbanken system, with Germany going on the offensive and now trying to recoup as much money as they can, look for gray market putback estimates to soar by another $20-40 billion, which will result in BAC selling the other half of its stake in the Chinese Construction Bank any minute, especially with Chinese banks starting to tumble like dominoes on Chinese slow down concerns.
From Reuters:
JPMorgan Chase & Co and Bank of America Corp were hit with new lawsuits by investors seeking to recover losses on $4.5 billion of soured mortgage debt, expanding the litigation targeting the two largest U.S. banks.
Sealink Funding Ltd said between 2005 and 2007 it bought nearly $2.4 billion of residential mortgage-backed securities (RMBS) from JPMorgan and $1.6 billion from Bank of America in reliance on offering materials that were misleading about the quality of the underwriting and underlying loans.
According to court papers, Sealink is an Irish entity that oversees RMBS purchased by special purchase vehicles once sponsored by SachsenLB.
Another plaintiff, Landesbank Baden-Wurttemberg, raised similar claims in a separate lawsuit against JPMorgan over $500 million of RMBS that it said it bought.
The plaintiffs seek compensatory and punitive damages.
Look for BAC to drop to under $6 once the market realizes the implications of this putback tsunami which has just hit the inverse mother lode: a lot of very pissed off German banks.
h/t Manal Mehta
It is Time to Put Up or Shut Up
by Zero Hedge - September 30th, 2011 11:09 am
Courtesy of ZeroHedge. View original post here.
Submitted by thetechnicaltake.
It is time for the market to put up or shut up!
Many of the indicators that I look at suggest that the markets are at an inflection point. For example, some of our shorter measures of investor sentiment from the Rydex data series have gotten so extreme that they are suggesting there can only be only two outcomes to the current volatile trading range. Either the market will go strongly higher or we should have a waterfall decline. There is nothing insightful to analysis that says we will go higher or lower, but the point is that the resolution to the current volatile trading range should occur soon and the move should be substantial. The direction just isn’t known.
If I were to put numbers or probabilities on to which scenario is most likely, it would probably be 80% resolution to the upside and 20% resolution to the downside. That is what history would tell us, and identifying what the outcome will be is only a guess in my opinion. Furthermore, I don’t think you need to know what the outcome will be to survive in the market. It is more important to understand what is happening and then take action.
Figure 1 is a daily chart of the S&P Depository Receipts (symbol: SPY) going back to the bear market top in October, 2007. The red dots are key pivot points. Look to the right hand edge of the chart and the cluster of 3 pivot points. A close below three pivots is only seen in a bear market. The low pivot here comes in at 112.58. So if we close below this level, we should see continuation of the bear market for equities. The alternative is that this level will hold and prices will move higher.
Figure 1. SPY/ daily
In summary, I see the equity markets at a pivotal juncture. The three pivots will either be the bottom or prices will head significantly lower.
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Longwei Petroleum Provides Corporate Update
by Insider Scoop - September 30th, 2011 10:58 am
Courtesy of Benzinga.
Longwei Petroleum Investment Holding Ltd. (NYSE: LPH) today provided a corporate update.
“The Company’s operations continue to perform well, and we have had solid first fiscal quarter 2012 results,” said Cai Yongjun, Chairman and CEO of Longwei. “This follows our strong fiscal year 2011 performance, which produced record revenues and earnings. Our revenues increased 40% to $482 million in fiscal 2011, and adjusted net income increased 44% to $68 million or $0.67 earnings per share (adjusted net of non-cash warrant derivative liability expense).”
“We are disappointed with the drop in our share price, which we believe does not correlate to our successful operating results,” stated Mr. Cai. “We continue to move our operations forward and plan to complete the acquisition of the Huajie Petroleum assets during this next quarter using Company cash generated through operations.”
As of June 30, 2011, Longwei had paid a RMB 550 million (approximately $85.1 million USD) deposit toward the total purchase price of RMB 700 million (approximately $108.3 million USD) for the purchase of the assets of Huajie Petroleum, a fuel storage depot in northern Shanxi Province with a 100,000-metric-ton storage capacity.
“Certain U.S.-listed Chinese stocks have been much maligned in the marketplace over accounting and corporate governance issues, which we are not involved in. We have a clean financial audit opinion as of June 30, 2011. Unfortunately, the ongoing volatility in the capital markets and the turmoil in the Chinese small-cap sector have pulled stocks in our sector down considerably,” stated Michael Toups, CFO of Longwei.
Longwei has undergone two reviews of certain of its filings by the Securities and Exchange Commission (“SEC”) with the effectiveness of its S-1 registration statement in March 2010 and S-3 registration statement in February 2011.
Guest Post: Our Many Layers Of Entitlement
by Zero Hedge - September 30th, 2011 10:36 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Submitted by Charles Hugh Smith from Of Two Minds
Our Many Layers of Entitlement
The entitlement mindset includes much more than government benefits programs.
The word entitlement commonly refers to government benefits to which we are entitled as taxpayers and/or citizens/residents. But there are layers of entitlement in the American psyche far beyond government benefits programs.
Let’s start with the government benefits entitlements. The programs most people refer to as entitlements are Social Security and Medicare, which taxpayers pay for with payroll taxes (even if the money just goes into one giant Federal pot).
Beyond these “I paid into them” entitlements are the “welfare” entitlements of Medicaid, Section 8 Housing, SNAP/food stamps, etc., which are paid out of general tax revenues and which are available to anyone who qualifies, regardless of their status as taxpayers.
Buried within Social Security is another large entitlement program for the disabled and dependents (widows and orphans).
Veterans are entitled to benefits as a result of their military service, as are their families.
Employers pay for other employment-related entitlements: Federal and state unemployment, workers compensation and disability insurance, etc.
The entitlement mindset is thus firmly established in the American psyche. If we experience bad luck and/or the negative consequences of poor choices, we have been trained to expect the government at some level to alleviate our suffering, cut us a check or otherwise address our difficulties.
The poisonous problem with the entitlement mindset is intrinsic to human nature: once we “deserve” something, then our minds fill with resentment and greed, and we focus obsessively on creating multiple rationalizations for why we “deserve our fair share.”
Eventually this leads to a government that has been reduced to a competitive stripmining operation in which the spoils are divided up amongst the most politically powerful Elites: in other words, the government we now have.
The entitlement mindset atrophies self-reliance, adaptability and flexibility, all key survival traits. If the government will “fix” our health, we no longer feel responsible in the way one does if there is limited government/employer-provided healthcare. If we expect our Social Security retirement regardless of what other conditions may be affecting the global economy or our nation, then we stop being responsible for managing our financial affairs in the same…
Personal Consumption Expenditures: Price Index for August
by Chart School - September 30th, 2011 10:35 am
Courtesy of Doug Short.
The monthly Personal Income and Outlays report was published today by the Bureau of Economic Analysis. The first chart shows the monthly year-over-year change in the personal consumption expenditures (PCE) price index since 2000. I’ve also included an overlay of the Core PCE (less Food and Energy) price index, which is Fed’s preferred indicator for gauging inflation.
The latest Headline PCE price index YOY rate of 2.86% is an increase from last month’s upwardly revised 2.78%. The Core PCE index increased to 1.65% from last month’s upwardly revised 1.58%.
I’ve calculated the index data to two decimal points to highlight the change more accurately. It may seem trivial to focus such detail on numbers that will be revised again next month (the three previous months are subject to revision and the annual revision reaches back three years). But PCE is a key measure of inflation for the Federal Reserve, and the price increases in oil and gasoline, although now well off their interim highs, puts consumer behavior in the spotlight.
A core PCE range of 1.75% to 2% is generally mentioned as the target for the Federal Reserve’s price-stability mandate.
For a long-term perspective, here are the same two metrics spanning five decades.
Note: I use the data from Table 9 in the full release and tables available here.
The Shanghai Indicator
by Chart School - September 30th, 2011 10:35 am
Courtesy of Doug Short.
I’ve highlighted the Shanghai index many times in my commentaries, pointing out that a multi-year flag/pennant pattern was forming. On April 12th the Shanghai was at the top of this pattern and my advice was to harvest gains and lower risk exposure because key multi-year resistance was at hand (see post here). Since that time the Shanghai index is down over 20%! Any global impact during that time? here have been few places to hide! Stock markets around the world are lower, and broad based Commodities indexes (CRB/CRX) are lower too. Is the Great Escape part 2 in play?
When it comes to portfolio construction for professional and individuals, the Shanghai index was suggesting back in April to lower risk exposure. The chart above is sending another key message for portfolio construction! If this crossroads of support DOES NOT hold for the Shanghai index, the odds of GE2 picking up speed is huge, and the message that would be sent by a breakdown would be to have risk exposure down to a minimum!
Investors might have wished they had dialed back risk exposure when the Shanghai index broke the bottom of the multi-year flag/pennant pattern back in May (see this commentary). Don’t miss this opportunity to do the same if support does not hold in the Shanghai!
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