Central Perk: 8 oct. 2011

sâmbătă, 8 octombrie 2011

Mish's Global Economic Trend Analysis

Real Reasons for Last Week's Rally Emerge

Posted: 08 Oct 2011 06:35 PM PDT

I immediately dismissed stories running rampant about a Financial Times article starting last week's rally. In Viral Nonsense About What Caused Tuesday's Rally I stated

No fewer than a half-a-dozen sites featured or repeated a silly story about Tuesday's late rally that propelled the S&P 500 up 45 points in an hour. I am commenting because of all the emails I received on the idea.

This is a case of looking for a cause and finding one.

The most likely explanation of this rally is purely technical. Support was breached, no more sellers stepped in and a short-covering rally from deeply-oversold commenced as bears covered. If you prefer, "short-term psychology changed for unattributable reasons"

It is highly doubtful this all happened because of non-statements with no details from Olli Rehn. Rather, Rehn just happened to be spouting nonsense right as the market was ready to reverse on short-covering.

It is a mistake to look for an immediate explanation for every market move. Sometimes the explanation will not come for days (then be attributed to something else), and sometimes there really is no explanation other than short-term psychology changed.

When everyone starts fishing for answers, someone will find one, no matter how silly, and the story gets repeated everywhere.

I now have strong evidence that view is correct.

Please consider the following interview on Bloomberg with Tom DeMark

URL if video does not play: Tom DeMark on U.S. Stocks, Gold and Oil.

You may not be a follower of DeMark. Indeed most people probably have never heard of him. However, scores of hedge funds and institutions do follow him and do pay attention to technical levels.

Dovish Actions by Trichet

Those seeking a more fundamental reason can find it in the ECB's decision to extend more loans to banks on easy terms as noted by Bloomberg in European Central Bank Extends Loans, Bond Buys

Trichet, announcing a policy decision for the final time, said the ECB will resume covered-bond purchases and reintroduce year-long loans for banks as the sovereign-debt crisis threatens to freeze money markets. Trichet will step down at the end of the month and be succeeded by Italy's Mario Draghi.

"The markets are a bit relieved that they're getting some support rather than no support from the ECB in the form of liquidity measures," said Kathy Lien, director of currency research at this online trading firm GFT Forex in New York.

Expect Leaks

Inquiring minds may be wondering how something announce later could have precipitated a rally sooner. The answer is leaks. Someone always knows in advance and that someone is never you or me but rather banks and hedge funds.

Two Possible Reasons for Last Week's Rally

Dovish Actions by Trichet telegraphed in advance
DeMark Technical levels reached then reversed

The widely circulated reason of a Financial Times rumor made little sense at the time, and now makes zero sense in retrospect. Most bloggers missed the mark by a mile and parroted silliness related to a Financial Times story that by accident came minutes before the rally started.

My friend "Pater Tenebarum" also got this correct. Please see Post Mortem of 'Turnaround Tuesday' for his interpretation.

It is a huge mistake to think reasons for something will be immediately available. Sometimes reasons only become apparent days later, sometimes not for months.

By the way, don't expect the rally to last. Nothing has been solved.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Merkel, Sarkozy Feud Over How to Recapitalize Banks

Posted: 08 Oct 2011 11:16 AM PDT

German Chancellor Angela Merkel and French President Nicolas Sarkozy are in a public dispute as to how to recapitalize woefully undercapitalized European banks.

Via Google translate, please consider Merkel and Sarkozy on Sunday concoct a new plan to recapitalize banks

German Chancellor Angela Merkel and French President Nicolas Sarkozy, meet tomorrow in Berlin to lay the foundations for a new program to recapitalize European banks.

The umpteenth emergency meeting of the two leaders since the crisis began will try to outline a mechanism agreed to provide public funds to private financial sector in Europe in the event that Athens was doomed to see a default, a hypothesis increasingly shuffled in Europe.

The main pitfall of the meeting is that despite the good feeling that boasts the Franco-German axis, Berlin and Paris have called for different models of bank recapitalization, each with the interests of his country in mind.

The Chancellor stressed that it would be best that the banks themselves were able to raise funds "for his own," ie in the market or, alternatively, that national governments take charge of their recapitalization needs, a position broadly shared by Brussels.

Only if they fail the first two springs, and if it is a bank of "systemic", states could resort to EFSF to support the institutions in trouble, a measure that would require some "conditionality" reciprocal form of "structural reforms ".

The French position, meanwhile, denies this response in three steps and openly advocates that is used in the first place EFSF capital.

The French Finance Ministry itself said yesterday that there is "divergence" between Paris and Berlin and that both nations agree that the European banks need more money.

According to the IMF, the need to recapitalize European banks is between 100,000 and 200,000 million euros, well above as outlined in the stress tests conducted in July by the European Banking Authority (EBA).

The "stress test" made in July, in which cited eight banks, five of them Spanish, assumed sovereign bond holdings, including Greece, had zero risk.

A similar report appears in Reuters: Germany, France split on bank aid before summit

Under strong U.S. and market pressure Chancellor Angela Merkel and President Nicolas Sarkozy will try to bridge differences on how to use the euro zone's financial firepower to counter a sovereign debt crisis that threatens the global economic recovery.

A ratings downgrade on both Italy and Spain by Fitch Ratings on Friday underscored the grim climate.

A German source said Paris wanted to be able to tap the euro zone's 440 billion euro rescue fund to recapitalize its own banks, which have the largest exposure to peripheral euro zone debt, while Berlin insisted the fund should be used only as a last resort when no national funds are available.

After meeting Dutch premier Mark Rutte, Merkel confirmed the German position was that the European Financial Stability Facility was a backstop to be used "only if that country is unable to cope on its own.

"I hear that the French are scared that too much bank recapitalization could jeopardize the French AAA and that is why they push for the EFSF solution for French banks. I expect Merkel to stick to national funds for recapitalization," said economist Jacques Delpla, a member of the French government's advisory council of economic analysis.

France has the highest debt-to-GDP ratio of any of the six triple-A countries in the euro zone at 86.2 percent.

If France, the second largest guarantor of the rescue fund after Germany, were to lose its top-notch rating, the whole edifice of financial support for Greece, Portugal and Ireland would crumble.

"The main issue is a crisis of confidence in the sovereign. ... What is important is to deal with the Greek issue as quickly as possible and then rebuild confidence in the capacity of each bank in Europe to reduce its debt," Oudea said at SocGen's Paris headquarters.

France and Belgium are arguing over whose taxpayers should pay to salvage cross-border municipal lender Dexia, which came close to collapse this week and is to be broken up.

Moody's Investor Service on Friday said it may cut Belgium's credit rating.

Until last week, the position of France was that French banks have no toxic assets. This prompted me to write on September 25 Desperate Times Lead to Desperate Lies; Europe Weighs the Weightless; Even Citigroup Sees the Lies

Are central bankers and politicians really as stupid as they sound or are they pathological liars who simply cannot help it?

Check out these preposterous lies by Bank of France Governor Christian Noyer as quoted by Bloomberg in Noyer Sees 'Absolutely No Reason' to Use Bank Backstop
Noyer Lies

"I'm extremely confident" in French banks because "we know them very well. We know their balance sheets, their risk assessments. We know they have no toxic assets."
There is "absolutely no reason" to activate a support system for the nation's banks that was set up during the financial crisis in 2008.
Markets "are over-reacting," he said. "They need to come back to a sense of reality."

All of those are blatantly preposterous. However, lie number 1 has to be one of the top lies of the year. "French banks have no toxic assets"?!

For starters, what about Greek bonds about to take a 50% haircut or more in default? That lie is so ridiculous no one on the planet can possibly believe it.

On October 3, Dexia bank became the First Casualty of Greek Default.

Now Merkel and Sarkozy are in an open feud over what to do about it. Bear in mind this is not about Dexia, the entire banking system is insolvent.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Damn Cool Pics

Lassi Hurskainen Angry Birds

Posted: 07 Oct 2011 08:24 PM PDT

Lassi Hurskainen is back with a new trick shot video. This time he teamed up with his fellow UNC Asheville goalkeeper Dan Jackson for a real life Angry Birds soccer match.

Celebrities With Insured Body Parts

Posted: 07 Oct 2011 07:55 PM PDT

What's a limb worth? Well, if it's yours or mine, probably nothing. If it belongs to a celebrity it might be worth millions. Many celebrities with "notable" body parts insure them just in case they lose a leg or a boob in an accident. Here are 23 celebrities who have taken out huge insurance policies for their precious assets.

Merv Hugles, cricket player
$317,000 Mustache

Ornella Muti, actress
$350,000 Breasts

Bette Davis, actress
$357,000 Waistline ($28K in 1930s)

Jimmy Durante, actor
$442,000 Nose

Ben Turpin, comedian
$500,000 Eyes ($25K in 1910s)

Rihanna, singer
$1 Million Legs

Keith Richards, guitarist
$1.6 Million Hands

Heidi Klum, model
$2.2 Million Legs

Egon Ronay, food critic
$2.3 Million Taste Buds ($330K in 1960s)

Jamie Lee Cirtis, actress
$2.8 Million Legs

Tina Turner, singer
$3.2 Million Legs

Dolly Parton, singer
$3.8 Million Breasts ($600K in 1970s)

Tom Jones, singer
$7 Million Chest Hair

America Ferrera, actress
$10 Million Smile

Ken Dodd, comedian
$10.6 Million Teeth ($6.2M in 1989)

Betty Grable, actress
$14.8 Million Legs ($1.2M in 1940s)

Rod Stewart, singer
$15.5 Million Voice ($6M in 1940s)

Angela Mount, wine expert
$16 Million Taste Buds

Brice Springsteen, singer
$31.2 Million Voice ($5.7M in 1980s)

Michael Flatley, dancer
$40 Million Feet

David Beckham, soccer player
$70 Million Legs

Jennifer Lopez, singer
$300 Million Buttocks

Mariah Carey, singer
$1 Billion Legs

Source: gawno

Weekly Address: Making Your Voice Heard on the American Jobs Act

Your Daily Snapshot for
Saturday, October 8, 2011

Weekly Address: Making Your Voice Heard on the American Jobs Act

President Obama urges Congress to pass the American Jobs Act to put more people to work, put more money in the pockets of working Americans and give the economy the jolt it needs right now.

Watch the video.

Weekly Wrap Up

Here's what happened this week on Whitehouse.gov:

Equality for All Americans President Obama spoke at the 15th Annual Human Rights Campaign National Dinner at the Washington Convention Center in Washington, D.C., stressing his continuing commitment to the cause of equality for all Americans. He also talked about the most recent progress made for human rights, the repeal of Don’t Ask, Don’t Tell.

Putting America Back to Work President Obama held a press conference in the East Room to discuss the American Jobs Act, which would put thousands of teachers back to work, rebuild our nation’s old and broken infrastructure and provide tax cuts that will benefit hard-working Americans. He also traveled to Texas to meet with students and teachers at Eastfield College in Mesquite, where he explained how the Jobs Act will prevent up to 280,000 teachers from losing their jobs. The President met with the members of his cabinet to emphasize the importance of all agencies doing everything possible to help pass the American Jobs Act and put thousands of people back to work.

Fall Harvest Students from two local elementary schools joined First Lady Michelle Obama for the 3^rd Annual Fall Harvest of the White House kitchen garden. Mrs. Obama designed the garden as a way to connect children with the food they eat — an essential component to her Let’s Move! initiative. The students joined Mrs. Obama for grilled garden pizzas made from the produce they picked.

Girl Power The president hosted the three winners of the first Google Global Science Fair. The impressive young women—all American high school students — made remarkable scientific discoveries and beat out over 10,000 students from 91 countries.

Fun on the Field It was a week of celebrating athletic achievements as several major sports figures visited the White House, including the U.S. Women’s National Soccer team, who participated in a Let’s Move soccer clinic, the Texas A&M women’s basketball team, who won the 2011 NCAA championship and the 1985 Chicago Bears, who were recognized 25 years after winning the Super Bowl.

Pretty in Pink In honor of National Breast Cancer Awareness Month, the White House illuminated the exterior of the White House in a glowing pink. Actress Jennifer Aniston, who recently directed a new Lifetime Original movie exploring a family affected by breast cancer, joined Dr. Jill Biden, Secretary Kathleen Sebelius and a group of breast cancer survivors to discuss lessons learned from those who have been treated for breast cancer.

West Wing Week: Check out your video guide to everything that happened at 1600 Pennsylvania Avenue.

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Seth's Blog : Marketing to narcissists

Marketing to narcissists

The self-absorbed are always in the market for a louder microphone and a shinier mirror.

They also have trouble distinguishing between interested and interesting. It turns out that the best way to appear interesting to someone who cares a lot about himself is to be interested.

And if you don't see that, if you're not so interested in what others are thinking about, it might be because the best way to market to you is to offer you a shinier mirror and a louder microphone...