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Monthly Archives: August 2012

Italy Kicks Off a Bill Auction With the Lowest Yield Since March

“Italy sold 9 billion euros ($11.3 billion) of Treasury bills at the lowest rate since March on optimism the European Central Bank will intervene to curb the country’s borrowing costs.

The Rome-based Treasury sold the 181-day bills at 1.585 percent, down from 2.454 percent at the last sale of similar- maturity debt on July 27. Investors bid 1.69 times the amount of bills offered, up from 1.61 times last month.”

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Draghi Defends His Bond Buying Plan Amid German Criticism

“European Central Bank President Mario Draghi hit back at German criticism of his plan to intervene in bond markets and reminded Europe’s largest economy of its responsibility to anchor the euro.

The ECB “will always act within the limits of its mandate,” Draghi wrote in a commentary for German newspaper Die Zeit provided by the Frankfurt-based ECB today. “Yet it should be understood that fulfilling our mandate sometimes requires us to go beyond standard monetary policy tools.”

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Spanish Bonds Fall Again on Funding Concerns

Spain’s 10-year bonds declined for a second day on concern the country will struggle to finance itself as a call for assistance from its most indebted region turned investor attention to other troubled provinces.

The losses pushed yields to the highest in a week after Catalonia, Spain’s largest region, announced yesterday it would seek 5 billion euros ($6.27 billion) in aid after being shut out of financial markets. Italy’s bonds reversed losses after the nation sold 9 billion euros of six-month bills at the lowest yield since March. It aims to sell a combined 7.5 billion euros of debt due in 2017 and 2022 tomorrow. German 10-year bund yields fell to the lowest in more than three weeks.”

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Plaquemines Parish President Billy Nungesser Loses Roof


Plaquemines Parish President Billy Nungesser, scrambling to secure low-lying areas from Hurricane Isaac ‘s storm surge and spirit stranded residents to shelter, has found the storm striking back in his own backyard. Nungesser said Tuesday evening that portions of the roof on his Pointe Celeste home lay scattered on the lawn and water has begun poring inside.

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It isn’t just Case Shiller: Almost Every House Price Index has Bottomed

From the Bonddad Blog:

But the Case Shiller index is only one house price index. There are a dozen such indexes, all relying on different methods. There are asking prices indexes, median and mean sales price indexes, and repeat sales indexes. Within each type there are seasonally adjusted and non-seasonally adjusted metrics. Back in April I reported on slew of house price indexes, and concluded that March may have marked the turn in the market. With the Case Schiller index turning positive YoY, now is a good time to check those indexes again. Do they contradict the Case Shiller turning point, or do they confirm it?

Read the rest here.

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Dow Theory?

A great chart-chomping Dow Theory blog post can be read here.

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John Paulson is Getting Hit with Massive Redemptions

Many of Paulson & Co.’s investors hung with it last year despite an annus horribilis in which the company’s flagship hedge fund lost 35 percent. But with returns continuing to sag amid a rising equities market, some of those investors are now jumping ship.


John PaulsonCitigroup (C) announced last week that it was pulling Paulson off its hedge-fund investment platform and planned to take back $410 million in assets.

Morgan Stanley’s (MS) brokerage firm has reportedly had the fund company on watch for possible removal from its hedge-fund platform for months now. And other investors big and small are considering redeeming their capital soon as well, say bank officials and fund of funds managers.

During a phone call with clients and employees of Bank of America late Tuesday, Paulson & Co. founder John Paulson said he was “disappointed” about the loss of Citigroup as an investor, according to someone briefed on the call, but noted that the bank’s platform accounted for less than 2 percent of his company’s overall investments. Paulson also said that he wanted to “reaffirm” his commitment to the flagship fund and the “entire business,” this person added.


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Time Machine Special: Governor Chris Christie’s Speech Text

This stage and this moment are very improbable for me.

A New Jersey Republican delivering the keynote address to our national convention, from a state with 700,000 more Democrats than Republicans.

A New Jersey Republican stands before you tonight.

Proud of my party, proud of my state and proud of my country.

I am the son of an Irish father and a Sicilian mother.

My Dad, who I am blessed to have with me here tonight, is gregarious, outgoing and loveable.

My Mom, who I lost 8 years ago, was the enforcer. She made sure we all knew who set the rules.

In the automobile of life, Dad was just a passenger. Mom was the driver.

They both lived hard lives. Dad grew up in poverty. After returning from Army service, he worked at the Breyers Ice Cream plant in the 1950s. With that job and the G.I. bill he put himself through Rutgers University at night to become the first in his family to earn a college degree. Our first family picture was on his graduation day, with Mom beaming next to him, six months pregnant with me.

Mom also came from nothing. She was raised by a single mother who took three buses to get to work every day. And mom spent the time she was supposed to be a kid actually raising children – her two younger siblings. She was tough as nails and didn’t suffer fools at all. The truth was she couldn’t afford to. She spoke the truth – bluntly, directly and without much varnish.

I am her son.

I was her son as I listened to “Darkness on the Edge of Town” with my high school friends on the Jersey Shore.

I was her son as I moved into a studio apartment with Mary Pat to start a marriage that is now 26 years old.

I was her son as I coached our sons Andrew and Patrick on the fields of Mendham, and as I watched with pride as our daughters Sarah and Bridget marched with their soccer teams in the Labor Day parade.

And I am still her son today, as Governor, following the rules she taught me: to speak from the heart and to fight for your principles. She never thought you get extra credit for just speaking the truth.

The greatest lesson Mom ever taught me, though, was this one: she told me there would be times in your life when you have to choose between being loved and being respected. She said to always pick being respected, that love without respect was always fleeting — but that respect could grow into real, lasting love.

Now, of course, she was talking about women.

But I have learned over time that it applies just as much to leadership. In fact, I think that advice applies to America today more than ever.

I believe we have become paralyzed by our desire to be loved.

Our founding fathers had the wisdom to know that social acceptance and popularity is fleeting and that this country’s principles needed to be rooted in strengths greater than the passions and emotions of the times.

Our leaders today have decided it is more important to be popular, to do what is easy and say “yes,” rather than to say no when “no” is what’s required.

In recent years, we as a country have too often chosen the same path.

It’s been easy for our leaders to say not us, and not now, in taking on the tough issues. And we’ve stood silently by and let them get away with it.

But tonight, I say enough.

I say, together, let’s make a much different choice. Tonight, we are speaking up for ourselves and stepping up.

We are beginning to do what is right and what is necessary to make our country great again.

We are demanding that our leaders stop tearing each other down, and work together to take action on the big things facing America.

Tonight, we choose respect over love.

We are not afraid. We are taking our country back.

We are the great grandchildren of men and women who broke their backs in the name of American ingenuity; the grandchildren of the Greatest Generation; the sons and daughters of immigrants; the brothers and sisters of everyday heroes; the neighbors of entrepreneurs and firefighters, teachers and farmers, veterans and factory workers and everyone in-between who shows up not just on the big days or the good days, but on the bad days and on the hard days.

Each and every day. All 365 of them.

We are the United States of America.

Now we must lead the way our citizens live. To lead as my mother insisted I live, not by avoiding truths, especially the hard ones, but by facing up to them and being the better for it.

We cannot afford to do anything less.

I know because this was the challenge in New Jersey.

When I came into office, I could continue on the same path that led to wealth, jobs and people leaving the state or I could do the job the people elected me to do – to do the big things.

There were those who said it couldn’t be done. The problems were too big, too politically charged, too broken to fix. But we were on a path we could no longer afford to follow.

They said it was impossible to cut taxes in a state where taxes were raised 115 times in eight years. That it was impossible to balance a budget at the same time, with an $11 billion deficit. Three years later, we have three balanced budgets with lower taxes.

We did it.

They said it was impossible to touch the third rail of politics. To take on the public sector unions and to reform a pension and health benefit system that was headed to bankruptcy.

With bipartisan leadership we saved taxpayers $132 billion over 30 years and saved retirees their pension.

We did it.

They said it was impossible to speak the truth to the teachers union. They were just too powerful. Real teacher tenure reform that demands accountability and ends the guarantee of a job for life regardless of performance would never happen.

For the first time in 100 years with bipartisan support, we did it.

The disciples of yesterday’s politics underestimated the will of the people. They assumed our people were selfish; that when told of the difficult problems, tough choices and complicated solutions, they would simply turn their backs, that they would decide it was every man for himself.

Instead, the people of New Jersey stepped up and shared in the sacrifice.

They rewarded politicians who led instead of politicians who pandered.

We shouldn’t be surprised.

We’ve never been a country to shy away from the truth. History shows that we stand up when it counts and it’s this quality that has defined our character and our significance in the world.

I know this simple truth and I’m not afraid to say it: our ideas are right for America and their ideas have failed America.

Let’s be clear with the American people tonight. Here’s what we believe as Republicans and what they believe as Democrats.

We believe in telling hard working families the truth about our country’s fiscal realities. Telling them what they already know – the math of federal spending doesn’t add up.

With $5 trillion in debt added over the last four years, we have no other option but to make the hard choices, cut federal spending and fundamentally reduce the size of government.

They believe that the American people don’t want to hear the truth about the extent of our fiscal difficulties and need to be coddled by big government.

They believe the American people are content to live the lie with them.

We believe in telling seniors the truth about our overburdened entitlements.

We know seniors not only want these programs to survive, but they just as badly want them secured for their grandchildren.

Seniors are not selfish.

They believe seniors will always put themselves ahead of their grandchildren. So they prey on their vulnerabilities and scare them with misinformation for the cynical purpose of winning the next election.

Their plan: whistle a happy tune while driving us off the fiscal cliff, as long as they are behind the wheel of power.

We believe that the majority of teachers in America know our system must be reformed to put students first so that America can compete.

Teachers don’t teach to become rich or famous. They teach because they love children.

We believe that we should honor and reward the good ones while doing what’s best for our nation’s future – demanding accountability, higher standards and the best teacher in every classroom.

They believe the educational establishment will always put themselves ahead of children. That self-interest trumps common sense.

They believe in pitting unions against teachers, educators against parents, and lobbyists against children.

They believe in teacher’s unions.

We believe in teachers.

We believe that if we tell the people the truth they will act bigger than the pettiness of Washington, D.C.

We believe it’s possible to forge bipartisan compromise and stand up for conservative principles.

It’s the power of our ideas, not of our rhetoric, that attracts people to our Party.

We win when we make it about what needs to be done; we lose when we play along with their game of scaring and dividing.

For make no mistake, the problems are too big to let the American people lose – the slowest economic recovery in decades, a spiraling out of control deficit, an education system that’s failing to compete in the world.

It doesn’t matter how we got here. There is enough blame to go around.

What matters now is what we do.

I know we can fix our problems.

When there are people in the room who care more about doing the job they were elected to do than worrying about winning re-election, it’s possible to work together, achieve principled compromise and get results.

The people have no patience for any other way.

It’s simple.

We need politicians to care more about doing something and less about being something.

Believe me, if we can do this in a blue state with a conservative Republican Governor, Washington is out of excuses.

Leadership delivers.

Leadership counts.

Leadership matters.

We have this leader for America.

We have a nominee who will tell us the truth and who will lead with conviction. And now he has a running mate who will do the same.

We have Governor Mitt Romney and Congressman Paul Ryan, and we must make them our next President and Vice President.

Mitt Romney will tell us the hard truths we need to hear to put us back on the path to growth and create good paying private sector jobs again in America.

Mitt Romney will tell us the hard truths we need to hear to end the torrent of debt that is compromising our future and burying our economy.

Mitt Romney will tell us the hard truths we need to hear to end the debacle of putting the world’s greatest health care system in the hands of federal bureaucrats and putting those bureaucrats between an American citizen and her doctor.

We ended an era of absentee leadership without purpose or principle in New Jersey.

It’s time to end this era of absentee leadership in the Oval Office and send real leaders to the White House.

America needs Mitt Romney and Paul Ryan and we need them right now.

There is doubt and fear for our future in every corner of our country.

These feelings are real.

This moment is real.

It’s a moment like this where some skeptics wonder if American greatness is over.

How those who have come before us had the spirit and tenacity to lead America to a new era of greatness in the face of challenge.

Not to look around and say “not me,” but to say, “YES, ME.”

I have an answer tonight for the skeptics and the naysayers, the dividers and the defenders of the status quo.

I have faith in us.

I know we can be the men and women our country calls on us to be.

I believe in America and her history.

There’s only one thing missing now. Leadership. It takes leadership that you don’t get from reading a poll.

You see, Mr. President – real leaders don’t follow polls. Real leaders change polls.

That’s what we need to do now.

Change polls through the power of our principles.

Change polls through the strength of our convictions.

Tonight, our duty is to tell the American people the truth.

Our problems are big and the solutions will not be painless. We all must share in the sacrifice. Any leader that tells us differently is simply not telling the truth.

I think tonight of the Greatest Generation.

We look back and marvel at their courage – overcoming the Great Depression, fighting Nazi tyranny, standing up for freedom around the world.

Now it’s our time to answer history’s call.

For make no mistake, every generation will be judged and so will we.

What will our children and grandchildren say of us? Will they say we buried our heads in the sand, we assuaged ourselves with the creature comforts we’ve acquired, that our problems were too big and we were too small, that someone else should make a difference because we can’t?

Or will they say we stood up and made the tough choices needed to preserve our way of life?

I don’t know about you, but I don’t want my children and grandchildren to have to read in a history book what it was like to live in an American Century.

I don’t want their only inheritance to be an enormous government that has overtaxed, overspent and over-borrowed a great people into second-class citizenship.

I want them to live in a second American Century.

A second American Century of strong economic growth where those who are willing to work hard will have good paying jobs to support their families and reach their dreams.

A second American Century where real American exceptionalism is not a political punch line, but is evident to everyone in the world just by watching the way our government conducts its business and everyday Americans live their lives.

A second American Century where our military is strong, our values are sure, our work ethic is unmatched and our Constitution remains a model for anyone in the world struggling for liberty.

Let us choose a path that will be remembered for generations to come. Standing strong for freedom will make the next century as great an American century as the last one.

This is the American way.

We have never been victims of destiny.

We have always been masters of our own.

I won’t be part of the generation that fails that test and neither will you.

It’s now time to stand up. There’s no time left to waste.

If you’re willing to stand up with me for America’s future, I will stand up with you.

If you’re willing to fight with me for Mitt Romney, I will fight with you.

If you’re willing to hear the truth about the hard road ahead, and the rewards for America that truth will bear, I’m here to begin with you this new era of truth-telling.

Tonight, we choose the path that has always defined our nation’s history.

Tonight, we finally and firmly answer the call that so many generations have had the courage to answer before us.

Tonight, we stand up for Mitt Romney as the next President of the United States.

And, together, we stand up once again for American greatness.

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Does Sector Rotation Spell the Untold Story in the Market ?

Regimes are shifting. Can you feel it? While at the surface, indices tumble along in small ranges and AAPL does its thing, asset-class movements and sector-rotations suggest something is afoot. Since the peak in the S&P 500 last week, we have seen a clear rotation from cyclicals to non-cyclicals, a major rotation from stocks into bonds, and a significant regime change in the relationship between Gold, the USD, and Treasury prices. One thing is clear – the heads-I-win, tails-you-lose high-beta strategy (on the ECB/Fed ‘has your back’ thesis) appears to be weakening a little (though in 100 milliseconds from now – who knows?)

Full article with chart porn

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ECB Board Member Drops Some Hints on the ECB Bond Buying Plan

“What will happen next in Europe? We just asked that question to analyst Lorcan Roche Kelly of Trend Macrolytics.

His answer: Check out the latest speech from ECB executive board member Jörg Asmussen, who hails from Germany.

The speech is in German, but Google Translate does a good job with it, and indeed it spells out the latest path forward.”

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Market Update

Markets remain largely unchanged as they wait for Bernanke and the ECB to drop some cocaine.

The big news of the day is that Issac is now a hurricane bearing down on “The City That Forgot” aka “The Big Easy” aka “The Crescent City”. Issac has shut down 93% of the oil output in the Gulf keeping WTI and gasoline futures higher than really need be.

Hopefully Issac will just dump a little rain and not the 10-20 inches expected on the Gulf coast.

Market update 

The Story

3 D heat map 

[youutbe://http://www.youtube.com/watch?v=Gu2pVPWGYMQ 450 300]

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On the Matter of Healthcare Vouchers

“If Mitt Romney and Paul Ryan have their way, then Americans of all ages may be spending more on health care during their retirement.

If Romney becomes president and repeals the Affordable Care Act as promised, then retirement would cost $11,100 more for the average 65-year-old and $18,600 more for the average 55-year-old because of higher Medicare premiums and drug costs, according to a report from Harvard economist David Cutler, an Obamacare architect, and the Center for American Progress.

What’s more, seniors on Medicare who depend on Medicaid would need to pay more than $2,500 more per year because of planned Medicaid cuts.

Romney’s plan would cost younger Americans even more, since Romney and Ryanwant to turn Medicare into a voucher system for Americans under 55 for when they qualify for Medicare. The report estimates that 48-year-olds would have to pay $124,600 more for Medicare during retirement under Romney’s plan, 39-year-olds would have to pay $216,600 more during retirement, and 29-year-olds would have to pay $331,200 more during retirement in total. That’s because the vouchers would not keep up with rising health care costs. For those 29-year-olds, the extra costs would consume 62 percent of their lifetime Social Security benefits.”

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