The Natural Gas Massacre Gets Bloodier
by Zero Hedge - May 24th, 2012 10:38 am
Courtesy of ZeroHedge. View original post here.
Submitted by testosteronepit.
Wolf Richter www.testosteronepit.com
The plight of natural gas driller Chesapeake Energy could almost make you feel sorry for the board of directors and CEO Aubrey McClendon. He lost his chairmanship after his conflicted entanglements and an in-house hedge fund seeped to the surface. The company announced it may run out of cash to fund its drilling operations next year. Fitch, in downgrading Chesapeake’s Issuer Default Rating and senior unsecured ratings to BB-, estimated that the shortfall this year alone would reach $10 billion—in the first quarter, the company bled $3 billion in cash—and that it would be forced to dump up to $20 billion in assets to get through this. But Chesapeake’s ability to get new money should not be underestimated during these crazy times when the Fed keeps iron-fisted control of the credit markets with its zero interest rate policy. Investors are dying for yield, at any risk. So Chesapeake got a loan of $4 billion from Goldman Sachs and Jefferies Group to bridge the current hole until some asset sales come through, hopefully. And all due to the low price of natural gas and the ugly economics of fracking.
Fracking, which allows drillers to get gas and oil from shale deep underground, triggered a revolution. Gas production in the US has been setting new highs, and as supply overwhelmed demand, prices have collapsed. Gas in storage is at a record high for this time of the year, and some doom-and-gloom prophets maintain that storage will reach capacity this fall, and that producers won’t be able to get rid of their gas and will have to flare it, pushing its price to zero.
However, natural gas for June delivery settled on Wednesday at $2.73 per million Btu on the New York Mercantile Exchange. A 44% jump from its April 19 low of $1.90 per million Btu, but still only half the five year average, and below the already low price at the beginning of the year. As this chart shows, the recent uptick isn’t much of a salvation for the beleaguered drillers.
In fracking, during the initial phase of production, high pressure blows a huge quantity of gas out the well—and the quantity of the first 24 hours, the “initial production,” is bandied about to investors and lenders,…
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DiggOslo Stock Exchange Fights Back Against HFT And Quote Stuffing
by Zero Hedge - May 24th, 2012 10:33 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
As High-Frequency-Trading rapes and pillages its way across global capital markets, perhaps it is no surprise that the country that gave the world ‘Vikings’ would be the first to stand up to the computerized hordes. In a breakthrough moment of clarity, The Financial Times reports, the Oslo Stock Exchange will issue punitive changes to traders if they send too many orders into the exchange that do not result in deals being done.
This first-of-its-kind crackdown on ‘Quote Stuffing’ comes after the exchange has seen a surge in the number of orders flooding its systems and while the bourse does not quite go so far as to say HFT is “in itself necessarily negative for the market”, it says the placement and cancellation frequency of trades has reduced the efficiency of its market. Bente Landsnes, chief executive of Oslo Bors, said: “A market participant does not incur any costs by inputting a disproportionately high number of orders to the order book, but this type of activity does cause indirect costs that the whole market has to bear. The measure we are announcing will help to reduce unnecessary order activity that does not contribute to improving market quality. This will make the market more efficient, to the benefit of all its participants.” From September 1st the exchange will limit each trader to 70 orders for every trade executed and any excess of that ratio will be charged $0.0008 per order. We are sure the NASDAQ, wanting to make up for its SNAFBU, will be next in line to punish the pernicious penny-pinchers.
Naturally, we fully expect those very much irrelevant, and lately totally tarnished US trading venues such as the now ‘butt of all jokes’ Nasdaq, to attempt to poach even more lowest common denominator HFT traffic from Europe, and provide even more “liquidity” rebates to Algo-Matic, in the process pushing electronic trading as a % of total nearly to triple digits.
Will the Grexit be Euro positive, or Euro negative?
by Zero Hedge - May 24th, 2012 10:14 am
Courtesy of ZeroHedge. View original post here.
Submitted by hedgeless_horseman.
THE BIG QUESTION…
Will the Grexit be Euro positive, or Euro negative?
Place your bets, ladies and, uhm, err, “gentlemen.”
What is my thesis? Short term Euro positive…long term very Euro negative as the other PIIGS are slaughtered, as and when needed, by the American/British Treasuries covering money printing operations…
WHO REALLY KILLED GREECE.
Germany, like Japan, are post-war pawns. Their currencies are DESIGNED to be debased, as and when needed, to achieve synchronized diving with the pound and dollar. If Germany wasn’t in the Euro, its prior experience with hyper-inflation would prevent it from debasing when instructed to do so (obviously not a problem with the Nips). Both countries go along as willing pawns simply because they have been re-created post-war as export nations totally reliant on weak currencies.
The PIIGS profligate spending has ALWAYS been there, like a fat store, and can be used by the brain when needed to feed the body.
What say ZeroHedge?
Guest Post: Low-Tech Solutions To High-Tech Tyranny
by Zero Hedge - May 24th, 2012 10:09 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Submitted by Brandon Smith from Alt-Market
Low-Tech Solutions To High-Tech Tyranny
Disclaimer: The following is a series of fictional accounts of theoretical situations. However, the information contained within was taken from established scientific journals on covered technology and military studies of real life combat scenarios. Alt-Market does not condone the use of any of the tactics described within for “illegal” purposes. Obviously, the totalitarian subject matter portrayed here is “pure fantasy”, and would never be encountered in the U.S. where politicians and corporate bankers are forthright, honest, and honorable, wishing only the sweetest sugar coated chili-dog best for all of mankind…
Imagine, if you will, a fantastic near future in which the United States is facing an unmitigated economic implosion. Not just a mere market crash, or a stint of high unemployment, but a full spectrum collapse driven by unsustainable debt spending and hyperinflationary printing. The American people witness multiple credit downgrades of U.S. Treasury mechanisms, the dollar loses its reserve status, devaluation of the currency runs rampant, and the prices of commodities and imported goods immediately skyrocket.
In the background of this disaster, a group of financial elite with dreams of a new centralized economic and political system use the chaos to encourage a removal of long held civil liberties; displacing Constitutional protections they deem “outdated” and no longer “practical” in the midst of our modern day troubles. This group then institutes draconian policies through the executive orders of a puppet president, including indefinite detention, assassination, and even martial law against citizens. For now, let’s just refer to them as “The Swedes”….
The Swedes have an extraordinary array of technological tools at their disposal. The kind of equipment dictators like Stalin and Hitler would have killed for…literally. This technology is so pervasive and so unprecedented in the history of tyrannical governments that average people shiver at the very thought of resistance. The Swedes seem to be invincible.
Some Americans think about escaping to a foreign country before the zealots totally dominate, but ultimately, running is meaningless. The Swedes want a global control grid, not just an American one. Eventually, the expatriates will have to face the music as well.
Others believe that they can take their families and hide alone in far off mountains to wait out the storm, but…
The PSI “Panacea”: A Greek Asset Neutron Bomb
by Zero Hedge - May 24th, 2012 9:59 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
While we were told during the PSI process that all was fixed and that Greece now had breathing room to cut spending and meet its TROIKA-mandated targets on the road to glory, it appears – just as we said it would – that things have got worse (much worse). In the 44 trading days since the PSI deal was struck, Greek government bonds are down over 44% in price – trading below 12% of par today for the first time ever. So much for Greylock’s “no-brainer”, “trade of the year” eh? Did equity markets signal an expectation of hope and change even as the government’s largesse was priced into its debt? Not so much – the Athens Stock Exchange index is down an incredible 35% since 3/22 – back at 22 year lows! Where is the Greek Whitney Tilson when we need him most?
GGBs below 12% or Par!
The Athens Stock Exchange index…
Charts: Bloomberg
Central Bank Gold Buying Surges To Over Over 70.3 Tonnes In April
by Zero Hedge - May 24th, 2012 9:54 am
Courtesy of ZeroHedge. View original post here.
Submitted by GoldCore.
Gold’s London AM fix this morning was USD 1,558.50, EUR 1,239.27, and GBP 993.62 per ounce. Yesterday’s AM fix this morning was USD 1,555.00, EUR 1,229.44, and GBP 989.56 per ounce.
Gold fell $5.60 or 0.36% in New York yesterday and closed at $1,561.20/oz. Gold has been trading sideways in Asia and was slightly lower in Europe prior to buying which saw gold rise to about the close in New York yesterday.
Fears about Greece and the EU after the EU summit came up short on delivering a grand solution to solve the debt crisis are supporting gold at these levels and leading to some safe haven buying.
EU leaders once again failed to agree to plans with regards to the increasing possibility that Greece exits the euro. Instead, Greece was again urged to continue to meet targets and continue the austerity to complete the ‘bailout’ schedule.
Meanwhile, the crisis is being compounded by the increasing insolvency of Spanish banks and indeed Spain itself.
Spain announced a 9 billion euro ($11 billion) bailout of Bankia on Wednesday, and endeavoured to find new ways to meet its demanding financing needs which may pull the country deeper into the eurozone crisis. The Irish NAMA style solution of creative accounting and kicking the can down the road is being looked at rather than the more prudent, but short term painful, winding down of all the ‘bad’ insolvent Spanish banks.
Gold may struggle to make gains over the coming trading session ahead of the expiry of monthly US options. However, sharp gains could be seen after option expiration – as has often been the case in recent years.
Reuters report that traders said that because the underlying June futures price was trading roughly between $1,550 and $1,600, where most at-the-money open interest was clustered, it was not clear which would exert a greater “gravitational pull” on the gold price.
Most open interest, which reflects investor positioning, is located at $1,550 and $1,600, with a firm bias towards the $1,550 level where gold may be guided towards.
Puts, options that give the holder the right, but not the obligation to sell a predetermined amount of an asset at a set price by a certain date, outnumber calls, or buy options, by nearly 2:1.
Gold 1 Year – (Bloomberg)
The…
Bank Of Russia Says Greece Has A Plan For Parallel Currency
by Zero Hedge - May 24th, 2012 9:38 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Someone apparerntly did not tell Russia to keep its mouth shut… That or, the sleeping bear is starting to awake and cause chaos and mischief:
- GREECE HAS PLAN FOR PARALLEL CURRENCY, SHVETSOV SAYS
- RUSSIA’S SHVETSOV SAYS `NECESSITY’ FOR GREECE TO LEAVE EURO
- SHVETSOV SAYS GREEK EXIT WOULD BE GOOD EXAMPLE FOR OTHERS
- BANK OF RUSSIA’S SERGEY SHVETSOV SPEAKS IN INTERVIEW IN MILAN
Kak skazat Oops po Russki? Cue Greek denials they have any plans about anything. Ever.
Euro Spikes On JPM Prediction Of 1-Year LTRO, ECB Rate Cut
by Zero Hedge - May 24th, 2012 9:07 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Wondering what caused the sudden spike in the EUR? Wonder no more, for JPM’s Greg Fuzesi merely put into words what everyone else had been speculating since this morning, namely more easing coming from the ECB. To wit: “We suspect the ECB’s first response will be in terms of new liquidity measures. The committment to supply unlimited liquidity at the regular refis (1-week, 1-month and 3-month) expires in mid-July and an extension of this should be announced at the June meeting. Whether the ECB will also announce some LTROs (likely of maturites up to one year) at the June meeting is less clear. Its latest commentary suggested that it is not minded to move this early and that it will wait instead for the outcome of an internal review that it is conducting about the effectiveness of its policy tools so far. Waiting until July would also give the ECB a better sense of the political situation in Greece after the election. Hence, we pencil in the announcement of 1-year LTROs for the July meeting. Beyond this we expect the main refi rate to be cut 25bp at the September meeting, with the deposit facility rate remaining at 0.25%. This implies that the ECB will respond very incrementally to the current macroeconomic weakness.” To summarize: help us Obi-Mario Draghi, you are our only hope.
From JPM:
Euro area: revising down growth after today’s weak PMI and expecting more from the ECB
Today’s business surveys were a big disappointment. The composite PMI declined 0.8pts to 45.9 in May and is now down 4.5pts since January. Composite new orders declined a bit less (0.4pts) but to a similarly low 44.5. Only the composite employment index nudged up to 48.3. Input price pressures eased a bit, while the output price index remained below its average. By sector, the output index fell 1.5pts in manufacturing to 44.7 and 0.4pts to 46.5 in services. New orders were roughly unchanged at 45.3 in services and they declined another point in manufacturing to just 42.5. The inventory indices rose a bit in manufacturing so that their ratio with new orders deteriorated a bit further. By country, the composite PMI fell 0.9pts to 49.6 in Germany and 1.2pts to 44.7 in France, while means that the…
FaceBook Makes Monness Crespi Idea Dinner Short List: Full Stock Pick Summary
by Zero Hedge - May 24th, 2012 9:01 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Now that the Ira Sohn conference has become a worthless hypefest, in which everyone and their kitchen sink is invited in a desperate attempt by hedge funds to offload positions put on ages ago to witless alphaclone chasers, the real “idea dinners” are few and far between. One such remaining one, which unlike other does not seek to publicize its positions to the retail investor is that held by Monness Crespi in which very select hedge funds are invited. Below we summarize the stock picks from last night’s dinner. We are not at all surprised to find FaceBook already making enemies.
MCH Technology Idea Dinner
1) Netflix Inc. (NFLX) – Short
2) Indira Sistemas (IDR SM) – Long
3) China Unicom (762 HK) – Short
4) TE Connectivity Ltd. (TEL) – Long
5) Western Digital Corp. (WDC) – Long
6) Facebook Inc. (FB) – Short
7) AAC Technologies Holdings Inc. (2018 HK) – Long
8) Taiwan Seminconductor Manufacturing Co. (TSM) – Short
9) Allscripts Healthcare Solutions (MDRX) – Long
10) Google Commentary – Long
11) Unisys Corp. (UIS) – Short
12) Broadsoft Inc. (BSFT) – Long
13) Mastec Inc. (MTZ) – Long
Initial Claims “Decline” Following Last Week’s Revision, Durable Goods Ex-Transportation Miss Big
by Zero Hedge - May 24th, 2012 8:46 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
In a absolutely shocking development, initial claims for the week ended May 5 printed in line with expectations of 370K, but to make the Mainstream Media’s life easy and unleash all those “Initial Claims Decline by 2,000″ headlines, last week’s number was increased from 370K to 372K (ignore that NSA number increased by 2,515). Continuing claims missed expectations of 3250K printing at 3260K, but down from an upward revised 3289K. Needs to say this week’s 370K adjusted print will be revised higher to 372-373K and the MSM will fall for it all over again. More importantly, the ongoing collapse in those collecting extended benefits now that legislation has halted extensions is becoming more acute: 40K dropped off Extended Claims and EUCs.
More importantly, Durable Goods rose by 0.2% in April to $215.5 billion, as expected. However, when removing the traditionally volatile transportation component, Durable goods slid by 0.6% on expectation of a 0.8% increase; compared to -0.8% in March; Cutting out Capital Goods and Non-Defense Aircraft, the collapse was even worse, printing at -1.9% on expectations of a 0.8% print. And the March number was slashed from -0.8% to -2.2%. The is now the second in a row (see below). Cue downward revisions to Q2 GDP any second.
From Bloomberg:
- “Very weak’’ orders for non-defense capital goods ex. aircraft “bodes poorly for capital spending in future GDP reports,” says Bloomberg economist Rich Yamarone
- 1.4% decline in non-defense capital goods shipments “weak start” for 2Q business investment
And cue horrible news is great news.
Update: sure enough, here it comes:
BREAKING: Initial Jobless Claims fall 2k to 370k for week ending May 19.
— CNBC (@CNBC) May 24, 2012
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