RANsquawk 19th March US Afternoon Briefing - Stocks, Bonds, FX etc.

by Zero Hedge - March 19th, 2010 12:29 pm

Courtesy of RANSquawk Video

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In Prior Week Money Markets Recorded Biggest Outflow Since Collapse Of Lehman At $60 Billion, Or 2.2% Of Assets

by Zero Hedge - March 19th, 2010 12:19 pm

Courtesy of Tyler Durden

Well, the administration finally succeeded in getting everyone to join it in going all in on the Ponzi. In the prior week, money market funds record a humongous $60 billion outflow, or a whopping 2.2% of all assets. This follows a $30 billion outflow in the prior week, and is the single biggest outflow since the fall of Lehman ($144 Billion, when money markets needed a Federal guarantee to be saved). Joe Sixpack has thrown the dice and its has fallen on pyramid scheme. The chase for yield (who cares about return of capital, return on capital rules), continues in the high yield arena as well: after 2 $1 billion outflows a month ago, it is now smooth sailing. Lipper estimated that for the week ended March 17, HY funds saw an inflow of $597 million, a small decline from the $795 million in the week prior and and $314 in the week before. As for High Grade - fughettabboutit - last week was a record 54th consecutive week of inflows into HG (nevermind that foreigners sold the greatest amount of corporate bonds on record in January), at $1.3 billion. And the biggest loser - why equities as usual, which “explains” why credit is at two week lows even as stocks push all time records. For logic there is Math 101. For everything else there is the Federal Reserve Bank of New York.

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Fed Must Disclose Bank Bailout Records As Court Of Appeals Withholds Historic “Mark Pittman” Decision

by ilene - March 19th, 2010 11:31 am

Fed Must Disclose Bank Bailout Records As Court Of Appeals Withholds Historic "Mark Pittman" Decision

Courtesy of Tyler Durden at Zero Hedge

Next step for the Fed weasels - petitioning the Supreme Court in an attempt to completely trample America’s constitution. In the meantime, Mark Pittman smiles from above as Satan reevaluates the amend and extend provisions of his affirmative covenants with the Fed.

From Bloomberg:

March 19 (Bloomberg) — The Federal Reserve must disclose documents identifying financial firms that might have collapsed without the largest ever U.S. government bailout, a federal appeals court said.

The U.S. Court of Appeals in Manhattan ruled today that the Fed must release records of the unprecedented $2 trillion U.S. loan program launched primarily after the 2008 collapse of Lehman Brothers Holdings Inc. The ruling upholds a decision of a lower-court judge, who in August ordered that the information be released.

The opinion might not be the final word in the bid for the documents, which was launched by Bloomberg LP, the parent of Bloomberg News, with a November 2008 lawsuit. The Fed could seek a rehearing or appeal to the full appeals court and eventually petition the U.S. Supreme Court.

The court was asked to decide whether loan records are covered by the U.S. Freedom of Information Act, or FOIA. Historically, the type of government documents sought in the case has been protected from public disclosure because they might reveal competitive trade secrets. The Board of Governors of the Federal Reserve System had argued that disclosure of the documents threatens to stigmatize lenders and cause them “severe and irreparable competitive injury.”

Financial Crisis

Bloomberg, majority-owned by New York Mayor Michael Bloomberg, sued after the Fed refused to name the firms it lent to or disclose loan amounts or assets used as collateral under its lending programs. Most of the loans were made in response to the deepest financial crisis since the Great Depression.

Lawyers for Bloomberg argued in court that the public has the right to know basic information about the “unprecedented and highly controversial use” of public money.

“Bloomberg has been trying for almost two years to break down a brick wall of secrecy in order to vindicate the public’s right to learn basic information,” Thomas Golden, an attorney for the company with Willkie Farr & Gallagher LLP, wrote in court filings.

Banks and the Fed warned that bailed-out lenders may be hurt if the documents are made public, causing a run or a sell- off…

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Amid a Depression and Linked Heavily into Western Europe, Latvia’s Government Collapses Today!

by Zero Hedge - March 19th, 2010 11:03 am

Courtesy of Reggie Middleton

From the UK Telegraph: Latvia government collapses amid economic crisis

The People’s Party, the largest group in a five-party coalition, walked out amid disputes over how to cope with the country’s severe problems.

Unemployment has now hit 20 per cent and the economy contracted by 18 per cent last year.

The People’s Party quit after its action plan failed to get the backing of Valdis Dombrovskis, the Latvian prime minister, who labelled it “populist”.

Mr Dombrovskis warned the People’s Party’s departure could cause yet further economic instability.

“Any contradictions in the government are immediately reflected in the financial markets, and they directly affect the fiscal stability our country… a policy that is truly responsible for the country cannot be self-centred,” he said.

But he said remained confident that an emergency IMF bail-out worth £6.7bn would remain unaffected by the political instability.

New Era, Mr Dombrovskis’s party, confirmed it had already extended invitations to other parties to join a new coalition in an attempt on gain the majority in Latvia’s 100-seat parliament.

It attempted to play down concerns about the prospect of a minority government at the helm of country in severe economic turmoil.

Laila Dimrote, a spokeswoman for New Era, said: “This is not a big deal. Latvia has had many minority governments in the past, and often this is the case prior to elections.”

Hopefully, subscribers and readers are taking full advantage of the research at hand. This plays into the fact that Latvia, and its neighboring countries, are in a depression. This economic contagion will be both converted into financial contagion through the banking system and transmitted as both financial and economic contagion to the wealthier western countries that have large economic claims on Latvia and do trade with them. 

Click to Enlarge… 

Click any graphic to enlarge…

For more opinion and analysis, see:

• The Depression is Already Here for Some Members of Europe, and It Just Might Be Contagious!

• and Financial Contagion vs. Economic Contagion: Does the Market Underestimate the Effects of the Latter?

I will be publishing the foreign claims model (which will tie all of the myriad global risks into one, cogent risk model) and my analysis of Italy early next week for subscribers, along with a free accompanying analysis for non-paying subscribers and readers.  Ireland, the UK and Spain are on tap. Earlier installments of the Reggie Middleton’s Pan-European Sovereign Debt Crisis

1. The Coming Pan-European Sovereign Debt Crisis -…
   

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Goldman Lowers Major Banks’ Projected Q1 EPS By 15%

by Zero Hedge - March 19th, 2010 10:48 am

Courtesy of Tyler Durden

Full report attached (it’s after 10am).

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Credit Is Now Completely Ignoring The Ridiculous No Volume Equity Melt Up, At Two Week Wides

by Zero Hedge - March 19th, 2010 10:23 am

Courtesy of Tyler Durden

If one were to think that the market is determined exclusively by the predominantly retarded action in equities over the past months or so, it would appear we have now fully entered the insanity dot com days, where each day could easily be the rally’s last, yet with shorts terrified of being steamrolled by the fine upstanding market manipulators at Liberty 33, the possibility of the Dow hitting 36,000 is distincitly realistic (only to be followed by Dow 0, and a Marsian bail out). What is notable, however, is that credit, which is and always has been the rational market, has not only bought this most recent melt up, but over the past week has in fact retrenched. Not only is credit weaker compared to its January tights, but is also at its widest over the past two weeks, just as equities were set to go parabolic on no volume and on giddy algos, already seeing themselves buying their third summer house in Binaryhampton.

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Congress Demands Explanation From Bernanke On Why Goldman And Ex-Fed Board Member Stephen Friedman Illegally Bought Shares Of Goldman In December 2008

by Zero Hedge - March 19th, 2010 10:11 am

Courtesy of Tyler Durden

Congress is pretending to be investigating yet more criminality out of Goldman and out of the New York Fed, and specifically the nexus where the two streams intersect (aside from private room meetings at assorted Financial District restaurants) - Goldman’s very own/the Fed’s very ex-own, Stephen Friedman. We can’t wait to see how quick before this investigation quietly disappears. Pay particular attention to rhetorical question #13: ” 13. Has the Federal Reserve investigated whether Goldman Sachs or Mr. Friedman benefitted financially from Mr. Friedman serving as Chairman of the Board of the New York Fed?” Duh.

Below is the full letter from Edolphus Towns, Chairman of the Committee on Oversight Committee on Oversight and Government Reform to Ben “Capo di tutti capi” Bernanke

Dear Chairman Bernanke:

We write you in connection with the House Oversight and Government Reform Committee’s hearings on the federal bailout of American International Group (AIG). The Committee is the principal oversight committee in the U.S. House of Representatives, with jurisdiction over “any matter.” Under Rules X and XI of the Rules of the House of Representatives, the Committee is investigating this matter further.

As you may recall, in the fall of 2008, at the height of the financial crisis, Mr. Stephen Friedman served both as a member of the Board of Directors of Goldman Sachs and as Chairman of the Board of Directors of the Federal Reserve Bank of New York (New York Fed). In September 2008, Goldman Sachs converted from an investment bank into a bank holding company, making the New York Fed its primary regulator. At the time of the conversion, Mr. Friedman owned approximately 46,000 shares in Goldman.

Notably, under a long-standing policy of the Board of Governors of the Federal Reserve System (Federal Reserve), Mr. Friedman was prohibited from owning shares of any company under the supervision of the Federal Reserve. Despite the clear prohibition and apparent conflict of interest, Mr. Friedman requested a waiver from the Board of Governors in Washington and was allowed to continue serving as chairman, in direct violation of Fed policy, until a decision on the waiver was made.

In the meantime, on December 17, 2008, despite the prohibition, Mr. Friedman bought an additional 37,000 shares of Goldman Sachs, a company that was under the supervision at the New York Fed. A waiver was granted by the Board of Governors on January 21, 2009.

It is…

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Guest Post: The Elusive Canadian Housing Bubble

by Zero Hedge - March 19th, 2010 9:09 am

Courtesy of Tyler Durden

The Elusive Canadian Housing Bubble, Submitted by Alec Pestov

This paper explores the subject of a possible housing bubble in Canada. It examines a diverse array of factors that may have contributed to the rise in house prices in Canada. The paper evaluates each factor individually and determines the health of the Canadian housing market using common valuation techniques.

Results suggest that economic fundamentals in Canada provide little explanation for the Canadian house price dynamics. Market fundamentals have become insignificant in affecting house prices, and the price-momentum conditions characteristic of a bubble now exist. The extreme decoupling of the market prices from the underlying fundamentals suggests an upcoming correction in housing prices in Canada.

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Alan Grayson Sends Angry Letter To AIG Credit Facility Trust, Demands All AIG Emails Be Made Public

by Zero Hedge - March 19th, 2010 9:01 am

Courtesy of Tyler Durden

It had been a little quiet without Alan Grayson these past few months. Too quiet. The Florida Democrat is now back with a bang after sending a letter to the representatives of the AIG Credit Facility Trust demanding that all AIG emails over the past decade be made public, as well as all company models and internal accounting documents. Yet it is the flourish of the narrative, which reminds one of Dan Loeb in his iconoclastic prime that is the centerpiece of the most recent, and every other letter. Where else can you find pearls like: “It is beyond outrageous that this company, which taxpayers capitalized after Wall Street used it as a slush fund, hides nearly all relevant facts from its owners, the public.” We are most enthused by Grayson (and others) finally picking up on a key theme - if you want something analyzed independently and objectively, just open it up to the broader public, and screw all corrupt internal commissions. Crowdsourcing is the only way to get anything done these days. Also, the crowd wonders, is it too late to replace the top two posts in the current administration with Grayson-Kaufman (in alphabetical order)?

March 18, 2010

AIG Credit Facility Trust
Trustee Peter A. Langerman
Trustee Chester B. Feldberg
Trustee Jill M. Considine

Arnold & Porter LLP
399 Park Avenue
New York, NY 10022

Dear Mr. Langerman, Mr. Feldberg and Ms. Considine,

I write to request that you turn over to this office, and the public, e-mails backed up on AIG’s servers, including internal accounting documents and financial models developed by the company in the last decade.  The public owns AIG.  We bought it, for an initial down payment of $182 billion.  You are the representatives of the public, through your positions as the three trustees of the AIG Credit Facility Trust.

The public is unhappy with the purchase.  In March, 2009, a poll found that 82% of the public wanted bonuses to AIG employees returned.  This didn’t happen.  We do not  know who is responsible for the company’s collapse, or whether they are working now at other banks or for the Federal government.  We do not know if they got bonuses, if they were committing fraud, whether there were kickbacks from counterparties, or if there was any significant restraining role played by the regulatory community.  We cannot separate the bad decision-makers from innocent employees, because we simply do not know…

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Frontrunning: March 19

by Zero Hedge - March 19th, 2010 8:49 am

Courtesy of Tyler Durden

• The start of the great unwind? JGB yield curve steepens asbig buyers faith dented (Reuters)
• Markets spooked as Greek rescue plan crumbles (Telegraph)
• Nobel winning economist extraordinaire responds: Steve Roach goes batty (NYT)… it’s going to be a slow news OpEx
• Latvia government collapses amid economic crisis (Telegraph)
• China tries to cool yuan dispute with US (Reuters)
• Stop losses see Sterling heavy in European Trade (Market News)
• Lehman’s auditor goes blind from all the cooking (Bloomberg)
• Finally some scrutiny on “expert networks”: Hedge fund matchmakers cannot escape scrutiny (Reuters)
• Dodd chief counsel bought financia stocks during 2008 crisis (BusinessWeek)
• Fed may boost discount rate before next meeting, economists say (Bloomberg)
• LIBOR keeps drifting wider, at 5 month high (Market News)
• CDO “Samaritan” Hildene duels Goliaths in collateral stripping (Bloomberg)
• The Lehman-Barclays lawsuit sure will be fun to watch (Bloomberg)
• SEC “Pay to Play” report tips unlikely figure (WSJ)

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